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That application for judicial review was brought pursuant to s 483A of the Migration Act 1958 (Cth), which has been subsequently repealed; however the repeal did not affect the continuance of the proceedings before the Federal Magistrates Court. The Tribunal affirmed the decision of a delegate of the respondent Minister made earlier on 5 March 2005 to refuse the grant of a protection visa to the appellant. The circumstances placed before the Tribunal were somewhat complex, emerging as they did from a confusing picture presented by the appellant's application for review to the Tribunal, and subsequently in the course of his appeals to the Federal Magistrates Court and thereafter to this Court. 2 At the time of his arrival in Australia on 30 August 2004 on a temporary business visa issued to him in Moscow, the appellant was a citizen of Armenia. He made application for a protection visa on 29 September 2004 with the assistance of a migration agent, who has since rendered assistance to the appellant in the context of the legal processes which he has pursued. That application stated that he had university qualifications in Armenian literature, and further that his employment was that of a businessman. The appellant claimed to have had a well-founded fear of persecution for his political opinion, and in that regard to have been persecuted by the Armenian authorities upon the basis of his active membership of the People's Party of Armenia (PPA) since 1999, his membership activities having involved financial support and distributions of political material. An aspect of his persecution had involved his arrest and threats of destruction of his business operation, said to have comprised 'retail shops'. The Tribunal described the PPA as both a large and lawful party in Armenia, some of whose members had been detained in April 2004 during protests, and also assaulted by members of the security forces. His PPA membership card tendered to the Tribunal was said to have consisted of an uncertified photocopy. 3 The appellant's claims extended to governmental arrest, detention and severe verbal and physical abuse in Armenia, and subjection to a politically motivated tax-audit conducted in relation to his business activities, being an audit for which he was ordered to provide to the authorities all of his financial information within a period of one week. His ultimate release from detention was said to have been made subject to conditions as to not leaving his city of residence, and as to provision of a bond provided by his relatives. He further claimed to have been 'charged in a court' and that in the upshot he was left with no alternative but to 'give away his businesses and go into hiding' in a relative's home for about two months or until he had completed the visa formalities for his departure to Australia. His visa was apparently issued by the Australian Embassy in Moscow. The PPA was in opposition in Armenia before and after elections in 2003 and 2004, being elections which were asserted by the appellant to have been flawed, as was apparently confirmed by country information. 4 Notwithstanding what I have summarised from documentary material present to Australian authorities upon his arrival in Australia, the appellant stated in his application for an Australian visa lodged in Moscow that he had been the 'Head of the Biology Department at the Vanevan University'. The Tribunal questioned the appellant's migration agent in that regard by its letter of 14 June 2005. The Tribunal observed that '[t] he 16 th International Congress of Eye Research's Conference Co-ordinator wrote to him at the university on 5 August 2004, and the head of the Vanevan Institute wrote a letter on his behalf to the Australian Embassy in Moscow dated 11 August 2004, saying he had been head of department since 2000... '. The appellant's evidence regarding his PPA political membership was considered by the Tribunal to have been at least vague. The Tribunal further considered that it would have been reasonable for him to have kept receipts for his asserted financial contributions to the PPA, had his claims to membership been sound, but which the appellant had not been able to produce. The Tribunal observed that '[t] he only documentary corroboration of the applicant... was a facsimile transmission copy of what was claimed to be a membership card for the political party which the applicant claimed to support. ' The appellant seemingly sought to undermine the Tribunal's decision in the course of his subsequent proceedings, as may conceivably be seen in the course of my review of this somewhat complex litigation, upon the footing of a denial on his part of having been employed as head officer of the Biology Department at the Vanevan University, and of the authenticity of documentation supplied to the Australian Embassy in Moscow. 7 The Tribunal took into account, for the purpose of decision-making, the independent country information, which indicated that exit permits may be denied to people involved in pending court cases, and inferred that since the appellant was issued with an exit permit it was doubtful the Armenian authorities were expecting to lay any charges against him when he left Armenia. In the result, the Tribunal was not satisfied that the appellant faced in reality circumstances involving persecution for any political opinion imputed to him, and affirmed accordingly the Ministerial decision not to grant him a protection visa. This does not raise any new arguments, except...[a] failure by the Tribunal to comply with a duty under s 424A(1)... and alternatively that failures of procedural fairness affected the conduct of the Tribunal's hearing. In relation to compliance with s 424A(1) , it is unfortunate that neither the Court Book nor other evidence before the Court allows a clear finding as to what was the actual source document or documents, whether physical or electronic, from which the Tribunal gained its information as to the documents presented to the Australian Embassy and the activities of the Embassy in checking those documents. I have set out above the description of the source information provided by the Tribunal to the applicant in the course of the hearing and in its reasons. It is not clear that the Tribunal, in fact, had before it the letters which had been provided to the Embassy. It is possible that it had only a description of the letter and inquiries in a "case note" obtained from a cable or computer screen. However, I am prepared to assume that somewhere within the possession or control of the Department of Immigration may have been the documents which had been presented on behalf of the applicant when obtaining his business visa, and notes of the procedures followed in the Embassy when obtaining "confirmation" from the Director of the academic institute as to the applicant's claimed position. Upon that basis, his Honour observed, ' [i] n some cases, the objects of the section might only be able to be met by the actual provision of a copy of the source documents for the Tribunal's information. For example, where the Tribunal proposes to draw information from the appearance of a document which can not adequately be described in particulars. ' His Honour then went on to observe that the '... s 424A letter sufficiently identified particulars of the information gained from the Moscow Embassy, which was then used in its reasons...'. The ' gist ' of that information obtained by the Tribunal, as so described by his Honour, '... comprised details of a claimed employment, the fact that letters had been given to the Embassy in corroboration of that employment, and that Embassy staff "had confirmed with the rector of the institute the claimed employment and position" . His Honour concluded that the letter '... sufficiently identified the potential relevance of that information, being that it was inconsistent with the factual claims of the [appellant] to the Tribunal as to his employment in Armenia and that he was in hiding' , and that as further stated in that letter in conclusion, those 'inconsistencies have the potential to cast doubt on the credibility of your claims to have had problems with the Armenian authorities for political reasons' . His Honour therefore concluded that 'I am therefore not satisfied that the Tribunal was in breach of its obligations under s 424A ' . 12 Smith FM then addressed what he described as '... the situation more broadly from the perspective of... procedural fairness, and assuming that these are capable of surviving notwithstanding the presence of s 422B of the [Migration] Act', and held that he was '... not persuaded that any failure of procedural fairness occurred in this case', or '[i] n particular... that there was any obligation on the Tribunal to provide copies of the source of its information in the absence of any request by or on behalf of the [appellant]'. His Honour observed further that '[w] ithin the [appellant's] submissions is a contention that the Tribunal was obliged to make further inquires as to the true position concerning the [appellant's] academic qualifications and his employment' , but pointed out that '... there is clear authority that no such duty lies upon the Tribunal' , referring thereby to a number of authorities, including the Federal Court decision of Win v Minister for Immigration and Multicultural Affairs [2001] FCA 56 ; (2001) 105 FCR 212 at [15] (Whitlam, Tamberlin and Sackville JJ) and the High Court in Minister for Immigration and Multicultural and Indigenous Affairs v SGLB [2004] HCA 32 ; (2004) 207 ALR 12 at [43] (per Gummow and Hayne JJ). His Honour further observed that the appellant's submissions 'pointed to various factual aspects of the [appellant's] claims, which the [appellant] argued revealed error in the Tribunal's doubting of his credibility' . However his Honour pointed out that '[s] everal of these facts do not appear, in fact, to have been presented to the Tribunal' , and in any event his Honour considered that the same did no more than 'argue the merits of the factual assessments made by the Tribunal' , and did not 'reveal that the Tribunal's reasoning was not open to it on the material before it' . 13 There was next addressed by Smith FM the appellant's further grounds raised for appellate review, and his Honour found no evidence to indicate that the Tribunal 'misled [the appellant] into thinking that it accepted his explanation as to the documents presented to the Moscow Embassy [or otherwise]... could reasonably have caused a false impression in the minds of the [appellant] and his agent'. His Honour gave consideration to the appellant's remaining submissions, and found at least that the same merely 'argue [d] with the merits of the factual assessment made by the Tribunal ,' and involved no issue of law which attracted judicial review. In the result, his Honour concluded that he was not persuaded that any jurisdictional error had occurred on the part of the Tribunal in its reasons for decision and dismissed the application for review of the Tribunal's decision. 14 On 24 April 2006 the appellant filed a notice of appeal in this Court from the decision of the Federal Magistrates Court, and thereby raised the following grounds in summary, being first that the Federal Magistrate 'misunderstood (and/or ignored)' material pertinent to the Tribunal's alleged breach of procedural fairness and non-compliance with s 424A(1) of the Act, in particular in relation to information obtained from the Australian Embassy in Moscow, and secondly, that his Honour 'failed to give weight to a similar matter in which the comparable issues have been addressed' . However as will be seen, the appellant endeavoured by the time of the hearing of the appeal to undertake a somewhat broader path, including the tender of documentary evidence. In the light of the High Court decision of SAAP v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 24 ; 215 ALR 162 at [43] , [91], [153] and [180], the Tribunal should be joined as a second respondent to the current proceedings. 16 In the context of the present appeal, the appellant sought to tender his affidavit evidence of 17 July 2006; prior thereto, the appellant had failed to file any written submissions. The Minister indicated that there was no objection to the Court receiving the affidavit as constituting the appellant's submissions, but observed that if it were to be treated as evidence, it 'would be objected to'. The Minister went on to observe that the affidavit contained material that was not before the Court below or the Tribunal. I have received the affidavit to the extent that it may serve as submissions for the appellant. At 154 (CB) it was confirmed that the University does exist in Armenia. He submitted, broadly and unspecifically, that 'the test is whether an applicant is fairly informed of the information considered to be adverse', and further that 'I was not fairly informed because... the Tribunal had evidence consistent with my claims, but did not inform me of the evidence'. The appellant asserted therefore that 'it is to be accepted that the Tribunal did fail to furnish more information relating to my alleged employment at the Vanevan University, which is a breach of s 424A... '. 19 The appellant submitted that 'the Tribunal had evidence before it to accept my claims that the letters provided to Moscow University had been fraudulent', and further that 'given the confirmed fact that the Vanevan University does not exist in Yerevan, the Tribunal had evidence before it to accept my claim that I had never worked as a head of the Biology Department at Vanevan University'. The Minister submitted that 'the difficulty' with that contention by the appellant is that 'even if one assumes in the [appellant's] favour that annexure A [which is attached to the appellant's affidavit of 17 July 2006] is a true copy of what the Moscow embassy received dated 5 August 2004,... and even if the [appellant] was able to overcome the problem that annexure A to his affidavit was not before the Court below and... even if one assumed that it was before the Tribunal, ultimately what the Tribunal is relying on in this paragraph is the [letter of] 11 August 2004'. There is some force to that contention by the Minister and I am persuaded that there has been no breach of s 424A as a consequence of any purported discrepancy between the address of Vanevan University contained in the letter provided in the appellant's affidavit and the address referred to by the Tribunal. 20 In any event, the major difficulty with the affidavit material belatedly presented by the appellant to the Federal Court is that it did not address the foundation or at least a material aspect of the appellant's case originally presented to the Minister and the Tribunal, being the appellant's membership of and active support otherwise of the PPA, inclusive of his claim to refugee status originally made, rightly or wrongly, concerning (broadly speaking) his alleged governmental detention and abuse, inclusive of a politically motivated taxation audit of his originally asserted business activities. 21 Further in the course of the hearing on the appeal, the appellant tendered a written submission which I marked for identification, which purported to respond to aspects of the Minister's written submissions, and in particular to what was asserted to be the Minister's case on appeal in summary that 'the Tribunal was not satisfied from the appellant's knowledge of PPA that he was a member or a financial contributor of PPA' and further that 'the Tribunal was not satisfied by the copy of the membership card that he was a member of PPA'. The basis of that case submitted by the appellant was to the effect, somewhat confusingly and in any event insufficiently in terms of precision, that '[w]hat the Tribunal said was that I had some knowledge of certain events and of PPA, but as this information was all in the public domain the Tribunal was unable to accept my claims on the basis of my knowledge of it, and, therefore, decided to consider other evidence'. However as that information is all in the public domain, I am unable to infer merely from his familiarity with it that he was a member of, and financial contributor to, the PPA. I have therefore considered other aspects of his evidence. ' The contention such as it was, is misconceived and without juridical foundation. The Minister submitted that those contentions made by the appellant regarding page seventeen of the Tribunal's judgment constituted 'a new section 424A case which was not put to the Federal Magistrate', in that the appellant contended that that information was not the subject of the section 424A notice provided to the appellant. The Minister pointed out rightly that those matters referred to by the appellant were all evaluations of evidence, not information within the meaning of s 424A of the Act. Reference was made by the Minister in that regard to the dictum of Allsop J in SZEEU v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 2 ; (2006) 150 FCR 214 at [206] - [207] , where his Honour discussed what is encompassed by the statutory notion of information in the context of s 424A(1) of the Act. In this respect, it is relevant to recall the root of the word 'information': that of which one has been told or apprised, or informed. The distinction can become fine: Paul at [95]. It is a distinction, nevertheless, to be maintained. Also, the fact that appraisal, thought processes and determination are not information does not mean they are not relevant to the operation of s 424A. The thought processes of the Tribunal may reveal the relevance of information for s 424A(1)(b) and may assist in understanding what the Tribunal must say or do to comply with s 424A(1)(a) , (b) or (c). And this unfairness is to be regarded as denial of procedural fairness and, itself the issue of apprehended bias. However, it may be observed that because s 422B of the Act took effect in relation to the present proceedings, the natural justice hearing rule has no application beyond the textual requirements contained within that section of the Act. The Minister referred in that regard to the Full Court decision of SZCIJ v Minister for Immigration and Multicultural Affairs [2006] FCAFC 62 (Heerey, Conti and Jacobson JJ), ' in which the decision of the same Full Court in Minister for Immigration and Multicultural Affairs v Lay Lat [2006] FCAFC 61 was applied to find that section 422B excluded the common law natural justice hearing rule' . 25 The appellant's complaints advanced on the appeal did not come relevantly to issue with the rejection by the Tribunal, and with the confirmation of that rejection by the Federal Magistrates Court, of the basis for his claims for refugee status to which I have referred, nor demonstrate moreover any viable basis upon which natural justice could conceivably be said to have been denied to him. The circumstances of the present appeal propounded by the appellant constitute at best a strained endeavour to formulate an issue of law based upon asserted contraventions of s 424A of the Act on the Tribunal's part. The appeal is in any event without at least forensic merit, whatever possible factual misunderstanding or shortcoming in relation to evidentiary matters may have occurred 'on the way', as it were, in the course of the administrative and judicial review processes that have occurred. The appeal must be dismissed.

whether breach established of s 424a(1) of the migration act concerning provision by tribunal of particulars whether denial of procedural fairness migration

As the issues in each proceeding are inter-related I have decided to publish one reasons for judgment which explain the reasons for making interlocutory orders in each proceeding. The applicant also relies upon ss 39B(1) and 1A(c) of the Judiciary Act 1903 (Cth) ("the Judiciary Act "). The proposed decision by the Minister is the giving of a notice pursuant to s 47(1) of the Northern Territory National Emergency Response Act 2007 (Cth) ("the NER Act") to the Northern Territory specifying certain pieces of land that are the subject of leases under the Special Purposes Leases Act 1953 (NT) ("Special Purposes Leases Act ") or the Crown Lands Act 1992 (NT) ("the Crown Land Act"). These pieces of land are known colloquially as the "Alice Springs town camps". The applicant brings the proceeding as a representative party pursuant to the provisions of Part IVA of the Federal Court of Australia Act 1976 (Cth) ("the Federal Court of Australia Act "). The group members to whom the proceeding relates are occupants under tenancy agreements of houses in the Alice Springs town camps with incorporated Housing Associations which have been granted Special Purposes Leases in perpetuity or leases in perpetuity under the Special Purposes Leases Act or the Crown Lands Act of land in the town camps. The group members are concerned that the Minister intends to make the proposed decision prior to 4 August 2009 without giving them reasonable, proper or appropriate notice of the proposed decision or affording them the opportunity to be heard in respect of how their rights and interests may be affected by the proposed decision. They claim that a breach of the rules of natural justice has occurred or is likely to occur in connection with the conduct of the Minister leading up to the decision. The issue which the applicant seeks to have determined in this proceeding is whether the power of the Minister to give the notice under s 47(1) of the NER Act is conditioned on the giving of reasonable, proper and appropriate notice to the occupants of land the subject of the notice as persons whose rights, interests and legitimate expectations will be affected by the proposed decision and whether such exercise of the power without giving the occupants such notice is beyond the power and jurisdiction of the Minister. Accordingly, they seek an order pursuant to s 16(2) of the ADJR Act or pursuant to s 39B(1) and 1A(c) of the Judiciary Act directing the Minister to refrain from making a decision under s 47(1) of the NER Act until such time as she has given reasonable, proper and appropriate notice of the proposed decision to each of the group members and given them the opportunity to be heard in respect of how their rights and interests may be affected by the proposed decision. The relief sought in the present application is interlocutory relief preserving the status quo until the principal proceeding can be heard and determined by the Court. If the Minister makes the decision foreshadowed in her letter, it will be a decision to which the ADJR Act applies. By virtue of s 6(1)(a) of that Act if a person is engaging or proposes to engage in conduct for the purpose of making a decision to which the Act applies a party aggrieved by that conduct may apply to the Court for an order of review in respect of the conduct on the ground, inter alia, that a breach of the rules of natural justice has occurred, is occurring or is likely to occur, in connection with the conduct. That provision is a mirror image of s 5(1) of the ADJR Act which gives a person aggrieved by a decision to which the Act applies a right to apply to the Court for an order of review on the ground that a breach of the rules of natural justice occurred in connection with the making of the decision. Section 16(2) of the ADJR Act gives the Court a discretion to make an order directing any party to refrain from doing an act. The Director is established under s 20B of the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) ("Aboriginal Land Rights Act"). The Director's functions include, if the Minister has agreed to a request under s 20CA(2) in relation to a lease and the Commonwealth intends to enter into the lease, to enter into the lease on behalf of the Commonwealth and administer the lease. The second proceeding is brought by the applicants as representative parties pursuant to the provisions of Part IVA of the Federal Court of Australia Act . In the second proceeding the first applicant Barbara Rachel Shaw is a member and tenant of the twelfth fourth respondent Mt Nancy Housing Association Inc. The second applicant is a member and tenant of the tenth Housing Association. The third applicant is a member and tenant of the second Housing Association. The fourth applicant is a member and tenant of the fourth Housing Association. The fifth applicant is a member and tenant of the thirteenth Housing Association. The sixth applicant is a member and tenant of the eighth Housing Association. The seventh applicant is a member and tenant of the sixth Housing Association. The eighth applicant is a member and tenant of the eleventh Housing Association. The ninth applicant is a member and tenant of the fifth Housing Association. The tenth applicant is a member and tenant of the first Housing Association. The eleventh applicant is a member and tenant of the third Housing Association. The twelfth applicant is a member and tenant of the ninth Housing Association. The thirteenth applicant is a member and tenant of the seventh Housing Association. The fourteenth applicant is a member and tenant of the fifteenth Housing Association. It appears that the ninth and fourteenth fourth respondent Housing Associations and the Irklancha Atwacha Association Inc (not a respondent) want the town camps which they manage to be acquired compulsorily. Pursuant to the provisions of s 20CA of the Aboriginal Land Rights Act, if the Housing Associations are considering granting sub-leases of the Alice Springs town camp land to the Commonwealth they may request the Minister to direct the Director to enter into sub-leases on behalf of the Commonwealth and administer the sub-leases. Pursuant to the provisions of s 47 of the NER Act the Minister may, on behalf of the Commonwealth, give the Northern Territory a notice specifying, relevantly for present purposes, the land on which are situated 17 town camps in and around Alice Springs: Pt 4 of Sch 1 cl 69. By virtue of s 47(3) all rights, titles and interests in land that is so specified are, subject to ss 48 and 51 of the NER Act (not presently relevant) vested in the Commonwealth and freed and discharged from all other rights, titles and interests (save for certain rights not presently relevant). The applicants allege that the Minister has required each of the Housing Associations to request, and then to grant, a 40 year sub-lease of the land in respect of which each of them holds a leasehold interest in perpetuity to the Director to which sub-lease the Northern Territory is a party and in respect of which the Minister was to agree under s 20CA of the Aboriginal Land Rights Act. The applicants allege further that if the Housing Associations do not enter into such sub-leases with the Director the Minister has threatened to give a notice to the Northern Territory under s 47 of the NER Act to vest the land in respect of which the Housing Associations hold a leasehold interest in perpetuity in the Commonwealth free and discharged of all rights and interests in the land including all rights of the group members to live in the houses they occupy on such land pursuant to tenancy agreements. The applicants allege further that the Minister has given, or intends to give, a notice to agree to the sub-leases under s 20CA(3) of the Aboriginal Land Rights Act. These allegations are challenged by the Minister. The group members to whom the second proceeding relates are occupants of houses in town camps in Alice Springs. Each of them has entered into a tenancy agreement with a Housing Association such as, in the case of Ms Shaw, Mt Nancy Housing Association. That Association has been granted a Special Purposes Lease from the Northern Territory which commenced on 23 August 1976 and is in perpetuity. If the Minister proceeds with the proposal to which I have referred the tenancy agreements under which Ms Shaw and the other group members occupy their present homes will be terminated and extinguished. Ms Shaw lives with her two daughters in House 5 on the Mt Nancy town camp under a tenancy agreement dated 27 August 2003. Ms Shaw's tenancy agreement is headed "Tenancy Agreement Permanent". The tenancy is unlimited in point of time and according to its terms, in para 15, the only ground upon which the Association can give Ms Shaw notice to quit the premises is if she breaks any of the rules of the Association. She pays rent currently of $123 per fortnight and also pays for services such as electricity, excess water and telephone. Around 200 people have entered into agreements similar to Ms Shaw's agreement relating to other houses in the Alice Springs town camps and of the order of 1,800 to 3,000 people live as family units in those houses. From time to time, visitors from remote communities come to stay in the town camps. Each town camp comprises a largely distinct Aboriginal community based on language and kinship groups. Fifteen Housing Associations control the Alice Springs town camps. Each of the Housing Associations has been granted a Special Purposes Lease or Crown Lease from the Northern Territory which commenced on various dates. The Tangentyere Council Inc ("the Council") has 18 members being the Housing Associations that control the Alice Springs town camps. The Council manages around 200 houses in the town camps. Each of the Housing Associations is incorporated and is governed by a Constitution substantially in the same terms and to the same effect. The Constitution of the Mt Nancy Housing Association Incorporated is dated 30 November 2006. The Council takes the view that leases such as are held by Ms Shaw are periodic tenancies terminable on 42 days notice under the Residential Tenancies Act 1999 (NT). However, Ms Shaw contends that when the proper matrix of facts is considered the tenancy agreement is only terminable without the agreement of the tenant on breach. It is not necessary to resolve this issue on the present application. The Parties acknowledge and agree that $100,000,000 inclusive of SIHIP Project Costs represents the entire amount that the Territory must expend pursuant to the Alice Springs Living Area Subleases (including this Sublease), regardless of how many Alice Springs Living Area Subleases are entered into. The SIHIP Annual Report must include details of expenditure under SIHIP on the upgrade and Construction of houses and Infrastructure in the Alice Springs Living Areas during the previous Sublease Year. I propose to refer only to those aspects of the background which bear upon the issues presently before me. For present purposes, the narrative commences in May 2006 when the then Federal Minister for Indigenous Affairs, the Hon Mal Brough and the then Northern Territory Chief Minister, Clare Martin announced a joint $30 million commitment to improve living conditions in the Alice Springs town camps. In March 2007 Minister Brough announced an additional $50 million to progress the implementation of the Alice Springs town camps strategy. In April 2007 Minister Brough wrote to Mr Tilmouth, the Executive Director of the Council and said that under the Australian Government's offer for the provision of funding, the Northern Territory Government would manage the Alice Springs town camps' housing as public housing and that he had agreed to the current holders of town camp leases retaining those leases, subject to their agreement to sub-lease residential areas to the Northern Territory Government for no less than 99 years without conditions. The Council resolved to decline this proposal which it called the Government's "$60 million conditional offer". On 21 June 2007, the Australian Government announced what it called a national emergency response for the protection of indigenous children in Northern Territory communities. The Australian Government will act in this area if the NTG fails to do so". The NER Act came into operation on 17 August 2007. In September 2007 new arrangements for the provision of essential services and infrastructure in Northern Territory town camps were established by a Memorandum of Understanding between the Australian Government and the Northern Territory Government. The "Strategic Indigenous Housing and Infrastructure Program" ("SIHIP") was established in accordance with the Memorandum of Understanding and has since been subsumed into the National Partnership Agreement on Remote and Indigenous Housing. On 17 June 2008 the Minister wrote to the Council offering up to $50 million from SIHIP to be used for infrastructure and housing in the Alice Springs town camps on the basis that sub-leases for a minimum of 40 years were granted over the town camps to the Government. On 25 June 2008 the Council Executive wrote to the Minister informing her that the Council Executive had passed a resolution agreeing to negotiate sub-leases within the framework set out in the Minister's letter. On 10 July 2008 an Agreed Work Plan was signed by the Minister, the (then) Northern Territory Minister for Housing and the President of the Council who signed for and on behalf of the 15 town camp Housing Associations. The Agreed Work Plan provided for 40 year sub-leases to be granted by the Housing Associations to the Director within six months. The working group constituted by representatives from the Northern Territory Government, the Council and the Housing Associations was established to implement the Agreed Work Plan. Thereafter a number of meetings were held to implement the work plan. On 3 November 2008 the Council released a media statement in which it confirmed its commitment to grant 40 year sub-leases to the Australian Government in accordance with the Agreed Work Plan. Thereafter negotiations ensued in relation to settling the terms of the proposed sub-leases. On 8 January 2009 the Australian Government extended the deadline for reaching agreement on the terms of the sub-leases from the Housing Associations to the Director to 28 February 2009. The Australian Government fixed that date as the deadline in order to enable construction under SIHIP to commence in 2009. On 9 January 2009 the Minister wrote a letter to each of the Housing Associations urging them to progress consideration of the sub-leases as soon as possible. Territory Housing would undertake these functions in consultation with each of the Housing Associations. Territory Housing has also agreed to subcontract Tangentyere Council as an agent, subject to Tangentyere meeting strict performance requirements. After the initial three year period, a competitive tender process would be held to allow other service provides to compete for housing services. This proposal would set out in the Agreed Work Plan which was signed on your behalf in July 2008". The first applicant, Barbara Shaw, attended the meeting held at the Mt Nancy camp on 4 March 2009. Between 11 and 14 March 2009, Australian Government and Northern Territory Government officers visited the town camps and provided information to residents about the Australian Government's proposal. The officers also distributed detailed fact sheets to residents in simple English. On 20 March 2009 the Minister wrote to the Council agreeing to a further extension of the negotiation period for the purpose of agreeing on the terms of the proposed sub-leases until 4 May 2009. Officers from my Department and from the Northern Territory Government attended each of the consultation meetings and in addition have been distributing information and discussing the proposed agreement with residents of the various town camps. Reports of this activity indicate that information about the proposed subleases and related arrangements is new to many town camp residents notwithstanding that the Agree Work Plan was signed on their behalf in July 2008 and that Tangentyere Council has been negotiating the subleases on behalf of the Housing Association for more than eight months. It is essential that we move quickly on land tenure to ensure that SIHIP can proceed quickly. This extension would be on the basis that a final and definite response on the proposed sublease be provided in writing by close of business on 4 May 2009. In order to assist with these further consultations, I again offer the assistance of my officials and pass on a similar offer from the Northern Territory Government. In addition, Minister Anderson and I propose to be available for a meeting with the Tangentyere Council Executive, Housing Association representatives and any other interested town camp residents on Friday 24 April 2009 so that we may explain in person the benefits of agreeing to the subleases. As occurred with the first round of consultations, Australian Government and Northern Territory Government representatives attended and detailed fact sheets in simple English were again distributed to residents. The meeting with the Minister scheduled for 24 April 2009 was rescheduled for 23 April 2009. On 21 April 2009 the Council sent an email to the Minister attaching an agenda for the meeting on 23 April 2009. The agenda included an update on sub-lease negotiations. The persons present at the meeting included Council representatives, Housing Association representatives and interested town camp residents. On 24 April 2009 the Council wrote to the Minister telling her that the Housing Associations had declined the Government's offer and pointing out what were the sticking points. On 1 May 2009 the Minister wrote to the Council with the revised offer in relation to the proposed sub-leases. The offer included a commitment to increase housing and infrastructure investment in the Alice Springs town camps to $100 million. During the week beginning 11 May 2009, Government officials conducted a fact sheet drop throughout the town camps to ensure the Housing Associations and residents were aware of the details of the Government's revised offer in relation to the proposed sub-leases. Negotiations continued thereafter in relation to the terms of the proposed sub-leases and on 21 May 2009 the Council wrote to the Minister saying that it would not endorse the Government's offer. It also noted that the Housing Associations had rejected the Government's offer. On 24 May 2009 the Minister announced the Australian Government's consideration of the compulsory acquisition of the Alice Springs town camp leases under s 47(1) of the NER Act. On the same day the Minister wrote letters to the Council and to each of the fifteen Housing Associations informing them of the Government's consideration of compulsory acquisition of the town camp leases. The letters were headed "Proposal to give a notice under section 47 of the Northern Territory National Emergency Response Act 2007 ". By the letters the Minister gave notice that she was considering giving the Northern Territory a notice under s 47(1) of the Act in respect of land covering some 16 town camps in and around Alice Springs which are some of the camps referred to in cl 69 of Pt 4 of Sch 1 of the NER Act. It is possible that the Commonwealth may lease or transfer the Land to the Northern Territory or a Northern Territory authority to enable it to be primarily responsible for providing and improving the housing and infrastructure. The non-extinguishment principle (within the meaning of the Native Title Act 1993 ) would apply to any native title affected by the vesting, by operation of s 51 of the NTNER Act. The vesting would not include rights, titles and interests in relation to minerals, petroleum or gas, by operation of s 47(9) of the NTNER Act. Existing registered easements or statutory easements would be preserved, by operation of s 48 of the NTNER Act. The letter also stated that the Minister would be available to meet with interested persons in Alice Springs at 10.30 am on 29 June 2009 to hear views on the proposal. The letter indicated that the Minister would take into account any views expressed at this meeting. The Minister attached to the letter the factors and material she considered to be relevant to her consideration of the proposal. Subsequently, the Council prepared a submission to the Minister in relation to her proposal to give the Northern Territory notice under the NER Act to acquire compulsorily the town camps. In the submission the Council set out its reasons why the contemplated compulsory acquisition of the leaseholds over the town camps would be poor policy and would be detrimental to the well-being of the people who lived in the town camps. The Council also presented a submission that management of the tenancies in the town camps and the housing in them would be more effectively carried out by a community based affordable housing company than by Territory Housing. On 4 June 2009 the Minister sent a further letter to the Council and the Housing Associations in which she revised the timetable of her consideration of compulsory acquisition to ensure that all affected parties would have sufficient opportunity to consider the proposed acquisition and to provide the Minister with their views. The deadline for the written submissions was extended to 28 July 2009. The Minister also proposed to have a second oral hearing in Alice Springs on 20 July 2009. Ms Caroline Edwards who has been the lead Australian Government negotiator in relation to the proposed 40 year sub-leases over the Alice Spring town camps has given evidence that during May and June 2009 Australian Government officials conducted an information drive and leaflet drop in the Alice Spring town camps regarding the Minister's consideration of compulsory acquisition. Ms Edwards has produced a document summarising the consultations with residents. It is apparent from that document that only a limited number of tenants in some of the town camps were spoken to. No-one was available to speak to the officials in a number of the town camps. It does not appear from the document that in the oral discussions which were held with the tenants that they were given specific details about the consequences of the Minister's exercise of power under s 47 of the NER Act, namely that the leases in perpetuity would be extinguished as would the rights of the tenants to occupy their houses under the existing tenancy agreements. The leaflets or fact sheets which were distributed did not provide such information either. The first line of the fact sheets stated "A possible compulsory acquisition --- what does this mean for people on Town Camps?". The fact sheet does not set out what would be the consequences of such compulsory acquisition in relation to the rights which would be extinguished. On 23 June 2009 a departmental officer sent an email either to the Council or to one of the Housing Associations advising that the Minister would be visiting Alice Springs and would like to meet with town camp residents and others who might be affected to listen to their views on the possible compulsory acquisition of the town camps. The email said that the Minister was hosting a meeting at the Centralian College on 29 June 2009 from 10.30 am to 12.30 pm and that buses would be available to provide transport for town camp residents to and from the venue. Leaflets were also distributed at the town camps and posters were displayed at the Council premises relating to this meeting. Further, from 23 to 29 June 2009 the Central Australian Aboriginal Media Association radio in Alice Springs broadcast a community service announcement on behalf of the Australian Government informing the public that people affected by the Australian Government's consideration of compulsory acquisition of the town camps leases would be able to meet with the Minister on 29 June 2009 in Alice Springs. Between 25 and 29 June 2009 the announcement gave specific details of arrangements for the 29 June meeting. On 29 June 2009 the Minister attended the meeting. Interpreters were provided at the meeting. A transcript of that meeting was provided in evidence. I will only extract those parts of the transcript of the meeting which I regard as particularly relevant to the issues presently before the Court. So if there are questions of detail there will be people from the department who will answer them if you have any questions but more than anything it is about me wanting to come to listen to your point of view of what we have proposed as you know we have been having many discussions over more than 12 months ... But we have come to the point where I am now considering compulsory acquisition of the leases and in the process of thinking about that I want to hear directly from you about your views in that regard. Although that inexorably followed from the matters referred to in the letter, that extinguishment was not made clear to the people at the meeting. If the Minister were to go ahead with the proposal current residents would be able to stay in their houses and if the Minister were to go ahead reasonable compensation would be paid to the Housing Associations who hold the current leases. People can stay. Ms Shaw did not receive the notice and does not recall having been told either during the meeting with the Minister or at any other time that if the Minister gives the proposed notice under s 47(1) of the NER Act it will terminate her current right of occupancy of her house. According to her solicitor, Ms Shaw is not aware of, and has never been told, what the content of the terms and conditions of "any new residential tenancy arrangements" referred to in the Minister's letter might be. On 3 July 2009 Gilbert + Tobin, the solicitors for the Council sent Ms Edwards a copy of a marked up form of sub-lease which the Council was prepared to recommend to the Housing Associations for execution. On 17 July 2009 Mr Tilmouth, the Executive Director of the Council sent a letter to the Minister seeking the opportunity to have further negotiations in relation to the terms of the proposed sub-lease. On 20 July 2009, Departmental officials conducted a further meeting with affected persons at the Alice Springs Indigenous Co-Ordination Centre. Only two persons attended the meeting. On 24 July 2009 the Minister wrote to the President of the Council rejecting Mr Tilmouth's request for further negotiations in relation to the terms of the proposed sub-lease. The Minister stated that the time for negotiations was now over and that there would be no further revisions to the sub-lease. In the letter the Minister observed that if the proposed sub-leases could not be finalised this would be part of her consideration regarding the possible acquisition of the town camps. The solicitor for the Council informed Ms Shaw's solicitor on 29 July 2009 that he had received instructions from the Council to accept the alternative offered by the Minister and that he was in the process of arranging execution of the required sub-leases. He also said that he had instructions to deliver the executed documents to the Minister by 31 July 2009. On 29 July 2009 the Minister announced in a media release that 16 Alice Springs town camps and the Council had signed up to a 40 year sub-lease agreement with the Australian Government. It appears that a critical element to the Australian Government investing in the Alice Spring town camps under the National Partnership Agreement and SIHIP is to ensure that it has sufficiently secured tenure to support its investment. The low standard of housing and service delivery in the town camps has led to a decision by the Australian and Northern Territory Governments to do things differently in the future and especially by means of the principles for housing reform set out in the National Partnership for Remote Indigenous Housing. This is designed to ensure Government is accountable and responsible for long-term repairs and maintenance programs and for best practice tenancy management. Governments must be able to ensure that major investment (such as the $100 million commitment in Alice Springs) will be used for the intended purpose --- that is for improving housing for Aboriginal people and to ensure that the assets continue to be applied for that purpose throughout the life of the asset. Professor Altman provided an opinion in which he points out that for the initial period of 2.5 to 3 years of the sub-leases the occupancy of the tenants and residents will be managed by a Commonwealth officer who will not be directly representative of the residents and will not have to have regard to the purposes and objects of the Housing Associations. The Director will provide housing services in such manner as he deems appropriate provided that the purpose is within those purposes of the head leases. Professor Altman concludes that the current aboriginal residents and occupants of the town camps are likely to be affected negatively by the proposed changes in the arrangements. If they are accountable to the Director or the Director's agent, they are more likely to be evicted and possibly homeless than if accountable to their own Housing Association or the Council. This is because the objects of Housing Associations are broader and more charitable than any that are likely to be adopted by a housing authority. This evidence of Professor Altman has little bearing on the legal issues which arise for consideration at this interlocutory stage and, apart from noting it, I have given it little weight when considering the reasons which follow. Consistently with established authority I am required to determine whether there is a serious question to be tried in relation to the causes of action raised by the applicants in each proceeding. If I am so satisfied and am satisfied that the applicants will suffer irreparable harm in respect of which damages are not an adequate remedy if an injunction is not granted, it is then necessary to determine whether the balance of convenience favours the grant or refusal of the injunctive relief sought. The tenants of the Housing Associations will be significantly affected by the proposed decision so that the Minister is obliged to observe the principles of natural justice or procedural fairness and ensure that the tenants are made aware of the manner in which their rights will be affected by the notice and are given an opportunity to make submissions to the Minister as to whether or not she should give a notice before she finally makes a decision. The applicants submitted that the power conferred on the Minister by s 47 of the NER Act to issue a notice which had the effect of vesting all rights and interests in the land to which the notice related with the Commonwealth (see s 47(3)), was subject to a duty imposed upon the Minister to accord procedural fairness or natural justice to the applicants. It was submitted that that duty had not been observed in the present circumstances as the tenants had not been made fully aware of the consequence of the notice on their rights to occupy the land which they sub-leased from the Housing Associations and that they had not been given an opportunity to make submissions to the Minister in respect of her proposal to give such a notice. The Minister submitted that the power given to the Minister pursuant to s 47 was not constrained by any obligation to accord natural justice or procedural fairness to the tenants whose rights would be affected, indeed extinguished, by the giving of a notice pursuant to s 47. The Minister acknowledged that generally one would expect that a power of the kind contained in s 47 would be subject to a duty to accord procedural fairness and that the Commonwealth's power to acquire land by compulsion contained in the Lands Acquisition Act 1989 (Cth) (" Lands Acquisition Act ") was generally subject to an obligation to notify affected parties. The Minister then submitted that the NER Act was enacted with a view to a need to respond urgently to a national emergency and that s 47 was enacted as a separate power and that the usual procedural provisions in the Lands Acquisition Act were expressly put aside in relation to acquisitions under s 47. In this context the Minister referred to s 50(2) of the NER Act. The Minister submitted that s 50(1) and (2) of the NER Act excluded written and unwritten natural justice obligations. The Minister submitted that s 50(1) was an unambiguous statement that the s 47 power was not constrained, even by an unwritten law that might otherwise support an implication for a natural justice obligation. The Minister submitted that it was plain that the legislative expressly turned its mind to, and excluded, procedural fairness that was expressed in written law. I consider that there is a serious question to be tried that this is not the proper construction and effect of s 50. Put another way, I consider there is a serious question to be tried that the provisions of s 47 of the NER Act taken with the provisions of s 50 do not oust the obligation cast upon the Minister to accord natural justice or procedural fairness to the tenants who will be affected by the proposed notice. I consider it is arguable that s 50 is concerned with laws whether written or unwritten which are inconsistent with the provisions of Div 1 and Div 2 of the Act. I consider that it is clearly arguable that the principles of natural justice or procedural fairness are not inconsistent with the exercise of power to give a notice under s 47. As the applicants submitted, it is arguable that natural justice is an adjunct to the exercise of that power. It is a well established principle that a statute will not be construed as excluding the operation of common law principles such as the obligation to accord natural justice or procedural fairness in appropriate circumstances unless there is a clear and unambiguous statement or inference to that effect to be extracted from the relevant legislation. In Mobil Oil Australia Pty. Ltd v Federal Commissioner of Taxation (1) Kitto J. pointed out that the obligation to give a fair opportunity to parties in controversy to correct or contradict statements prejudicial to their view depends on 'the particular statutory framework'. What is appropriate in terms of natural justice depends on the circumstances of the case and they will include, inter alia, the nature of the inquiry, the subject-matter, and the rules under which the decision-maker is acting: Reg. v Commonwealth Conciliation and Arbitration Commission ; Ex parte Angliss Group (2) ; National Companies and Securities Commission v News Corporation Ltd (3) . ... When the doctrine of natural justice or the duty to act fairly in its application to administrative decision-making is so understood, the need for a strong manifestation of contrary statutory intention in order for it to be excluded becomes apparent. The critical question in most cases is not whether the principles of natural justice apply. It is: what does the duty to act fairly require in the circumstances of the particular case? It will be convenient to consider at the outset whether the statute displaces the duty when the statute contains a specific provision to that effect, for then it will be pointless to inquire what the duty requires in the circumstances of the case, unless there are circumstances not contemplated by the statutory provision that may give rise to a legitimate expectation. However, in general, it will be a matter of determining what the duty to act fairly requires in the way of procedural fairness in the circumstances of the case. A resolution of that question calls for an examination of the statutory provisions and the interests which I have already mentioned. The proposal to give the s 47 notice was first raised or articulated clearly by the Minister in the letter of 24 May 2009. Prior to that time there had been numerous consultations and dialogue between the Minister and the representatives of the Housing Associations and the tenants but that was in relation to the proposal that the Housing Associations enter into 40 year sub-leases. Whether the Minister has accorded the tenants natural justice or procedural fairness in relation to her proposal to give a notice under s 47 is to be determined by her conduct and the conduct of her department on and after 24 May 2009. I consider there is a serious question to be tried that the media release, the letters sent by the Minister to the Council and to the Housing Associations, the meetings held subsequently with some of the tenants and other persons and the leaflet distributions have not been sufficient to discharge the Minister's obligation to bring to the attention of all the tenants the manner in which the proposed notice will affect their rights. There is also a serious question to be tried that they have not been given a proper opportunity to make submissions to the Minister. I am not satisfied that a process or procedure has been adopted whereby sufficient attempts were made to bring these matters to the attention of all the tenants. The evidence before me is insufficient to satisfy me that all the tenants have been given an opportunity to make submissions to the Minister and have had fairly and squarely put before them the consequences of the Minister giving a notice pursuant to s 47. The leaflets do not make it clear that the tenants' rights to occupy their properties by way of sub-leases will be extinguished forever. Further, this was not made clear at the meeting on 29 June 2009 or in the leaflets that were distributed in the town camps. There has not been an explicit statement communicated to the tenants that the tenants' rights to occupy their properties by way of sub-leases would be extinguished by the Minister giving the notice. I accept the Minister's submission that the content of natural justice is to be determined by reference to the circumstances of the case: Kioa v West [supra]. In my view, there is a serious question to be tried that the content of the natural justice principle in the circumstances of this case requires that the tenants be told directly, and not indirectly through the Housing Associations or the Council, that a consequence of the giving of the notice is the extinguishment of their rights to occupy their houses. The Minister submitted that a decision to acquire land by compulsion might in the ordinary case be regarded as having grave consequences for a person holding an interest in the land but that in the present case the evidence disclosed that the practical effect of a decision by the Minister to acquire the land pursuant to s 47 was substantially different to the ordinary case. The Minister submitted that the reality was that there would only be a beneficial impact on the living conditions of the town camp inhabitants. The difficulty with that submission is that it ignores, or it does not take into account, the fact that there will be an extinguishment of tenants' rights of occupation of their houses. To submit, as the Minister did, that "subject to new tenancy agreements being necessary, no other legal rights of the applicant or group members are impacted", is to ignore the fact that enforceable rights are being replaced with an opportunity to negotiate a new tenancy agreement which opportunity depends upon agreement between two parties. The next inquiry to be made is whether the balance of convenience is in favour or against the grant of an injunction. I do not intend to prescribe the process which the Minister should undertake in order to discharge her obligations to accord the tenants natural justice or procedural fairness. What I am disposed to do is to grant an injunction restraining the Minister from giving a notice pursuant to s 47 until further order. Such an injunction will enable the Minister to take such steps as she may consider, or she may be advised, will bring to the attention of the tenants the consequences of the giving of the notice and will give them an opportunity to make submissions to her. The injunction will be cast in terms restraining the Minister from giving a notice until further order. It will not be cast in terms restraining the Minister from taking any steps in and towards the giving of the notice. I consider that the balance of convenience is in favour of the grant of an injunction restraining the Minister from giving the notice. If a notice is given the tenants' rights (as well as those of the Housing Associations) are extinguished forever. In those circumstances, the tenants can be required to vacate the houses they occupy forthwith. The Minister submitted that if at trial it was ultimately determined that the Minister's decision to give a notice and the giving of the notice resulted in a failure to give the tenants natural justice or accord them procedural fairness then the decision would be a nullity and would be set aside. It was submitted that in those circumstances tenants' rights would still remain. That may arguably be so, although much depends upon the ultimate construction of the provisions of Div 1 and Div 2 of the NER Act. In any event, that submission does not take into account any circumstances which might occur in the intervening period before final judgment. If the Minister is restrained from giving a notice then no inconvenience or disadvantage accrues to the Minister. It may result in delay in the processes which the Minister wants to undertake in relation to the upgrading of the town camps but that is dependent on a number of factors which I cannot fully explore at this stage. In those circumstances I consider that an interlocutory injunction should go until further order in the terms I have proposed. It is a well accepted principle that it is not open to me to grant an interlocutory injunction in the air in the absence of a cause of action to be adjudicated upon at trial. It was made clear in Australian Broadcasting Commission v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 that an interlocutory injunction should only be granted by a court in support of a known cause of action upon which the applicant for the interlocutory injunction wishes to rely at trial. The 40 year sub-leases were not in the interests of the members of the Housing Associations as a whole because the Associations were giving away their control of the management of the tenancies of the individual residents to the Commonwealth which was outside the objectives of each Housing Association. This control was being given away for $1 per year and there was no guarantee by the Minister that any part of the proposed expenditure of $100 million in respect of the town camps would be allocated to any particular or specific Housing Association. The requests made by the Housing Associations were not voluntary. In the circumstances as they developed in the course of the hearing I do not consider that it is necessary to reach a conclusion whether there is a serious question to be tried in relation to each of the causes of action relied upon by the applicants. I am satisfied that there is a serious question to be tried that if they now enter into the sub-leases the Housing Associations will not be acting in the interests of their members as a whole thereby giving rise to a cause of action under s 109 of the Associations Act and s 166 of the Aboriginal Corporations Act. Under their Constitutions the only way a person can become a member of the relevant Housing Association is if that person is a resident of the town camp which is situated on the land which is comprised in the perpetual lease or Crown Lease held by the Association. The Housing Associations have agreed to enter into the subleases for the simple reason that you have threatened them with compulsory acquisition if they do not enter into the subleases. As you know, the loss of tenure to these lands is something that is abhorrent to the Housing Associations and they could not run the risk that it might occur. It is in the overriding best interests of the Associations and their members that their interests in these lands be maintained rather than completely foregone. Acquisitions of these land would not allow the Associations or members to have any input into protecting their rights or interests. That risk was made abundantly clear when you issued notice that you were considering these compulsory acquisitions. Likewise, your letter to Tangentyere dated 24 July 2009 makes it perfectly clear that unless the subleases are entered into in the terms attached to your letter then you will proceed in relation to the potential compulsory acquisitions. He submitted initially that the Housing Associations were prepared to grant the sub-leases to the Director for two reasons. Firstly, because it appeared that it was the only way that Commonwealth funding would be provided. Secondly, because it was the only way to avoid compulsory acquisition. I would point out that until the Minister raised the spectre of compulsory acquisition of the land on 24 May 2009 and for some time thereafter the Housing Associations were not prepared to enter into the sub-leases in the terms laid down by the Minister. Counsel for the Housing Associations accepted this proposition and said they would be endeavouring to obtain further changes. He submitted that the sub-leases did not contain all the terms the Council and the Housing Associations wanted and, in his words, the sub-leases were "sub-optimal". I interpret these submissions to mean that if it were not for the threat of the Minister to give a notice under s 47 of the NER Act the Housing Associations would not be executing the 40 year sub-leases as they take the view that those leases in their present form are not in the interests of their members (who are tenants) as a whole. Counsel for the Housing Association acceded to the proposition that if the Housing Associations were not constrained by the threat of the Minister acting under s 47, they would not be executing the leases. As I propose to grant an interlocutory injunction restraining the Minister from giving a notice under s 47 to the Housing Associations until further order, the threat with which the Housing Associations are concerned is not operative and cannot be implemented. In these circumstances there is no compelling need for them to enter into the sub-leases and if they do so, absent the existence of the threat, there is a serious question to be tried that they are not acting in the interests of their members as a whole. If the Housing Associations do enter into the sub-leases, notwithstanding the existence of the threat irreparable harm will result for the members as they will be subject to a change in control of their tenancies which they want to resist and they will be subjected to provisions in the sub-leases which the Housing Associations consider should be altered or added to. It is therefore necessary to go to the second stage of the process and determine whether the balance of convenience is in favour of, or against the grant of an injunction restraining the Housing Associations from entering into the sub-leases. The Minister submitted, in short, that if the injunction was granted there was a real possibility that the proposal of the Minister to spend substantial sums of money upgrading the town camps in relation to their houses and the infrastructure would be lost either for a considerable time or maybe for even longer. If that occurs that is a loss which falls upon the Housing Associations and their members. But, absent the threat from the Minister to give a notice under s 47 of the NER Act, the Housing Associations do not intend to enter into the sub-leases in their present form. They had refused to do so until such time as the Minister's proposal to give a notice under s 47 became a live issue. It therefore follows that if the interlocutory injunction is granted the Housing Associations will achieve the result they want, that is that they will not be entering into the proposed 40 year sub-leases in their present form. I therefore propose to grant an interlocutory injunction until the trial of the proceeding restraining the Housing Associations, the Director and the Northern Territory from entering into sub-leases of the land the Housing Associations hold under Special Purposes Leases in perpetuity or Crown Leases pending the determination of the trial of the proceeding or further order. Having regard to the conclusion I have reached that there is a serious question to be tried that the proposal by the Housing Associations to enter into the sub-leases constitutes conduct not in the interests of the members of the Housing Associations as a whole thereby giving rise to causes of action under s 109 of the Associations Act and s 166 of the Aboriginal Corporations Act it is not necessary to give further consideration to the other causes of action relied upon by the applicants. However, I wish to make an observation in relation to the allegation that the Minister was engaging in intimidation by unlawful means and that she was intimidating the Housing Associations to enter into the sub-leases when she had not given procedural fairness to the tenants. It is an integer in the tort of intimidation that the relevant conduct be undertaken by unlawful means. The applicants rely upon their submission that the Minister is threatening to give a notice pursuant to s 47 of the NER Act in circumstances where she has denied procedural fairness to the tenants. I do not consider that such action by the Minister constitute unlawful means. Further, as Senior Counsel for the Minister submitted, the tort of intimidation also requires establishing an intention on the part of the alleged tortfeasor to cause economic harm: Northern Territory of Australia v Mengel [1995] HCA 65 ; (1994) 185 CLR 307 at 342. There was no evidence before me of such an intention by the Minister. Indeed the intention of the Minister is to the contrary. The costs of the application for interlocutory relief in both proceedings will be reserved for further consideration. I certify that the preceding one hundred and three (103) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg.

interlocutory injunctions relevant principles serious question to be tried northern territory emergency response act 2007 s 47 compulsory acquisition alice springs town camps whether failure to accord natural justice whether contrary to members' interests as a whole balance of convenience injunctions

The applicant is the Gandangara Local Aboriginal Land Council. It filed an application on 25 November 2008 for a determination that there was no native title in the parcel of freehold land which the applicant owns. This parcel was transferred by the State of New South Wales to the applicant, on or about 31 March 2003, pursuant to the provisions of the Aboriginal Land Rights Act 1983 (NSW). The certificate of title notes that the land is subject to conditions in memorandum Y757000 and dealing number 9492998. Further, that there are restrictions on dealings pursuant to ss 40 and 40AA of the Aboriginal Land Rights Act . Under s 40AA , in particular, there are restrictions on selling and dealing with the land transferred by the State of New South Wales to the applicant. It is for this reason that the applicant seeks a determination that the land in question is not subject to native title. Under s 66 of the Native Title Act , notice of the application was required to be given.. The notice was published in the three month period, commencing 11 February 2009 and ending on 10 May 2009. The notice in question identified the land and drew the reader's attention to the fact that under the Native Title Act , there can be only one determination of native title for a particular area, so that if a person with any native title right or interest did not become a party, there may be no other opportunity for the Federal Court in making its determination to take into account those native title rights and interests. The Court's file discloses that there was no response to the notification. In addition, both the first respondent (the Minister for Lands) and the second respondent (NTSCORP Limited) have filed notices indicating that pursuant to s 86G of the Native Title Act , they do not oppose orders in or consistent with the terms sought by the applicant, namely that no native title exists in relation to the land. Section 86G of the Native Title Act deals with unopposed applications. Accordingly, the Court declares that no native title exists in relation to land comprised in New South Wales Department of Land Certificate of Title, folio identifier 101 in deposited plan 1028645 located in the local government area of Sutherland, Parish of Holsworthy, County of Cumberland, State of New South Wales. I also order that each party is to pay its own costs of the proceeding. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.

non-claimant application declaration sought that no native title exists in subject land orders accordingly. native title

In that judgment, her Honour dismissed an application to review a decision of the Refugee Review Tribunal rejecting the appellant's claim to a protection visa. 2 The basis upon which the Federal Magistrate dismissed the application to review was the failure of the appellant to appear on the day of the hearing. Her Honour invoked r 13.03A(c) of the Federal Magistrates Court Rules 2001 . She included in the orders dismissing the application a notation to the effect that pursuant to r 16.05(2)(a) the Court may vary or set aside a judgment or order made in the absence of a party. She did not consider the case on its merits. 3 The respondent Minister has filed a notice of objection to competency. That notice contends that the decision given on 21 February 2007 is an interlocutory judgment and accordingly not subject to appeal as of right. Further, pursuant to O 52 r 5 of the Federal Court Rules leave to appeal must be sought within 21 days of the pronouncement of the interlocutory decision, and the appellant must also obtain an extension of time. No application for leave to appeal has been sought. 4 Attempts have been made to contact the appellant in recent weeks. Save for the provision of a letter addressed to an officer of the Court, faxed on 17 May 2007, there has been no communication from the appellant. In particular, in breach of directions given on 19 March 2007, no written submissions have been filed on behalf of the appellant. 5 When the matter was called on for hearing this morning, there was no appearance by the appellant. The explanation may lie in the letter dated 17 May 2007 which says that the appellant is unable to come to the hearing today. It refers to a medical certificate as being attached for the attention of the Court and requests that the matter be adjourned to another date. There was, however, no medical certificate attached to the letter. 6 Curiously, the appellant is not alone in being unwell, and unable to attend Court this morning. Two other persons, each of whom is associated with the appellant, and whose cases were dealt with by the Federal Magistrate at the same time as that of the appellant, have also failed to comply with Court directions, and have also provided letters indicating that they are sick, and unable to attend Court today. Those letters again referred to medical certificates as being attached, but only one of the letters in fact provided such a certificate which was pro forma in nature and, as I have found, worthless. 7 Having regard to the history of this matter, I am not persuaded that I should adjourn this proceeding. The objection to competency is plainly well taken. A decision to dismiss an application by reason of the absence of the applicant is a decision of an interlocutory nature. Pursuant to s 24(1A) of the Federal Court Act 1976 (Cth) an appeal from the Federal Magistrates Court cannot be brought from such a decision without leave. See generally NACA v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 659 at [15] per Hely J; MZWQH v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 1491 at [26] per Kenny J; and MZWXC v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 172 at [9] per Young J. 8 It follows that the objection to competency will be allowed. The purported notice of appeal filed 9 March 2007 will be struck out as incompetent. The appellant will pay the first respondent's costs. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg.

purported appeal from judgment of federal magistrate dismissing application by reason of failure to appear objection taken to competency federal magistrate's judgment interlocutory appellant failed to appear at federal court hearing appeal dismissed as incompetent migration

There was an acknowledged breach of s 424A of the Migration Act 1958 (Cth) by the Refugee Review Tribunal in a proceeding which led to the affirmation by that Tribunal of a decision by a delegate of the Minister not to grant protection visas to the appellants. The learned Federal Magistrate was satisfied that at least two reasons for the Tribunal decision were not affected in any way by the breach of s 424A. 2 The substantial matter in this appeal is a contention that that the learned Federal Magistrate was wrong in so concluding, and that the breach of s 424A should have led to the setting aside of the Tribunal decisions. The two reasons can be described in shorthand as the 'no Convention' ground and the 'State protection' ground. The Tribunal did find against the appellants on each ground. In my respectful opinion, it cannot be concluded that the breach of s 424A had no relevance to either of those grounds. 3 The appellants are husband and wife who are citizens of Fiji, having lived there all their lives, of Indian ethnicity who practise the Hindu religion. They claimed to have a well-founded fear of persecution if they returned to Fiji upon the basis of both race and religion. The aim of this group was not to create any discriminations nor trouble but this was a simple group supporting Hindus and to promote the aims and objectives of Hindu religion which no doubt was very much disliked by the local indigious Fijians and they commenced to harass and intimidate the members of our group and wwere threatened that if they did not terminate their association with our group than the death warrants will be delivered. This was brought to my attention and I along with other members continued my work and the situation got heated and it became incrasibly for me to handle the heated situation. It was in October 2001 when in the late evening some unknown Indigious fijans gained forced entry in to my House and Indiscriminately assaulted me and my lady wife, No doubt it was a very threatening situation and my wife was extremely frightened and upset due to this incident and she decided to move and live with her brothers in Raki Raki and I was the only person who was forced to live alone and run my business with out any support. After this incident I was in a situation where it became terribly difficult and virtually impossible for me to run my business alone mainly due to the fear from the local Indigious Fijians mainly because Local indigious Fijians commenced to harass me in the area where I was running my business like daily few indigious Fijians will come and sit in front of my shop, drink "Kawa" and scream which was frightening for the customers which rapidly decreased and badly effected my business. On numerous occasions they spray painted the doors and walls of my shop and there were three major breakins which put me in a loss. It was in December 2001 when my Car was stolen and never recovered. Now I was in a position where I had no choice but to sell my business and move to another area and became very difficult for me sell my businss because peoples were aware of my situation, therefore, no one was willing to take a chance and buy my running business. Finally I was successful in selling my business in April/May 2002 and moved to "B A" and was extremely shocked to note that I was being followed by the Indigious Fijians as The Decision maker knows that Fiji is extensively dominated by the Indigious Fijians and they are quite united too. As soon as I noted that my enemies are still chasing me I quickly decided to come to Australia for Holidays and told every one in the area that am going abroad to live permanently so that my enemies willforget about me. I came to Australia in July 2002 snd stayed here up until October 2002. 1 was quite sure that upon my return to fiji my opponents will completely forget about me and I wil be able to live there peacefully. upon my return to Fiji in October 2002 I moved to another area which was approximately 10 Kilometers away from my area and started tio drive a taxi, it was one evening when I was driving a Cab that I was picked by one member of my opponents and he said you liar you are still round and left. I am definitely not sure how they were able to find exact location of my residence and it was on 24.12.2202 when On or about 4 am sis unknown Indigious Fijians gained forced entry in to my house, tied my wife with ropes and was ordered to sit in a corner robbed my house and before leaving Myself and my lady wife were indiscriminately assaulted and deprived from the valuable personal belongings and when Next day I went to report this matter to the local police I was called a liar, ill treated and accused of lodging a bogus police report and unfortunately was unable to gain any protection from the Police and decided to move to live with my Wife's family until such time I can find a safer place to live. I have numerously visited Australia and Newzealand but never sought a protection in any country but Now I have been placed in a situation where I had no choice but to seek protection in Australia. Please find attatched documentary evidence in support of my claim and consider them along with others. Please also consider the following submission. I draw your attention to one of the indo/Fijian Business man who recently has been assaulte and robbed in Lautoka and police has taken no action. What Department or this tribunal will say to Cry of indigious fuijians "Indians out". I being an Indian can only know and feel better than Department of immigration assessor. My prime concern at the moment is that Department of Immigration has given no weight to the treatment indo/Fijians are receiving in Fiji but all to the reports which are favourable to the Department of Immigration not the Applicant. I am requesting and hoping that your office will give kind consideration to all the matters involved. I intend to make following submission and would ask you to Please sympathetically consider my claims. As the tribunal is aware that "Fiji" is extensively dominate by the indigious Fijians and Indians are I minority and I further note that Mr Mehindra Chaudhry Ousted prime minister of fiji was noteven safe from the indigious Fijians and compare to him I have no status in Fiji. I further wish to emphasise that indigious Fijians are quite united with their hate against Indians and only for that reason thereis a Cry "Indians out" go back to India. Even one was to move to another area we both know that Indians are not safe, therefore, we have no choice but to rule out the relocation possibility. I am not sure if you were asking me the population of Lautoka or Natabua. Please note that I was a resident of "Natuba" and my business was in the same area. Please note that Natabua is a suburb of Lautoka. Because I was a resident of "Natabua" that's why I have given you the approximate population of "Natabua". Please understand. Another concern raised during the hearing was my no mention of my visit to NewZealand. I wish to9 make the following comments in relation to this. I visited NewZealand in 1975 which was about 30 years ago, therefore 1 would ask the tribunal to Understand since it has ben so long. It was just an honest mistake for which I apologise and would ask the Tribunal to make a note of this on file. I further note that "Australian high Commission" in Suva was attacked by the indigious Fijians very recetly reason why Ihave mentioned this just to prove my claim that even foreigners are not safe than how one could expect that Indians are safe. I further note that delegate of the Minister has given lot of weight to the reports and the evidence available to them and no weight was given to my claim except. I further note that the department of immigration" in their rasons for their decision has stated andI quote. The information was put to the male appellant during the course of the hearing and a number of questions were apparently based upon them. 7 In its reasons for decision, the Tribunal examined in some detail the incidents in October 2001 and December 2003 referred to in the protection visa application. In relation to each, the Tribunal concluded that it could not be satisfied that the essential and significant reason for each attack was for a Convention related reason or that there was any failure by the police to take the matters seriously. Part of the reasoning of the Tribunal was that at the hearing the applicant had not repeated all the claims he had made in his protection visa application. In the event, the Tribunal did not give any real consideration to the sequence of events referred to in the protection visa application. The Tribunal referred to various pieces of country information which supported the view that effective State protection was available to Fijians of Indian extraction practising the Hindu religion. Moreover, the Tribunal also accepts that after each of these visits to Australia they chose to return to Fiji. This point is further compounded by the fact that when they were again robbed on 24 December 2003 and they still entered Australia on 3 further occasions (prior to his last entry on 22 December 2004) without either he or his wife applying for a protection visa and, after each of these visits, accepts that they then returned to Fiji. The Applicant does not claim that he experienced any difficulties in Fiji after returning from these visits to Australia. Nor does he make any sur place claims. Accordingly, the Tribunal has not been able to satisfy itself that the Applicants have a well-founded fear of serious harm amounting to persecution for because of their Indo-Fijian race and Hindu religion or any other Convention related reason. The information directly affected the assessment of the claims for protection which were made by the appellants as well as affecting credibility generally. They would plainly be relevant to the question of whether or not the incidents suffered by the appellants were for a Convention reason. Counsel for the Minister, however, presses a submission that the question of State protection would not be so affected. I do not agree. If, for example, the appellants' version of events were accepted in whole, it would illustrate at least two occasions on which there was a failure of the police to take any steps at all, more probably than not based upon racial grounds. That would be cogent material to consider, whether or not it may have persuaded the Tribunal. It needs to be borne in mind that the independent evidence which was available by no means points unanimously in the direction of effective State protection. 9 In my opinion, it cannot be said that there is any 'independent and unimpeachable' basis for the Tribunal's decision, uninfected by any jurisdictional error under s 424A (see MZXGR v Minister for Immigration and Multicultural Affairs [2006] FCA 1167 at [7] ). Thus, although the matter is by no means free from doubt, the appeal should be allowed, the orders of the Federal Magistrate's Court set aside and in lieu thereof it be ordered that the decision of the Tribunal be set aside and the matter remitted to the Tribunal for determination according to law. The first respondent is to pay the costs of the appellants of the proceedings in the Federal Magistrates Court and of this appeal.

acknowledged breach of s 424a other reasons for tribunal decision not independent appeal allowed migration law

There are in fact two proceedings --- one commenced on 3 October 2008 (VID 830 of 2008) and the other on 14 August 2009 (VID 604 of 2009). In each proceeding, the Applicant complained of discrimination in the provision of educational services by the Respondent, the State of Victoria, pursuant to the DDA. Trial of the proceedings commenced on Monday, 28 September 2009. On Tuesday, 29 September 2009, the proceedings were referred to a Registrar for mediation and were ultimately resolved. The terms of the resolution are recorded in signed terms. The terms are confidential. By O 43, r 12 of the Federal Court Rules 1979 (Cth), the Court has power to approve a settlement of a proceeding brought by a person under a disability. The approval can be on terms. For example, the Court may require that any money payable, or applicable to or for the benefit of such a person, be dealt with by way of settlement or otherwise, as the Court thinks fit, for the benefit of that person. In support of the application for approval of the settlement, an affidavit sworn by Mrs Woodward has been filed. That affidavit addresses the adequacy of the settlement. It does so by reference to a number of facts and matters including: the Applicant's disabilities; the nature of the claims that has been made; the advice given about the risks of litigation including the possible liability for costs in the event that the proceedings are unsuccessful; the stress of the litigation to the Applicant and the other members of his family; and the fact that in the opinion of the Applicant's counsel, the terms of settlement are within the range of what might be awarded and, in fact, include terms which it is unlikely a Court would be able to order. In the circumstances, I will approve the settlement and order that: Pursuant to Order 43, rule 9 of the Federal Court Rules 1979 (Cth), the settlement between the parties recorded in Exhibit "MW-A" of the affidavit of Meredith Woodward sworn on 1 October 2009 ("the Woodward Affidavit") is approved. The applications made on behalf of the Applicant on 3 October 2008 in proceeding VID 830 of 2008 and on 14 August 2009 in proceeding VID 604 of 2009 pursuant to s 46PO(1) of the Human Rights and Equal Opportunity Commission Act 1986 (Cth) are dismissed. Subject to paragraph 5, the Woodward Affidavit and exhibits thereto be treated on a confidential basis by being placed in a sealed envelope marked " NOT TO BE OPENED WITHOUT THE PERMISSION OF A JUSTICE OF THIS COURT". On or before 15 October 2009, the Respondent pay into Court the sum specified in clause 2.3.6 of Exhibit "MW-A" to the Woodward Affidavit ("the Sum"). A Registrar of the Court is entitled to have access to the Woodward Affidavit and exhibits for the purpose of administering the Sum. The Registrar invest the Sum in an interest bearing account for the benefit of the Applicant. The Registrar be authorised to make payments out of the Sum for the benefit of the Applicant:- for educational purposes for so long as the Applicant remains at school; and thereafter for the general welfare of the Applicant. Any payments out in accordance with paragraph 7 of these Orders are to be made on application by the Applicant's next friend to the Registrar as is stipulated by the Registrar including by letter or orally. Upon the Applicant attaining the age of 18 years, the Registrar release to the Applicant, or his guardian if one has been appointed, the remaining part of the Sum (if any). I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.

discrimination disability child with alleged disabilities settlement of claim proper orders to make on approval of terms of settlement human rights

In my opinion, the application for leave must be refused. The Court will normally entertain an application for amendment of a pleading if the amendment is in proper terms. However the Court will not entertain such an application if the amendment is obviously futile or untenable or would cause substantial injustice which cannot be otherwise compensated, such as by an order for costs. 2 The proposed cross-claim is not in proper form and is confusingly drafted. It seeks to raise claims which are, in a number of respects, untenable or doomed to fail. For instance, it contains a claim under s 88 of the Trade Marks Act 1995 (Cth) for cancellation of the registration of a trade mark; however, the claim does not reflect the statutory conditions for an application under s 88 nor does it make clear what precise statutory grounds are relied upon to support the s 88 claim. The proposed cross-claim also alleges what are said to be various jurisdictional errors by the Registrar. In my opinion, those allegations are not clearly tied to any statutory provisions concerning the power or jurisdiction of the Registrar to accept the trade mark application. Many of these matters go to questions of mere process by the Registrar that would not, in my view, amount to any kind of jurisdictional error. 3 I do not propose to examine the proposed cross-claim in any greater detail in these reasons for decision, save that I will make some comments about the parts of the proposed cross-claim that rely on the Administrative Decisions (Judicial Review) Act 1977 (Cth) ('ADJR Act') and the Trade Marks Act . It is alleged that the Registrar, in accepting the trade mark application, made errors of law, acted beyond jurisdiction, made decisions that were not authorised and exercised the power improperly or in a way that resulted in an uncertain exercise of power. 5 These claims seem to be an alternative way of putting the basic grievances concerning the Registrar's decision to register the trade mark. I doubt very much whether an application under the ADJR Act can be used to seek the cancellation of a trade mark when there is a direct avenue for that remedy under s 88 of the Trade Marks Act : see Mark Foys Pty Ltd v TVSN (Pacific) Ltd [2000] FCA 1626 ; (2000) 104 FCR 61 at 78-79 [63] - [66] . 6 There are other reasons for thinking that the ADJR Act application is untenable in its present state. The pleading is irregular as to form and the statutory basis for the allegation of error of law is not made clear. There are substantial discretionary obstacles to the grant of relief under the ADJR Act, aside from the availability of more direct remedies under the Trade Marks Act : the trade marks were registered in 2001; the proceeding was issued in 2004; the application for leave to file and serve the proposed cross-claim was mounted in July 2006; and, following orders for further directions, it is being heard only now in September 2006. 7 I do not propose to express any final view about the question whether an ADJR Act application could conceivably be filed, if properly framed. The form of the proposed cross-claim is not one I am prepared to allow to proceed. As I followed counsel's argument and as I interpret the form of the proposed cross-claim, there are two substantive grievances that may provide a foundation for relief under the Trade Marks Act . 9 The first relates to an amendment to the trade mark application made prior to its acceptance by the Registrar which is alleged to have been made contrary to s 65 of Trade Mark Act . Mr Archibald, counsel for the respondents, put that complaint in two ways: first, he said that the endorsement had, by confining the mark to the shape of the barrel, substantially affected the identity of the trade mark. The basis for this allegation was that before the endorsement was made, the trade mark comprised the shape of the entire lighter, including the lighting mechanism. That mark was said to be a substantially different mark than a mark consisting of the barrel only. 10 The other argument, which I find less persuasive, is that the amendment that described the three dimensional shape of the barrel of a lighter as being a 'right cylinder of elliptical cross section' fell foul of s 65 because there could be any number of right cylinders of elliptical cross section. The difficulty with this argument is that it seeks to read the endorsement without regard to the pictorial depiction of the elliptical shape in the representation of the mark. The two must be read together: see Woolworths Limited v BP plc [2006] FCAFC 132 at [31] - [47] . 11 In my view, there is the possibility of such arguments being raised under s 65 to found an opposition to registration under s 68, having regard to the provisions of s 62(a). 12 The second substantive grievance raised concerned the Registrar's decision to accept registration of the mark under the provisions of s 41(6). 13 Section 41(6)(a) provides that before a shape mark can be registered, the Registrar must be satisfied, by evidence, that because of the extent to which the applicant has used the trade mark before the filing date in respect of the application, it distinguishes the designated goods and services as being those of the applicant. If the evidence establishes those matters, the trade mark is taken to be capable of distinguishing the designated goods or services for the purposes of s 41(2). 14 The proposed cross-claim complains that the Registrar relied on an informal survey in determining that the trade mark the subject of the application was distinctive under s 41(6). This complaint is, in my view, essentially a complaint that there was no evidence before the Registrar that satisfied s 41(6). If the claim were framed in this way, there would at least be a tenable ground for cancellation under the provisions of s 57 and s 88. However, the claim has not been put in terms of s 41(6); indeed Mr Archibald said that the proposed cross-claim, as presently framed, does not rely upon s 41(6). It is hard to see what other relevance the informal survey has to the claim for cancellation. 15 In making those observations, I am not expressing any view as to whether a properly framed claim might be brought under s 88. I make these observations simply to illustrate the fact that, if such a claim is to be made, it ought to be put in a way that conforms to the provisions of the Trade Marks Act . The present claim does not do that. In my view, the proposed cross-claim does not disclose tenable causes of action and is certainly not expressed in a proper form. 17 The applicant has sought an order for the costs of this application. I will order costs in the terms sought by the applicant, save that I will not order the costs to be taxed and payable forthwith.

application for leave to file and serve revised cross-claim whether revised cross-claim properly pleaded whether claims obviously futile or untenable consideration of irregularities as to form cross claimant alleged jurisdictional errors by registrar where claims brought under administrative decisions (judicial review) act 1977 (cth) and relief is available under trade marks act 1995 (cth) whether court should exercise discretion to refuse application under administrative decisions (judicial review) act 1977 (cth) in light of relief available under trade marks act 1995 (cth) pleadings requirements of ss 41(6) and 65 of trade marks act 1995 (cth) practice and procedure trade marks

On 8 November 1994 he arrived in Australia travelling on an Indian passport and using an Australian Business Visa which authorised him to remain in the country for up to three months. 2 On 25 September 1997 he applied for a Protection Visa (866). On 2 October 1997 the Minister's delegate refused that application. 3 On 15 October 1997 the Appellant applied to the Refugee Review Tribunal ('the Tribunal') for review of the Minister's delegate's decision. 4 By letter dated 9 February 1999 the Tribunal advised the Appellant that it was unable to decide the matter favourably to him on the information then available to it. Accordingly, it invited him to attend a hearing of the Tribunal to give oral evidence in support of his claims. 5 On 17 May 1999 the Appellant appeared at a hearing of the Tribunal which lasted for a little over an hour. 6 On 31 May 1999 the Tribunal handed down its decision which was to affirm the Minister's delegate's decision not to grant a Protection Visa to the Appellant. The Tribunal was not satisfied that the Appellant was a person to whom Australia had protection obligations under the 1951 Convention Relating to the Status of Refugees as amended by the 1967 Protocol Relating to the Status of Refugees ('the Refugees Convention'). 7 On 8 October 2004 the Appellant applied to the Federal Magistrates Court of Australia for constitutional writ relief under s 39B of the Judiciary Act 1903 (Cth). On 17 December 2004 the Appellant filed an Amended Application in the Federal Magistrates Court of Australia and thereafter filed a Further Amended Application dated 24 August 2005. 8 The last mentioned Further Amended Application was the application which was considered by the Federal Magistrates Court of Australia on 8 September 2005. On that occasion Mr A N Silva, solicitor, appeared for the Appellant and Ms L Clegg of counsel appeared for the Respondent Minister. When the matter came before this Court on 9 March 2006 the Appellant was again represented by Mr Silva and the Respondent Minister by Ms Clegg. 9 On 22 November 2005 the Federal Magistrate before whom the matter had come delivered his decision and dismissed the application. 10 On 6 December 2005 the Appellant filed a notice of appeal from the decision of the Federal Magistrate and on 9 March 2006 made an application for leave to file in Court an amended notice of appeal. That application sought to amplify both grounds 1 and 2 as expressed in the original notice of appeal. The application for leave to amend the notice of appeal was refused in respect of ground of appeal 1 but, by consent, allowed in respect of ground of appeal 2. Under s 65(1) of the Act the Minister is to grant the visa, after considering a valid application therefor, if satisfied of certain matters. He also states that poverty exacerbates his situation. Although the independent information above would appear to indicate that Muslims from Pakistan have been particularly targeted by such Hindu extremists as Shiv Sena, it is plausible that hostility to people from Pakistan would spill over and result in hatred of Sindhi Hindus, particularly where they are of a low caste. Specifically, the Tribunal has no reason to doubt that the applicant's father was killed in a communal riot and that the shop of the applicant was also destroyed in a riot. The independent evidence cited above indicates that the Shiv Sena in Bombay would seem to be particularly intolerant of minorities and that this intolerance is supported by the state government which they dominate. However, the Tribunal finds no support for the applicant's contention that "the Indian government encourages fundamentalist people to 'kill and eradicate' low caste people". Indeed, the independent information indicates that the Indian government through constitutional and legislative provisions is taking steps to address the discrimination experienced by scheduled castes. The Tribunal also acknowledges that the independent evidence indicates that there occurs regularly in India inter-caste tensions and that there is evidence of inter-caste based communal violence. However, the independent evidence indicates that most state and federal governments take active steps to put an end to communal violence. Clearly no State can ensure the complete safety of all of its citizens against all forms of harm, mistreatment or even death (See Thiyagarajah v MIMA (1997) 73 FCR 176 at 179 and Full Federal Court in MIMA v Prathapan (1998, 156 ALR 672 at 682). However, the independent evidence indicates that the Indian authorities act to restore order in situations of civil disturbance and take action against those who have committed criminal offences. In the light of this, the Tribunal finds that the applicant's fear of persecution for his membership of a particular social group, being low caste Hindus, not to be well founded. The Tribunal notes that the US State Department's India Country Report on Human Rights Practices for 1998 , identifies certain areas of India where caste discrimination is worse than other areas. In the circumstances the Tribunal finds it is reasonable for the applicant to relocate to an area of India where caste discrimination is not so prevalent and where state protection would be available. [the last mentioned passage which has been highlighted is said to demonstrate that the Tribunal used the "wrong test" in deciding whether State protection was available for the Appellant in India and in deciding that it was reasonable for the Appellant to relocate in India as suggested in Ground 2] The Tribunal has considered the applicant's statement that he could not relocate because his family were too poor to move. The Tribunal finds this to be implausible in the light of the applicant's ability to find the money to relocate to Australia. The Tribunal finds the applicant has relocated to Australia for some four and a half years and he holds a bachelor's degree and an electrician's diploma indicating that he has skills that are readily transferable to live elsewhere in India. In the light of this, the Tribunal finds it is reasonable for him to relocate to some other area of India where he would be at some distance from the danger he feels in Maharashtra state. The Tribunal sympathises with the applicant but finds that any harm arising from poverty not to be for a convention reason. Therefore the Tribunal finds his fear is not well founded. The Minister further submits that the Appellant's argument asserting jurisdictional error should be rejected for the reason that the findings in question were not 'critical'. 20 The material to which Minister draws attention was detailed in para [22] of the reasons for judgment of the learned Federal Magistrate. (1) of the constitution of India guarantees Indian citizens certain rights and freedoms, including the rights "to move freely throughout the territory of India," "to reside and settle in any part of the territory of India," and "to practise any profession, or to carry on any occupation, trade or business" (Abhyankar Sept. 1997, 31). However, these rights are subject to "reasonable restrictions," as imposed by law, "in the interests of the general public" (ibid., 32). Persons who lose their freedom of person under the law also lose their capacity to exercise these rights and freedoms (Kumar 13 Sept.1998). These "scheduled" castes and tribes benefit from special development funds, government hiring quotas, and special training programs. According to the 1991 census, scheduled castes made up 16 percent and scheduled tribes 8 percent of the country's 1991 population of 846 million. However, this act has had only a modest effect in curbing abuse. The Union Home Ministry reported that 14,109 crimes against scheduled castes and 2,413 crimes against scheduled tribes were recorded during 1998. (ii) What is the Indian government's current attitude/position regarding the Shiv Sena? (iii) What are the risks of Muslims suffering persecution at the hands of the Shiv Sena? YES, THE SHIV SENA IS A BOMBAY-BASED POLITICAL PARTY, INCORPORATING A WIDER SOCIAL NETWORK BASED ON AN IDEOLOGICAL COMMITMENT TO THE PROMOTION OF NATIVE MAHARASHTRIANS (BOMBAY IS THE CAPITAL OF THE STATE OF MAHARASHTRA) AGAINST PERCEIVED ECONOMIC ADVANTAGES CLAIMED BY IMMIGRANTS TO THE CITY FROM OTHER STATES SINCE PARTITION. IT WAS FOUNDED IN BOMBAY ON 10 JUNE 1966 BY POLITICAL CARTOONIST BAL THACKERAY (WHO STILL LEADS THE PARTY AND THE MOVEMENT), INITIALLY DIRECTING ITS ENERGIES AGAINST SOUTH INDIANS WHO HAD COME TO THE CITY IN LARGE NUMBERS FOR EMPLOYMENT OPPORTUNITIES. ... TO CONSOLIDATE ITS POLITICAL POWER BASE IT BEGAN TO EVOLVE MORE TOWARDS A HINDU-FUNDAMENTALIST PLATFORM, ACCOUNTING FOR ITS INCREASINGLY ANTI-MUSLIM STANCE. IN THE 1970'S THE SHIV SENA ACHIEVED PARTY STATUS AND BEGAN COMPETING IN LOCAL MUNICIPAL ELECTIONS. ... IT FORGED AN ELECTORAL ALLIANCE WITH THE HINDU FUNDAMENTALIST OPPOSITION BHARATIYA JANATA PARTY (BJP). IN THE 1990 ELECTIONS TO THE MAHARASHTRA STATE ASSEMBLY (THE STATE PARLIAMENT) IT WON 52 SEATS IN THE 288---STRONG ASSEMBLY. IN THE 1991 ELECTIONS TO THE NATIONAL PARLIAMENT, IT WON 4 SEATS FROM MAHARASHTRA. HOWEVER IT SPLIT IN 1992 OVER THE DICTATORIAL ATTITUDE OF BAL THACKERAY AND ONE FACTION OF ABOUT 17 STATE MP'S JOINED THE CONGRESS (I). IN THE 1990 ASSEMBLY ELECTIONS THE SHIV SENA FOR THE FIRST TIME EXTENDED ITS BASE BEYOND METROPOLITAN BOMBAY. ITS POLITICAL BASE NEVERTHELESS REMAINS LARGELY CONFINED TO BOMBAY AND ITS CONSTITUENCY OF MAHARASHTRIAN INTERMEDIATE-CASTE HINDU INDUSTRIAL WORKERS. THE SHIV SENA IS WIDELY REGARDED AS HAVING PLAYED A MAJOR ROLE IN ATTACKS AGAINST MUSLIMS DURING THE JANUARY 1993 COMMUNAL RIOTS IN BOMBAY. THE INCIDENT THAT ALLEGEDLY SPARKED THE RIOTS WAS THE IMMOLATION OF A HINDU FAMILY OF FOUR IN THE BOMBAY SUBURB OF JOGESHWARI AS A RESULT OF A PROPERTY DISPUTE BY A MUSLIM SLUM-LORD. SHIV SENA LEADER BAL THACKERAY USED THIS AS THE EXCUSE FOR A "DECLARATION OF WAR" PUBLISHED IN HIS MARATHI DAILY "SAMNA" (MEANING "CONFRONTATION"), IN THE FORM OF A FRONT PAGE WARNING AS WELL AS AN EDITORIAL SAYING THE TIME HAD COME FOR THE SENA TO TEACH MUSLIMS A LESSON. THE ANSWER TO THIS QUESTION IS COMPLEX: THE RULING CONGRESS PARTY CHAMPIONS SECULARISM AND HAS VOCALLY CONDEMNED ALL FUNDAMENTALIST ORGANISATIONS AND PARTIES SINCE THE DEMOLITION OF THE MOSQUE AT AYODHYA IN DECEMBER, 1992 (WHICH THE SHIV SENA, INCIDENTALLY, CLAIM CREDIT FOR). ... GOVERNMENT ACTION AT THE TIME OF THE JANUARY RIOTS IS CONSIDERED TO HAVE BEEN SERIOUSLY INADEQUATE, ALTHOUGH THE CENTRE DID TAKE STRONG SUBSEQUENT MEASURES SUCH AS DISMISSING THE MAHARASHTRA CHIEF MINISTER FOR HIS FAILURE TO KEEP THE PEACE. THE MINISTER OF STATE FOR HOME RAJESH PILOT EVENTUALLY REGISTERED FOUR CASES AGAINST THACKERAY FOR HIS INFLAMMATORY STATEMENT ISSUED IN "SAMNA", AND THE GOVERNMENT LATER ORDERED A JUDICIAL ENQUIRY INTO THE RIOTS. WE WOULD CONFIRM THAT NORMALCY HAS RETURNED TO BOMBAY AND THAT THE COMMUNAL FACTOR IS NOT IN ANY WAY DISTURBING THE NORMAL COMMERCIAL FUNCTIONING OF THE CITY. In addition, a report by Amnesty International stated that, "police in the lower ranks were said to have sided with the Shiva Sena party, which itself was accused of instigating the riots". However other police were praised for acting impartially (Amnesty International, 1997, Amnesty International Country Report --- 1997, p. 9 (ISYS Amnesty International) Amnesty International Country Report, 1996). 22 The references to the provisions of the Indian Constitution , The Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act of 1989, the reduction in the number of reported crimes against scheduled castes and scheduled tribes, the reported return to 'normalcy' in Bombay and the Amnesty International report of praise for police, who were not occupying the 'lower ranks', for acting impartially, provide some evidence to support the challenged findings. Accordingly the 'no evidence' submission must be rejected. 23 As to the Appellant's submissions that the challenged findings were 'critical', Mr Silva draws attention to the fact that the Tribunal's finding that 'the applicant's fear of persecution for his membership of a particular social group, being low caste Hindus, not to be well-founded' was preceded by the words 'In the light of this' which words in turn followed the challenged findings. There is some force in this submission. However, the Tribunal's finding that the Appellant's fear of persecution was not well-founded is really addressed in two stages and one cannot disregard the importance of the finding in the following paragraph that there were areas of India where caste discrimination was not so prevalent as in Maharashtra and 'where State protection would be available'. After making this finding the Tribunal proceeded to its ultimate conclusion that it was not satisfied that there was a real chance that the Appellant might face persecution in the foreseeable future for his membership of a particular social group or for any other Convention reason. Accordingly, it found the Appellant's fear to be not well founded. 24 Remembering that the critical questions arising under the Refugees Convention were whether the Appellant was outside India owing to a well-founded fear of being persecuted for reasons of his membership of the Sindhi community and his being a low caste Hindu; and whether owing to a well-founded fear of being persecuted for reason of his membership of the Sindhi community and his being a low caste Hindu was unwilling to avail himself of the protection of India, it is difficult to see that the particular challenged findings were critical to the Tribunal's ultimate decision. Firstly, in determining whether or not state protection was available in areas of India outside Maharashtra, the question was whether in those areas the state was willing and able to provide protection for persons living there. Secondly, as to whether or not a person experiencing difficulties in a particular part of India should relocate, the question was, 'Would it be reasonable for the person to do so?'. 26 In reaching its conclusion on the question of relocation the Tribunal did refer to the fact that there were parts of India where discrimination on the basis of caste or of being a Sindhi was 'not so prevalent'. The Tribunal also noted the independent country information which established that there were certain areas of India where caste discrimination was 'worse than other areas'. 27 These observations do not go far enough to justify the Tribunal's ultimate conclusion. The fact that there may be parts of India where caste discrimination or community based discrimination is not as bad as it is in other areas does not allow a conclusion that in the 'better' areas a fear of persecution for reason of race or membership of a particular social group could be said to be other than well-founded. 28 True it is that where internal protection is available there is no need for asylum abroad. But did the Tribunal properly direct itself to the question of available internal protection in India? 29 Whilst the Tribunal proceeded to find that there were areas of India where state protection would be available, the relevant finding of the Tribunal was based upon its preceding observations about the existence of parts of India where discrimination was not so prevalent, as is evident from its use of the words 'In the circumstances'. 30 It seems to me that the Appellant's submission that the Tribunal failed to address the correct test, namely whether or not there were other parts of India to which the Appellant could reasonably relocate where the state was willing and able to provide protection, should be upheld. 31 In relation to the question of relocation it seems to me, as the Minister submitted, that the correct test was considered and applied at least in terms of physical relocation. 32 In the learned Federal Magistrate's reasons for judgment he noted at [26] that the Appellant's submission was that the Tribunal did not address the issue of whether the state protection was effective or not and whether the state of India had the capacity to provide effective protection if the Appellant moved to another state within India. 33 At [30] he noted the submission of the Respondent Minister that the question for the Tribunal was ultimately whether the government was willing and able to protect the Appellant, that the Tribunal addressed that question and accordingly there was no jurisdictional error. Reference was also made to the 'whether the ... government was willing and able to protect the appellant' from serious harm test as stated in WAHK v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 12 at [22] , per Lee and Tamberlin JJ'. The fact that attempts may have been made to control violence is not the same as a finding of a willingness and ability to control violence. 36 The Tribunal did not properly consider whether the Appellant had a well-founded fear of persecution for a Convention reason in circumstances where it found relocation to another area within India to be reasonable but did not address whether in such an area the state was willing and able to provide protection to the Appellant as a member of the Sindhi community and being of low caste. Its failure to address the appropriate question constituted jurisdictional error on its behalf. 37 Ground of Appeal 2 should be upheld. Accordingly, the appeal should be allowed with costs. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham.

jurisdictional error failure by the refugee review tribunal to address whether state protection available in parts of india to which the appellant might relocate where discrimination was not as prevalent as it was in the maharashtra, a state in which a member of the sindhi community of low caste had been exposed to serious harm migration

An unresolved question raised at those case management conferences related to the joinder of the Western Australian Fishing Industry Council (Inc) (WAFIC) as a party. In addition, the representative body for the two regions proposed orders generally providing a mechanism for the removal of inactive respondents in applications across the regions generally. The two applications in which WAFIC seeks joinder are brought on behalf of the Amangu and Ngarla People respectively. The Amangu Peoples' claim was filed on 19 April 2004. Its named applicants include Raymond Dann, Barry Dodd and other representatives of the native title claim group. The area covered by the application is approximately 27,388.48 square kilometres. It covers both land and sea. The sea part of the application as presently defined extends 10 kilometres seaward of the coast from Jurien in the south, to north of Geraldton. The land component runs east to the Shires of Coorow, Perengori and Yalgoo. The Court's records, reflected in a Status Report relating to the application, show a total of 43 respondents as at 18 September 2006. They comprise the State and Commonwealth Governments, five local authorities, one indigenous respondent, seven mining interest holders, 14 pastoral lease holders, two persons claiming fishing interests, 11 persons claiming leasehold interests and Telstra. The Ngarla Peoples' claim known as Ngarla People (No 2) was filed on 7 April 2005. It names as applicants Alexander Brown, Charlie Coppin, Clinton Cooke and Jeffrey Brown. The area of the claim is 524,779 square kilometres. It covers land and sea areas north of Port Hedland. There are 19 parties named as respondents. They comprise the State and Commonwealth Governments, three indigenous respondents, five parties claiming mining interests, eight parties claiming pastoral interests and Telstra. In the Amangu matter WAFIC filed a notice of intention to become a party on 28 July 2005. It did so during the notification period for which the Native Title Act 1993 (Cth) (the Act) provides. The District Registrar referred the question of its joinder to Nicholson J on 6 January 2006. Given my absence for the first three months of this year on long service leave, the matter was stood over to the Geraldton Region case management conference held on 1 August 2006 and judgment reserved until today. Although WAFIC has been named as a respondent in some other native title determination applications in Western Australia, the District Registrar who received its notice of intention to become a party to the Amangu application referred the matter to a judge because of a decision of Lindgren J refusing an application by the Chamber of Minerals and Energy of Western Australia to be joined as a party in the Wongatha proceedings --- Harrington-Smith on behalf of The Wongatha People v State of Western Australia [2002] FCA 184. It referred to its role of liaising with government on behalf of its members in connection with the management of various fisheries. Some of those fisheries are located in the claim area. If the claim were made out WAFIC's role in advising government in relation to issues raised by the committees would be affected as the rights of its members would be affected by the declaration of co-existing rights or by the declaration that no rights exist. It described its role in those committees as 'political' in that it plays a part in the political process of lobbying or at least making recommendations to government. It was further asserted that the business and economic interests of WAFIC would be affected by the existence or otherwise of native title over waters. WAFIC's ability to represent its members and the content of that representation on various committees would change depending on the outcome of the case. It was said that the economic interests of WAFIC were linked to its membership and the health of the industry. A determination that native title exists in the claim area in the terms claimed would detrimentally impact on the economic interests of WAFIC members and interests within the claim area. It was also pointed out that pursuant to fishing industry legislation in Western Australia there are about 1,500 fishing boat licences and numerous pearling and aquaculture licences in the State. Fishing boat licences allow fishing other than in areas noted on such licences. WAFIC submitted that there are in excess of 1,500 individual fishing interests which could be affected by the claim. WAFIC's application was supported by an affidavit of Guy Leyland, its Executive Officer, sworn 20 December 2005. It referred to an earlier affidavit in the matter of the Ngaluma and Ingibandi Peoples' claim which comprised WAG 6017 of 1996 and part WAG 127 of 1997. That affidavit set out, inter alia, the Constitution of WAFIC. In his affidavit Mr Leyland affirmed the currency of the affidavit filed in the Ngaluma and Ingibandi matter. He said that in relation to the claim area covered by the Amangu application there are a number of 'managed fisheries' or 'interim managed fisheries' under the Fish Resources Management Act 1994 (WA) (the FRMA). Some 13 such fisheries were named. The affidavit also reaffirmed that the claim covers water in which a large number of fishermen licensed under the FRMA are entitled to fish and fishermen that have a specific endorsement on their licence to fish. Mr Leyland also said that a number of companies and licensed fishermen had refrained from seeking joinder or requesting WAFIC to be their agent under s 84(b) of the Act on account of their expectation that WAFIC would be made a party to the native title claim. Three fishermen were named as well as another person, acting on behalf of the Geraldton Fishermen's Co-operative, which has a sizeable number of members who fish for rock lobster. Mr Leyland pointed out that WAFIC was joined as a respondent in the Ngaluma Ingibandi claim by Nicholson J. There were no published reasons for that decision nor for the decision of Lee J joining WAFIC as a party in the Bardi Jawi application. Section 63 provides that an application filed under s 61 must, as soon as practicable, be given, by the Registrar of the Federal Court to the Native Title Registrar. Section 66 sets out the obligations of the Registrar to give notice of the application. The Registrar is required to give copies of the application to the relevant Minister of a State or Territory where any of the area covered by the application is within the jurisdictional limits of that State or Territory. A copy of the application must also be given to representative bodies for areas which it covered. In addition the Registrar is to give notice containing details of the application to the various classes of persons or bodies set out in s 66(3) which include 'any local government body for any of the area covered by the application ...' (s 66(3)(a)(vi)). The Registrar is required to 'notify the public in the determined way of the application' (s 66(3)(d)). In the case of a claimant application the notice requirements imposed by s 66(3) are not to be complied with until the Registrar has decided, under s 190A, whether or not to accept for registration the claim made in the application (s 66(6)). The notice given under s 66(3)(a) or (d) must specify a date known as the 'notification day' (s 66(8)). The notification provisions are to be read with s 84 of the Act which deals with parties to proceedings in relation to applications to which s 61 applies. The leading case on the range of 'interests' which confer standing under the Act is Byron Environment Centre Inc v Arakwal People (1997) 78 FCR 1. That case concerned the party provisions of the Act in effect before the 1998 amendments. They were ss 68 and 69 . The decision, however, remains authoritative for the similarly worded party provisions in s 84. In that decision the Full Court held that the interests which could be affected by a determination in relation to an application for native title and thus give rise to an entitlement to party status are not confined to the interests in land or waters which are referred to in s 253 of the Act. Black CJ held that the interest sufficient to give a person the right to become a party to an application should be greater than that of a member of the general public. They must be genuine and the possible effect must be genuine. The Parliament could not have contemplated that the rights given to persons as parties would have other than a genuine foundation. The nature and content of the right also suggests that the interests must be capable of clear definition and, equally importantly, that they are of such a character that they may be affected in a demonstrable way by a determination in relation to the application. To the contrary, the consensual objects of the Act would seem to be advanced if a person with genuine interests of that nature that might or would be affected did have the rights of involvement in the process of native title determination given by the Act to a person who is a party. Each case will of course turn on its own facts and whether or not interests will or may be affected will depend upon an assessment of the interaction between the interests asserted by a person who wants to be a party and the nature and extent of the native title rights and interests claimed. The class of interests for which it provides is wider than that defined by s 253 and it would be impossible and unwise to attempt to define the class in any definitive sense. The person must have some interest that may be affected by the native title determination. The persons who sought the status of parties before French J in the Gunai application provide a good example of persons with a relevant interest for the purposes of s 68(2)(a). If it be said that this is too broad an analysis and that the floodgates will open, then I must say that over the past 18 years on the Bench of this Court I have never seen the floodgates open in any matter, despite dire predictions to the contrary. His Honour also referred to the joinder of the persons and organisations referred to in the Gunai Peoples' case. He observed that the 10 groups of persons and organisations admitted as parties in that case included frequent recreational users of the land and waters covered by the claim, commercial entities said to be dependent for their livelihood upon continuing recreational use of the claimed area by local persons and visitors, property owners entitled to free access to parts of the area claimed and sporting and angling clubs or associations which are the conducted sporting, shooting or angling activities in parts of the claimed areas or had members who frequently or habitually engaged in such activities. Put another way, it is the interests of members, rather than those of an organisation representing them, that may be affected. In such cases there is no reason in principle why such organisations may not be persons whose interests may be affected by a determination. His Honour held, following the judgments in Byron Environment Centre that a body that represents the interests of others whose members have interests that may be affected does not, for that reason alone, become a person whose interests are affected. Katz J distinguished the Gunai decision and its acceptance by Lockhart J on the basis that the Lake Tyers Beach Sports and Angling Club was not a legal person, separate from its individual members. His Honour said that to recognise 'the Club' as a party was simply an informal method of recognising its individual members as parties. He observed that Lockhart J appeared to be conscious of the Club's unincorporated status. See also Adnyamatha People v South Australia [2003] FCA 1377 ; (2003) 133 FCR 242 (Mansfield J). In the present case WAFIC does not take issue with what Lindgren J drew from Byron Environmental Centre and Woodridge . Rather, WAFIC contended that its factual position differed from that of the Chamber of Minerals and Energy in a material way. It relied in particular upon WAFIC's representation on, and participation in, advisory committees established under the FRMA. This participation, it was said, included representing the interests of its members by presenting and promoting its members' views with respect to fishery management and protection policy and acting as an intermediary between government and industry. It referred to the formulation of cohesive industry policy. It was contended that WAFIC's participation in these committees is essentially in its own right and on behalf of 'industry' and not merely on behalf of any particular member of WAFIC. An impact on fisheries in the claim area would or could have an effect on management of fisheries outside or partly outside the claim area. WAFIC submitted that the cases which suggest that an industry body does not have an entitlement to participate in the native title claim in its own right have not dealt with an industry body with statutory functions in resource management under existing statutes. It also referred to Nicholson J's decision to allow WAFIC's application to be joined in Ngaluma Ingibandi and it was submitted that unless the view was formed that Nicholson J was clearly in error in allowing WAFIC's notice, then WAFIC ought to be joined as a party to the claim. However, the basis upon which his Honour made the joinder order is not evident as there were no reasons published for the decision. In the alternative, WAFIC submitted that it should be '... joined as a party as agent for specified parties under s 84B of the Native Title Act '. It is clear from the authority of the Full Court decision in Byron Environment Centre that WAFIC cannot acquire party status by reason of the possible effects of a native title determination on the interests of its members. It asserts, however, that it has an affected interest by reason of its participation in statutory committees advising government in relation to managed fisheries, some of which exist in the claim area. It does not appear to me however that this function, carried out on the part of WAFIC, can be compared to that of a statutory authority with direct responsibility for the management of an area the subject of a native title determination application. WAFIC's involvement as described in its submissions and supporting evidence, seems to relate to advice to government on policy for the management of the relevant fisheries. No evidence is shown which logically link the economic interests of WAFIC as an organisation to a native title determination in the claim area. Nor am I satisfied that the evidence discloses any real basis upon which WAFIC's capacity to participate in the committees to which it has referred would be affected. In so saying, I accept that WAFIC has been joined as party in some applications without any contention and has acted as agent in others. It has played a valuable role in the submissions that it has made in such cases, not least in the Bardi Jawi case which I heard as trial judge, albeit WAFIC had been joined by order of Lee J. In my opinion however, I am bound by the authority in Byron Environment Centre to reject WAFIC's application for joinder as a party. It may of course act as agent on behalf of a party in relation to the proceeding. That does not require the intervention of the Court. Under s 84B a party to a proceeding can appoint an organisation as its agent. WAFIC's application for joinder is therefore refused. The same considerations arise in relation to the Ngarla Peoples' claim and again, WAFIC's application for joinder in that claim will be refused. I note that among the proposals for amendments to the Act arising out of the recent Commonwealth Government review is a proposal under which industry bodies could be joined as parties. In my opinion, provided that their participation is confined to the representation of their member interest holders in matters directly relevant to the impact of a native title determination on those interests, then the capacity to effect such a joinder may be a useful facility. The orders are designed to remove from the party list respondents who do not wish to play an active part in the proceedings. In my opinion such orders may be helpful in respect of particular applications where evidence is put before the Court to support the practical utility and justice of such a direction. The application for springing orders will be refused. This allows for the possibility that such applications may be made in respect of particular applications in the future.

native title determination application parties interest industry association insufficiency of direct interest based on members' interests participation of industry association in statutory committees whether sufficient interest interest insufficient joinder refused association able to act as agent if so requested by parties native title

On 11 November 2008, that Court dismissed an application for constitutional writs directed to the Refugee Review Tribunal ("the Tribunal"). The appellant is a male child who was born on 3 June 2004. He was born in Australia and, by reason of the fact that his parents are Albanian nationals, his nationality is Albanian. Throughout the administrative and legal processes which followed his application for a Protection (Class XA) visa ("protection visa"), his father has acted on his behalf. The appellant lodged an application for a protection visa on 28 June 2007. On 23 July 2007, his application was refused by a delegate of the Minister for Immigration and Citizenship. He applied to the Tribunal for a review of the delegate's decision. In a decision handed down on 3 December 2007, the Tribunal affirmed the decision of the delegate not to grant a protection visa to the appellant. On the application made by the appellant to the Federal Magistrates Court for constitutional writs, a federal magistrate held that the Tribunal had not fallen into jurisdictional error, and dismissed the application. As I have said, they are Albanian nationals. The appellant's father arrived in Australia on 11 July 2000 and his mother arrived in Australia on 17 October 2000. They applied for protection visas on 29 November 2000. The appellant's father made his claim based on a Convention reason. His mother's claim was based on her membership of her husband's family. A delegate of the then Minister for Immigration and Multicultural and Indigenous Affairs refused the applications. The appellant's parents applied to the Tribunal for a review of the delegate's decision. The appellant's father claimed refugee status on the ground of his membership of a particular social group, being his family. He claimed that he feared persecution if he returned to Albania because of the blood feud between his family on the one hand and two other families, the Lleshi and Biba families, on the other. The essential facts of the claim made by the appellant's father were contained in an affidavit sworn by him on 29 November 2000. The Tribunal accepted the appellant's father as a truthful witness. It is convenient to summarise the contents of the affidavit. The appellant's family owned good quality farming land in Velipoj, a place situated by the coast in northern Albania. His family owned the land prior to the commencement of communism in Albania in the mid-1940s. The appellant's family also owned land in a mountain area approximately 60-65 kilometres from Velipoj. The appellant's family had owned the land for hundreds of years. The appellant's family was able to keep their land until 1958 but at that time the government directed that all land holdings be turned into co-operatives. The appellant's family was able to keep a small part of their land for their own use. The appellant's great grandfather opposed communism. During the period of communist rule, his family were known as "Kulaks" or landowners, because they had been landowners prior to the introduction of communism. In 1992, communist rule in Albania ended and the government attempted to introduce a program of land redistribution. The details of the programme are not clear, but it appears that the appellant's family received some of the land that they had previously owned. There was other land which was available for use by other persons but those persons were not permitted to sell the land or build on it. Two families who were using the other land, and who were causing trouble were the Lleshi family and the Biba family. There are three brothers in the Lleshi family and a father and three sons in the Biba family. The Lleshi family attempted to build on land previously owned by the appellant's family and a dispute broke out. In April 1997, the appellant's family dug a large ditch across a road to prevent the Lleshi family and the Biba family from constructing buildings. On 25 April 1997, six or seven members of the Lleshi and Biba families came to the land of the appellant's family in a heavy truck. An argument broke out. A member of the Lleshi family shot an uncle of the appellant's father, who was thereby injured. Another uncle of the appellant's father, Uncle Ded, got a shotgun and shot at the group as they were leaving. Two members of the Biba family and one member of the Lleshi family were injured, but the injuries were not of a serious nature. The police attended after the shooting and arrested Uncle Ded. Uncle Ded claimed that he was only protecting himself and his property and he was not charged. It is said by the appellant's father in his affidavit that the police accepted that Uncle Ded was acting in self-defence. The appellant's father claims that in his tradition "if someone kills or injures a member of the family you can kill one of them". The Lleshi and Biba families have said that "they will kill our family if any of us are seen outside" and negotiations to end the feud have failed. Male members of the appellant's family have left Albania and the appellant's father claims he was in hiding from April 1997 until July 2000 when he left Albania. In his affidavit, the appellant's father claimed that his wedding was not a public one because of the blood feud. The appellant's father claims that he cannot return to Albania and he states that, if he returns to that country, he will be killed by either a member of the Lleshi family or a member of the Biba family. The Tribunal found that the family of the appellant's father was involved in a blood feud with the Lleshi and Biba families because Uncle Ded had wounded three members of those families in the course of a dispute over land. It found that there is a tradition of blood feuds in Albania, particularly, in the north of the country. It found that the Albanian authorities had recognised the problems presented by blood feuds and had put in place proper police and judicial procedures to address the problems. Note: Section 5G may be relevant for determining family relationships for the purposes of this section. The Tribunal reached the conclusion that s 91S prevented the appellant's father's membership of his family being used as a vehicle to bring him within the scope of the Refugees Convention because the persecution or fear of persecution was motivated by a non-Convention reason. The Tribunal went on to consider (and ultimately reject) arguments that there were other particular social groups to which the appellant's father belonged. There is no need for me to set out the details. The appellant's father applied for constitutional writs and his application was heard by Selway J in 2004 and refused: STJB v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCA 861. The decision of Selway J was upheld by the Full Court of this Court: STJB v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCAFC 9. An application for special leave to appeal to the High Court was refused on 16 December 2005. His legal advisers wrote to the Tribunal on 19 September 2007. In their letter, they said that the appellant accepted that, as a result of the High Court's decision in STCB v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 61 ; (2006) 231 ALR 556 , the appellant could not claim refugee status on the basis that he is a member of the particular social groups described as "Albanian citizens who are subject to the customary law" or "the [X] family" which are at risk of persecution because of a blood feud. I use the letter, X, in lieu of the name of the appellant's family. On the appellant's behalf, his legal advisers submitted that he was a refugee on the following grounds: that he is a member of the particular social group being a "male Albanian child" and will suffer persecution because of that membership; that he is a member of the particular social group being a "Kulak (landowner) family" and will suffer persecution because of that membership; or his imputed political opinion as a member of a Kulak family. The appellant's legal advisers submitted that, although Albanian law does not uphold traditional or customary law, the Albanian authorities are unwilling and unable to protect the appellant from the risk of harm which he faces if he returns to that country. The appellant's father gave evidence on the appellant's behalf at a hearing of the Tribunal. The Tribunal member accepted that there were blood feuds in Albania and that they represented an ongoing danger. The Tribunal member appears to have accepted the appellant's father as a witness of truth. The Tribunal member said that the particular social group which presented itself, having regard to the appellant's claim, was the appellant's family and that led to a consideration of s 91S of the Act. The Tribunal member said that the direct cause of the blood feud was the act of Uncle Ded shooting at members of the Lleshi and Biba families and not for any other reason. The fear of harm resulted from the blood feud and the blood feud would not have arisen without the occurrence of the shooting incident. The Tribunal member said that Uncle Ded's fear of reprisals was for the shooting incident and is not Convention related. As the fear held by the appellant's family member was not Convention related, the threshold question in s 91S(a) was satisfied. She said that the shooting incident triggered the blood feud which in turn is the reason for the fear of harm. The Tribunal member concluded that the appellant did not have a well-founded fear of persecution for a Convention reason and she was not satisfied that the appellant came within Article 1A(2) of the Refugees Convention. First, she had not determined at the outset whether the particular social groups advanced by the appellant were particular social groups for the purposes of the Convention and therefore she had not followed the steps laid down in Dranichnikov v Minister for Immigration & Multicultural & Indigenous Affairs [2003] HCA 26 ; (2003) 197 ALR 389. This error was not said by the appellant to be fatal of itself, but when combined with other errors it was significant. As I understand the federal magistrate's reasons, he accepted that the Tribunal had not made findings about these matters, but he held that this had not led to jurisdictional error. Secondly, it was submitted that the Tribunal member had erred in not undertaking an examination of whether there was a causative link between the fear and the motive for persecution. The Tribunal had failed to consider the evidence relevant to the objective ascertainment of the motives of those who were responsible for the persecution. It evaluated the evidence presented by the parents on behalf of that claim and examined the country information as well and came to a conclusion that the risks presented to the child stemmed from the blood feud. I can readily conceive of cases where dealing with the subjective element and then the nexus between that and the convention related harm simply upon the basis of an attribution to the child of parental fears would give rise to a jurisdictional error. They would be circumstances where, for example, there was material before the Tribunal providing an objective basis for the fear which is attributed to the child being held for a convention related reason. The only material available to the Tribunal here was either country information that did not relate to convention-related persecution or material that indicated that the perceived harm arose from the existence of the blood feud and its consequences. Shortly prior to the hearing, the appellant forwarded to the Court an amended notice of appeal which raised three further grounds of appeal. He feared persecution for reason of membership of that particular social group, and further feared that he would receive no protection from the Albanian State, and consequently he had a Convention reason for his fear of persecution. That document included the grounds in the original notice of appeal, but the appellant indicated that those grounds were no longer pressed. In other words, the appellant pressed only those grounds set out above (at [31]). The appellant acknowledged that he had not raised these grounds as part of the case he presented to the Federal Magistrates Court. The first respondent did not oppose the granting of leave to amend. I said that I would hear the submissions before deciding whether to grant leave. I have heard submissions and I think that it is appropriate to grant leave to amend. The Tribunal member had said that Uncle Ded's fear of persecution arose from the shooting incident and was not Convention related. Of course, there are a number of other issues in addition to the question of whether a particular social group exists for the purposes of the Convention. First the tribunal needs to determine whether the group or class to which an applicant claims to belong is capable of constituting a social group for the purposes of the Convention. That determination in part at least involves a question of law. If that question is answered affirmatively, the next question, one of fact, is whether the applicant is a member of that class. There then follow the questions whether the applicant has a fear, whether the fear is well-founded, and if it is, whether it is for a Convention reason. In this case, I do not need to consider the other issues and the issue of State protection because I have reached the conclusion that the Tribunal did not err in not identifying and considering whether Uncle Ded belonged to a particular social group described as "Albanian householders who had resisted armed encroachment onto their property". The claim now made in relation to Uncle Ded was not expressly articulated before the Tribunal and it was not dealt with by the Tribunal. The principles concerning the Tribunal's obligation to deal with claims before it are clear, although their application may give rise to difficulties. I should say that I do not think the principles or their application differ because the claim for membership of a particular social group is made in relation to a third party (Uncle Ded) and not the appellant himself. In Dranichnikov , the Tribunal had not considered a substantial, clearly articulated argument relying upon established facts, that being whether the applicant was a member of a particular social group consisting of entrepreneurs and businessmen who publicly criticised law enforcement authorities for failing to take action against crime or criminals (at 394 [24] per Gummow and Callinan JJ). The Tribunal had in fact considered another question which was whether the applicant's membership of a social group being "businessmen in Russia" was a reason for persecution and relevantly nothing more. In taking that approach, the Tribunal had constructively failed to exercise jurisdiction (at 394 [25] per Gummow and Callinan JJ; at 406 [86] per Kirby J; at 408 [95] per Hayne J). The Tribunal's obligation to consider a claim extends beyond those claims which have been clearly articulated. The question of the extent of the Tribunal's obligation to consider a claim not clearly articulated before it was considered in NABE v Minister for Immigration and Multicultural and Indigenous Affairs (No 2) [2004] FCAFC 263 ; (2004) 144 FCR 1. The Tribunal is required to deal with the case raised by the material or evidence before it: Chen v Minister for Immigration and Multicultural Affairs [2000] FCA 1901 ; (2000) 106 FCR 157 at [114] (Merkel J). There is authority for the proposition that the Tribunal is not to limit its determination to the "case" articulated by an applicant if evidence and material which it accepts raise a case not articulated: Paramananthan v Minister for Immigration and Multicultural Affairs [1998] FCA 1693 ; (1998) 94 FCR 28 at 63 (Merkel J); approved in Sellamuthu v Minister for Immigration and Multicultural Affairs [2001] FCA 1802 ; (1999) 90 FCR 287 at 293-294 (Wilcox and Madgwick JJ). By way of example, if a claim of apprehended persecution is based upon membership of a particular social group the Tribunal may be required in its review function to consider a group definition open on the facts but not expressly advanced by the applicant: Minister for Immigration and Multicultural Affairs v Sarrazola (No 2) [2001] FCA 263 ; (2001) 107 FCR 184 at 196 per Merkel J, Heerey and Sundberg JJ agreeing. It has been suggested that the unarticulated claim must be raised "squarely" on the material available to the Tribunal before it has a statutory duty to consider it: SDAQ v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 120 ; (2003) 129 FCR 137 at [19] per Cooper J. The use of the adverb "squarely" does not convey any precise standard but it indicates that a claim not expressly advanced will attract the review obligation of the Tribunal when it is apparent on the face of the material before the Tribunal. Such a claim will not depend for its exposure on constructive or creative activity by the Tribunal. ... Although such a claim might have been seen as arising on the material before the Tribunal it did not represent, in any way, "a substantial clearly articulated argument relying upon established facts" in the sense in which that term was used in Dranichnikov . A judgment that the Tribunal has failed to consider a claim not expressly advanced is, as already indicated in these reasons, not lightly to be made. The claim must emerge clearly from the materials before the Tribunal. However, I think it is clear on which side of the line this case falls because the case now put is quite a different one to the case put to the Tribunal. Even so, this Court has insisted that, on judicial review, a decision of the Tribunal must be considered in the light of the basis upon which the application was made, not upon an entirely different basis which may occur to an applicant, or an applicant's lawyers, at some later stage in the process. In this application for a protection visa, the appellant claimed that he had a well-founded fear of persecution because he was a male member of his family and he was at risk of being killed by members of an opposing family. A blood feud had arisen as a result of disputes over land ownership. Before the Federal Magistrates Court, the appellant maintained the claims he had made before the Tribunal. In essence, the appellant's submission was that the Tribunal erred in not making findings as to whether there were particular social groups properly described as "male Albanian child" and "Kulak (landowner) family". That submission was rejected. On appeal to this Court, the appellant reformulated his claim. As I understood his submission, he accepts that he is now putting his claim on the ground that he has a well-founded fear of persecution for reasons of membership of a particular social group consisting of his family, and that s 91S of the Act must be considered. The appellant also accepts that his well-founded fear of persecution arises because of events surrounding the conduct of Uncle Ded on 25 April 1997. The appellant's argument is put in this way. The relevant family member for the purposes of a consideration of the effect of s 91S is Uncle Ded. However, he has a Convention reason for his fear of persecution because he fears persecution for reasons of his membership of a particular social group, being "Albanian householders who had resisted armed encroachment onto their property". The submission is that there was no reason to disregard Uncle Ded's fear of persecution, and no reason to disregard the appellant's fear of persecution. It followed that the appellant's fear of persecution arose because of his membership of a particular social group, being his family. The Tribunal failed to consider this claim and thereby fell into jurisdictional error. There are a number of reasons why the appellant's argument must be rejected. First, the appellant, with legal assistance and the advantage of the Tribunal's decision in relation to his parents' claims, formulated social groups for the purpose of the Tribunal hearing that were quite different from those formulated in this appeal. Namely, they did not relate to his family and the actions of one particular member of the family. The social groups formulated by the appellant avoided altogether (in terms of the formulation of the social group) an examination of the appellant's family and the actions of one particular member of the family. This point is not decisive, but it is a relevant consideration. Secondly, the particular social group now formulated by the appellant seems to me to be somewhat artificial and it must be questionable whether it comprises a cognisable group in the community (see Applicant S v Minister for Immigration and Multicultural Affairs [2004] HCA 25 ; (2003) 217 CLR 387). It is artificial because it is very general and because it seems to me it could be formulated in a number of other ways. Clearly, it is not my role to decide these issues, but the fact that they arise is clearly relevant to whether the claim was apparent on the face of the material before the Tribunal. They suggest it was not. Thirdly, the appellant submitted that Uncle Ded's conduct was clearly not criminal and that a purpose behind the introduction of s 91S was to remove the potential for criminal families to otherwise claim refugee status ( STCB v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 61 ; (2006) 231 ALR 556). However, the evidence before the Tribunal was at the very least equivocal as to whether Uncle Ded's conduct constituted a criminal act. It is true that he was not charged by the police over the shooting incident, but the evidence suggests that Uncle Ded shot at members of the Lleshi and Biba families as they were leaving the property. Again, it is clearly not my task to make findings about these issues. Again, they suggest that the claim now made was not apparent on the face of the material before the Tribunal. I have considered all the circumstances and I do not think the claim now advanced was apparent on the face of the material before the Tribunal. In my opinion, the Tribunal did not fall into jurisdictional error in not considering whether there was a social group of "Albanian householders who had resisted armed encroachment onto their property" and whether Uncle Ded was a member of such a group. I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.

appeal from orders made by federal magistrate dismissing appellant's application for review of decision of minister's delegate refusing appellant protection visa decision of minister's delegate affirmed by refugee review tribunal where appellant born in australia and appellant's parents born in albania where tribunal decided that appellant did not have convention reason for fear of persecution where tribunal decided that appellant's fear of persecution arose from blood feud between appellant's family and two families in albania where appellant claimed that he had fear of persecution for convention reason because he was member of social group consisting of his family where appellant claimed that tribunal had committed jurisdictional error by failing to consider whether appellant's father's uncle had convention reason for fear of persecution because he was member of social group consisting of albanian householders who had resisted armed encroachment onto their property where claim not made before tribunal whether claim apparent on material before tribunal migration

The Notice of Motion was supported by an Affidavit filed 13 February 2006 sworn by Mr Richard Mark Hamwood, a solicitor employed by the solicitors for the Respondent ('Mr Hamwood's affidavit'). 2 Through its solicitors, the Respondent had previously requested particulars of the Statement of Claim by letter dated 14 November 2005. All references in this judgment to 'Request' followed by a number, are references to requests for further and better particulars contained in that letter, attached as Exhibit RMH 1 to Mr Hamwood's affidavit. 3 The Applicant's solicitors took objections to the request for further and better particulars in a document dated 20 December 2005 and entitled 'Applicant's further and better particulars of the Statement of Claim in response to the Respondent's request dated the 14 November 2005'. This document is Exhibit RMH 2 to Mr Hamwood's affidavit. 4 The Respondent's solicitors responded by letter to the Applicant's solicitors on 31 January 2006 acknowledging the objections and pressing for answers to a number of the requests. This letter is Exhibit RMH 3 to Mr Hamwood's affidavit. 5 The Notice of Motion was heard by me on 13 February 2006. Outlines of Submissions on behalf of both the Applicant and Respondent were filed at that time. 6 The Applicant submits generally that the Respondent's requests for particulars are in the nature of interrogatories; are vexatious and oppressive due to the number of requests made and the repetitive nature of many of the requests; and that the requests generally fail to make any distinction between a request for particulars of material facts and a request for the evidence which might be led to establish a pleaded material fact. The Applicant contends that proper and appropriate answers have been provided to the Respondent and no further order should be made. 7 The Respondent submits that the particulars sought from the Applicant fall into four categories: (1) particulars of the form and circumstances relating to agreements or terms of agreements relied on; (2) particulars of the form and circumstances relating to specific communications; (3) particulars of supporting facts relied on; and (4) particulars to clarify what is meant or intended in the Statement of Claim without which there is unresolved ambiguity or uncertainty. The Respondent submits that each request is a proper request for particulars and should be provided by the Applicant. (Atkin's Encyclopaedia of Court Forms and Precedents in Civil Proceedings , Butterworths, vol 8, p 31). Particulars complete the picture of the applicant's cause of action with information sufficiently detailed to put the respondent on guard as to the case it has to meet and to enable it to prepare for trial ( Spedding v Fitzpatrick (1888) 38 Ch D 410; R v Associated Northern Collieries [1910] HCA 61 ; (1910) 11 CLR 738 at 741; Goldsmith v Sandilands [2002] HCA 31 ; (2002) 190 ALR 370 at 371; King v AG Australia Holdings Ltd ( formerly GIO Australia Holdings Ltd ) [2003] FCA 543 at pars 16-18). A request for further and better particulars should be made initially by letter, however the Court may order further and better particulars to be provided pursuant to O 12 Federal Court Rules . 9 Particulars and interrogatories have complementary functions in preparing for trial. Unlike further particulars, interrogatories may be only be filed and served by leave of the Court (O 16 r 1 Federal Court Rules ). And thus, while to a certain extent the giving of particulars may render interrogatories unnecessary by informing the opponent of the case he has to meet, they do not perform a function which is co-extensive with that of interrogatories. There are indeed occasions when it is proper to interrogate as to the truth of the particulars, and on the other hand there are cases in which it would not be proper to order particulars, but where interrogatories could be allowed. They are pointers rather than boundary marks'. ( The Atlantic Star [1974] AC 436 at 468). However it is claim of some seriousness, as 'vexatious and oppressive' conduct in the framework of litigation connotes an abuse of process of the court ( Walton v Gardiner [1992] HCA 12 ; (1992-1993) 177 CLR 378 at pp 392-393, International Entertainment (Aust) Pty Ltd v Churchill [2003] QSC 247 , para 24, Young v Holloway [1895] P 87, 90). 13 When these terms are sought to be applied to a request for further and better particulars, the practical application of them is not always an easy task. The special circumstances of each case must be carefully considered ( Wootton v Siev ier [1913] 3 KB 499 at 503). One test which can be applied is whether the pleading is such that no reasonable person could properly treat it as bona fide ( Norman v Mathews (1916) 85 LJKB 857). However, courts will not lightly rule that pleadings are to be struck out for this reason ( Bean v Flower (1895) 73 LT 371). ) Further, a request for particulars should not include a request to disclose evidence by which the applicant intends to prove its case at trial ( Temperton v Russell (1893) 9 TLR 319 at 322). The application of this principle to individual facts can be difficult. A useful illustration of the principle however was in Re Dependable Upholstery Ltd (1936) 3 All ER 741, where the liquidator of a company sought a declaration against two directors that dividends had been paid wholly out of the capital of the company and not out of profits, and that there had been no profits of the company out of which dividends could be paid. The defendant directors sought further and better particulars of the facts relied upon in support of these allegations. Crossman J held that the liquidators were not required to give particulars of those facts. But it is suggested by Mr Morton on behalf of the respondents, the directors, that you have to go behind that allegation and find out the allegations or facts upon which that statement is based. It seems to me if one begins there, I do not know where one would end in the particulars which would have to ordered; because the fact that each of the dividends was paid wholly out of the capital of the company is the fact on which each party relies in the claim or defence. The facts which lead up to that are, in my view, really the evidence of the fact that the dividends were in fact paid wholly out of the capital of the company. Paragraph 6 of the Statement of Claim states 'At approximately 9.30 am on Monday the 25 th October 2004, Moloney, Frost and Taylor ("the Audit Team") entered the Budget Mt Gravatt premises'. 18 The Respondent seeks particulars clarifying the difference (if any) in the acts asserted in para 6 (that at approximately 9:30 am on Monday 25 October 2004, the Audit Team 'entered' the Budget Mt Gravatt premises) and para 7 in which the 'arrival' of the Audit Team is referred to. In addition the Respondent contends that it is entitled to know who the Applicant alleges notice or warning was to be given and why such notice or warning was required. 19 The Applicant objects to answering such request on the grounds that it is not a proper request for particulars. 20 In my view the Respondent is entitled to further but limited particularisation in relation to this paragraph. Insofar as Request 3(a) is concerned, the Respondent is entitled to clarification as to whether the 'arrival' of the Audit Team is intended to refer to the same event as referred to in para 6 of the Statement of Claim where it is alleged that the Audit Team 'entered' the Applicant's premises. The Applicant should provide the Respondent with sufficient particulars of the time of the event referred to in para 7. 21 In relation to Requests 3(b) and 3(c), although compelling arguments have been submitted from both parties, I am of the view that the Respondent is entitled to further and better particulars as sought. I accept the submission of counsel for the Respondent that para 7 contains an incomplete assertion, namely that notice or warning should have been provided to someone. The information sought here is limited, and is limited to the issue of to whom notice of the visit of the auditors should have been given. It is not akin to providing evidence of facts on which the parties pleading rely for claim or defence. In my view, this is part of the case the Respondent is required to meet, as distinct from evidence which the Applicant will lead to substantiate its claim. Further, in my view the request is not vexatious nor oppressive, nor in the nature of an interrogatory. 23 In addition to a general claim that the request is in the nature of interrogatories, is vexatious and oppressive, seeks evidence rather than material facts, and is not otherwise a proper request for particulars, the Applicant submits that there is a need to distinguish between the existence of a conversation as being a material fact, and the content of a conversation as being a material fact. The Applicant argues that the fact that a conversation has occurred does not lead to a conclusion that it is necessary for the pleader to plead the substance of the conversation and unless the pleader does, it is not capable of particularisation or a request for particulars. 24 It is submitted by the Respondent that when a communication is alleged in a pleading, the usual particulars of such communication are whether it was oral or written, when it was made, between whom it was made and the substance of the conversation if it was oral, or a copy of the document provided if it is written. 25 The Respondent is entitled to further particulars regarding how and when the conversation referred to in para 9 of the Statement of Claim was 'relayed' by Mr Livoni to Ms Wilde. The Applicant should provide such particulars to give clarity to their pleading in relation to this alleged event. 26 However, I am of the view that the Respondent is not entitled to particulars detailing the substance of any alleged conversation between Mr Livoni and Ms Wilde as this is appears to be a request for evidence and not a proper request for particulars. The content of any conversation between Mr Livoni and Ms Wilde is irrelevant for the purposes of para 10 as that paragraph itself pleads to a conversation 'referred to in para 9' of the Statement of Claim. Paragraph 9 of the Statement of Claim gives particulars of a conversation between Mr Livoni and one or more of the Audit Team. 28 The Respondent submits that they whilst it is aware of what records it says it copied, it does not know whether the Applicant alleges that it took any further material. The Respondent also seeks a time frame as to the events alleged in para 11 where the term 'subsequent' is used. 29 The Applicant objects to this request for particulars on the grounds that it is not a proper request for particulars and that it seeks enquiries into matters wholly within the knowledge of the Respondent. 30 With regard to Request 10, the Respondent is again entitled to particulars in relation to the timing of the alleged event. The Respondent cannot adequately answer the allegation if it is unclear as to when the event occurred. 31 The Respondent is entitled to the particulars it requests in Request 11 as such material is referred to in the Applicant's prayer for relief at para 35(b) of the Statement of Claim. The Applicant seeks an order that the Respondent, by itself, its servants or agents, yield up all information recorded or otherwise copied or taken from the Applicant. The Respondent is therefore entitled to know the details of what information or records the Applicant alleges it took, recorded or copied. Paragraph 13 of the Statement of Claim alleges an exchange of comments between one or more members of the Audit Team and Ms Wilde and Mr Livoni. The requests for further and better particulars in relation to paras 12 and 13 are similar. 33 The Respondent submits that it is entitled to know who is alleged to have had the relevant conversations with Ms Wilde and/or Mr Livoni and the substance of those conversations. 34 The Applicant objects to all requests for particulars relating to paras 12 and 13 of the Statement of Claim on the grounds that they are not a proper request for particulars. 35 In my view the Respondent is not entitled to the further and better particulars it has sought in relation to paras 12 and 13 of the Statement of Claim. The information sought is a request for evidence and not a proper request for particulars. The nature of the questions asked by members of the Audit Team to Ms Wilde and/or Mr Livoni, and conversations as a result of the posing of questions is a matter to be determined in evidence at the trial. 37 The Respondent seeks particulars of the Applicant's claim that permission was not 'freely given'. The Respondent seeks clarification as to whether the Applicant alleges that no permission was given or that permission was given but under some form of duress or after complaint. The Respondent submits that if it is said that permission was given but not 'freely', that is entitled to know the facts giving rise to that allegation. 38 The Applicant objects to the requests relating to para 14 on the grounds that they are not proper requests for particulars but are more in the nature of interrogatories. 39 I am prepared to allow limited particularisation of para 14. Again, in my view whether or not the hard drive was removed from the premises of the Applicant over the stated complaint or objection of the applicant is part of the case the respondent is required to meet. Further, in stating that permission was not 'freely' given the Applicant is alleging a condition of mind. The contents of any such complaint or objection are an issue of evidence and need not be pleaded. 42 The Respondent argues that it is entitled to know what records the Applicant alleges it collected along with any information relating to the substance of the request by the Respondent for the collection of records from the Applicant. The Respondent also seeks clarification of para 18(b) of the Statement of Claim which it submits is ambiguous (request 24). 43 The Applicant has provided some particulars to the requests relating to para 18 of the Statement of Claim but objects to providing further particulars on the basis that the Respondent's requests are not proper requests for particulars but are more in the nature of interrogatories. 44 Earlier in this judgment I ordered limited particularisation of para 11 of the Statement of Claim. To the extent that the Applicant claims a report, produced by Ferrier Hodgson, is based on information and materials obtained by the Respondent, it should describe what that information and materials are. It may be appropriate for the Applicant to cross-reference para 18 to the particulars to be included in para 11. 45 In relation to Request 23, contrary to the submission of the Respondent I do not accept the analogy between the pleadings in the case before me, and those in Gold Coast City Council v Pioneer Concrete (Qld) Pty Ltd (1998) 157 ALR 135. In my view, in para 18(a) of the Statement of Claim the Applicant has supplied sufficient particulars to the Respondent. The remainder of the Respondent's request is a request for evidence and not a proper request for particulars. 46 In relation to Request 24, in my view para 18(b) of the Statement of Claim is ambiguous, for the reason that, on the face of the document, paras 6, 7, 8, 9, 10, 12 and 13 do not contain references to information obtained by the Respondent. The Applicant is required to either amend para 18(b) or provide particulars as sought by the Respondent. 48 The Respondent seeks particulars of what conduct the Applicant relies upon to assert the allegation and specific details of the policy decision or facts from which the policy decision may be inferred. 49 The Applicant objects to the request for particulars of the conduct establishing that the Respondent failed to 'act in good faith and fairly' on the grounds that it is not a proper request for particulars and says that it is not able to give further and better particulars in relation to the 'policy decision' until after disclosure. 50 Paragraph 24(b) of the Statement of Claim is currently drafted in broad terms, and makes serious allegations against the Respondent. In my view in order to be in a position to meet the case against it, the Respondent is entitled to particularisation of this paragraph as requested by Request 26, but only as to the facts upon which the Applicant is relying to assert the allegation in subpara (b). In doing so I note the somewhat similar situation in The Briton Medical and General Life Association Limited v The Britannia Fire Association and Whinney (1889) 59 LT 888 where the plaintiff association claimed, inter alia, 'The defendants...knew or ought to have known, and must be taken to have known, the improper motives which actuated the said directors of the plaintiff association'. Kay J, in noting that he was required to draw a line between requiring the plaintiff association to make a statement which would prevent the defendant association being taken by surprise at the trial, and requiring the plaintiff association to make a statement of the evidence on which it intended to rely, nonetheless ordered the plaintiffs to give particulars of the improper motives alleged in that para (at 890). 51 Request 27(c) however, which relates to the alleged policy decision of the Respondent referred to in para 24(c) of the Statement of Claim, in my view is more in the nature of an interrogatory, and not a proper request for particulars. The Applicant asserts that the process undertaken on 25 and 26 October 2004 was unlawful and of no effect under the terms of the Franchise Agreement. 53 The Respondent requests particulars of what the Applicant alleges it should have done but failed to do in accordance with the terms of the Franchise Agreement. 54 The Applicant objects to the Respondent's request on the grounds that it is not a proper request for particulars. 55 The Applicant has alleged that the Respondent failed to act in accordance with the Franchise Agreement. 56 In my view, the Respondent is entitled to particulars of the conduct constituting the alleged failure to act in order to properly answer the case against it. 58 The Respondent submits that this is akin to an allegation of fraud by both the Respondent and the author of the report. Therefore the Respondent seeks particulars of the facts upon which the allegation is based. 59 The Applicant objects to the Respondent's requests on the grounds that they are not a proper request for particulars. 60 In my view, this paragraph of the Statement of Claim makes serious allegations against the Respondent and the author of the report. While the Applicant contends that the claim is not in the nature of fraud, in my view it comes close. I note that O 12, r 2 Federal Court Rules requires a party pleading fraud to give particulars of any fraud on which it relies. I make no finding at this stage as to whether the Applicant is pleading fraud. In my view the Respondent is entitled to particularisation of this paragraph, in order to be in a position to meet the case against it.

requests for further and better particulars function of particulars comparison with interrogatories 'vexatious and oppressive' whether requests for further and better particulars amount to requests for evidence by which material facts are to be proved practice and procedure

3 Order 78 r 12 of the Federal Court Rules provides an application for review must be filed within 42 days of the notification of the Registrar's decision. There is presently no requirement on claimants to amend their claim to meet the requirements of the registration test. The amendments inserted by item 73 are intended to provide a greater focus on the responsibility of applicants to take steps to improve the quality of their claims, recognising that poor quality claims are a burden on the native title system. 5 If the Court considers the application has been amended since consideration by the Registrar or is likely to be amended in a way that would lead to a different outcome once considered by the Registrar, it would be appropriate for the Court to await the outcome of the reapplication of the registration test before considering whether to dismiss the application. 6 Pursuant to s 190F(6) of the NTA, the Court may consider any 'other reason' why an application should not be dismissed. 7 By way of example, the Explanatory Memorandum suggests that the Court may consider that an application should not be dismissed if, despite being unregistered, the claim is close to reaching resolution (para 4.331). 8 As to the principles applicable to how s 190F(6) should operate, I refer to and respectfully adopt, (without repeating), the recent analysis by Logan J in Christine George & Ors on behalf of the Gurambilbarra People v State of Queensland [2008] FCA 1518. The application was filed in the Federal Court on 14 January 2005. The application, which lies in-between the Ngarluma Yindjibarndi determined area and the Kariyarra claim (WAD 6169/98) in the north-west Pilbara, covers approximately 1,500 square kilometres of land. 10 The applicants are not currently represented by the representative Aboriginal/Torres Strait Islander body for the area (Yamatji Marlpa Bama Baba Maaja Aboriginal Corporation) or otherwise legally represented although counsel has filed submissions on behalf of the applicant in relation to the s 190F(6) issues which have been raised by the court with the parties. 12 The conditions of the registration test are set out in section 190B and 190C of the NTA. Subsection 190A(6) provides that the Registrar must be satisfied that the application meets all of the conditions in s 190B (which deals mainly with the merits of the claim) and s 190C (which deals with procedural and other matters) before the claim in the application can be accepted for registration. 13 The delegate of the Registrar decided not to accept the application for registration because it did not pass the authorisation condition in s 190C(4). The delegate did not consider the application against the remaining conditions in s 190C and s 190B due to findings that the shortcomings in the authorisation process were so fundamental that any consideration of the application against the remaining conditions was not warranted. 14 No further steps in relation to the application have been taken by the applicants since that time and the application has never been amended. 16 Since the applicants were notified of the Registrar's decision, no application seeking leave to amend the Bindurrna application has been filed; nor has an application for review of the Registrar's decision been made. Those submissions were directed primarily to s 190F(6)(b). 19 Although no evidence was provided in support of the submissions, it was accordingly submitted that the application be adjourned to December at which time a better assessment of the merits may be possible. 20 Alternatively, it was argued that the resolution of the issues raised by s 190F should not be undertaken without a full examination of the evidence and an opportunity to call witnesses and cross examine them. 21 I did permit the applicants to file more substantive submissions before determining the position. However in my view nothing in the submissions of the applicants raises any more than generalised hopes and possibilities. 22 There is no clear evidence that an amended application (at all) will be filed, let alone one that is likely to lead to a different outcome once considered by the Registrar. 23 It can not be argued that the applicant has not had the opportunity to address the issue and provide evidence and submissions in support of the likelihood of a different outcome. 24 It is open to the Court to dismiss the matter 'on its own motion' - this just means that it has raised the issue itself. Directions have been made in relation to dismissal of the application and the parties have been given the opportunity to provide submissions. The applicants, the State and any other interested party are to file submissions no later than 7 days prior to the review hearing in relation to the disposition of the application having regard to the outcome of the registration test. The Tribunal (in its regional report prepared for the Pilbara regional directions hearing 30 June 2008) has advised that, unless resolved, the dispute may affect the negotiated resolution of both claims. 27 As the State has not been directly involved in the Tribunal's mediation efforts, it is not aware of all of the details of the dispute between the Bindurrna and Kariyarra applicants. Accordingly, it is not in a position to make an informed submission to the Court as to whether or not a valid 'other reason' (s l90F(6)(b) of the NTA) currently exists not to dismiss the Bindurrna application. 28 There is simply no basis for concluding that there is any 'other reason'. 30 There is no evidence or indication that the application is likely to be amended in a way that would lead to any different conclusion by the Registrar. 31 There is no other reason why the application should not be dismissed. 32 The application will be dismissed. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.

court's discretionary power to dismiss an application on its own motion if the application has not been amended since earlier failure of registration test and no evidence that likely to be amended in a way that would lead to a different outcome no other reason why the application should not be dismissed native title

On 20 February 2007, the Minister decided to cancel the applicant's visa. The applicant held a transitional (permanent) visa Class BF granted to him by operation of law on 1 September 1994 under the Migration Reform (Transitional Provisions) Regulations , and the Minister made the decision to cancel the applicant's visa under s 501 of the Migration Act 1958 (Cth) ("the Act "). The Minister gave written reasons for his decision under s 501G of the Act . He came to Australia from Scotland in 1955 when he was 15 years old. He came with his parents and his younger brother. In Australia the applicant did a printing apprenticeship and then he obtained work as a printer. He resigned from his employment in December 2002. 3 In 1983, the applicant committed two offences of indecent assault. He was convicted of those offences and sentenced to 12 months' imprisonment in relation to each offence. It seems that an order was made that the sentences be served concurrently. However, the sentences of imprisonment were suspended upon the applicant entering into a bond to be of good behaviour for two years. On 10 December 2002, the applicant committed two offences of indecent assault of a person under the age of 12 years, and two offences of unlawful sexual intercourse with a person under the age of 12 years. The victim in each case was a boy aged 11 years. On 2 July 2003, a Judge of the District Court of South Australia imposed one sentence of imprisonment with respect to the various offences of five years and six months, commencing on 20 February 2003 with a non-parole period of three years. The Judge said that, but for the applicant's pleas of guilty, the sentence of imprisonment would have been eight years. 4 The applicant was released on parole on 19 February 2006. On 7 August 2006, the Department of Immigration and Multicultural Affairs advised the applicant by letter that consideration was being given to the cancellation of his visa under s 501(2) of the Act . The applicant was given a copy of the relevant statutory provisions and the relevant direction under s 499 of the Act (Direction --- Visa Refusal and Cancellation under Section 501 --- No 21) ("Direction No 21") and invited to make submissions to the effect as to why his visa should not be cancelled. By letter dated 15 August 2006 the applicant made submissions to the effect that his visa should not be cancelled. The Department wrote to the applicant again on 4 October 2006 advising him that it had reports of the Parole Board of South Australia relating to his case and inviting him to make further submissions. The applicant made further submissions by letter dated 4 October 2006. 5 On 20 February 2007, the Minister decided to cancel the applicant's visa. An officer of the Department had prepared a report and the Minister noted on that report his decision to cancel the visa. The written reasons of the Minister are signed by him and dated 20 February 2007. By letter dated 28 February 2007, the applicant was advised of the Minister's decision and was given a copy of the Minister's reasons. That matter is not in dispute. 7 The Minister referred to the fact that he was not bound by Direction No 21. I determined whether each of the relevant considerations weighs in favour or against exercising my discretion to cancel Mr Black's visa under section 501(2). As to the exercise of the discretion under s 501(2) , Direction No 21 identifies three matters as "primary considerations". The first primary consideration is the protection of the Australian community and members of the community. In terms of deterrence to others, that was a matter he gave no weight. 10 The second primary consideration in Direction No 21 is the expectations of the Australian community. After referring to matters for and against a particular conclusion, the Minister said that he was "more inclined" to believe that the Australian community would expect the applicant's visa to be cancelled and him removed from Australia and that was a matter he gave moderate weight. Again, it is not necessary to examine the Minister's reasons for reaching that conclusion. Mr BLACK has no children. The information relevant to this consideration weighs in favour of cancelling Mr BLACK's visa. I gave this consideration considerable weight. Mr BLACK has a brother who is resident in South Australia. No evidence has been presented which indicates that Mr BLACK's brother would suffer hardship. The information relevant to 'other considerations' weighs in favour of cancelling Mr BLACK's visa. I gave this consideration moderate weight. In reaching my decision I concluded that the seriousness of Mr BLACK's offences outweighed all other considerations above. Having given full consideration to all of these matters, I decided to exercise my discretion to cancel Mr BLACK's visa under s 501(2). A breach of the rules of procedural fairness occurred in relation to the making of the decision. 2.2 If the Respondent proposed to make a decision not in accordance with the Applicant's legitimate expectation, procedural fairness required that the Applicant should be given notice and an adequate opportunity of presenting a case against the taking of such a course. 2.3 In the alternative to paragraph 1 above, the Respondent proceeded in accordance with the Direction and considered the primary consideration 'Best Interests of the Child' in Ministerial Direction No 21. He concluded in respect of that consideration that there was no such child whose interests would detract from the weight of the facts in favour of cancellation. He gave significant weight to this conclusion. 2.4 Such a conclusion departed from, and was not in accordance with, the weight or significance to be given to the consideration in the Direction. The Respondent did not give notice or provide an opportunity to the Applicant to make submissions in respect of the conclusion. However, he did not suggest that he would have conducted his case differently in terms of the evidence he presented had the additional matters been the application as originally filed and, in those circumstances, I think it is appropriate to allow the amendment. First, he misconstrued the Direction insofar as it relates to the best interests of children and, secondly, insofar as it relates to other considerations. 18 The Act does not expressly state the matters the Minister must or may take into account in exercising his discretion to cancel a visa under s 501(2). However, he may choose to do so. In this case, he said that he would proceed in accordance with the Direction. 20 The applicant submits that the third primary consideration referred to in Direction No 21, namely, the best interests of the child, is only relevant if there is a child. The best interests of any children aged 18 years or more is not a primary consideration but may be considered with other considerations under paragraph 2.17. 22 I do not think the Minister challenged the applicant's submission that the best interests of the child with Direction No 21 can only be a relevant consideration if there is a child as defined. Rather, the argument centred on the proper construction of the respondent's reasons. I gave this consideration considerable weight. That information was the fact that the applicant had no children. ' Considerable weight' was given to that fact. A fair reading of this paragraph, in the context of the Statement of Reasons, is that the Minister, having determined to follow the terms of Ministerial Direction No 21 (...) placed weight on the fact that there was no child; that a consideration which might otherwise have weighed in favour of not cancelling the visa, did not apply. In other words, he placed weight on the fact that this consideration did not apply to detract from the other considerations which the Minister considered weighed in favour of cancellation. 24 Even adopting that approach, I am of the opinion that the Minister misconstrued Direction No 21. The Minister referred to "the information relevant to this consideration" and the only information to which that could have referred is the statement that the applicant has no children. That is the information the Minister said weighed in favour of cancelling the applicant's visa and to which he said he gave (as a consideration) considerable weight. In my opinion, that is a misconstruction of Direction No 21 because once the decision-maker finds that a non-citizen has no children, the matter or consideration became irrelevant. I do not think it is possible to construe the Minister's reasons as saying no more than that the matter of the best interests of the child was irrelevant and, as this was generally a matter in favour of not cancelling the visa, the other matters in favour of cancellation were not counter-balanced by this consideration. 25 The next question is whether the error of the Minister being a misconstruction of Direction No 21 amounts to jurisdictional error. In a limiting case a policy may be so broadly stated as to cover all considerations properly brought to bear on the exercise of the discretion. In such a case misconstruction of the policy may reduce to misconstruction of the statute or misunderstanding of its purpose. I think that approach is correct. In other words, where the decision under s 501(2) is made by the Minister, as opposed to his delegate, jurisdictional error is not established simply by showing a misconstruction of Direction No 21; it must be shown that the Minister acted outside the terms of the statutory power. Section 501(2) does not state the matters the Minister must or may take into account in exercising the discretion. In exercising an apparently unconfined discretion the determination of the limits of the statutory power is made having regard to the subject-matter, scope and purpose of the power and the Act in which it appears. By analogy, where the ground of review is that a relevant consideration has not been taken into account and the discretion is unconfined by the terms of the statute, the court will not find that the decision-maker is bound to take a particular matter into account unless an implication that he is bound to do so is to be found in the subject-matter, scope and purpose of the Act. I think that concession was correctly made because there is nothing in the nature and purpose of the statutory provisions to indicate that the fact that the applicant had no children is a matter the Minister was prohibited from taking into account. 28 The applicant submits that the Minister in fact made a more serious error than simply taking into account that the applicant had no children and that the error he made was a jurisdictional error. I do not find it easy to articulate the more serious error identified by the applicant but, as I understand it, it was that the Minister had found that the best interests of the children favoured cancellation of the visa when in fact that there were no children. I reject that submission. A fair reading of the Minister's reasons is that he found that the fact that the applicant had no children was a matter in favour of cancelling his visa. That was a misconstruction of Direction No 21 but not a jurisdictional error. 29 The applicant put a similar submission in relation to the Minister's approach to the topic of "other considerations" in Direction No 21. I have set out the Minister's reasons in relation to that topic in [12] above. I am not persuaded that the Minister misconstrued Direction No 21 in relation to that topic but, even if he did, for the reasons I have given in relation to the matter of the best interests of the child, a misconstruction of that nature would not constitute jurisdictional error. 31 The applicant submits that the matter the Minister took into account --- the fact that the applicant did not have children was a matter in favour of cancelling his visa --- stood outside the terms of Direction No 21. The applicant submits that he was not given the opportunity to comment upon whether that was a matter the Minister should take into account. The applicant submits that there had been a breach of the rules of procedural fairness and he put two alternative submissions. 32 First, he submits that he was led to believe that the Minister would make his decision by reference to the matters in Direction No 21 and only by reference to those matters. That submission requires an examination of the two letters sent to the applicant inviting him to make submissions in support of his contention that his visa should not be cancelled. Those directions are contained in Direction No 21 ('Direction under Section 499 --- Visa Refusal and Cancellation under Section 501 Migration Act 1958 '). I have attached a copy of Direction No 21 for your information. These reports have been classified as 'non-disclosable information' pursuant to Section 5(1) of the Act and can not [sic] be released to you, however you are invited to comment. If there is any additional information that you wish the Minister or delegate to consider, you must give that information to the Department. If you do not provide any further information the Minister or a delegate may rely upon the information set out above to determine that your visa are [sic] are liable to cancellation under s 501(2) of the Migration Act . In preparing your comments, please read fully and carefully the contents of the Minister's Direction. You should address each and every topic that you feel applies to you or is relevant to your circumstances. You may also provide any further information, apart from those considerations found in the Minister's Direction, that you feel the Minister or delegate ought to be aware of and take into account. First, the applicant is advised that the Minister is not bound by the terms of Direction No 21. Secondly, the applicant is encouraged to provide any information he considers relevant including information as to matters not dealt with in Direction No 21. I do not think that it can be said that a representation was made to the applicant that the Minister would only have regard to the matters in Direction No 21 or that there was any other basis for such a belief. As I have said, by letter dated 15 August 2006, the applicant made submissions to the Department. Although the reports were classified as 'non-disclosable information' pursuant to Section 5(1) of the Act, you were invited to comment. The previous notice did not explain how the Parole Board of SA reports related to your case. This information is non-disclosable, as defined at s 5(1) of the Act, but you are invited to comment on any issues you believe to be relevant to these factors. You should address each and every topic that you feel applies to you or is relevant to your circumstances. You may also wish to provide other information that you consider should be taken into account when a decision is made whether to cancel your visa. It was not represented to the applicant that the Minister would only have regard to the matters in Direction No 21 and I reject the first basis upon which the applicant contends that there was a breach of the rules of procedural fairness. 35 The second basis upon which the applicant contends that there was a breach of the rules of procedural fairness is perhaps a development of his first submission. It is submitted that the applicant was led to believe that the topic of children and the best interests of children would only be dealt with in the manner contemplated by Direction No 21 and not otherwise. 36 In my opinion, there are two answers to that submission. First, I am not satisfied that it can be inferred that the correspondence from the Department would have led to the belief (based on reasonable grounds) that the topic of children and the best interests of children would only be dealt with in the manner contemplated by Direction No 21 and not otherwise. In this case it is a matter of looking at what may be reasonably inferred from the letters sent by the Department and other circumstances. It was not contended that the applicant's actual belief is relevant; in any event there was no evidence of his belief. It seems to me that the significance to the decision of having a family including children in Australia or not having a family for a person facing the cancellation of their visa would be obvious. Furthermore, I note that although it appears under the heading of "Other considerations" in Direction No 21, the Direction identifies "family composition of the non-citizen's family, both in Australia and overseas" as a relevant consideration: cl 2.17(d). Secondly, I do not think it can be said that any practical injustice has been shown: Lam at 14 [38] per Gleeson CJ, at 34-35 [106] per McHugh and Gummow JJ. I realise that the Court must be careful not to engage in a determination of the merits of a decision under the guise of considering an argument as to futility. However, in this case I do not think there was any practical injustice to the applicant. In practical terms he was afforded a full opportunity to be heard on the matters ultimately taken into account by the Minister. I will hear the parties on costs. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.

application for constitutional writs where applicant's visa cancelled under s 501(2) migration act 1958 (cth) where ministerial direction no 21 made under s 499 migration act 1958 (cth) where decision to cancel visa made by minister personally and not by a delegate where applicant had no children where minister gave considerable weight to 'the best interests of the child' whether minister misconstrued direction no 21 whether minister bound by direction no 21 whether misconstruction of direction no 21 amounted to jurisdictional error whether applicant entitled to expect that 'the best interests of the child' would not be considered whether applicant denied procedural fairness. administrative law

The applicants claim to have legal professional privilege in relation to documents produced by third parties in response to such notices. They claim the return of documents in respect of which legal professional privilege is asserted to exist. 2 The Court has conducted a final hearing on the basis of admissions made on the pleadings. However, if the applicants succeed in their primary contentions, it will be necessary for there to be a further inquiry in order to identify relevant documents and to determine what consequences should flow if it be the fact that privileged documents have been produced to the Commission without the consent of the applicants. 3 In order to put the issues raised in the proceeding in context, it is necessary to say something about the scheme of the Act. I shall then say something about the relevant facts arising from the pleadings. The Commission consists of the Chief Executive Officer of the Commission ( the CEO ), examiners appointed under s 46B(1) of the Act ( Examiners ) and the members of the staff of the Commission. The Board of the Commission is established by s 7B of the Act. The functions of the Board include authorising the Commission to investigate matters relating to federally relevant criminal activity and determining whether such an investigation is a special investigation . 6 Before determining that an investigation is a special investigation, the Board must consider whether ordinary police methods of investigation into the matters are likely to be effective. Such a determination must describe the general nature of the circumstances or allegations constituting the federally relevant criminal activity and set out the purpose of the investigation. 7 Division 2 of Part II of the Act, which consists of ss 24A to 36 inclusive, deals with examinations. Under s 24A an examiner may conduct an examination for the purposes of an investigation into matters relating to federally relevant criminal activity that the Commission is conducting ( ACC Operation/Investigation ). Section 25A deals with the conduct of such an examination. 8 Under s 28(1) an Examiner may summon a person to give evidence and to produce such documents or other things, if any, as are referred to in the summons. However, under s 28(1A) , before issuing such a summons, the Examiner must be satisfied that it is reasonable in all the circumstances to do so. The Examiner must also record in writing the reasons for the issue of the summons. Under s 28(4) an Examiner who is holding an examination may require a person appearing at the examination to produce a document or other thing. Under s 30(2)(c) , a person appearing as a witness at an examination before an Examiner must not refuse or fail to produce a document or thing that he or she was required to produce by a summons under the Act served on him or her as prescribed. 9 Section 29(1) of the Act provides that an Examiner may, by notice in writing served on a person, require the person to attend before an Examiner, or a member of the staff of the Commission, to produce a document or thing specified in the notice, being a document or thing that is relevant to a special ACC Operation/Investigation. However, before issuing such a notice, the Examiner must be satisfied that it is reasonable in all the circumstances to do so. The Examiner must also record in writing the reasons for the issue of the notice. Under s 29(3) , a person must not refuse or fail to comply with a notice served on him or her under s 29. 10 Section 30(3) relevantly provides that, where a legal practitioner is required to produce a document at an examination before an Examiner and the document contains a privileged communication made by or to the legal practitioner in his or her capacity as a legal practitioner, the legal practitioner is entitled to refuse to comply with the requirement unless the person to whom or by whom the communication was made agrees to the legal practitioner complying with the requirement. Section 30(9) provides that s 30(3) does not affect the law relating to legal professional privilege. Under s 29(4) , those provisions apply to a person who is required to produce a document or thing by notice served on him or her under s 29 in the same manner as they apply in relation to a person who is required to produce a document or thing at an examination before an Examiner. 11 Sections 29A and 29B of the Act were inserted by the National Crime Authority Amendment Act 1991 (Cth) ( the 1991 Amendment Act ). On the second reading of the Bill for the 1991 Amendment Act, the Attorney-General said that the Bill contained several proposals that were designed to improve the efficiency and effectiveness of the operations of the National Crime Authority, the predecessor of the Commission. The Attorney-General said that the amendments would prevent the disclosure of the existence of processes issued by the Commission in the course of its investigations and would also prevent disclosure of any information about the reference, the investigation or any hearings or proceedings to which the process relates. The Attorney-General said that, previously, some recipients of summonses or notices, such as financial institutions, felt obliged to inform their clients of the receipt of such documents and that that resulted in suspects being alerted to investigations and concealing or destroying evidence or going into hiding. The Attorney-General said that the amendments would help to prevent that happening again and would clarify the legal position of such institutions. The effect of ss 29A and 29B, which are critical to the issues raised in this proceeding, must be understood against that background. 12 Section 29A(1) provides that the Examiner issuing a summons under s 28 or a notice under s 29 must, or may, as provided in s 29A(2), include in the summons or notice a notation to the effect that disclosure of information about the summons or notice, or any official matter connected with it, is prohibited except in the circumstances, if any, specified in the notation. 16 Under s 59(1), the Chair of the Board must keep the Minister informed of the general conduct of the Commission in the performance of the Commission's functions. If the Minister requests the Chair to provide information concerning a specific matter relating to the Commission's conduct in the performance of its functions, the Chair must comply with the request. Section 59(7) provides that the CEO may give to any law enforcement agency any information that is in the Commission's possession that is relevant to the activities of that agency, if it appears to the CEO to be appropriate to do so and to do so would not be contrary to a law of the Commonwealth, a State or a Territory that would otherwise apply. The Wickenby Investigation includes the investigation of the taxation affairs of the applicants, and entities associated with them, and involves complex questions of Australian and international taxation law. In connection with the Wickenby Investigation an Examiner made a decision to issue notices under s 29 of the Act to persons or entities other than the applicants. 18 Pursuant to that decision, notices were issued to persons and entities other than the applicants, including advisers to the applicants who were accounting firms. Neither of the applicants was aware, and was not informed by the Commission, of the fact that notices had been issued to such persons and entities. Each of the notices sought the production by the recipient of the notice of documents to the Commission. 19 At the time of the making of the decision to issue such notices, a possibility existed that a proposed recipient might be in possession of documents that might prove to be the subject of a claim for legal professional privilege held by one of the applicants. The Examiner who decided to issue the notices intended not to give to the applicants any prior opportunity to assert any claim for legal professional privilege over any documents that were the subject of notices issued to persons or entities other than the applicants. In order to comply with the notation, you must not disclose the existence of this notice, or any information about it, or the existence of or any information about any official matter connected with this notice. Also, you must not disclose information from which a person could reasonably be expected to infer the existence of this notice or of any official matter connected with it. Where such claims have been made, the relevant documents have been isolated and have not otherwise been used by the Commission. However, some recipients of a notice have not claimed legal professional privilege that could have been claimed on behalf of the applicants. The Commission has had produced to it and has taken possession of documents that are prima facie subject to legal professional privilege of one or other of the applicants. 23 The Commission did not at any relevant time have any written or other documented policy in place in relation to the question of how the Commission would deal with, or treat, legal professional privilege in the event that documents were produced to it containing communications that were subject to legal professional privilege or if claims were made by the recipient of a notice in relation to legal professional privilege. The Commission and the CEO accept that, if the Court determines that the notices are invalid, those declarations and that order should be made. • In deciding to issue a notice, the relevant Examiner did not take into account the fact that the applicants, as opposed to the recipient of the notice, had such a right to make a claim for legal professional privilege prior to the production to the Commission of documents by that recipient. They say that for legal professional privilege to be anything other than theoretical, they must have the opportunity to claim the privilege prior to documents in respect of which the privilege exists being produced to the Commission. Thus, they say, they should have been notified of the fact of the issue of a notice to a recipient where that recipient might be in possession of documents that were subject to the privilege. 29 Alternatively, the applicants say that, by reason of the subject matter, scope and purposes of the Act, the right to claim legal professional privilege was a factor that the relevant Examiner was bound to take into account. They say that the relevant Examiner failed to have regard to that necessary consideration when deciding to issue a notice, in that the relevant Examiner failed to consider whether it was desirable or appropriate to provide, in a notation pursuant to s 29A on each notice, that the recipient would not be prevented from making a disclosure to the applicants of the fact that documents that were the subject of legal professional privilege were required to be produced to the Commission. Section 29B(2)(e) and s 30(3) do not set out the only circumstances in which legal professional privilege may be claimed. Accordingly, any person who is given a notice may refuse to comply with it on the ground that one or more documents required to be produced may be subject to legal professional privilege. Such a claim for privilege may be made, irrespective of whether the privilege is held by the recipient of the notice or by another person. 31 It follows that each recipient of a notice was entitled to claim privilege on his or her own behalf and was entitled to claim privilege on behalf of each of the applicants. It also follows that each recipient of a notice was entitled to obtain legal advice in relation to a notice. That legal advice could encompass whether a claim of privilege could or should be made with respect to individual documents in the possession of the recipient, in respect of which the applicants were the holders of such privilege. Finally, it also follows that each recipient of a notice was entitled to communicate with the applicants in order to clarify the existence or otherwise of legal professional privilege of the applicants in documents in the possession of the recipient and to ascertain whether the applicants wished to claim privilege. 32 However, while legal professional privilege is not abrogated by the Act, as a matter of pragmatic practicality, the holder of the privilege may not be in a position, himself, herself or itself, to claim or assert the privilege in relation to the production of documents pursuant to a notice under s 29 if that holder of the privilege is not aware of the existence of the notice. Thus, the recipient would not be permitted to, and was not entitled to, disclose to the applicants the existence of the notice or its contents or any information about it or any official matter connected with it; nor could the recipient disclose information from which the applicants could reasonably be expected to infer the existence of any such thing. 33 Where documents that are the subject of legal professional privilege are in the possession or custody of a person other than the holder of the privilege, that is a fact of which the holder of the privilege would be aware. It is always open to the holder of privilege in relation to documents to require another person in whose possession or custody the documents may be to assert the holder's privilege, in any circumstances where that person is required to produce the documents to someone else. 34 In any event, the recipient of a notice would have an obligation to claim privilege over documents in the possession of the recipient that the recipient reasonably believed were subject to the privilege of someone else, such as a client of the recipient. The recipient would have an obligation to preserve legal professional privilege by reason of the character or status of the documents as being privileged. The privilege attaches to a document and, once privileged, the document will always be privileged. As the possessor or custodian of a document that has such a special character or status, the recipient of a notice requiring production of such a document would have an obligation to take steps to preserve and maintain that character or status. The recipient of a notice would be obliged to make claims for privilege in respect of documents where the privilege might reasonably be expected to exist in order to ensure that such a claim for privilege would not be lost (see Commissioner of Taxation v Citibank Limited (1989) 20 FCR 403 at 414). 35 A governmental authority issuing a compulsory production notice, in whatever form, must provide the recipient of the notice with a reasonable opportunity to claim legal professional privilege, both on its own behalf and on behalf of others. The recipient must not be denied the opportunity to make adequate claims for privilege in relation to the documents of itself or its clients that are the subject of the compulsory production notice (see Citibank at 414). 36 However, there is no requirement for such an authority to give clients of the recipient, as distinct from the recipient, a reasonable opportunity to make claims for privilege before enforcing the compulsory production notice. The most that is required is that the recipient of such a notice must be afforded the opportunity of asserting legal professional privilege, either on the recipient's account or on account of another person, such as a client. It has not been suggested that any recipient of a notice in issue in the present proceeding was not given an opportunity to obtain legal advice or that any claim for privilege made by a recipient, on behalf of the recipient or a third party, was not respected. 37 There is no requirement that a person other than a recipient be afforded the opportunity to claim or assert legal professional privilege and the scheme of the Act makes it clear that no such right is to be afforded to a person in the position of the applicants. There is no requirement for the Commission either to notify persons in the position of the applicants that a notice has been issued to a third party that may require the production of documents that are subject to a privilege of the applicants. Nor is there any requirement for a person in the position of the applicant to be notified by the Commission, after production of documents by a recipient of a notice, of the fact of the production of documents that may be the subject of a claim for privilege on behalf of an applicant that was not made by the recipient of the notice. There is no requirement, for example, that an authority issuing a compulsory production notice to a solicitor should notify the solicitor's clients that the solicitor has been given such a notice in order that the client might have the opportunity to challenge the validity of the notice on grounds of privilege (see May v Commissioner of Taxation [1999] FCA 287 ; (1999) 92 FCR 152 at [36] , [31] and [38]. 38 Further, the regime contemplated by s 29A(4) , under which a notation will be cancelled in specified circumstances, would be effective to ensure that, even if the privilege had not been claimed previously, it could be claimed as soon as a criminal proceeding is begun. Thus, the holder of the privilege would be able to make the claim for privilege prior to the tendering in evidence against that person of any document obtained by the Commission pursuant to a notice containing a relevant notation. The right of the holder of the privilege not to have privileged material used in evidence against him or her would therefore be protected. 39 Section 29B evinces a clear intention on the part of the Parliament that, in relation to documents produced by third parties who are not lawyers, the existence of the notice pursuant to which it is produced is not to be disclosed even to a potential holder or privilege, for so long as the notation is operational. The Act does not take away or abrogate legal professional privilege. It simply has the effect that, in particular circumstances, the holder of the privilege may not know that documents that might be the subject of the privilege are the subject of a notice requiring production by the possessor or custodian of the documents. If a statute states expressly the factors that must be taken into account, that will be decisive. However, if the relevant factors are not expressly stated, they must be determined by necessary implication from the subject matter, scope and purpose of the [1986] HCA 40 ; Act ( Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24 at 39-40). 41 In the present case, s 29A(2) sets out factors that an Examiner must consider when determining whether a notation must or may be included in a notice. 43 Under s 30(3) a legal practitioner may refuse to comply with a requirement to produce a document containing a privileged communication unless the person with whom the communication was made agrees to the practitioner complying with the requirement. The subject matter, scope and purpose of the Act make it abundantly clear that an Examiner who is deciding whether or not to issue a notice and whether to include a notation in the notice is not required to have regard to the possibility that the recipient of the notice may not discharge that recipient's obligation to assert or claim legal professional privilege that may reside in a person other than the recipient in relation to the document that the recipient is required to produce. 44 That is the clear intent and purpose of ss 29A and 29B. However, the clear object of ss 29A and 29B is to ensure that, in some circumstances, the object of an investigation, such as persons in the position of the applicants, is not informed of the existence of a notice. The relevant Examiners did not fail to take into account a consideration that they were bound to take into account simply by reason of the fact that they did not have regard to the possibility that documents that were required to be produced by a notice might be the subject of legal professional privilege of a person other than the recipient. Nor was any such summons or notice invalid simply by reason of the fact that the Examiner who decided to issue it did not have regard to the possibility that a person other than the recipient of it may have legal professional privilege in respect of a document that was the subject of the summons or notice. 46 It follows that the proceeding should be dismissed with costs. I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

where notices requiring production of documents issued to persons or entities other than holder of the privilege whether notices invalid whether requirement to give holder of privilege a reasonable opportunity to assert legal professional privilege. legal professional privilege

(As will become apparent later in these reasons, although I am satisfied that Mr Pritchard, by specific and identified conduct as a director of Warrenmang, contravened ss 180 , 181 and 182 of the Corporations Act , I amended the form and content of the declarations sought by ASIC to ensure that the conduct the subject of the declarations was sufficiently described. At that time, its directors were Mr Pritchard, Mr Van Assche and Mr Mealey and the company had in excess of 20.82 million ordinary shares issued fully paid in the sum of $50,000. Mr Pritchard held approximately 20 million of the 20.82 issued shares in Warrenmang, was at all times the person in charge of Warrenmang's day to day activities including maintenance of its financial records and was its controlling mind. The evidence of one of the other directors, Mr Van Assche, was that neither he nor Mr Mealey were involved in the day to day running of Warrenmang. 6 Warrenmang sought to become listed on the Australian Stock Exchange ("ASX"). On 5 December 2003, Warrenmang issued an Initial Public Offer ("IPO") of shares by lodging with ASIC a prospectus for equities. The prospectus recorded that Warrenmang intended to enter the wine export business and was seeking to raise in its IPO some $6 million through the sale of 17,142,857 fully paid ordinary shares at an issue price of $0.35 per share. The opening date was 12 December 2003 and the closing date was 30 January 2004. Warrenmang was unable to raise the minimum subscription under the IPO within the period specified by s 724 of the Corporations Act . About $2.5 million was paid to Warrenmang by 404 subscribers for approximately 7.34 million shares. This was less than half the amount sought to be raised by the IPO. 7 In relation to the IPO subscriptions, no shares were ultimately issued by Warrenmang and Warrenmang was not listed on the ASX. More significantly, some of the investors were not repaid their subscription monies. That course of events contravened ss 722 and 723 of the Corporations Act . 8 Sections 722 and 723 are in Division 5 of Chapter 6D of the Corporations Act and are concerned with fund raising. At that time, it was anticipated that Warrenmang would list on the ASX by 19 April 2004. That did not occur. It failed to reach the minimum subscription level required for it to issue securities and accordingly, the IPO was unsuccessful. The second report provided by the provisional liquidator of Warrenmang estimated that $1,279,575 was still owed to subscribers as at 14 December 2006. Again, the failure to repay the funds as required by ss 722(1) and (2) and further or alternatively, s 723(3)(d) was a contravention of the Corporations Act . 11 In August 2005, ASIC received a complaint from an investor who had applied for shares and requested a refund following the unsuccessful IPO. As a result of that complaint, ASIC contacted Mr Pritchard and the application monies of that investor were refunded. 12 In December 2005, ASIC received a letter from solicitors on behalf of Warrenmang which stated that Warrenmang had been unsuccessful in its capital raising in the period from December 2003 to May 2004 and that all subscribers who had requested return of their application monies had been repaid. 13 In October 2006, ASIC received another complaint alleging that application monies from the IPO had not been refunded, that Mr Pritchard had contracted to sell his primary residence in Toorak and that settlement was to occur on 3 November 2006. Preliminary enquiries were conducted by ASIC. On 1 November 2006, ASIC commenced its investigation into suspected contraventions of the Corporations Act by Warrenmang and by Mr Pritchard. 14 In the course of that investigation, ASIC conducted a number of searches and served a number of notices to produce documents and further or alternatively, to appear for examination. It is neither necessary nor appropriate to detail those searches and enquiries. It is sufficient to note that as at 17 November 2006, Warrenmang remained an unlisted public company and on 20 December 2006, this Court ordered that Warrenmang be wound up on just and equitable grounds. The first deposit was $12,250.00 on 8 January 2004. The balance prior to the receipt of IPO funds on and after 8 January 2004 was $132.17. On the same day, $290,000 was paid from that business account to a personal account held by Mr Pritchard. Over the next two days, $291,885.75 was withdrawn from that personal account and used partly to fund the purchase of a house in Toorak in the name of Mr Pritchard in the form of a payment of $185,128.56 at the direction of the vendor of the property to its mortgagee and the balance on other property related expenses such as stamp duty and registration fees. I have set out the relevant provisions earlier. 18 Sections 180 , 181 and 182 in Division 1 of Part 2D.1 of the Corporations Act are concerned with the general statutory duties of directors. 22 The statutory duties imposed by ss 180 , 181 and 182 of the Corporations Act reflect and, to some extent, refine the obligations of the directors at general law: Australian Securities and Investments Commission v Maxwell (2006) 59 ACSR 373 at [99]. Each is a duty owed by a director to the corporation. However, directors' duties provisions are not concerned with any general obligation owed by directors to conduct the affairs of the company in accordance with the law generally or the Corporations Act . Moreover, the directors' duties provisions do not necessarily make a director liable for a breach by the company of another provision in the Corporations Act . The corollary is that it cannot be said that every breach by a company of the Corporations Act necessarily gives rise to a breach of the directors' duties provisions. 23 That last proposition or principle (that not every breach by a company of the Corporations Act necessarily gives rise to a breach of the directors' duties provisions) is self evident. It is reinforced by the fact that, under s 180(1) of the Corporations Act , the circumstances of the particular company are relevant to the content of the duty of a director to exercise reasonable care and diligence. The circumstances may include, but are not limited to, the type of company, the size and nature of the company's business, the director's position and responsibilities within the company, the particular functions the director is performing, the manner in which responsibility for the business of the company is distributed and, of course, the circumstances of the case: Maxwell at [100] and the authorities referred to. 24 The need to consider the circumstances of a particular company in defining the content of the duty of a director to exercise reasonable care and diligence is demonstrated in the case of Mr Pritchard. The circumstances of Warrenmang are outlined in paras [5] to [15] above. There was an " identity of interest between the directors and the shareholders, so that in effect the directors [were] the shareholders ": Maxwell [103]. Ordinarily that fact may make the requirement to prevent self-interested dealing much less acute: Maxwell at [103]. In the case of Warrenmang, the identity of interest between the directors and the shareholders in fact meant the requirement to prevent self-interested dealing was acute because of the following circumstances. This is one of those cases where it was a contravention of the duty owed by the director to the company for the director to authorise or permit the company to contravene the Corporations Act . Mr Pritchard was the controlling mind of the company. He alone controlled its day to day activities. He alone decided what steps were and were not taken by Warrenmang. That conduct is inexcusable. In my view, the conduct was deliberate and he knew that it was not in the interests of Warrenmang. The declaration sought by ASIC referred to an alleged payment of $290,000 from Warrenmang to Mr Pritchard. As para 15(7) above demonstrates the payment was in fact $300,000. 27 As a result of each of those matters, Mr Pritchard exposed Warrenmang to offences for contraventions of ss 722 and 723 of the Corporations Act for which there was no countervailing potential benefit to Warrenmang: Maxwell at [104]. To adopt the words of Brereton J in Maxwell at [105], Mr Pritchard's contravention of s 180(1) of the Corporations Act is founded on jeopardy to the interests of Warrenmang and, in the circumstances of the case, also on jeopardy to the interests of investors as potential creditors. 28 On no view it could be said that conduct summarised in paragraph [26] above satisfied the requirement under s 181 of the Corporations Act for Mr Pritchard as director of Warrenmang to exercise his powers and discharge his duties in good faith in the best interests of Warrenmang and for a proper purpose. He clearly did not. Mr Pritchard abused his power, he permitted his personal interests and those of Warrenmang to be placed in conflict and he misappropriated a portion of trust monies (the subscription monies) for himself. Contrary to s 181(1) and the duty imposed by s 182 , Mr Pritchard abused his position for his own advantage to the detriment of Warrenmang: Maxwell at [106] to [110]. 29 The foregoing analysis does not suggest and is not to be taken as suggesting that every breach by a company of the Corporations Act necessarily gives rise to a breach of the directors' duties provisions. It does not. 31 Section 1317E of the Corporations Act is in Part 9.4B of the Corporations Act entitled " Civil consequences of contravening civil penalty provisions" . Section 1317E expressly provides that a Court must make a declaration if the Court is satisfied that a person has contravened one or more of specified provisions of the Corporations Act . These provisions are defined in s 1317E as " civil penalty provisions ". For present purposes, it is relevant to note that ss 180(1) , 181 (1), 181 (2), 182 (1) and 182 (2) are listed as civil penalty provisions. Sections 722 and 723 of the Corporations Act are not. 32 ASIC may apply for such a declaration: s 1317J. As a result, the court must specify the conduct that constituted the contravention with sufficient particularity to enable the declaration of contravention not only to stand on its own but to meet the statutory requirements and purpose of s 1317E. 33 Other sections provide for the making of pecuniary penalty orders (s 1317G) and provide that the Court must apply the rules of evidence and procedure for civil matters (s 1317L). 34 The intersection between the civil and criminal process is addressed in ss 1317M , 1317N and 1317P . The intersection is not easy. In the present case, it is further complicated by the timing of ASIC's application for declaration of contravention. Otherwise, the proceedings for the declaration or order are dismissed. It provides that proceedings for a declaration of contravention or pecuniary penalty order are stayed if criminal proceedings are on foot at the same time in relation to conduct that is substantially the same as the conduct alleged to constitute the contravention. In this provision, no distinction is drawn between proceedings for a declaration of contravention and proceedings for a pecuniary penalty order. 36 Section 1317P then deals with criminal proceedings after civil proceedings. 39 As I have noted, Mr Pritchard did not oppose the relief sought by ASIC. Counsel for Mr Pritchard referred the Court to the fact that Part 9.4B of the Corporations Act in its present form was enacted by the Corporate Law Economic Reform Program Act 1999 (Cth). It replaced its predecessor, s 1317EA (read with s 1317FB) of the Corporations Law , which was introduced by the Corporate Law Reform Bill 1992 (Cth). The civil penalty provisions apply to contraventions of certain specified sections (such as the duty on directors to prevent insolvent trading). The civil penalty provisions currently include a number of complex provisions designed to address the situation where a prosecution for the criminal offence has failed, but the court is satisfied that there has been a contravention of the relevant civil penalty provision. In these circumstances the court is currently able to make a civil penalty order. It is proposed to repeal these provisions. Instead, where a criminal prosecution has failed, ASIC would have to commence fresh proceedings to obtain a civil penalty order. This is intended to prevent evidence obtained in the course of the civil proceedings being used in subsequent criminal proceedings. However, the rule does not operate as a bar to commencing criminal prosecutions under other Acts (for example, the Crimes Act ). It also provides a significant disincentive for ASIC to commence civil penalty proceedings. This designed to prevent the evidence being used in the prosecution of any offence involving substantially similar conduct, not merely in the criminal prosecution of offences established by the civil penalty provisions. It will also allow a later prosecution to commence where this would be appropriate, without prejudice to the defendant's right to a fair trial because of the earlier proceedings for a pecuniary penalty order. This will make it necessary for ASIC to begin fresh civil proceedings if it wishes to pursue civil remedies following an unsuccessful prosecution. To take just one example, s 1317P is directly contrary to that submission. Moreover, the decision of Fryberg J in Australian Securities and Investments Commission v Intertax Holdings Pty Ltd [2006] QSC 276 does not support that submission. It was not concerned with s 1317E of the Corporations Act or a civil penalty provision but the more difficult question of the power of a court to make a declaration as to whether conduct by a corporation or its officer contravened the Corporations Act when where there is a likelihood or prospect of criminal proceedings. 42 If there is prejudice to any person by ASIC taking the step of first pursuing and securing a declaration of contravention (without seeking a pecuniary penalty order) under s 1317E of the Corporations Act prior to criminal proceedings being started against that person for conduct that is substantially the same as the conduct that constituted the contravention of the civil penalty provision, ASIC takes that step assessing the risk that it may impede any subsequent criminal proceedings whether by application of the principles under the heading of abuse of process or related doctrines (see for example, Pearce v The Queen [1998] HCA 57 ; (1998) 194 CLR 610 at [29] and [30] (per McHugh, Hayne and Callinan JJ) citing Maxwell v The Queen [1995] HCA 62 ; (1996) 184 CLR 501 at 512 and Rogers v The Queen [1994] HCA 42 ; (1994) 181 CLR 251 in relation to stay of criminal proceedings for abuse of process and Williams v Spautz [1992] HCA 34 ; (1992) 174 CLR 509 at 518-520) or otherwise. It is neither necessary nor appropriate to explore these issues in the present case. It was not the subject of argument and, in any event, the issue may never arise. 43 In the circumstances, it is also unnecessary to consider the second ground relied upon by ASIC for the granting of the declarations - the Federal Court Act . In my view, there was and remains a real issue whether, having regard to the provisions in issue, it was within the discretionary guidelines for a court to make a declaration as to whether conduct by a corporation or its officer contravened the Corporations Act . The precise boundaries of such a power are by no means clear where there is a likelihood or prospect of criminal proceedings. In light of the view that I have formed that s 1317E of the Corporations Act gives the Court jurisdiction to grant the declarations against Mr Pritchard, it is neither necessary nor appropriate to consider the precise boundaries of the power under the Federal Court Act . In the present case, that issue may have never arisen in relation to Mr Pritchard for no other reason than ASIC informed the Court that there were only four reasons why it had sought declarations: (1) to deter other members of the public from engaging in similar conduct; (2) to deter Mr Pritchard from repeating the conduct; (3) because the liquidator of Warrenmang could not identify every investor who had not been repaid and (4) because " it [was] in the public interest to make declarations which record the outcome of enforcement proceedings" . 44 I now turn to consider whether the Court should, pursuant to s 1317E of the Corporations Act , grant the declaration sought. See also Australian Securities and Investments Commission v Cash King Pty Ltd [2005] FCA 1429 at para [3] . 47 In the present case, for the reasons outlined earlier, I am satisfied by the evidence that it is appropriate to grant declarations of contravention against Mr Pritchard. Warrenmang contravened ss 722 and 723 of the Corporations Act . The contraventions were serious. The IPO was just that --- a public offer. Subscribers for shares subscribed and not only did not get their shares but, at least some of them, did not get their subscription monies returned. The legislative safeguards which were designed to ensure that the subscription monies provided by the members of the public were protected were breached. The director who " authorised " or " permitted " Warrenmang to commit those contraventions of the provisions of the Corporations Act was Mr Pritchard. The declarations sought by ASIC suffered from two particular defects --- they were not sufficiently time specific and did not accurately describe the conduct said to give rise to the contraventions of ss 180 , 181 and 182 of the Corporations Act . In relation to paras (b) and (c), the declaration of contravention specifies the relevant conduct as occurring no later than 10 June 2004. Under the Supplementary Prospectus, 10 June 2004 was the last date that Warrenmang could have listed on the ASX: s 723(3)(b) of the Corporations Act . There will be no order as to costs. Finally, I would like to express the Court's gratitude to Mr S Horgan who acted and appeared as pro bono counsel for Mr Pritchard. I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.

breach of directors' duties relating to the holding and application of funds raised in anticipation of public listing of company where application monies not refunded to subscribers where application monies applied for personal benefit declarations of contravention under s 1317e of corporations act 2001 (cth) construction of part 9.4b of corporations act 2001 (cth) intersection of provisions relating to civil and criminal process corporations declarations

The Court announced that it would publish its reasons for judgment this afternoon. The following reasons contain the Court's reasons for making those orders. The appellant has appealed from a judgment of a Federal Magistrate delivered on 24 November 2008 ( SZMFY v Minister for Immigration & Anor [2008] FMCA 1609) which dismissed his application for judicial review of a decision of the Refugee Review Tribunal ('the Tribunal'). The Tribunal had affirmed a decision of a delegate of the first respondent Minister to refuse the appellant a protection visa. The appellant is a Hindu from the state of Gujarat in India. He has a wife and two children who reside in India. The appellant bases his claim for refugee status on his political opinion. The appellant claimed that he was an active social member of the Bhartiya Janta Party ('BJP') at the time of the infamous Godhra riots in 2002. The riots involved communal tension between Hindus and Muslims. The appellant said that he and his family were highly affected by the riots. The appellant told the Tribunal that certain unidentified people of the Muslim faith believed he was involved in violence against Muslims in a village about four kilometres from his own village in the 2002 riots. The appellant told the Tribunal that the people who suspected his involvement in the riots had doubts about him because he was a member of the BJP. After a while they started to threaten him on the phone. He stated that the threats started about a week after the violence in Sardarpur village in October or November 2002. He said that around that time he received several calls threatening to kill him and his family. He said that he reported the threats to the police but the police could not provide him with safety because the situation was out of control. He said that due to extreme fear, he withdrew his children from school and brought them back to his village. He also disconnected his phone around 6 to 7 months after he started receiving the threatening phone calls in 2002. The appellant claimed that he was attacked in September 2006 when he went to live in Ahmedabad for a short while ('the Ahmedabad incident'). The Tribunal noted that his application did not contain any information about this attack. He told the Tribunal that he was on his way to a pond when two or three unidentified people caught him and told him that he was involved in killing their families. He said that they beat him, but that because people were around, they could not cause him significant harm. He also told the Tribunal that he did not report the incident to the police (at [37]). He further claimed that he was attacked on 28 August 2007. He said that when he was travelling to a temple with his spouse on his motor bike, two unidentified people attacked them near a crossing. He said that the assailants threatened him and said that they had been searching for him for a long time and they would kill him. This incident was reported to the police. However, there were some inconsistencies in his narration as to how many people attacked him and his wife, and how the incident was reported to the police. The appellant claimed to have signed an information report at the police station, but he later made no inquiries as to what happened in the investigation and was unaware of its outcome. At the end of the hearing, the Tribunal referred the appellant to areas of concern relating to the credibility of his claims. It also alerted the appellant to the Tribunal's belief that the appellant could obtain protection from threats if he returned to Gujarat. The appellant was invited to comment. He offered to obtain proof from India in relation to the withdrawal of his children from their schools in 2003, the first information report given to the police in 2007 and documents showing his position in the BJP party. The Tribunal said that it did not believe that he should be given time to present that material as the material would not add anything to what he had told it. However, the Tribunal gave the benefit of doubt to the appellant and accepted certain of his claims. In respect to the threats, it said that the 'Tribunal has given the applicant the benefit of the doubt and has accepted that the threats started in 2002 and may have continued until early 2003 although infrequently'. The Tribunal did not accept that the Ahmedabad incident took place. The Ahmedabad incident occurred in September 2006 nearly 3 years after the threats ceased and was the first time the applicant claimed he had been attacked. The Tribunal discussed with the applicant that he had not mentioned this incident in his statement and asked for his comment or response. They stated that the student who had helped him to prepare his statement as well as himself had made a mistake. However, the applicant also stated that the statement had been read back to him prior to him signing it. The Tribunal does not accept the applicant's explanation. This was the first violent incident that had happened to the applicant and this is the type of incident you would expect to be in a statement provided to the Department in support of a protection visa application. That an incident of this nature was not included in the applicant's statement indicates that it is a recent invention. The Tribunal ultimately concluded that the appellant would have recourse to State protection in India and it was not satisfied on the evidence before it that the appellant possessed a well founded fear of persecution if he were returned to India as he is not 'unwilling or unable to avail himself of the protection of that country'. The applicant, although reluctantly, did report the incident to the police and a FIR was lodged. The applicant did not claim that he had to pay a bribe to lodge the FIR or that the police refused to accept the FIR. The applicant stated that he reported to the police that unknown people attacked him. The applicant was not able to tell the Tribunal what was happening in relation to this FIR when asked directly. The applicant stated that it was in a different area and he does not have any interest in the police. Therefore, the police may be investigating the matter as there is nothing to indicate that they have refused to investigate...Further, even if the 28 August 2007 incident was more to do with him being a member of the BJP or former member of the BJP, the country research indicates that the police are strongly influenced by the BJP and that the Patels have strong links with the BJP and, as referred to above, he lodged and FIR which was accepted. Further, the Tribunal also finds, for the same reasons, that if the applicant were to return to India in the reasonably foreseeable future he would continue to be able to obtain the police support and assistance. In the Court below, the appellant advanced various grounds that were contained in his original and amended application for review. The Magistrate carefully dealt with all the grounds advanced by the appellant and dismissed them. The appellant's first ground in the Court below concerned his contention that 'the Tribunal erred in law by considering whether the persecution claimed by the applicant was solely for a Convention reason'. The Federal Magistrate dismissed this ground. I am not persuaded that the Tribunal made that error. Indeed, a characterisation of the reasons for the harm feared by the applicant did not form any part of the reasoning of the Tribunal. It concluded that there did not exist a real chance that the appellant would continue to receive the threats, and ultimately rejected the appellant's case on the basis that he had recourse to State protection. The learned Federal Magistrate correctly dismissed the above ground. In the Court below, the appellant advanced certain grounds that lacked merit and the Federal Magistrate accordingly dismissed them. The appellant raised a ground concerning the incorrect application of the principles of relocation and the learned Federal Magistrate noted that the issue of relocation did not play any role in the Tribunal's reasoning and, accordingly, dismissed the ground. He contends that the Tribunal failed to comply with the mandatory procedure prescribed by the Migration Act 1958 (Cth) ("the Act"), in failing to comply with section 424AA(b)(iv). He contends that the Tribunal should have given him an opportunity to obtain certain documents from India that corroborated his claims. A similar ground was raised in the Court below, and I respectfully agree with the learned Federal Magistrate's reasons with respect to this ground. As noted above, the appellant sought additional time to submit documentary proof from India in relation to three matters and this was declined by the Tribunal on the basis that the relevant documentation would not add anything that the appellant had told the Tribunal. Prima facie, it is difficult to identify any jurisdictional defect in the Tribunal's opinion under s 424AA(b)(iv). The additional documents that the appellant sought to obtain from India would have had no bearing on the Tribunal's decision and the appellant did not suffer any practical unfairness. In my view, the Federal Magistrate correctly concluded that prima facie no breach of s 424AA could be established. Regardless of the correctness of the above argument, it is useful to state that a mere non-compliance with s 424AA on its face will not have jurisdictional consequences. This is because the operation of s 424AA is closely connected to s 424A. It is useful to briefly explain this relationship. It does not compel the Tribunal to orally give an applicant any particulars of country information which it intends to rely on. This will complement the RRT's existing obligation under section 424A , in that, if the RRT does not orally give information and seek comments or a response from an applicant under section 424AA , it must do so in writing, under section 424A. The corollary is that if the RRT does give clear particulars of the information and seek comments or a response from an applicant under section 424AA , it is not required to give the particulars under section 424A. Section 424A(3) identifies material that is not 'information' to which s 424A applies. Material that is not 'information' for the purposes of s 424A of the Act is also not 'information' for the purposes of s 424AA. See SZLXI v Minister for Immigration and Citizenship [2008] FCA 1270 at [27] per Cowdroy J. It also means that the exclusions of s 424A(3) therefore also apply as exclusions to any jurisdictional requirement to observe s 424AA as an alternative to the procedure under s 424A(1). As the appellant was self-represented, in fairness to him I have carefully considered the decision of the Tribunal and the judgment of his Honour below. I can find no jurisdictional error in the former. I can discern no appeallable error in the latter. For the above reasons, the appeal is dismissed with costs. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall.

protection visa appeal from the federal magistrates court whether the refugee review tribunal complied with the requirements of s 424aa of the migration act 1958 (cth) migration

That Ian Delaney be joined as a party to the Native Title Determination Application --- QUD355/2006 Noonukul of Minjerrabah. 2. That the Native Title Determination Application --- QUD355/2006 Noonukul of Minjerrabah be struck out. 3. Such further or other orders as the Court considers fit. These claims were accepted for registration on 11 October 2000 and 14 June 2000 respectively. However, it substantially overlaps the Quandamooka Claims and was rejected for registration by a delegate of the Native Title Registrar on 9 January 2007. 4 Queensland South Native Titles Services ("QSNTS") for Mr Delaney submits that prosecution of Mr Delaney's notice of motion relates to concerns by the Quandamooka Claim group that the Noonukul Application would impede progress towards a consent determination, due to the policy of the State of Queensland not to engage in mediation when overlapping claims exist. 5 This matter was listed for directions before me on 9 March 2007. At that hearing there was no appearance by the applicant, however I granted leave to Mr Robert Corowa to appear for the applicant. Ian Delaney be joined as a respondent in the proceedings pursuant to s 84(5) Native Title Act 1993 (Cth). 2. The notice of motion filed 13 February 2007 to be heard at 10.15 am on 28 May 2007. 3. The respondent to the notice of motion to file and serve any material upon which it intended to rely by 30 March 2007. 4. The applicant to the notice of motion to file and serve an outline of argument by 13 April 2007. 5. The respondent to the notice of motion to file and serve an outline of argument in response by 4 May 2007. 6. Notification of witnesses required for cross-examination by any party to be served upon the other party and filed by 14 May 2007. Further, it is apparent from the file that the applicant did not comply with my orders of 9 March 2007 in relation to the filing of material for the hearing of this notice of motion. I note that QSNTS filed an outline of submissions on 13 April 2007. I am satisfied that Mr Corowa, who filed the application on the applicant's behalf and appeared for the applicant on the last occasion this matter came before the Court, was aware of the hearing of 28 May 2007, and that all attempts were made to ensure that the applicant was made aware of the hearing. 9 In the circumstances of the applicant's non-appearance in Court, I indicated to QSNTS and the State of Queensland that I would consider the matter on the material filed, and on the basis of any further oral submissions that they wished to make. 10 Mr Hardie, principal legal officer of QSNTS, sought to rely on his written submissions. 11 Mr Prowse for the State of Queensland indicated that the State broadly supported the submissions of QSNTS. Mr Prowse also handed up documentation including a map produced by the Department of Natural Resources and Water showing the boundaries of the Noonukul Application as interpreted by the National Native Title Tribunal (Tribunal), and the boundaries of the Noonukul Application as interpreted by the State. Mr Prowse submitted that the map shows that the Tribunal and Department of Natural Resources and Water identified a substantially different interpretation of the boundaries, illustrating the fact that the description of the claim area in the Noonukul Application itself is so defective or so uncertain as to be impossible of proper definition. 12 Mr Prowse further submitted that the Noonukul Application overlaps the Quandamooka Claims, the Turrbal claim, the Jagara claim and the Kabi Kabi #2 claim, and in some respects has the appearance of being mischievous. Note: The main application may still be amended even after a strike-out application is filed. (2) The Court may receive evidence on the hearing of an application for an order under subrule (1). The language of s 84C and O 20 r 2 is dissimilar in that s 84C refers to "strike-out" of the application, whereas O 20 r 2 deals with permanent stay or summary dismissal of the proceedings. Further, the issues of which proof is required under each provision differs in that s 84C applies where an application does not comply with ss 61 , 61A or 62 whereas O 20 r 2 is only enlivened if no reasonable cause of action is disclosed, the proceeding is frivolous or vexatious, or the proceeding is an abuse of process. To that extent, s 84C is concerned with matters of form and authority rather than the merit of any native title determination (Branson J in Bodney v Bropho [2004] FCAFC 226 ; (2004) 140 FCR 77 at 85). 17 Notwithstanding these distinctions, the Courts have tended to equate the consequences of strike-out under s 84C with those of summary dismissal under O 20 r 2. However, an application under s 84C, if successful, has the very serious consequence that the native title application is struck out. Such a result is akin to a court proceeding being summarily dismissed, or at least dismissed before any hearing on the merits. No court proceeding is summarily dismissed except in a very clear case: Dey v Victorian Railways Commissioner [1949] HCA 1 ; (1949) 78 CLR 62 at 91 per Dixon J; General Steel Industries Inc v Commissioner for Railways [1964] HCA 69 ; (1964) 112 CLR 125 at 129. [49] Applications for native title are brought by representatives of the native title claim group. The dismissal of an application because, for example, the applicant has not been authorised means the dismissal of the native title claim group's claim. The repercussions, therefore, are far reaching. I see no reason why an application to strike out a native title claim under s 84C should be treated any differently to any other application to dismiss a claim summarily. The power should be exercised sparingly and with caution, and only when the Court is satisfied that the moving party has made out a clear case that the applicant has not complied with the relevant section and cannot, by amending the application, comply. Section 84C assumes that a party might respond to a strike out application by amending the claim to comply with the requirements of the Act. A claim can be amended without obtaining leave. 19 In considering Mr Delaney's notice of motion, I propose to first consider the submissions in relation to s 84C, and then if necessary consider the case with respect to summary dismissal under O 20 r 2. It does not comply with the requirement of s 61(4) which requires that the claim group be clearly described. 2. It does not comply with the requirement of s 61(1) which requires that the application be authorised by the claim group. 3. It does not comply with the requirement of s 62(1)(a) which requires that the application be accompanied by affidavits in the prescribed form. 4. It does not comply with the requirement of s 61(1) because it is not authorised by all persons who hold native title. I propose to consider each issue raised, combining issues 2 and 4 which relate to authorisation. Consequently, the issue for this Court is whether the alternative requirement in s 61(4)(b) has been met. 24 Schedule A of Form 1 under the Native Title Act "Native Title Determination Application Claimant Application" provides for the listing of persons in the relevant native title claim group or a description of such persons sufficiently clearly so that it can be ascertained whether any particular person is one of those persons. The claimants, by definition, are comprised of all the persons descended from the apical ancestors identified in paragraph 5. Noonukul is comprised of members of the family bloodline groups to the island of Minjerribah and the waters of Quandamooka. 4. The Noonukul who make up the Native Title Claim Group are the identified descendants of Oodgeroo the Late Kath Walker, the mother to the applicant. It is the native title claim group which provides authorisation under s 251B , and it is the group on whose behalf the claim is then pursued and, if successful, in whose favour a determination of native title is then made. 28 I agree with the submission of QSNTS that the group is not described sufficiently so as to allow one to ascertain whether any particular person is in that group: cf Dieri People v State of South Australia [2003] FCA 187 ; (2003) 127 FCR 364 at 379, Harrington-Smith on behalf of the Wongatha People v State of Western Australia (No 9) [2007] FCA 31 at [1206] - [1225] ). Indeed, if anything, the descriptions of claimants provided in various places in the application are contradictory in that "the members of the family bloodline groups to the island of Minjerribah and the waters of Quandamooka" is clearly a larger group than the "identified descendants of Oodgeroo the Late Kath Walker". I note in this regard the affidavit of Ms Waters, consultant historian, sworn 24 January 2007, where she deposes that 11 family groups make up the Quandamooka Claim groups. Application, as mentioned in subsection 13(1), for a determination of native title in relation to an area for which there is no approved determination of native title. Note 2: Section 251B states what it means for a person or persons to be authorised by all the persons in the native title claim group. QSNTS cites Hillig as administrator of the Wormi Local Aboriginal Council v Minister for Lands for the State of New South Wales (No 2) [2006] FCA 115 at [70] in support. 32 QSNTS further submits that in any event, the Noonukul Application does not meet the authorisation requirements of s 61(1) and s 251B. Indeed, QSNTS submit that there is simply no evidence presented that any type of authorisation process was followed to authorise the making of the Noonukul Application. 33 Part A s 2 of the Form 1 of the Native Title Act "Native Title Determination Application Claimant Application" provides for details about authorisation. The Applicant has been authorised to make this application for a claim over the determination area through Traditional Custom and Lore by the authority of the late Oodgeroo the late Kath Walker and carry out the business pertaining to it. In the present application the persons who compromise the Native Title Claim Group are not identified either by name or by reference or by any sufficient description. There is also a lack of evidence that the Native Title Claim Group, which is alleged to have authorised Mr Booth, had any applicable traditional decision-making process or that any particular process was followed. There is no evidence that the Native Title Claim Group agreed to and adopted some other decision-making process in relation to authorising the applicant to make the application. Nor is there any evidence that the process has been recognised or that any process has been followed. Other than an assertion by the applicant that the late Oodgeroo, the late Kath Walker, has authorised the applicant to make the application, and that such authorisation is through "Traditional Custom and Lore", there is no evidence that the applicant is authorised by the claim group, even to the extent that the claim group in this case can be identified. No details of the decisions that the claim group made are provided. There is no evidence of the process, or that any particular process was recognised or followed by the claim group (cf Booth [2003] FCA 418 at [11] ). 36 I again note the affidavit of Ms Waters which states that the Oodgeroo descendants are part of the Gonzales family group, one of 11 family groups forming the Quandamooka Claim group. QSNTS has submitted that there is no suggestion that the smaller family group, the Oodgeroo group, could establish particular rights and interests which the larger Quandamooka Claim group cannot. Further, I note the affidavits filed by Jonathon Patrick Malone sworn 23 January 2007 and Edward Ruska sworn 7 February 2007, who depose that they are members of the Noonukul of Minjerrabah and that they did not authorise the making of the Noonukul Application and were not advised of or involved in the process of authorisation. 37 Accordingly in my view, and in circumstances where, despite the applicant's non-appearance in Court, the applicant has had an opportunity to put forward evidence in relation to this and other issues, I am satisfied that not only is there a lack of clarity as to the persons who make up the claim group, but that in any event the applicant was not authorised to make the application on behalf of such people of the claim group as have been identified. It therefore appears that the applicant is not authorised to make an application on behalf of all of the claim group. If the applicant represents a family subgroup which claims to hold native title, it is not the group which holds the common or group rights or interests within s 61 of the Act ( Risk v National Native Title Tribunal [2000] FCA 1589 at [60] , Dieri 127 FCR at 377, Hillig [2006] FCA 1115 at [60] ). 38 It follows therefore that the applicant has not complied with s 61(1) of the Act. Mr Prowse for the State has further submitted that the Noonukul Application does not conform to the requirements of s 62(2)(a) (as required by s 62(1)(b)). 40 The terms of s 62(1)(a) and (b) require mandatory compliance. As was submitted by Mr Prowse for the State, the Department of Natural Resources and Water and the Tribunal, using the description of the boundaries of the application as provided by the applicant, reach different conclusions as to the geographical areas purported to be included in the claim. Mr Prowse has provided a copy of these to the Court by way of illustrating the fact that the description of the claim area in the application itself is so defective or so uncertain as to be impossible of proper definition. 43 In my view the applicant has failed to comply with s 62 of the Act. I note the serious consequences of strike-out pursuant to s 84C , and the caution with which the Court should exercise the power under s 84C to strike out a claim. However in my view the serious and fundamental deficiencies in this application could not be cured by amendment. Accordingly, I have considered the merits of the notice of motion brought by Mr Delaney on the papers. 47 I am prepared to grant the order sought, namely that Native Title Determination Application --- QUD355/06 Noonukul of Minjerrabah be struck out pursuant to s 84C of the Act. In light of this decision it is unnecessary for me to consider whether the application should also be summarily dismissed pursuant to O 20 r 2 Federal Court Rules . The Native Title Determination Application --- QUD355/2006 Noonukul of Minjerrabah be struck out pursuant to s 84C Native Title Act 1993 (Cth).

strike-out application section 84c native title act 1993 (cth) non-compliance with section 61 native title act 1993 (cth) identification of claim group authorisation description of claim area application also brought pursuant to order 20 rule 2 federal court rules native title

The Tribunal decided that it had no jurisdiction to hear Mr Pomare's application to it for a review of a decision of a delegate of the first respondent (Minister). 2 The appeal raises the question of whether the Tribunal was correct to decide that it lacked jurisdiction because the application to the Tribunal was lodged outside the nine day period referred to in s 500(6B) of the Migration Act 1958 (Cth) (the Act). 3 For the reasons that appear below, in my opinion Mr Pomare was not notified of the Minister's decision in accordance with s 501G(1) of the Act, and so the nine day period did not begin to run. In the result, the reason given by the Tribunal for holding that it lacked jurisdiction was not a valid reason, and the matter should be referred back to the Tribunal to be heard and determined in accordance with law. 4 The second respondent entered an appearance submitting to such order as the Court might make save as to costs. He first arrived in Australia on 26 August 2005. He holds a Class TY Subclass 444 Special Category visa. He has remained in Australia since his arrival, except for a nine month absence from November 2005 to August 2006. 6 On 15 February 2007, Mr Pomare was convicted at Broken Hill District Court of robbery using corporal violence and was sentenced to two years and three months imprisonment with a non-parole of 12 months. 7 Subsection 501(2) of the Act provided that the Minister could cancel a visa that had been granted to a person if the Minister reasonably suspected that the person did not pass the character test, and the person did not satisfy the Minister that the person passed the character test. On 11 October 2007, a delegate of the Minister cancelled Mr Pomare's visa. It is not in dispute that the conditions laid down in s 501(2) were satisfied. 8 Paragraph 500(1)(b) of the Act provided that an application could be made to the Tribunal for a review of a decision of a delegate of the Minister under s 501. It is not disputed that Mr Pomare had a right to have the delegate's discretionary decision to cancel his visa reviewed by the Tribunal. Accordingly, paragraph 29(1)(d) and subsections 29(7), (8), (9) and (10) of the Administrative Appeals Tribunal Act 1975 do not apply to the application. 9 Mr Pomare was "in the migration zone" at all relevant times. The various provisions in the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) referred to in s 500(6B) were provisions allowing the Tribunal to extend time for the making of applications for review to the Tribunal. It follows from their exclusion that the nine day time limit could not be extended. 10 Subsection 501G(1) of the Act provided that if a decision was made under, relevantly, s 501(2) of the Act to cancel a visa granted to a person, the Minister was required to give the person a written notice that set out the decision and met other requirements as to the content of the notice. 12 On 17 October 2007 the foreshadowed further notice was delivered by hand to Mr Pomare. An acknowledgment of receipt of the " Notice of visa cancellation under subsection 501(2) of the Migration Act 1958 " was signed by Mr Pomare and witnessed on 17 October 2007. The question that arises on the appeal is whether on 17 October 2007, Mr Pomare was notified of the cancellation decision "in accordance with subsection 501G(1)" (see s 500(6B) of the Act). The Tribunal proceeded on the basis that he was. If the Tribunal was correct to proceed on that basis, Mr Pomare's application for review, which was not received by the Tribunal until 1 November 2007, was received outside the nine day time limit (which expired on 26 October 2007) and the Tribunal lacked jurisdiction in respect of the application. 13 The Minister does not dispute that if the notice that was delivered to Mr Pomare on 17 October 2007 was not in accordance with s 501G(1) of the Act, the nine day time limit did not begin to run. Did the notice comply with subpara 501G(1)(f)(iv) of the Act? Your application for review must be accompanied by a copy (or the original) of the document notifying you of the decision plus a set of all the documents given to you at the time of notification of the decision. Unless you do this your application for review will be invalid. The address of the AAT office in Victoria is listed overleaf. There is a fee payable when you apply for a review. This fee can sometimes be waived. More information about fees can be obtained from the AAT. Mr Pomare was incarcerated in New South Wales. Postal Address: GPO Box 9955 Telephone: 1300 366 700. 19 The terms of para (f) of s 501G(1) make it plain that is it not a compliance with subpara (f)(iv) of s 501G(1) of the Act merely to state that a person has a right to have a cancellation decision reviewed by the Tribunal. The notice must, in addition, state "where" the application to the Tribunal for review can be made. 20 The AAT Act does not throw much light on the answer to the question where the application to the Tribunal for review can be made. Subsection 29(1) of the AAT Act provides only that an application to the Tribunal for a review of a decision must be, relevantly, in writing and may be made in accordance with the prescribed form. 21 It was, correctly, common ground on the appeal that an application to the Tribunal is not "made" until it is received by the Tribunal. In my opinion, in order to state where an application for review by the Tribunal can be made, the written notice must state the place where the person can cause the Tribunal to receive his or her application, and so, in the present case, cause the time limit fixed in s 500(6B) of the Act to cease to run. In any event, I would have so held. It should not be readily accepted that a notification would be in accordance with subpara 501G(1)(f)(iv) by specifying a post office box in view of the difficulty or impossibility for a person and, indeed, the Tribunal itself, of ascertaining and proving the time when an application reached the specified post office box. The importance of being able to know when an application is received, and therefore "made", is obvious, as the present case shows. All difficulty disappears if the relevant place where an application may be made is a registry office of the Tribunal. I use the expression "registry office" to mean the office of the Registrar where applications initiating proceedings before the Tribunal are received, and can be lodged and delivered, and where the Tribunal's files relating to proceedings before it are maintained. The word "registry", standing alone, may be sufficient to convey that meaning. 24 The view that an application is received by, and therefore made to, the Tribunal only when it reaches the registry office is consistent with subreg 9(1) of the Administrative Appeals Tribunal Regulations 1976 (Cth) which provides that the Registrar must cause the date on which a document was lodged or received at his or her office to be recorded on the document. It is also consistent with other provisions found in those Regulations which refer to receipt or lodgement or delivery: see, for example, regs 6(2), 8, 9(2), 9(3), 10. I infer that the date and time mark the date and time of receipt at the registry office. 26 In summary, in my opinion, in order to satisfy subpara (f)(iv) of s 501G(1) of the Act the written notice that the Minister gives to the person must state the address of a registry office or the addresses of registry offices of the Tribunal. I need not decide whether the written notice is required to state the addresses of all of the registry offices of the Tribunal at which the person would be entitled to lodge the application. The notice in the present case stated none. 27 In Zhan v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 327 ; (2003) 128 FCR 469 ( Zhan ), Allsop J had to deal with an alleged failure of a written notice to comply with s 66(2) of the Act. That provision related to notification of a decision to refuse an application for a visa. In the circumstances, the notification was required to state where an application for review of the decision could be made (subpara 66(2)(d)(iv) of the Act). His Honour said (at [64]) that the purpose of such a statement was to give information as to where the applicant could "make the application", that is, "initiate it". His Honour's statement is consistent with my holding above. 28 In Zhan , the applicant was told that lodgement of documents had to be at "a registry of the Tribunal" and no address was given. A leaflet giving that information was not included with the letter. His Honour left open the possibility that identification of "registries" of the Tribunal in the telephone directory might have sufficed to supply the meaning of the expression "a registry of the Tribunal", but the fact was that the telephone directory did not specify that the address given in it was that of a "registry". Allsop J remarked (at [65]) that the address given in the telephone directory might have been the Tribunal's head office or the site of some other activity of the Tribunal. 29 The word "registry" assumed a special significance in Zhan because of its appearance in the letter --- a feature that is absent from the present case. In this respect Zhan is distinguishable. 30 Counsel for the Minister submits, correctly, that the facts of the present case are different from those in Zhan because the written notice in the present case did state "the Tribunal at GPO Box 9955". However, as noted earlier, the Minister correctly concedes that an application would not be received by the Tribunal and therefore would not be made to the Tribunal when it reached that address. If an applicant led evidence to support an inference that an application reached the nominated post office box, it would nonetheless be open to the Minister to defeat the application by proving that the application was not in fact received in the registry office of the Tribunal. 31 In Chan Ta Srey v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 1292 , Gray J, after referring to Zhan , held (at [53]) that where any of the requirements of s 66(2) of the Act were not complied with, there was no "notification" with the result that time did not begin to run in respect of an application to the Migration Review Tribunal. The same reasoning must apply to a non-compliance with paras 501G(1)(c)-(f). In any event, the parties accepted that if I should uphold Mr Pomare's submission that the notice did not comply with subpara 501G(1)(f)(iv), the matter should be remitted to the Tribunal to be heard and determined in accordance with law. Did the notice comply with subpara 501G(1)(f)(v) of the Act? However, it seems appropriate to indicate that I would not have upheld Mr Pomare's submission that the written notice handed to him did not satisfy that provision. 35 In relation to s 500(6C), counsel for Mr Pomare makes three submissions. First, he submits that the statement made in relation to s 500(6C) contained a clerical slip or error in that the reference to "501" should have been to "500". I do not think that this clerical slip or error prevented the notice from satisfying the statute. Second, counsel submits that the word "include" was erroneous because s 500(6C) requires that the application be "accompanied by" certain documents. Third, counsel submits that reference in the statement to "one set of all documents given to the person at time of notification of the decision" involved a failure to state the effect of s 500(6C) because, while it is true that that subsection requires the application to the Tribunal to be accompanied by one set of certain documents, the documents are those given to the person under s 501G(2), and that provision requires that two copies of certain documents be given to the person, so that it was at least misleading for the notice to Mr Pomare to have referred to "one set of all documents". 36 There is no substance, in my view, in any of the attacks made on the notice insofar as it purported to state the effect of ss 500(6B) and (6C). While there may be argument over the extent of the requirement that a document state the "effect" of a statutory provision, I think it is clear that the requirement is not one that every aspect of the statutory provision be referred to, otherwise the legislature would have simply required that a copy of the statutory provisions be supplied with the notice. The notice handed to Mr Pomare did state the effect of ss 500(6B) and (6C). The Minister should pay Mr Pomare's costs. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren.

appeal from decision of administrative appeals tribunal tribunal had held it lacked jurisdiction because application to it had been made outside statutory time limit time limit in s 500(6b) of migration act 1958 (cth) of nine days after day on which person notified of decision "in accordance with subsection 501g(1)" s 501g(1) required giving of notice stating "where the application for review can be made" notice referred only to post office box. held : (1) notice was required to state address of registry office where application for review could be received by tribunal; (2) failure of notice to state where application for review could be made had effect that nine day time limit had not commenced to run; (3) tribunal's decision set aside and matter remitted to tribunal. appeal from decision of administrative appeals tribunal tribunal had held it lacked jurisdiction because application to it had been made outside statutory time limit time limit in s 500(6b) of migration act 1958 (cth) of nine days after day on which person notified of decision "in accordance with subsection 501g(1)" s 501g(1) required giving of notice stating "where the application for review can be made" notice referred only to post office box. held : (1) notice was required to state address of registry office where application for review could be received by tribunal; (2) failure of notice to state where application for review could be made had effect that nine day time limit had not commenced to run; (3) tribunal's decision set aside and matter remitted to tribunal. administrative law migration

2 I found in favour of Darrell Lea: Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 4) [2006] FCA 446 ; (2006) 69 IPR 23 (the earlier judgment). Subsequently the Full Court upheld Cadbury's appeal on the ground that I had wrongly excluded evidence sought to be adduced by Cadbury from three expert witnesses, Dr Brian Gibbs, Dr Constantino Stavros and Mr Timothy Riches (collectively, the Cadbury experts): Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd [2007] FCAFC 70 ; (2007) 72 IPR 261 ( Full Court I ). 3 Cadbury sought a new trial but their Honours at [114] directed that it be remitted to me for further hearing. It is not possible, therefore, to conclude that there was no miscarriage of justice by reason of that error. Accordingly, the appeal should be upheld, the orders of the primary judge should be set aside and there should be an order for the proceeding to be remitted to the primary judge for further trial. 4 Cadbury brought a motion to the Full Court seeking an order that the previous order remitting the matter to the trial judge for further hearing be varied to provide that the matter be remitted to the trial judge for a new trial: Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 2) [2007] FCAFC 102 ( Full Court II ). Cadbury's motion appears to have been prompted by a directions hearing before the primary judge on 12 June 2007 during which his Honour indicated his understanding that the effect of the Full Court's order was that there would be a further hearing at which the excluded evidence would be adduced, but that that would be the extent of the further hearing. It would seem that that was not Cadbury's understanding of the effect of the Full Court's order of 21 May 2007. 5 It is clear that Cadbury sought a new trial as part of the relief claimed in the appeal. On the hearing of the appeal, one of the issues was whether, even if there had been an error on the part of the primary judge in excluding evidence there was nevertheless no miscarriage of justice and the orders made by the primary judge should therefore stand. The Full Court rejected that contention. The Court concluded that it could not be said that the disputed evidence was of so little weight that it could not influence the result of a new trial, so as to produce a different result (at [111]). 6 However, the Court did not consider that a new trial was justified. Rather, the Court was of the view that justice would be served by a further hearing before the primary judge, at which Cadbury would have another opportunity of adducing the disputed evidence. 7 The proceeding was remitted on the basis that it would be before the primary judge as though the case were part heard. Thus, it would be a matter for the primary judge to determine the extent to which, after entertaining all proper objections and making rulings on such objections, additional or further evidence should be admitted. That may have the consequence that Darrell Lea would seek to adduce its own evidence in response to the disputed evidence. 8 We indicated in our reasons (at [110]) that, if proper objections were taken to the disputed evidence at the further hearing and the evidence was rejected, it would be open to the primary judge to allow Cadbury to elicit further evidence to overcome the objections. That would be an aspect of the management of the further hearing by the primary judge in the same way as it would have been had his Honour not rejected the disputed evidence in its entirety. That is to say, it would be for counsel for Darrell Lea to make such objections to the admissibility of the disputed evidence on formal grounds as they may consider appropriate. If, in the exercise of his discretion, the primary judge were to permit Cadbury the opportunity of adducing further evidence to overcome any objections, that would be a matter entirely for his Honour at the further hearing. 9 It is conceivable that, after hearing proper objections from Darrell Lea, none of the disputed evidence will be admitted. We do not, by that comment, indicate any view about the outcome of any objections one way or the other, except to the extent that we indicated the principles to be applied in our reasons of 21 May 2007. It is, of course, conceivable, and we make no comment one way or the other as to whether it is likely, that is Honour would still reject the disputed evidence under s 135 of the Evidence Act . That is entirely a matter for the primary judge. 10 Further, there would be no reason why the primary judge should entertain any contention that he should reverse earlier rulings made by him that were not in any way dependant upon the rejection of the disputed evidence. His Honour should be in a position to conduct the further hearing as though he had admitted such of the disputed evidence as his Honour finds to be admissible after considering appropriate objections. 11 In so far as we referred to "a further trial" (at [129]) or "the new trial judge" (at [130]) we should be understood as having referred to a further hearing by the primary judge along those lines. Of course, if the primary judge were prepared to entertain a submission that he would not be able to bring an open mind to the resolution of the proceeding in the light of his Honour's earlier rulings both on the disputed evidence and in the final decision, it would be a matter for his Honour to decide whether he considered it was appropriate for the proceeding to be referred to another judge for a retrial ab initio. The primary judge should be regarded as being in the same position as he would have been in had he not made the ruling of 31 March 2006. It is clear from the context that the term "rulings" in [10] is a reference to rulings on evidence and procedure and not substantive findings, as to which see [11]-[12] below. 5 Cadbury applied to the High Court for special leave to appeal against the Full Court's remission of the matter to the primary judge. The application was refused: Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd [2007] HCATrans 468. 6 After hearing further argument the Full Court made orders in relation to costs of the appeal: Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 3) [2007] FCAFC 119 ( Full Court III ). The Full Court ordered that Darrell Lea pay Cadbury's costs other than its costs of and associated with grounds 1-14 inclusive, 17 and 18 of the amended notice of appeal, and that Cadbury pay Darrell Lea's costs of and associated with those grounds. 7 Their Honours in Full Court III noted at [8] that at the hearing of the appeal some grounds of the amended notice of appeal were abandoned by Cadbury, namely grounds 3, 4, 5, 6, 8, 13, 14, 17 and 18, and that grounds 1, 2, 7, 9, 10, 11 and 12, which raised challenges to substantive findings of the trial judge, were pressed only formally at the hearing of the appeal and were rejected by the Court. 8 On the further hearing Cadbury called its three experts and they were cross-examined by senior counsel for Darrell Lea. Darrell Lea had filed an affidavit by an expert in the same area, a Mr Hall, but did not read his affidavit. 96 There is wide awareness amongst Australian consumers of the use by Cadbury of a dark purple colour (i) in connection with the marketing, packaging and presentation of certain chocolate products particularly Cadbury Dairy Milk and other block milk chocolate products, and (ii) as a corporate colour. [Grounds 1, 2] 97 Cadbury does not have an exclusive reputation in the use of this dark purple colour in connection with chocolate. Other traders have, with Cadbury's knowledge, for many years used a similar shade of purple. Cadbury has not consistently enforced its alleged exclusive reputation. In relation to its chief competitor Nestlé, Cadbury has, for its own commercial reasons, permitted a use of purple in relation to popular chocolate products. [Grounds 1, 2] 98 Cadbury markets many chocolate products which have little or no purple in their packaging. 99 Cadbury products, regardless of the presence or absence of purple in the packaging, always bear the Cadbury name in a distinctive script. [Ground 2] 100 Cadbury's use of purple in marketing advertising and promotion is, and is seen by consumers to be, inextricably bound up with the well known name Cadbury in its distinctive script. Cadbury never uses the colour purple in isolation as an indicium of trade. [Ground 2] 101 Cadbury products, with insignificant exceptions, are not sold at retail level at premises owned or occupied by Cadbury. [Grounds 6, 7, 8] 102 Cadbury's marketing of chocolate heavily emphasises specific products and in particular Cadbury Dairy Milk block chocolate. [Ground 8] 103 Darrell Lea is a name well known in connection with chocolate in those parts of Australia where it operates, even though not as well known as Cadbury. [Ground 10] 104 The names Darrell Lea and Cadbury are quite distinct in sound and appearance (especially with the respective scripts the parties have adopted) and not likely to be mistaken for each other. [Grounds 10, 11, 12] 105 Darrell has since at least Christmas 2000 used in its marketing, packaging, promotion and point of sale presentation a purple colour much like that used by Cadbury. There has been particular use at Christmas 2000 to 2004 inclusive and also uses at other times. Such usage has diminished and purple has been to a significant extent replaced by blue since 2004. [Ground 12] 106 Darrell Lea did not adopt the colour purple with the intention of leading consumers to believe its products were Cadbury products or that it, or its products, had some kind of association with Cadbury. [Grounds 3, 4, 5] 107 Most of Darrell Lea's retailing occurs in premises which it owns or occupies. Other retailing occurs from separate stands or displays in retail premises, such as newsagents, pharmacies, convenience stores and video stores. Darrell Lea has only a minor presence in supermarkets and only, in the past, to a very limited and transient extent in the major chains. Its products are not presented for sale in close proximity to Cadbury's. [Grounds 6, 7, 8] 108 Darrell Lea's marketing gives less emphasis to particular products than does Cadbury. [Grounds 8, 10, 11, 12] 109 Darrell Lea does not sell moulded block chocolate. [Grounds 10, 11, 12] 110 Darrell Lea uses its name in a distinctive script widely and consistently in marketing, packaging and point of sale presentation. [Grounds 10, 11, 12] 111 Colour recognition or attraction can play an important part in consumer decisions to purchase chocolate. [Ground 9] 112 Consumer decisions to purchase chocolate are often made quickly and on impulse but not necessarily irrationally. Price and brand recognition can play an important part. Cadbury and Darrell Lea are competitors in the retail chocolate market, yet they each have distinctive product lines which are sold from different sorts of premises under distinctive trade names. [Grounds 8, 9, 10, 11, 12] They have distinct identities in the market place. [Grounds 11, 12] Cadbury does not own the colour purple and does not have an exclusive reputation in purple in connection with chocolate. Darrell Lea is entitled to use purple, or any other colour, as long as it does not convey to the reasonable consumer the idea that it or its products have some connection with Cadbury. I am not satisfied that this has occurred, or is likely to occur. 11 Since the order I made dismissing Cadbury's application was set aside, the findings at [95]-[112] and [121] have no legal binding effect. Nor do they create any presumptions. I do not use the term "findings" to suggest the contrary. However, it is clear from the repeated orders of the Full Court that there was not to be a new trial and the further evidence was to be limited to the three Cadbury experts and such opposing experts as Darrell Lea wished to call. Some of the findings could be the subject of rejection or modification (or enhancement) in the light of the evidence given by Cadbury's experts, or indeed evidence given at the earlier hearing, eg [96], [97], [100], [111] and [112]. Most of the findings, however, are findings of primary fact. 12 The findings should be regarded for present purposes as tentative or provisional. As directed by the Full Court, the trial is to be treated as continuing. Not infrequently a judge will indicate that he or she has reached tentative conclusions and states them for the benefit of counsel. The findings in the earlier judgment will be treated on the same basis, as an analytical framework. Of course, this does not exclude the possibility of further findings which may be warranted by the evidence of the Cadbury experts or evidence given at the earlier hearing. I now turn to summarise the evidence of the Cadbury experts. He holds a doctorate in Behavioural Science and Marketing from the Graduate School of Business at the University of Chicago (1992). He moved to Australia from Canada in 2003. Amongst the institutions at which he has given invited presentations are Harvard, Cornell, University College Dublin, and Oxford and Cambridge Universities. 14 His two affidavits extend over 90 pages, including exhibits. The thrust of his evidence is summarized in an "Executive Summary" at pars 28-31 of his first affidavit as follows. (Emphasis in original. Definitions provided elsewhere in the first affidavit are summarized and indicated in brackets. As a result, the colour purple is strongly associated with the Cadbury brand. Purple signifies the brand to consumers, and can trigger the rich set of tangible and intangible but meaningful brand judgments, attitudes, concepts, and feelings that are associated with the Cadbury brand in the mind of the consumer. In this sense, purple is an activator of Cadbury's brand equity, and so is a brand element of considerable value to Cadbury. 29 Darrell Lea has recently made significant use of purple in relation to packaging and point of sale displays, at the same time as it has focused on a new distribution strategy that goes beyond its traditional dedicated shops and seeks to take advantage of "convenience" distribution channels. 30 In my opinion, Darrell Lea's use of purple is likely to cause four information-processing errors to occur among consumers of chocolate confectionery, and these errors are likely to cause harm to Cadbury. Misidentification and miscuing are errors relating, respectively, to conscious and unconscious processes of consumer choice; misinference and misassociation are errors relating, respectively, to conscious and unconscious processes of consumer judgment. Harm to Cadbury from misidentification can take the form of sales lost to Darrell Lea, induced "trailing" of Darrell Lea's products, blame from consumers for the confusing common use of colour by the two brands, and damaged consumer attitudes toward Cadbury due to cognitive dissonance [a state of discomfort produced by inconsistencies between simultaneously held beliefs or between beliefs and behaviour] or due to violated expectations. Although misidentification is the most obvious of the consumer errors likely to be experienced by reason of Darrell Lea's conduct, I believe it is the least significant, all things considered. 30.2 Miscuing is when consumers use purple as a spurious cue in decision making and choice; in this capacity the colour can function as a decision-heuristic [a shorthand decision rule or "rule of thumb" functioning to reduce decision-making effort while maintaining an adequate level of accuracy] cue, an operant-conditioning [a form of learning in which modification of behaviour is brought about by the consequences that followed upon the occurrence of the behaviour in the past (for example, reward)] cue, or a behaviour-instigating cue. Harm to Cadbury from miscuing takes the form of sales lost to Darrell Lea. 30.3 Misinference is when consumers, in trying to make sense of the common use of purple by Darrell Lea and Cadbury, draw mistaken inferences about one or both of the brands. Harm to Cadbury from misinference can take the form of enhanced consumer attitudes towards its competitor Darrell Lea, reduced brand control by Cadbury, and perhaps, damaged consumer attitudes toward Cadbury. 30.4 Misassociation is when consumers mistakenly link Cadbury brand associations with Darrell Lea, and vice versa, as a result of the two brands' associative networks [a framework for understanding how pieces of semantic information interact in an individual's memory in which concepts or other information stored in memory are represented by nodes that are interconnected in a network of links] having become connected in consumers' minds through the common use of purple. Harm to Cadbury from misassociation can take the form of reduced mean positivity of Cadbury associations, dilution of the Cadbury brand, reduced differentiation between Cadbury and Darrell Lea, reduced brand control by Cadbury, a strengthening of Darrell Lea's brand, and perhaps, emboldened competitors in general. All things considered, I believe misassociation is the most significant of the consumer errors likely to be experienced by reason of Darrell Lea's conduct. Harm to Cadbury from these errors may take the form of reduced Cadbury reputation and leverage in the distribution channel (retailers), reduced valuations of the Cadbury brand (investors), and reduced morale in the Cadbury workforce (employees). 31.2 The use of purple by Darrell Lea is likely to reduce the perceptual distinctiveness of Cadbury products, and this may also cause harm to Cadbury in the form of lost sales. The following summary is taken from Full Court I at [22] et seq. 22 First, the affidavit dealt with general marketing concepts and theories under five headings. It is desirable to summarise what Dr Gibbs said about them. 1. The brand concept and brand equity: 23 In contemporary marketing theory and practice a brand is understood to be an essentially psychological entity. A brand is a set of associations in the mind of the consumer. The importance and value of a brand to its owner lies in the ability of this mentally held set of associations to influence consumer behaviour, especially information processing associated with product perception, evaluation and choice. Consumers often buy the brand rather than the product itself. The brand transcends the product in that extra dimensions have been added to the core product in order to differentiate it from other products designed to satisfy the same needs. Such differentiation may be based on tangible, rational differences related to product performance or on intangible differences of an emotional or symbolic nature related to what the brand represents. A brand can be highly valuable to its owners. The notion of the value attributable to a brand is captured by the concept of brand equity. 2. Nature and storage of brand associations in memory: 24 An essential function of memory is to draw together similar experiences to enable one to discover patterns in one's interactions with the environment. Thus, memory serves to make current perceptions meaningful by relating them to knowledge that has been distilled from previous experiences. In the field of consumer behaviour, the issue of how brand associations are stored in the minds of consumers and accessed by them, as they form judgments and make decisions, is typically understood in terms of "the associative-network model of memory". That type of model has a long history in psychology. On that model, a brand is conceptualised as a set of nodes that represent concepts or other information stored in memory and are interconnected in a network of links. This network of nodes in memory can include a wide variety of brand associations, which are created through actual use of the branded product or through exposure to advertising or other marketing. Those networked associations comprise all the explicit or implicit pieces of knowledge that the consumer retains about the brand. 25 Brand associations are formed in the mind of a consumer through a process of learning. However, not all such consumer learning is conscious. A key feature of associative-network models is the concept of spreading activation. Nodes vary in their activation levels, with some nodes having more activation and others having less at any given moment. A node is activated when the consumer perceives a stimulus or cue corresponding to that node. The extent to which activation spreads between two nodes depends on how closely they are linked in the associative network. It is therefore a crucial responsibility of brand management to maintain control over what associations become linked into the brand's network. • Because typically only a subset of nodes in a brand's network is activated at once, a brand's meaning or image is not fixed, even for a given consumer, but varies with the cues or activators present in the specific context. This context sensitivity of brand meaning creates the potential for the strategic activation of specific portions of the associative network, and a great deal of marketing effort can be understood as being directed at activating some portions of the network and not activating others. However, certain nodes in a brand's network, by virtue of being easily and strongly cued or closely linked to many other nodes in the network, can serve as "primes" or "triggers" to prompt consumers to retrieve a full range of brand associations. A major responsibility of marketing management and practice, therefore, is to establish such primes or triggers, often in the form of tangible brand elements, such as names, logos, symbols, slogans, signage and packages. Role of packaging as a marketing communication: 26 Brand elements, along with other distinctive aspects of product form and packaging, such as colour, can be powerful cues for the activation of the set of associations linked to a brand. Exposure to such brand elements generally triggers recall of the brand's attributes and benefits as well as stored attitudes and emotions associated with the brand as a result of the consumer's exposure to past promotion, purchase and use of the brand. Product form and packaging is one of the most important ways by which consumers recognise and respond to many brands. 4. Importance and impact of colour: 27 Colour should not be viewed as just a trivial element of package design or of marketing communications more generally. The power of colour as a marketing tool is considerable and marketers make heavy use of colour. Colour can have very basic effects on information processing, even at a sensory or physiological level. Thus, colour can affect the subjective sensation of temperature and can also affect time perception. Colour has a special status in visual information processing because colour, as a basic visual feature, is perceived automatically, prior to the allocation of focal attention to specific locations in the visual field. Thus, consumers can register the colour of a package rapidly and effortlessly and yet not perceive the conjunction of that colour with other packaging elements, such as the brand logo. Convenience goods and consumer involvement: 29 The majority of confectionary products sold in mainstream channels are classified by marketers and consumer behaviourists as convenience goods, which are goods usually purchased relatively frequently, immediately and with a minimum of effort. For any given consumer, it is likely that chocolate confectionary may be a routine or staple purchase on some occasions (such as buying chocolates as a regular treat for children's school lunches) and an impulse purchase on other occasions, depending on a variety of circumstances. Many categories of convenience goods are purchased by consumers under conditions of low consumer involvement, which is generally thought to reflect the degree of perceived self-relevance, be it intrinsic or situation specific, of an object to a consumer, based on the consumer's needs, values and interests. Buying behaviour for low-involvement goods often becomes somewhat habitualised and even automated. 30 Consumers rely on, and respond to, familiar brand cues within product categories and do not go through a complex process of comparison and evaluation of competing products. When involvement is lower, consumers acquire information more narrowly and rely more heavily on brands and salient brand cues to expedite product selection. For many selections made under these circumstances, the consumer actually scans the display and identifies and selects the target product at some distance from the shelf, based on recognition of the packaging of the familiar usual brand being sought. Under those circumstances, the most salient visual cues, such as package size, shape and colour, are usually the predominant stimuli upon which consumers rely to identify brands and to optimise their time spent shopping. In the context of an impulse purchase, consumers also pay rather limited attention to detail, responding more strongly to the immediacy of the most salient cues. The Cadbury and Darrell Lea brands 31 Dr Gibbs' affidavit then dealt with the Cadbury brand. It did so by reference to consumer research materials provided to him by Cadbury's solicitors. Those materials consisted of some 25 separate reports that were compendiously referred to as "document Q". Document Q was not in evidence. Although Cadbury sought to prove the materials in document Q, the evidence was rejected because it was not filed in accordance with the directions given by the primary judge. 32 Dr Gibbs also included a section on the Darrell Lea brand. No particular exception seems to have been taken in relation to the material in that section. They describe the consequences of consumers being misled or deceived by Darrell Lea's use of the colour purple. That was a basis of complaint by Darrell Lea. 35 Dr Gibbs began his overview by saying that viewing the effects of Darrell Lea's use of purple in terms of consumer information-processing errors provides a useful unifying framework for understanding those effects. He expressed the opinion that Darrell Lea's use of purple in its marketing and sales activities is likely to cause the four errors to occur among consumers of chocolate confectionary. He explained that those four errors can be classified along two dimensions: whether they involve consumer choice or consumer judgment, and whether the relevant information processing is primarily conscious or primarily unconscious. Misidentification and miscuing relate, respectively, to conscious and unconscious processes of consumer choice. Misinference and misassociation relate, respectively, to conscious and unconscious processes of consumer judgment. While some forms of those errors cannot occur simultaneously in the same consumer, the four effects are not mutually exclusive. 36 Dr Gibbs then dealt with the four consumer information processing errors, each of which he said is "likely to result from Darrell Lea's use of Cadbury purple". As indicated above, there was no evidence that Dr Gibbs had any direct knowledge of Darrell Lea's use of purple. His understanding of that use was based on photographs provided to him by Cadbury's solicitors. The photographs, which were in evidence, were of various Darrell Lea products as displayed in a newsagent, a tobacconist, a convenience store of some type and a store owned by Darrell Lea. Thus, Dr Gibbs suggested that retailers may notice and react to the described potential for weakening of the Cadbury brand and business and Cadbury may consequently experience a loss of reputation and leverage in the distribution channel. Those effects appear to be further instances of harm that would be caused to Cadbury by reason of errors analogous to the four consumer information-processing errors. He has taught there since 1994. Although he has taught across a range of marketing areas, his specialty, and the subject of his doctoral dissertation, is the study of long-term relationships between professional sporting organisations and consumers. He came to the notice of Cadbury when he was interviewed on the Neil Mitchell program on 3AW and volunteered the view that Cadbury has "done such a great job of making themselves synonymous [with the colour purple], in fact so synonymous at the moment in the middle of a legal proceedings --- legal proceedings to try and take ownership of that colour". 16 The evidence of Dr Stavros substantially overlapped with that of Dr Gibbs. He said that a brand is a "set of complex offerings and associations that reside in the mind of the customer or consumer", the significance of which to its owner lies in its "psychological and behavioural effects" which influence the decision making of consumers with regard to "perceived value, product identification, risk reduction and buying process evaluation". 17 He discussed the concept of "involvement" in the consumer context which he defined as "the level of personal relevance to the consumer of the product category and/or the purchase decision". In the case of a "low-involvement" product, the consumer "perceives little risk in purchasing the product and may do so relatively automatically and committing little time or mental resources to search, evaluation or consideration". Chocolate confectionery will often be regarded as such a low involvement purchase, "made by many consumers without pre-planning and on impulse". Colour of packaging was "a more critical factor in low-involvement purchasing than in high-involvement decisions, as it becomes a more prominent factor". 18 He considered that Cadbury's marketing actions had developed a strong brand identity linked to elements including the name in the distinctive script, the glass and a half image and the colour Cadbury purple and that "while all these elements taken together sum up the Cadbury brand they do also stand individually as key elements of the Cadbury brand". In his opinion "it is not necessary for all three elements to be present for consumers to recognise a brand". In cross-examination he described the Cadbury brand as "iconic". 19 He said he would show his students a slide which only featured the colour purple and they would respond "often as a chorus" with "Cadbury", which in his view demonstrated a "strong, enduring relationship between the colour purple and Cadbury". 20 He distinguished the use of purple in the packaging of third party products such as Milka, Polly Waffle and Violet Crumble as "product specific instances of the use of a colour, rather than a corporate or master branding or mega branding approach". He holds degrees in Law and Arts (philosophy major) from Monash University and a Graduate Diploma in Business (Marketing) from RMIT University. 22 At the time he swore his first affidavit in November 2005 he had been with FutureBrand for six years. He has been responsible for major branding projects with clients including Tourism Australia, BHP Billiton, Streets, Sensis, ANZ Bank and the Commonwealth Bank. a person, a country, a cause or a sport) which influence that person's predisposition towards that product either positively or negatively. These perceptions and associations ... add a "layer" of additional value to the product. 24 He described how corporations use brands to create business value in three broad ways, (i) by market share and/or profit margin, in attracting more customers and sales and driving price premium and thus more profit per sale, (ii) by customer retention and (iii) by innovation and extension, with new products carrying an existing brand. He explained in detail how corporations, with the assistance of his firm, implement "brand management" practices, including taking "a disciplined approach to the management of their face to the market". 25 He said that a "brand identity system" will contain "brand identity elements" such as a logo, distinctive typefaces, a colour palette (a limited range of colours), distinctive graphic devices and tone of voice. Such a brand identity element can be thought of as a "hook", that is to say "a simple thing on which the brand owner or marketer can 'hang' a more complex set of associations". 26 He said that as a brand identity element, colour can have "particular uses and benefits in helping to build strong brands", for example red and the combination of red and white for Coca-Cola and yellow and red for Shell. In a competitive, crowded and visually cluttered retail environment, colour can achieve "'shelf presence'... in the otherwise highly fragmented and confusing landscape of, say, a supermarket aisle" and can alone identify a brand to a consumer. In Cadbury's case, colour was the most important brand element in "cutting through the clutter". 27 Mr Riches gave evidence of FutureBrand's involvement in Cadbury's promotions at the 2000 Sydney Olympics (see earlier judgment at [24], [88]). He said that "the colour purple was Cadbury's most flexible and powerful brand identity element (and of far more utility than other Cadbury brand elements such as the glass and a half logo)". 28 He considered that Cadbury's "Masterbrand/Megabrand" strategy had a "systematic approach (which) has featured the use of purple as a widely recognisable brand identity element". 29 He said that Cadbury had deliberately sought to associate purple with its Dairy Milk brand and that ingredient had been "'leveraged' across the product range with the intention of communicating quality and other product associations that attach to Cadbury Dairy Milk". 30 People in the marketing industry, according to Mr Riches, described the association between Cadbury and purple as the "top of the mind" example of a strong brand colour association. It was "marketing folklore". 31 In his view, none of the third party users of purple such as Violet Crumble "have ever come close to dominating the chocolate confectionery market in the same way as Cadbury Dairy Milk". The use of purple was "unusual" in supermarkets. He had only lived in Australia for some two years prior to swearing his first affidavit. He visited a Darrell Lea store in September 2005 and had no prior knowledge of Darrell Lea. 33 Dr Stavros also had no specialist experience of the marketing of confectionery in Australia. He had never been involved in the marketing of any confectionery product. His specialty in the relationships of sporting organisations seems well removed from the marketing of day-to-day consumer products, let alone confectionery in particular. As already noted, his recruitment as an expert seems to have been prompted by his volunteering some preconceived ideas about Cadbury and the colour purple on a popular radio program. He visited two Darrell Lea stores in about October 2005, one in Chadstone and one in the city of Melbourne. 34 Mr Riches' direct involvement with Cadbury was limited to the Sydney 2000 Olympics promotional campaign, and then in the role of planning and design rather than the actual selling of chocolate. He is not a specialist in the confectionery sector. In connection with the Olympics campaign he visited "a supermarket and, I think, a couple of convenience style outlets which had a significant weight of confectionery and chocolate product on display". After receiving instructions from Cadbury's solicitors he visited a Darrell Lea store in October 2005. 35 The Cadbury experts' uniform lack of practical experience in the retail confectionery market is consistent with Cadbury's case as a whole. Nobody has given evidence of actually buying or selling chocolate at the retail level, or observing or enquiring of those who do. Darrell Lea does not suggest the Cadbury experts' evidence is inadmissible for this (or any other) reason, but the admitted deficiency in market knowledge does go to weight, especially in a context where the Court is entitled, and bound, to form its own opinions. 36 The Cadbury experts relied on documentary material such as photographs of Cadbury and Darrell Lea stores and products (Document M in Exhibit Z) and instructions from Cadbury's solicitors. As already mentioned, they also made some store visits. However, as far as the evidence goes, the visits were limited to inspection of the goods on display and physical surroundings and did not involve any observation of consumer behaviour. 37 Darrell Lea submitted that there were many matters about Cadbury and Darrell Lea and the marketplace as to which the Cadbury experts were not instructed. Senior counsel for Darrell Lea put these matters as features of what he called Marketplace B, the real retail confectionery market, as distinct from Marketplace A, the marketplace as to which the Cadbury experts were instructed. No evidence of loss of Cadbury sales or increase in Darrell Lea sales. 38 Cadbury's response was that these matters were either not put to the Cadbury experts in cross-examination or, where they were put, there was no challenge to the witnesses' opinion. My expectation is that such sales would increase ... --- I don't know of any specific research, but I am trying to draw inferences in my affidavit as to the potential damage that could be done to Darrell ... The answer is, you don't know of any such research? --- No, not of any such research. And you say it's a field that could be researched? --- I think it's possible to assess that, yes. There are other instances where the Cadbury experts conceded that a certain matter was "relevant" or "capable of being researched" or that particular research would be "helpful". 39 Cadbury submitted that if Darrell Lea wished to challenge or qualify the conclusions reached by the witness on the basis of different factual assumptions the Rule in Browne v Dunn (1893) 6 R 67 required the cross-examiner to ask the witness whether such matters resulted in any change to his opinion. 40 As well as Browne v Dunn itself, Cadbury cited in support of this proposition the decision of the Full Court in Bush v The Queen [1993] FCA 361 ; (1993) 43 FCR 549. That case concerned an appeal from a jury's conviction of the appellant for attempted murder of his second wife and murder of her lover. Evidence was given by a Mr Saulwick of a survey of persons in the Australian Capital Territory as to their knowledge of the appellant's conviction five years earlier of the manslaughter of his first wife and the effect any such knowledge would have on their opinion as to his likely guilt of a similar offence in relation to the second wife. This evidence was adduced in support of an application for leave to challenge jurors as to cause. There was discussion at 557 by Drummond J (with whom Davies and Miles JJ agreed) critical of the usefulness of the survey. In substance his Honour found it was not useful and not a sufficient basis for its conclusion that at least one member of the jury would have connected the appellant with the 1987 killing and, for that reason, would have found the appellant guilty of the 1992 offences. Davies J at 551-552 also gave reasons for his conclusion that the survey questions were "misconceived". Mr Saulwick was cross-examined. It may be that some matters relied on by their Honours were not put to him. For example, in making the point that the sample was drawn from ACT voters and not the more limited population of the ACT eligible for jury service Drummond J said at 557: "This may or may not affect Mr Saulwick's opinion". If anything, the case seems contrary to Cadbury's argument. In any event, Browne v Dunn is not mentioned. 41 In Raben Footwear Pty Ltd v Polygram Records Inc (1997) 145 ALR 1 Tamberlin J discussed the application of the Rule in Browne v Dunn in the context of a copyright infringement case where one issue was whether a Mr Ron Lewy had, as he claimed, spoken by telephone to a German company and received certain assurances about copyright arrangements in Australia in respect of CDs which Mr Lewy's company was about to import. The trial judge had not accepted that the words were said. The failure by his Honour to address the point was said to amount to procedural unfairness. Counsel referred to a number of decisions including Payless Superbarn (NSW) Pty Ltd v O'Gara (1990) 19 NSWLR 551 at 554---7. Ultimately, the rule in Browne v Dunn is one of procedural fairness. Whether his Honour should have taken any action in relation to the failure to put the disputed words called for the exercise of a discretionary judgment on his part. As Hunt J has pointed out, in Allied Pastoral Holdings Pty Ltd v FCT [1983] 1 NSWLR 1 at 26---7; (1983) 44 ALR 607 , the rule is designed to ensure fairness to the witness so as to enable the witness to deal with the disputed matter and perhaps to give further evidence in corroboration or to contradict any inference which may be sought to be drawn. See also Dolan v Australian & Overseas Telecommunications Corp [1993] FCA 202 ; (1993) 42 FCR 206 at 207---8; [1993] FCA 202 ; 114 ALR 231 ; Marelic v Comcare [1993] FCA 599 ; (1993) 121 ALR 114 at 119---20. It is common ground that it was not expressly put to Mr Ron Lewy that the words were not said. In commercial litigation (including intellectual property matters), where issues are clearly defined, there will often be no point in formally challenging every aspect of the evidence which is contested. There will often be a large number of matters in respect of which it will be apparent from the pleadings and particulars there is clearly a contest. Where this is the case the principle need not be applied in an unduly technical way. This was pointed out by Lord Herschell ([in Browne v Dunn] at 71). The nature of the defendant's case and the particulars given, and otherwise the conduct of it may make it sufficiently clear that such an assumption is unwarranted and that there has been no surprise or prejudice concerning the matter. 43 As to the application of Browne v Dunn in modern commercial litigation, see also Australian Competition and Consumer Commission v J McPhee & Son (Australia) Pty Ltd (1998) ATPR (Digest) |P 46-183 at 50,323, approved on appeal: J McPhee & Son (Australia) Pty Ltd v Australian Competition and Consumer Commission [2000] FCA 365 ; (2000) 172 ALR 532 at [103] - [107] . 44 In the present case there was the unusual situation that Cadbury was on notice from the earlier judgment of what factual matters were claimed by Darrell Lea to bear on the passing off and trade practices claims --- and indeed what matters the trial judge had considered to be relevant and important, such as, for example, price sensitivity and product choice. Cadbury was in a position to obtain instructions from its experts as to their views on these matters and the effect, if any, on their opinions. As well as the affidavits sworn before the trial, the Cadbury experts all swore affidavits in August 2007, that is after the earlier judgment and the Full Court's judgment. Moreover, any response to the matters put by Darrell Lea could have been elicited in re-examination (as in fact occurred in respect of one matter put to Dr Gibbs). There was no unfairness. 45 As to the features of Darrell Lea's "Marketplace B" ([37] above), Cadbury challenged the factual accuracy or relevance (or both) of items 1, 2, 5, 6 and 8 but not the remainder. Putting aside for the purposes of argument the challenged items, I think Darrell Lea's criticism is valid. 47 While that is probably correct as a matter of common law, embarrassingly for myself and counsel (not including Mr Hutley SC and Mr Rebikoff, who did not appear at the earlier trial) nobody adverted to s 80 of the Evidence Act 1995 (Cth) which provides that opinion evidence is not inadmissible only because it is about a fact in issue or an ultimate issue or a matter of common knowledge: see Full Court I at [49], [52], [54]. 48 Nevertheless s 80 of the Evidence Act deals only with the admissibility of evidence. It does not affect the approach to particular kinds of evidence in particular categories of cases. This is not only because there is, as is common in cases of this kind, conflict between the evidence of the two experts. It seems to me that evidence of opinions based on market research and expert appreciation of consumer behaviour will rarely be of assistance in litigation where the Court's primary concern is with the behaviour to be expected of, and the judgments likely to be made by, ordinary (even if it might be thought, somewhat credulous) members of the community intent on making a relatively modest purchase in a conventional way. I endorse the comment of Beaumont J in Pacific Publications Pty Ltd v IPC Media Pty Ltd [2003] FCA 104 at [92] that where a claim is essentially a matter for the Court's impression, expert views which are merely 'impressionistic' can be given no more than nominal weight. These observations are not intended in any way to belittle the importance of market research and expert appreciation of consumer behaviour in other types of cases and for other purposes. 23 Lord Diplock points out in General Electric that a different rule applies in the case of sales not to the general public but in specialised markets concerning persons engaged in a particular trade. In the present case the relevant market is that in which the consumers are business users of domain names. Such users constitute large sections of the public and are not participants in a specialised market in the sense discussed by Lord Diplock. By that I mean: that if the issue had now, as formerly, to be tried by a jury, who as members of the general public would themselves be potential buyers of the goods, they would be required not only to consider any evidence of other members of the public which had been adduced but also to use their own common sense and to consider whether they would themselves be likely to be deceived or confused. The judge's approach to the question should be the same as that of a jury. He, too, would be a potential buyer of the goods. He should, of course, be alert to the danger of allowing his own idiosyncratic knowledge or temperament to influence his decision, but the whole of his training in the practice of the law should have accustomed him to this, and this should provide the safety which in the case of a jury is provided by their number. That in issues of this kind judges are entitled to give effect to their own opinions as to the likelihood of deception or confusion and, in doing so, are not confined to the evidence of witnesses called at the trial is well established by the decisions of this House itself. It was put that by choosing not to adduce any expert evidence, Darrell Lea "effectively accepts the (Cadbury) expert evidence" and that in accordance with Browne v Dunn "Darrell Lea is now estopped from making any submissions that the expert evidence is incorrect". I do not accept this submission. The decision upon the issue of similarity is an original decision for the court itself. It is to be reached upon an assessment of such similarities and dissimilarities as appear to the court between the plans or buildings under consideration. The fact that one particular expert of the highest authority and of unimpeachable credit is permitted to swear to an opinion on similarity or dissimilarity does not relieve the court of the responsibility of forming its own opinion on this issue. In this sense the expert evidence in a suit such as the present fills a somewhat unusual role. It is almost as if each side calls an expert to argue out with counsel in examination-in-chief and cross-examination the similarity or dissimilarity which that particular expert sees between the plans and houses. By attending to the progress of this argumentative process between counsel and expert the court is enabled to perceive and more readily to appreciate the points of similarity and dissimilarity. In this way the tendering of expert evidence is of value in exposing the facets of the ultimate question to which the expert opinion evidence is directed. But the important point is that, in distinction from the judicial process in relation to expert evidence such as is normally encountered in litigation, a court in the present type of litigation is entitled, and, indeed, bound, to form and act on its own original opinion. His Honour's approach would seem to apply a fortiori in a case concerning the retail marketing of everyday consumer products. I again stress that in themselves they are not legally binding and do not create any presumptions, although the overall burden of proof in the case remains of course on Cadbury. 53 Wide awareness of Cadbury's use of purple [96]. Cadbury's case implicitly is that this is an understatement of the importance of purple to its business. Cadbury purple is said to be "iconic" and a major element in its "brand equity". In Dr Gibbs' view purple is "strongly associated with the Cadbury brand" and can "trigger the rich set of tangible and intangible but meaningful brand judgements, attitudes, concepts, and feelings that are associated with the Cadbury brand in the mind of the consumer". 54 Characterisation of a brand element as "iconic" or otherwise has no legal significance. I accept that there is a widespread association in consumers' minds between Cadbury's business and its chocolate products and the colour purple. 55 Non-exclusive reputation in the use of purple [97]. The background to this issue is that Cadbury originally pleaded in par 10 of its statement of claim that it had achieved "a substantial, exclusive and valuable reputation and goodwill" in the colour purple. This alleged exclusivity was denied by Darrell Lea and became the subject of substantial evidence and disputation at the trial: see earlier judgment at [52]-[68]. 56 The case was argued on the common assumption that there was no relevant difference between the passing off and trade practices causes of action: earlier judgment at [117]. Indeed, Cadbury's final submissions at the present hearing asserted that its trade practices claims were "coextensive with its passing off claim". However in Full Court I at [99] it was pointed out that there was no requirement of exclusivity in relation to the trade practices claims. The question is whether the use of the particular get-up or name by an alleged wrongdoer in relation to his product is likely to mislead or deceive persons familiar with the claimant's product to believe that the two products are associated, having regard to the state of the knowledge of consumers in Australia of the claimant's product. 57 After the Full Court's judgment Cadbury obtained leave to amend its statement of claim by deleting "exclusive". However, lack of exclusivity remains relevant at a factual level. The more extensive a plaintiff's reputation, the easier it will be to show that any contrary message that might be conveyed to consumers by third party usage can be discounted. Conversely, knowledge of third party usage can impact on the likelihood or otherwise of consumers being misled or deceived. But I know that other chocolate makers' products such as Violet Crumble use purple. So Cadbury does not have a monopoly in the use of purple for chocolate. Seeing chocolate in a purple wrapper with Darrell Lea's name on it in a Darrell Lea shop does not makes me think it comes from Cadbury. 58 Cadbury submitted that the failure of Darrell Lea to adduce evidence (expert or lay) as to the effect that third party use of purple has adversely impacted Cadbury's reputation in Cadbury purple meant that the Court ought to draw a Jones v Dunkel (1959) 101 CLR 298 inference that any evidence it might have sought to adduce would not have assisted its case in this respect. I do not agree. There was substantial evidence of the fact of third party usage given by Darrell Lea's Mr Michael Lea (earlier judgment [52]-[54]) and evidence of Cadbury's "Co-existence Agreement" with Nestlé under which Cadbury agreed not to object to Nestlé's use of get-ups for Violet Crumble (a chocolate-coated honeycomb bar which might be said to verge on the iconic), Wonka, Quality Street and Polly Waffle, all of which featured purple ([55]-[56]). For its part Cadbury adduced evidence of its efforts to restrain third party usage, which met with mixed success ([57]-[67]). There was evidence of actual third party usage in the present case sufficient for the Court to make its own findings. 59 Mr Riches said that the third party products "did not come close to dominating the chocolate confectionery market in the same way as Cadbury Dairy Milk" and that no other brand consistently used purple as a "brand identity element" in promotional campaigns. Dr Stavros thought that purple used with Polly Waffle and Violet Crumble were "product specific instances of the use of a colour, rather than a corporate or master branding or mega branding". However, the lack of specialised knowledge of the confectionery market of these witnesses has already been noted. 60 Dr Stavros said that some consumers would pick up a Violet Crumble, see the Nestlé brand and "make the connection between those brands [ie Nestlé and Cadbury] and be aware that there's a distinction between those organisations". Dr Stavros' hypothesis, involving as it does a very well known non-Cadbury manufacturer and a very well known non-Cadbury product, is speculative and quite unrealistic. 61 I see no reason to vary the finding at [97] of the earlier judgment. I regard it as a valid and relevant fact. 62 Some (a majority) of Cadbury products feature little or no purple [98]. I did not understand this fact to be disputed; see earlier judgment at [22]. Dr Gibbs thought that since "the Cadbury Milk bar [sic] is --- was kind of their flagship brand and that one is --- it prominently uses purple. So in that sense I was considering the other uses to be less important in the line". It is of some significance that consumers would see Cadbury as a firm which used purple a great deal, but also other colours as well. 63 Cadbury products (with or without purple) always bear the "Cadbury" script [99]. Again, this is not disputed; see earlier judgment at [11]-[13]. 64 Use of purple seen to be bound up with the "Cadbury" script --- purple never used in isolation [100]. The fact that purple was never used without the "Cadbury" script does not seem to be disputed; see earlier judgment [82]-[87]. 65 The Cadbury experts said that this was irrelevant. I do not agree. Cadbury's expert called at the earlier trial, Professor Roger Layton, Emeritus Professor of Marketing at the University of New South Wales, clearly regarded the association of brand with colour as relevant to consumer perceptions; see earlier judgment at [77]-[78]. For obvious enough reasons, consumers are never presented at the point of sale with a Cadbury product, in purple or not, without the Cadbury name prominently displayed. The ordinary reasonable consumer is to be credited with awareness of this when confronted with the allegedly misleading Darrell Lea product. 66 Cadbury products not sold at Cadbury premises [101]. This is not disputed; see earlier judgment [9], [88]. 67 Heavy emphasis in Cadbury marketing on specific products, particularly Cadbury Dairy Milk [102]. This seems to be positively advanced in Cadbury's case. 68 " Darrell Lea" name well known in connection with chocolate [103]. Apparently not disputed. 69 Names "Darrell Lea" and "Cadbury" quite distinct in sound and appearance [104]. Not disputed; see earlier judgment at [38]-[39]. 70 Darrell Lea used purple 2000-2004 particularly at Christmas [105]. This of course is a central part of Cadbury's case. The Cadbury experts relied on inspection of one or two shops and viewing of photographs and information provided by Cadbury, all in late 2005. The value of their opinions as to what in fact happened in the marketplace in 2000-2004 must be limited. On reflection, perhaps greater weight should be accorded to the fact that the usage of which Cadbury primarily complains, that at Christmas 2000-2004, was not just of purple but a combination of purple and copper. As one Darrell Lea witness said, speaking of Christmas time, "everything in the store was purple and copper". Note also Ms McGlinchey's evidence as to the choice of copper (earlier judgment at [47]). There is no suggestion Cadbury ever used copper in conjunction with purple. This would be a relevant distinguishing feature between Cadbury and Darrell Lea in the perceptions of consumers. 71 Darrell Lea did not adopt purple to mislead consumers vis-a-vis Cadbury or its products [106]. This was a major issue at the trial; see earlier judgment at [43]-[51]. On the appeal, Cadbury's attack on this finding was abandoned. It cannot be affected by the opinions of the Cadbury experts. Cadbury's use of statements in its written submissions in the present hearing like "Enticing consumers into the marketing web" and "The manipulation of consumer choice is a matter of expert evidence" and assertions that Darrell Lea's use of purple was "strategic, sustained" and "a departure from previous use of red and green at Christmas time, requiring decision at CEO and Board level" may be an attempt to suggest a different, or qualified, conclusion on this issue. If so, it must be rejected. 72 Most of Darrell Lea's retailing occurs in its own premises --- other retailing from store-in-stores --- minor presence in supermarkets and very limited in major chains --- products not presented for sale in close proximity to Cadbury's [107]. The evidence was that at the time of trial Darrell Lea sold its products through 126 of its own shops and 699 "store-in-store" displays (free-standing units in other shops such as newsagencies and pharmacies --- they sold a substantially smaller range than Darrell Lea's own shops). About 70 per cent of sales were through the former category, but the latter were more profitable. It is likely that category of outlet will be expanded. 73 The only qualification I would make to that finding is that, in relation to the concluding sentence, the summary of evidence at [89] of the earlier judgment has some inaccuracy. Mr Selvay took his photographs in February 2006, not 2005, in five IGA supermarkets, two video stores, a pharmacy and a newsagency. The photographs show Cadbury and Darrell Lea products within the same picture. Sometimes they are on opposite sides of an aisle and sometimes closer together. The name "Darrell Lea" in its distinctive script appears on prominent signage. However, the fact remains that the familiarity of Darrell Lea stand alone shops, coupled with distinctive signage in both types of outlet, would be likely to emphasise and reinforce in the minds of consumers that Darrell Lea is a different firm from Cadbury and sells different products. Ms Linda Hurst, a Darrell Lea national marketing manager, said that the shops "were the things that generated the brand imagery for Darrell Lea" (earlier judgment at [35]). Moreover, as is mentioned in the earlier judgment at [88], IGA supermarkets were minor sales outlets for Darrell Lea. 74 Darrell Lea gives less emphasis to particular products [108]. This does not appear to be disputed. Darrell Lea had no equivalent to Cadbury's flagship Cadbury Dairy Milk. 75 Darrell Lea does not sell moulded block chocolate [109]. Again, not disputed. 76 Darrell Lea's distinctive script widely and consistently used [110]. Not disputed. 77 Colour recognition can play an important part in consumer chocolate-purchasing decisions [111]. Much of the Cadbury experts' opinions were taken up with an exegesis of this theme, which ordinary experience would suggest is fairly self-evident. Although senior counsel for Cadbury said that the science of marketing is "in great part counter-intuitive" in my view the evidence in this case rather suggests the contrary. 78 The present case concerns the use of colour in retail marketing. Ordinary experience, history and literature all tell us that colours operate as powerful stimulants of memory, identification and loyalty: "The Wearing of the Green", "The people's flag /Is deepest red". So it is not surprising that attractive colours including, but not limited to, purple, play an important part in the marketing of chocolate. The science of marketing confirms this intuitive perception. 79 Another example is the concept of "brand equity". That a brand can be, as Dr Gibbs says, highly valuable to its owners, is not particularly arcane knowledge. 80 Consumer chocolate-purchasing decisions often quick and impulsive, but not necessarily irrational --- price and brand recognition can be important [112]. Again this accords with much of what the Cadbury experts said about "low involvement" products. There was evidence about the price sensitivity of Cadbury chocolate (earlier judgment at [92]-[93]). This is significant evidence. It is virtually the only evidence of actual consumer behaviour in the retail chocolate market. The fact that consumers clearly make purchasing decisions having regard to price suggests they do not act irrationally and are capable of distinguishing between differently branded products. 81 Cadbury and Darrell Lea are competitors in the retail chocolate market [121]. Not disputed. 82 Cadbury and Darrell Lea have distinctive product lines [121]. This is a fair conclusion; see earlier judgment at [36], [90]. 83 Cadbury and Darrell Lea products are sold from different sorts of premises [121]. This is substantially correct; see earlier judgment at [88] and [72]-[73] above. 84 Cadbury and Darrell Lea products are sold under distinctive trade names [121]. This is an important, and undisputed, fact. 85 Cadbury and Darrell Lea have distinctive identities in the retail chocolate marketplace [121]. While no doubt conclusionary, I think this is a fair summary. Apart from the question of exclusive reputation in trade practices claims (see [56] above) and of course the s 80 point, Full Court I does not suggest there was any incorrect statement of principle. 87 In its written submissions Cadbury cited numerous decisions which were said to involve facts or issues similar to the present case and statements of judges about the facts in those cases. For its part, Darrell Lea sought to draw different messages from those, and other, cases and statements. Without wishing to disparage the industry of counsel, I did not find this exercise particularly helpful. I repeat the statement of Lord Oliver in Reckitt & Colman Ltd v Borden Inc (1990) 17 IPR 1 at 7, quoted in the earlier judgment at [120]. Mutatis mutandis , similar considerations apply to the trade practices claims. As was pointed out in Domain Names and Interlego (see [49]-[50] above), these are jury questions. A jury would not be asked to consider what was said by judges in other cases because a jury has to apply legal principle to the facts before it, and no other facts. 88 One additional aspect of trade practices law which should be mentioned is that conduct which results in mere confusion, or consumers being "caused to wonder", does not amount to misleading and deceptive conduct within the meaning of the statute. The position is to be distinguished from that in trade mark law. I need not add to what their Honours said on this subject (1980) 49 FLR, at pp 458-459, 475-476. In some circumstances, conduct could conceivably be properly categorized as misleading or deceptive for the very reason that it represents that confusion or uncertainty exists where, in truth, there is no proper room for either. Ordinarily, however, a tendency to cause confusion or uncertainty will not suffice to establish that conduct is of the type described in s 52. The question whether particular conduct causes confusion or wonderment cannot be substituted for the question whether the conduct answers the statutory description contained in s 52. Much of Dr Gibbs' opinions as to misinference and misassociation would seem to be examples of the "caused to wonder" reaction by consumers (and others such as employees and competitors). Insofar as they are, they would seem to raise matters outside the purview of the Trade Practices Act or the tort of passing off, even if they are matters of commercial concern to Cadbury. I am not satisfied that such usage has resulted, or would result, in a hypothetical ordinary and reasonable member of the class constituted by prospective purchasers of chocolate being misled or deceived, contrary to ss 52 or 53 (c) and (d). 90 The application will be dismissed. Questions of costs will be adjourned to a date to be fixed. I certify that the preceding ninety (90) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey.

use of colour purple in confectionery market further hearing on remitter from full court after opinion experts as to consumer behaviour wrongly excluded rule in browne v dunn trade practices evidence

The obvious intention of the present motion is to add her daughter to be part of "the applicant", so that there are two persons constituting the applicant. In addition, Ms Karen McFadden, Research Director of Queensland South Native Title Services (QSNTS), has executed an affidavit in which she deposes to having carried out "preliminary research" which has led her to express an opinion that David Isaacs was a sibling of Connie Isaacs. In the affidavit of Connie Isaacs filed on 22 June 2007, she says that: David Isaacs was my half-brother. He was at least ten years older than me. I knew him personally from my earliest memories up to his death in 1948. He was the son of my mother Bella Mclean, but he was not the son of Billy Isaac and was not a descendant of the Duke of York. His father was a white man. Exhibited to me at the time of my affirming this affidavit is a bundle of documents marked " C EX ". Page 2 of that exhibit is an extract from the Registrar General's Office Birth Consolidated Index 1905-1909 in which the field for "Father's Name" has been left blank in the rows dedicated to Bella Mclean's children David and Doris. Page 3 of that exhibit is a copy of my own birth certificate, which identifies my mother as "Bella Meyers", and which identifies the only previous issue of my parents' relationship as " 1 male deceased " and " 4 females deceased ". Page 4 is a "Record of Death" for my father, Billy Isaac, who died in 1923. She often talked proudly in my presence about being a Kamilaroi woman (I call it "Milaroi" for short). Accordingly, the descendants of David Isaacs are not of Turrbal descent, and are not members of the Turrbal people. The application in the principal proceedings says that the native title claim group " is comprised of all the biological descendants of the Turrbal ancestor known as the Duke of York . " Maroochy Barambah asserts that David Isaacs was not the son of Billy Isaacs. She refers to a genealogical chart prepared by Norman B. Tindale as part of his extensive genealogical work throughout Australia as supporting her assertion. What the material filed on behalf of Mr Delaney indicates is that there are other persons who identify themselves as Turrbal people and who say that they have never been included as part of the claim group in these proceedings. There is thus a serious factual dispute, which includes whether the descendants of David Isaacs are descendants of the Duke of York; and if they are not, are they, nevertheless, Turrbal people who would need to be included in a properly constituted Turrbal claim group. It is a natural use of language to designate the group of persons on whose behalf a claimant application is made, as 'a claim group', whether or not the application proves to be successful, and those persons, 'including the applicants', as 'claimants'. Yet the expression 'native title claim group' is defined in the NTA as being, relevantly, all the actual holders, according to their traditional laws and customs, of the particular native title claimed: NTA ss 253, 61(1). It follows that there cannot be an authorisation within s 61(1) unless there are actual holders of the particular native title claimed. Since I decide below that there are no holders of the particular native title claimed, the making of the present application could not have been authorised by all of those persons. I will address the issue independently of my conclusion that there are no actual holders of the particular native title claimed. I will address it as if I were dealing with a strike out application under s 84C. In my opinion, the answer is that the striking out remedy is available once it clearly appears that, if the application were to succeed according to its own terms, the applicants would not have been authorised by all those persons the Court would determine to be the actual holders of the particular native title claimed, that is to say, by all the members of the 'claim group' (all the 'claimants'). The observations of Lindgren J in [1192] above indicate that a strike out application would depend on whether it was established that the applicant was not authorised by all the members of the claim group, ie, all the "claimants". The question of whether all the "claimants" constitute the persons who actually hold the common or group rights and interests confirming the particular native title claimed, or whether the persons who actually hold those rights and interests is a wider group (as Mr Delaney contends), being a factual dispute, is not properly the subject of determination on a strike out application. In Bodney v Bropho [2004] FCAFC 226 , I said that determination of the question of the "proper" claimant group is not properly a subject for determination on a strike out application. William Warrell and Margaret Gentle had sworn affidavits consistent with the view that the Ballaruk and Didjarruk people was a wider group than Mr Bodney's immediate family. However, Mr Warrell and Ms Gentle were not cross-examined, even though it is plain that Mr Bodney disputed the accuracy and indeed the truthfulness of the claims that they made in their respective affidavits. The finding of lack of authorisation (or, more precisely, the primary judge's finding that Mr Bodney had failed to establish authorisation in either of the ways contemplated by s 251B of the Act), was dependent on the factual finding by the primary judge on that question. Three of the persons who have executed affidavits for Mr Delaney, namely, Neville Isaacs Jnr, Ervyn Isaacs, and Stella Isaacs, are respondents to the principal proceedings, and therefore are entitled to be heard on those issues in the proceeding. It is a curious feature of the present application that it is contended that there are alternative bases for the authorisation to change the composition of the applicant. The primary submission is that Ms Connie Isaacs, on 9 February, made the decision, and she, as Elder was entitled to make that decision for the purposes of s 251B(a) of the Act. The traditional laws and customs of the native title claim group, it was said, gave the authority to make that decision to Ms Isaacs as Elder. That was the basis on which Ms Isaacs made the original application. In the present case, all but one of the adult members of the native title claim group (as expressed in the original application) have acquiesced and acceded to this particular exercise of authority by Ms Isaacs, after there was consultation among members of the claim group as to what was proposed. The remaining adult member, Jodie Briggs, has previously acknowledged the authority of Ms Isaacs as Elder. The curious feature is that it was submitted that if the Court was not satisfied that the decision of Ms Connie Isaacs as Elder was the process of decision making under the traditional laws and customs of the persons in the Turrbal native title claim group, there had nonetheless been a decision made to authorise Ms Isaacs and Ms Barambah pursuant to a process of decision making agreed to and adopted by the persons in the native title claim group, to be inferred from the conduct of the members of the native title claim group between 9 February and 15 June 2007, when the senior members of the Turrbal group met for the purpose of making a decision. That decision was subsequently ratified by as many adult members of the Turrbal claim group as practicable (indeed, by all but one), and the resolution initially passed on 9 February 2007, having subsequently been ratified by all but one adult members of the native title claim group, constituted a sufficient authorisation within the requirements of the Act. There is simply no evidence that that method of decision making was the process of decision making required to be complied with in relation to authorising things of that kind under the traditional laws and customs of the persons in the native title claim group. The original application was not authorised by that process and, it seems to me, the alternative form of authorisation contended for factually is at odds with the primary contention of the applicant concerning authorisation, namely, that Ms Connie Isaacs as Elder had the authority of the native title claim group to make the original application, because that was the decision making process mandated by the traditional laws and customs of the native title claim group. If Connie Isaacs had authority on that basis to make the original application, she similarly had authority on the same basis to make the decision to change the constitution of the applicant from Ms Connie Isaacs to Ms Connie Isaacs and Maroochy Barambah. Both Helen Bowskill, counsel for the State of Queensland, and Mr Peter Flanagan SC for the Commonwealth submitted that s 66B assumes that the current applicant (who is sought to be replaced by the current applicant and her daughter) had authority to bring the claim at the time the claim was made: s 66B(1)(a)(i). Section 66B assumes that the current applicant, who is sought to be replaced, had authority to bring the claim at the time the claim was made: s 66B(1)(a)(i). Such an issue can be explored either in the course of a strike-out application under s 84C of the Act, or at the trial of the application. Because of the possible consequences of the application, it is in all parties' interests that the application be heard before any other steps are taken in relation to the main application. The subsection requires the Court to 'consider the application made under subsection (1)'. The subsection does not require the Court to determine the application before any further steps are taken. The use of the word 'consider' without an obligation on the Court to also 'determine' the application is deliberate. Where the application to strike out is obviously without merit then it may be dismissed immediately. Where the application is clearly a case that calls for relief under the section, recognising that relief will be provided sparingly as I have described it, then an order will be made dismissing the main application. In many cases, an applicant faced with an application under s 84C will apply to amend the application to cure an identified deficiency. For example, where an application is based upon an applicant's failure to comply with s 62 in supplying the details under that section, an applicant might respond by amending the application to make it comply. In those cases, the Court will not be called upon to determine the s 84C application. For example, it may be difficult to decide, on the papers, whether the applicant has been authorised by the native title claim group. It may be, as submitted by Mr Wright on behalf of the State, that the requirement to "consider" the application does not include a requirement to determine the application. It may be open to the Court, having considered the merits of an application, to decide to defer a ruling on it until the trial of the principal application. Whether or not that is so, it is clearly the policy of the Act that the Court should give immediate attention to a strike out motion. The reason, no doubt, is that it is undesirable to allow parties to be put to trouble and expense in relation to an application that fails to comply with the fundamental requirements stated in ss 61, 61A and 62. For the above reasons, I am satisfied that it is proper to grant the relief sought by the notice of motion. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender.

notice of motion seeking to replace applicant in proceedings whether applicant should be replaced whether entire relevant claim group has been included whether applicant was authorised to make original native title application where section 66b of the native title act applies where determination of "proper" claimant group not properly a subject for determination where section 66b of the native title act assumes the applicant had authority to bring the claim where determination of authorisation should more properly be determined in a strike out application under section 84c of the native title act where if applicant had authority to make original application the applicant had authority to change the applicant where leave granted to change applicant native title

His Honour dismissed, with costs, an application to review a decision of the Refugee Review Tribunal ("the Tribunal") signed on 25 October 2006 and given on 14 November 2006. 2 The appellant is a citizen of the People's Republic of China. He arrived in Australia on 20 October 2004. On 3 December 2004 he applied for a protection (class XA) visa. On 7 March 2005 a delegate of the respondent Minister refused that application. The appellant then sought review of that decision from the Tribunal. The Tribunal affirmed the delegate's decision on 4 August 2005. The appellant then sought judicial review. 3 On 5 June 2006 Federal Magistrate Barnes made orders by consent quashing the Tribunal's decision and remitting the application for reconsideration. The appellant was then invited to attend a second Tribunal hearing, which he did. Ultimately, the Tribunal rejected his application. In doing so, it found that his evidence was not credible, largely because the claims that he advanced before the first Tribunal differed in certain respects from his claims before the second Tribunal. 4 The appellant's claims can be briefly stated. He says that he is a member of Falun Gong, and that by reason of that fact, he faces persecution if required to return to China. 5 In his application for a protection visa the appellant said that he was born in Fujian, China, in 1972 and was married in 1996. His wife and daughter continue to reside in China. He said that he was a sales/department manager prior to coming to Australia, and had held that position from March 2003 to October 2004. He claimed that he had been unemployed from February 1996 until February 2003 and that prior to that he had been a construction worker and a farmer. He claimed that he left China legally using a passport issued in his name in Fujian in November 2002 which would expire in November 2007. He claimed that he had had difficulties, which he detailed as "bribery", obtaining his passport. He claimed that his passport was not valid for return to China because "it must have been blacklisted". 6 The appellant stated that he had been involved in the 1989 students' pro-democracy movement. He said that this prevented him from going to college although he had passed the entrance exams. He said that he began practising Falun Gong in 1997 and claimed that he had been detained for one month after being arrested, together with other members, at that time. He said that it was as a result of his arrest that he was prevented from taking on employment between 1997 and 2003. 7 The appellant then said that he went through many years of hardship and finally became a real estate manager. He became involved in further demonstrations and hunger strikes calling upon the authorities to release Falun Gong members who had been arrested and detained. He claimed that he went into hiding and eventually used the passport issued to him in 2002 to escape to Australia. He claimed to have participated in Falun Gong activities in Australia which he said would aggravate the "crimes" for which he was wanted in China. 8 In a written statement made on 17 May 2005 the appellant gave a somewhat different version of events. He claimed that his passport had been taken by force by a person whom he named. He said that he had come to Australia together with eight other people, six of whom were not with his company. Five of those people had gone onto the United States. He claimed that he was now being sought in Australia by one of the people he had come to this country with, and that his family had been told that he would be killed if he returned to China because he had destroyed the plans of others. Those persons had his documents, including his building certificate. He had not revealed these matters to his migration agent because he was worried that she might pass that information on to those who were looking for him. 9 The appellant gave evidence at a hearing before the first Tribunal. On this occasion he stated that he did not have his passport because a person whom he named had taken it from him together with his money at the airport. The person threatened to kill his family if he told anyone about this. He claimed that there was a person in Australia looking for him, but he was too frightened to identify that person to the police. 10 Also, before the first Tribunal the appellant claimed that in 1997, after his arrest, he had in fact been detained for a year and not as he previously said for one month. He said that his migration agent had mistakenly written in his application for a protection visa that he had been detained for a month. The appellant said that he had only practised Falun Gong in 1997 for a period of three months. Presumably that explained why he could not explain or describe the main exercises of Falun Gong, and said that he simply "followed others". When he came to Australia he pursued Falun Gong and claimed to have been photographed by Chinese government security agents who had shown the photographs to his family in China. 11 Before the second Tribunal the appellant claimed that he had in fact been regularly practising Falun Gong in China since at least 2002. He claimed to have been practising Falun Gong in Australia since August 2005. On this occasion he said that he had sent a camera, with film enclosed, which showed him practising Falun Gong in Australia to his family in China in 2006. He claimed that the camera had been intercepted by the Chinese authorities. 12 By the time of the second Tribunal hearing in September 2006, the appellant had acquired a great deal more knowledge about Falun Gong than he had had at the time of the first Tribunal hearing. He also provided photographs of himself practising Falun Gong, and submitted a petition signed by 11 individuals attesting to the fact that he was a practising member. He claimed to have taken part in protest activities outside the Chinese consulate and claimed (for the first time) that three of his colleagues had been arrested for Falun Gong activities in October 2003. He said that their imminent release would be problematic because they had identified him. 13 The appellant also claimed that he had been involved in the pro-democracy movement in 1989. He claimed that this led to his having been administratively detained for 14 days, and expelled from school. He outlined a number of consequences that had befallen him as a result of his pro-democracy activities and his Falun Gong practice. He said that he had been forced to report regularly to the authorities and to undergo political study. He claimed that his daughter's school fees had been doubled, and that his movements within China had been restricted. He claimed that he had been restricted to having one child, while others had been permitted to have more. 14 Finally the appellant claimed that he had gained employment in 2002 with a real estate firm and by 2003 had been promoted to the position of project manager at that firm. As previously indicated, he said that he had travelled on his own passport but a Chinese person had seized it, together with his money, upon his arrival in this country. He said that he had come to believe that the Chinese person was part of a smuggling ring. He said that he had been able to get a fresh Chinese travel document after his arrival in Australia. He claimed that he owned a property in China which he had had to offer as security to ensure his return. Thus he was forfeiting that property by making this application. 15 The second Tribunal was plainly concerned about some of the material put forward by the appellant. On 7 September 2006, the day following the hearing, it sent a letter to the appellant, in apparent compliance with s 424A of the Migration Act 1958 (Cth), giving him particulars of information that it considered would be the reason or a part of the reason for affirming the decision under review, and inviting comment upon it. Notwithstanding that response, the Tribunal concluded that the appellant's claims should be rejected. It did so primarily because it regarded the appellant as a person of no credibility. It rejected his account of having become the manager of a property development company within a year or so of joining that company, after many years of unemployment, as inherently improbable. It noted that he had travelled regularly within China and was able to travel overseas legally using a passport issued in his own name. It noted further that at the second Tribunal hearing the appellant contradicted his evidence before the first Tribunal in various respects, including the period that he practised Falun Gong in China, the matter of the camera and film, and the period of imprisonment that he had actually served. It regarded his claim, first raised in September 2006 that three of his colleagues had been arrested in October 2003 as a "recent invention". 17 The Tribunal did not accept that the appellant had been able to pay off a property within two years. Nor did it accept his claim that the Chinese authorities had taken that property as security for his return. It found that he was of no adverse interest to those authorities. It doubted the genuineness of his commitment to Falun Gong, and concluded that the reason he had involved himself with that sect in Australia was purely to strengthen his claims as a refugee. It therefore disregarded the conduct engaged in by the appellant in Australia in accordance with s 91R(3) of the Migration Act . 18 Finally, the Tribunal concluded that the appellant had not been a pro-democracy activist. It regarded his claims of past harm as contrived. It rejected the appellant's professed theory that the Chinese person who had supposedly taken his passport had any connection with the Chinese authorities, and viewed this claim as pure speculation. 19 The Federal Magistrate dismissed the application for judicial review largely on the basis that the appellant was simply challenging findings of fact. No jurisdictional error had been shown. 20 The Notice of Appeal to this Court alleges that the Federal Magistrate erred in finding that there was no evidence to support the appellant's claim that the second Tribunal had made a statement to the effect that it did not understand why the matter had been remitted after the first Tribunal hearing. No particulars of any evidence regarding that issue were provided in the Notice of Appeal. An affidavit was filed, apparently directed towards obtaining leave to appeal from the judgment of the Federal Magistrate. However, leave to appeal is not required, and the affidavit is therefore pointless. 21 The appeal raises one ground only. That ground obviously required evidence to be put before the Court below. It is of note that a direction had been made by the Federal Magistrate that, with the exception of the Court Book, all evidence relied upon by a party must be in the form of an affidavit. No evidence going to the ground raised was tendered. In fact, the issue was only raised as an oral submission by the appellant, presumably in support of an argument that the second Tribunal exhibited bias of one sort or another. 22 Plainly, this ground of appeal cannot succeed. The other points made by the appellant all invite merits review. No appealable error has been shown. The appeal must be dismissed with costs. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg.

appeal from judgment of federal magistrate dismissing appeal from refugee review tribunal no appealable error appeal dismissed with costs migration law

Counsel for Ms Antipova argued that a great number of aspects of the manner in which the Tribunal conducted the proceeding, and reasoned its decision, gave rise to jurisdictional error on its part. The issues include denial of procedural fairness. Most significantly, it was suggested that the Tribunal denied Ms Antipova procedural fairness by misleading her as to the issues on which it proposed to decide her case, and by cutting short the presentation of her case during the Tribunal's hearing. There is also a question whether the Tribunal misconstrued a criterion applicable to Ms Antipova's case. 2 Ms Antipova is a citizen of the Russian Federation. She entered Australia on 21 March 2002 as the holder of a Business (Class UC), subclass 456 visa, valid until 21 June 2002. On 18 June 2002, she applied for a Partner (Temporary) (Class UK) visa, subclass 820 (Spouse) and a Partner (Residence) (Class BS) visa, subclass 801 (Spouse), on the basis of her de facto relationship with an Australian citizen, Michael Charles Petrou. An application of this kind is considered first as an application for a subclass 820 visa. If that visa is granted, then the applicant may be considered later for the grant of a subclass 801 visa, a criterion for which is that the applicant have held a subclass 820 visa for a specified period, usually two years. On 3 January 2003, a delegate of the Minister decided to refuse to grant a visa. Ms Antipova applied to the Tribunal for review of the delegate's decision. The Tribunal conducted its hearing on 21 October 2003. On 9 December 2003, the Tribunal sent to Ms Antipova its written decision and reasons for decision. The Tribunal affirmed the decision under review, finding that Ms Antipova was not entitled to the grant of either a subclass 820 visa or a subclass 801 visa. 3 In respect of that decision of the Tribunal, Ms Antipova applied to the Court, seeking relief of the kinds which the Court is empowered to grant in the exercise of the jurisdiction conferred on it by s 39B of the Judiciary Act 1903 (Cth). Section 360 is found in Div 5 of Pt 5 of the Migration Act , which also contains s 357A. Their relationship began in California, in the United States of America. Ms Antipova had gone to California to follow her then fiancé, with whom she had had a long relationship in Russia. At a party in April 2001, she met Mr Petrou, who fell in love with her. Although she was to be married shortly, Ms Antipova continued to meet Mr Petrou socially, with other friends she had made through studying English, on a daily basis. She went ahead with her plans to marry. The wedding took place on 30 April 2001. After she married, her husband became violent towards her. She quickly decided that she did not wish to remain with her husband, and preferred to make her life with Mr Petrou. She moved into a house that he shared with others on 18 May 2001. 11 Ms Antipova and Mr Petrou supplied to the Tribunal a quantity of material designed to bear out the case as to how long they had lived together. The material included statutory declarations of Mr Petrou's parents. MICHAEL INTRODUCED NATALIE TO US AND TOLD US THAT THEY WERE TOGETHER AND INTENDED TO MARRY. MICHAEL INTRODUCED NATALIE TO ME AND TOLD ME THAT THEY WERE A COUPLE AND INTENDED TO BE MARRIED. I have known Michael for two years, having met him in June 2000 in San Jose, California. We then shared an apartment in San Jose from April of 2001 to July of 2001. Natalie came to our apartment multiple times for dinners and coffee and lived with us in our apartment during the month of May. It is very apparent to me that the two were completely in love. As I stated, I met Michael in about June 2000 and we became, and continue to be, very good friends. We shared a house in San Jose from April 2001 until July 2001, when I left the house to travel and settle in Venezuela. I met Natalie in late April 2001 and Natalie moved in with Michael in May 2001. I left in July 2001 and Natalie was still living with him when I moved out. As I also stated it was clear that they were very much in love, and not surprisingly, they have now married. Natalia had a group of friends from the school that included people from many parts of the world. Natalia gave me a tour of the house and I saw the bedroom that they occupied with its adjoining ensuite. Mr Petrou has two children by a previous marriage, who have developed a close relationship with him and Ms Antipova since they arrived in Australia. ' The letter referred to 'the enclosed information sheet, which contains information about the conduct of Tribunal hearings. ' Enclosed was a two-page document, entitled 'INFORMATION ABOUT TRIBUNAL HEARINGS'. A transcript of the hearing, 46 pages long including the cover page, was placed before the Court by means of a supplementary court book. The reason was, in my view, that you were unable to satisfy the officer that you had lived together for 12 months, and there was no evidence of any compelling or compassionate circumstances to waive or excuse that requirement. Do you understand the framework that we're working with today? I'm also going to ask you if there are any compelling or compassionate reasons why I should waive that 12 month requirement if I'm not satisfied that you did live together as husband and wife during that 12 month period. Do you understand I'll be doing that today? In a general sense, I'm only concerned with the 12 month period, and that one issue. Do you understand that? Is the issue today whether or not they lived together for 12 months or whether they were involved together for 12 month? That's the requirement of the regs and when I say "husband and wife" I mean in a relationship like husband and wife. There has to be all the evidence to support that. After discussion with the migration agent, the Tribunal member said that it would not be necessary for Mr Petrou to leave while she questioned Ms Antipova. The Tribunal member then began questioning Ms Antipova about the circumstances in which she separated from her first husband and commenced her relationship with Mr Petrou. Why did you do that? In the course of those pages, there are revealed at least a dozen occasions on which the Tribunal member interrupted Ms Antipova's answers to questions, either asking a further question, or seeking to discourage her from giving as much detail as Ms Antipova obviously wished to give. Just tell me how it finished? Can you just please tell me when your relationship with Grigori started coming undone, at what point? We need to move on because we're running out of time. You've been asked a number of times to provide documentary evidence of you having lived with Mr Petrou from May 2001 and you haven't provided gas accounts, electricity accounts, phone accounts, that sort of thing, and I can understand why that would be in a shared house where you'd just moved in as one of many. I understand that. We're running out of time so just let's keep it simple. Ms Antipova's migration agent said that he would look for those documents. How come we're on such a clock? Another hearing is coming in after us. Anything finally either of you would like to say? We do have to finish now. The Tribunal went through the requirements of reg 1.15A(3) of the Migration Regulations , discussing the requirements of the separate paragraphs of that subregulation under separate headings. 34 In relation to the financial aspects of the relationship, at [51] of its reasons for decision, the Tribunal found that there was no evidence that the parties combined their financial affairs in the 12 months prior to the time of application, or that they shared assets or liabilities. The Tribunal accepted that Mr Petrou was the only lessee of a house that was shared with others, so it would have been impractical for him to include Ms Antipova's name on accounts for household expenses. 35 Under the heading 'Nature of the household', at [52] --- [58], the Tribunal dealt with the issue of the date from which Ms Antipova and Mr Petrou had begun to cohabit. The Tribunal noted that there would have been sufficient bedrooms in the house occupied by Mr Petrou and four others for Ms Antipova to have had her own room. It referred to the fact that the first letter from Ms Downie did not indicate whether Ms Antipova and Mr Petrou were living in separate bedrooms or sharing Mr Petrou's room. It found that Ms Downie's two letters were inconsistent, in that the first said that Ms Antipova was a member of the household during the month of May, but the second said that Ms Antipova moved in with Mr Petrou in May 2001 and remained with him until Ms Downie left in July 2001. The Tribunal gave the letter from Ms Shpits 'very little weight', as it was not signed. The Tribunal referred to the absence of documentary evidence that Ms Antipova lived at Mr Petrou's home and that she and Mr Petrou travelled together in America. 37 Under the heading 'Social aspects of the relationship', at [59], the Tribunal referred again to the letters from Ms Downie and Ms Shpits and to the statutory declarations from Mr Petrou's parents. It noted that Mr Petrou's family did not indicate that he and Ms Antipova were living together in America. 38 Under the heading 'Nature of the persons' commitment to each other', at [60] --- [64], the Tribunal expressed a finding that Ms Antipova and Mr Petrou met in April 2001 and married on 2 March 2003. It said, 'The Tribunal accepts that they share a degree of companionship and support and that they see the relationship as being long term. ' It then discussed the question whether, in the period of 12 months prior to 18 June 2002, when the visa application was made, the parties saw the relationship between them as being long-term and shared companionship and support throughout. 39 The Tribunal obviously had difficulty accepting that Ms Antipova had formed the view that she wished to be in a permanent relationship with Mr Petrou before she proceeded to marry her first husband. Two weeks after meeting [ Mr Petrou ] the...applicant married her former husband and lived as his spouse until 18 May 2001, when she claims to have moved into [ Mr Petrou ]'s home in a de-facto relationship. Although the...applicant has claimed that her former husband became violent towards her in the second week of their marriage, and that he kidnapped and violently assaulted her on the day that she moved in with [ Mr Petrou ], there is no claim before the Tribunal that she entered the marriage with her former husband because of threats, intimidation or physical violence from him. The...applicant has not provided a logical or convincing explanation for proceeding with that marriage if she was, as stated, already in love with [ Mr Petrou ] and wanting a permanent relationship with him. The Tribunal can not reconcile the...applicant's claim to have been committed to a relationship with [ Mr Petrou ] at the same time that she was entering into marriage with another man. Further, the Tribunal does not accept that, if the parties drew a significant level of companionship and support from each other at that time, the review applicant would have withheld information about her recent marriage from [ Mr Petrou ] until the day before she commenced a de-facto relationship with him. The Tribunal also notes that the...applicant was continuing to have a physical relationship with her former husband at a time when she said she wanted a permanent relationship with [ Mr Petrou ]. The Tribunal accepted that Ms Antipova moved into Mr Petrou's home on 18 May 2001, but was not satisfied that she did so as his de facto spouse. ' The Tribunal did not accept that they lived together as husband and wife from 18 May 2001. 42 At [64], the Tribunal said that it was unable to make a finding whether Ms Antipova continued to live in Mr Petrou's home from 18 May 2001 and unable to make a finding as to when she entered into a de facto relationship with him. It only found that, at some point after she moved into Mr Petrou's home, she became committed to a long-term relationship with him. After discussing aspects of the evidence, the Tribunal found that the evidence given by Ms Antipova and Mr Petrou in support of the application was 'not entirely credible' and that some aspects of Ms Antipova's account of the development of her relationship with Mr Petrou 'were also lacking in plausibility. The Tribunal accepts that there was a developing relationship between the parties during the relevant period prior to the date of application, but is not satisfied that the relationship between them was a genuine and continuing spousal relationship for the entire period. The Tribunal is also not satisfied that the parties were living together as husband and wife throughout the relevant period. At [74], it referred to Boakye-Danquah v Minister for Immigration & Multicultural & Indigenous Affairs [2002] FCA 438 (2002) 116 FCR 557. In that case, the Court was dealing with an earlier version of item 820.211 in Sch 2 to the Migration Regulations , in which there was a requirement to satisfy several criteria found in Sch 3, 'unless the Minister is satisfied that there are compelling reasons for not applying those criteria. ' Relying on an explanatory memorandum issued by the Minister at the time when this provision had been inserted into the Migration Regulations , which described the provision as a 'waiver provision', Wilcox J held at [33] that it was clear that the 'compelling circumstances' criterion was intended to be satisfied at the time of application for a visa, not at the time of decision, because item 820.211 in its entirety was required to be satisfied at the time of application. However, the Court clearly stated that the relevant criterion in that case was concerned with "the circumstances in which the application is made". The 12 month cohabitation requirement is also clearly concerned with the circumstances in which the application is made. This requirement may only be waived if there are circumstances sufficiently compassionate and compelling which would justify the parties having lodged the visa application before they had lived together in a spousal relationship for a sufficient period to satisfy the definition of spouse under regulation 1.15A. If the Tribunal was to take into account compassionate and compelling circumstances which apply only at the time of the decision it would be, in effect, making a determination in relation a [ sic ] time of application requirement by reference to facts which did not yet exist at the time of application. Such a determination would entirely undermine the two-stage assessment process which underpins the regulations. That is, an assessment of relevant factors which exist at the time of application and a later assessment of factors which exist at the time of decision. ' It expressed a finding that the only circumstances which could properly be taken into account 'in determining whether to exercise the waiver of the 12 month cohabitation requirement are those circumstances which applied at the time of application. The parties should be given the opportunity to present information as to why they consider there are compelling and compassionate reasons to waive the one year pre-existing cohabitation requirement. However, it is the policy intention that an assessment that the parties' relationship is genuine would not, in the absence of a dependent child of the relationship, be sufficiently compelling to justify not applying regulation 1.15A(2)(d) requirements. It referred to the relationship between Mr Petrou and the two children of his former marriage and to the fact that he had lived away from them for some time. It took the view that Mr Petrou would be able to prepare his children psychologically for his departure from Australia to be with Ms Antipova. The Tribunal found that it was not satisfied that a close relationship existed between Mr Petrou and his children at the time of application and was not satisfied that the relationship amounted to compassionate and compelling circumstances at that time. It was also not satisfied that the current needs of Mr Petrou's children were sufficiently compelling to justify a waiver of the 12-month cohabitation requirement, even if it could properly take those circumstances into account. Some of the points raised can be dealt with very briefly, whereas others require a more detailed examination. The three documents are the amended application, filed on 8 June 2004, contentions of fact and law, also filed on 8 June 2004, and contentions in response to the respondent's supplementary contentions, filed on 2 May 2005. 49 Ms Antipova contended that the Tribunal's reasoning manifested a misconstruction of, incorrect understanding of, or imposition of an impermissible gloss on, the statutory criteria for a subclass 820 visa or a subclass 801 visa, particularly the definition of 'spouse'. This alleged error was said to have been demonstrated by the Tribunal finding: that there was no evidence of combined financial affairs of Ms Antipova and Mr Petrou in the 12 months prior to the date of application; that Ms Antipova and Mr Petrou had no shared assets or liabilities, nor a joint bank account; that the documentary evidence provided by Ms Antipova was relevant but not conclusive of a de facto relationship during the 12 months; and implicitly that Ms Antipova had not been living in a de facto relationship with Mr Petrou for 12 months. The same error was alleged to have been shown by the Tribunal giving little weight to statements and letters from friends and statutory declarations from members of Mr Petrou's family. It was also said to have been revealed by the Tribunal's finding that there were no compelling and compassionate circumstances for the grant of the visa, for the purpose of which the Tribunal limited its inquiry to the relationship between Mr Petrou and his children, and did not consider Ms Antipova's own relationship with those children. 50 Allied with the alleged error in failing to apply the correct criteria was the allegation that the Tribunal failed to take into account relevant considerations and took into account irrelevant considerations. It was said that the Tribunal failed to consider the mandatory elements of reg 1.15A(3)(a)-(d) of the Migration Regulations . In particular, it was said that the Tribunal: failed to consider the joint burden on Ms Antipova and Mr Petrou of debt incurred in respect of legal expenses, loans and university fees; focused only on the question whether Ms Antipova and Mr Petrou had a joint bank account; failed to take account of the opinion of friends and family members as to whether the relationship was genuine, concentrating instead on whether friends and family could give evidence as to the couple's living arrangements; and failed to consider evidence of joint social activities, making no reference to travel itineraries, air tickets and copy passports, tendered by Ms Antipova. 51 It was also argued that the Tribunal failed to take account of relevant considerations because it: ignored Ms Downie's explanation of the meaning of her first letter; made no reference to a letter from Asiye Karagoz, a friend of Mr Petrou who provided a statement as to Mr Petrou's expressed intentions with respect to Ms Antipova in May 2002; refused to give weight to the letter of Ms Shpits on the ground that it was unsigned, thereby demonstrating that the Tribunal allowed itself to be bound by technicalities, in contravention of s 353(2)(a) of the Migration Act ; and ignored evidence that Mr Petrou had undergone surgery for the reversal of a previous vasectomy, which was advanced as evidence of his intention, and that of Ms Antipova, that they would have children of their own. 52 Further, Ms Antipova claimed that the Tribunal took into account irrelevant considerations. It was said that the Tribunal did this by forming a view, based on the history of travel undertaken by Ms Antipova and Mr Petrou, that they had greater financial resources than they claimed, and therefore could have had a joint bank account or significant joint assets. It was said that this reasoning involved reliance on irrelevant material and conjecture. Another irrelevant consideration was said to have been the fact that Ms Antipova continued to have a physical relationship with her fiancé after meeting Mr Petrou and proceeded to marry her fiancé. These facts were said to be irrelevant because the Tribunal was required to consider the relationship between Ms Antipova and Mr Petrou, not her relationship with any other person. Ms Antipova also said that the Tribunal wrongly speculated about why Ms Antipova withheld from Mr Petrou information about her recent marriage until she left her husband and moved in with Mr Petrou, because this was irrelevant to her intention, and that of Mr Petrou, as to their relationship. 53 One of the major aspects of Ms Antipova's case was the allegation that the Tribunal denied her procedural fairness. This was put in three ways. First, it was argued that the imposition of a time limit on the hearing, and the significant number of interruptions of Ms Antipova's evidence by the Tribunal member, deprived Ms Antipova of the opportunity to give evidence and present arguments relating to the issues arising in relation to the decision under review. To the extent to which s 357A(1) of the Migration Act might be thought to prevent Ms Antipova relying on the ordinary principles of procedural fairness, reliance was placed on s 360(1). It was said that, because Ms Antipova was not given a proper opportunity to give evidence and present arguments, the Tribunal had failed to comply with its statutory obligation to invite Ms Antipova to appear before it for a hearing of the kind contemplated by that subsection. Second, it was contended that the Tribunal misled Ms Antipova about the issue to be decided, by telling her at the outset of the hearing that it was not concerned with the genuineness of the relationship, and thereafter made a finding against Ms Antipova that the relationship had not been genuine during the 12 months prior to the application for a visa. Third, Ms Antipova said that the Tribunal failed to inform her that it did not propose to give any weight to the letter from Ms Shpits, because it was unsigned, and to give Ms Antipova an opportunity to make submissions on that issue. 54 There were other issues raised on behalf of Ms Antipova. Her counsel argued that the Tribunal's conduct of the hearing was such that a reasonable bystander would have concluded that it was not going to grant Ms Antipova a visa, and was thereby ostensibly biased against Ms Antipova. It was said that, in breach of its obligation pursuant to s 353(1) of the Migration Act , the Tribunal failed to conduct a mechanism of review that was fair and just. It was contended that, in breach of its duty pursuant to s 353(2)(b) of the Migration Act , the Tribunal failed to act in accordance with substantial justice and the merits of the case. It was argued that the Tribunal had wrongly assumed that it had a discretion to limit its inquiry to the question of satisfaction of the criteria at the date of application, and did not consider satisfaction of the criteria at the date of decision, thereby not making a bona fide attempt to perform its duty to review a decision, conferred on it by s 348(1) of the Migration Act . Finally, it was said that the Tribunal failed to give genuine and realistic consideration to the issues raised by the review of the decision of the Minister's delegate, as demonstrated by its treatment of the evidence of friends and family and its failure to apply reg 1.15A(5) of the Migration Regulations . The Tribunal's task was to determine whether Ms Antipova met the criteria in item 820 of Sch 2 to the Migration Regulations . It was not open to the Tribunal to choose which criteria to apply; it was bound by all of them and, if Ms Antipova failed to meet any one of them, the Tribunal could not grant her a visa. The first step in the Tribunal's reasoning, inevitably, was to apply the criteria to be satisfied at the time of application. If Ms Antipova failed to satisfy those criteria, she was not entitled to the visa she sought, and there would be no point in the Tribunal proceeding to determine whether she satisfied any other criterion. By approaching the matter in this way, the Tribunal was not exercising any discretion to limit its inquiry. It was performing its task. 56 Crucial to the Tribunal's application of the criteria was the definition of 'spouse' in reg 1.15A of the Migration Regulations . An element of this was the question whether, for a period of 12 months immediately preceding the date of application for a visa, Ms Antipova and Mr Petrou had 'a mutual commitment to a shared life as husband and wife to the exclusion of all others' and, during that period, 'the relationship between them was genuine and continuing'. Additionally, the Tribunal had to inquire whether, during that 12-month period, Ms Antipova and Mr Petrou had been living together or, at least, had not been living apart on a permanent basis. It is possible to imagine that, in the majority of cases of this kind, issues of the quality of a relationship in the 12-month period preceding an application for a visa are not of great significance. Ordinarily, people will apply for a visa when they are sure that they meet the criteria for it. It would be an unusual case in which a person applies for a subclass 820 visa on the basis of a relationship that manifestly began within the 12-month period. The present case might have been different, however. The application for a subclass 820 visa was made on 18 June 2002, three days before the expiration of the visa on which Ms Antipova had entered Australia. The Tribunal might have taken the view that the date of the application had more to do with Ms Antipova's need to procure a visa, in order to remain in Australia with Mr Petrou, than it did to the ability of Ms Antipova to satisfy the 12-month criterion. In addition, the case had unusual features. Ms Antipova and Mr Petrou sought to establish that their entry into a marriage-like relationship occurred on, or soon after, 18 May 2001. They had met only the previous month, and only socially prior to 18 May. At the time they met, Ms Antipova was engaged to another man, whom she proceeded to marry on 30 April 2001. According to her, her relationship with her husband deteriorated rapidly after the marriage, to the point where she left him. Straight away, she claimed to have entered into a marriage-like relationship with Mr Petrou. Although this story is by no means impossible to accept, the Tribunal cannot be criticised for treating it as a story that needed investigation. 57 To determine whether it was satisfied that Ms Antipova's de facto relationship with Mr Petrou had begun before 18 June 2001, the Tribunal had to consider whether the material in support of this proposition did indeed establish it to the requisite degree of probability. There were two aspects to this. One was the question whether the Tribunal accepted that the material itself tended to establish the proposition. The other was whether, in the Tribunal's view, the surrounding circumstances were such as to make the proposition inherently less likely than it might have been in the absence of those circumstances. The Tribunal had to balance the material and the circumstances and reach a conclusion. This was the exercise of its very function. The Court cannot substitute its own view of the facts for that of the Tribunal. The question of the weight to be given to the statements of friends and family was entirely a matter for the Tribunal, and certainly not one for the Court. It was not the duty of the Tribunal to accept without question everything Ms Antipova placed before it; there is no such thing as evidence conclusive of a fact, for the purposes of the Tribunal's performance of its function in the present case. 58 As part of the fact-finding process, the Tribunal had regard to Ms Antipova's relationship with the man she married on 30 April 2001. Plainly, this was a circumstance relevant to her claim that she had wanted a permanent relationship with Mr Petrou from the time she met him, and began such a relationship on 18 May 2001. In examining it, the Tribunal was not considering a relationship between Ms Antipova and another person, as Ms Antipova's written submissions contended. The Tribunal was considering the very relationship it was required to consider, in order to determine whether it met the criteria which the Tribunal was obliged to apply. There was no conjecture involved in the Tribunal's reasoning on this aspect of the case. It simply compared Ms Antipova's own account of her feelings and intentions with her own account of her actions, and found them incompatible. One manifestly relevant aspect of this was the evidence that Ms Antipova did not tell Mr Petrou that she had recently married when, a few days later, he declared his feelings for her. Another was her evidence that, despite her claim that she wanted a permanent relationship with Mr Petrou from the time she met him, she continued to have a physical relationship with the man she then proceeded to marry. Another decision-maker might have been more accepting of indecision and the impact of personal or social pressure, but the finding of facts was the task of the particular Tribunal member. 59 In determining whether Ms Antipova and Mr Petrou had lived together as husband and wife prior to 18 June 2001, the Tribunal looked at all the material Ms Antipova provided to it. Far from ignoring the letters from Ms Downie, it quoted the essential parts of both of them. In its reasons for decision, the Tribunal devoted a significant amount of time to what it regarded as an inconsistency between the two letters. Another decision-maker might not have regarded this apparent inconsistency as important, or might have found that any ambiguity in the first letter was resolved by the second, but the conclusion that it could not give either letter significant weight, because of its inability to resolve the perceived inconsistency was a finding of fact, and not a matter on which the Court can reverse the decision. Similarly, the Tribunal did not ignore the letter from Ms Shpits. It quoted the substance of the letter, but gave it very little weight, because of the absence of a signature, despite the fact that the letter was the subject of a certificate of a notary of the State of California. Another decision-maker might not have regarded the absence of a signature with such seriousness as the Tribunal did in the circumstances, but the weight it gave to the letter of Ms Shpits was a matter for the Tribunal. Nor did the Tribunal ignore the written statement of Ms Karagoz. It expressly said that it took this statement into account. It is worth pointing out that, in its terms, the statement provides evidence that, in May 2002, when he apparently visited Germany, Mr Petrou made it clear that he was very much in love with Ms Antipova and wanted to spend his life with her. This information hardly bore on the question whether Mr Petrou and Ms Antipova had been in a de facto relationship since May of the previous year. Nor did it bear upon whether Ms Antipova had a commitment to spending her life with Mr Petrou in May the previous year. The Tribunal accepted that Mr Petrou developed a strong, and perhaps overwhelming, affection for Ms Antipova shortly after they met. It did not accept that Ms Antipova reciprocated his feelings or was committed to a long-term relationship with him when she moved into his house. The statement of Ms Karagoz threw no light on that issue. 60 In determining whether Ms Antipova and Mr Petrou had been in a de facto relationship for 12 months or more prior to the visa application, the Tribunal was bound to have regard to all of the matters referred to in reg 1.15A(3) of the Migration Regulations . That subregulation so provides and, as the Tribunal pointed out at [48] of its reasons, the mandatory nature of the provision was emphasised in Nassouh v Minister for Immigration & Multicultural Affairs [2000] FCA 788 at [10] . In conformity with its obligation, the Tribunal discussed in its reasons for decision each of those matters, to the extent to which there was evidence before the Tribunal relating to them. It did so under headings reflecting the requirements of pars (a), (b), (c) and (d) respectively of reg 1.15A(3). This arrangement of the Tribunal's reasons for decision makes it difficult for Ms Antipova to sustain the argument that the Tribunal failed to consider the mandatory considerations. 61 In its consideration of the financial aspects of the relationship, required by reg 1.15A(3)(a) of the Migration Regulations , the Tribunal first found that there was no evidence that, in the 12-month period it was considering, the parties combined their financial affairs or shared assets or liabilities. It acknowledged that Ms Antipova had given a reason for the lack of a joint bank account, namely that she and Mr Petrou had little money and there was no need. The Tribunal pointed out that there was no documentary evidence of shared household or daily living expenses in the relevant 12-month period, but appeared to accept that it would have been impractical to have had such evidence, because Mr Petrou was the sole lessee of the six-bedroom house in California in which Ms Antipova claimed to have lived with him and others. The Tribunal clearly did not focus solely on whether Ms Antipova and Mr Petrou had a joint bank account, as the submissions on behalf of Ms Antipova suggested. Nor did it ignore evidence of the joint burden of debt for legal expenses, loans and university fees. To the extent that such a joint burden might have existed, it plainly did not exist during the 12 months preceding the application for a visa. Indeed, as late as 1 September 2003, Ms Antipova's migration agent (who was also, apparently, a legal practitioner) submitted in writing to the Tribunal the statement that Ms Antipova and Mr Petrou 'do not have joint financial commitments because of their parlous financial position. ' The Tribunal could hardly have made any finding other than the one it made on this aspect of the case. In weighing the credibility of Ms Antipova's case, the Tribunal was certainly entitled to use material that Ms Antipova had supplied to it, concerning the travel undertaken by her and Mr Petrou, when testing their assertion that, because they had very little money, they did not open a joint bank account and Ms Antipova did not apply for a divorce from her former husband. The material was relevant to this issue, and there was no element of conjecture involved in the Tribunal's reliance on it. 62 In considering the social aspects of the relationship during the 12-month period, as required by reg 1.15A(3)(c) of the Migration Regulations , the Tribunal dealt expressly with the material supplied by Ms Antipova from friends and family. As I have already pointed out, it gave little weight to the statements of Ms Downie, Ms Shpits and Ms Karagoz. It did not reject the statements as evidence that family and friends considered Ms Antipova and Mr Petrou to be a couple, and thereby used the statements for the purpose for which they were required under the regulation, and for the purpose for which they had been supplied to it. The Tribunal did point out, however, that the statements of Mr Petrou's parents did not bear upon whether Ms Antipova and Mr Petrou were living together at the relevant time. Since this was the crucial issue, the Tribunal could not be criticised for making this observation, although it did so under the heading dealing with the social aspects of the relationship, rather than under the earlier heading, dealing with the nature of the household, including the living arrangements. The Tribunal did not fail to consider the evidence of travel itineraries, air tickets and passport copies, as Ms Antipova contended. It detailed every document in its reasons for decision. The material indicated that the parties travelled together in March 2002. Although evidence of later events can sometimes cast light on the nature of a relationship at an earlier time, it is hard to see, and counsel for Ms Antipova never explained, how the evidence of joint travel in March 2002 could bear upon the nature of the relationship between Ms Antipova and Mr Petrou in May and June 2001. The Tribunal was not bound to look at this material in relation to the issue of the social aspects of the relationship at the relevant time. 63 The evidence before the Tribunal disclosed that Mr Petrou underwent surgery to reverse a vasectomy in August 2003, and that a proposal that he should do so, in the hope that he and Ms Antipova could have children of their own, was discussed between Ms Antipova and him 'at the start of their relationship', and investigated in August 2001. The Tribunal did not ignore this evidence, but mentioned the operation at [25] of its reasons for decision, as having been advanced as 'evidence that they are committed to each other and wish to begin a family together. ' Without more detail, it is hard to see how this evidence bore upon whether the de facto relationship began prior to 18 June 2001, which was the crucial issue before the Tribunal. 64 It is clear from this examination of the issues that were before the Tribunal, and the manner in which it dealt with them in its reasons for decision, that a number of the arguments advanced on behalf of Ms Antipova were not made out. The Tribunal did not misunderstand or misconstrue the criteria it had to apply by reason of reg 1.15A(3) of the Migration Regulations , and did not apply any impermissible gloss on those criteria. It did not take into account irrelevant matters, nor fail to take into account relevant ones it was bound to take into account. For the most part, the arguments I have dealt with so far were really attempts by counsel for Ms Antipova to reargue the merits of the case before the Court. As I have said, the facts were entirely the responsibility of the Tribunal, and cannot be agitated in the Court. 65 Similarly, the Tribunal cannot be criticised for failing to apply reg 1.15A(5) of the Migration Regulations . That provision is relevant to the determination of whether a relationship is genuine and continuing. It does not bear at all upon the question whether, during the 12-month period immediately preceding the date of application for a visa, the relevant persons had a mutual commitment to a shared life as husband and wife to the exclusion of all others. This was the issue on which Ms Antipova's case turned in the Tribunal. In particular, the Tribunal saw its task as attempting to determine whether it could fix the time of the starting point of a relationship involving such a mutual commitment between Ms Antipova and Mr Petrou. The fact that they lived together at the same address for more than six months as their relationship advanced, thereby providing strong evidence that the relationship became genuine and continuing, could not assist in determining the starting point of a relationship of which a mutual commitment to a shared life as husband and wife, to the exclusion of all others, was an essential element. 66 The contention that the Tribunal failed to act in accordance with substantial justice and the merits of the case, as it was required to do by s 353(2)(b) of the Migration Act , also appears to be an attempt to reargue the merits, and therefore impermissible. In Minister for Immigration & Multicultural Affairs v Eshetu [1999] HCA 21 (1999) 197 CLR 611 at [46] --- [52] per Gleeson CJ and McHugh J (Hayne J concurring at [158]), [69] --- [77] per Gaudron and Kirby JJ, [106] --- [109] per Gummow J, and [175] --- [179] per Callinan J, the High Court held that s 420 of the Migration Act was insufficiently specific to constitute a ground for review of a decision under the limited jurisdiction then given to this Court by s 476 of the Migration Act , which has since been repealed. Section 420 makes provisions with respect to the Refugee Review Tribunal in terms identical to those made by s 353 with respect to the Tribunal. For reasons similar to those given in Eshetu , s 353 is unlikely to be the source of an obligation, failure to comply with which could be said to constitute jurisdictional error. On 6 August 2002, Ms Antipova and Mr Petrou were interviewed separately by an officer of the Department of Immigration and Multicultural Affairs (subsequently the Department of Immigration and Multicultural and Indigenous Affairs) (in both cases, 'the Department'). The notes of the interview record that Ms Antipova was asked when and where she moved in with Mr Petrou. Her answer was 18 May 2001, and she gave the address of the premises at which Mr Petrou lived in California. The officer asked if she had any other documents that would support this claim, and Ms Antipova said that she did not. By letter dated 16 August 2002, the officer referred to a request on 6 August 2002 'to provide further evidence of cohabitation within 28 days' and requested certain specified documents. With a letter dated 6 September 2002, Ms Antipova's migration agent provided the statutory declarations of Mr Petrou's parents, the statement of Ms Karagoz and a statement of Mr Petrou. With a letter dated 15 October 2002, the migration agent provided the letter of Ms Downie dated 15 August 2002. 68 The decision of the Minister's delegate to refuse to grant Ms Antipova a visa was accompanied by written reasons, dated 3 January 2003. According to those reasons, the delegate found 'conflicting information about the extent of commitment of this relationship since May 2001'. The delegate found that there was 'inadequate evidence...to support claims of a de facto marital relationship to have been in existence for at least 12 months prior to the date of application' for the visa [underlining in original]. It was for this reason that the delegate decided that Ms Antipova was not entitled to the visa. That might include lease agreements, utility accounts (telephone, gas, electricity), correspondence to you at the nominator's address. That relationship must have been in existence at least 12 months prior to the 18 June 2003. Continuous physical cohabitation for the 12 months is, of course, not the requirement that must be satisfied. It is the existence of the genuine and committed relationship and cohabitation is merely one factor that evidences that relationship. With it, the migration agent forwarded a number of documents, including the letter from Ms Downie dated 15 August 2002 (already in the Department's file), the letter from Ms Downie dated 17 August 2003, the letter from Ms Shpits, and the letter and statement of Ms Karagoz (already in the Department's file). 72 There can be little doubt that, at the outset of the Tribunal hearing, Ms Antipova and her migration agent must have appreciated that the Tribunal was obliged to apply reg 1.15A of the Migration Regulations . In particular, they must have appreciated that the Tribunal had to determine whether the marriage-like relationship, which clearly had come into existence between Ms Antipova and Mr Petrou, had come into existence early enough to enable Ms Antipova to satisfy the requirement of the 12-month period referred to in reg 1.15A(2)(d) at the date of her application for a visa, as required by item 820.211(2)(a) in Sch 2 to the Migration Regulations . Ms Antipova must have been as prepared as she could be to attempt to satisfy the Tribunal on that issue. The question is whether, by what the Tribunal member said at the start of the hearing, the Tribunal caused her to refrain from putting what she would otherwise have put. 73 There can be little doubt that what the Tribunal member said early in the hearing had the potential to confuse Ms Antipova. The distinction between 'the genuineness of the relationship' and 'the 12 months co-habitation period' was plainly a false distinction, because reg 1.15A(2)(d)(ii) of the Migration Regulations required that Ms Antipova establish that, during the 12-month period, the relationship was 'genuine and continuing'. The attempt to exclude from consideration not only the genuineness of the relationship, but also 'evidence of joint finances', 'what you did', and 'all that sort of jazz' (whatever that vernacular expression might have been intended to mean to a person whose first language is not English) was plainly something that could not be achieved. Regulation 1.15A(3)(a) required the Tribunal to take into account financial aspects of the relationship, including joint ownership of assets, joint liabilities, pooling of financial resources, assumption of legal obligations and sharing of household expenses. What Ms Antipova and Mr Petrou 'did' was also likely to have been relevant to the other mandatory considerations listed in reg 1.15A(3). 74 Confusion aside, it seems clear that the Tribunal member was intending to be helpful. The Tribunal member seems to have intended to make a distinction between the state of the relationship at the time of the Tribunal hearing and the origin of the relationship, so far as it bore upon the need to satisfy the 12-month requirement at the date of the application for a visa. This conclusion is supported by the fact that the Tribunal member mentioned the question of compelling or compassionate circumstances. In case there was any doubt, the Tribunal member explained the distinction she was making, in answer to the questions of Ms Antipova's migration agent, a short time after her attempt to outline the distinction at the beginning. 75 Ms Antipova has not provided to the Court any evidence that she was actually misled by the Tribunal member's confusing distinction. More importantly, she has not provided any evidence that, in consequence of what the Tribunal member said, she refrained from providing evidence that she would have provided otherwise. As I have said, at the outset of the hearing, Ms Antipova could have been in no doubt that her application was vulnerable on the issue of whether her de facto relationship with Mr Petrou had begun at least 12 months before she applied for the visa. That was the issue raised in the Department's request for information before the application for a visa was considered by the Minister's delegate. It was the issue on which Ms Antipova failed in the view of the Minister's delegate. It was the issue brought to her attention, through her migration agent, by the Tribunal's letter of 5 August 2003. At least the migration agent well understood the nature of the issue, as his letter to the Tribunal in response showed. To the extent that she was able to do so, Ms Antipova had provided the Tribunal with documentary evidence relevant to that issue before the hearing. In her oral evidence to the Tribunal, she was asked many questions about the circumstances in which she left her former husband and took up with Mr Petrou. Indeed, the bulk of her evidence was taken up with questions from the Tribunal member about those circumstances. The Tribunal also questioned Mr Petrou at length about the circumstances in which his relationship with Ms Antipova began. Nothing in the transcript of the Tribunal hearing shows Ms Antipova expressing any surprise that she was being questioned about those circumstances, as a consequence of what the Tribunal member said at the outset of the hearing. 76 Ultimately, Ms Antipova failed in the Tribunal because of the Tribunal's finding that it was not satisfied that she was committed to a long-term relationship with Mr Petrou when she left her former husband and moved into Mr Petrou's home. The Tribunal was not satisfied that she moved into Mr Petrou's home on 18 May 2001 as his de facto spouse. It did not accept that Ms Antipova genuinely reciprocated the strong feelings Mr Petrou had for her at the time she moved into his house. The danger of failing on this issue was apparent to Ms Antipova and her migration agent throughout the proceedings in the Tribunal. Nothing the Tribunal member said in her opening remarks removed any part of that danger. Ms Antipova has not shown that she was misled as to the issue, or that what the Tribunal member said about the issue influenced her approach to the evidence she provided. Whatever might have been the result in any other case of an attempt, such as the Tribunal member made, to narrow the issues, that attempt did not have the effect of denying procedural fairness to Ms Antipova in the present case. Nor did it warn her that she should keep her answers brief, and direct them only to what the Tribunal member thought was the relevant aspect of what she was saying. The information the Tribunal gave to Ms Antipova prior to the hearing was to the opposite effect. The Tribunal's standard-form information sheet, which I have quoted in [17], invited Ms Antipova to take her time in answering questions. Nor did the Tribunal member warn Ms Antipova at the outset of the hearing that she had a limited time. It was only some way into the hearing that Ms Antipova first heard that her time was limited. She learned of this limit in the context of attempting to follow the advice she had been given in advance of the hearing, to take her time answering the Tribunal member's questions. The Tribunal member countermanded this advice. 78 A different, but related, issue was that of interruptions. As I have said in [23], the Tribunal member repeatedly interrupted Ms Antipova's answers, in an attempt to persuade her to make them briefer, with a view to concluding the hearing within what the Tribunal member regarded as the time allocated for the hearing. Again, this practice was not the subject of prior warning and was in contradiction of what Ms Antipova had been told by means of the standard-form information sheet. The result of the frequent interruptions, and the attempts of the Tribunal member to persuade Ms Antipova to be brief, was that she did not tell the Tribunal all that she could have, and all that she wanted to tell, about her case, particularly about the circumstances in which she left her former husband so soon after marrying him, and came to live with Mr Petrou. This conclusion is obvious from an examination of the transcript of the hearing, particularly the interruptions I have quoted in [23] --- [28]. The Tribunal member had revealed her scepticism about the claim that Ms Antipova had ended her relationship with her former husband so soon after marrying him, and begun a relationship with Mr Petrou immediately, by the third question on the subject, which I have quoted in [22]. It is understandable that Ms Antipova would have been concerned to give detailed evidence about the circumstances in which she changed partners, to convince the Tribunal that her claim was true. She was not allowed to do this. 79 In my view, the Tribunal did not give Ms Antipova a fair hearing in these two respects. It sought to impose an arbitrary time limit on her, and it interrupted her to the extent that she was prevented from giving her evidence as she wished to. Counsel for the Minister argued that, like a court, the Tribunal has the power to impose time limits on hearings. Accepting that to be so, in the present case the Tribunal did not exercise that power in a manner that was fair to Ms Antipova. Fairness would have required that she be warned, either in the standard-form information sheet or, at the very least, at the outset of the hearing, that her time was limited. Fairness would also have required that the advice given in the standard-form information sheet should have been different, so that it was not countermanded by the Tribunal's imposition of a time limit, and exhortations to shorten the answers to questions, in order to fit within that time limit. Even when Mr Petrou made his complaint about the imposition of the time limit, which I have quoted in [30], the Tribunal was not dissuaded from its course. If nothing else alerted the Tribunal member to the need to change her approach to the hearing, that complaint should have, especially Mr Petrou's contention that 'obviously we're not getting all the information across'. Instead of abandoning her attempt to adhere strictly to a time limit, the Tribunal member berated Mr Petrou for wasting the time available by making his complaint. 80 It is also clear that Ms Antipova was disadvantaged in the presentation of her case by the Tribunal's unfairness in both respects. She lost an opportunity to make her case to the Tribunal in the way she wished to make it. The crucial issue was whether the Tribunal would accept what it regarded as the unlikely claim that Ms Antipova, having married on 30 April, after she met Mr Petrou, would have left her husband on 18 May and gone on to begin a de facto relationship with Mr Petrou. It was this issue on which Ms Antipova had failed at the first stage, the decision of the Minister's delegate. It was the issue identified by the Tribunal in the question I have quoted in [22]. The Tribunal ultimately found that Ms Antipova failed on this issue. Had she been allowed to go into detail as to the circumstances of her separation from her former husband and her flight to Mr Petrou, she might have been able to persuade the Tribunal not to reject her claim. 81 Denial of procedural fairness, potentially affecting the outcome of a proceeding in the Tribunal, is a jurisdictional error. Ordinarily, it justifies the Court quashing the decision of the Tribunal. See Re Refugee Review Tribunal; Ex parte Aala [2000] HCA 57 (2000) 204 CLR 82 and Plaintiff S157/2002 v Commonwealth [2003] HCA 2 (2003) 211 CLR 476. The question is whether any provision of the Migration Act prevents Ms Antipova from relying on this jurisdictional error in the present case. In particular, the question is whether s 357A(1) of the Migration Act has that effect. 82 There are two possible answers to this question. The first is that s 360(1) of the Migration Act requires the Tribunal to invite the applicant 'to appear before the Tribunal to give evidence and present arguments relating to the issues arising in relation to the decision under review. ' If the Tribunal has conducted what purports to be a hearing, but has not in truth allowed an applicant to give evidence and present arguments relating to those issues, it has not complied with this statutory obligation. The Tribunal has failed to comply with an essential precondition to making a decision on the applicant's application to review the decision of the Minister's delegate, and has therefore failed to perform the duty, conferred on it by s 348 of the Migration Act , to review that decision. Its decision is invalid and must be set aside. This is the reasoning followed by the Full Court in Minister for Immigration & Multicultural & Indigenous Affairs v SCAR [2003] FCAFC 126 (2003) 128 FCR 553 at [33] --- [41], in relation to s 425(1) of the Migration Act , which imposes on the Refugee Review Tribunal an obligation in terms identical with the obligation imposed on the Tribunal by s 360(1). At [41], the Full Court found that the Refugee Review Tribunal in that case had not extended 'a meaningful invitation'. 85 In the present case, because it interrupted her and imposed an arbitrary time limit on her, the Tribunal did not permit Ms Antipova to give evidence and present arguments as she wished to do. Although there was a semblance of a hearing, and the Tribunal invited Ms Antipova to it in terms mandated by s 360(1) of the Migration Act , the invitation was not a real and meaningful one, because what she was invited to do was denied to her. The Tribunal failed to observe a precondition of the exercise of the jurisdiction conferred on it. Its decision was made without an invitation to attend a hearing of the kind required, because such a hearing has not yet been conducted. 86 Counsel for the Minister submitted that SCAR has been the subject of judicial criticism, and even that it has been not followed. Reference was made to WAJR v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCA 106 (2004) 204 ALR 624, in which French J distinguished SCAR on the facts at [46]. At [57] --- [59], his Honour discussed the question whether s 422B of the Migration Act operated to preclude the application of the principles of procedural fairness in the context of the failure of the Refugee Review Tribunal to ask any questions at the hearing as to a particular issue on which it later found adversely to the person seeking a protection visa. In the course of that discussion, his Honour examined whether there had been a failure to comply with s 425 of the Migration Act . In the alternative, his Honour examined the issue on the assumption that s 425 had no application, holding that the denial of procedural fairness in that case amounted to jurisdictional error, notwithstanding s 422B. Nothing that his Honour said in that passage amounted to a criticism of SCAR , or a refusal to follow it. That obligation is so central to the conduct of the tribunal process that it necessarily conditions the power to make an adverse decision on review. At [58], his Honour accepted that compliance with s 425 was held in SCAR to be a precondition to the valid exercise of the Refugee Review Tribunal's jurisdiction, and that failure to comply would therefore be jurisdictional error. According to its terms the section simply requires that an opportunity be given to the applicant to appear and give evidence. Obviously if there is no real opportunity given then the section has not been complied with. This could arise, for example, where relevant evidence is not admitted or misleading statements are made by the decision-maker which discourage an applicant from calling or proceeding with a particular line of evidence. The Full Court in NALQ proceeded to discuss earlier authorities on the nature of the invitation required. At [34], there was a discussion of whether the Full Court in SCAR at [37] had misconstrued the judgment of Hely J in Applicant NAHF of 2002 v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 140 (2003) 128 FCR 359, but the Full Court in NALQ did not determine this question. 91 This examination of the authorities demonstrates that, far from having been criticised or not followed, SCAR is very much in the mainstream of authority. The invitation required by s 425 of the Migration Act (and, for identical reasons, that required by s 360), must be real and genuine. As the reasoning of Tamberlin and Katz JJ in Cho at [33] demonstrates, it is legitimate to examine what occurred at the hearing, in order to ascertain whether the invitation extended satisfies that requirement. If what took place under the guise of a hearing was not a genuine opportunity for an applicant for review 'to give evidence and present arguments relating to the issues arising in relation to a decision under review', then the invitation required by s 425 (or s 360) will not have been extended as required. Of course, it is necessary to bear in mind, as Tamberlin and Katz JJ said in Cho at [29], that it is not legitimate to regard every want of procedural fairness as nullifying the invitation. It is only defects rendering the proceedings ineffective to fulfil the purpose for which the invitation is required that will have this effect. SCAR is therefore binding on me as a single judge. In any event, in my view, it is correctly decided. 92 The next question is whether what took place at the hearing in the present case was so defective as to render the invitation to a hearing other than real and genuine. Manifestly, this was the case. Ms Antipova was interrupted often in attempting to give evidence, so that what she was attempting to say was cut short. She was invited to give evidence in a form, or to give a version of her evidence, that the Tribunal member found more acceptable because of its brevity. This was not the evidence that Ms Antipova wanted to give. It was not the evidence that the invitation to the hearing entitled her to give. It was not the evidence that she was encouraged by the material accompanying the invitation to believe she would be permitted to give. The behaviour of the Tribunal member amounted to a refusal to hear the evidence Ms Antipova wanted to give about a crucial question. There can be no doubt that the question was one of 'the issues arising in relation to the decision under review', in the words of s 360(1) of the Migration Act . The invitation purportedly given pursuant to that provision was not perfected, because Ms Antipova was not allowed to 'give evidence and present arguments' relating to that issue. 93 If SCAR is wrongly decided, and s 360(1) of the Migration Act is not to be given the meaning it bears in my opinion, it is necessary to consider the second answer to the question whether s 357A of the Migration Act ousts the right, which Ms Antipova would have otherwise, to establish that the Tribunal's unfairness to her constitutes jurisdictional error, entitling her to have the Tribunal's decision set aside. Section 357A is a difficult provision to construe. It does not exclude altogether the principles of procedural fairness. There must be some doubt as to whether Parliament could exclude procedural fairness altogether, given that a denial of procedural fairness is a ground for the remedies referred to in s 75(v) of the Constitution . At best, the legislative power extends to regulating procedures, and this is what s 357A attempts to do. It provides that Div 5 of Pt 5 of the Migration Act is taken to be 'an exhaustive statement of the requirements of the natural justice hearing rule in relation to the matters it deals with'. The provision assumes that there will be aspects of the 'natural justice hearing rule' that are not matters dealt with by any provision of Div 5. As the cases so far have shown, identifying a provision dealing with a particular 'matter', relating to procedural fairness is not always easy. See, for example, the passages in WAJR , to which I have referred in [86]. The present case is relatively easy. No provision of Div 5 deals with the imposition of time limits on the hearings of the Tribunal. Unless it be s 360(1) , no provision deals with the process by which evidence is adduced at a Tribunal hearing. There is certainly no provision dealing with the 'matter' of a Tribunal member interrupting answers to questions. No provision gives the Tribunal member a right to control and censor the evidence given, by refusing to hear what the applicant for review wishes to say. 94 In Minister for Immigration & Multicultural & Indigenous Affairs v WAFJ [2004] FCAFC 5 (2004) 137 FCR 30, the Full Court dealt with a case in which, on more than one occasion, the Refugee Review Tribunal had interrupted the evidence of an applicant for a protection visa, accused him of misbehaving, asserted that his evidence could not be believed, and treated him rudely and with sarcasm, to the point where he was likely to have become upset, confused and distressed, and to have been deflected from the presentation of his case. By majority, the Full Court upheld a judgment of a federal magistrate, setting aside the Refugee Review Tribunal's decision, by reason of denial of procedural fairness. In Minister for Immigration & Multicultural & Indigenous Affairs v Maltsin [2005] FCAFC 118 (2005) 88 ALD 304, another Full Court dealt with the case of an applicant for a visa similar to that sought by Ms Antipova. In that case, similarly to this one, the Tribunal announced in the course of the hearing that it did not have sufficient time to hear all the evidence the applicant wished to give. The Tribunal also interrupted the applicant and prevented him from giving details in the course of his evidence. The Tribunal made repeated references to the need to hurry, and to the shortage of available time. It did not hear all the witnesses who had attended for the purpose of giving evidence on behalf of the applicant. The Full Court held that the resulting decision of the Tribunal was the result of jurisdictional error, which involved a denial of procedural fairness. 95 These two cases illustrate that denial of procedural fairness can arise from the manner in which the Tribunal conducts its hearing, particularly the curtailment of the opportunity, which the hearing is intended to afford, for the applicant to give evidence. If the Tribunal attempts to hurry the course of evidence unduly and interrupts frequently, and if the behaviour of the member constituting the Tribunal betrays a lack of interest in what the applicant is saying, a denial of procedural fairness can occur. In the absence of provisions in Div 5 of Pt 5 of the Migration Act dealing with these matters, s 357A does not operate to exclude from operation those aspects of procedural fairness, or the natural justice hearing rule as it is called. The Tribunal's jurisdictional error in denying the applicant procedural fairness can be a ground for quashing the Tribunal's decision. The degree to which Ms Antipova's evidence was interrupted and curtailed in the present case was sufficient to give rise to a denial of procedural fairness, capable of amounting to jurisdictional error if it affected the exercise of the Tribunal's statutory function. 96 Since writing these reasons for judgment, I have become aware of the judgment of the Full Court in Minister for Immigration & Multicultural Affairs v Lay Lat [2006] FCAFC 61. That judgment deals with an appeal by the Minister from a judgment of the Federal Magistrates Court, which quashed a decision of a delegate of the Minister to refuse a Business Skills Migrant visa to the respondent to the appeal, a person who had applied from outside Australia for that visa. The issue was whether the respondent had been denied what the Full Court called 'common law procedural fairness', because the decision-maker did not draw to the respondent's attention the point on which the decision against him turned. If the respondent were entitled to succeed on that issue, there was then an issue as to whether a right to procedural fairness was excluded by s 51A of the Migration Act , a provision in terms similar to both s 357A and s 422B , but relating to decisions by the Minister or delegates of the Minister. At [46] --- [59], the Full Court held that there had been no denial of procedural fairness, because the relevant point was obvious to the respondent. The Full Court then proceeded, at [60] --- [70], to make some observations, which are clearly obiter, on the effect of s 51A. Following VXDC v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCA 1388 (2005) 146 FCR 562, the Full Court expressed the view that s 51A operates to exclude the 'common law natural justice hearing rule' altogether. 97 To the extent to which Lay Lat might be taken to be authority on the meaning and effect of s 357A of the Migration Act , it does not bind me to hold that Ms Antipova's only entitlement to procedural fairness is to be found in the meagre provisions of Div 5 of Pt 5 of the Migration Act . In my view, to the extent that it suggests that s 422B excludes all principles of procedural fairness, other than those found in Div 4 of Pt 7 of the Migration Act , VXDC is fundamentally wrong. The obiter remarks in Lay Lat are entitled to great respect, appearing as they do in a considered judgment of a Full Court, but I cannot bring myself to accept that they are correct. For the reasons I gave in Moradian v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCA 1590 (2004) 142 FCR 170 at [28] , I remain of the view that the words 'in relation to the matters it deals with', appearing in each of ss 51A , 357A and 422B of the Migration Act are intended to qualify the words preceding them, and to reduce what would otherwise be the absolute effect of those exclusionary words. If this were not the case, the words 'in relation to the matters it deals with' would be otiose, and it is not to be supposed that Parliament intended to enact meaningless, surplus words in a crucial amendment. The words are not the 'plain words of necessary intendment' required to exclude the requirements of procedural fairness. See Annetts v McCann [1990] HCA 57 ; (1990) 170 CLR 596 at 598 per Mason CJ, Deane and McHugh JJ, and the authorities there cited. It is highly unlikely that Parliament had in mind all of the myriad ways in which procedural fairness, a concept the content of which is dependent on the circumstances of each case, could arise. The present case forms a good example of what would result if the view expressed in Lay Lat were to be followed. Assuming that s 360(1) of the Migration Act does not have the meaning that it has in my view, the Tribunal could reduce the time of a hearing arbitrarily as much as it chose, interrupt and curtail the evidence of the applicant constantly, and deprive the applicant of any opportunity to put his or her case, and the applicant would have no redress. It is impossible to imagine that Parliament intended such a drastic result. 98 To the extent to which the views expressed in VXDC and Lay Lat are said to be based on a reading of the explanatory memorandum and the second reading speech relating to the bill by which ss 51A , 357A and 422B were introduced into the Migration Act , I repeat the view I expressed in Moradian at [35]. Those documents do not contain statements specific enough to resolve any ambiguity in those provisions, or to disclose a purpose specific enough to warrant a construction of the provisions that would regard them as excluding the entirety of the principle of procedural fairness described as the 'natural justice hearing rule'. 99 For these reasons, if it is necessary to ask the question whether Ms Antipova is entitled to succeed on the basis that the Tribunal denied her procedural fairness, by the manner in which it conducted her hearing, I do not regard VXDC and Lay Lat as requiring me to take a view different from that I have expressed above. 100 It is therefore necessary to see whether the particular denial of procedural fairness made a difference, in the sense referred to in Stead v State Government Insurance Commission [1986] HCA 54 ; (1986) 161 CLR 141 at 147, ie whether the Tribunal's error deprived Ms Antipova 'of the possibility of a successful outcome. ' In the present case, the answer is plain. The Tribunal disbelieved Ms Antipova when she said that she was determined to make a life with Mr Petrou from the time she went to live with him on 18 May 2001. To a significant extent, the Tribunal's reasoning in this respect was based on its refusal to accept Ms Antipova's explanation of how she had come to continue with her marriage plans after meeting Mr Petrou, and then abandoned her marriage so soon after she had undertaken it. It was this very question that Ms Antipova was attempting to answer when the Tribunal member interrupted her, on several occasions, and asked her for a less detailed answer. If the Tribunal had been patient enough to listen to the detail, it might well have been persuaded to accept what Ms Antipova said. In other words, the very point on which Ms Antipova lost, because she was disbelieved, is one on which she would have given a fuller explanation, if the Tribunal had permitted her to do so. It cannot be said that the denial of procedural fairness in truncating Ms Antipova's evidence, to fit within a timetable about which she had not been warned, could have made no difference to the outcome of the proceeding. 101 It follows that the performance of the Tribunal's statutory function was affected by the denial of procedural fairness. The Tribunal's decision is therefore tainted by jurisdictional error, either because of its failure to comply with s 360 of the Migration Act , or because of a denial of procedural fairness, which s 357A of the Migration Act does not exclude from consideration. The effect of that provision was that the requirements of reg 1.15A(2)(d) (in this case, the requirement of a mutual commitment to a shared life as husband and wife to the exclusion of all others for a period of 12 months immediately preceding the date of the application for a visa) did not apply if Ms Antipova could 'establish compelling and compassionate circumstances for the grant of the visa. In doing so, the Tribunal said that it was following Boakye-Danquah . That was a case concerned with criteria for a particular type of visa, found in a schedule to the Migration Regulations , in which the reference to 'compelling reasons' appeared in the very criterion required to be satisfied at the time of application for the visa. That provision referred to compelling reasons for not applying certain otherwise applicable criteria. It is not surprising that Wilcox J in that case construed the relevant provision as requiring the compelling reasons to exist at the time of application for the visa. 104 Regulation 1.15A(2A) of the Migration Regulations is a very different provision. It is found in a separate regulation, providing a definition of the word 'spouse', for a variety of purposes, wherever that word is found in the Migration Regulations . It does not call upon a decision-maker to determine 'whether to exercise the waiver of the 12 month cohabitation requirement', as the Tribunal characterised it at [77] of its reasons. Rather, reg 1.15A(2A) provides that reg 1.15A(2)(d) does not apply if a specified condition is met. That condition is not that the applicant can establish compelling and compassionate reasons for not applying the criteria referred to in reg 1.15A(2)(d), but that the applicant can establish 'compelling and compassionate circumstances for the grant of the visa. ' In other words, the Tribunal is not required to determine whether compelling and compassionate circumstances exist for the waiver or non-application of the 12-month requirement, but whether such circumstances exist for the granting of the visa sought. The focus is not on the criteria to be ousted from consideration, but on the end result. The wording of reg 1.15A(2A) suggests strongly that, at whatever stage of whatever decision-making process the question of special circumstances arises, it is to be determined by reference to whatever circumstances exist at the date of decision. It would be a strange result if the circumstances to be considered differed according to whether the application of the definition of 'spouse' was required to be applied at the time of application of the visa, or at the time of decision, or at some other stage, so that different views might be taken as to whether compelling and compassionate circumstances for the grant of the visa existed at different times. The wording of the provision suggests strongly that this is not the intention. 105 Applying this view does nothing to undermine the two-stage assessment process of determining entitlement to the type of visa Ms Antipova sought, as the Tribunal suggested at [76] of its reasons. Even assuming the definition in reg 1.15A of the Migration Regulations to be confined in its application to that type of visa (and subreg (2)(d) in its terms applies to a range of types of visas, including any permanent visa), the two-stage process remains intact. In determining whether the applicant for a visa was the spouse of a nominating person at the date of application for the visa, the decision-maker is required to determine whether, throughout a 12-month period prior to that date, the two persons met the three requirements of reg 1.15A(2)(d), namely mutual commitment, genuine and continuing relationship, and cohabitation. If any of these three requirements should be absent, the decision-maker is then required to consider whether the applicant has established compelling and compassionate reasons for the grant of the visa. If so, reg 1.15A(2)(d) no longer has to be satisfied at the date of application for the visa; it no longer applies. Once understood in this sense, reg 1.15A(2A) can be seen to be compatible with the two-stage process of assessment. On this analysis, there is nothing strange about making a determination about the application of a criterion to be satisfied at the time of application for a visa by reference to facts not in existence at that time, as the Tribunal thought. 106 In Neofotistou v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCA 919 (2005) 144 FCR 478 at [19] --- [28], the Court took a view similar to the one I have expressed, with respect to the provisions of reg 3A of the Migration Regulations 1989 (Cth). At [25], his Honour referred to the fact that reg 3A(2) was an ameliorating provision, which suggested that it should be given an expansive, rather than a restrictive, meaning. At [26], his Honour regarded any uncertainty arising from applying the assessment on the facts as they exist at the time of the decision, rather than at the time of the application, as insufficient to outweigh the intended ameliorating purpose of the regulation. His Honour did not refer to Boakye-Danquah . In many respects, the provision with which North J was dealing in Neofotistou was more similar to that with which Wilcox J was dealing in Boakye-Danquah than either is to reg 1.15A(2A) of the Migration Regulations. Despite the fact that North J appears to have been unaware of Boakye-Danquah , I regard Neofotistou as correct, and as supporting the view I take of reg 1.15A(2A). As I have said, Boakye-Danquah is distinguishable, because it dealt with a provision very different from reg 1.15A(2A). 108 The Tribunal appears to have been led into error by its misunderstanding of the principle for which Boakye-Danquah stood as authority, and by its incorrect characterisation of reg 1.15A(2A) of the Migration Regulations, at [76] of the Tribunal's reasons, as permitting waiver of the criteria in reg 1.15A(2)(d) 'if there are circumstances sufficiently compassionate and compelling which would justify the parties having lodged the visa application before they had lived together in a spousal relationship for a sufficient period to satisfy the definition of spouse under regulation 1.15A. ' As I have said in [104], reg 1.15A(2A) did not focus on the circumstances attending the making of the application for a visa, but on the circumstances justifying the granting of the visa. Those circumstances are the ones the Tribunal was required to take into account in determining whether the criteria in reg 1.15A(2)(d) was applicable. 109 Such an error is capable of amounting to a jurisdictional error if it affected the exercise of the Tribunal's statutory function. In the present case, the issue of compelling and compassionate circumstances turned on Mr Petrou's re-established relationship with his children from a former union, and on Ms Antipova's emerging relationship with those children. The Tribunal was prepared to take into account the needs of those children in determining whether compelling and compassionate circumstances existed. Having held that it could not take into account the circumstances that existed at the date of decision, the Tribunal nevertheless expressed the view at [82] of its reasons that, even if it could do so, it did not regard the current needs of the children as 'sufficiently compelling to justify a waiver of the 12 month cohabitation requirement'. Despite the incorrect characterisation of the effect of reg 1.15A(2A), it is fair to take this finding to be a finding that there were no compelling and compassionate circumstances, for the purposes of the application of that provision, even if current circumstances were to be considered. The assessment of the circumstances against the standard of 'compelling and compassionate' was a matter for the Tribunal. It does not appear that the Tribunal misunderstood or misapplied the required standard. The result, therefore, is the same as if the Tribunal had not held erroneously that it could not take circumstances at the time of the decision into account. In effect, it did so. Its error did not amount to a jurisdictional error, because it did carry out the task required of it by the legislation. 110 For this reason, the Tribunal's decision cannot be set aside on the basis of its error in construing reg 1.15A(2A) of the Migration Regulations. The ground was raised, but not argued in detail. The test for ostensible bias as a ground for setting aside a decision of the Tribunal is whether a fair-minded lay observer with knowledge of the material objective facts might entertain a reasonable apprehension that the Tribunal might not bring an impartial and unprejudiced mind to the resolution of the question in issue. See Webb v R [1994] HCA 30 ; (1994) 181 CLR 41 at 67-68 per Deane J. In my view, a fair-minded lay observer, informed as to the material objective facts, who witnessed the Tribunal dealing with Ms Antipova's case, would have been more likely to conclude that the Tribunal had simply not performed its statutory function very well, rather than that it would fail to bring an impartial and unprejudiced mind to the resolution of Ms Antipova's case. The insistence on imposing a time limit, and the associated interruptions and attempts to shorten the evidence, were indicative of a desire to deal with the matter expeditiously, rather than of a desire to find against Ms Antipova, whatever the evidence might reveal. Nothing about the Tribunal's reasoning discloses that it approached the case with a closed mind. That error consists of failure to comply with the essential precondition to the exercise of the jurisdiction, provided by s 360(1) of the Migration Act , that the Tribunal invite the applicant to appear before it, to give evidence and present arguments relating to the issues arising in relation to the decision under review. Although the Tribunal gave Ms Antipova such an invitation in form, because of the manner in which it conducted the hearing, there was no such invitation in reality. Alternatively, the Tribunal denied Ms Antipova procedural fairness by the manner in which it conducted the hearing, and the denial of procedural fairness is such as to amount to jurisdictional error. Ms Antipova is entitled to have the decision set aside, and to have the Tribunal rehear her application for review of the decision of the Minister's delegate. 113 Among the relief Ms Antipova seeks is a writ of certiorari, for the purpose of quashing the Tribunal's decision, as well as an order remitting the matter to the Tribunal for determination according to law (in reality, a writ of mandamus, or an order in the nature of mandamus). Relief of these kinds can only be granted against the Tribunal, which is not a party to the proceeding. See SAAP v Minister for Immigration & Multicultural & Indigenous Affairs [2005] HCA 24 (2005) 215 ALR 162 at [43] per McHugh J, [91] per Gummow J, [153] per Kirby J and [180] per Hayne J. It will therefore be necessary for me to make an order joining the Tribunal as the second respondent to the proceeding. It is safe to assume that the Tribunal would follow the usual practice of submitting to any order that the Court might make, save an order for costs against the Tribunal. Service of the application and associated material on the Tribunal can therefore be dispensed with. A writ of certiorari should issue, directed to the Tribunal, bringing the decision into the Court, for the purpose of quashing it. The decision should be quashed. A writ of mandamus should also issue, directed to the Tribunal, requiring it to hear and determine the application of Ms Antipova for review of the decision of the Minister according to law. 114 No reason was advanced, and none appears, why the usual order, that costs follow the event, should not be made. The Minister will be ordered to pay Ms Antipova's costs of the proceeding. I certify that the preceding one hundred and fourteen (114) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray.

visa spouse visa whether migration review tribunal complied with requirement to invite applicant to give evidence and present arguments whether denial of procedural fairness imposition of time limit on hearing after hearing had begun and without prior warning frequent interruptions of applicant's answers to questions and requests to make answers briefer advice of tribunal sent with invitation to hearing that applicant should take time in answering questions whether invitation to hearing real and genuine tribunal disbelieved applicant on issue about which she was attempting to give detailed evidence whether tribunal misled applicant about issues on which review would be determined whether tribunal misconstrued criteria to be applied compelling and compassionate circumstances for the grant of the visa whether confined to circumstances existing at date of application for visa whether ostensible bias migration

2 In the course of its investigation, ASIC gathered information primarily through the exercise of its compulsory powers under the ASIC Act . It conducted examinations of employees and former employees of AWB and AWBI pursuant to s 19 of the ASIC Act and, in addition, obtained signed witness statements voluntarily from other employees and former employees. Nineteen transcripts of the s 19 examinations and fourteen signed witness statements are in issue in these proceedings ("the AWB Information"). 3 In early 2008, ASIC received a request from the Australian Federal Police ("the AFP") that it disclose certain information, including the AWB Information, to the AFP. AWB's solicitors learned of the request from a current employee and three former employees who had been examined by ASIC. Those current and former employees had been contacted by ASIC about the AFP request. ASIC informed them that ASIC was considering whether to provide the transcript of their s 19 examination to the AFP and, consistent with the decision of the High Court in Johns v Australian Securities Commission [1993] HCA 56 ; (1993) 178 CLR 408 , provided each of them with an opportunity to be heard and to make submissions to ASIC in relation to the proposed release of the transcript of their s 19 examination to the AFP. 4 Upon learning of the proposed disclosure by ASIC, AWB wrote to ASIC on 1 April 2008 seeking an opportunity to be heard and to make submissions to ASIC in relation to the proposed release of information to the AFP including the conditions of the release. ASIC responded on 11 April 2008. At that time, the request was limited to the transcripts of the s 19 examinations. ASIC outlined the terms of the AFP request, its proposal to release the transcripts of the s 19 examinations to the AFP and the conditions upon which that information was proposed to be released. Although it is ASIC's view that ... [AWB's] interests will [not] be adversely affected by any decision to release the information to the AFP on the limited basis identified in paragraph 5 above, ASIC proposes to give [AWB] an opportunity to make submissions in relation to the conditions to be imposed on the disclosure of the transcripts of examinations of current or former employees of [AWB] to the AFP under section 127(4) of the ASIC Act . By July 2008, the AFP request had extended to disclosure of the witness statements that had been provided voluntarily by the employees and former employees of AWB. 6 In general terms, AWB sought to prevent disclosure of the AWB Information to the AFP to the extent that the AWB Information would disclose a communication which is the subject of AWB's legal professional privilege. AWB did not seek access to the AWB Information. Instead, it suggested two possible solutions to the problem - the appointment of an independent third party to review the AWB Information to ensure that disclosure of the AWB Information would not disclose a communication which is the subject of AWB's legal professional privilege, or, pursuant to s 127(4A) of the ASIC Act , that conditions be attached to the disclosure of the AWB Information to the AFP. The delegate did not adopt either of the solutions proffered by AWB. 9 At the time each of the employees or former employees of AWB were examined under s 19 of the ASIC Act , a set of procedures were agreed between ASIC and AWB for determining claims of legal professional privilege over documents which were required to be produced to ASIC pursuant to a notice issued by ASIC under s 30 of the ASIC Act . The protocol included an acknowledgement that if documents which are the subject of a claim of legal professional privilege by AWB were inadvertently disclosed to ASIC pursuant to the protocol, ASIC acknowledged and agreed that ASIC would not assert that legal professional privilege had been waived by AWB solely by reason of that inadvertent disclosure and any inspection of the documents by ASIC would not have the consequence of waiving legal professional privilege. 10 Of course, AWB was not examined or interviewed. Its former and current employees were the subject of the s 19 examinations. It was for that reason that AWB also sought to attend each of the examinations to protect its legal professional privilege. We do not seek a general right of intervention in the examination. What we are seeking is a very limited and narrow right of audience in which we seek to address privilege issues. We are merely wishing to protect AWB[']s privilege, and in particular, any threatened disclosure of privileged communications. [AWB is] seeking to invoke and maintain its legal professional privilege in any material and information that is properly protected by privilege. I have three ... main areas of concern and they are all closely related to one another. ... [We are] concerned about oral disclosures being made by examinees and witnesses which may reveal AWB[']s privileged communications. AWB[']s privilege may be disclosed, albeit unintentionally, insofar as ASIC is concerned. ASIC may not seek to elicit any privileged material but it may nonetheless occur. A situation might arise, for example, where AWB[']s privilege is disclosed in an answer given by a witness to Mr Inspector's question. For example, the witness might volunteer deliberately in the belief that the oral disclosure will be of assistance to that particular witness --- maybe in the belief it will be exculpatory of that witness. Now, the fact that ASIC has generously given the undertaking not to ask and not to intend to ask questions that will elicit answers that may, in turn, disclose privileged communications will not prevent this sort of privileged information being disclosed by the witness. We are aware, and it is true, that individual examinees do not have the power to waive the company's privilege. It's AWB[']s privilege we're here to maintain today. But individual witnesses can inadvertently or deliberately reveal, nonetheless, confidential communication. It's not so much the documents that we're concerned with or all those documents that were ruled upon, for example, by Young J in the Federal Court[;] we're concerned about the possibility of oral answers being given which disclose privileged communications.... That's our first concern, and as I said we have only three main concerns. The second one[,] which is a consequence of the first concern, is that if there is an unauthorised disclosure, and I refer to it as "unauthorised" because an individual does not have the capacity or the legal capacity to waive the company's privilege. If, nonetheless, there is an unauthorised disclosure by an individual employee for example, or an examinee of the privileged information, then ASIC will become fixed with knowledge of this privileged information, and it will still be privileged if AWB has not waived it. Now, the consequences of ASIC becoming fixed with such knowledge of privileged material has the potential of compromising the integrity of the investigation. It's difficult to unscramble pieces of privileged information from pieces of non-privileged information. It's difficult to segregate in the corporate mind of ASIC those pieces of information. And there is learning on this --- cases which say that once you are aware and have knowledge of privileged information, you are in a sense tainted with that knowledge and you have that knowledge and you can't build that Chinese wall in your head. Now, there's also the problem of derivative use of that information once ASIC has knowledge of the privileged information. It may be used in --- there will not be a flow-on effect to other information. And I make mention of the Cole Inquiry here where situations were given where individual witnesses revealed privileged information of the company, in the hope for example, that --- or expectation --- that [it] may be exculpatory of them. And unless the company --- AWB, who obviously was present at the Cole Inquiry, unless they objected at that time then the privilege was said to have been lost or waived because of the silent acquiescence of the privilege holder, and that is the company itself. So my second concern, in short, is simply that once disclosed then the AWB[']s privileged communications cannot be ignored or segregated in the corporate mind of ASIC. And this has the potential to undermine the integrity of the examination because the intellectual use of that information will simply remain. And there's another related concern to this --- the derivative [use] point --- and that is that obviously there can be disclosures of written records of section 19 examinations under section 25 of the ASIC Act , and we're concerned about that because given there are several class actions on foot against AWB, that concern that we have is far from hypothetical. And the third concern is this. AWB has a fundamental right to claim privilege and this, we submit, this right does not interfere with the privacy of section 19 examinations. We're aware that examinations are to be conducted in private but we say that that privacy does not extend to preventing the exercise of fundamental common law rights. The privacy of your examinations might exist to protect the interest of examinees or their identity or the integrity of the investigation, but privacy has a particular connotation here. The documents themselves that are used at the examinations can ultimately be released in one way or another and could ultimately be used in evidence. And it's difficult to see how giving the company --- AWB --- a right to assert privilege will interfere with the privacy of the examinations. Most of the Cole information, for example, is publicly known and released and these examinations might be simply conducted with a view to swearing up some of those statements and that information that's already publicly known form the Cole Inquiry. So, our third concern is simply that it's fundamental that the company --- AWB --- as the privilege holder has a right to have an adequate opportunity to claim legal professional privilege in respect of its own privileged communication. Now adequate opportunity is a phrase that's used in the learning and it has been said "What is an adequate opportunity will depend on the facts of a particular case. " But if there's an adequate opportunity it must be conferred on privilege holders to assert and invoke their privilege. We are aware that, through your email of 4 October 2007, that you said that you will be notifying --- you ASIC --- will be notifying witnesses at the commencement of the interviews, they're not obliged to disclose communications over which they or a third party may claim legal professional privilege. Well, you also have given a concession that you will not intend to ask questions that elicit answers that may disclose privileged communications. And you have said that in circumstances where a witness discloses a privileged communication, ASIC does not intend to ask the examinee to disclose the substance of that communication. Our submission is that these concessions are helpful but they do not go far enough to ensure that the company's privilege is and will be protected. There must be a specific invocation of privilege --- legal professional privilege --- privilege is personal to the holder of the privilege and the privilege may either be invoked or waived. And only the holder of the privilege may waive the privilege. And in the event of waiver, the communication that is otherwise privileged, will be released or disclosed. And the fact that ASIC will be notifying the examines and the witnesses that they're not obliged to disclose communications over which a third party --- and in this case AWB being the third party --- may have a claim to privilege, is not sufficient to protect the privilege of that party. Any my final point is simply this. This is a context where the ordinary concerns of confidentiality in the examinations have to some extent, at least, been eroded by the fact that much of what is being addressed in these examinations has already been canvassed at the public hearing of the Cole Inquiry. And we note that in, for example, the section 19 notice to Sarah Scales this morning, you have asked [her] to refresh her memory from statements that she gave to the Cole Inquiry in December 2005 in her addendum statement in February 2006, and her ... oral evidence that she gave to the Enquiry in February 2006. And those are my submission[s], and thank you for the opportunity to present them. We'll be confirming to witnesses that they are --- in answer to any question --- they are not obliged to disclose communication[s] over which they or a third party may have a claim for legal professional privilege. (2) To whom and by whom it was made. (3) The circumstances in which it was made. The investigator was not prepared to issue reasons. Mr Inspector. I only just have one final question and that is, is it contemplated that --- I think it was the penultimate point number 5 --- where it was identified that the name of the person who may have a claim to privilege --- can assert the privilege --- is it contemplated that that person --- examinee --- can claim the privilege on behalf of the company? MR CARIDI: [T]he only party to whom a claim for legal professional privilege can make that claim is the holder themselves. In a situation such as this where ... Sarah Scales may consider that a third party might have a claim, one would envisage that that may well be AWB. And so in an answer to that question, one would imagine that she would venture the answer --- AWB would be the holder of the privilege. DR McNICOL: So it is contemplated that examinees can claim the privilege on behalf of the company? MR CARIDI: No, they're not entitled to make the claim. They can say that another party may have a claim and may make a claim, and if they do ASIC will proceed accordingly in the way that I have described. Moreover, none of these arrangements was expressly said to apply when ASIC voluntarily obtained a witness statement from some of AWB's employees or former employees. In those circumstances, was ASIC required to consider whether passing the AWB Information to the AFP would disclose a communication which might be the subject of AWB's legal professional privilege? For the reasons that follow, the answer to that question is no. (4A) The Chairperson may impose conditions to be complied with in relation to information disclosed under subsection (4). The AFP is an "agency" within the meaning of the Freedom of Information Act 1982 (Cth) (s 127(4)(a) of the ASIC Act ) and the AWB Information is "information" for the purposes of s 127 of the ASIC Act . 16 It was also not contended by either side that a different analysis or result should obtain under s 127 of the ASIC Act for the transcripts of the s 19 interviews as opposed to the voluntarily obtained witness statements. This is not surprising; as s 127(1) makes clear, the section applies equally not only to information obtained in connection with its powers and functions under the corporations legislation but also to information "given to it in confidence" and obtained "in connection with the performance of its functions. " There was no suggestion here that the 14 witness statements were given to ASIC otherwise than in confidence and in connection with the performance of its functions (here, the s 13 investigation). Both because the issue (ie whether a different analysis or result was required for the witness statements) was not raised by the parties and because I am independently satisfied that no different analysis or result is required, I need not and do not distinguish between the transcripts and witness statements for purposes of the following analysis. 17 The issue which lies at the heart of the dispute between ASIC and AWB concerns what occurs if an examinee or witness inadvertently, or deliberately, discloses material in which AWB claims privilege when AWB has not been provided with an opportunity to protect its privilege and ASIC is then requested to disclose the information (including the privileged communications) under s 127(4) of the ASIC Act . 18 Section 127(1) of the ASIC Act imposes an obligation on ASIC to take all reasonable measures to protect the unauthorised use or disclosure of information given to it in confidence in performance of its functions: Onefone Australia Pty Ltd v One.Tel Ltd [2007] NSWSC 1188 at [7] . Section 127(4) provides an exception to that general principle. Where ASIC is satisfied "particular information" will assist, for example, the AFP, then disclosure of that "particular information" to the AFP will be taken to be an authorised use and disclosure of that "particular information". 19 The exercise of the power under s 127(4) of the ASIC Act is the exercise of an additional power in relation to the "particular information" identified by ASIC at the time of the request by the AFP. It necessarily will involve consideration of "information" that did not exist at the time of the examination (here, the questions and answers recorded in the transcript) or the taking of the witness statement (here, the statement). It will also necessarily involve the consideration of matters that did not exist at the aforementioned times, including the nature of the agency function or power (here, criminal investigation by the AFP) and the usefulness of the information to that exercise of power (here, the conduct of that investigation). Section 127(4A) of the ASIC Act provides that ASIC may impose conditions in relation to disclosure of the "particular information" under s 127(4). The conditions imposed by ASIC in respect of the AWB Information are those set out in [7] above. 20 In the present case, the dispositive issue (see [13] above) has two aspects to it. For reasons which will become obvious, it is first necessary to deal with the question of power. However, if the AWB Information does contain information to which the legal professional privilege of AWB attaches, ASIC would have power to pass on that material to the AFP. That conclusion requires development. 22 It is settled that "legal professional privilege is a rule of substantive law which may be availed of by a person to resist the giving of information or the production of documents which would reveal communications between a client or his or her lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services": Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49 ; (2002) 213 CLR 543 at [9] and [11] and the authorities cited. 23 In the absence of a statutory provision to the contrary, legal professional privilege may be availed of to resist the giving of information or the production of documents in accordance with investigatory procedures of the kind contained in s 155 of the Trade Practices Act 1975 (Cth) ("the TPA"): Daniels Corporation [2002] HCA 49 ; 213 CLR 543 at [10] and [11]. Despite differences in language between the TPA and the ASIC Act , no different result ensues. There is no express provision in the ASIC Act abrogating legal professional privilege. Moreover, there is nothing in the ASIC Act supporting the contention that the abrogation of legal professional privilege is a necessary implication: see eg ss 1(1) , 1 (2), 1 (3), Pt 3 and, in particular, ss 68 and 69 . 24 In the course of argument, ASIC appeared to suggest there were qualifications to the general proposition that the ASIC Act did not abrogate legal professional privilege. The qualifications were, first, that the ASIC Act is silent as to whether a person other than a lawyer may refuse to give information on the ground that it would disclose a communication for which the person claims legal privilege. If that observation by ASIC was intended to provide support for a contention that an individual, not a lawyer, could be compelled by ASIC to disclose information for which the individual had a claim for legal professional privilege, then that contention is rejected. It is rejected because it finds no support in the Act and is contrary to authority ( Daniels ). There is no basis for distinguishing between a lawyer and an individual in the context of legal professional privilege. So much is made clear from the express words of s 69 of the ASIC Act . In the circumstances specified (which includes ASIC's powers of investigation, examination and information gathering in Pt 3) , a lawyer may refuse to comply with a requirement to give information or produce a book, where to do so would involve the disclosure of a privileged communication with the lawyer in their capacity as a lawyer " unless ... the person to whom, or by or on behalf of whom, the communication was made consents to the lawyer complying with the requirement" (emphasis added): s 69(2). In other words, consistent with authority, the section proceeds on the premise that the holder of the privilege (being the client regardless of whether the client is an individual or a body corporate) must consent to the disclosure of the privilege it holds. No other party is able to waive the privilege; it is the holder of the privilege (the client) that must act inconsistently with the maintenance of that privilege for privilege to be waived: see Cadbury Schweppes Pty Ltd v Amcor Ltd (2008) 246 ALR 137 at [17]. Any other result is contrary to the fundamental principles summarised in [21] and [22] above. 25 That then brings me to the second of ASIC's suggested qualifications - that even if the ASIC Act does not abrogate legal professional privilege, the privilege rises no higher than that ASIC cannot compel a person, subject to a s 19 notice to attend for examination, from disclosing his or her own privileged information. That contention requires closer examination. 26 On the assumption that, at the outset of a s 19 examination, ASIC told an examinee that legal professional privilege may be availed of by that person to resist the giving of information or the production of documents that would reveal communications between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services, then disclosure by an examinee or witness of information in which he or she holds the privilege would constitute an act inconsistent with the maintenance of that privilege and privilege would be waived: see Cadbury 246 ALR 137 at [13]. So much may be accepted. It is consistent with the established principles on waiver. 27 If ASIC's submission is intended to suggest that if that same person (for example, an employee, director, consultant to, but not a legal adviser of, a third party) was privy to the privileged communications of the third party, then ASIC could compel production of that privileged information, that contention should be rejected for the reasons outlined in [21] and [22] above. 28 If, however, ASIC meant to submit not that it could compel a person (here, an employee or former employee) to disclose a third party's (here, a company's) privilege by force of statute, but rather that the person may lack the standing to assert the third party's privilege, then that contention may be accepted. Just as an employee can only waive a corporation's privilege if he or she has authority to do so (typically, where the person is a current officer or director), so too may an employee only assert a claim of privilege belonging to a corporation if he or she has the requisite authority: Commodity Futures Trading Commission v Weintraub [1985] USSC 102 ; 471 US 343 , 348-49 (1985); In re Grand Jury Proceedings [2006] USCA1 234 ; 469 F3d 24 (1 st Cir 2006); Wrench LLC v Taco Bell Corporation 212 FRD 514 , 517 (WD Mich 2002) (collecting cases); see also S McNicol, Law of Privilege (1992) at 161-62 (citing Rochfort v Trade Practices Commission (1982) 153 CLR 134 for the proposition that an employee cannot assert the privilege of self-incrimination on behalf of a corporation [at that time corporations were still thought to have such a privilege] because the privilege is personal to the holder). To put it another way, the ASIC investigator was legally correct when he told counsel for AWB that "[n]either ... could [the employees] make the claim [of privilege on behalf of AWB] nor [could they] waive the claim...": [12] above. 29 In other words, I accept the contention that although ASIC cannot compel the production of legally privileged communications of a person (ie the ASIC Act does not override or abrogate legal professional privilege), that does not mean that ASIC cannot receive such communications under any circumstances. As ASIC contended, legal professional privilege affords a person immunity from compulsory disclosure of its privileged communication ( Daniels ). That immunity does not prevent receipt by ASIC in the circumstances of the present case of legally privileged information from the examinees and the witnesses where they were not the holder of the privilege. 30 That conclusion sounds, at least at first blush, as harsh or unjust. What is more it would deprive him of the privilege of objecting to produce a document on the ground that it has a tendency to incriminate him. 31 First, although the examination under s 19 of the ASIC Act is private, it is an examination where "the inspector may give directions about who may be present during it, or during a part of it": s 22(1). If a direction is made for a person to attend, that person is entitled to attend the examination: s 22(2). The "person" referred to in s 22 is not the examinee's lawyer. The right of the examinee's lawyer to attend and address the inspector is separately and expressly provided for in s 23. Who then could that person be? One obvious contender is the legal adviser of the examinee's employer in circumstances such as those outlined in the extracts of the transcript (see [10] above). But ASIC did not permit that to occur. The power to make directions must include directions not only about the identity of the legal representative who might be entitled to attend on behalf of the company at any examination, but also about the non-disclosure of the contents of the examination to any person or entity (including the entity seeking to protect its privileged communications). 32 Of course, there cannot be a general rule that a legal representative of the employer or the former employer of the examinee should be permitted to attend to protect the employer's privilege. There may well be circumstances where to do so would jeopardise the investigation: see eg Gangemi v Australian Securities and Investments Commission [2003] FCA 494 ; (2003) 129 FCR 284 at [35] , [38]; see also Rochfort at 145 (Mason J) (stating that request for the production of privileged information should generally be directed to the employer but "the protection of the employer's interests [in the information] must give way to the public interest in the efficient administration of justice in case of collision between the two"). But in the absence of such a circumstance, the voluntary grant by ASIC of a limited right to be present in the manner outlined by counsel for AWB might have forestalled the issues raised in these proceedings. 33 However, neither AWB nor AWBI took any step to review the decision of the investigator to refuse to permit AWB to be represented at the examinations. Whether such an effort would have succeeded seems unlikely (see [36]-[37] below); in this regard, it is illuminating to examine United States v Western Electric Corp Inc 1990-1 Trade Cases |P 68,939; 1990 WL 39129 at *1 (DDC 1990) (stating that the company had no right to have its own counsel present, whether in addition to or in lieu of individual counsel, at examinations of present or former employees because that "would be an obvious prescription for frustrating investigations into wrongdoing"). 34 However that may be, the fact of the matter is that ASIC now has possession of information which, at least in theory, could be subject to a valid claim of privilege by AWB. The question then is whether ASIC is entitled to make use of that information, notwithstanding the possible privilege claim, and the answer to that question is yes. Consequently, once information in a privileged document has come into the hands of a party to litigation, even as a result of compulsive process which is later reversed, the fact that the document was and remains privileged does not of itself prevent that party from making use of the information [ Calcraft v Guest [1898] 1 QB 759, 763-4; Baker v Campbell [1983] HCA 39 ; (1983) 153 CLR 52 (Gibbs CJ, in diss ), 67, 80 (Mason J, in diss ) 101, 109-110 (Brennan J in diss ), 129 (Dawson J); Trevorrow v State of South Australia (No 4) (2006) 94 SASR 64 , 70 (Doyle CJ), 80 (Debelle J), 101 (White J); Heydon, Cross on Evidence , 7 th Aust Ed (2004) [25025]. Given the arrangements put in place by ASIC (see [9], [11] above), there was no (and could be no) complaint that the examinees were not provided with a reasonable opportunity to claim legal professional privilege on their own behalf. 36 I should also note that examinees were even given an opportunity to raise an issue as to a possible third-party privilege. No doubt this is the best policy, but whether it was required as a matter of law may be doubted: see Rochfort at 145-47 (noting that in general effort should be made to respect potential interests of the third-party lawyer but that there are various circumstances where the interests of justice will trump protection of those interests). In MM , Emmett J held that a person must be given a reasonable opportunity to claim privilege on behalf of others as well as himself or herself. In support of this proposition, his Honour relied on the Full Court's decision in Citibank ; however, that decision was disapproved by the later Full Court decision in JMA . Moreover, the conclusion in MM rested on a premise which may be in doubt. Emmett J reasoned (at [35]) that an examinee "would be obliged to make claims for privilege in respect of documents where the privilege might reasonably be expected to exist in order to ensure that such a claim for privilege would not be lost . " (Emphasis added. ) In other words, his Honour found that the obligation to make a claim on behalf of others must exist in order to prevent waiver. However, as I have already noted, and as the parties in this case recognised from the start, only the holder of the privilege may waive it. Thus there is no possibility that the failure of an employee to claim privilege on behalf of the corporation would result in waiver or loss of the privilege (except perhaps where the employee is authorised to waive the privilege). To the contrary, it is precisely if a general duty to claim the privilege is imposed that a risk of waiver arises - that is, imagine that an employee under a duty was given a reasonable opportunity to claim privilege on behalf of the employer but failed to do so; under Mann v Carnell [1999] HCA 66 ; (1999) 201 CLR 1 that would be conduct inconsistent with the maintenance of the privilege and would mean that any employee, without the knowledge or authority of the corporate employer, could waive the corporation's privilege. For those reasons, it does not seem either necessary or wise to impose a general obligation on an examinee to claim privilege on behalf of a third party, nor to create a general obligation on behalf of the examiner to give the examinee a reasonable opportunity to make such a claim. While an employee may have an obligation in contract or equity to maintain the confidences of his or her employer ( NP Generations Pty Ltd v Feneley (2001) 80 SASR 151 at [16]-[19]), that cannot be converted into an ability to control the exercise of the employer's legal professional privilege. See by way of example, May v Deputy Commissioner of Taxation [1999] FCA 287 ; (1999) 92 FCR 152 at [31] , [36] and [38] and MM at [36] and [37]. 38 That is not surprising. If ASIC were under an obligation to notify a third party that the exercise of its compulsory power in relation to another individual (such as an examinee) may result in that individual providing information that is subject to a claim of legal professional privilege by that third party, by what criteria would ASIC determine when and in what circumstances it was required to notify a third party? Would ASIC be required to interrupt an examination upon becoming aware of the prospect of or the fact of information being provided by an examinee which might be the subject of a claim of privilege by a third party? How would ASIC determine if it was properly subject to a claim for legal professional privilege? The list of difficulties is endless and the possibility great that efficient and timely investigation of wrongdoing would be frustrated. 39 Moreover, there are measures that the third party can take to prevent disclosure of its privileged information even in the absence of a right to intervene. First, where an examinee is subject to the exercise of compulsory powers by a government authority and in possession of privileged information where the holder of the privilege is a third party, it is open to the holder of privilege to require or authorise the examinee to assert the holder's privilege to the authority: MM at [33] (cf s 122(3) of the Evidence Act 1995 (Cth)). Of course, the efficacy of this strategy is likely to be limited in situations where the third party does not have prior notice of the examination or other exercise of power over another under the ASIC Act . 40 Secondly, equity may restrain use of confidential information improperly obtained , especially where the information is used as a "springboard for a claim or defence in litigation": Cowell v British American Tobacco Australia Services Ltd [2007] VSCA 301 at [15] - [17] . As Emmett J noted in MM , there is nothing to prevent the holder of a claim for privilege making a privilege claim prior to the tendering of evidence against the holder of any information obtained by ASIC in circumstances not giving rise to a waiver: eg ss 76 - 83 of the ASIC Act ; ss 118 and 122 of the Evidence Act 1995 (Cth) and British Coal Corporation v Dennis Rye Ltd (No 2) [1988] 3 All ER 816. Put another way, "the right of the holder of the privilege not to have privileged material used in evidence against him or her [or it]" is not affected by the disclosure of the privileged material by a party within the scope of the privilege but not entitled to control its exercise: MM at [38]. This is a natural consequence of the basic principle that only the holder of the privilege may waive it. Moreover, although not applicable in the present case (because the third party here is a corporation, which has no privilege against self-incrimination: Daniels at [31]), that preservation of privilege extends not only to legal professional privilege but also privilege against self-incrimination because the ASIC Act abrogates privilege against self-incrimination (s 68(1)) and then provides a "use immunity" to the examinee in relation to information obtained in a s 19 examination where the requirements of s 68(2) are satisfied: s 68(3) of the ASIC Act . Interestingly, unlike other Commonwealth legislation, the "use immunity" in the ASIC Act only applies to persons in relation to the making of an oral statement or the signing of a record and not to the production of documents: s 76(1)(d) of the ASIC Act ; see also Privilege in Perspective , ALRC Report No 107 (2007) at Ch 7 and in particular, paras [7.65] --- [7.69] and [7.103] and [7.104]. 41 Against that background, it is necessary to turn to consider s 127 of the ASIC Act . If a statute states expressly the factors that must be taken into account that will be decisive. However, if the relevant factors are not expressly stated, they must be determined by necessary implication from the subject matter, scope and purpose of the Act: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40 ; (1985) 162 CLR 24 , 39-40; Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30 ; (2001) 206 CLR 323 , 347-348. 43 As noted earlier, in the present case the question does not centre upon ASIC's power to compel the examinee to reveal anything; it turns upon the proper construction of ASIC's separate and distinct power to pass on what, by hypothesis, is privileged information. The relevant power is found in s 127 of the ASIC Act . Two questions arise: what does s 127 provide and, in particular, does it state expressly the factors that must be taken into account by the decision maker in deciding under s 127(4) "that particular information ... will enable or assist ... [the AFP] ... to perform or exercise any of the agency's functions or powers". 44 Section 127 is set out above (see [14]). Subject to ss (2) to (4), it protects the confidentiality of information to which it applies. Subsection (4) is the relevant section. It provides that the delegate of the Chairperson must consider whether the "particular information" will enable or assist the AFP to perform or exercise of its functions or powers. Although there was some dispute in the present case about the purpose of ASIC's investigation, the AWB did not suggest that the release by ASIC to the AFP of the AWB Information was for any purpose other than to enable or assist the AFP to perform or exercise its functions or powers: s 127(4). 45 However, that is not the end of the enquiry. The disclosure of the AWB Information by ASIC to the AFP was subject to conditions imposed under s 127(4A) (see [7] above). ASIC's s 127 power to disclose is discretionary: Johns at 428 and 469. The conditions are important. When, as here, conditions are imposed they are enforceable as an equitable obligation. The AFP is affected by the terms on which it received the AWB Information: Johns at 429. The obligation (expressed as a condition) is enforceable, at least, by injunction: Johns at 429. 46 The question which then arises is whether the disclosure of the AWB Information under s 127(4) requires ASIC to observe procedural fairness not only towards the examinee but also a party in the position of AWB consistent with the principles set out in Johns v ASC [1993] HCA 56 ; (1993) 178 CLR 408. The exercise of the statutory power is conditional upon the observance of the rules of natural justice ( Johns at 470; Ainsworth v Criminal Justice Commission [1992] HCA 10 ; (1992) 175 CLR 564 , 591 and Annetts v McCann [1990] HCA 57 ; (1990) 170 CLR 596 , 598), but does that natural justice requirement extend to AWB? 47 First, it must be recalled that the AWB Information was protected by disclosure (s 127(1)) subject to the qualifications prescribed in ss (2)-(4). That antecedent right or duty is not determinative. However, it is a relevant factor affecting the exercise by ASIC of its discretionary statutory power to disclose the AWB Information to the AFP. Exercise of the authority conferred by s 127(4) was "apt to affect adversely" the interests of the examinees who are prima facie entitled to have the transcripts kept confidential: Johns at 430. It was for that reason, consistent with Johns , that ASIC observed the rules of natural justice and informed each of the examinees that it proposed to disclose the transcripts and gave each examinee an opportunity to oppose: Johns at 430-431. 48 The present case, however, concerns not the examinee but AWB, the employer or previous employer of each examinee. In Johns , McHugh J said (at 472) that "the need to preserve the confidentiality of ASIC's investigation does not exclude procedural fairness, but reduces its content, perhaps in some circumstances to nothing". Here, the question of whether or not ASIC was obliged to observe the rules of natural justice in the case of AWB did not arise. Although AWB was not told by ASIC of the proposed disclosures to the AFP, it learned of that fact, was "given the opportunity to put submissions before [ASIC] relating to matters requiring the non-disclosure of information by [ASIC]" ( Johns at 472) and took advantage of that opportunity by making numerous submissions opposing the disclosure. AWB might have persuaded ASIC to accept or adopt its submissions. It did not. In the circumstances, it is not necessary to pursue McHugh J's observation to its end to determine precisely how much the content of procedural fairness may have been reduced with respect to AWB; I need only find (and do find) that the opportunity to be heard that was given to AWB was sufficient. The specific grounds are disposed of as follows. AWB's contentions that ASIC was "[not] empowered by the ASIC Act to obtain confidential and privileged communications from persons other than the holder of the privilege in circumstances where the holder has not expressly or by implication waived the privilege" is too broad a proposition. ASIC is not empowered to compel production from the privilege-holder and did not do so. 51 However, as noted earlier, although ASIC cannot directly compel the production of legally privileged communications, that does not mean that ASIC cannot receive such communications otherwise than through compulsion of the privilege-holder. Moreover, s 127(4) expressly confers power upon ASIC to disclose information properly obtained to third parties. The contentions proceed on a factual misconception that the delegate did not inspect the AWB Information. The delegate did (see [14] of the Decision). Moreover, the allegations that the delegate failed to consider whether the act of disclosure by ASIC to the AFP constituted a use of confidential and legally privileged communications and would destroy the confidentiality that AWB was entitled to maintain assume that it was necessary for ASIC to consider those matters. With respect to the first matter (use of confidential and privileged information), it was not necessary for ASIC to do so because, as noted earlier, "the fact that the [communication] was and remains privileged does not of itself prevent [a party] from making use of that document": see [33] above. With respect to whether confidentiality would be destroyed, the delegate carefully considered that issue and imposed conditions on the disclosure to the AFP designed to preserve confidentiality and limit any further disclosure or use of the information. In this connection, it is also important to reiterate that because any privilege belonging to AWB still exists and has not been waived, it is still open to AWB to oppose, on the ground of legal professional privilege, the use against it in any legal proceeding of the AWB Information. AWB's "rights" were to prevent the inadvertent or deliberate disclosure of privileged information which may have been included in the AWB Information. For the reasons explained above (see [30] to [37] above), there was no obligation on ASIC to provide AWB with any opportunity to protect those "rights" in the first instance (ie the right to be present at the examinations or otherwise interject privilege objections), and in any event, AWB did not challenge ASIC's decision to exclude it from the information-gathering process. ASIC obtained the information other than by compulsion of the privilege-holder. It is entitled to use it. AWB is still entitled to protect its rights in the manner described above (see [38] to [39]). 55 In my view, there was no denial of natural justice. AWB was "given the opportunity to put submissions before [ASIC] relating to matters requiring the non-disclosure of information by [ASIC]" ( Johns at 472) and took advantage of that opportunity by making numerous submissions opposing the disclosure. As I have found, this opportunity to be heard was enough to satisfy any requirements of natural justice in the circumstances: see [47] above. Moreover, it is of the utmost importance to recall that in a proceeding of this nature it is neither necessary nor right to decide the merits of the decision. 56 For those reasons, I would dismiss the application and order the applicant to pay the respondent's costs to be taxed in default of agreement. I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.

whether australian securities and investment commission act 2001 (cth) (asic act) abrogates legal professional privilege where asic decides pursuant to s 127(4) of the asic act to share with another agency information gathered in the course of an asic investigation from persons who may have inadvertently or voluntarily disclosed communications subject to legal professional privilege of a third party whether asic is required to give the third party a reasonable opportunity to assert legal professional privilege before sharing information when corporate employee may assert or waive privilege belonging to corporation privilege

The first is whether the Refugee Review Tribunal ('the Tribunal') exercised its statutory function properly, by dealing with all aspects of the applicant's case. The second is whether the Tribunal erred in law, in a way that affected the exercise of its statutory function, in failing to understand correctly the meaning of 'persecution' in the relevant international instruments and the relevant legislation. The questions arise in the context of a proceeding in which the applicant seeks remedies of the kinds contemplated by s 75(v) of the Constitution , with respect to the Tribunal's decision, in the exercise of the jurisdiction conferred on this Court by s 39B of the Judiciary Act 1903 (Cth) ('the Judiciary Act '). 2 The applicant is a citizen of Egypt, who was born there in 1971. He arrived in Australia on 26 February 1997. On 3 April 1997, he applied for a protection visa. A delegate of the Minister for Immigration and Multicultural Affairs (subsequently the Minister for Immigration and Multicultural and Indigenous Affairs) (in both cases, 'the Minister') made a decision refusing to grant the visa. On 10 December 1999, the Tribunal made a decision affirming the delegate's decision. The applicant applied to this Court for review of that decision of the Tribunal. On 3 November 2000, the Court set aside both the delegate's decision and the Tribunal decision, on the basis that the application for a protection visa was not a valid application. 3 On 4 January 2001, the applicant made an application for a protection visa. A delegate of the Minister again refused to grant a protection visa. The applicant applied to the Tribunal again. On 16 April 2003, the Tribunal conducted a hearing, at which the applicant gave evidence. In a written decision, dated 28 April 2003 and handed down on 16 May 2003, the Tribunal affirmed the decision not to grant a protection visa. 4 On 29 August 2003, the applicant applied to the High Court of Australia, seeking an order nisi for prohibition, certiorari and mandamus. In terms, the draft order nisi filed in the High Court sought prohibition against the Minister, who was named as a respondent, and certiorari and mandamus against 'the second respondent', although there was no second respondent named in the draft order nisi, or in any of the documents filed. The further proceedings in this application be remitted to the Federal Court of Australia, Victoria District Registry. The application for an Order Nisi proceed in that Court as if steps already taken in the matter in this Court had been taken in that Court. I also granted a certificate pursuant to O 80 of the Federal Court Rules , so that the applicant could receive legal advice from a barrister. Counsel who ultimately appeared for the applicant accepted the referral. An amended draft order nisi was filed, in which prohibition was sought against the Minister, and certiorari and mandamus against the Tribunal, although the Tribunal was still not named as a respondent to the proceeding. Remedies cannot be sought against the Tribunal unless it is named as a respondent, so it will be necessary for me to make orders adding the Tribunal as a respondent, with consequential amendments to the documents filed. See SAAP v Minister for Immigration & Multicultural & Indigenous Affairs [2005] HCA 24 (2005) 215 ALR 162 . A criterion for a protection visa is that the person applying for it be a non-citizen in Australia to whom the Minister is satisfied that Australia has protection obligations under the Refugees Convention as amended by the Refugees Protocol. The terms 'Refugees Convention' and 'Refugees Protocol' are defined in s 5(1) of the Migration Act to mean respectively the Convention relating to the Status of Refugees done at Geneva on 28 July 1951 and the Protocol relating to the Status of Refugees done at New York on 31 January 1967. It is convenient to call these two instruments, taken together, the 'Convention'. His claims arose out of the fact that he was engaged by the management of a nightclub in Egypt to make videotapes of activities at the nightclub, and to sell those videotapes to the persons who had been participating in the activities. The nightclub was available for hire for functions. From time to time, it was hired by groups of people for functions involving heavy metal music. The applicant made videotapes of these functions and sold them to those who had participated in them. The religious authorities in Egypt took the view that these concerts involved satanic practices, or 'devil-worship'. The authorities were aware of the involvement of the applicant. As part of a crackdown on the practices, the authorities had obtained a court order against the applicant, requiring his arrest. The applicant's father had been required to give an assurance that he would give up the applicant to the authorities, if the applicant should return. Two of the applicant's brothers, who lived outside Egypt, had been detained and questioned at the airport, when they visited Egypt. The questioning concerned the applicant's whereabouts. 9 The applicant claimed to fear that he would be punished severely, including arrest and torture, for his perceived apostasy or blasphemy, and that what he had done would be held against him for the rest of his life, so that he would be unable to live normally. His claim to fear of persecution for the reason of religion was therefore based on his contravention of a religious-based law, or his failure to conform to the dictates of a dominant religion. So far as his alternative claim was concerned, it was based on the suggestion that he was a member of a particular social group, namely those perceived to be involved in satanic rituals. The Tribunal similarly is prepared to accept his claims made at the hearing as to his purpose in and method of departing Egypt and his arrival in Australia. It accepts that there are court orders out against the applicant, that Egyptian authorities are interested in talking to the applicant on return, that his brothers have been questioned about his whereabouts at the airport and that his father has been forced to sign a document to notify the authorities if he discovers his son's whereabouts. The young people were mostly students from well-off families, who had adopted Western modes of dress and behaviour and who listened to "heavy-metal" music; few if any appeared to have any real connection with Satanism. Most of the youths were released after a short period, although some were held for longer periods. News reports on these events include the following. The report stated that a senior Egyptian mufti had called members of this group who had been arrested apostates, and had called for the death penalty if they did not repent and return to religion. 13 The Tribunal also referred to a report on the arrest of a number of young people in Egypt for the Washington report on Middle Eastern affairs in May 1997, which referred to a hundred people having been arrested and to three or four of them being still in jail by late February 1997. This report described most of those arrested as 'young sons and daughters of the relatively well-to-do whose only crime seemed to be their penchant for foreign, heavy metal bands'. It described them as dancing, 'maybe a bit spastically, at concerts by raucous local rock bands', and as wearing black T-shirts imprinted with skull and crossbones, painting their nails black, wearing black lipstick and tattooing their arms. The report indicated that the connection with the practice of Satanism had been made by the authorities and the media. It described the official reaction as typical of 'short-lived hysterias, whipped up by government and opposition media', about various issues. 14 The Tribunal referred to a report in January 1997 of Deutsche Presse-Agentur , headlined 'Teenage devil worshippers rounded up in Egypt 1997'. It referred to a January 1997 Agence France Presse report, which quoted the Coptic Pope as urging the imposition of the stiffest possible sanctions against dozens of youths under investigation for alleged 'Satan worship'. Two weeks later, the prosecutor ordered the release of 24 others, and on Wednesday, all the remaining defendants were freed except for four young men whose detention was extended for 15 days pending further investigation. 16 The Tribunal referred to what it described as a 'detailed analysis by A. Khattab', published in May 1997. This quoted 'SSP General Attorney Hesham Sarraya' as acknowledging that there are no devil worshippers in Egypt, but a group of 'spoiled teenagers who suffer from lack of parental control. All were convicted and fined for scorning religion. Four of the teens spent 45 days in custody, while the others were released. The Tribunal notes the comments of SSP General Attorney Hesham Sarraya that there were no devil-worshippers in Egypt whatsoever; rather they were "just a group of spoiled teenagers who suffer from lack of parental control". The Tribunal also notes the explanation of one observer that Egypt was going through a particularly tough passage in its continuous struggle to come to terms with influences from the West. It was investigated thoroughly and dealt with; all those who were arrested have long since been released. There is no evidence before the Tribunal to suggest that any of those involved, including "ring leaders", were dealt with by authorities in a persecutory manner; rather, of those arrested, all were convicted and fined for scorning religion. The Tribunal finds that such treatment does not amount to serious harm under s.91R of the Act. The Tribunal also expressed the view that, even if the applicant were to return to Egypt, and to re-engage in videotaping or other involvement in heavy metal parties, he would not face a real threat of persecution for such involvement. Because his fear of persecution was not well-founded, the Tribunal was not satisfied that the applicant was a person to whom Australia had protection obligations under the Convention. The first ground was that the Tribunal had failed to take into account relevant considerations. The considerations identified were the facts by which the applicant sought to differentiate himself from those who had merely been involved in the events at the nightclub. The applicant complained that the Tribunal had ignored those facts, and had regarded the information it had as to the manner in which the majority of those people had been dealt with as applicable to the applicant's case. The second ground was that the Tribunal had failed to understand the meaning of persecution, and the provisions of s 91R of the Migration Act as to serious harm. The third ground was that the Tribunal had denied the applicant procedural fairness, because the interpreter through whom he gave his evidence at the Tribunal hearing was Lebanese, and failed to interpret accurately what the applicant was saying. At the hearing of the proceeding, counsel for the applicant expressly abandoned the third ground. The matter proceeded on the basis that it was argued that the Tribunal had failed to deal with the actual case made by the applicant, and that it had failed to understand the meaning of persecution and to construe correctly the provisions of s 91R of the Migration Act . It was contended that these errors amounted to jurisdictional errors, and that they entitled the applicant to have the Tribunal's decision set aside and his application to review the decision of the Minister's delegate reviewed again by the Tribunal, according to law. As I have said, the relief sought against the Minister is prohibition. The High Court Rules contained no time limit in respect of an application for prohibition. Counsel for the Minister contended that it was inappropriate to seek prohibition against the Minister; once the Tribunal decision has been made, if it is not set aside, the Minister has a statutory obligation to remove the applicant from Australia. While this argument may be correct, it is of no consequence in the present case. It is conceded that, as against the Tribunal, the remedy of certiorari was sought by the filing of the application in the High Court within the time limit then fixed by O 55 r 17(1) of the High Court Rules. The application to the High Court was not filed within the two-month time limit, fixed by O 55 r 30 of the High Court Rules, in respect of an application for mandamus. In Applicants M16 of 2004 v Minister for Immigration & Multicultural & Indigenous Affairs [2005] FCA 1641 at [73] , after examining some of the authorities, I expressed the conclusion that the better view is that, once the High Court has remitted an application for an order nisi to this Court, the time limits applicable in that court are no longer of any consequence. I remain of that opinion. 22 In any event, there was an amended draft order nisi filed in this Court. Although the use of an amended draft order nisi was perhaps not the most convenient procedure, it was of itself sufficient to invoke the jurisdiction of this Court, conferred by s 39B of the Judiciary Act , afresh. On the assumption that the Tribunal's decision is affected by jurisdictional error, and is consequently not 'a decision...made...under this Act' for the purposes of the definition of 'privative clause decision' in s 474(2) of the Migration Act , the time limit then fixed by s 477(1) was inapplicable. On that assumption, there was no time limit fixed for invoking the jurisdiction conferred on this Court by s 39B of the Judiciary Act , in respect of the Tribunal's decision. See Applicants M16 at [74]. 23 If it were necessary to enlarge the time limit for the application for mandamus, to give the applicant a constitutional entitlement to seek certiorari as an adjunct to mandamus (certiorari being a remedy not mentioned in s 75(v) of the Constitution ), then I should not hesitate to do so in the present case. There has been no undue delay. The proceeding was commenced within the time limited for an application for certiorari. The delay is not, in any event, gross. The Minister has not claimed to have suffered any prejudice by reason of the delay. The applicant's claim is one that has merits. 24 An alternative view is that certiorari might be a remedy available to the applicant, pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth), in a proceeding in which the jurisdiction of the Court is invoked validly by the remittal by the High Court of the application for prohibition against the Minister, even if the applicant could not succeed in obtaining that remedy against that respondent. 25 For all these reasons, it is unnecessary to consider the issue of the time of the commencement of the proceeding any further. At the time of the events, the applicant was not a teenager, but was in his mid-twenties. He was not merely attending the events at which what were regarded as satanic rituals were taking place, but was facilitating those events, by making videotapes, and ensuring that the memory of the events was kept alive, by selling the videotapes to the participants. It was perhaps true to say, as the Tribunal did, that he was not an 'organiser' of the events, but he was certainly not in the same category as the ordinary participants. 27 Further, the applicant's case included the proposition that there was a current court order for his arrest, and that he was being sought actively by the authorities, who had questioned his two brothers at the airport in 2001 and 2003, seeking information as to the applicant's whereabouts. The applicant's father had given an undertaking to give up the applicant to the authorities if he should return. 28 The Tribunal found in favour of the applicant in relation to all of these facts. Having done so, it did not mention any of those facts again in the course of its reasoning. In terms of the Tribunal's findings, in the paragraph under the heading 'Devil Worship', which I have quoted in [11], the applicant did not fit the picture. He was not as young as the others involved. He was not a student. He was not from a 'well-off' family. As a consequence, it was a matter of some doubt whether he would be in the category of 'most' of those people, who were released after a short period. At the very least, it would have been likely that the applicant would have been among those who were 'held for longer periods. If it were the case that 'all involved had eventually been freed by March 1997', it was also the case that some had been released on bail. This certainly suggested that further action against them was pending at that time. The evidence afforded no foundation for the Tribunal's finding that 'all those who were arrested have long since been released. ' There appears to have been no evidence of what subsequently occurred in relation to those released on bail. 30 The Tribunal was entitled to place emphasis on the opinion of SSP General Attorney Hesham Sarraya, that there were no devil-worshippers in Egypt, but just a group of spoiled teenagers suffering from lack of parental control. Its reference to the opinion of an observer that Egypt 'was going through a particularly tough passage in its continuous struggle to come to terms with influences from the West' is more difficult to comprehend. Given that the Tribunal described the struggle as a continuous one, it might have been expected that the Tribunal would turn its attention to the possibility that Egypt would go through another such 'tough passage', and that another wave of 'short-lived hysteria[s], whipped up by government and opposition media', might be generated. Although it is possible to be critical of the Tribunal's approach to these issues, they were essentially issues of fact for the Tribunal to determine. It is not possible to overturn the Tribunal's decision on the basis that it took a wrong view of the facts, even if that view seems not to accord with the evidence. 31 The stark feature of the Tribunal's reasoning is its failure to deal with the differentiating factors in the applicant's case, apart from finding that they existed. Instead, the Tribunal appears to have acted on the assumption that whatever had happened to the majority of the young people who had been arrested in consequence of the activities at the nightclub, and in other places, would happen to the applicant. Without turning its attention to the question whether the differentiating factors would be enough to ensure that something more might happen to the applicant, the Tribunal cannot be said to have dealt with the case that the applicant put. 32 It is true, as counsel for the Minister argued, that the applicant cannot object to the processes of reasoning of the Tribunal. He cannot object to the emphasis given by the Tribunal to various matters of fact, nor to its choice of the material on which it relies in making findings. In my view, however, this case falls on the other side of the line that separates those issues from a failure to deal with the case as put. The Tribunal's statutory function, pursuant to s 414(1) of the Migration Act , was to review the decision of the Minister's delegate. The Tribunal was obliged to exercise this power on the basis of the material before it, reaching its own conclusion on that material, and not merely deciding whether the delegate had reached the correct conclusion on the material before him or her. It follows that the Tribunal was obliged to take account of all the material before it. It was insufficient for the Tribunal simply to pay lip-service to that material. In my view, that is what the Tribunal did in the present case. It made findings in favour of the applicant as to all the facts he had alleged, which differentiated him from the majority of those arrested for satanic practices in Egypt. It did not then go on to consider whether those differentiating facts did in fact differentiate the applicant from those others. In my view, the Tribunal thereby failed to deal with the applicant's case. Its failure to do so amounted to a jurisdictional error. The Tribunal went on to say that all were convicted and fined for scorning religion, and that such treatment does not amount to serious harm within the meaning of s 91R of the Migration Act . 34 In fact, as the Tribunal itself had said, there was any amount of evidence that more serious consequences than convictions and fines were visited upon those who were arrested, particularly some of them. As the February 1997 Deutsche Presse-Agentur report said, there was evidence that 24 of those arrested were held in custody for two weeks, others for some greater time, and four for at least 15 days after that. On 3 March 1997, Deutsche Presse-Agentur reported that the last four were released on bail, which suggests that further proceedings against them were contemplated. The Associated Press report of 8 June 2001 recorded that four of the teenagers spent 45 days in custody. There was no evidence to contradict these statements, which were chosen by the Tribunal as the material on which it wished to rely. The evidence did not sustain the Tribunal's finding that all of those arrested were merely convicted and fined. There was substantial, uncontradicted evidence that a number of them were detained for significant periods, including four who were said to have been held for 45 days and then released on bail. 35 Section 91R of the Migration Act was inserted into the Migration Act by amendment in 2001, apparently for the purpose of attempting to clarify what should be regarded as persecution. It is clear that the section contains no exhaustive definition of persecution, but subs (2) provides examples of serious harm that Parliament has seen fit to characterise as persecution. The first of these, in par (a), is 'a threat to the person's life or liberty'. Imprisonment of up to 45 days plainly involves a loss of liberty. The applicant's case amounted to an assertion that, on his return to Egypt, the court order for his arrest would be enforced, consequent upon his father complying with the undertaking to give up the applicant to the authorities. On the uncontradicted evidence on which the Tribunal chose to rely, the applicant might then be liable to imprisonment for up to 45 days. Such a scenario required the Tribunal to consider whether it amounted to a threat to the applicant's liberty, and therefore to serious harm, amounting to persecution. It is certainly the case that the prospect of imprisonment for up to 45 days is capable of involving a threat to liberty. Imprisonment necessarily involves loss of liberty. 36 For the Tribunal to have reached the conclusion that there was 'no evidence' that any of those involved, including ring-leaders, were dealt with in a persecutory manner, it must have misunderstood the concept of persecution. In particular, it must have misunderstood the requirement of s 91R of the Migration Act that there be serious harm before there could be persecution, and that an example of serious harm involved a threat to liberty. If it had not misunderstood the concepts of 'serious harm', and consequently of persecution, the Tribunal could not have reached the conclusion that there was 'no evidence' to suggest that persecution had occurred. 37 Manifestly, in the exercise of its statutory function to review the delegate's decision, the Tribunal was required to apply the law. In particular, it was required to apply the correct standard, when determining whether a fear of persecution was well-founded. This the Tribunal failed to do, and its failure to do so may have affected the outcome of the applicant's case. The Tribunal therefore did not perform its statutory function. There was jurisdictional error. For the reasons I have given in [5], orders must be made having the effect of adding the Tribunal as a respondent to the proceeding. In accordance with the usual practice of administrative decision-makers, the Tribunal ordinarily submits to any the Court may make, except for an order for costs against it. It is therefore safe to dispense with the requirement to serve process on the Tribunal. As the proceeding remains in form an application for an order nisi, the order nisi should be granted and made absolute. A writ of certiorari should issue, bringing the Tribunal's decision into Court for the purpose of quashing it, and it must be quashed. A writ of mandamus must also issue, directed to the Tribunal, ordering it to hear and determine the applicant's application for review of the decision of the Minister's delegate according to law. 39 In the normal course, costs would follow the event. As I have said, counsel for the applicant was engaged pursuant to a referral under O 80 of the Federal Court Rules . Ordinarily, solicitors and counsel who accept such referrals are required to do so without charging any fee to the person referred to them. Order 80 r 9(2) provides that, if an order for costs is made in favour of a litigant who is assisted under the O 80 scheme, the legal practitioner who has provided the legal assistance is entitled to recover the amount of the fees and disbursements that another party is required to pay under the order. In the present case, an order for costs ought to be made. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray.

visa protection visa whether application for constitutional relief out of time whether high court rules apply to remitted applications whether court's jurisdiction invoked afresh absence of time limits applying to decisions affected by jurisdictional error whether jurisdictional error by tribunal whether tribunal dealt with case put by applicant facts differentiating applicant from others about whom tribunal made findings whether tribunal misconstrued 'persecution' and 'serious harm' prospect of imprisonment others imprisoned for up to 45 days whether no evidence of persecution 'serious harm' migration words and phrases

The bid was to acquire 100 percent of the fully paid ordinary shares in the capital of CMG Gold Limited (CMG) in consideration for 4.25 fully paid ordinary shares in Venturex per share in CMG (takeover bid). Offerees were informed on p 4 of the offer that the issued shares would be listed on the Australian Stock Exchange (ASX). The directors of CMG unanimously recommended acceptance of the offer by shareholders of CMG. There has been overwhelming acceptance of it. However the assurance as to the ASX listing has met with a difficulty. Venturex did not apply to the ASX before 22 May 2009 for listing. There has therefore been non-compliance with s 625(3)(c)(i) CA. This is by failure to apply by 22 May 2009, namely, seven days after commencement of the bid period, for admission to official quotation of the shares to be issued on the successful completion of the takeover bid. The solicitors for Venturex did not become aware of the failure to conform with the seven day rule until late in the afternoon of Friday, 12 June 2009 (six days ago). On the morning of Monday, 15 June 2009, the solicitors advised Venturex, the ASX and the Australian Securities and Investments Commission (ASIC) of the failure and that an application would be made to the Court to rectify the omission. At the same time, Venturex lodged with the ASX an application seeking admission to quotation of the shares to be issued upon the successful completion of the takeover bid. Venturex has continued to comply with the provisions of the CA in relation to the takeover bid as if it had complied with s 625(3) CA. The bid will close at 5.00 pm on 27 June 2009. At this stage no shares have been issued under the bid. Both ASIC and ASX have been notified of the position and of this proceeding. Neither objects to the relief sought if granted. CMG has also been informed. No objection to granting relief has been expressed by CMG. Note 2: Sections 659B and 659C deal with court proceedings during and after a takeover bid. The prohibition is set out in subs (1) with the definition of takeover proceedings provided for in subs (4). The Court is given power by subs (2) to stay proceedings until the end of the period after having regard, amongst other things, to the factors set out in subs (3). On the face of it, the current application is a Court proceeding commenced prior to the end of a bid period and in relation to a takeover bid. No other party, including ASIC, has taken the point that s 659B CA would preclude Venturex approaching the Court before ending the takeover bid period in order to obtain this particular remedial relief. I delivered oral reasons at the hearing but have now added additional reference to some authority. It seems, this particular point has not been specifically addressed in the context of the specific relief sought, in any reported decision. Section 659B CA was part of a scheme designed to prevent the plethora of takeover litigation which had occurred prior to the important reforms it achieved. That litigation at least in some measure, frustrated rather than advanced the objectives of Ch 6 of the CA. In a more informal, less costly and speedier setting, the Takeovers Panel now deals with such disputes. Section 1325A CA does not suggest that the power of the Court to make remedial orders, a power which should be exercised liberally, can only be exercised after the end of a takeover bid. Particularly in relation to s 1325A(2) CA, it is a power to be considered in a very limited circumstance. In Tower Software Engineering Pty Limited; Pendant Software Pty Limited v Harwood [2006] FCA 717 ; (2006) 154 FCR 150 , Goldberg J considered a comparable situation in connection with remedial orders sought under s 1071F CA. His Honour held that s 659B CA was a general provision whereas s 1071 CA was a specific provision in relation to a specific remedy and the Court would not be precluded from considering the specific relief. That approach was also summarised, obiter, by Austin J (at [18]) in Lionsgate Australia v Macquarie Private Portfolio [2007] NSWSC 318 ; (2007) 210 FLR 106. The same process of reasoning would apply, perhaps even more obviously, in the case of s 1325A CA which is a very specific provision dealing with a specific deficiency and one that will almost inevitably arise only during a takeover bid. The earlier reasons of Goldberg J are not reported but his Honour's reference in Tower Software Engineering [2006] FCA 717 ; 154 FCR 150 (at [22]) as I perceive it, could only be to the principle of statutory construction that provisions of general application give way to specific provisions when they are in conflict (less helpfully known as 'generalia specialibus non derogant': Goodwin v Phillips [1908] HCA 55 ; (1908) 7 CLR 1 , Maybury v Plowman [1913] HCA 43 ; (1913) 16 CLR 468 , per Barton CJ at 473-474 and more recently in Associated Minerals Consolidated Ltd v Wyong Shire Council (1974) 4 ALR 353 at 359). The learned authors of Pearce D C and Geddes R S, Statutory Interpretation in Australia , 6th ed Sydney: LexisNexis Butterworths, 2006 at [4.31] suggest that the generalia specialibus rule should be observed more strictly in the interpretation of a provision within an Act than in the case of separate enactments. With respect, I consider this suggestion has merit. Clearly in the latter circumstance, it may well be that the draft-person did not consider the impact of the competing Acts. As observed by Pearce and Geddes, when a single document is being considered, the draft-person may be more likely to have relied on the rule. That tension can be resolved as a matter of construction by reading the Act as a whole and applying the principle that Parliament intends that different sections of the same Act will operate harmoniously, requiring a process of reconciliation. (See Institute of Patent Agents v Lockwood [1894] AC 347 at 360; Ross v The Queen [1979] HCA 29 ; (1979) 141 CLR 432 at 449. Where any conflict arises with the general words of another provision, the very generality of the words of which indicates that the legislature is not able to identify or even anticipate every circumstance in which it may apply, the legislature is taken not to have intended to impinge upon its own comprehensive regime of a specific character. In passing the special Act, the legislature had their attention directed to the special case which the Act was meant to meet, and considered and provided for all the circumstances of that special case; and, having so done, they are not to be considered by a general enactment passed subsequently, and making no mention of any such intention, to have intended to derogate from that which, by their own special Act, they had thus carefully supervised and regulated. The purpose of s 1325A(2) CA is, in an appropriate case, to facilitate intended market behaviour by remedying a technical defect which would otherwise frustrate that intent. Its function is to give effect to the purposes of Ch 6 of the CA, not to thwart them. Given the objectives of Ch 6 of the CA and the purpose to which the remedial power of s 1325A(2) CA is directed, the absence of any express provision that the power may only be exercised after completion of a takeover bid suggests that in the specific situation there considered, the general prohibition against issuing proceedings during a takeover period (which is directed to a completely different objective) should give way to the specific power. In my view, the very specific provisions of s 1325A(2) CA do override the general provision in s 659B CA. Parliament could not be taken to have overlooked the very important and fundamental provision in s 659B CA in drafting s 1325A(2) CA. Also to be noted is that s 1325A(3) CA lists a broader range of people who may seek the remedial relief under that section than the range of public officers including ASIC under s 659B(1) CA. Further, given the matters to which I have given consideration below, it would be inappropriate to exercise any power under s 659B(2) CA to stay this application (and no such application has been made), as the Takeovers Panel would not be able to exercise the jurisdiction conferred under s 1325A CA. This is an express consideration required under s 659B(3)(b). The Takeovers Panel does not exercise judicial power ( Attorney-General Cth) v Alinta Limited [2008] HCA 2 ; (2008) 233 CLR 542 (at [174]-[175])). Further, for the purposes of s 659B(3)(a), to stay the proceeding would, in my view, frustrate the purposes of Ch 6 CA if orders could not be made under s 1325A CA before the end of the bid period. Finally, although this point has not been squarely considered in other cases, the approach I propose to take is consistent with the similar circumstances in GrainCorp Limited, in the matter of GrainCorp Limited [2008] FCA 996 and In the matter of MacMahon Holdings Limited (ACN 007 634 406) [2008] FCA 1079. Further, absent an order of the Court under s 1325A CA, the failure to comply with s 625(3) CA would mean that the offers made under the takeover bid are void. As I observed in relevantly similar circumstances in MacMahon Holdings [2008] FCA 1079 , in such a situation the primary consideration would appear to be the interest of offerees. The intent of the subsection must be to ensure that those accepting the offer, receive the benefit of that which they have accepted. As in Re Pinnacle VRB Ltd (No 9) [2001] ATP 25 and Re Pinnacle VRB Ltd (No 10) [2001] ATP 21 , the acceptors/offerees would be prejudiced if after acceptance of the offer the bidder did not proceed with an application to have the relevant shares quoted on the ASX. I am satisfied on the evidence provided, including two affidavits, (one of them lengthy) from the solicitor for Venturex, that both Venturex and the solicitor have acted honestly in relation to the contravention; notification has been given promptly on behalf of Venturex to ASIC, ASX and the solicitors for CMG; an application has been lodged by Venturex with the ASX for official quotation of the shares to be issued as consideration for the takeover bid and the ASX has confirmed that subject to the satisfaction of certain standard conditions it will admit the shares to quotation on the ASX; Venturex has already received acceptances for approximately 94.95 percent of the voting shares in CMG. It intends to undertake the compulsory acquisition of the remaining shares in CMG pursuant to Ch 6A CA on the close of the takeover bid on 27 June 2009; the shareholders of CMG who have accepted the offers have done so on the understanding that the shares issued to them will be listed on the ASX. Given the current level of acceptances of the takeover bid, the grant of the orders will advance the objects of Ch 6 of the CA. No shares have yet been issued under the takeover bid and therefore no offeree has suffered any prejudice. Relief should be granted. The most appropriate order under which relief should be granted is under s 1325A CA (see MacMahon Holdings at [17]-[18]). Accordingly, I will make the following orders: The time for service of this originating process be abridged. Pursuant to s 1325A(2) of the Corporations Act 2001 (Cth) for the purposes of the offers described in the applicant's bidder's statement dated 15 May 2009, the date for compliance with s 625(3)(c)(i) of the Corporations Act 2001 (Cth) be extended to 15 June 2009. A copy of this order be served on the Australian Securities and Investments Commission as soon as practicable after the order is made. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.

whether general prohibition of commencement of litigation before the end of the takeover period precludes the seeking of remedial relief during the takeover period pursuant to s 1325a(2) of the corporations act 2001 (cth) ca whether a general provision gives way to a specific provision what were the purposes of the respective provisions what are the interests of those affected by the irregularity which it is sought to cure considerations taken into account in granting relief offer would be void offerees who have accepted would be deprived of the benefit of the acceptance vast majority of offerees accepting with unanimous support of directors from target company corporations

He having retired, a question arose as to his entitlement for payment in lieu of long service leave under the Trustee Industry Award 1999 . 2 The Award provides in cl 18.1.1 for a "general entitlement" to thirteen weeks of long service leave "on completing" fifteen years of continuous service and seven weeks of such leave "on completing" each period of eight years of continuous service after the first fifteen years. At the time he retired Mr Fitzgerald had completed three years of an eight year period of service. Was he entitled to pro rata payment in lieu of long service leave for that three year period? O'Sullivan FM answered that question in the affirmative: Jordan v Tasmanian Perpetual Trustees Limited [2007] FMCA 1511. TPT now appeals. 3 The respondent to the appeal, the applicant in the court below, is a Workplace Inspector under s 167(2) of the Workplace Relations Act 1996 (Cth). 18. His Honour cited a number of authorities on the construction of awards: Short v FW Hercus Pty Ltd [1993] FCA 51 ; (1993) 40 FCR 511 at 520; Kucks v CSR Limited (1996) 66 IR 181 at 184 and City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Unions [2006] FCA 813 at [57] . They bind the parties on pain of pecuniary penalties. 6 The learned Magistrate held at [47] that although cl 18.2 does not explicitly designate that the payment in lieu of long service leave after fifteen years of service was to be calculated on a pro rata basis, the "practical application" of cl 18.2.2(b) evinces that that was the intention of the framers of the Award. TPT's construction would, his Honour thought, render cl 18.2.2 redundant. Moreover, his Honour accepted the respondent's contention that cl 18.2.1 states that those who receive payment in lieu of long service leave on termination are those who are entitled to long service leave by virtue of cl 18.1. He considered that such an interpretation was consistent with the treatment of payment of other classes of employees in the Award as well as those under other instruments. 7 His Honour at [56] accepted the argument that there was no "logical discernible policy reason" by which the Award should distinguish between, on one hand, those whose employment ended after ten but before fifteen years of continuous service, who were entitled to payment in lieu on a pro rata basis, and on the other, those whose service ended after fifteen years but just before a further eight years had passed, who could receive no payment in lieu for that second period. 9 Clause 18.2, as its heading indicates, is concerned with payment in lieu of long service leave where the employment stops after fifteen years. Sub-clauses 18.2.1 and 18.2.2 deal respectively with what might be termed liability and quantum. Entitlement under cl 18.2.1 only arises if there is entitlement to leave in accordance with cl 18.1 and "that leave is not taken". In other words, there must be the possibility of actually taking leave in accordance with cl 18.1.1(b), that is to say "on completing" the relevant period of service. The word "leave" appears three times in cl 18.2.1. It is plainly referring to the same thing --- that is to say long service leave which the employee has been entitled to take in accordance with cl 18.1.1(b) but has not taken. I do not accept the contention of the respondent that the omission of the adjectival demonstrative "that" from the third mention of "leave" gives the word some other meaning. 10 Plainly cl 18.2.2 has work to do, if only from the practical point of view of setting out entitlements and avoiding confusion. The ratio of seven weeks to eight years would be slightly greater than one over 60 (one over 59.43). 11 The respondent's argument seems quite inconsistent with the express provision under cl 18.3 for pro rata long service leave which is specifically limited to periods of service between ten and fifteen years. If the intention were to provide generally for payment in lieu of long service leave on a pro rata basis one would not find 18.3 in its present form. 12 TPT's construction is consistent with cl 18.4. The entitlement is conditional on the non-taking of leave the deceased employee would have been entitled to take but did not. 13 I do not accept that there is anything "narrow and pedantic" or "unjust" in TPT's construction. The Award takes the approach that entitlement to long service is structured around milestones. This creates a benefit not only for the employee but also for the employer who has an interest in retaining experienced staff. It might seem unjust that an employee who has nine years and 364 days continuous employment misses out entirely on long service leave, but the alternative is to provide pro rata entitlement from commencement of employment, which plainly the Award does not do. 14 Clause 18.3 dealing with the ten to fifteen year employee can rationally be seen as a special case. There may be a need to protect employees who might be seen as vulnerable when they are approaching a point which involves the incurring of a significant liability for their employer. Be that as it may, the plain words and structure of the Award in my opinion leave no room for doubt as to the position of employees who serve beyond fifteen years. 15 Counsel for the respondent sought to rely on provisions in legislation in Tasmania and other States dealing with long service leave. This is quite irrelevant. Awards are a result of negotiation. For all I know a position less favourable in relation to long service leave may have been conceded in return for some other benefit. 16 Counsel also argued that I should look at the earlier award in 1965 which was "simplified": see Award Simplification Case (1997) 75 IR 272. I agree with counsel for TPT that it would not be proper to have regard to such factors in a context where no evidence of such matters was raised in the court below. The learned Magistrate noted at [5] that there was no dispute about the facts. The dispute concerned the correct interpretation of the relevant terms of the Award. The history of the earlier award would be a matter of fact, provable by evidence. In place of those orders it is ordered that the respondent's application No. LNG6 of 2007 be dismissed. Leave is granted to the parties to file written submissions as to costs within seven days. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey.

interpretation of award whether state legislation or previous award relevant to interpretation of award long service leave pro rata payment in lieu on retirement industrial law

See Australian Prudential Regulation Authority v Siminton (No 12) [2008] FCA 101. 2 I made the orders sought save for the order requiring attendance for oral examination. I did not make that order because I was informed that an oral examination had taken place. I reserved the right of the receiver to apply for an order requiring a further oral examination. 3 I reserved the question of costs. As directed each party has filed and served written submissions on what costs orders should be made. I have now considered those submissions. 4 It was necessary for the receiver to make application for the orders relating to the funds and extensions of time but the hearing was lengthened by the respondent's opposition to the making of those orders. The other orders which were made were necessary because the respondent had failed to comply with orders made by the Court in November 2007. The respondent also resisted the making of any of the other orders sought. Thus, although a short hearing at the instance of the receiver was unavoidable the respondent's unsuccessful opposition to the making of the orders sought added to the time required for the parties' preparation and for the hearing. 5 In my view the appropriate order is that the respondent pay 50 per cent of the receiver's costs of the Amended Notice of Motion dated 4 February 2008. If the respondent does not comply with the order that he pay these costs the receiver should be entitled to be indemnified from the funds under his control to the extent of any default. He should not be required to bear that cost personally should the respondent fail to satisfy the costs order made against him. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice TRACEY.

costs costs associated with receiver's notice of motion where application necessary but lengthened by respondent's opposition and failure to comply with earlier orders written submissions on costs orders respondent ordered to pay 50 per cent of the receiver's costs practice and procedure

It was produced by the Warner Bros Group ("Warner Bros") and the respondent companies are related to that corporation. 3 The applicants are considering whether to commence proceedings against the respondents for recovery of moneys, damages and other relief on the basis that they are entitled to receive payments in respect of licence fees under complex transaction documents that confer an entitlement to a proportion of the proceeds from distribution of the film by the respondents. They claim to have a cause of action arising out of a Distribution Agreement that was entered into by the parties on 1 March 1999. 4 The prospective entitlement depends on a formula which forms part of the series of transaction documents according to which funds were advanced through subsidiaries of National Australia Bank Limited ("NAB") and Leighton Holdings Limited ("Leighton"). Under the Distribution Agreement, there is an obligation to pay a share in the profits to the financiers by way of licence fees calculated by reference to the formula which is detailed and complex ("the Licence Fee formula"). In the Amended Application filed on 6 April 2006, the applicants set out, in more than thirty paragraphs and sub-paragraphs, a series of categories of documents of which they seek preliminary discovery in addition to the documents which have already been produced. 5 The applicants say that the documents necessary to prepare earning statements evidencing revenues and expenses in respect of the distribution of the film are within the possession of the respondents. The Distribution Agreement formula permits the financiers to carry out an audit of the earnings statements on an ongoing basis. This process has been commenced and implemented over several years. The principal auditor is Ms Elaine Douglas of Hacker Douglas, a Los Angeles consultant with considerable experience in auditing financial arrangements relating to film production, distribution and financing. 6 The applicants, through NAB and Ms Douglas, have made numerous requests for documents to permit a comprehensive audit to be completed and to enable Ms Douglas and the applicants to ascertain what licence fees, if any, are payable and to what extent earnings statements and information furnished to them are correct. To date, only an amount of approximately USD42,000 has been paid to NAB under the first earnings statement by way of licence fees. This is a relatively small sum when compared to the US box office takings in respect to the Matrix film which are said to be in excess of USD175 million. Ms Douglas has expressed a preliminary view that it is highly likely that further licence fees above USD42,000 are due and owing to NAB under the Licence Fee formula. Ms Douglas says that without obtaining further information from Warner Bros, she cannot determine whether the earnings statements are incorrect and if so, to what extent. Ms Douglas also claims she cannot advise as to the extent of the claims or a likely range of further fees that might be owing without seeing this information. She has provided an affidavit to the Court dated 2 September 2005 to this effect. 7 Similar opinions are in evidence from Mr Rodney Knight, a banker who has engaged in efforts to determine whether the earnings statements are false and whether licence fees are payable to the applicants. He has sworn an affidavit dated 11 August 2005 in which he states that his estimate of the licence fees owing in respect of the period to 31 December 2002 are likely to be at least approximately AUD2 to 3 million but no more than approximately AUD23 million. This conclusion is qualified by a statement that given the large number of assumption estimates he had to make in the process of his calculations, he considers it highly probable these figures would change upon receipt of the information sought by the applicants. 8 This is not a case where no documents have been provided to the applicants. In fact, over several years a large number of documents have been furnished to Ms Douglas as part of the audit, and an additional eighteen folders of documents have also been produced by the respondents. According to agreements between the parties, the contractual right to pursue the audit is not exhausted and has been extended to 31 May 2006. 9 In the event that the earnings figures provided are shown to have been misleading, the applicants contend they may have a claim for damages for breach of the Distribution Agreement and possibly a claim for damages under the Trade Practices Act 1976 (Cth). This dispute largely turns on the question whether preliminary discovery should be given in respect of both the contract suit and a possible trade practices action. 10 Mr Knight stated that in preparing his affidavit, he was shown copies of further document requests that have since been sent to Warner Bros. He recalled expressing an opinion at an earlier time that the list of documents sought by the applicants addressed most, if not all, of his most significant concerns relating to the shortcomings in the available information . Mr Knight says that if the information contemplated by the document request were forthcoming, he believes he would be able to refine his analysis and improve his advice as to the extent of the claims relating to the earnings statements. He also states he would be in a position to narrow his estimates as to the range of dollar amounts that he believes should be payable to the applicants under the Distribution Agreement in the period up to 31 December 2002. He does not contend that further examination of the documentation sought might reduce or extinguish the claim. 11 The applicants have also filed an affidavit by Mr David MacGregor of NAB dated 13 September 2005. Mr MacGregor was Head of the Structure Finance Australia Business Unit at the time it entered into the Matrix investment transaction, and this unit remains responsible for the transaction on an ongoing basis. 12 Mr MacGregor states that based on advice from Ms Douglas and Mr Knight in relation to a number of audit issues in the earnings statements, he considers it likely that further sums by way of licence fees over and above that paid under the earnings statements to date are owing and payable to the applicants. In addition, he states it appears likely to him that Warner Bros has misled the applicants in certain respects in relation the reporting of revenue and expenses for the Matrix film pursuant to the Licence Fee formula. 13 Mr MacGregor claims that given the cost and risk in commencing legal proceedings, NAB does not wish to commence proceedings if Warner Bros can justify what the applicants allege to be a number of serious irregularities in the earnings statements. He notes that Hacker Douglas has been unable to advise NAB of a possible dollar amount or range which Hacker Douglas believes is likely to be due and owing to the applicants. He further states that Mr Knight's range of figures representing the licence fees possibly owing to the applicants is subject to very heavy caveats and qualifications. Mr MacGregor also states that if it became clear that NAB has valid and substantive claims, it would take legal proceedings to recover such licence fees as are owing to it. These indicate that O 15A r 6 is to be beneficially construed and given the fullest scope that its language will reasonably allow, with the proper brake on any excesses lying in the discretion of the Court in the light of the specific circumstances. Each of the elements in sub-paragraphs (a) to (c) of r 6 must be established. The test for determining whether the applicant has "reasonable cause to believe" as required by r 6(a) is an objective one. There is no requirement for the applicant to make out a prima facie case, but a mere assertion that there may be a right to obtain relief is not sufficient. There must be more than suspicion or conjecture. If there is no reasonable cause to believe that one of the necessary elements of a potential cause of action exists, that would dispose of the application in so far as it is based on that cause of action. 15 In relation to r 6(b), the authorities indicate that the question is whether an applicant has sufficient information for the limited purpose of making a decision as to whether to commence proceedings in the Court. It is permissible for an applicant to obtain discovery to determine what defences are available to the respondent, and the possible strength of these defences, but discovery is not available to an applicant so that it may exhaust every possible line of defence. The question as to whether sufficient information is available requires an objective assessment to be made. 16 The relevant principles were also considered by Lindgren J in Glencore International AG v Selwyn Mines Ltd (2005) FCA 801. In that case, his Honour indicated that the measure of preliminary discovery is the extent of information that is necessary, but no more than that which is reasonably necessary, in order to overcome the insufficiency of information already possessed by the applicant after it has made all reasonable inquiries to enable it to make a decision as to whether to commence proceedings. 17 In Alphapharm Pty Ltd v Eli Lilly Australia Pty Ltd [1996] (unreported, No. No doubt inspection of the documents referred to in Alphapharm's application would assist it in taking that decision, but I am of the view that it already has reasonably sufficient information to enable it to decide. Another way of expressing the matter is to say that Alphapharm has not, after making all reasonable inquiries, come up against an obstacle consisting of the lack of key information which it reasonably needs to enable it to decide whether to commence a proceeding; rather, it hopes to be comforted in taking the decision which it already has sufficient information to enable it to take . It is necessary for an applicant to show more than a mere assertion that there is a case against a prospective respondent: see C7 Pty Ltd v Foxtel Management Pty Ltd [2001] FCA 1864 at [39] . The purpose of preliminary discovery is not to produce material which will strengthen or enhance a decision to commence proceedings but rather to provide what is reasonably necessary to enable the decision to be made. In addition, the respondents submit that as a matter of discretion, the Court should refuse to grant the discovery sought on the basis that it is oppressive and so broadly cast as to encompass what are likely to be a substantial number of irrelevant documents. 21 In relation to r 6(a), the respondents submit that, objectively approached, there is no reasonable cause to believe that the applicant may have a right to obtain relief in the Federal Court. This is because the elements of the prospective cause of action advanced by the applicants which might attract federal jurisdiction, namely, a claim for misleading and deceptive conduct under the Trade Practices Act 1974 (Cth), are not present on the evidence. It is said that as an objective conclusion, it has not been established that the elements of such an action can be made out. For present purposes the respondents do not dispute that there may be a cause of action in contract, but say this is not sufficient to ground jurisdiction for the grant of preliminary discovery because it lacks the necessary federal element to satisfy r 6(a) so that there is a right to relief in the Federal Court. Unless there is reasonable cause to believe there is a federal cause of action, it is said that the preliminary discovery application must be refused for want of jurisdiction. 22 The respondents say that there is only an allegation that there may have been misleading and deceptive representations and that the other elements of the cause of action, including reliance, causation and loss or damage said to flow from any misrepresentation, have not been formulated or evidenced. Accordingly, the respondents submit that the application must be dismissed for failure to satisfy the preconditions which enliven r 6(a). 23 I do not accept this first line of submission. Rule 6(a) uses the expression " may have the right to obtain relief". If there is a misrepresentation in the present case in the sense that the earnings statements are false, then it follows, if it can be shown that there are underpayments, that the applicants suffer loss by not being paid the amount due. If no action is brought, the applicants will have relied on the earnings statements produced to them and will therefore have suffered a loss of the payments which they are entitled to under the Distribution Agreement. There is clearly a substantial overlap between a possible trade practices claim and a contract claim in the present circumstances, but I do not consider it can be said that preliminary discovery must be refused on the ground that there is no evidence of all the elements of the factual claim. The applicants also point out that if they can make out a misrepresentation, they have incurred a resultant loss in being put to the expense of engaging the US auditors. Having regard to these matters, and to the marked discrepancy between the total US box office takings (in the order of USD175 million) and the relatively insignificant amount of USD42,000 paid to the applicants, as well as to the allegations raised by the auditors and the other evidence of the applicants, I consider that the requirements of r 6(a) have been satisfied. The approach submitted by the respondents is, in my view, too narrow in circumstances where the purpose of the preliminary discovery is to evaluate whether proceedings should be commenced. 24 In relation to r 6(b), the respondents submit that all reasonable enquiries have not been made by the applicants because there is still a period in which further requests and audits can be carried out. Having regard to the history of this matter and the extensive investigation carried out over several years by the applicants, I do not consider this submission should be accepted. It seems to me that exhaustive enquiries have been made and persisted in and it cannot be said that all reasonable inquiries have not been made so as to exclude the operation of r 6(b). 25 The next submission of the respondents in relation to r 6(b) is that the applicants have not established they have insufficient information to enable a decision to be made as to whether to commence a proceeding in the Court to obtain relief. There is evidence that a very large amount of documentation has been provided over several years in the course of the audit and that an additional eighteen folders of documents have also been provided. Both Ms Douglas and Mr Knight have been able to formulate detailed, albeit tentative, appraisals of approximate amounts that may be recoverable, making allowances for elements of doubt. It is true that the evidence indicates that these figures are the subject of significant assumptions and that the deponents of the applicants have doubts as to their accuracy. Nevertheless, the detailed breakdown by Ms Douglas and the relatively precise figures arrived at by Mr Knight (including a three case scenario) demonstrate that there is a sufficiency of evidence for the purpose of commencing an action. The applicants are seeking comfort in taking the decision when they already have sufficient information to enable them to make a decision to commence proceedings. 26 Although highly qualified, the summary of possible audit claims by Ms Douglas in her report dated 12 May 2004 indicates that the possible claim of the applicants on a ten percent entitlement may be USD3,760,921 plus undetermined issues. I accept that the figure is subject to reservations and is based on extensive assumptions but the clear import of her report is that there appears to be a significant claim. In addition, this figure appears to be a base claim because her estimate makes reference to a possible additional sum in respect of undetermined issues. 27 In the case of Mr Knight, it is true that his estimates are also stated to be heavily qualified. However, the Court has been furnished with Exhibits 2, 3 and 4, which contain details and spreadsheets only available recently and go to substantiate a possible claim ranging between AUD3,244,772 on a low case basis to a AUD23,073,185 on a high case basis, with a best case figure of AUD5,631,478. The documents include notations on the rationale for each level of figures prepared by Mr Knight stating assumptions, suppositions and reductions. Mr Knight does not suggest in his affidavit that the base range he refers to is likely to be cut down by additional material. Rather, the implication is that the claim could be increased by additional material. 28 Based on this information, the detailed workings by Mr Knight and Ms Douglas, and the surrounding circumstances, including the discrepancy between the gross takings and the very small amount paid to the applicants to date, I consider there is sufficient information in the material already provided to enable a decision to be made as to whether to commence an action. I do not consider that the respondents' case on discovery is materially weakened by the fact that Ms Douglas and Mr Knight were not cross-examined, given the nature of the application, their current residence overseas, and the fact that their detailed workings only came to light relatively recently. 29 In relation to r 6(c), the respondents also argue that the classes of documents sought have not been shown to be relevant to the question of whether the applicant has the right to obtain relief. The submission is that the classes of documents on their face are manifestly too broad and that many documents sought could be said to be irrelevant and their production oppressive. 30 In my view, there is force in this submission and this is disclosed by an examination of the thirteen categories of documents sought and the breadth of these categories. I also consider that having regard to what has already been produced and the degree to which it has been able to be analysed and formulated, albeit with substantial reservations, this is not a case where a convincing argument has been made out for preliminary discovery of the documents sought. As a matter of discretion, and taking into consideration the breadth of the categories of the documents sought and the oppression likely to be caused to the respondents, I do not propose to grant preliminary discovery. 31 In these circumstances, it is not necessary for me to make determinations with respect of each of the classes individually. 32 For the above reasons, I dismiss the application for preliminary discovery in this matter with costs. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.

preliminary discovery extensive documentation produced by respondents whether information produced sufficient to enable a decision as to commencement of proceedings preliminary reports by consultants to applicants whether reasonable cause to believe applicant may have cause of action in the court practice & procedure

2 On 5, 6 and 7 March 2007 the Tribunal heard two applications by the applicant, George Jovanovski, for review of decisions made by the respondent, Telstra Corporation Limited (Telstra), pursuant to the Act, together. Accordingly, since 1 September 2005 and as at the present date, Telstra is not liable to pay compensation under section 16 and Part II Division 3 of the SRC Act in respect of the 1990 injury. The effects of the injury resulting in any incapacity for work or the need for medical treatment ceased as at 27 October 1979. (b) Telstra Corporation Ltd has no present liability to pay compensation pursuant to section 19 , 20 , 21 and/or 16 of the SRC Act as at 6 June 2006 and has not been liable since 27 October 1979. (c) The claimant suffered injury on 1 October 1981 in the form of "sprained back". The effects of the injury resulting in any incapacity for work pursuant or the need for medical treatment ceased as at 10 October 1981. (d) Telstra Corporation Ltd has no present liability to pay compensation pursuant to section 19, 20, 21 and/or 16 of the SRC Act as at 6 June 2006 and has not been liable since 10 October 1981. (e) The claimant suffered injury on 25 May 1982 in the form of "right sacroiliac and lumbar strain". The effects of the injury resulting in any incapacity for work or the need for medical treatment ceased as at 31 May 1982. (f) Telstra Corporation Ltd has no present liability to pay compensation pursuant to section 19, 20, 21 and/or 16 of the SRC Act as at 6 June 2006 and has not been liable since 31 May 1982. (g) The claimant suffered injury on 23 July 1985 in the form of "sore back". The effects of the injury resulting in any incapacity for work or the need for medical treatment ceased as at 5 August 1985. (h) Telstra Corporation Ltd has no present liability to pay compensation pursuant to section 19, 20, 21 and/or 16 of the SRC Act as at 6 June 2006 and has not been liable since 5 August 1985. (i) The claimant suffered injury on 29 May 1991 in the form of "low grade form of lumbosacral strain". The effects of the injury resulting in any incapacity for work or the need for medical treatment ceased as at 14 November 1991. (j) Telstra Corporation Ltd has no present liability to pay compensation pursuant to section 19, 20, 21 and/or 16 of the SRC Act as at 6 June 2006 and has not been liable since 14 November 1991. (k) The claimant suffered injury on 10 August 1992 in the form of "aggravation of previously abnormal L5/SI disc". The effects of the injury resulting in any incapacity for work or the need for medical treatment ceased as at 31 March 1993. (1) Telstra Corporation Ltd has no liability to pay compensation pursuant to section 19, 20, 21 and/or 16 of the SRC Act as at 6 June 2006 and has not been liable since 31 March 1993. (m) The claimant suffered injury on 26 July 1994 in the form of "aggravation of degenerative condition". The effects of the injury resulting in any incapacity for work or the need for medical treatment ceased as at 8 August 1994. (n) Telstra Corporation Ltd has no present liability to pay compensation pursuant to section 19, 20, 21 and or 16 of the SRC Act as at 6 June 2006 and has not been liable since 8 August 1994. (o) The claimant did not suffer injury in March 2003 and accordingly Telstra Corporation Ltd is not liable to pay compensation pursuant to section 14 of the SRC Act. (p) The claimant did not suffer injury in respect of the nature and conditions of his employment and accordingly Telstra Corporation Ltd is not liable to pay compensation pursuant to section 14 of the SRC Act. • Whether Mr Jovanovski has an incapacity for work arising from a compensable condition. • In doing so, the Tribunal had also to consider whether Mr Jovanovski suffered injury (in terms of the legislation) as a result of the nature and conditions of his employment, and whether Telstra was therefore liable to pay compensation pursuant to section 14 of the Act. 6 The Tribunal had to consider a long history. The applicant had commenced working for Telstra in 1975 and had worked as a labourer for some 18 years. As appears from the second decision, he suffered compensable injury to his back as long ago as 26 September 1979, and various other injuries related to his back over the years. He was transferred to light clerical duties in 1992 and was made redundant in 2005. 7 The Tribunal received a volume of written and oral evidence. Both parties were represented by solicitors and counsel. The Applicant also relies upon s.7(1) of the SRC Act. Amongst the conditions specified in writing by the Minister as a disease related to employment is "diseases caused by vibration (disorders of muscles, tendons, bones, joints, peripheral blood vessels or peripheral nerves)" arising from "employment involving exposure to vibration": see Ballard & Sutherland, Annotated Safety, Rehabilitation and Compensation Act 1988 , Seventh Edition, page 740. The Applicant says that his work as a labourer with Telecom carrying out jackhammering work on a daily basis is work which exposed him to vibration of the kind referred to in the Minister's specification. Accordingly, there is presumed to be a work connection to the Applicant's spinal degenerative disease unless the evidence establishes to the contrary. The Applicant says that the evidence does not permit such a contrary conclusion to be drawn. Diseases caused by vibration (disorders of muscles, tendons, bones, joints, peripheral blood vessels or peripheral nerves). Employment involving exposure to vibration. See Statements of Facts and Contentions. (b) The Applicant gave not a word of evidence about being exposed to vibration. At its highest an inference would have to be drawn and even if this was done the Tribunal has no detail as to any such exposure. On the applicant's vague evidence the Tribunal would not be satisfied that any such inference could reliably be drawn. (c) None of the Doctors who gave evidence (orally or by report) have dealt with the matter. You will be aware that this matter was heard over three days on 5, 6, and 7 March, and that there was ample time for both parties to make full submissions and closing addresses, which in fact took place on the final day. The matter was reserved on that day. It is unusual for the Tribunal to reopen a case which has been concluded and reserved, but if the Applicant wishes to make a case to try and persuade the Tribunal that it would be of assistance to do so, then that application may be considered. Meanwhile the additional material from both parties will not be taken into account in the preparation of the decision. Please let me know by close of business on or before Monday 19 March 2007 how you wish to proceed. The answer to your question is that I do not wish to do any more than I have done, which is simply to draw s.7(l) to the Tribunal's attention, with as concise an explanation as I can muster as to why it is relevant to the Tribunal's consideration of the matter. Clearly, the Tribunal is now aware of s.7(1) and the associated determination (and may have been aware of it before I sent my additional submission). The Applicant says it is relevant. I expect that the Respondent says it is not. It is a matter for the Tribunal, on the existing evidence, to decide which view is correct, and then complete its consideration of the case taking that decision into account. In my respectful submission, the one thing that the Tribunal cannot do is simply ignore the fact that s.7(1) and the associated determination have been drawn to its attention as being relevant to the case. The point is that s.7(1) is not a discretionary provision. If it is relevant to the evidence in this case, then it must be applied in reaching the correct or preferable decision for Mr Jovanovski. Even if the Tribunal could ignore the submission on s.7(l) as a matter of law, it is respectfully submitted that there is no evident reason why it would choose to do so in the circumstances. Counsel had referred to s 33(1)(b) of the Administrative Appeals Tribunal Act 1975 (Cth) and indicated that he did not wish to adduce fresh evidence or make any lengthy submissions that might have required the recalling of witnesses. The Tribunal has noted that you do not make application to have the case re-opened, assures you it is mindful of its role in deciding cases, and is aware of relevant statutory provisions relating to the various legislative enactments which empower it. (Emphasis added. Mr Jovanovski suffered injury or aggravation at work, and liability for injury or aggravation to Mr Jovanovski's degenerative back was accepted by the Respondent several times between 1979 and 2003. Each time Mr Jovanovski was able to return to work after a short time when the aggravation had settled. In Matter N2005/1628, which we have affirmed, the decision maker held that at 1 September 2005 the condition that occurred as a result of the 1990 lumbar disc lesion exacerbation no longer resulted in incapacity for work or the need for medical treatment. We have accepted from the evidence and Matter N2006/835, that the first incident of aggravation to Mr Jovanovski's lumbar spine was in 1979. We are satisfied that at 1 September 2005 and at the time of our decision, Mr Jovanovski does not suffer incapacity for work or the need for medical treatment, and has no present entitlement to compensation for work related injury pursuant to section 19 , 20 , 21 of the Act or section 16 medical expenses. Mr Jovanovski did not suffer a back injury likely to have been of sufficient severity to result in internal disc derangement; Mr Jovanovski did not sustain a significant disc protrusion. Having regard to the findings in N2005/1628, and the fact that the legislation is beneficial legislation, we have found that at 1 September 2005 (rather than at 8 August 1994), at the time of our decision, Telstra has no present liability for Mr Jovanovski pursuant to sections 19 , 20 , 21 or section 16 of the Act. (b) The Respondent stated that he did not accept liability for the March 2003 injury. We are satisfied to accept the agreement of the parties that liability was accepted for the March 2003 injury and is not disputed. (c) The Respondent stated that he did not accept liability for injury in respect of the nature and conditions of Mr Jovanovski's employment pursuant to section 14 of the Act. We were satisfied from the opinions of Drs Searle, Dalton, Stephenson, Matheson, Weisz and Potter who opined that Mr Jovanovski's different episodes of back pain between 1979 and 1992 were contributed to by the nature and conditions of his work as a labourer with Telstra, and that the effects of the aggravations had resolved when they examined Mr Jovanovski in 2005/6. We accept their opinions, and decide accordingly, that at 1 September 2005 and at the time of our decision, Telstra has no present liability for Mr Jovanovski pursuant to sections 19 , 20 , 21 or section 16 of the Act. (d) Mr Jovanovski's subsequent and present complaints are not work related, and are due to the degenerative condition of his lumbar spine. We are satisfied that any medication he needs or exercise program he has been recommended to take is in connection with his constitutional degenerative back, and not as a result of work related injury or aggravations. Mr Jovanovski is fit for clerical duties which he had been doing for some 13 years before 2005. The Tribunal affirms the decision in Matter N2005/1628. 104. Any subsequent and present complaints are due to the degenerative condition of his lumbar spine. (b) We find that Mr Jovanovski has no present entitlement since 1 September 2005 to compensation for work related injury pursuant to sections 19 , 20 or 21 of the Act, and is not presently after 1 September 2005 and at the date of this decision, eligible for section 16 medical expenses. (c) The Respondent stated that he did not accept liability for the March 2003 injury. We are satisfied to accept the agreement of the parties that liability was accepted for the March 2003 injury and is not disputed. The Tribunal accepted that the applicant did heavy manual work, including jackhammering, for 18 years. There was ample evidence of the regular use of jackhammers by the applicant. If he was using the jackhammer and it wasn't causing symptoms it would still be causing problems with the spine because it's also been shown quite clearly that that vibration effect does cause damage to the joints through which the vibration is transmitted. (Emphasis added. You would agree with that, wouldn't you?---Yes. And that if a person has, for example, a constitutionally greater tendency to react in the spine to those kinds of stresses, develop degeneration as a result of those stresses, wearing of the articular cartilage and that kind of thing, then you might expect that that person would develop greater degeneration than someone who didn't have that constitutional predisposition. Is that correct?---You certainly might expect, you would expect that they would get deterioration; I accept that that's certainly the case but as I said, it's interesting people who don't have load will also get deterioration. So the correlation is not as clear cut as it seems although certainly, if you have a degenerative back and you shovel and dig, it's not unreasonable that that will render it symptomatic at various times. The extent to which that actually causes acceleration or not is a difficult one and I. think the problem with - - - It's a difficult one but it's not, you don't say, do you, you don't go as far as saying that doesn't happen?---No. Ever?---No. All you're saying is, as I understand you, that in a particular case it may be difficult to determine whether it's happened?---Yes. (Emphasis added. It is submitted that, if that question were to be explored, evidence would be needed including, for example, the type of equipment the applicant was using, the amount of vibration emitted, the length of time that the applicant used any such pieces of equipment and any medical evidence as to the effect of such use. It was also submitted that there was no medical evidence before the Tribunal which opined that the applicant was suffering from a "disease of any nature caused by vibration". 22 There is no doubt that the applicant's employment involved exposure to vibration via use of jackhammers over many years. The evidence of Drs Searle and Dalton, to which I have referred, would provide an arguable basis for finding that the applicant's back condition was a disorder of muscles, tendons, bones or joints caused by vibration. That finding as to the existence of the occupational disease does not involve any aspect of causation in the particular case. In particular, it does not require a finding that the disorder was caused by vibration in the particular case under consideration. That is the ultimate fact to be determined, with the benefit of the statutory presumption pursuant to s 7(1) where applicable. In practical terms, the question is whether the condition presented is known to be caused by vibration or, put another way, whether it is consistent with being caused by vibration. Then, if employment involved the exposure to vibration, the statutory presumption applies. This alleviates the difficulty of diagnosis referred to by Dr Dalton that would otherwise exist. 23 The statutory presumption would be of importance if it applied in this case. The applicant had worked with jackhammers for about four years before the first report of back injury. The presumption would, thus, bear upon the initial diagnosis as well as the subsequent diagnoses following the continuation of jackhammer work over the years and the recurrence of back trouble. 24 The Tribunal was placed in a difficult situation by reason of the issue having been expressly adverted to only after the completion of the hearing in the way it was. However, the Tribunal, by implication, professed to be aware of s 7(1) and then went on to expressly consider that issue in the decision. In doing so, it held that there was no evidence in relation to it. That was not correct. To so hold was an error on a question of law within the meaning of s 44(1) of the Administrative Appeals Tribunal Act ( Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 per Mason CJ at 355 (agreed with by Brennan J and Deane J); Lees v Repatriation Commission [2002] FCAFC 398 ; (2002) 125 FCR 331 at [21] ---[25]). 25 The appeal must be allowed, the orders below set aside and the cases remitted to the Tribunal to be heard and decided again. That being so, it is neither necessary nor desirable that the other purported grounds of appeal be determined. They involve challenges to decisions on questions of fact that will arise again, but in a somewhat different setting. The constitution of the Tribunal that rehears the cases and the procedure to be adopted are matters for the Tribunal. 26 Telstra must pay the applicant's costs of this appeal. Costs of the hearing before the Tribunal should await the ultimate outcome of the case when all relevant aspects can be taken into account by the Tribunal. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles.

appeal from decision of administrative appeals tribunal whether tribunal erred in determining not to apply s 7(1) of the safety, rehabilitation and compensation act 1988 (cth) whether tribunal erred in finding no evidence to establish presumption pursuant to s 7(1) administrative law

She applied to the Australian Embassy in Phnom Penh for a Partner (Migrant) (Class BC) visa under s 65 of the Migration Act 1958 (Cth) (the Act) on 4 May 2004. She was sponsored by Mr Asna Yi, an Australian citizen. The application was accompanied by a statutory declaration from Mr Yi, who declared that he married the appellant in Cambodia on 17 April 2004. The appellant and her sponsor attended an interview at the Australian Embassy on 6 September 2004. On 9 September 2004, the appellant was granted a Subclass UF 309 Spouse Provisional (Temporary) visa. She arrived in Australia on 11 September 2004. On 18 December 2006, a delegate of the Minister refused the appellant's application for a Partner (Migrant) visa. The delegate notified the appellant by a letter sent by registered mail on 19 December 2006. The appellant did not actually receive the notification of the decision until 15 January 2007. The Tribunal found that the decision of the delegate was an MRT-reviewable decision under s 338(2) of the Act, but that it did not have the jurisdiction to conduct the review because the appellant's application for review was received outside the time limits prescribed by the Act. The Tribunal was satisfied that this met the requirements of s 494B(4) of the Act. Accordingly, the Tribunal found that, pursuant to s 494C(4), the appellant was taken to have received the notification of the decision on 29 December 2006, being seven working days from the date of the notice, even though the notice was not received by the appellant until 15 January 2007. The Tribunal found that the fact that the appellant did not actually sign for and receive the letter until 15 January 2007 was irrelevant to the operation of the deeming provision under s 494C(4) of the Act. The Tribunal concluded that as the application for review was received by the Tribunal outside the mandatory time limit it was not a valid application and, therefore, the Tribunal did not have the jurisdiction to review the delegate's decision. The appellant contended that s 347(1)(b) and s 348(1) of the Act and reg 4.10(1)(a) of the Regulations were invalid on the basis that they impermissibly infringed the implied right to freedom of communication on government or political matters; impermissibly infringed a right of potential applicants for review to the Tribunal which is implied in the system of government for which Ch II of the Constitution provides; and impermissibly infringed the right of potential applicants for review which is implied in the system of government for which the Constitution provides or which is implied in the principle of the rule of law underlying the Constitution and which permeates the fabric of the Constitution . The Federal Magistrate found that s 347 of the Act did not have the effect of preventing or controlling communication on political and governmental matters in a manner which is inconsistent with the system of representative government for which the Constitution provides. The Federal Magistrate was also not satisfied that reg 4.10(1)(a) of the Regulations was invalid as s 347 of the Act envisaged the prescription, by regulation, of a period of time, that may be 28 days or less. The Federal Magistrate also set out in his reasons a passage from the joint judgment of the High Court in the case of Bodruddaza v Minister for Immigration and Multicultural Affairs (2007) 228 CLR 651 ( Bodruddaza ). This passage describes the underlying facts in Bodruddaza , which are similar to the facts in this case. In that passage of the joint judgment reference is made to s 347(1)(b) of the Act and reg 4.10(1)(a) of the Regulations without comment. Having referred to that passage of the joint judgment in Bodruddaza , the Federal Magistrate went on to observe that as the High Court had considered an essentially similar situation in Bodruddaza and had made no adverse comment on the validity of either s 347 or reg 4.10, neither should the Federal Magistrates Court. (Grounds 10, 11 and 12). (h) The Federal Magistrate erred in the exercise of his discretion in awarding costs to be paid by the appellant. That submission, which asserts that the freedom does not extend to communications with government authorities or other persons in the course of, or for the purposes of, the administration of an Act according to its terms, takes a too narrow view of the part which freedom of communication plays in the workings of representative democracy and government. That freedom necessarily extends to the workings of the courts and tribunals which administer and enforce the laws of this country. The provision of advice and information, particularly by lawyers, to, and the receipt of that advice and information by, aliens in relation to matters and issues arising under the Act falls clearly within the potential scope of the freedom. Non-citizens who are actually present within this country, like citizens, are entitled to the protection afforded by the Constitution and the laws of Australia. It follows that non-citizens actually within this country are entitled to invoke the implied freedom of communication, particularly when they are exercising that freedom for the purpose, or in the course, of establishing their status as entrants and refugees or asserting a claim against government or seeking the protection of government. And that is precisely what aliens are doing when they receive legal advice, obtain representation and procure the making of representations in connexion with entry applications, applications for refugee status, the refusal of such applications and consequential review proceedings and court proceedings. In essence, the advice and services sought and received relate to the rights and status of an alien under a law of the Commonwealth. The provision by citizens of advice and services to non-citizens on such matters falls clearly within the freedom. (Footnote omitted. The appellant submitted that the restriction imposed by the impugned provisions was not reasonably appropriate and adapted to meet a legitimate purpose and, therefore, the Court should find that the provisions are invalid. In support of that contention, the appellant said that the time limits imposed by the legislation restrict a person's opportunity to arrange to take advice from an advisor, receive advice from an advisor, prepare an application for review to the Tribunal, sign an application for review to the Tribunal and give the application for review to the Tribunal. In practice, the operation of the provisions may reduce the time to do all this to just four days. In my view, the observations of Mason CJ do not assist the appellant. First, Mason CJ was in the minority in Cunliffe and the judges in the majority did not adopt the observations of Mason CJ relied upon by the appellant. Further, Mason CJ did not state that the implied freedom would be infringed by the legislative imposition of time limits for the bringing of review applications to the Tribunal. The Cunliffe case was concerned with legislation which sought to regulate a liberty, namely, the provision of advice on immigration matters, which was previously unregulated. The Cunliffe case was not concerned with the question of whether a statute providing for the terms on which an unsuccessful visa applicant would be entitled to a merits review, constituted a challenge to the implied freedom. The provisions of the Act and the Regulations which are impugned by the appellant are part of the same legislative scheme which creates and defines the scope of, a statutory benefit, namely, the merits review. As counsel for the first respondent said, the impugned provisions of the Act are facilitative of an unsuccessful visa applicant's entitlement to a merits review and not destructive to it. Proof of a burden on the implied constitutional freedom requires proof that the challenged law burdens a freedom that exists independently of that law. It is a freedom from laws that effectively prevent the members of the Australian community from communicating with each other about political and government matters relevant to the system of representative and responsible government provided for by the Constitution . Unlike the Constitution of the United States, our Constitution does not create rights of communication. It gives immunity from the operation of laws that inhibit a right or privilege to communicate political and government matters. But, as Lange shows, that right or privilege must exist under the general law. (Original emphasis). (Footnote omitted. It follows that the impugned provisions cannot be said to infringe the implied constitutional freedom of communication upon government and political matters. It follows that, in my view, the Federal Magistrate did not err in rejecting the appellant's contention that the impugned provisions were invalid because they infringed the implied freedom of communication in respect of political and government matters. Ground 1 of the appeal is dismissed. In Bodruddaza , the High Court considered the constitutional validity of s 486A of the Act. That section imposed a time limit within which a party could apply for relief under s 75(v) of the Constitution in respect of a migration decision. The High Court held that s 486A of the Act was invalid because it limited the exercise of the constitutional remedy in a manner which was inconsistent with the place of that provision in the Constitution . The High Court, in the joint judgment, observed at 672, at [58] that the time limit subverted the constitutional purpose of s 75(v) of the Constitution . In my view, ground 2 of the appellant's grounds of appeal misconceives the observations made by the Federal Magistrate. The Federal Magistrate's comments are made in passing. The Federal Magistrate is not thereby saying the High Court decisively dealt with the question of the validity of the impugned provisions as the appellant's ground of appeal appears to assume. In any event, there is no utility in ground 2 of the appeal standing alone because it does not contend for an alternative finding which would assist the appellant. The alternative finding contended for, which is that the reasoning in Bodruddaza supports the appellant's case, is found in ground 3. Grounds 2 and 3 must, therefore, be read together. The appellant is correct in her contention that the validity of the impugned provisions of the Act and Regulations was never in issue in Bodruddaza and that, therefore, the High Court did not consider the validity of those provisions in that case. However, for the reasons set out below, the appellant's contention that Bodruddaza supports her contention that the impugned provisions are invalid, is not to be accepted. The appellant in the case of SZAJB v Minister for Immigration and Citizenship (2008) 168 FCR 410 ( SZAJB ), contended that by reason of the decision in Bodruddaza , s 477 of the Act was invalid. Section 477 of the Act imposed a time limit for the bringing of an application for judicial review of a migration decision in the Federal Magistrates Court in terms similar to those of s 486A. French J (as he then was) (with whom Tracey J agreed) rejected the appellant's contention and held that the decision in Bodruddaza did not require the Court to find that s 477 of the Act was invalid. Section 486A operated directly upon the jurisdiction conferred upon the High Court by operation of s 75(v) of the Constitution . The considerations which underpinned the High Court's finding that s 486A was invalid do not apply to s 477. In my view, the reasoning of the Full Court in SZAJB undermines the appellant's submission that the ratio decidendi and observations of the High Court in Bodruddaza support her contention that the impugned provisions are invalid. It follows that grounds 2 and 3 of the appellant's grounds of appeal are dismissed. The appellant contended that such rights existed by analogy with the High Court's recognition of the existence of the implied freedom of communication on political and government matters. However, this contention misapprehends the effect of the implied freedom. As McHugh J observes in the passage from Mulholland referred to at [22] above, the implied freedom does not confer rights but provides an immunity from the operation of laws that inhibit a right or privilege to communicate about political and government matters. Those grounds of appeal are dismissed. Further, the reliance by the appellant upon concepts such as representative and responsible government and the rule of law, said to underlie the Constitution , as sources for the implication of the rights contended for is contrary to the approach taken by the majority of the High Court to the interpretation of the Constitution in McGinty v State of Western Australia (1996) 186 CLR 140 (see Brennan CJ at 169-170, Dawson J at 184, McHugh J at 236 and Gummow J at 284). (Footnote omitted. As these contentions have failed it follows that these grounds of appeal are also dismissed. The appellant contended the Federal Magistrate should have treated the case as "public interest litigation" and, should have, accordingly, made no order as to costs. It is the case that the Court may in the exercise of its discretion depart from the usual order for costs because of the public interest element in the litigation in question. The case of Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 ( Ruddock ) is such an example. However, as the Full Court in Ruddock said at 242, at [29], that case was a "most unusual case". Among the special circumstances which combined to make that case a "most unusual case" was the fact that the claim was brought on behalf of a number of persons, that the case involved the alleged deprivation of the liberty of individuals, and that the case involved difficult and important questions of law on which there was a divergence of judicial opinion and that the case also involved Australia's obligations under international law. In this case, the appellant contended that by reason of having raised constitutional arguments, the case had potentially wide ranging consequences, and, therefore, the Federal Magistrate should have treated the case as "public interest litigation" and made costs orders accordingly. In my view, the mere fact that a party has raised constitutional arguments will not result in the litigation being treated as "public interest litigation". It is only one element to be weighed in assessing whether to depart from the usual order for costs. As the Full Court has said, many cases in common law jurisdictions have wider implications for persons other than the parties to the litigation ( Hollier v Australian Maritime Safety Authority (No 2) [1998] FCA 975 at [13]; Save the Ridge Inc v Commonwealth (2006) 230 ALR 411 at 415). A substantial factor in considering the weight to be given to the fact that the appellant raised constitutional arguments would be the merit or otherwise of the arguments raised. In this case, the constitutional arguments raised by the appellant had little prospect of success. In my view, therefore, little weight can be placed upon the fact that the appellant raised constitutional arguments. Further, I also take into account the fact that this case did not involve any question of the deprivation of the liberty of an individual and that the case was not brought on behalf of anyone other than the appellant herself. In my view, it was for the reasons set out above, open to the Federal Magistrate to have made the costs order which he made. I, accordingly, dismiss ground 13 of the appeal. The appeal is dismissed. For the reasons given at [37]-[38] above, the appellant is to pay the first respondent's costs of the appeal. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.

whether s 347(1) and s 348(1) of the migration act 1958 (cth) and reg 4.10(1)(a) of the migration regulations 1994 (cth) infringed the implied constitutional freedom of communication in respect of government and political matters whether constitutional rights may be implied by reference to the concepts of representative democracy and the rule of law. whether litigation was public interest litigation. constitutional law costs

In order to finance the project, Meadow Springs raised $4.85 million in capital by the issue of shares, and borrowed in the vicinity of $7.47 million. It granted security over the project land and its assets and undertaking to secure the repayment of the loans. Before undertaking the project, Meadow Springs obtained an "on completion" valuation of the land from Colliers International Consultancy & Valuation Pty Ltd (Colliers). Meadow Springs used the valuation in deciding whether to undertake the project, and to raise capital and borrow funds. On the completion of the project, Meadow Springs was unable to sell the apartments. On 21 February 2001, administrators were appointed to Meadow Springs. On 23 January 2002, Meadow Springs went into liquidation. 2 On 16 June 2004, the liquidator of Meadow Springs, having entered into a funding agreement with Insolvency Litigation Fund Pty Ltd (ILF), commenced a proceeding in this Court against Colliers alleging that Colliers had acted negligently and had engaged in misleading or deceptive conduct in providing the valuation to Meadow Springs. The funding agreement provided that the liquidator and the company pay to the litigation funder management fees and account for between 30% to 45% of any sum obtained by Meadow Springs on the resolution of the litigation - referred to in the agreement as the Resolution Sum. In August 2004, a second funding agreement on essentially the same terms and intended to replace the first funding agreement, was entered into by Meadow Springs with the fourth defendant (IMF) - the parent company of ILF. 3 On 10 June 2007, Meadow Springs settled the claim against Colliers with the consequence that the liquidator is now in possession of a fund of $6.4 million comprising monies obtained from the settlement. 4 IMF contends that the amounts comprising 35% of the Resolution Sum and management fees under the IMF Funding Agreement must be met from the fund in priority to the claims made on the fund by the secured creditors. Meadow Springs does not oppose IMF's contention. The first and the second defendants dispute IMF's contention. The first defendant (Balanced) contends that it is a secured creditor under a fixed and floating charge given by Meadow Springs with an attendant right to be paid from the fund in priority to the sums claimed by IMF. The second defendants (the Knightsbridge parties) contend that the second named second defendant (Knightsbridge Managed Funds) has an interest in the fund as a secured creditor with a right to be paid in priority to IMF. Each of the parties seeks declarations from the Court which reflect their respective contentions. 6 Meadow Springs required equity and debt funding to acquire the property and to undertake the project. As previously mentioned, Meadow Springs raised $4.85 million from its shareholders. 7 In September 1999, Clifton Partners Finance Pty Ltd (Clifton Partners) was a company under the control of Mr Kimberley Clifton, which carried on business in Western Australia as a finance broker. Clifton Partners' business comprised procuring persons to contribute monies to be advanced on the security of a first mortgage, to borrowers who had approached Clifton Partners to procure such loan funds. It was usual for Clifton Partners to use the vehicle of a related party company, Westralian Capital Holdings Pty Ltd (WCH), to enter into the loan agreement with the borrower. Clifton Partners subsequently changed its name to Knightsbridge Finance Pty Ltd, and is the third named second defendant in this proceeding. 8 In September 1999, Mr Lyle Kenny, a director of Meadow Springs, applied to Clifton Partners to borrow $6.35 million. 9 Meadow Springs' application was approved and as a consequence on 24 September 1999, WCH entered into a loan agreement with Meadow Springs to advance $6.35 million to Meadow Springs (the WCH Loan Agreement). The loan was repayable in two years. 11 On 24 September 1999, Meadow Springs also granted a fixed and floating charge over its assets and undertaking in favour of WCH dated 24 September 1999 as security for the repayment of the advance. This charge was registered with the Australian Securities and Investments Commission (ASIC) on 1 October 1999. 12 By a loan agreement dated 24 September 1999, the third defendants, Hurly Investments Pty Ltd (Hurly Investments) and Mr Timothy Joseph Casey agreed to advance $1 million to Meadow Springs. On the same day, Meadow Springs entered into a second registered mortgage over the property, and a fixed and floating charge over its assets and undertaking in favour of Hurly Investments and Mr Casey. 13 In December 1999, legislation providing for the establishment of managed investment schemes became effective. Mr Clifton decided to operate the Clifton Partners' finance broking business within the framework of the new legislative regime. He, therefore, established a managed investment scheme, known as Clifton Partners Finance Mortgage Scheme. Mr Clifton procured the second named second defendant, then known as Australian Managed Funds Limited, to act as the responsible entity for the Clifton Partners Finance Mortgage Scheme (the Scheme). The Scheme subsequently changed its name to Knightsbridge Finance Mortgage Scheme, and Australian Managed Funds Limited subsequently changed its name to Knightsbridge Managed Funds Limited (Knightsbridge Managed Funds). 14 There was a constitution for the Scheme. Knightsbridge Managed Funds, the responsible entity and each member of the public who invested in a Scheme loan was bound by the constitution of the Scheme. The extent of each investors interest in the loan will be the same proportion as the amount of principal money owed to each investor from time to time bears to the total amount of all principal money owing under the particular loan at the same time. 16 Section 601FC(2) of the Corporations Law (Cth) provided that the responsible entity of a managed investment scheme holds the Scheme property on trust for the Scheme members. 17 In early 2000, Knightsbridge Managed Funds issued a number of prospectuses inviting members of the public to participate in making loans to third party borrowers on the security of a first registered mortgage and, in some circumstances, debenture security. A prospectus was issued in respect of each loan. The prospectus comprised two parts. The first part contained details of the general operation of the Scheme. The second part described the borrower and the details of the specific loan in respect of which an investment was invited. Thus, for example, the second part of the prospectus issued in respect of the Meadow Springs loan described, among other things, the borrower, the purpose of the loan, the security for the loan given by Meadow Springs and the terms of the advance. Investors themselves make the secured loans either individually or in conjunction with other investors on a contributing basis. In most cases, the investors' names appear on the mortgage as mortgagee. In some cases, Australian Managed Funds Limited will be reflected on the mortgage as mortgagee. However, in those cases, Australian Managed Funds Limited will hold the mortgages on trust for the individual investors and the mortgage can only be dealt with in accordance with the trust arrangements and the directions of the investors who have a specific beneficial interest in the relevant mortgage. Investors will be notified as to the type of security they will have over each investment and this will be set out in the second part of this prospectus. Where the borrower is a company, the mortgage security is usually enhanced by a registered debenture charge over the assets and undertaking of the borrower company and a [sic] unlimited guarantee and indemnity from the directors of the borrower company. Lower Interest Rate 10.85% per annum. A rate review will be conducted after 12 months from settlement of the loan facility to the higher of the rate as determined at first draw of the loan facility or a margin of 5% above the 90 day bank bill swap reference rate as published in the Australian Financial Review. Higher Interest Rate The lower rate plus 3%. Term of Loan 24 months from commencement of loan. Loan to Value Ratio 42.6%. This has been calculated by reference to the available equity in the secured property as determined from the valuation report using the "on completion" valuation. As construction progresses the property's value will increase. Each progress claim by the builder is certified by Colliers Jardine. The "on completion" valuation is calculated by reference to the available equity in the security property on the conclusion of construction. Commencement Date 24 th September 1999 --- This is the date the mortgage documents were registered. Clifton Partners Finance will use its best endeavours to draw mortgagee capital to the loan and as and when required. However, Clifton Partners cannot warrant or guarantee that the loan will be fully funded at the time your capital is invested in the loan facility. The monies received from these investors by Knightsbridge Finance, acting under the Custodial Agreement, were banked into a trust account maintained by Knightsbridge Finance. 21 During the period from 3 March 2000 to 28 November 2000, Knightsbridge Finance then disbursed funds from the trust account to, or at the direction of, Meadow Springs to pay expenses incurred by Meadow Springs in relation to the Meadow Springs development. The Knightsbridge parties plead that a total of $3,494,723.25 was disbursed by Knightsbridge Finance (para 11 and para 26 of their cross-claim). 22 One of a number of persons and companies that paid monies to Knightsbridge Finance for investment in the Meadow Springs loan was Penlas Pty Ltd (Penlas). The amount invested by Penlas was $90,000. A director of the company was Ms Penny Hellens. Penlas advised Knightsbridge Finance that it did not accept the provisions in the prospectus which referred to the security for the loan being held on trust for the Scheme investors. Rather, it required that its interest in the securities be registered. 23 By a deed dated 28 March 2000, WCH transferred its interest in the WCH Mortgage to Knightsbridge Managed Funds and Penlas. However, WCH did not at that time also assign its interest in the WCH Charge to Knightsbridge Managed Funds or Penlas. 24 On 7 April 2000, Knightsbridge Finance forwarded to Ms Hellens on behalf of Penlas, a deed of assignment of the WCH Charge for execution by Penlas. The document provided for the assignment by WCH of its right, title and interest in the WCH Charge to Knightsbridge Managed Funds and Penlas and had been executed by WCH and Knightsbridge Managed Funds. However, Penlas did not execute the document. 25 At that time Ms Hellens was concerned about the security of the investment Penlas had made in the Meadow Springs loan and requested the repayment to Penlas of the sum of $90,000. By a document dated 17 May 2000, Mr Clifton on behalf of Knightsbridge Finance provided Penlas with an irrevocable undertaking to repay Penlas the sum of $90,000. 26 A source of Mrs Hellens' concern was that doubts were emerging as to the security of investments made through finance brokers operating in Western Australia. A further consequence of the emergence of these doubts was that Knightsbridge Finance was unable to raise from private investors, enough money to satisfy the $6.35 million commitment made to Meadow Springs. Mr Clifton asked Mr David Geer, a director of HG & R Finance Limited, whether that company would be prepared to advance $3 million to Meadow Springs because Knightsbridge Finance was having difficulty in raising from private investors, sufficient monies to fulfil the commitment made to advance $6.35 million to Meadow Springs. Mr Geer agreed to do so. HG & R Finance Limited has since 31 January 2006 been known as Balanced Securities Ltd (Balanced), and is the first defendant in this proceeding. 27 On 24 May 2000, Meadow Springs, Knightsbridge Managed Funds, Balanced and Penlas executed an agreement known as the 24 May Loan Agreement. I note that the document in evidence does not contain the seal of Balanced, but the case has proceeded on the basis that Balanced did execute the agreement. AMFL which is referred to in the recital, is a reference to Knightsbridge Managed Funds and HGR is a reference to Balanced. The "Borrower" is Meadow Springs and the "Mortgagee" is Knightsbridge Managed Funds. 30 On 24 May 2000, Meadow Springs granted a third registered mortgage over the property in favour of Balanced (the Balanced Mortgage) and a fixed and floating charge over the whole of the assets and undertaking of Meadow Springs (the Balanced Charge). The Balanced Charge was registered on 13 June 2000. 31 By an oral agreement evidenced in writing, Knightsbridge Managed Funds agreed to advance $125,000 to Meadow Springs. Meadow Springs granted a fourth registered mortgage over the property in favour of Knightsbridge Managed Funds. 32 On 24 May 2000, Knightsbridge Managed Funds, Penlas, Hurly Investments and Mr Casey, Balanced and Meadow Springs also entered into a Deed of Priority (known as the 24 May Deed of Priority). The parties agreed that the first, third and fourth registered mortgages would have priority over the second registered mortgage (being the mortgage granted to Hurly Investments and Mr Casey) and that each of the first, third and fourth mortgages would rank pari passu up to the amount of $6.45 million. 33 On 16 June 2000, Knightsbridge Managed Funds paid Penlas $90,000 in satisfaction of the irrevocable undertaking given by Mr Clifton (referred to in [25] above). On 24 August 2000, following the payment of the $90,000, Penlas executed a deed whereby it transferred its interest (90/6350 th share) in the WCH Mortgage to Knightsbridge Managed Funds. Balanced claims that the amount of $3 million was advanced. Meadow Springs has put Balanced to the proof of the precise amount that was advanced to Meadow Springs. 35 By August 2000, the construction of the proposed apartment development project was completed, and the Meadow Springs Fairway Resort opened for trading. On 4 September 2000, Knightsbridge Managed Funds executed a declaration of trust in respect of the first registered mortgage in favour of the Scheme investors. 36 The Meadow Springs Fairway Resort traded poorly and Meadow Springs could not sell any of the apartments. On 21 February 2001, the directors of Meadow Springs appointed Mr Brian McMaster and Mr Anthony Smith of Ernst & Young, as administrators of Meadow Springs. 37 On 27 February 2001, Knightsbridge Finance lodged with the administrators of Meadow Springs particulars of the debt claiming $3,508,388 plus accruing interest "as mortgage manager for and on behalf of the first mortgagees". 38 On 8 March 2001, Hurly Investments and Mr Casey served a notice of demand on Meadow Springs demanding the immediate repayment of the amount owing to them. The demand was not met. 39 On 22 March 2001, Balanced served a notice of default upon Meadow Springs under the Facility Agreement and the Balanced Mortgage. On 27 September 2001, Balanced served another notice of default on Meadow Springs under the Facility Agreement and the Balanced Mortgage. No monies were paid to Balanced. 40 On 13 December 2001, the Supreme Court of Western Australia held that the monies paid by Knightsbridge Finance to Meadow Springs formed part of the Scheme and appointed Mr Giovanni Maurizio Carrello as the person to wind-up the Scheme. Mr McMaster was appointed liquidator of Meadow Springs. 42 In February 2002, Mr Carrello, as the person appointed to wind-up the Scheme, received an offer to purchase the Meadow Springs resort from Lifestyle Leisure Villagers Pty Ltd. Mr McMaster disclosed to Mr Carrello legal advice he had received from his solicitors as to the validity of the securities granted by Meadow Springs and their respective priority. 43 By a letter dated 11 February 2002, Mr Carrello, writing as "Scheme Liquidator", sought Mr McMaster's consent in his capacity as liquidator of Meadow Springs, to sell the Meadow Springs property for the price and on the terms which Mr Carrello had disclosed to him. In this letter Mr Carrello advised Mr McMaster that the Scheme investors had resolved to accept the offer and instructed him to take the "necessary steps for the offer to be dealt with". 44 On 26 February 2002, Knightsbridge Managed Funds served a notice of demand on Meadow Springs under the WCH Mortgage. Knightsbridge Managed Funds recited in the notice of demand that WCH had, pursuant to the WCH Loan Agreement, advanced $3,349,000 to Meadow Springs on 3 March 2000. It also alleged that Meadow Springs had breached cl 5 of the WCH Loan Agreement, as well as clauses in the WCH Mortgage, by failing to repay the principal sum. Knightsbridge Managed Funds demanded repayment under the WCH Mortgage. 45 On 20 March 2002, Mr Carrello, as agent for Knightsbridge Managed Funds, gave Meadow Springs notice that he had, as Scheme Liquidator, entered into possession of the Meadow Springs property pursuant to Knightsbridge Managed Fund's rights under the WCH Mortgage. 46 On the same date, WCH gave Meadow Springs notice that it, by its agent Mr Carrello, had taken possession of the property the subject of the WCH Charge. In this notice WCH recited that WCH had, pursuant to the WCH Loan Agreement, advanced $3,349,000 to Meadow Springs. 47 By a sale agreement made on 23 April 2002, Knightsbridge Managed Funds and WCH (acting under the WCH Charge) agreed to sell, and Lifestyle Leisure Funds Ltd agreed to purchase the property, comprising the strata title units constructed on the land and the chattels for the sum of $7 million. 48 During the period August 2002 until September 2004, Mr Carrello distributed the proceeds from the sale of the resort property pari passu between Knightsbridge Managed Funds and Balanced consistently with the terms of the 24 May Deed of Priority. Balanced has pleaded that it received distributions totalling $3,574,689.56 and Knightsbridge Managed Funds has pleaded that it received distributions totalling $4,100,735.16. Meadow Springs and IMF have put Balanced and Knightsbridge Managed Funds to proof in relation to the quantification of the distributions each received from the sale of the Meadow Springs property. 49 Knightsbridge Managed Funds in turn made distributions to private Scheme investors who had invested in the loan to Meadow Springs under the Scheme. 50 Following the sale of the resort property, Meadow Springs' only substantial asset was its claim against Colliers arising out of the valuations prepared by Colliers. 51 By September 2003, Mr McMaster, as liquidator for Meadow Springs, received an indicative offer of litigation funding from ILF. Mr McMaster advised creditors in writing that he had received the indicative offer of funding from ILF and sent a copy of the proposed funding agreement to the creditors. 52 By a circulation to creditors dated 16 June 2003, Mr McMaster invited creditors and/or shareholders to participate in a "fighting fund" to pursue litigation against a number of potential defendants. No creditors or shareholders indicated any willingness to fund the potential litigation. 53 On 19 September 2003, Mr McMaster convened a meeting of creditors to seek a resolution from creditors to allow him to enter into the funding agreement. None of the first to third defendants attended the meeting. At that meeting the creditors approved a resolution that "pursuant to Section 477(2)B of the Corporations Act the Liquidator may enter into the proposed funding agreement with Insolvency Litigation Fund Pty Ltd". 54 By a letter dated 23 September 2003, Mr McMaster sent a copy of the proposed funding agreement with ILF, to each of the secured creditors. The purpose of the meeting was to seek a resolution allowing me to enter into an agreement for litigation funding from Insolvency Litigation Fund Pty Ltd ("ILF") in relation to a potential action Meadow Springs has against a valuer. I confirm that the unsecured creditors resolved unanimously to allow me to enter into the funding agreement. In addition to the support of the unsecured creditors, I also seek your express consent to proceed with this matter. In particular, I seek your consent on the basis that the proposed funding agreement will alter the priorities in relation to the floating asset portion of your charge. That is, under the terms of the funding agreement, ILF will be entitled to full payment ahead of the secured creditors. These terms and conditions are standard in this type of arrangement. In essence, the funding agreement states that ILF will agree to fund both the legal costs and my costs (to certain limits) in pursuing the matter and provide protection for an adverse costs order in return for which IMF will receive a payment of the reimbursement of the amounts spent and a percentage of the amount received from the action ranging from 30% to 45%. The differential in the percentage rates is to allow for the level of risk assumed by IMF as disclosed in clause 4.3 of the Funding Agreement. I enclose a draft copy of the agreement for your review. 56 Hurly Investments and Mr Casey consented to Mr McMaster entering into the funding agreement and to priority being given to ILF. 57 Mr Hugh McLernon, an executive director of IMF and ILF, met with Mr McMaster and Mr Carrello on 21 October 2003 to discuss whether the Scheme investors would be prepared to grant ILF priority for its claim to the Resolution Sum over their security interests should ILF make a litigation funding agreement with Meadow Springs. During the discussions Mr Carrello told Mr McLernon that he would recommend a proposal to the Scheme investors that they provide a deed of priority to ILF and that he believed the Scheme investors would accept his recommendation. Mr Carrello also said to Mr McLernon that he would speak to Mr Geer of Balanced and recommend to Mr Geer that Balanced also grant ILF priority. 58 On 3 November 2003, Mr McMaster and Meadow Springs entered into a funding agreement with ILF. Under this agreement ILF agreed to pay Meadow Springs' costs of conducting any public examination and any resulting action for negligence or breach of the Trade Practices Act 1974 (Cth) (the TPA) in the Supreme Court of Western Australia against Colliers. ILF also agreed to meet any order for security for costs, and also to meet any adverse costs orders that may be made against Meadow Springs in the course of that litigation. Meadow Springs agreed to pay ILF a fee of $115,000 maximum comprising a management fee to a maximum of $100,000 and an assessment fee of $15,000, and also to account for an amount of between 30% to 45% of any sum that Meadow Springs may obtain on the resolution of the litigation. 59 By a letter dated 9 December 2003 to the Scheme investors, Mr Carrello outlined the details of the proposed action against Colliers and the terms of the ILF funding agreement. His letter described the advantages and disadvantages of the ILF funding agreement. It is my opinion that this is reasonable, however there is always a view that the amount is excessive. Accordingly the disadvantage is that you are releasing your interest in this asset. If the answer is yes then this proposition has no attraction, if the answer is no then I believe the proposed agreement with ILF is reasonable. At the meeting, the Scheme investors declined to authorise Mr Carrello to execute a deed of priority in favour of ILF. 62 By a letter dated 16 January 2004, Mr Carrello reported to Mr McMaster that the Scheme investors did not agree to him executing a deed of priority in favour of ILF. Mr McLernon also saw a copy of this letter a few days later. 63 In December 2003, Mr Carrello met with Mr Geer and discussed the priority question. Whilst we have acted in consort with Mr Carrello in certain realisation procedures we wish to make it quite clear that our interests are secured separately to the interests he represents and should not be treated as one. All matters involving HG & R Finance Limited should be addressed directly to us. For our part we are currently reviewing the likely extent of our losses and possible claims against, amongst others, the valuation firm Colliers for a possibly negligent valuation report which induced us to enter into the loan transaction in question. Until these enquiries have been finalised we would certainly not agree to any position which compromised these rights in any way. Mr Carrello provided us with a copy of your letter to secured creditors dated 23 September 2003, which has only recently come to our attention. We wish to put you on notice that we will not be agreeing to the priorities sought, and require adequate notice should a court application be made by you to enable us to be heard in Court in opposition to such application. It may well be possible that there are advantages in combining any action against Colliers. However, we would not agree to an arrangement where our rights against Colliers as mortgagee would be compromised and could be settled by a third party litigation funder without our approval. 65 In March 2004, Mr McMaster, Meadow Springs and ILF entered into an agreement varying the terms of the ILF funding agreement. The amendments introduced clauses which permitted various accounts to be rendered in the event that one or both of the secured creditors exercised its security rights over the foreshadowed proceeding against Colliers. It also amended the definition of Lawyers Fee Agreement and provided that the proceeding could also be brought in the Federal Court. 66 As already mentioned, on 16 June 2004, Meadow Springs, acting through solicitors, Solomon Brothers, commenced a proceeding in this Court against Colliers alleging that Colliers had acted in breach of the contractual term to exercise reasonable care, acted negligently and had engaged in misleading or deceptive conduct in providing the valuation of the project to Meadow Springs. 67 In August 2004, Mr McMaster, Meadow Springs and IMF entered into a funding agreement (the IMF Funding Agreement). 4.2 The obligation imposed by clause 4.1 is to be met prior to the payment from the Resolution Sum of any other expenses of the Insolvency Practitioner, including any other fees or costs. 9.2 If the Proceeding becomes the subject of an appeal and the Insolvency Practitioner does not make any distributions or payments from the Resolution Sum as a result, IMF's share of the Resolution Sum is to be paid from the Resolution Sum, if any, when the appeal is withdrawn, or otherwise determined. In this proceeding Balanced has alleged that it relied upon a valuation from Colliers in deciding to lend monies to Meadow Springs under the Facility Agreement. It claims that by lending the monies to Meadow Springs it was deprived of the opportunity of advancing the monies to another borrower which would have provided a higher return than did Meadow Springs. 72 At a time between September 2004 and April 2006, WCH was administratively deregistered by ASIC. On 19 September 2006, the registration of WCH was reinstated by an order of the Supreme Court of Western Australia, and a liquidator, Mr Melvyn Posner, was appointed to that company. 73 On 14 November 2006, Mr Posner, the liquidator of WCH, purporting to act under the WCH Charge, appointed Mr Carrello as the receiver and manager of Meadow Springs to take possession of its causes of action against Colliers. By February 2007, Mr Carrello had entered into a funding agreement with a litigation funder, Hillcrest Litigation Services Limited, in respect of the proceeding in this Court by Meadow Springs against Colliers. The terms of this funding agreement were not in evidence. 74 On 6 February 2007, Christensen Vaughan, as solicitors for Mr Carrello in his capacity as receiver and manager of Meadow Springs, filed and served a notice that Solomon Brothers had ceased acting for Meadow Springs and that Christensen Vaughan now acted for Meadow Springs. On the 16 April 2007, Justice Marshall ordered that the notice of change of solicitors filed by Christensen Vaughan be uplifted. 75 Shortly prior to the trial, Meadow Springs settled the claim against Colliers for $6.95 million comprising $6.40 million in satisfaction of Meadow Springs claim and $550,000 in satisfaction of the liquidator's costs, including legal costs. IMF waived recovery of $92,000 in respect of the total amount of legal costs which it had paid under the IMF Funding Agreement. 76 By letter dated the 16 August 2007, Balanced gave notice to Meadow Springs it required Meadow Springs to pay the sum of $3,876,578.81 within seven days failing which Balanced would take such further action as it was advised. Meadow Springs has not paid the amount demanded. Balanced alleged that all of the monies claimed were monies secured by the Balanced Charge. Each of Meadow Springs and IMF challenged this claim. Accordingly, there is also before the Court an amended notice of motion pursuant to which Meadow Springs seeks relief from the Court to remedy the failure of the liquidator to obtain the approval. 78 Section 477(2B) of the Act provides that, except with the approval of the Court or the committee of inspection or a resolution of the creditors, a liquidator must not enter into an agreement on the company's behalf which is likely to endure for longer than three months. Meadow Springs seeks the approval of the Court because, although the ILF funding agreement was approved by the creditors at the meeting on 19 September 2003, the replacement funding agreement, namely, the IMF Funding Agreement, entered into by the liquidator with IMF in August 2004 was not. Nor did Mr McMaster obtain approval by any of the other means, referred to in s 477(2B) of the Act before entering into the IMF Funding Agreement. 79 Meadow Springs relied upon the affidavit of Mr McMaster sworn 15 October 2007 in support of its motion. Meadow Springs contended that an agreement entered into by a liquidator without compliance with s 477(2B) is not void and that approval may be given by the Court retrospectively. Balanced and the Knightsbridge parties opposed the granting of relief to Meadow Springs on the same grounds as they relied upon in opposition to IMF's contention that the fees and portion of the Resolution Sum claimed by IMF under the IMF Funding Agreement have priority over the monies secured by their respective securities. 80 Because the decision whether to grant relief in terms of the amended notice of motion overlaps with some of the issues pertaining to IMF's claim to priority, I will defer deciding whether to grant the relief, until I consider the priority claim made by IMF. 82 First, whether the amounts comprising the assessment fee of $15,000, the management fee of $100,000 and 35% of the Resolution Sum claimed by IMF under the IMF Funding Agreement are to be paid to it in priority to the amounts claimed by the Balanced and the Knightsbridge parties under their respective securities? 83 Secondly, whether Balanced has by reason of the Balanced Charge an enforceable security over the monies in the fund and if so, how much of the amount it claims is subject to the security? 84 Thirdly, whether WCH and Knightsbridge Managed Funds are, by reason of the WCH Charge, the holders of an enforceable security in respect of the fund, and if so, how much of the amount which it claims is subject to the security? Alternatively, whether Meadow Springs is estopped from contending that WCH and Knightsbridge Managed Funds are not by reason of the WCH Charge, the holders of an enforceable security in respect of the fund? 85 There are subsidiary issues which arise in relation to each of these three main issues. 86 The third defendants, Hurly Investments Pty Ltd and Mr Casey, entered an appearance but they did not participate in the trial. Each of the witnesses was cross-examined. The evidence did not give rise to any credibility issues. I accept that each of the witnesses gave evidence truthfully. I accept each witness' evidence which is set out in these reasons. The need to make the orders arose because the trial was limited to four days and there was not, therefore, sufficient time to deal with all the disputes raised on the pleadings in relation to the quantification of the amount of monies advanced and distributed. The parties, therefore, proposed that the only matters relating to quantification that would be tried at this hearing would be those matters expressly raised in the opening submissions of the parties, and in para 48 of the Knightsbridge parties' cross-claim. These matters, it was said, raised questions of principle which, if determined, would resolve, or assist in resolving, questions relating to the validity of the claims made in respect of these items. I made orders to that effect. IMF's claim in respect of priority for fees and a portion of the Resolution Sum. 90 IMF bases its claim on three grounds. First, it is contended that a sum comprising 35% of the Resolution Sum is held on trust by the liquidator of Meadow Springs for IMF and that IMF has a superior equity in respect of that sum to that of Balanced and the Knightsbridge parties. Secondly, it relies upon the principle in the case of In Re Universal Distributing Company Limited (In Liquidation) [1933] HCA 2 ; (1933) 48 CLR 171 ( Universal Distributing ). It is said that there is an equitable lien in favour of Mr McMaster, the liquidator which secures the payment of the monies claimed by IMF in priority to the monies claimed by Balanced and the Knightsbridge parties. Thirdly, it is contended that the monies claimed by IMF are payable in priority under the principles of salvage. Meadow Springs does not oppose these contentions. 92 IMF contended that cl 4.3 of the IMF Funding Agreement effected an assignment of future property, namely, the fruits of the claim against Colliers. It was said that an incident of this assignment was that an equitable interest arose in favour of IMF once the Resolution Sum came into the hands of Meadow Springs and not before. IMF contended further that the Balanced Charge and the WCH Charge were floating charges which insofar as the proceeds of the claim against Colliers was concerned, also charged future property. Therefore, said IMF, Balanced and WCH only acquired an equitable interest in the proceeds of the claim by reason of their respective charges on the same basis, and at the same time, as IMF, namely, when the proceeds of the claim were received by Meadow Springs. It followed, contended IMF, that each of the equitable interests of IMF, Balanced and the Knightsbridge parties in the proceeds of the claim, arose at the same time. In other words, the equitable interest held by each of Balanced and the Knightsbridge parties in the fruits of the Colliers claim enjoyed no priority by reason of being earlier in time to IMF's equitable interest. IMF went on to contend that IMF's equity to claim its share of the fund was superior to the equity of each of Balanced and the Knightsbridge parties because IMF had taken the risk of indemnifying the liquidator in respect of the conduct of the litigation, and Balanced and the Knightsbridge parties had acquiesced in this conduct. 93 I do not accept IMF's contention. First, each of Balanced and WCH acquired an equitable interest in the property, the subject of the floating charge, on the crystallisation of the floating charge. For the reasons which follow, I do not accept that the equitable interest which these parties acquired on the crystallisation of the Balanced Charge and the WCH Charge respectively in the Colliers claim, is properly to be characterised as an assignment of future property. 94 A chose in action comprises property of a company and, subject to the laws of champerty and maintenance, may be the subject of a charge in the same way as any other property ( South Australian Management Corporation v Sheahan (1995) 16 ACSR 45 at 52-53). Each of the two floating charges would have crystallised, at the latest on the appointment of Mr McMaster and Mr Smith as administrators of Meadow Springs on 21 February 2001. Any breach of the valuation contract and wrongful conduct by Colliers would have occurred before that date and, thus, the elements of the chose in action against Colliers would have been in existence by the date of the crystallisation of each charge. 95 In the case of Re Oasis Merchandising Services Ltd (in liq) [1997] 1 All ER 1009 ( Oasis Merchandising ), Peter Gibson LJ distinguished between the types of assignment that may be made in relation to the disposal of litigation rights. The first is the transfer of property carrying with it the right to prosecute any cause of action closely related to that property, such as the assignment of a debt. Such a transfer and any action brought by the transferee to enforce that right are not champertous (see, eg, Camdex International Ltd v Bank of Zambia [1996] 3 All ER 431, [1996] 3 WLR 759). The second is the assignment of a bare cause of action or bare right to litigate. Such assignments offend public policy (see, eg, Trendtex Trading Corp v Crédit Suisse [1981] 3 All ER 520, [1982] AC 679). The third is the assignment of the damages or other monetary compensation that may be awarded in an action in which judgment has not yet been given. Such an assignment, being an agreement to assign future property (damages if and when awarded), operates in equity and if supported by consideration will be valid and no question of unlawful maintenance or champerty will arise, at any rate when the assignee has no right to influence the course of the proceedings (see Glegg v Bromley [1912] 3 KB 474, [1911-13] All ER Rep 1138). Such an agreement does not give the assignee any rights to prosecute or conduct the action and the assignee does not acquire any beneficial interest in the action itself: Glegg v Bromley [1912] 3 KB 474 at p 484. In other words, the assignment falls into the first, and not the third, of the categories referred to by Peter Gibson LJ in Oasis Merchandising . 98 I find, therefore, that on the date of the crystallisation of each of the charges each of Balanced and WCH respectively, acquired an equitable interest in the chose in action against Colliers which included its proceeds. It follows that I reject the submission of IMF that the assignment effected by the crystallisation of each charge was no more than an assignment of future property. 99 It follows, also, that I do not accept IMF's contention that each of IMF, Balanced and WCH acquired their respective equitable interests in the fund simultaneously, namely, when the liquidator of Meadow Springs received the Resolution Sum. 100 Accordingly, in my view, each of Balanced and WCH acquired an equitable interest in the Colliers claim and its proceeds, before IMF acquired its equitable interest in the proceeds of the claim. 101 I would mention, in passing, that no point was taken that because the claim against Colliers was founded on tort and a breach of s 52 of the TPA, as well as on breach of contract, the chose in action could not be the subject of an assignment by charge. 102 The next question is whether IMF has a better equity in the proceeds of the claim than either Balanced or WCH, notwithstanding that Balanced and WCH acquired their equitable interests before IMF did, because IMF took the risk associated with the conduct of the Colliers claim, whereas Balanced and WCH and the other Knightsbridge parties did not. 103 As previously mentioned, IMF contended that the disposition of a portion of Meadow Springs' interest in a share of the Resolution Sum in favour of IMF was effected by cl 4.3 of the IMF Funding Agreement. 104 IMF contended that the IMF Funding Agreement was entered into by means of a novation between Meadow Springs, IMF and ILF. By the time that IMF entered into the ILF funding agreement, each of the WCH Charge and the Balanced Charge had been registered. Further, Mr McLernon, on behalf of IMF, had actual knowledge of the WCH Charge and the Balanced Charge, and of the fact that each of Balanced and the Knightsbridge parties claimed, thereby, to have an equitable interest in the Colliers claim by reason of their rights under the respective charges. That Mr McLernon had this knowledge is apparent from his discussion with Mr Carrello on 21 October 2000, about canvassing Balanced and the Knightsbridge parties to agree to give IMF priority in respect of its rewards under the ILF funding agreement (see [57] above). Mr McLernon had this knowledge even before he signed, on behalf of ILF, the ILF funding agreement on 22 October 2003. Mr McLernon said that he signed the ILF funding agreement on the basis of the belief that the Knightsbridge parties and Balanced would grant ILF priority in respect of its claim to the proceeds of the Colliers claim. In my view, this does not assist IMF. In any event, by the time IMF entered into the IMF Funding Agreement in August 2004, Mr McLernon was aware of Balanced's and the Knightsbridge parties' decision not to grant priority. 105 Thus, well before IMF acquired its equitable interest in the fund when the proceeds were received by Mr McMaster, IMF had actual knowledge of the equitable interests of Balanced and the Knightsbridge parties. 106 In the case of Moffett v Dillon [1999] 2 VR 480 ( Moffett ), the Court of Appeal in Victoria considered the question of the priority of competing equitable interests. Brooking JA (with whom Buchanan JA agreed) observed that a person with a notice of equity takes subject to it. He said that the "rule is...distinct from the rule that where equities are equal the first in time prevails". Earlier I deferred consideration of whether circumstances are conceivable in which an equity acquired with notice of a prior equity could nevertheless be held to prevail over it. There are nonetheless exceptions to this of which the most obvious are an agreement to postpone or waiver of priority. There may also be other conduct on the part of the holder of the prior equity which may estop her from asserting her priority. I have said that there are two rules or principles at work in cases like the present, the rule that a person taking with notice of an equity takes subject to it and the rule where the equities are equal the first in time prevails. As regards the second rule, I have referred to the wide view taken by Mason and Deane JJ in Heid v Reliance Finance Corp Pty Ltd at 341 that broad principles of right and justice will guide the court in determining whether the equities are equal. As what I have already written should make plain, I do not regard the question whether a person who acquired an equity did so with notice of a prior equity as no more than a consideration to which regard is to be had in determining whether one of the equities is better than the other. I regard the rule about notice as a distinct and fundamental one and I do not consider that Mason and Deane JJ intended to question its existence or to subsume this particular matter of notice under a broad question so as to make it no more than a consideration bearing upon which was the better equity. The question of whether IMF's equity is superior by reason of it having been the party that took the risk in relation to the litigation against Colliers, therefore, does not arise. 108 It follows that I do not accept IMF's contention that it is entitled to priority in respect of 35% of the Resolution Sum by reason of it having a superior equity to the proceeds of the Colliers claim to that of each of Balanced and the Knightsbridge parties. As previously mentioned, IMF contended that the obligation to pay the fees of $115,000 and 35% of the Resolution Sum, were expenses reasonably incurred by the liquidator in realising the Resolution Sum and were, therefore, payable in priority. 110 Mr McLernon deposed that he is, and was in 2003, when the ILF and IMF funding agreements were entered into, an executive director of IMF. IMF is, and was in 2003, a public company which carried on business of litigation funding. Mr McLernon said that IMF was at that time the largest company in Australia providing litigation funding. It was also the only public company engaged in that business. 111 Mr McLernon said that he had executive responsibility for litigation funding through various entities since the 1990s and was well acquainted with the market for litigation funding in Australia. Mr McLernon said that in 2003, at the time that the IMF Funding Agreement was entered into, the status of litigation funding agreements in Australian law had not been decisively determined and, therefore, there was always a risk that there would be a challenge made to the lawfulness of the funding agreement. That factor increased the risk that the litigation funder undertook, and in 2003 the percentage of the resolution sum which was provided for in funding agreements was higher than would be the position today. 112 Mr McLernon said that he had in the last six years considered and approved about 150 funding agreements. He said he had considered and rejected about three times that number of funding proposals. Mr McLernon said that "rewards" provided for in the ILF and IMF funding agreements were representative of those being sought and paid in 2003. 113 As to the management fees, Mr McLernon deposed that he had been personally involved in the conduct of the proceeding against Colliers. He had dealt directly with the firm of solicitors, Solomon Brothers, who had been acting for Meadow Springs. One of Mr McLernon's functions was to review the reasonableness of the solicitor's fees. Another function was to monitor the progress of the litigation which IMF had funded. There was attached to his witness statement a schedule of work undertaken by Mr McLernon personally. The schedule shows Mr McLernon liaising with the solicitors and taking a keen and detailed interest in the conduct of the proceedings. 114 Mr McMaster's evidence was that he did not make inquires from any other litigation funder before agreeing to enter into the agreements with ILF and IMF. He dealt with IMF because he wanted to deal with a "company of substance which appeared able to meet its liability under an indemnity for costs". Further, he said that he had not considered whether the management fees were a reasonable reward to IMF for the services it would provide for those fees. He said that he regarded the management fees as part of the overall consideration to be paid to procure the funding. 115 Mr Geer deposed that Balanced had no need for litigation funding, and that Balanced's preference was to pursue its own claim for its losses against Colliers. Mr Geer said that he received the circular letter from Mr McMaster dated 16 June 2003 and the circular letter from Mr McMaster dated 23 September 2003. 116 The Universal Distributing case involved the fixing of the remuneration of an official liquidator. The official liquidator had left at the Court his accounts of receipts and payments up to the end of 1932. The insolvent company had granted a debenture creating a floating charge over the assets of the company. The liquidator had realised the assets and had created a fund over which the debenture-holder had security. The debenture-holder contended that the liquidator's remuneration and certain disbursements contained in the accounts ought not be allowed out of the fund in priority to the amount the subject of the debenture-holder's security. The security is paramount to the general costs and expenses of the liquidation, but the expenses attendant upon the realization of the fund affected by the security must be borne by it ( In re Oriental Hotels Co ; Perry v Oriental Hotels Co ). The debenture-holders are creditors who have a specific right to the property for the purpose of paying their debts. But if it is realized in the winding up, a proceeding to which they are thus parties, the proceeds must bear the cost of the realization just as if they had begun a suit for its realization or had themselves realized it without suit (cf In re Regent's Canal Ironworks Co ; Ex parte Grissell ; and see Batten v Wedgwood Coal and Iron Co ). In applying this principle, only those expenses appear to have been thrown against the fund belonging to the debenture-holders which have been reasonably incurred in the care, preservation and realization of the property. In the present case the liquidator has employed a material part of his time and energies in recovering moneys, both uncalled capital and debts, which enure for the debenture-holder, and in so far as these services increase the remuneration which he receives, I see no reason why the burden should not be thrown upon the proceeds. The question is not whether moneys available for unsecured creditors should be relieved at the expense of the security. In such a case it may be said that the service of collecting enough to discharge the debenture must in any event be performed in order that a surplus may then arise in which the unsecured creditors may participate. The question in the present case is whether the liquidator can charge against the fund passing through his hands as between himself and the person to whom it is payable, so much of the remuneration fixed or work done in the winding up as is referable to the calling in and conversion of the assets producing the fund. I see no reason why remuneration for work done for the exclusive purpose of raising the fund should not be charged upon it. (Footnotes omitted. (Emphasis added. His Honour fixed a lump sum of 250 guineas together with an amount for travelling expenses. Dixon J determined further that of the total sum of 250 guineas, 30 guineas comprised remuneration for work done in realising or collecting assets claimed by the debenture-holder and should, therefore, be given priority to the debenture-holder's debt. 119 Dixon J also considered the question of disbursements. He declined to allow a disbursement in respect of the premium paid by the liquidator to a guarantee company to obtain the security which was required by the winding up order appointing him. Dixon J, otherwise, allowed the liquidator's disbursements. However, of the disbursements allowed, Dixon J (at 176) identified three disbursements which were to rank "behind the debenture holder's debt". Dixon J then declared that the liquidator was entitled to retain from monies comprising the fund, 30 guineas - being his remuneration - and an amount for the disbursements allowed, other than the three disbursements identified, in priority to the claim of the debenture-holder. 120 IMF contended that the fees and the liability in respect of 35% of the Resolution Sum comprised expenses reasonably incurred by the liquidator in producing the fund. Therefore, in accordance with the principle in the Universal Distributing case, the liquidator was entitled to retain from the fund, monies to discharge those expenses in priority to the secured creditors. Further, it was contended that the liquidator was entitled to rely upon an equitable lien to protect that right ( Shirlaw v Taylor (1991) 31 FCR 222). 121 In my view, a distinction is to be drawn between the fees and the liquidator's obligation to account under cl 9.1.2 of the IMF Funding Agreement in respect of a portion of the Resolution Sum. I deal, first, with the claim made in relation to the obligation in respect of the Resolution Sum. 122 Clause 9.1.2 of the IMF Funding Agreement imposes an obligation to "remit IMF's share of the Resolution Sum to IMF". It is apparent from the IMF Funding Agreement that it was the parties' intention that IMF's share of the Resolution Sum is to be held on trust for IMF. Clause 4.3 of the IMF Funding Agreement provides for the disposal by Meadow Springs to IMF of a share in the Resolution Sum. Further, cl 5.4 of the IMF Funding Agreement provides specifically that IMF is to have a "propriety interest" in the Resolution Sum. As I have already mentioned, IMF has contended that the disposal effected by cl 4.3 was the assignment of future property and so, it was said, IMF's share of the Resolution Sum "never vested in Meadow Springs absolutely". 123 In my view, the obligation which arose under the IMF Funding Agreement on the liquidator on receipt of the proceeds from the settlement of the Colliers claim, was to account as trustee to IMF for such amount of the fund as IMF was beneficially entitled pursuant to the disposal under cl 4.3 of the IMF Funding Agreement ( Palette Shoes Pty Ltd (In Liquidation) v Krohn [1937] HCA 37 ; (1937) 58 CLR 1 ( Palette Shoes ). In my view, this obligation on the liquidator to account as trustee to his or her beneficiary was not an obligation of the character contemplated by Dixon J under the Universal Distributing principle. 124 In Palette Shoes , Latham J distinguished between the nature of the obligation to account as trustee attendant upon the assignment of future property and the liability incurred under ordinary contractual rights. The cases are not concerned with determining the priorities of creditors who by their own resources have secured a beneficial interest in the property of the company. 127 Accordingly, in my view, the liability of the liquidator to account to IMF for its portion of the Resolution Sum, is not a liability which comprises an "expense" of the nature contemplated by Dixon J in Universal Distributing . The fund cannot, therefore, be charged with that liability under the principle in that case. 128 Balanced advanced an alternative argument. It contended that on a proper understanding of the observations of Dixon J referred to at [116] above, the amount of the liquidator's fees and disbursements expended in realising the fund that could take priority to a secured creditor was limited to the amount of the fees and disbursements that the secured creditor would have incurred had it realised the fund. But if it is realized in the winding up, a proceeding to which they are thus parties, the proceeds must bear the cost of the realization just as if they had begun a suit for its realization or had themselves realized it without suit. (Emphasis added. Accordingly, so it was contended, the amount of the liquidator's fees and disbursements which would take priority to Balanced's claim to the fund, would be limited to the costs which Balanced would have incurred had it appointed a receiver and conducted the proceeding against Colliers without litigation funding. The amount Balanced says it would have incurred is $642,000 --- being the receiver's remuneration of $200,000 and legal costs of $442,000. Those figures are derived from an estimate of the receiver's remuneration, and the legal costs incurred by IMF in conducting the proceeding against Colliers. It says that it would not have expended any more than that amount. Accordingly, the fees and the 35% share of the Resolution Sum did not have priority. 130 Because of the view to which I have already come, it is unnecessary, to consider this argument, at least in relation to the share of the Resolution Sum. However, in deference to the time and care that was devoted to this argument, I will express my view. 131 In my view, contrary to Balanced's submissions, the observations of Dixon J in Universal Distributing do not comprise binding authority for the proposition Balanced advanced. The highlighted words of Dixon J at [128] above are, in my view, intended to do no more than provide a rationale for giving priority to the costs, charges and expenses incurred by the liquidator in realising or creating the fund in which the secured creditor has an interest. Those words are not to be construed as imposing a limitation upon the amount in respect of which priority would be accorded, by reference to the hypothetical amount that would have been expended by the secured creditor in realising or creating the fund, had it done so itself. 132 First, in the Universal Distributing case, Dixon J made no reference in his judgment to the hypothetical steps that the secured creditor would have undertaken in realising or creating the fund, nor the expenses that the secured creditor would have incurred had it appointed a receiver who had created the fund. If Balanced was correct in its submission that the highlighted words were intended by Dixon J to impose the limitation contended for, then Dixon J would have been required to have regard to the hypothetical action that the secured creditor would have taken to realise or create the fund and the expenses that the secured creditor would have incurred in carrying out of that action. This he did not do. 133 Secondly, Dixon J referred to Batten v Wedgwood Coal and Iron Co (No 1) (1884) 28 Ch D 317 ( Batten ). In that case there had been an abortive attempt to sell the property before the party realising the assets finally sold the property. The property must be realized by some-one in order that it may be distributed, and whoever has realized it and brought the proceeds under the control of the Court, has really constituted the fund which has to be distributed for the benefit of the receiver and everyone else who is entitled. These costs must therefore be paid in priority to the receiver. The principle is that the man who has actually produced the fund for distribution is to have his costs of producing it paid in priority. Pearson, J:- The abortive sale appears to me to have been one step towards the realization of the property; I cannot distinguish the costs of it from the other costs of realization. The limitation on whether the actual expenses incurred are to be given priority, is whether they were reasonably incurred. 136 Balanced also referred to the case of Moodemere Pty Ltd (in liq) v Waters [1988] VR 215. In that case, it was the receiver and manager who had been appointed under a floating charge after the company had gone into liquidation, who had realised the property and created the fund. The Victorian Full Court applied the Universal Distributing principle and held that the receivers and managers were entitled to retain from the fund the costs, expenses and remuneration incurred in realising the assets of the company. There was no consideration by the Full Court of the contention advanced by Balanced. 137 I now deal with the claim in respect of fees in the amount of $115,000. As previously mentioned, there were two elements of the fees, namely, an assessment fee of $15,000 and a management fee of $100,000. 138 In my view, the obligation on the liquidator to pay the fees is an obligation of such a nature as to comprise "an expense" of the kind referred to by Dixon J in the Universal Distributing case. The question is whether the obligation to pay the fees was reasonably incurred. 139 The issues raised by this question overlap with the issues raised by Meadow Springs' notice of motion to approve the IMF Funding Agreement retrospectively. It is appropriate, therefore, that I deal also with the notice of motion at this stage. The notice of motion was amended after the decision in Australian Securities and Investments Commission v Forestview Nominees Pty Ltd [2007] FCA 1985 ( Forestview ) was handed down in December 2007. The extension application is sought under s 1322(4)(d) of the Act. In my opinion s 1322(4)(d) does not authorise the Court to extend time under s 477(2B). That is because s 1322(4)(d) provides for extension of periods within which certain things have to be done under the Act. Section 477(2B) defines no such period. It merely requires prior approval of the class of agreement to which it applies. Despite the difficulty associated with the application of s 1322(4)(d) to approvals under s 477(2B) , retrospective approval can be effected in other ways and a declaration made that the Agreement was not invalid notwithstanding the absence of prior approval. The liquidator may be directed, under s 479(3) of the Act, to act as though the Agreement had been approved. The Court may in the exercise of its implied incidental power and its power under s 23 of the Federal Court of Australia Act 1976 (Cth) (the Federal Court Act ), approve the Agreement. It may also, in the exercise of its power under s 1322(4)(a) of the Act, declare the entry into the Agreement and the Agreement not to have been invalid for want of prior approval. For the reasons that follow I am prepared to make orders approving the Agreement, directing that the liquidators may act on the Agreement as though it had been approved prior to execution and declaring that their entry into the Agreement and the Agreement itself are not invalid. 142 In determining whether a liquidator has acted reasonably in entering into a litigation funding agreement, the Court is mindful that it is possible that the pursuit of litigation with the assistance of a litigation funding agreement will result in the liquidator and the litigation funder earning substantial fees without the creditors obtaining any tangible benefit from the conduct of the litigation. (See, Palmer J in Hall v Poolman (2007) NSWSC 1330 at [368] - [379] . ) A relevant consideration, therefore, in determining this question, is whether there is a reasonable prospect that there will be extraneous benefits, particularly to creditors, from the liquidator entering into the funding agreement and the subsequent pursuit of the litigation. 143 In my view, the Court should, for the following reasons, exercise its power to grant the relief sought by Meadow Springs. 144 First, the claim against Colliers was Meadow Springs' only substantial asset. There was clearly a viable cause of action against Colliers, which had the potential to bring extraneous benefits to creditors, and the liquidator was unable to obtain funding from the creditors to pursue the cause of action. By the dates of entry into the ILF and IMF funding agreements, none of the secured creditors had appointed a receiver to pursue the litigation against Colliers. Litigation funding was the only source of funding available for the liquidator to pursue the litigation. As it has transpired, however, the settlement of the claim has not produced sufficient funds to result in a dividend to unsecured creditors who were at the time of entry into the ILF funding agreement, owed a total of approximately $450,000. 145 Secondly, it was not unreasonable for Mr McMaster not to have approached any other litigation funders before entering into the ILF funding agreement. Mr McMaster explained that he chose to enter into a funding agreement with ILF, and later with IMF, because IMF was well-known and a public company which had the financial resources to fulfil the obligations which it had undertaken. On the evidence of Mr McLernon, which was not contradicted, IMF was at the time the pre-eminent litigation funder in the market, and the terms of the IMF Funding Agreement were usual in the market at that time. In my view, the liquidator's approach and reasons for not approaching any other litigation funders, was, in the circumstances that prevailed in the litigation funding market in 2003, not unreasonable. 146 The evidence of Mr McLernon that the terms of the IMF Funding Agreement were usual in the marketplace at the time, is supported by the fact that in his letter to the Scheme investors dated 9 December 2003, Mr Carrello, an experienced liquidator, said that he regarded the terms of the ILF funding agreement to be reasonable. Further, the cases in which the Court has considered whether to approve the entry into a funding agreement by a liquidator, demonstrate that the courts have approved litigation funding agreements which contain clauses providing for the payment of a share in the proceeds of, depending on the circumstances, between 12% to 75%. (See, Jarbin Pty Ltd v Clutha Ltd (in liq) [2004] NSWSC 28 ; (2004) 208 ALR 242 at 269, at [108]). 147 Balanced said that because Mr McMaster did not have regard to whether the fees were a reasonable reward to IMF for the services IMF would provide, the incurring of this obligation was unreasonable. Whilst some criticism may be made of the liquidator's approach in this regard, this does not have the consequence that incurring the obligation to pay the fees is to be characterised as unreasonable. The obligation was incurred as part of a wider litigation funding agreement in a limited market, in circumstances when it was reasonable for the liquidator to enter into such an agreement. 148 In its written opening submissions Balanced claimed that it was not reasonable for the liquidator to enter into the IMF Funding Agreement because this was an attempt to subordinate legitimate and lawful claims of Balanced to the interests of the unsecured creditors and IMF's self interest. The gravamen of this submission was directed to IMF's contention that the obligation to account for the Resolution Sum would take priority over the claims on the fund by the secured creditors. During the course of oral closing submissions, Balanced accepted that dehors this consideration, the liquidator had, in the circumstances confronting him, acted reasonably in entering into the IMF Funding Agreement. It was, in the words, of senior counsel for Balanced a "win-win" situation. 149 In my view, the liquidator acted reasonably in entering into the IMF Funding Agreement. 150 In any event, the entry into the IMF Funding Agreement was not open to be impugned on the grounds set out in Balanced's written opening submissions because Balanced was always able to protect its own interest in respect of Meadow Springs' claim against Colliers by appointing a receiver to take control of Meadow Springs' property under the Balanced Charge and to pursue the litigation. However, it chose not to do so. 151 A further consideration in deciding whether to grant retrospective approval to the IMF Funding Agreement is the explanation for the failure to obtain approval prior to entry into the agreement. Mr McMaster explained that he did not believe he needed approval to enter into the IMF Funding Agreement having already obtained approval to enter into the ILF funding agreement. The failure of the liquidator to obtain the requisite approval under s 477(2B) of the Act for the novation by which the parties thereto entered into the IMF Funding Agreement, was, in my view, an honest and understandable mistake. It is understandable that a liquidator may take the view that the novated agreement on essentially the same terms and with a new party that is the parent of the existing party to the agreement, would not require a renewed approval by the creditors. 152 Accordingly, in accordance with the approach of French J in Forestview, I grant the relief sought in para 4 of the amended notice of motion. 153 It, also, follows that I find that the liability to pay the management and assessment fees of $115,000 under the IMF Funding Agreement is an expense which was reasonably incurred by the liquidator in establishing the fund, and that expense falls to be charged against the fund in priority to the claims of Balanced and the Knightsbridge parties. In support of this contention, IMF said that IMF had through the implementation of the IMF Funding Agreement produced a fund which had conferred an "incontrovertible benefit" on Balanced and the Knightsbridge parties. The fund should, therefore, be charged with the amounts due to IMF under the IMF Funding Agreement as expenses incurred in producing the fund. 155 In the case of Dean---Willcocks v Nothintoohard Pty Ltd (in liq) [2006] NSWCA 311 , the New South Wales Court of Appeal addressed the question of the so-called principle of "salvage" in the context of the principle in Universal Distributing . In that case both Spigelman CJ and Beazley JA observed that the so-called principle of "salvage" does not, on proper analysis, comprise a separate basis upon which to support the claim made by IMF, but rather provides a rationale for the principle adopted and applied by Dixon J in Universal Distributing . In that regard, it must be recognised that "salvage" is merely a convenient expression to describe the basis upon which a receiver is entitled to be reimbursed for costs and to be paid remuneration before other persons entitled to the funds. This is, in my opinion, more of a metaphor than a legal principle. It follows that I do not accept IMF's contention based on the so-called "salvage" principle. Balanced claims that its rights as a secured creditor are founded upon the fact that it made advances to Meadow Springs under the Facility Agreement, and that those advances, interest payable thereon and other costs and expenses, are monies secured under the Balanced Charge. 160 Balanced also seeks an order that Meadow Springs pay to Balanced all monies (and any interest accrued thereon) presently held by or on behalf of Meadow Springs. Balanced claims that after having received the benefit of the monies disbursed to it by Mr Carrello from the proceeds of the sale of the Meadow Springs property, it was still owed $2,054,742.57. Balanced claims that that amount has increased by reason of the accrual of interest under the Facility Agreement. Balanced pleads that on 16 August 2007, it demanded (pursuant to the Balanced Charge) that Meadow Springs pay it $3,876,578.81 and that Meadow Springs has failed and refused to pay that amount. 161 Balanced also pleads that the Balanced Charge ranks pari passu with the WCH Charge but otherwise it has priority over all other claims against the assets of Meadow Springs, save for the reasonable expenses of the liquidator in establishing the fund. 162 Meadow Springs raised a number of defences to Balanced's claims. 163 First, it was contended that the monies had not been advanced to Meadow Springs under the Facility Agreement, but under the WCH Loan Agreement. 164 Secondly, Meadow Springs contended that the Facility Agreement is void and unenforceable because in entering into the Facility Agreement, Balanced acted in contravention of s 26 of the Stamp Act 1921 (WA) (the Stamp Act ). 165 Thirdly, it is claimed that, in any event, Balanced has substantially overstated its claim. This is because it has charged interest pursuant to cl 5 of the Facility Agreement when that provision is unenforceable as a penalty because it provides for the payment of "interest on interest on interest". 166 Fourthly, it is alleged that, on its proper construction, the "Monies Hereby Secured" under the Balanced Charge does not include compound interest, and is confined to simple interest. 167 In addition, each of Meadow Springs and IMF claimed that a number of items of expenditure Balanced claimed as being within the ambit of "Monies Hereby Secured" by the Balanced Charge, were not so included. 169 It was said that this was the consequence of Recital E of the 24 May Loan Agreement (see [27] above) which referred to the "transfer" of shares in the WCH Loan Agreement to Balanced, and cl 1 and cl 3 of the 24 May Loan Agreement which referred to the Facility Agreement as being "part of" the WCH Loan Agreement. 170 This contention is not accepted. In my view, the contractual intention of the 24 May Loan Agreement was that Balanced and Meadow Springs would enter into a different agreement for the advance of $3 million and that Meadow Springs waived its rights to call upon WCH to advance that sum under the WCH Loan Agreement, and any claims in respect of the failure to provide that advance. Recital E explained how the Facility Agreement came to be made. It did not replace the contractual intention as expressed in the 24 May Loan Agreement and in the Facility Agreement, that the Facility Agreement was to contain the terms on which the $3 million was to be made by Balanced, and was to comprise a different agreement to the WCH Loan Agreement. In any event, Recital E referred to the Facility Agreement as a separate agreement. 172 It was said that by Recital E of the 24 May Loan Agreement (see [27] above,) Balanced stated matters that it knew to be false, namely, that Knightsbridge Managed Funds had agreed to transfer to Balanced 3,000 undivided 6,350 th shares in the WCH Loan, the WCH Mortgage and the WCH Charge and that the Facility Agreement was to evidence the transfer of those securities. Meadow Springs contended that there had not been any such agreement and that it was not intended that the Facility Agreement evidence the transfer of the shares in the securities. Meadow Springs said that Balanced did not disclose that it would make a separate advance of monies under the Facility Agreement supported by its own security. Further, Meadow Springs alleged that Balanced had prepared the terms of Recital E of the 24 May Loan Agreement with the intention of avoiding the incurring of duty in respect of the Facility Agreement. This, it was said, demonstrated prima facie evidence of an intent by Balanced to defraud the Crown and a contravention of s 26(1) of the Stamp Act . 173 Meadow Springs went on to contend that there was no evidence from the draftsman of the 24 May Loan Agreement, Mr Murie of solicitors, Murie Edwards, and the Court should draw an adverse inference in accordance with the principle in Jones v Dunkel (1959) 101 CLR 298 , and conclude that there had been a contravention of s 26(1) of the Stamp Act , with the consequence that the Facility Agreement was illegal and void. 174 Meadow Springs relied upon the cases of Caporale Enterprises Pty Ltd v Papa [1993] ANZ Conv R 541 ( Caporale ) and Gray v Pastorelli [1987] WAR 174 ( Gray ) in support of its contention. (1a) For the purposes of subsection (1) the suppression from an instrument of any fact or circumstance referred to in subsection (1) or the inclusion therein of any matter that is known to be false in a material particular is prima facie evidence of intent to defraud the Crown. (2) The Commissioner may, in a case in which he considers that the circumstances so require, permit any error in an instrument to be corrected before the instrument is duly stamped. 178 The notation affixed to the Facility Agreement shows that the officer who assessed the document for duty treated the Facility Agreement as an instrument to which s 87(1) of the Stamp Act applied by reason of duty having already been paid on the WCH Loan Agreement. 179 In his evidence, Mr Geer said that it was always his intention that Balanced would advance the $3 million on the terms set out in the Facility Agreement and supported by Balanced's own security. Mr Geer said that he wanted to take an assignment of the securities held by the Knightsbridge parties in addition to his own securities but he did not know whether that was ever done. He said that he left the question of stamping the agreement to Mr Murie who was the solicitor acting for Balanced. 180 In my view, contrary to the submissions of Meadow Springs, the evidence did not comprise prima facie evidence of an intention to defraud the Crown and of a contravention of s 26(1) of the Stamp Act . The cases that are relied upon by Meadow Springs are distinguishable. 181 In Caporale , the instrument submitted to the Western Australian State Taxation Department was a contract for the sale of property which showed the sale price as $138,000. The contract which the parties had originally signed reflected the true price of $145,000 which had been agreed by the parties. The false documents submitted for stamping had been subsequently drawn up. The plaintiff sued on the contract of sale relying upon the false documents. The defendant raised the defence of illegality. Wallwork J drew the inference that the false representation in the document as to price did deceive the revenue authorities "including the Western Australian State Taxation Department". Wallwork J said that it would be contrary to public policy for the court to allow the plaintiff to succeed in this case on a written contract which described the purchase price as being $7,000 less than it, in fact, was and which deceived the revenue authorities. 182 In Gray , the Full Court of the Supreme Court of Western Australia considered a case where the parties had agreed in writing to the sale of a property for $70,000 but later entered into two separate instruments: one, a contract for the sale of the property for $50,000, and the second, an acknowledgment of debt for $20,000. The arrangement was structured in this way at the request of the seller so as to avoid a capital gains tax liability which the seller thought would otherwise be payable in respect of the profit on the sale of the property under the Income Tax Assessment Act 1936 (Cth). 183 When the purchasers were sued on the acknowledgment of debt, they raised the defence of illegality. It transpired that the seller was mistaken in believing that he would be liable to tax on the profit of his house. The Full Court concluded that public policy did not in these circumstances require the court to withhold support from the seller in the enforcement of the contract. 184 Only one of the three judges, Pidgeon J, referred to s 26 of the Stamp Act . He observed, in passing, that it was not necessary for the court to have regard to that provision. However, at 189, Pidgeon J does assume, without discussion, that a contravention of that section might result in the impugned contract being void. 185 In my view, these cases are distinguishable because in each of Caporale and Gray false documents were knowingly produced by the parties with the intention of preventing the revenue authorities from learning the true underlying facts of the transaction. The revenue authorities did not, therefore, have an opportunity to make their judgment as to the appropriate assessment based on the documents which recorded the actual transaction. 186 In this case, the State revenue authorities were required to make a judgment as to whether s 87 of the Stamp Act applied in assessing the duty chargeable in respect of, inter alia, the Facility Agreement. In other words, they had to assess whether the Facility Agreement was the security for "some or all of the same moneys" as those the subject of the WCH Loan Agreement. 187 Unlike the false documents submitted in Caporale and Gray , the 24 May Loan Agreement and the other documents recording the underlying transaction spoke for themselves. The legal effect of the agreement as described in Recital E may not have been clear, but in colloquial terms the message of the recital was reasonably clear, namely, that Balanced had agreed with Knightsbridge Managed Funds to lend to Meadow Springs $3 million of the $6.3 million referred to in the WCH Loan Agreement and that Balanced was to have a shared security position in respect of the $3 million loan, that the Facility Agreement was evidence of that agreement, and that no further stamp duty was payable because it had already been paid in respect of the WCH Loan Agreement. 188 The Facility Agreement, the Balanced Mortgage, the Balanced Charge, the 24 May Loan Agreement and the 24 May Deed of Priority were submitted to the State revenue authorities for assessment as to stamp duty. The State revenue authorities were able to read the terms of each of the agreements comprising the underlying transaction. It was, therefore, a matter for the State revenue authorities to assess, in the context of the determination that they had to make, whether the suite of documents submitted to them gave effect to Recital E, and the consequences for their assessment if they did not. 189 Thus, contrary to Meadow Springs' submission, the State revenue authorities would have been aware from the terms of the documents submitted that the Facility Agreement provided for the making of an advance of $3 million under that agreement and that each of the Balanced Mortgage and the Balanced Charge provided security for the making of that advance, and that those securities would rank pari passu with the WCH Mortgage and the WCH Charge. 190 I accept, as Meadow Springs submitted, that one purpose of Recital E was to procure that the Facility Agreement was stamped as collateral to the WCH Loan Agreement. However, this was patent and open. It was obvious from the terms of Recital E that Balanced (and the other parties to the agreement) were advocating a view in respect of the application of the Stamp Act . Recital E was in the form of an assertion that the Facility Agreement qualified for assessment under s 87 of the Stamp Act . The State revenue authorities were not bound to accept the assertion in the recital that the Facility Agreement was to be stamped as collateral to the WCH Loan Agreement. In this regard, the situation is distinguishable from Caporale and Gray where the false instruments were produced and the parties' intent was to procure a favourable assessment by deliberate deception. 191 Accordingly, I do not find that Balanced contravened s 26(1) of the Stamp Act . Meadow Springs contended that cl 5.5 of the Facility Agreement was an unenforceable penalty because it provided interest on interest on interest. Any interest calculated at the Higher Rate remaining unpaid may at the option of the Lender be capitalised on the last day of each month and added to the Moneys Hereby Secured and shall then bear further interest accordingly at the Higher Rate. 194 Clause 5.5 provided that if the borrower defaulted in the payment of interest then the borrower was obliged to pay interest at the higher rate of 17% on the unpaid interest as well as paying interest on the outstanding amount, and if unpaid, the unpaid interest for that month and the interest thereon, could then be capitalised at the end of the month, and added to the monies secured and then bear further interest, accordingly, at the higher rate. Counsel for Meadow Springs characterised this as a compound interest clause which charged interest on interest on interest. 195 Meadow Springs referred to the case of Ringrow Pty Ltd v BP Australia Pty Ltd [2005] HCA 71 ; (2005) 224 CLR 656 and contended that cl 5.5 was extravagant, oppressive and unconscionable and "out of all proportion" to the potential damage Balanced would suffer by Meadow Springs' default. 196 However, in the case of David Securities Pty Ltd v Commonwealth Bank of Australia (1990) 23 FCR 1 , the Full Federal Court held that a clause providing for compound interest was not to be regarded as a penalty. It was formerly considered, as a general rule, that, in equity, covenants converting interest into principal from time to time as the interest became due, but was not paid, conflicted with the usury laws and consequently could not be supported: RH Coote, Coote on Mortgages (9 th ed, 1927), Vol 1, pp 157-158. That certainly still was so in the time of Lord Eldon. But in modern times, with the repeal of the usury laws, it is well settled that a stipulation entered into at the time of a loan for payment of compound interest is valid and does not attract the doctrine concerning penalties: Domaschenz v Standfield Properties Pty Ltd (1977) 17 SASR 56 at 60-61; CJ Belmore Pty Ltd v AGC (General Finance) Ltd [1976] 1 NSWLR 507 at 510; W Fisher and J Lightwood, Law of Mortgage (supra), pp 47-48, 654: cf Cityland & Property (Holdings) Ltd v Dabrah [1968] Ch 166 ; National Bank of Greece SA v Pinios Shipping Co (No 1) [1990] 1 All ER 78 (HL). 198 Accordingly, I do not find that cl 5.5 amounts to a penalty. Meadow Springs contended further that if it was correct in this submission, Balanced's claim to the fund would be reduced because the claim was based on compound interest. 200 It is necessary to set out parts of cl 1 of the Balanced Charge to deal with this contention. Meadow Springs contended further that the portions of interest capitalised each month under the Facility Agreement are not to be included within the meaning of an "advance". 203 Meadow Springs went on to contend that, on its proper construction, the term "interest" referred to in cl 1.1(j) of the Balanced Charge refers only to simple interest. Thus, says Meadow Springs the only amounts that are secured under cl 1 of the Balanced Charge are the amounts of the advances made by Balanced under the Facility Agreement which total $3 million, and simple interest thereon at the rate provided for under the Facility Agreement, and not the capitalised compound interest which Balanced has charged. 204 Meadow Springs' contention is not to be accepted. In my view, cl 1.1(ag)(vii) provides that capitalised interest is to be included as part of the "Moneys Hereby Secured" under the Facility Agreement. The Facility Agreement provides for the repayment by Meadow Springs of the "Moneys Hereby Secured" under that agreement. Clause 1.1 of the Balanced Charge provides that the purpose of the deed is to secure the payment of "all...money for which [Meadow Springs] is now or may hereinafter become indebted to [Balanced]". The scope of this obligation, therefore, includes the liability on Meadow Springs to repay the "Moneys Hereby Secured" under the Facility Agreement. This is reinforced by cl 1.1(b) which refers to all monies owing or payable by Meadow Springs to Balanced "on any account whatsoever" as being secured by the Balanced Charge. It supported its claim with a detailed Schedule setting out each of the line items which comprised its claim. 206 Each of Meadow Springs and IMF challenged certain charges and payments which Balanced alleged were secured by the Balanced Charge and which were included in the Schedule. By a letter dated 23 October 2007, IMF challenged a number of identified items in the Schedule and requested that Balanced provide a justification for claiming that each such item fell within the definition of "Monies Hereby Secured" under the Balanced Charge. 207 At the commencement of the hearing, IMF in its opening submissions identified a number of these charges and payments. It was said that the dispute in respect of those charges raised questions of principle, which if resolved, would determine, or facilitate the determination of, the question of whether the charges comprised monies which were secured by the Balanced Charge. Balanced contended Meadow Springs was liable to pay the monies expended on the Colliers claim because they were "costs charges expenses and payments including legal costs and disbursements which the Lender...may suffer sustain incur or become liable for or be put to...in obtaining or endeavouring to obtain payment of all or any of the Moneys Hereby Secured". These are words from cl 1.1(ag)(iii) of the Facility Agreement which define the "Moneys Hereby Secured" by that agreement --- being the monies which Meadow Springs is liable to pay under that agreement. 209 The claim which Balanced has made against Colliers is based on a loss of opportunity to advance the monies which it advanced to Meadow Springs to another party, which would have performed the loan agreement according to its terms. Balanced submitted that because Balanced would have to account in its claim against Colliers for any monies which it received from Meadow Springs, the monies expended in the pursuit of the litigation against Colliers are costs incurred in an attempt "to obtain payment of all or any" of the monies due under the Facility Agreement. 210 In my view, the claim against Colliers is not a claim seeking "to obtain payment of all or any" of the monies due by Meadow Springs under the Facility Agreement. To the contrary, Balanced's claim against Colliers is to obtain compensation for not being able to obtain from Meadow Springs payment of the monies due under the Facility Agreement. The fact that Balanced would have to account in its assessment of damages against Colliers for the monies received from Meadow Springs does not change the characterisation of the claim as a claim for compensation for damages for loss of opportunity against a third party to the Facility Agreement. 211 The claim against Colliers is, therefore, in my view, not to be characterised as an attempt to obtain payment of all or any of the "Monies Hereby Secured" under the Facility Agreement and the amount expended in pursuing that litigation does not comprise monies secured by the Balanced Charge. 212 It follows, therefore, that the amounts comprising fees and disbursements incurred in the conduct by Balanced of its litigation against Colliers do not comprise monies secured by the Balanced Charge. Senior counsel for Balanced correctly conceded that there was no basis upon which the claim for $50,000 could be sustained. Accordingly, I find that the claim for a provision for legal costs on settlement in the sum of $50,000 does not fall within the ambit of the monies secured by the Balanced Charge. The Schedule records this debit as "1 months Additional Interest on Repayment". 215 The next item challenged was the sum of $56,505.25 which is shown in the Schedule as an anticipated debit to be charged when the final payment discharging the outstanding amount comprising the "Moneys Hereby Secured" under the Facility Agreement, is made. The item is described in the Schedule as: "One Month's Additional Fee on Discharge". 216 Balanced claims that the entitlement to charge each of the amounts is to be found in cl 4.4 of the Facility Agreement. Balanced contended that the defined term "Principal Outstanding" meant the total amount of the monies outstanding under the Facility Agreement and this included capitalised interest. In other words, because interest was capitalised it was to be regarded as part of the "Principal Outstanding". 221 IMF contended that the term "Principal Outstanding" referred specifically to the $3 million advance originally made less any repayment of that advance which had occurred. Thus, IMF contended, once the advance had been repaid, the clause could not operate so as to permit Balanced to make any charge in respect of one month's interest on the total balance which was then outstanding under the Facility Agreement. In any event, any interest charged could only be charged on so much of the original advance, if any, as was outstanding at the time the final payment of the monies due was made. 222 In my view, the construction contended for by IMF is to be preferred, for the following reasons. First, cl 4.4 of the Facility Agreement distinguishes between the "Moneys Hereby Secured" and the "Principal Outstanding". There would have been no need to distinguish between the two concepts if Balanced's view was correct. Secondly, the object of the clause is to compensate Balanced by way of liquidated damages for the late repayment of the advance, on the basis that it has lost the opportunity of completing the formalities necessary to on lend the amount comprising the advance timeously. 223 On the basis of the construction which I have placed on cl 4.4, I do not, on the evidence in this case, accept the submission of Meadow Springs that the one month's interest charge is a penalty. This is because there is nothing to suggest on the evidence, that the charge is not a genuine pre-estimate of loss arising to Balanced through the disruption to the process of the documenting and approving the making of a new loan arising from the delay in repaying the advance. 225 As to the fees paid by Balanced to Mr McMaster, IMF contended that there was no obligation on Balanced to make any payment to Mr McMaster in respect of his fees in acting as administrator of Meadow Springs. It was said that the remuneration of an administrator was to be met from the assets of the company in administration. The administrator had the benefit of a lien to secure payment of his fees. 226 In my view, the monies payable to Mr McMaster are also properly to be characterised as falling within the ambit of monies secured under the Balanced Charge on the basis that they were expenses incurred in seeking to enforce its security for the repayment of the monies due under the Facility Agreement. The evidence shows that Balanced sought to cooperate with Mr McMaster in the steps he took relating to the realisation of the property. It was said that any insolvency practitioner would have taken those steps, had Balanced sought to appoint such a practitioner as a receiver to realise its securities. In my view, Balanced's submission is to be accepted. These were expenses which Balanced would otherwise have expended had it taken steps to enforce its securities. It does not matter that Mr McMaster also had a right to obtain remuneration in respect of his administration from the assets of the company. The fact is that he provided services which also served the interests of Balanced in recovering the monies due under the Facility Agreement, and which it would otherwise have had to pay from itself had it appointed a receiver under its securities. 227 The amounts, therefore, comprise monies secured by the Balanced Charge. 229 Balanced says that the amounts are secured by the Balanced Charge because the legal costs are for work performed in connection with the enforcement, or attempted enforcement, of its security. 230 The amounts claimed are supported by legal invoices rendered by the two law firms involved, namely, Pye and Quartermaine and Herbert, Geer & Rundle. These accounts are detailed and record each item of work which was done by the solicitors. 231 The resolution of the question whether the expenditure was incurred in enforcing or attempting to enforce the security would require an assessment of the items of work described in the invoices. The question is not, therefore, one which raises for determination a matter of principle that can resolve the question, or facilitate its resolution. This issue does not, therefore, satisfy the basis on which matters going to quantification were to be resolved at this hearing. 232 Accordingly, I will make directions for the resolution of this issue at a different time and by an appropriate means. I will hear the parties on the question. 234 The Knightsbridge parties based their claim on the following grounds. 235 First, they contended that the monies due under the WCH Loan Agreement are secured under the WCH Charge because the monies advanced by Knightsbridge Finance to Meadow Springs, were advanced under the WCH Loan Agreement. 236 Secondly, the Knightsbridge parties contended that Knightsbridge Managed Funds is entitled to the benefit of the WCH Charge. In support of this contention, the Knightsbridge parties say that the WCH Charge is held on trust by WCH, alternatively, the WCH Charge was assigned to Knightsbridge Managed Funds. 237 Thirdly, the Knightsbridge parties contended as an alternative contention, that Meadow Springs is estopped from denying the monies advanced by Knightsbridge Finance were advanced pursuant to the WCH Loan Agreement and that Knightsbridge Managed Funds is entitled to the benefit of the WCH Loan Agreement and the WCH Charge. Were the monies advanced by Knightsbridge Finance advanced under the WCH Loan Agreement? 239 Meadow Springs and IMF denied that the monies were advanced under the WCH Loan Agreement. They contended that the "Financier" is defined under the WCH Loan Agreement as WCH. They said that the monies which were advanced by Knightsbridge Finance were monies which had been paid to Knightsbridge Finance by the Scheme investors. It followed, said Meadow Springs and IMF, that the monies were not advanced by WCH, and, therefore, the monies were not advanced under the WCH Loan Agreement because it required that the "Financier", namely, WCH (and no one else) advance the monies. The consequence, it was said, was that the monies advanced to Meadow Springs by Knightsbridge Finance did not fall within the definition of "Moneys Secured" under the WCH Charge because there were no monies advanced to, and so, there were no monies payable by, Meadow Springs under the WCH Loan Agreement. 240 The WCH Charge was made as a deed between Meadow Springs and WCH. The operative part of the charge charged the assets and undertaking of Meadow Springs "with the payment of Moneys Secured and Interest but excluding pre-paid interest held in an interest bearing cash management account held by the company's second mortgagee [the third defendants]...in the sum of...$250,000.00 with the Bank of Adelaide". However there is in fact no cl 3.3 in the WCH Charge. 243 The term "Specific Agreements" is defined to mean "this security, the Principal Agreement and the Collateral Security as each may be varied, amended, supplemented, novated or replaced from time to time". The term "Principal Agreement" means the WCH Loan Agreement. Meadow Springs is defined as the "Company" and the "Borrower". WCH is defined as the "Mortgagee". 244 The Knightsbridge parties pleaded that WCH entered into the WCH Loan Agreement whereby WCH agreed to advance $6.35 million. The Knightsbridge parties also contended that Knightsbridge Finance advanced a total of $3,494,723.25 to Meadow Springs under the WCH Loan Agreement. These advances were made in response to draw-down requests submitted by Meadow Springs to Knightsbridge Finance. 245 Mr Clifton gave evidence that he has been a director of Knightsbridge Finance, previously known as Clifton Partners, since 1979 and that he was the sole director of WCH from its incorporation until 30 May 2000. Mr Clifton also said he used WCH within the operations of the Clifton Partners finance broking business to enter into the loan agreements for the loans brokered by Clifton Partners only in a custodial or trustee capacity. It was not intended that, and nor did, WCH advance monies to a borrower under a loan agreement in its own right. The way in which the business operated was that the loan funds would be supplied by individual investors and WCH would hold the benefit of the loan agreement and the securities securing the payment of the monies due under the loan agreement upon trust for the individual investors. In most cases, documentation would subsequently be drawn up which recorded the names of individual investors who contributed to the advance in question on the title to the security in accordance with their share of the overall loan. Mr Clifton said that after the introduction of the managed investment scheme legislation in late 1999, he decided to conduct the finance broking business, formerly conducted by Clifton Partners, within the framework of the new legislation. Accordingly, he established the Clifton Partners Finance Mortgage Scheme, as it was then known. The monies that were paid by Knightsbridge Finance to Meadow Springs were monies raised from the investors under the Scheme. 246 Mr Daws gave evidence. He has 27 years experience as an accountant and has been assisting Mr Carrello in the administration of Knightsbridge Managed Funds and Knightsbridge Finance since Mr Carrello's appointment to each of those companies. Mr Daws said that he was familiar with the books and records of Knightsbridge Finance because of his involvement in the administration and subsequent liquidation of that company. He said that Knightsbridge Finance maintained a series of electronic trust ledger accounts in respect of the general trust account. Each trust ledger account related to a particular loan. The separate trust ledger accounts were known as "split accounts". There was a split account kept in respect of Meadow Springs. Mr Daws said that because the split accounts were trust ledger accounts those accounts did not disclose on whose behalf a particular payment was made by Knightsbridge Finance. 247 Mr Daws deposed that on 3 March 2000, Meadow Springs paid a total of $424,951 to Knightsbridge Finance by three cheques. Those funds were deposited to Knightsbridge Finance's trust account. Mr Daws went on to depose that on 8 March 2000 Knightsbridge Finance created a trust ledger account in respect of $400,000 of that deposit and, thereafter, interest payments from that account were deducted on the third day of each month. 248 Mr Daws also deposed that in the case of the loan to Meadow Springs, the funds advanced to Meadow Springs by Knightsbridge Finance were contributed to Knightsbridge Finance by individual Scheme investors. He said that advances to Meadow Springs were made by Knightsbridge Finance progressively following the receipt by Knightsbridge Finance of a draw-down letter from Meadow Springs requesting that an advance be made. 249 I find that WCH did not advance any monies to Meadow Springs in its own right and that the monies which were advanced by Knightsbridge Finance to Meadow Springs were monies which had been invested by Scheme investors who had subscribed to the prospectuses issued by Knightsbridge Managed Funds as part of the Scheme. 250 I also find that in receiving the money from the individual Scheme investors and in advancing the money, Knightsbridge Finance acted pursuant to the terms of the Custodial Agreement referred to in [15] above. 251 It is possible, as a general rule, for a person, other than a contracting party itself, to perform that party's contractual obligations. In other words, there can be vicarious performance of a contractual obligation. There will, however, be circumstances when the performance contracted for would be of such a nature as not to permit vicarious performance. For example, a party may have contracted to obtain the skill of a particular person. Whether a contract is one which is not capable of vicarious performance will depend upon its terms and surrounding circumstances. The contract here, as in so many cases, has to be collected partly from the language used and partly from the acts of the parties. The nature of the work to be performed is, of course, always material. In other words, the parties to the agreement knew and understood that WCH would not perform the agreement in its own right but that the monies advanced to Meadow Springs would be made from funds contributed by third-party investors who would have the benefit of the agreement and the security furnished by Meadow Springs. 254 First, cl 15 of the WCH Loan Agreement (see [9] above), provided that the loan would be managed by Knightsbridge Finance and that the WCH Loan Agreement would be held on trust by WCH for "private mortgagees" and that the securities collateral to the WCH Loan Agreement would also be held on trust for "private mortgagees". This term shows that it was never the intention that WCH make advances in its own right or hold the benefits of the WCH Loan Agreement and the securities given by Meadow Springs for its own benefit. 255 Secondly, Mr Kenny, a director of Meadow Springs, chose to approach Clifton Partners to raise the monies for the $6.35 million advance. It is to be inferred that in doing so Mr Kenny knew that Clifton Partners conducted business as a finance broker and that as such, its modus operandi was to raise the funds which would be advanced to the borrower, from private persons who would have the benefit of the loan agreement and collateral securities given by the borrower. 256 This inference is fortified by the fact that Clifton Partners sent Mr Kenny a letter dated 2 September 1999 which contained a document headed "Deed of Appointment of Broker" and the indicative letter of offer for the loan. The indicative letter of offer said that the formal approval was subject to the acceptance by "the mortgagee clients of Clifton Partners Finance". 257 Accordingly, I find that the WCH Loan Agreement is an agreement capable of and indeed, intended to be, performed vicariously. In my view, the advances made by Knightsbridge Finance to Meadow Springs comprised the vicarious performance of the WCH Loan Agreement. 258 IMF contended that the inference should be drawn that the monies were not advanced by Knightsbridge Finance pursuant to the WCH Loan Agreement because there were differences between the terms of the WCH Loan Agreement, the terms of the loan as described in the prospectus issued by Knightsbridge Managed Funds under the Scheme, and what actually happened. 259 First, it is said that the WCH Loan Agreement provided for interest to be payable at the rate of 10.35% and for it to fluctuate in the first year with the bank bill rate, whereas interest was charged at 10.85%. Further, the higher interest rate in the WCH Loan Agreement was 13.35%, whereas it was 13.85% in the Scheme prospectus. I note that on 2 March 2000, Knightsbridge Finance informed Meadow Springs that the interest was to be charged on the loan at 10.85%. The higher interest rate remained constant at 3% higher than the ordinary interest rate. 260 Next it is said that the WCH Loan Agreement did not provide for progressive draw-downs but provided for the issue of a draw-down notice for the whole of the $6.35 million. However, said IMF, in practice Meadow Springs progressively issued a number of draw-down requests and Knightsbridge Finance made payments in response to those requests. 261 Further, it is said that under the WCH Loan Agreement the prepayment of interest of $400,000 was to be deducted from the advance, whereas what happened was that Meadow Springs made a cheque payment to Knightsbridge Finance. It also provided that $400,000 would be lodged in a cash management account with Knightsbridge Finance to "assist in the monthly payments of interest". It was also said that the WCH Loan Agreement imposed an absolute obligation to advance $6.35 million, but the Scheme prospectus stated that the sum of $6.35 million may not be fully funded. 262 In my view, the existence of these differences does not lead to the drawing of the inference that there was an abandonment of the WCH Loan Agreement. In my view, for the following reasons, the proper inference to draw is that, notwithstanding the differences referred to by IMF, the WCH Loan Agreement was not abandoned. 263 First, there is no evidence that Meadow Springs ever entered into any other loan agreement in respect of the monies advanced to it by Knightsbridge Finance. Neither IMF nor Meadow Springs pleaded that Meadow Springs entered into any other loan agreement with any other party in respect to the advance of those funds. 264 Secondly, Mr Kenny, by a letter dated 4 April 2000, consented to the inclusion in the prospectus to be issued by Knightsbridge Managed Funds under the Scheme, of the prospectus Meadow Springs issued to raise capital. The prospectus issued by Knightsbridge Managed Funds contained under the heading "Investment Particulars" a description of the loan to be made to Meadow Springs. These particulars referred to the commencement date of the "loan agreement" as being 24 September 1999 --- the date of the WCH Loan Agreement. The "Investment Particulars" also contained the variations from the terms of the WCH Loan Agreement referred to by IMF. It is to be inferred that in giving his consent to the use of the prospectus in the Knightsbridge Managed Funds prospectus, Mr Kenny was aware of the terms of the "Investment Particulars" in the Knightsbridge Managed Funds prospectus - which referred to the variations and to the loan agreement as having been made on 24 September 1999. 265 Thirdly, further support for the conclusion that the WCH Loan Agreement had not been abandoned, is to be found in the notation in the audited accounts for the year ending 30 June 2000 which records WCH to be a secured lender in the sum of $2,907,257, interest being charged on the advance at the rate of 10.85% and the security for the loan comprising the WCH Mortgage and the WCH Charge. 266 Fourthly, by 24 May 2000, Meadows Springs had received advances which totalled more than $3 million from Knightsbridge Finance. On 24 May 2000, Meadow Springs executed the 24 May Loan Agreement. By cl 1 of that agreement Meadow Springs agreed "to enter into HGR's Loan with HGR" as part of the WCH Loan Agreement. Further, by the 24 May Deed of Priority, Meadow Springs recognised Knightsbridge Managed Funds as the first mortgagee of Meadow Springs' property and the WCH Loan Agreement, the WCH Mortgage and the WCH Charge as the first mortgagee. Both the 24 May Loan Agreement and the 24 May Deed of Priority are founded on the premise that the monies that had been advanced by Knightsbridge Finance to Meadow Springs had been advanced in part performance of the WCH Loan Agreement. 267 Fifthly, no directors of Meadow Springs were called to give evidence. Nor was their failure to do so explained. I, accordingly, draw an inference under the principle in the case of Jones v Dunkel (1959) 101 CLR 298. 268 The matters referred to in the preceding paragraphs are inconsistent with IMF's contention that the variations lead to the inference that the parties had abandoned the WCH Loan Agreement. As already mentioned, the more appropriate inference is that the WCH Loan Agreement remained on foot and the parties had, to the extent of the variations, agreed to amend the WCH Loan Agreement, alternatively that the parties had to the extent of the variations, waived compliance with terms of the WCH Loan Agreement. In this regard, it is to be noted that the definition of "Specific Agreements" in the WCH Charge includes the WCH Loan Agreement as varied or amended. 269 During oral submissions, Meadow Springs referred to the case of Vickery v Woods (1952) 85 CLR 336 in support of a contention that there had been no novation between Meadow Springs, WCH and the Knightsbridge parties. That case, however, is distinguishable from the circumstances in this case because there it was not contended that there had been vicarious performance of Mr Vickery's contract (see, the observations of Dixon J at 343). 270 It follows that I find that the monies advanced by Knightsbridge Finance to Meadow Springs were advanced under the WCH Loan Agreement. 271 It follows also that Meadow Springs is bound by the terms of the WCH Loan Agreement. Is Knightsbridge Managed Funds entitled to the benefit of the WCH Charge? The Knightsbridge parties contended that the WCH Charge was assigned to Knightsbridge Managed Funds and Penlas by WCH in April 2000. They also contended that on or after April 2000, WCH held the WCH Loan Agreement and the WCH Charge on trust for Knightsbridge Managed Funds. 273 In response to the claim made by the Knightsbridge parties that there was an assignment of the WCH Charge, Meadow Springs and IMF raised a number of defences. 274 First, it was contended that Meadow Springs said Penlas had refused to execute, and did not execute, the deed of assignment. It was contended that in the absence of Penlas executing the charge there could be no effective assignment. It was also contended that it was not possible to assign the WCH Charge other than in writing. Meadow Springs contended that s 34(1)(c) of the Property Law Act 1969 (WA) required that the assignment of the WCH Charge be in writing. This is because it was contended that the WCH Charge created an equitable interest in the assets of Meadow Springs and s 34(1)(c) required that an assignment of an equitable interest be in writing. 275 Secondly, IMF contended that there could be no assignment in equity of the WCH Charge to Knightsbridge Managed Funds because Knightsbridge Managed Funds was a volunteer. 276 Thirdly, Meadow Springs said that cl 8.7(a) of the WCH Charge provided that, except with the consent of Meadow Springs, the WCH Charge could only be assigned to one or more banks or other financial institutions. It was argued that neither Knightsbridge Managed Funds, nor Penlas was a bank or a financial institution. 277 Fourthly, Meadow Springs contended that there was never any declaration of trust by WCH in respect of the WCH Charge in favour of Knightsbridge Managed Funds. B The Assignee has agreed to pay to the Assignor the Principal Sum in the proportions mentioned herein subject to the Assignor assigning to the Assignee all its right title estate and interest pursuant to the Debenture. I also find that any interest that Penlas may have had as a Scheme investor in the benefit of the WCH Charge ceased when Penlas was paid the $90,000 which it had invested in the Scheme in August 2000. 283 In my view, for the following reasons, there has been an effective assignment in equity of the WCH Charge to Knightsbridge Managed Funds as trustee for the Scheme investors. 284 First, it would not be necessary for Penlas to have executed the document for the assignment to have been effective in equity. It is sufficient that the party assigning the interest in the charge execute a document assigning the benefit of the charge. Section 34(1)(c) of the Property Law Act provides no more than that the disposition of an equitable interest shall be "in writing signed by the person disposing of the interest". This is what WCH did. Further, the section does not require that the disposal be by way of deed, nor that the document assigning the interest be signed by the assignee. 285 The interest of Penlas in the benefit of the charge having ceased, Penlas would not be entitled to enforce the WCH Charge. By paying Penlas $90,000 for its interest and Penlas executing the release Ms Hellens referred to in her evidence, Knightsbridge Managed Funds effectively acquired Penlas' interest in the WCH Charge. 286 In my view, it cannot be said that Knightsbridge Managed Funds is precluded from enforcing the WCH Charge, or from the assignment being effective in equity, by reason that Knightsbridge Managed Funds is a volunteer. This is because the charge was assigned to Knightsbridge Managed Funds in its capacity as responsible entity of the Scheme and as trustee for the Scheme investors in the Meadow Springs loan. The consideration for the assignment would, therefore, have comprised the monies Knightsbridge Finance advanced to Meadow Springs from the funds provided by the Scheme investors in performance of WCH's obligation under the WCH Loan Agreement. WCH's conscience would, accordingly, have been bound and it would not be open to WCH (nor does WCH seek to do so) to deny that the assignment had the effect of transferring the benefit in the WCH Charge to Knightsbridge Managed Funds as trustee for the Scheme investors. 287 Insofar as notice of the assignment to Meadow Springs was necessary, this was provided by the terms of the 24 May Loan Agreement and the 24 May Deed of Priority, both of which referred to the assignment of the WCH Charge to Knightsbridge Managed Funds and Penlas. 288 Further, insofar as cl 8.7(a) of the WCH Charge imposed a prohibition on assignment without Meadow Springs' consent, such consent by Meadow Springs was provided by its acknowledgement of the assignment in the 24 May Loan Agreement. 289 It was also submitted that the assignment could have no effect because it was a condition precedent to the assignment that the assignee pay the assignor the "Principal Sum". The Principal Sum was variously described in the WCH Charge as $6.35 million or "[a]ll moneys presently owing or to become owing or payable to the Chargee by Meadow Springs". In my view, WCH has waived compliance with the condition. This is evidenced by the fact that WCH accepted that the monies obtained from the exercise of its powers of sale under the charge were held on trust by Knightsbridge Managed Funds as trustee for the Scheme investors, and were disbursed to the Scheme investors accordingly. 290 Accordingly, in my view, there was an assignment in equity of the WCH Charge by WCH to Knightsbridge Managed Funds. It follows that the WCH Charge is held by WCH for the benefit of Knightsbridge Managed Funds as responsible entity and trustee for the Scheme investors. 291 Alternatively, even if there was no effective assignment of the WCH Charge in equity, in my view, the WCH Charge is held on trust by WCH for the benefit of Knightsbridge Managed Funds as responsible entity of the Scheme. 292 The intention of WCH to hold the WCH Charge on trust for Knightsbridge Managed Funds as responsible entity for the Scheme investors, is evident from the following matters. First, cl 13 of the WCH Loan Agreement provides that the WCH Loan Agreement and the collateral securities are to be held on trust for the "private mortgagees". Secondly, WCH did not advance any monies from its own funds. Thirdly, it is evident from the terms of the assignment of the WCH Charge executed by WCH that WCH did not intend to hold the WCH Charge beneficially, but intended to transfer the legal and beneficial interest to Knightsbridge Managed Funds and Penlas. 293 Meadow Springs contended that there was never any declaration of trust in respect of the WCH Charge or, indeed, the WCH Loan Agreement. In my view, such writing is comprised by the assignment of the WCH Charge executed by WCH and the terms of cl 13 of the WCH Loan Agreement. The fact that at the time that the WCH Loan Agreement and the assignment of the WCH Charge were executed by WCH not all the members of the class of "private mortgagees" were identified, does not preclude a finding that the WCH Charge and the WCH Loan Agreement are held on trust for the benefit of the Scheme investors. What is significant is that the WCH Loan Agreement referred to the class of beneficiaries as the "private mortgagees" and the members of that class are now, and were, identifiable at the time that the distributions came to be made of the proceeds of the sale of the Meadow Springs resort ( Kinsela v Caldwell [1975] HCA 10 ; (1975) 132 CLR 458 at 461). Does the WCH Charge secure interest payable under the WCH Loan Agreement? 295 Meadow Springs referred specifically to cl 1.1 in the WCH Charge which defines "Moneys Secured". As previously mentioned, at [241] above, that clause provides that "Moneys Secured" means the aggregate of a number of separate items which are described in subparas (a) to (j) of the definition. However, the WCH Charge does not include cl 3.3. Clause 3 of the WCH Charge includes only subcl 3.1 and subcl 3.2. However, in my view, the contention of Meadow Springs is not to be accepted. 300 First, in construing the WCH Charge it is necessary to have regard to the words "without limiting the generality of the foregoing" in subpara (a) of the definition of "Moneys Secured". 301 In light of the absence of any meaning to be accorded to the defined term "Interest" and the use of the words "without limiting the generality of the foregoing" in subpara (a), I am of the view, that full effect is to be given to the words "all moneys payable by [Meadow Springs] under any of the Specific Agreements". These words are wide enough to include such monies as are charged by way of interest under the WCH Loan Agreement as these are "moneys payable" by Meadow Springs under the WCH Loan Agreement --- a Specific Agreement. This is because the interest charges would, by reason of subpara (b) of the definition, comprise monies which WCH would be "entitled to debit and charge to the account of [Meadow Springs]" under the WCH Loan Agreement. Is Meadow Springs estopped? 304 My earlier findings that the advances made by Knightsbridge Finance were made under the WCH Loan Agreement and that Knightsbridge Managed Funds is entitled to the benefit of the WCH Charge, mean that it is not necessary for me to deal with this issue. However, in deference to the arguments of counsel and, in case I am wrong, I will briefly state my views. 305 The Knightsbridge parties relied in their submissions upon two kinds of estoppel, namely, estoppel by convention and estoppel by representation. 306 I deal first with the claim based on estoppel by convention. The effect of an estoppel by convention is to preclude a party from denying the assumed facts or law if it would be unjust to allow him to go back on the assumption. (References omitted. 309 In short, the Knightsbridge parties contended that until 11 June 2006, Meadow Springs and Knightsbridge Managed Funds acted in accordance with the assumption that Knightsbridge Finance had advanced the monies to Meadow Springs under the WCH Loan Agreement, and that Knightsbridge Managed Funds was entitled to the benefit of that charge in its capacity as trustee for the Scheme investors as security for the payment of monies under the WCH Loan Agreement. On 11 June 2006, however, Mr McMaster instructed Solomon Brothers to send a letter to the solicitors for the Knightsbridge parties, in which it was asserted for the first time that the monies had not been advanced under the WCH Loan Agreement and that the WCH Charge did not secure the repayment of the monies due under the WCH Loan Agreement. 310 The Knightsbridge parties contended that the matters referred to in [263] to [266] above, evidence the adoption of the assumption by Meadow Springs whilst it was under the control of its directors. The Knightsbridge parties also contend that after Mr McMaster took control of Meadow Springs, as an administrator and then liquidator, the company, until 11 June 2006, continued to act in accordance with the assumption. 311 By reason of the findings I have made in [262] to [268] above, I also find that during the time that Meadow Springs was under the control of its directors, that Knightsbridge Managed Funds and Meadow Springs adopted and acted upon the assumption that the monies which had been advanced by Knightsbridge Finance, had been advanced under the WCH Loan Agreement, and that Knightsbridge Managed Funds was entitled to the benefit of the WCH Charge to secure payment of the monies due under the WCH Loan Agreement. The entry into and the terms of the 24 May Loan Agreement and the 24 May Deed of Priority, in particular, evidence the adoption of the convention alleged by the Knightsbridge parties. Each of Meadow Springs and Knightsbridge Managed Funds was a party to those agreements. The 24 May Loan Agreement contains a statement by Meadow Springs acknowledging that the benefit of the WCH Loan Agreement and the WCH Charge had been "transferred" to Knightsbridge Managed Funds. Further, as already mentioned in [266] above, the terms of the agreements are premised on the assumption that the monies advanced by Knightsbridge Finance had been advanced under that WCH Loan Agreement. The assumption is fortified by the evidence of the notation in the annual accounts of Meadow Springs referred to in [265] above, which acknowledge that the monies were advanced under the WCH Loan Agreement. 312 As to the allegation that Knightsbridge Managed Funds and Meadow Springs, whilst under the control of Mr McMaster, continued to act in accordance with the convention, I make the following findings in relation to the conduct of Mr McMaster as the liquidator of Meadow Springs. 313 By 11 February 2002, Mr McMaster was aware that Knightsbridge Managed Funds under the control of Mr Carrello acted as trustee for the Scheme investors. This is evidenced from a letter from Mr Carrello to Mr McMaster seeking his approval to accept an offer to sell the Meadow Springs property. The letter refers to the attitude of the Scheme investors (referred to in the letter as "mortgagees") to the proposed sale of the Meadow Springs property. Mr McMaster also recognised the beneficial interest of the Scheme investors in the Meadow Springs property by procuring that they pay part of his fees in respect of services he provided to facilitate the realisation of the secured property. 314 On 20 March 2002, Mr Carrello notified Mr McMaster that Knightsbridge Managed Funds had entered possession of the property pursuant to the exercise of its powers as Mortgagee under the WCH Mortgage. Further, Mr Carrello also notified Mr McMaster in writing that he had, as agent for WCH, pursuant to WCH's powers under the WCH Charge, taken possession of all the fixtures and other specified property of Meadow Springs. In each of these documents it is asserted that the monies owed by Meadow Springs had been advanced under the WCH Loan Agreement. Mr McMaster raised no objection to the assertion that the monies which had been advanced to Meadow Springs had been advanced under the WCH Loan Agreement. Nor did he object that WCH was not entitled to exercise powers under the WCH Charge to take possession of the Meadow Springs property on the basis of its claim to be owed monies under the WCH Loan Agreement. 315 Before the contract for the sale of the Meadow Springs resort was executed in April 2002, Mr McMaster was aware that Mr Carrello intended to sell the Meadow Springs property pursuant to the exercise of powers under the WCH Mortgage and the WCH Charge. Mr McMaster took no steps to stop the sale of the Meadow Springs property by Mr Carrrello, nor did he assert that Knightsbridge Managed Funds and WCH were not entitled to any rights under the WCH Charge to sell the Meadow Springs property secured by the WCH Charge. By virtue of the appointment of the Agent I was no longer able to participate in the sale of the property. The Agent advises me that the property was sold for $7 million and that settlement occurred on 25 June 2002. The amount owed to the secured creditors exceeds the sale price of the property and accordingly there were no funds available from the sale for distribution to unsecured creditors or shareholders. By reason of his previous dealings with Mr Carrello, Mr McMaster knew that Mr Carrello held the belief that the Scheme investors had, under the WCH Mortgage and WCH Charge, a beneficial interest in those proceeds. This was a belief which Mr McMaster shared; and he did not object to the distribution of the proceeds by Mr Carrello in a manner which gave effect to that belief. 318 On 24 March 2006, solicitors for Meadow Springs, on the instructions of Mr McMaster, wrote to Mr and Mrs Croft who were Scheme investors. Letters in the same terms were sent to all Scheme investors. At that time, Mr McMaster was contemplating settling the proceeding against Colliers. The purpose of the letter was to persuade the Scheme investors to direct Mr Carrello to accept settlement of Knightsbridge Managed Fund's claim against Meadow Springs under the WCH Charge. The offer made by Meadow Springs was for the payment of $500,000 to Knightsbridge Managed Funds as part of an overall settlement of the proceeding against Colliers. The mortgage was in the name of Knightsbridge, but Knightsbridge held an interest in the mortgage on trust for you...The total amount lent through Knightsbridge, and in Knightsbridge's name, was $3,474,000. Similarly, you have or had the benefit of a charge over the company in Westralian Capital Holdings' name. You are owed interest payments by the company. Default by the company occurred in about February 2001 and, although some interest payments have been made after that date, some interest is owing from early 2001. You might have also incurred some costs which may be recoverable against the company. The property owned by the company, and over which Knightsbridge had a mortgage, has been sold. You and the other lenders through Knightsbridge, have the benefit of a charge over the company although the charge is in Westralian Capital Holdings' name. The only likely asset which is subject to that charge is the proceeds of the action brought against Colliers. Knightsbridge's liquidator will then pay, after his costs, a dividend to you from that $500,000. In exchange for making that payment, the company requires a release of all claims by Knightsbridge or Westralian or you against the company and a discharge of the charge Knightsbridge has over the company. 323 Mr McMaster said that, until June 2006, he relied upon Solomon Brothers' advice that the WCH Charge was held on trust for the Scheme investors. He said that Solomon Brothers' advice was based on a "mistaken assumption" and Solomon Brothers advised him to that effect in June 2006. 324 I find that, until June 2006, Mr McMaster assumed and acted on the assumption that the monies had been advanced to Meadow Springs under the WCH Loan Agreement, the WCH Charge secured payment of the monies due under the WCH Loan Agreement, and the WCH Charge was held for the benefit of Knightsbridge Managed Funds which in turn held it for the benefit of the Scheme investors. I also find that by reason of his dealings with Mr Carrello, Mr McMaster knew that Mr Carrello shared the assumption and that he had, and would, act in accordance with the assumption; and that Mr McMaster until June 2006, permitted Mr Carrello to act in accordance with that assumption. 325 Meadow Springs and IMF submitted that there could be no conventional estoppel in the terms claimed by the Knightsbridge parties, because it could not be established that Knightsbridge Managed Funds assumed that the WCH Charge had been assigned to it or that it had the benefit of the WCH Charge. This was because, it was submitted, Knightsbridge Managed Funds knew that the monies advanced to Meadow Springs had been advanced by Knightsbridge Finance from funds provided by the Scheme investors, and secondly, because Knightsbridge Managed Funds knew that Penlas had not executed the deed of assignment of the WCH Charge. 326 Further, Meadow Springs submitted that there was no evidence that Meadow Springs knew anything about the internal arrangements within the Knightsbridge group of companies, particularly, in relation to the basis on which Knightsbridge Finance advanced the monies to it. Accordingly, it was contended that Meadow Springs could not, by acquiescence, adopt a convention in respect of matters of which it was ignorant. 327 Even assuming the factual premise of the contentions were correct, the contentions of Meadow Springs and IMF are not accepted. This is because an estoppel by convention can operate even if the assumption adopted and acted upon is founded upon a false state of affairs. Parties may adopt as the conventional basis of the transaction between them an assumption which they know to be contrary to the actual state of affairs. A tenant may know that his landlord's title is defective, but by accepting the tenancy he adopts an assumption which precludes him from relying on the defect. This assumption was made and acted upon by both parties both before and after Meadow Springs went into liquidation, until June 2006. 329 Meadow Springs has claimed in this proceeding (para 22.7 of Meadow Springs' response to the Knightsbridge parties' cross-claim) that because Knightsbridge Managed Funds was not entitled to sell the charged property, the Scheme investors who received the distributions from Knightsbridge Managed Funds from the sale of the charged property, should account for any benefit they thereby received in excess of their entitlements as unsecured creditors in the liquidation of Meadow Springs. 330 I am of the view that it would be unjust if Meadow Springs were permitted to go back on the shared assumption. This is because in reliance on the assumption, Knightsbridge Managed Funds, with the acquiescence of Meadow Springs, acted in accordance with the assumption, and, in particular, during the period April 2001 to October 2004 sold the charged property, and made distributions to the Scheme investors from the proceeds of the sale of the charged property. It is plain, therefore, if Meadow Springs were permitted to go back on the assumption that the position of the Scheme investors would be seriously prejudiced. 331 I am of the view, therefore, that Meadow Springs is estopped from denying that the monies advanced to Meadow Springs by Knightsbridge Finance were advanced pursuant to the WCH Loan Agreement, that the WCH Charge secures monies due under the WCH Loan Agreement, and that Knightsbridge Managed Funds, as trustee for the Scheme investors, is entitled to the benefit of the WCH Charge. 332 Further, Meadow Springs contended that even if an estoppel operated, Knightsbridge Managed Funds could only have a secured interest in the funds if the WCH Charge was rectified to refer to Knightsbridge Managed Funds as the chargee and there was now no power to rectify the WCH Charge because Meadow Springs was in liquidation. In my view, there is no need for the charge to be rectified. The WCH Charge is held in the name of WCH and the estoppel operates to preclude Meadow Springs from denying Knightsbridge Managed Funds' equitable interest in respect of the charge. 333 It, therefore, is not necessary to deal with the second basis, namely, estoppel by representation, upon which the Knightsbridge parties claim for estoppel is founded, since no different relief is sought in respect of that basis. 335 The first item relates to the legal expenses incurred in making an application to the Supreme Court of Western Australia for the reinstatement of WCH. 336 Mr Daws deposed that in April 2006 he became aware of the fact that WCH had been deregistered. Mr Clifton said that he again became a director of WCH in October 2003, having previously resigned from that office. He said that WCH had been deregistered by reason of an administrative oversight because ASIC had sent the renewal documents to an incorrect address. On 19 September 2006, the Supreme Court of Western Australia ordered the reinstatement and winding up of WCH. 337 The Knightsbridge parties contended that they are entitled to claim the legal costs associated with the reinstatement of WCH as monies secured under the WCH Charge, because they are costs payable by Meadow Springs under cl 8(c) of the WCH Loan Agreement. The premise underlying that clause is that the costs in respect of which the indemnity will operate will be those costs incurred by a company, namely WCH, already incorporated. 339 The purpose of incurring costs in reinstating WCH was to provide it with the necessary capacity to exercise enforcement powers referred to in cl 8(c), but the costs of that exercise are to be distinguished from the actual costs of enforcement by WCH once it had regained corporate status. Until it had regained that status, it was incapable of incurring the costs contemplated in cl 8(c). The costs of reinstatement are, accordingly, of a fundamentally different character to the costs contemplated under cl 8(c) of the WCH Loan Agreement. 340 I now deal with the second item of legal expenses. 341 On 14 November 2006, WCH appointed Mr Carrello as receiver and manager over the Meadow Springs claim against Colliers and Mr Carrello took steps to assume conduct of that litigation. 342 There was a dispute between Mr Carrello and Mr McMaster when Mr McMaster refused to permit Mr Carrello to take control of the action. This resulted in legal costs and expenses being incurred in an application to this Court. The Knightsbridge parties claim that the legal costs involved in respect of that dispute fall within the ambit of the monies secured under the WCH Charge as being expenses incurred in the enforcement of rights under the WCH Charge. IMF contends that the monies are not monies secured under the WCH Charge because WCH had no entitlement to appoint a receiver and manager because the WCH Charge had been assigned to Knightsbridge Managed Funds. Thus, the costs were not costs which were contemplated by cl 8(c) of the WCH Loan Agreement. 343 In my view, the expenses were expenses properly incurred in seeking to enforce rights under the WCH Charge and, therefore, fall within the ambit of cl 8(c) of the WCH Loan Agreement. I have found that the assignment of the WCH Charge was an equitable assignment. The consequence is that, as the party with legal title to the WCH Charge, it was incumbent upon WCH to take steps on behalf of the equitable owner to enforce the charge. WCH was, therefore, entitled to rely upon cl 8(c) of the WCH Loan Agreement. 345 It was said that Meadow Springs was entitled to claim damages from WCH by reason of WCH's failure to provide $3 million of the $6.35 million it undertook to advance under the WCH Loan Agreement. The consequence of WCH's breach of contract was that Meadow Springs suffered loss because it was required to pay interest at a higher rate under the Facility Agreement. 346 This contention is not to be accepted. In my view, the effect of the 24 May Loan Agreement and 24 May Deed of Priority was that Meadow Springs waived the obligation on WCH to provide the $3 million advance and any claims in respect of the failure to provide the advance. This is to be implied particularly from the language of the 24 May Loan Agreement which refers to the Facility Agreement as being "part of" the WCH Loan Agreement. 347 I have not dealt with the declaration sought by the third defendants in their cross-claim. I shall hear from the parties on how that claim is to be progressed. 348 I adjourn this matter to a date to be fixed to permit the parties to produce a minute of orders giving effect to these reasons, and also, for the making of directions as to the further conduct of the outstanding matters. I certify that the preceding three hundred and forty-eight (348) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.

litigation funding agreement failure by liquidator to obtain approval to enter litigation funding agreement under s 477(2b) of the corporations act 2001 (cth) whether the court should approve entry into litigation funding agreement retrospectively whether obligations under litigation funding agreement reasonably incurred assignment of a future property assignment of fruits of litigation to litigation funder whether litigation funder is entitled to priority over the interests of secured creditors whether litigation funder's equity in the fruits of litigation superior to the interests of secured creditors whether litigation funder entitled to priority to the claims of secured creditors on the basis of the universal distributing principle or the "salvage" principle assignment of charge whether valid assignment in equity loan agreement whether agreement capable of vicarious performance whether parties abandoned contract whether agreement vicariously performed whether parties shared a common assumption whether parties bound by conventional estoppel corporations equity contract estoppel

The decision was given in August 2008. The Tribunal set aside the decision of the Inspector-General to include ten elevenths of the net income of M. K. McGushin Pty Ltd in its assessment of the assessable contribution of the respondent (Mr McGushin) pursuant to s 139W(1) of the Bankruptcy Act 1966 (Cth) (BA) for the Contribution Assessment Period from the commencement of the bankruptcy on 6 March 2003 to 5 March 2004 (the CAP). At the time he became bankrupt he was director of M. K. McGushin Pty Ltd (the Company). Mr McGushin held ten of the eleven issued shares. His former wife was one director and Mr McGushin was the other. The company operated a medical practice in which the only practitioner was Mr McGushin. On 6 March 2003 a sequestration order was made against his estate and on 21 August 2003, Mr McGushin and his former wife were replaced as directors of the Company by his subsequent wife and by Dr Keith McCallum, a medical colleague. Not long after (on 8 December 2003), the Company also went into liquidation. Mr McGushin thereafter was employed by another company. In the meantime, on 19 November 2003, Mr McGushin's trustee in bankruptcy issued a notice of assessment of contributions for the CAP. Mr McGushin requested the Inspector-General to review the trustee's decision. By a reviewable decision delivered on 14 September 2007 the Inspector-General set aside the trustee's decision and decided Mr McGushin's assessed income should be reduced. The only live issue before the Tribunal related to the determination of the Inspector-General that ten elevenths of the net income of the Company was assessable income of Mr McGushin by virtue of s 139L(1)(a)(vii) BA. Mr McGushin did not receive any distribution of profit from the Company during the CAP nor did he expect to do so because the Company was liquidated in December 2003. Whatever assets the Company held at that date were taken over by the liquidators. When Mr McGushin was operating the Company he did not have any set salary and the amount he would draw from the Company would differ from year to year. However, he did receive fortnightly periodic transfers automatically from the Company's bank account into his personal bank account. His practice had also been to additionally transfer lump sums when available and when needed. Those transactions were all recorded and the Company's bank account showed the transfers of funds as did cheque butts. The accounting was left in the hands of Mr McGushin's accountant. All of the funds received by ongoing automatic payments from the Company until the appointment of the liquidators were included in Mr McGushin's tax return as part of his salary. He did not receive any other distribution from the Company after it was wound up. The Inspector-General made the assessment however on the basis of ten elevenths of the fees paid to the Company to reflect the shareholding of Mr McGushin in the Company. It is that specific analysis which has fallen for consideration. After the amendments it has become accepted that there will be both realisation of property of a bankrupt together with the possibility of a proportion of his or her income being contributed towards the estate in the manner now regulated by Div 4B. The possibility of a contribution does not detract from the underlying principle that income in itself does not vest in the trustee. Under the provisions now contained in Div 4B, the trustee in bankruptcy is to assess the income likely to be derived or actually derived by the bankrupt during a CAP. The trustee will then determine the income threshold amount and the contribution, if any, that the bankrupt is required to pay under s 139W(1) BA. Under the legislation, the word 'income' has always been treated expansively. That treatment continues. As will be seen in this appeal, however, notwithstanding the width of the definition of 'income', it is important that the concept of derivation of the income which is articulated in the Division also be addressed. The effect of s 139L BA is that 'income' now has a wider meaning than in the former provisions of the BA. By s 139K, ' income , in relation to a bankrupt, has the meaning given by section 139L'. However when the trustee is required to perform the assessments for the purposes of this Part, other provisions also fall for consideration. Section 139Y BA makes provision for the trustee making adjustments of income for the purposes of the Division by assessing what 'reasonable remuneration' might be and s 139W BA deals with ongoing assessment of a bankrupt's income and contribution during any relevant CAP. The effect of these provisions is that for the purposes of the trustee's assessments, income is identified not simply by virtue of having been received but also and importantly in the present context at least, on the basis of it having been 'derived'. Although income still does not vest in the trustee ( Re Gillies; Ex parte Official Trustee in Bankruptcy v Gillies [1993] FCA 289 ; (1993) 42 FCR 571 at 577), the process of assessing income in its broad meaning involves applying a formula as against that assessed income for the purposes of making contributions by a bankrupt towards his or her estate. Dr McCallum was also called to give evidence as to taking over all responsibility of staffing issues when he was appointed a director such that Mr McGushin became an employee of the Company. He said that he took complete control of the Company and did not allow Mr McGushin to access any Company monies. Ultimately the Tribunal found that the historic procedure had been that in addition to a fortnightly periodic payment transferred from the Company's bank account to Mr McGushin's own bank account, Mr McGushin would transfer lump sums from the Company's bank account into his personal bank account from time to time as and when such funding was available and was needed by him. He also had used the Company's bank account to pay some of his personal expenses and drew cheques for his personal use. Those transactions would all be recorded. At the end of the year they would be totalled with the total becoming his income for the financial year. The Tribunal found that when Mr McGushin became bankrupt on 6 March 2003 he continued to work in the medical practice and to draw an income the same way that he did before being made bankrupt. He was signatory to the Company cheque account until Dr McCallum was appointed as a director of the Company on 20 August 2003. Administrators were appointed to the Company on 10 December 2003 and were then appointed liquidators on 13 January 2004. The Tribunal did emphasise that it was important that there was no suggestion that the corporate structure was any form of a sham or a device employed by Mr McGushin for the purpose of seeking to avoid the provisions of the BA. That factor was common ground in the hearing of this appeal. But the argument for the Inspector-General was that the simple application of the ordinary meaning of the words in s 139L(1)(a)(vii) BA meant that the fees paid to the Company were still assessable income as determined by the Inspector-General. The Tribunal concluded that the Inspector-General's decision was incorrect. The Tribunal noted that the definition of 'income' had been considerably broadened but it concluded that to be the 'bankrupt's income' and therefore capable of being included in the contribution assessment in the CAP, it was necessary to also consider s 139W BA and to determine whether the income was 'likely to be derived or was derived by the bankrupt'. The Tribunal noted that the mere fact that a third party receives money as a consequence of work done or services performed by a bankrupt does not mean that it is 'income derived by the bankrupt' for the purpose of s 139W BA. That conclusion was illustrated by postulating a notional law firm employing a bankrupt legal practitioner and receiving fee income as a consequence of work performed by the bankrupt legal practitioner. Such income was not 'income derived by the bankrupt' within the meaning of s 139W BA. The Tribunal said 'it would be absurd to suggest that the net income derived by the law firm from the efforts of its bankrupt employee was income to be included in any calculation of the contribution that the bankrupt is liable to pay under the Act'. The Inspector-General argued before the Tribunal in this instance however, that the income was income derived by the bankrupt because the Company was his 'alter ego'. The Tribunal also rejected that submission. The assertion that during (as distinct from before) the CAP that the Company was the alter ego of Mr McGushin was problematic in my view. Mr McGushin's shares in the Company should have vested in the trustee in bankruptcy when he became bankrupt. If the control of the Company was in the hands of anyone, it was or should have been in the hands of the trustee. But in any event, Mr McGushin had also ceased, for a substantial portion of the CAP (and certainly at the end of it), to be a director. How he remained a director following his bankruptcy was unclear (see s 206A and s 206B of the Corporations Act 2001 (Cth). The Tribunal's conclusion was that where work was carried out or services performed by a bankrupt as an employee, the entitlement to charge for those services and thereby derive income is that of the employer, not of the employee. The legal entitlement to charge for the services provided by the employee was that of the employer. The legal entitlement to receive payment for those services was that of the employer. The employee's entitlement was no more than an entitlement to be paid by his or her employer for the work done by the employee as its agent. Nor does the analysis alter by reason of the fact of the number of persons employed by the employer company to provide income generating work. The combined effect of s 139L(1)(a)(vii) BA and s 139W(1) BA allowed the Inspector-General to include as a bankrupt's income monies paid to persons other than the bankrupt. But it was still necessary that there be undertaken a characterisation of those payments in order to determine whether or not they were 'income derived by the bankrupt' as distinct from income derived by a third party. Nothing in the BA changed the fact that the monies paid to an employer for work performed by an employee is income derived by the employer through its agent rather than the agent's income. The Tribunal erred in failing to find that the money or the value of any other consideration, paid to the M K McGushin Pty Ltd by patients treated at the clinic of M K McGushin Pty Ltd during the CAP period was received by M K McGushin Pty Ltd as a result of work done or services performed by the respondent and such money or consideration, less any expenses necessarily incurred by M K McGushin Pty Ltd, was thus to be treated as income of the respondent by virtue of section 139L(1)(a)(vii) of the Act and thereby income that is likely to be derived, or was derived, by respondent for the purposes of section 139W(1) of the Act. The Tribunal incorrectly interpreted the operation of section 139L(1)(a)(vii) of the Act in that it incorporated into the determination of its application a requirement that it be established as a fact that the person other than the bankrupt receiving the money or other consideration from another person was a sham and the payments were made to that other person with a view to avoiding the operation of s 139W(1). The Tribunal erred in failing to have regard to section 139M(1)(b) or (c) of the Act and find that the income of M K McGushin Pty Ltd during the CAP period was accumulated or dealt with on behalf of the respondent or as the respondent directed and was thus to be treated as income derived by the respondent by virtue of section 139M(1)(c) of the Act and thereby income that is likely to be derived, or was derived, by the respondent for the purposes of section 139W(1) of the Act. There was no warrant for restricting the effect of the plain words of the provision. The provision in its terms makes it clear that it intends to expand the meaning of income beyond its 'ordinary meaning'. It was said that the words 'performed by' rather than 'provided by' were used emphasising the personal exertion aspect of the provision of services. The requirement to deduct expenses necessarily incurred by the other entity clearly contemplated that the services were being provided by the bankrupt through that other entity. The earnings of the company, which are directly attributable to the bankrupt's work or services are some times far greater than the salary or wages actually paid to the bankrupt. In cases such as this, where the income of the entity is substantially attributable to the bankrupt's work or services, the income of the bankrupt is taken to include the income of the entity concerned. Section 139L BA in its original form (as considered by the Tribunal in Re Stevenson and Inspector-General in Bankruptcy (1996) 45 ALD 775) was subsequently repealed and substituted by the amendment act. The new s 139L omitted the phrase 'amount derived by the bankrupt' and in effect replaced it with 'in relation to the bankrupt'. It was contended that the change in the definition manifested an intention to broaden its application by avoiding the provision being restricted by notions of whether income in the expanded sense was derived or not. This approach, it was said, was applied in Robbins and Insolvency & Trustee Service Australia, Re; AAT Case 13,585 [1998] 43 ATR 1262. However, the decision made by the Tribunal, correctly in my view, was not made in the context of applying s 139L(1)(a)(vii) alone but was made in the context of deciding whether the 'income' within the expanded definition of that term was 'likely to be derived or was derived by the bankrupt' for the purposes of s 139W(1). In order for 'income' to be assessable within the parameters set down in s 139W(1) BA it must satisfy two tests. The first is that the income must fall within the broad definition of income as expanded by s 139L BA. Secondly, it must be derived or likely to be derived by the bankrupt as required by s 139W. It is the second aspect which is the point of departure between the parties on this appeal. The Tribunal did find (correctly) that the money received by the Company through the work performed by Mr McGushin fell within the expanded definition of income but the money (the fees) did not constitute income derived or likely to be derived by him for the reason that it was income derived by the Company. One element of the factual matrix which appears to have persuaded the Tribunal in reaching that decision was the fact that there was no suggestion by the Inspector-General that the interposition of the Company was a 'sham'. A 'sham' might be evident in circumstances contemplated by the Explanatory Memorandum referred to above where the earnings of the Company are 'far greater' than the salary paid to the bankrupt. No 'sham' argument was either open or advanced by the Inspector-General. As to the second particular of the first ground, the Tribunal's decision did not suggest that the operative effect of s 139L(1)(a)(vii) BA was limited to an arrangement involving a sham. Rather, the Tribunal gave the definition of income its full expanded meaning under s 139L(1)(a)(vii) BA but concluded that such income was not assessable under s 139W BA because s 139W BA itself added the additional second test that the income needed to be derived or likely to be derived by the bankrupt. While I accept the submission of the Inspector-General that the ordinary meaning of the words in s 139L(1)(a)(vii) BA should be applied in construing what constitutes 'income' equally, there is nothing in the Act to suggest that the words 'derived or likely to be derived' in s 139W(1) BA should be disregarded. The existence of a definition of 'derived' in s 139K BA and the further expansion on that definition in s 139M BA suggests not only that those words are intended to have a clear meaning but that the meaning is to form an integral part in interpreting the effect of s 139W(1) BA. Further, the analogy drawn by the Tribunal, was, in my view, correct. If income does not have to be 'derived' income in order to be relevantly assessable, it would mean that all bankrupts employed by a third person or entity should immediately resign after they become bankrupt because whatever money was received by their employer as a result of their labours would constitute their income for the purposes of this Division of the BA. They could be required to pay income contribution on it irrespective of whether they received any benefits other than their wages or salaries. There is no indication that this was the legislative intention. It could produce a quite unexpected outcome. It is submitted that the Tribunal failed to have regard to s 139M(1) BA in its deliberation on this aspect of the matter as: the Company was set up as a vehicle through which Mr McGushin conducted his practice; all income earned by the Company was earned by it directly from the medical services provided by Mr McGushin; Mr McGushin held ten of the eleven issued shares in the Company and his former wife held the remaining share; and Mr McGushin controlled the monies contained in the Company's bank account through setting his salary and using the monies to pay some of his personal expenses up until the appointment of Dr McCallum as director of the Company on 20 August 2003. The Inspector-General argues that until the appointment of Dr McCallum as a director, the income of the Company was being accumulated or dealt with on behalf of Mr McGushin or as he directed. It followed, accordingly, by virtue of s 139M(1)(b) and (c) respectively that the Company's income as derived by Mr McGushin was his income for the purposes of assessment even though it was not received by him. It is true that the Tribunal did not specifically deal with s 139M BA but I note also that that provision was not referred to by the Inspector-General in his letter to the bankrupt's solicitor of 14 September 2007. There is no reference to that provision in the reasons of the Tribunal, and it is by no means clear to me that the argument was advanced before the Tribunal. Certainly it was the 14 September 2007 letter of the Inspector-General which the Inspector-General specifically adopted in the statement of findings on material questions of fact, evidence and reasons for decision signed on 19 November 2007. I note, however, that there was no objection to the argument being raised. Counsel for the Inspector-General did observe that 'one clear intended application of 139M is when an employer, instead of paying money to the employee bankrupt, directs it to the benefit of the bankrupt by paying it to someone else, or paying off his debts, or something like that'. He went on to say that while that is one operation, it does not mean that the operation contended for by the Inspector-General should not also be applied. Section 139M BA can only be directed to the portion of the fees received by the Company which were not distributed by way of wages or other payments to Mr McGushin. That is because s 139M BA is dealing with derivation of income and provides that income will be taken to be derived in certain circumstances even though it has not been received by the bankrupt. Further, and quite properly, as the actual wages and payments received are not the subject of the 'question of law' or the grounds of appeal but rather the totality of the fees received by the Company, s 139M BA has no application. The only benefit received by Mr McGushin is that which has been already assessed by the Inspector-General. The portion which was not wages or personal payment as assessed, was never accumulated or received for the benefit of the bankrupt but was received (insofar as his 10/11 th share was concerned) by the trustee in whom the shares vested from the bankruptcy which were in reality ultimately in the Company liquidator. I am not satisfied that the profit or income received by the Company was reinvested, accumulated or capitalised or certainly not for the benefit of Mr McGushin or at his direction. In fact the funds received by the Company after payment of the net entitlements of its employee were absorbed by the liquidator on the appointment of the liquidator in winding up the Company. There is no evidence of Mr McGushin dealing with the monies in any sense to which I believe s 139M BA is directed. There is no suggestion that he directed that funds received by the Company be paid, for example, to any third party. The portion of the monies received by the Company with which he 'dealt' (if he did at all) was simply that portion to which he was entitled by way of income payable by the Company and which had already been included in his assessable income. As a separate consideration, as a consequence of Mr McGushin's bankruptcy, the beneficial entitlement, at least, of the shares in the Company, to which he held 10, had passed by effect of law to the trustee. I cannot accept that there was any hint of reinvestment, accumulation or capitalisation of the income but to the extent it might be argued that income was dealt with in accordance with his direction, it was not a direction in respect of which the bankrupt had the power as the shares in the Company were, by operation of law, held by the trustee not by the bankrupt. There is no evidence at all of income being accumulated or dealt with on behalf of the bankrupt or as the bankrupt directs for the purposes of s 139M BA. Accordingly the appeal will be dismissed. The applicant is to pay the respondent's costs of the appeal, including any reserved costs, to be taxed if not agreed.. I certify that the preceding fifty-seven (57) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.

appeal by inspector-general in bankruptcy from decision of tribunal surgeon employed by company tribunal found net income of company was distinct from income paid to respondent held net income of company not income 'derived by the bankrupt' for the purposes of s 139w of the bankruptcy act 1966 (ba) whether tribunal correctly interpreted operation of s 139(l)(a)(vii) ba whether income received by company was income 'derived by' the respondent whether income derived by company could be deemed as being income derived by employee by virtue of s 139m ba bankruptcy

The Federal Magistrate's orders were interlocutory (rule 44.12(2) of the Federal Magistrates Court Rules 2001 (Cth)). The applicant therefore requires leave to appeal to this Court (ss 24(1)(d) and 24 (1A) of the Federal Court of Australia Act 1976 (Cth)). The first respondent opposes the application on the basis that Driver FM's judgment is not attended with sufficient doubt to warrant leave to appeal being granted and no substantial injustice would result if leave were not granted. 2 The applicant first sought review of the Tribunal decision on 17 January 2005. In SZFMW v Minister for Immigration [2006] FMCA 768 , Smith FM dismissed the application on the basis that the Tribunal decision contained no jurisdictional error. In that application for review, there was no ground alleging a breach of s 441G of the Migration Act 1958 (Cth) ('the Act'). On 22 August 2006, Cowdroy J dismissed an appeal from that decision ( SZFMW v Minister for Immigration and Multicultural Affairs [2006] FCA 1110). The applicant sought special leave to appeal from the High Court ( SZFMW v Minister for Immigration and Multicultural Affairs [2008] HCATrans 138). On 7 March 2008, Heydon and Kiefel JJ dismissed the application saying that there were insufficient prospects of success to justify the grant of special leave to appeal. 3 The applicant filed a second application for a review of the Tribunal decision on 28 July 2008 in the Federal Magistrates Court. Federal Magistrate Driver said that the application faced two potential jurisdictional problems. 4 First, Cowdroy J had found that the Tribunal's ultimate finding was free from jurisdictional error and the High Court had found insufficient prospects of success to justify the granting of special leave. Accordingly, the question whether the Tribunal decision was free from jurisdictional error had already been conclusively determined. On that basis the Court would have no further jurisdiction. 5 Second, Driver FM noted that the applicant sought to take advantage of a recent decision of the Full Court of the Federal Court in SZIZO v Minister for Immigration and Citizenship [2008] FCAFC 122 ; (2008) 102 ALD 541 concerning s 441G of the Act. 6 His Honour said that, while the issue was not raised in the earlier court proceedings, the principle of res judicata would still probably apply and that, even if it did not, there was no reason why the issue could not have been raised in the earlier legal proceedings. His Honour said that the applicant was simply seeking to take advantage of a recent Court decision that appeared to favour an argument that could have been raised previously. In his Honour's view, the circumstances gave rise to an estoppel in accordance with the principles in Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45 ; (1981) 147 CLR 589 and Wong v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCA 51 ; (2004) 146 FCR 10. His Honour said at [5]: ' Applicants cannot continue to agitate concluded litigation when new court decisions are made that appear to be to their advantage ' and dismissed the application. The Refugee Review Tribunal (the Tribunal) made a jurisdictional error as it did not apply the law according to s.441G. The decision of the Tribunal is infected by jurisdictional error because of the breach of s.424A as admitted by the High Court. There was no evidence in previous Courts as to when the appellant physically received the Tribunal's decision. The current Court is asked to allow this appeal as time does not begin to run under s.477 until the actual physical delivery of the Tribunal's decision to the applicant. (SZKNX). The Tribunal appears to have corresponded with authorised recipient not according to the address completed in the application. In light of SZIZO published on 3 July 2008 and within twenty eight (28) days the applicant became aware of the decision made by the Tribunal and the error of law involved. The notice of appeal asserts that the Tribunal breached s 424A of the Act ' as admitted by the High Court '. There was no such finding by Heydon J (with whom Kiefel J agreed). Rather, his Honour noted that even if there had been a breach, this did not affect a conclusion otherwise reached by the Tribunal that there was no Convention reason disclosed to found the grant of a protection visa. Further, when the Tribunal decision was considered in this Court, Cowdroy J at [21] noted that he examined the judgment of the Federal Magistrate and the Tribunal decision to ensure that there was no jurisdictional error which escaped the attention of the applicant. This ground constitutes an attempt to relitigate the Tribunal decision. 9 An attempt to relitigate matters and decisions that have been the subject of litigation and consideration up to the High Court is an abuse of the process of the Court and vexatious and oppressive: SZCNP v Minister for Immigration and Citizenship [2008] HCASL 216 ; SZBPB v Minister for Immigration and Citizenship [2008] HCASL 164 ; MZXOW v Minister for Immigration and Citizenship [2008] HCASL 73. At the time the first application, heard by Smith FM, was filed, the applicant was represented by solicitors. After the solicitors filed a notice of withdrawal and at the hearing, the applicant was self-represented. 11 The applicant, who appears in person assisted by an interpreter, was unable to point to any error in Driver FM's decision to dismiss the application on the basis of Anshun estoppel. He reiterates the difficulties with his previous legal representatives and relies upon his lack of appreciation of what could have been advanced before Smith FM. 12 There is no evidence of whether the applicant or his legal advisers were or were not aware of the possibility of reliance upon s 441G of the Act at any time prior to the decision of SZIZO . Even if that section could apply in the present case, a later change to the law does not affect the fact that no jurisdictional error was found in the Tribunal's decision. In Wong the Full Court of the Federal Court applied Anshun in the context of judicial review of administrative action. The applicant does not advance any special circumstances beyond the fact that the argument was not put. 15 Contrary to the assertion by the applicant, the failure to raise s 441G of the Act earlier and the fact that the applicant's solicitors failed to appreciate that the applicant may have had an argument under s 441G of the Act does not constitute fraud on the Tribunal within the meaning of SZFDE v Minister for Immigration and Citizenship [2007] HCA 35 ; (2007) 232 CLR 189 ; see also Minister for Immigration and Citizenship v SZLIX [2008] FCAFC 171 ; (2008) 245 ALR 501. 16 In any event, the Minister submits that the grant of leave to appeal is futile. He points out that s 441A(4)(c)(ii) of the Act provides that the Tribunal may give a document to a person by posting it to the last residential or business address provided by the recipient in connection with the review. The Minister says that the postal address disclosed in correspondence satisfies the requirements of that section. On that basis no breach of s 441G of the Act could be made out as the Tribunal sent the correspondence to the authorised recipient at the postal address disclosed in correspondence between the authorised recipient and the Tribunal in respect of the review of the applicant's application. 17 In SZKNX v Minister for Immigration and Citizenship (2008) 104 ALD 475 the Full Court of this Court considered the meaning of notification for the purposes of s 477 of the Act. The Full Court concluded that notification occurred when an applicant has physical possession of a decision by any means. It is reasonable to infer that the applicant was in possession of the Tribunal decision at least by the time he filed his application for special leave to the High Court on 20 September 2006. The applicant submits that the time runs from the date of the decision in SZIZO . That is clearly not correct. The application to Driver FM was made out of time. 18 The applicant has not established special circumstances or exceptional circumstances that warrant a reconsideration of the Tribunal decision. The applicant has not demonstrated any error in the Federal Magistrate's conclusion that he had no jurisdiction to hear the application for review of the Tribunal decision. 19 The application for leave to appeal is dismissed with costs. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett.

application for leave to appeal tribunal decision considered and special leave refused further application for review new argument based on s 441g of the migration act 1958 (cth) federal magistrate held no jurisdiction anshun estoppel no special circumstances notification of tribunal decision authorised recipient served reasonable inference that applicant in receipt of tribunal decision application dismissed migration

She obtained a passport which was issued in Liaoning on 11 August 2005. On 4 April 2006 she secured a temporary business visa. On 22 May 2006 she departed the People's Republic of China and entered Australia on 23 May 2006, travelling under the passport issued in her name and utilising the visa which she obtained on 4 April 2006. 2 On 15 June 2006 she applied for a Protection (Class XA) visa. On 21 August 2006 her application was refused by a delegate of the Minister. 3 On 5 September 2006 she applied to the Refugee Review Tribunal ('the Tribunal') for review of the Minister's delegate's decision. On 19 September 2006 she was forwarded an invitation to a hearing before the Tribunal on 27 October 2006. That invitation indicated that the Tribunal had considered the material before it in relation to her application but was unable to make a decision in her favour on that information alone. 4 She was invited to come to a hearing of the Tribunal to give oral evidence and present arguments in support of her claims. She in fact participated in a hearing before the Tribunal by video link on 27 October 2006. 5 After the hearing, a letter was sent by the Tribunal to the appellant dated 2 November 2006. That letter was headed, 'Invitation to comment on information'. In your answers you demonstrated very limited knowledge of and familiarity with Falun Gong practices, including in particular the key exercises which all Falun Gong practitioners must perform. On the basis of this information the Tribunal is not satisfied that you are a Falun Gong practitioner. ... The Tribunal considers it implausible that a travel agency would undertake to obtain a passport on behalf of a client in violation of established procedures. The Tribunal considers it more likely that you obtained a passport yourself and this indicates that you do not fall into a group of persons who would be denied passports by the Chinese authorities. On 6 December 2006 the Tribunal member who had conducted the hearing decided the application for review adversely to the appellant affirming the decision of the Minister's delegate not to grant the applicant a Protection (Class XA) visa. The decision was handed down by the Tribunal on 3 January 2007. 7 On 18 January 2007 the appellant applied to the Federal Magistrates Court of Australia ('the Federal Magistrates Court') for an order to show cause why constitutional writ relief should not be granted in respect of the Tribunal's decision. 8 On 20 April 2007 an Amended Application was filed in the Federal Magistrates Court. That Amended Application was heard by a Federal Magistrate and decided adversely to the appellant on 7 November 2007. In the course of her reasons for judgment the learned Federal Magistrate drew attention to the letter of 2 November 2006, which her Honour said identified concerns which the Tribunal had about the appellant's claims. The appellant appeared in person with the assistance of a Mandarin interpreter before the learned Federal Magistrate. Reference was made by her Honour to the appellant's Amended Application of 20 April 2007 and an affidavit sworn by the appellant on 17 April 2007 which annexed a transcript of the Tribunal's hearing. The learned Federal Magistrate recorded that the appellant declined to say anything further in support of her application. However, at the heart of the Applicant's complaint appears to be an allegation that the Tribunal failed to give the Applicant for comment, before the hearing, independent country information to which the Tribunal referred; and that the Tribunal only referred to independent country information that was not in favour of the Applicant. The Applicant also made a bare assertion of " procedural errors in the Tribunal's decision constituting an absence of natural justice. Whilst s.424A of the Act forms part of pt.7 div.4, this Court has already found that there was no breach of that section by the Tribunal. Accordingly, her Honour ordered that the proceeding before her, commenced by way of application filed 18 January 2007, be dismissed. She further ordered that the appellant pay the costs of the respondent Minister fixed in the sum of $5,000.00. 11 The matter has come before this Court pursuant to a Notice of Appeal from the learned Federal Magistrate's decision of 7 November 2007. The Tribunal did not comply with s422B & s 424A of the Migration Act 1958 . The Tribunal breached the rules of natural justice in connection with the making of the decision. The respondents denied the applicant natural justice by not considering the context in which the applicant will face persecution and serious harm for being a Falun Gong practitioner in China. The making of the decision was an improper exercise of the power conferred by the enactment in pursuance of which it was purported to be made. The respondents have not considered the evidence which is in favour of the applicant. They have only considered the evidence which is not in favour of the applicant. The Tribunal cited a number of Country Information. But the Tribunal did not comply with its obligations under s424A of the Migration Act 1958 ('the Act'). The letter, inviting comment on the information contained in it, was signed by a Tribunal Officer, being a person who was different from the Tribunal member who had conducted the hearing and, of course, decided the application for review. It seems to me that nothing turns upon the fact that it was signed by a Tribunal Officer rather than by the Tribunal member who was responsible for deciding the matter. It is evident from the terms of the letter itself that the initiative for the provision of the information must have been the Tribunal member who ultimately decided the matter. 16 It seems to me that if the Tribunal hearing in this matter had taken place after the High Court handed down its reasons for decision in SZBYR v Minister for Immigration and Citizenship [2007] FCA 26 ; (2007) 235 ALR 609 ('SZBYR'), the s 424A letter, to which reference has been made, would not have been sent. In that case the High Court gave close attention to the circumstances in which s 424A was engaged. Section 424A does not require notice to be given of every matter the tribunal might think relevant to the decision under review. Section 424A has a more limited operation than the appellants assumed: its effect is not to create a back-door route to a merits review in the federal courts of credibility findings made by the tribunal. Even if this was not intended, the matter fell into the category of one where it could legitimately be said that there was an apprehension of bias. 21 I have been helpfully referred to some authorities by counsel appearing for the respondent Minister which bear upon the matter. The first is a judgment of a Full Court constituted by Branson, Finn and Bennett JJ in Minister for Immigration and Multicultural Affairs v SZGMF [2006] FCAFC 138. That was a case where a s 424A letter had been sent to the respondent after the hearing before the Tribunal. The case is not on all fours with that which is presently before the Court. 22 The letter included material which was preceded by the words 'The Tribunal has received reliable information as follows:'. What is critical is that the member not close his or her mind against any additional material that might possibly prove probative. It seems to me to suggest that the Tribunal member did 'close her mind' against any additional material that might possibly prove probative. 25 Another case to which I have been directed is the decision of Cowdroy J in SZBLY v The Minister for Immigration and Citizenship [2007] FCA 765. That was a case where a s 424A letter was sent but was not received by the appellant's agent, who was a solicitor, prior to the handing down by the Tribunal of its decision. The Tribunal had in its decision formed a view adverse to the appellant. It would appear that the Tribunal member had proposed to recall the decision and to reissue his invitation to comment on the s 424A information, that had been referred to in the letter which was never received. Apparently, the letter had been misdirected by the Tribunal. There is no obligation on a Tribunal member to maintain a neutral state of mind during the entire course of a review of a delegate's decision. However it is critical that the Tribunal does not close its mind to any additional material that might possibly prove probative ... If the decision maker's mind is closed, 'no hearing really takes place' ; see Kanda v Government of Malaya [1962] AC 322 at 337 per Lord Denning MR. Because of the inquisitorial nature of Tribunal proceedings, the threshold for a finding of apprehended bias is necessarily higher than it is in curial proceedings ..., but it is sufficient if, the parties or the public 'might entertain a reasonable apprehension' [of bias], ... Apprehension of bias is fundamentally contrary to the efficient and effective administration of justice, and if found to exist constitutes procedural unfairness. A breach of the obligation to provide procedural fairness constitutes jurisdictional error for the purposes of s 75(v) of the Constitution ; see SAAP v Minister for Immigration and Multicultural and Indigenous affairs [2005] HCA 24 ; (2005) 79 ALJR 1009 at 1027 per McHugh J at [83]. The Tribunal cannot fulfil its statutory function where apprehension of bias exists, since a decision attended by jurisdictional error is no decision at all; see Plaintiff S157/2002 v Commonwealth (2003) 211 CLR 476. it. It does not seem to me that in this case the Tribunal member maintained such an open mind, rather the Tribunal member appears to have reached conclusions in relation to important matters before the letter of 2 November 2006 was sent. 29 I note that in the reasons for affirming the decision of the Minister's delegate not to grant the appellant a Protection (Class XA) visa in this case the Tribunal member made findings which accorded with what had been stated as matters of conclusion in the 2 November 2006 letter. While the applicant claims to have commenced the practice of Falun Gong in 1998, she displayed little knowledge or understanding of its philosophy beyond the broadest concepts of "truth" and "kindness". It follows that the Tribunal does not accept that the applicant has suffered serious harm from the Chinese authorities in connection with Falun Gong in the past. 32 The Tribunal ultimately concluded that it was not satisfied that the appellant had a well-founded fear of persecution within the meaning of the Refugees Convention. 33 I am of the opinion that the appellant was denied natural justice in that the Tribunal member did not, when she proceeded to consider the application for review, have an open mind on the matters requiring her consideration. If there was not actual bias, there was certainly an apprehension of bias. In the circumstances I am of the opinion that the appeal should be allowed and that the matter should be remitted for reconsideration by the Tribunal. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham.

jurisdictional error tribunal member failing to keep an open mind until the applicant had an opportunity to respond to a s 424a invitation migration

Each compound is a high intensity sweetener. The composition is for an improved high intensity sweetener. The patent has several claims. Claim 1 is for a sweetener composition comprising DMB-APM and APM and/or AceK in a ratio which gives a sweetness quality thereto closer to that of sucrose than any one of the compounds. Claims 2, 3 and 4 are claims for compositions of the compounds in particular ratios. Claim 5 is for a beverage comprising the sweetener composition ratio of any one of claims 1 to 4. Claim 6 is for a beverage, the subject of claim 5, in carbonated form. Finally, claim 7 is for a composition according to claim 1, claim 2 or claim 3 "as described with reference to examples". Ajinomoto wishes to amend the claims. 2 The circumstances in which this application is made are unusual. On 28 October 2005, in an action brought by Nutrasweet Australia Pty Ltd, I found Ajinomoto's patent to be invalid on the ground of obviousness. See Nutrasweet Australia Pty Ltd v Ajinomoto Co. Inc (2005) 67 IPR 381. No revocation order was made because on 22 October 2004 Ajinomoto had filed a motion to amend the patent and that motion was still outstanding. The motion had been filed just three days before the trial of the action. Ajinomoto did not ask for the application to be dealt with at the trial, nor did it seek to defer the trial. At its request the motion was stood over, with Nutrasweet reserving its position. 3 The motion to amend the claims is not the only matter that must be dealt with. On 16 March 2007 Ajinomoto filed a notice of motion seeking to reopen the proceeding in which the patent was found to be invalid. It could make that application because, as yet, there are no final orders in the action. 4 Following a hearing on the motions over three days, I dismissed the application to reopen the case and reserved my decision on the motion to amend. I propose to dismiss that motion as well. What follows are my reasons for both orders. 5 Ajinomoto seeks to reopen the case to demonstrate that I fell into error and to have me reverse my decision so that "all claims are held valid on that issue and that all other challenges due validity are dismissed. " Mr Hess SC for Ajinomoto makes five broad complaints about my judgment, which he describes as "significant errors of fact and law". When I explain the particular errors about which complaint is made, it will become apparent that, in substance, Mr Hess put submissions at this hearing (which are summarised in several lengthy written outlines) that amount to a substantial repetition of the submissions made at the trial. 6 The alleged errors are as follows. First, it is said that there was "impermissible resort to hindsight analysis ... when assessing the issue of inventive step". That invites going over the evidence of all of the experts. 7 The second alleged error concerns the prior art that can be taken into account when assessing obviousness. Section 7(3) of the Patents Act 1990 (Cth) provides that in determining inventiveness regard may be had not only to the common general knowledge but also to any publicly available information which a relevantly skilled addressee could "be reasonably expected to have ascertained, understood, regarded as relevant" to work in the relevant art. On the question of obviousness I relied on the patent by the inventors of DMB-APM that has been referred to as the Nofri Tinti patent. I relied on that patent after having reached the conclusion that the statutory conditions for its use had been satisfied. 8 Ajinomoto seeks to argue, as it did at trial, that, when properly construed, s 7(3) does not pick up the Nofri Tinti patent. In part the argument depends upon an analysis of what is the proper construction of s 7(3). Mr Hess insists that I did not adopt the correct construction. His submission also involves a review of the facts, because it is put that several of the conditions in s 7(3) had not been satisfied. Part of the criticism (and I emphasise that it is only a part of the criticism) is that I overlooked certain important evidence in arriving at the conclusion that the Nofri Tinti patent would be "regarded as relevant" by a skilled addressee. 9 The third alleged error concerns a statement in my reasons (para 55) that at the priority date of the patent, the taste profile of DMB-APM formed part of the common general knowledge. This raises the question whether I had treated the taste profile of DMB-APM as part of the common general knowledge for the purpose of assessing the obviousness of the patent. It is evident that the statement at para 55 is wrong. That statement is to be contrasted with several earlier statements (for example in paras 27 and 44) that the Nofri Tinti patent did not form part of the common general knowledge at the priority date. The inquiry as to whether s 7(3) permitted use to be made of the Nofri Tinti patent is also relevant when considering whether I in fact treated the patent as part of the common ground knowledge. 10 The next alleged error relates to the evidence of the overseas experts called by Nutrasweet. It was common ground at trial that there was no art in Australia of developing new high intensity sweeteners. Ajinomoto used this to argue, among other things, that the overseas experts could not give relevant evidence. I was not persuaded by the argument. In my reasons I said that where, as here, there was information widely circulating in Australia that could likely easily be referred to by a person interested in the art, that information could not be ignored when deciding whether an invention was obvious. Ajinomoto argued at trial, and now wishes to repeat its argument, that there can be no hypothetical skilled addressee who can address obviousness when there is no relevant art in Australia. 11 The final error relied on is that I failed to give reasons for finding lack of inventive step in relation to the ratio claims 2 to 4 and the composition claim 7. Here the question is whether it was necessary to deal specifically with each of the dependant claims when the principal claim was found to be invalid. 12 The power to reopen a case is not in doubt. It is, however, a power that must be exercised sparingly, having regard to the public interest in maintaining the finality of litigation. Smith v New South Wales Bar Association (No 2) [1992] HCA 36 ; (1992) 176 CLR 256, 265. Still, there are occasions in which it is both appropriate and fair to allow further argument and even further evidence in a case before it is finally disposed of. For example, if it turns out that a court finds that the unsuccessful party has not had the clear and adequate opportunity to argue its case, there might be a denial of procedural fairness if the case were not reopened: Autodesk Inc v Dyason (No 2) [1993] HCA 6 ; (1993) 176 CLR 300, 309. It would also be appropriate to reopen if it were clear that the court had proceeded "on a misapprehension as to the facts or the law", especially where the misapprehension was the result of accident or oversight and not the fault of the party seeking to reopen the case: De L v Director-General, NSW Department of Community Services (No 2) [1997] HCA 14 ; (1997) 190 CLR 207. 13 This is not one of those cases. At the risk of being too blunt, all Ajinomoto wishes to do is have the opportunity to repeat the arguments which I did not accept with regard to obviousness. There is no suggestion that Ajinomto was denied the opportunity of putting forward any argument at trial. To the contrary, Ajinomoto wishes to repeat most of those arguments. It is not suggested that, for some inexplicable reason, I proceeded on a mistaken view of the facts, or that for some unknown reason I had erred in law. The real contention is that I fell into error and that upon further reflection, the error will become apparent so that I can then put things right. 14 If that were all there was to Ajinomoto's application, it would be dismissed out of hand. It turned out, however, that the matter was a little more complicated. The complication arose by reason of the motion to amend the patent, to which I will now return. 15 The proposed amendments were of two kinds. Some were to amend clerical errors and obvious mistakes in the specification. They can be put to one side. The remaining amendments were, according to Mr Hess, to bring into the specification "new and narrower claims to meet the Nutrasweet objections to those claims [that were at trial attested] on the ground of lack of fair basis [and] lack of utility. First it was said that the amendments were not allowable under s 102 of the Patents Act in that if the amendments were made the specification would not comply with s 40 of the Patents Act . There was also an objection based on discretionary grounds. It is worthwhile noting that in its particulars, Nutrasweet identified one discretionary ground as follows: "It is an inappropriate exercise of the Court's discretion and a waste of Court time and resources for the Court to now consider the validity of the proposed fall back claims". Other objections were that Ajinomoto was precluded from asserting that its proposed claims (as amended) were valid by reason of the principle of res judicata and that even if the amendments were allowed the patent would be invalid for the reasons set out by me in my judgment. 17 In accordance with directions given after the trial, the parties filed affidavits in support of their respective contentions. So far as Nutrasweet was concerned, the affidavit material filed by it dealt with both the s 40 issues and obviousness. Material filed by Ajinomoto on the amendment motion included not only evidence that had been tendered at the trial but also additional evidence on obviousness, including a document whose tender had been rejected at trial. It appeared that the parties were getting ready for a retrial of the main dispute, although necessarily limited to the new claims Ajinomoto sought to add to its patent. 18 On a point of detail, Ajinomoto did suggest that the appropriate forum for testing inventiveness was not through the amendment application but in a separate revocation action. Mr Hess said that the only matters that should be considered on the amended motion were the s 40 issues and discretionary factors. The cases in this area do not present a united front: see eg. Richardson-Vicks Inc Patent [1995] RPC 568; Minister of Agriculture's Patent [1990] RPC 61; Neurizon Pty Ltd v Jupiters Limited (2005) 67 IPR 33; Novartis AG v Bausch & Lomb (Australia) Pty Ltd (2004) 62 IPR 71. In view of the order I intend to make it is not necessary to consider this issue. 19 On the assumption that I would deal with obviousness during the amendment application, Ajinomoto argued that this would be a good reason to reopen the case. Mr Hess made the (not unreasonable) point that the case should be reopened if for no other reason than to avoid the possibility (and the obvious embarrassment) of inconsistent findings. He pointed out that if on the amendment application he could persuade me to disregard the Nofri Tinti patent, the inventive step challenge to the new claims would fail. In that circumstance, he said, the old claims should also be restored. 20 While this argument was superficially attractive, upon closer analysis it must be rejected. There is no realistic possibility of there being inconsistent findings. According to the cases, a patentee is not entitled, following a trial on validity, to bring an application to amend the invalid claims, except in very limited circumstances and this is not one of them. 21 Windsurfing International Inc. v Tabur Marine (Great Britain) Ltd [1985] RPC 59 was an infringed action. The defendant successfully contested the validity of the patent in suit on several grounds, including obviousness. After judgment against the plaintiff was given, counsel asked for the order revoking the patent to be suspended pending consideration of an amendment to the specification. The application was refused. In fact, however, no-one, from first to last, advanced or considered the specialised qualities of a surfboard as an inventive concept and the suggestion that there should be an adjournment for this now to be raised and investigated as a basis for the claim to monopoly involves, in effect, a fresh trial, the recalling of most, if not all, of the most important witnesses, and a considerable degree of recapitulation of the evidence as well as the calling of fresh evidence on an issue never previously suggested either in the specification or in the pleadings. We would require considerable persuasion that the imposition upon a successful defendant of such a manifestly inconvenient and oppressive course would be a proper exercise of discretion even in an otherwise strong case. In that case Aldous LJ (with whom Brooke and Roch LJJ agreed) refused an application for leave to amend a patent after trial. He said "(at 790) "[I]t is a fundamental principle of patent litigation that a party must bring before the court the issues that he seeks to have resolved, so as to enable the court to conclude the litigation between the parties. There David Young QC, sitting as a Deputy Judge of the High Court, refused an application to add new claims to a patent found to be invalid. He said that what the patentees wanted was "to have their cake and eat it". He referred to Raleigh Cycle Co. Ltd v Miller H. & Co. Ltd (1950) 67 RPC 226, 230 where Lord Normand said that having been put on notice that there was an attack on the validity of their patent, the patentees were "put to an election between amending these claims and continuing their action without amending while maintaining that the claims were valid" and having chosen the second alternative, they were disentitled from pursuing the first except in "very special circumstances". He instanced by way of example a patent held to be invalid in part where the amendment is required to excise the invalid part. For example in Nikken Kosakusho Works v Pioneer Trading Co. [2006] FSR 4 the English Court of Appeal (per Jacob LJ) said that it might also be possible to permit an amendment the effect of which would be to rewrite claims so as to exclude invalid claims (or dependencies). Reference was made to Hallen Co v Brabantia (UK) Ltd [1990] FSR 134 where it was said that "a proposed claim which was not under attack and could not have been under attack prior to trial" would not be allowed after trial. 25 These cases (most of which were followed by the Full Court in Woolworths Limited v BP plc (No 3) [2006] FCAFC 160) show that the course Ajinomoto was attempting to take was simply not available to it. 26 On the last day (day three) of the hearing, and probably to avoid the impending shipwreck, Mr Hess changed tack. Contrary to the position he had taken over the previous two days, Mr Hess said the proposed amendments were not intended to overcome the invalidity finding and that: "It is not intended that the proposed amended claims have that effect. " He went so far as to say that issue estoppel "may comprehend the new claims [and] that now Ajinomoto would not contest that point. " Mr Hess tactic may in part have been in response to a move by Mr Cain SC, who was also shifting ground to improve his position. On the previous day Nutrasweet had withdrawn its objection to the amendments on the grounds of lack of fair basis and inutility. With lack of inventiveness as the only basis for opposing the amendments Mr Cain found a good way of highlighting the problem. 27 It was far too late in the day for any tactical move to save the application. The position in law is quite clear. Ajinomoto should have brought on its application to amend so that it could be dealt with at or before the trial. Thereafter it was too late. 28 There are, in any event, two further difficulties standing in the way of the amendments. First, Mr Hess' concession that Ajinomoto would not contest obviousness meant he was seeking to add invalid claims to the patent. I know of no precedent for such a course. Secondly, it is inappropriate to allow an amendment to a patent that has been found to be invalid and will in due course be revoked. 29 I accept that if the Full Court overturns my decision, Ajinomoto may still press for the amendments. Were the patent valid, there being no objection to the form of the amendments, I would have been disposed to allow them. But that is of no present relevance. 30 The motion to amend will be dismissed. I will hear the parties on the costs of both motions. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.

patent invalid by reason of obviousness application to amend claims refused to exercise discretion to amend orders not entered power to vacate patents practice and procedure

Mr Nathan's amended statement of claim in the proceeding below traversed many issues, however his Honour struck out all aspects of it other than those concerning ss 52 and 60 of the Act . In his reasons for judgment, Burchardt FM said at [10]: "I did ... make it clear that the trial would be restricted to the issues involving alleged contraventions of s 52 and s 60 of the Act . " The aspects of the amended statement of claim dealing with other issues were the subject of interlocutory decisions of the primary judge in respect of which Mr Nathan did not seek leave to appeal. Mr Nathan's case was essentially as follows: • on 24 May 2001 he visited the premises of James Lane Motors in Coburg; • at that time he was employed as a casual psychiatric nurse by a nursing agency; • he spoke to a Mr Gavin Fernandez at James Lane Motors about purchasing a motor vehicle; • on 28 May 2001, he returned to James Lane Motors and spoke to a Mr Cameron McCredie; and • Mr McCredie told him that the loan arrangement for the purchase of the vehicle included "loan protection cover" for the monthly payments. The respondent's case on the s 52 issue was essentially as follows: • Mr Nathan might be confused about loan protection insurance on the car because he had taken out a personal loan with the respondent in September 2001 which included a sickness, accidental injury or involuntary unemployment insurance policy, as part of that personal loan; • no such loan protection cover was included in the car loan or any representation made to that effect; • it is not possible to obtain such insurance cover in favour of a debtor; and • if such a representation was made by Mr McCredie, he was not authorised to do so by the respondent. His Honour noted at [53] of his reasons for judgment that Mr Nathan did not ask Mr McCredie whether he made the relevant representation. This appears to be technically incorrect as Mr Nathan asked Mr McCredie about whether he said to Mr Nathan that the monthly repayment provided comprehensive and loan insurance. Mr McCredie said he did not recall. However, Mr Nathan did not put squarely to Mr McCredie that he said, in May 2001, that there was such loan insurance included in the policy. I think that is the context in which his Honour was critical of Mr Nathan in his questioning of Mr McCredie. However, his Honour said at [60]: "... I do not believe for one moment that Mr McCredie made any such representation. " Further, Burchardt FM said at [62] that it defied "commonsense" and "obvious reality" to suggest that the representation would be made. It is well understood that in cases where a class of person is claimed to have been misled or deceived that an assessment of the reactions of the 'ordinary' or 'reasonable' members of a class is required and that "the court may well decline to regard as controlling the application of s 52 those assumptions by persons whose reactions are extreme or fanciful"; see Campomar Sociedad, Limitada v Nike International Ltd [2000] HCA 12 ; (2004) 202 CLR 45 at 86 per Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ. Where a particular individual, rather than a class of persons, is said to have been misled or deceived it is also appropriate to consider the assumptions of that individual as to the meaning of a representation and whether that meaning or interpretation can be said to be reasonable in the circumstances. It is fanciful for Mr Nathan to believe that the alleged statement by Mr McCredie regarding loan protection would absolve him from liability for payment of the loan in default. Even if a representation had been made to Mr Nathan, which is not borne out by the evidence, there is doubt in my mind whether Mr Nathan's assumptions about its meaning fall within the protection of s 52. 7 In considering whether any such representation had been made, his Honour also took into account that he accepted Mr McCredie as a witness of the truth but considered Mr Nathan "a very unimpressive witness" who told lies to the respondent about being in the movie business in order to secure the loan that enabled him to purchase the vehicle. Indeed I am positively certain that no such representation was made. Mr Nathan was not induced to take out the loan with the Respondent that he took out on the basis of a representation made by Mr McCredie because no such representation was ever made, by him or by anyone else, for or on behalf of the Respondent. Those findings of fact, referred to above, on the s 52 issue were strong and decisive ones, aided by the primary judge's observations of the evidence given by Mr Nathan and by Mr McCredie. Grounds one, three and seven of the notice of appeal dealing with the s 52 issue challenge certain findings of fact made by the primary judge. Those findings include his Honour's categorisation of Mr Nathan as an unimpressive witness with a propensity not to tell the truth. Those are not matters on which this Court is any better placed than the court below to assess, nor is a review of the factual findings the Federal Magistrate made a proper exercise of the appellate jurisdiction of this Court; see Fox v Percy [2003] HCA 22 ; (2003) 214 CLR 118 at 125-126 per Gleeson CJ, Gummow and Kirby JJ. The only substantive legal challenge to the s 52 aspect of the case as dealt with below is the allegation in ground two of the notice of appeal that Mr Nathan was denied natural justice by his Honour's alleged failure to give proper effect to s 52. That ground is related to ground eight which alleges that the primary judge failed to consider whether the alleged representation induced Mr Nathan into error. Those grounds are untenable. Section 52 precludes a corporation, in trade or commerce, from engaging in conduct that is misleading or deceptive or is likely to mislead or deceive. His Honour found that no such conduct occurred. That finding was open to him on the evidence before him. No appealable error has been identified on this aspect of the appeal. The endeavours made by the Respondent to repossess the car and to otherwise pursue legal avenues against Mr Nathan were all, in my view, entirely reasonable and do not begin to approach what might be said to be harassment within the meaning of s 60 of the Act . He claimed that legal action commenced against him by the respondent designed to repossess the vehicle and to bankrupt him amounted to harassment. As did the Federal Magistrate, I disagree with that submission. In attempting to repossess the vehicle and take action under the Bankruptcy Act 1966 (Cth), the respondent was doing no more than asserting its legal rights. There was no implied warranty to enjoy quiet possession of a vehicle in respect of which payments were not made as required under the agreement. The current appeal was, to that extent, premature; see O'Sullivan v Parkin [2007] FCAFC 98. No orders were made until 18 September 2007 when his Honour dismissed the application and ordered costs against Mr Nathan on an indemnity basis. Mr Nathan has not sought to appeal from the judgment which contained the operative orders in respect of which he seeks relief. However, despite this, I have dealt with his appeal as if the judgment of 10 September 2007 contained an order dismissing his application. This is the most practical commonsense way of dealing with the controversy between the parties, especially as Mr Nathan does not have the benefit of legal representation. It is also necessary to deal with the remaining grounds of appeal enumerated in Mr Nathan's notice of appeal. Ground four contains a new allegation of bias against the primary judge and has not been substantiated by Mr Nathan. The allegation concerned a disclosure made by his Honour of a shareholding in the parent company of the respondent. Mr Nathan conceded that he did not raise any issue of bias at the time his Honour made the disclosure and therefore acquiesced in his Honour hearing the application. However, Mr Nathan referred in his oral submissions today to comments made in transcript by the Federal Magistrate at an interlocutory hearing. Those comments showed that the Federal Magistrate was keen to bring the proceeding to finality. That does not mean that he was biased in any way against Mr Nathan or that there exists any basis for a reasonable apprehension of bias against his Honour. Ground six is: "Did the learned Federal Magistrate err in law in assuming the terms of the Loan Protection insurance in the absence of the policy itself...". This ground is based on an incorrect premise that the primary judge assumed the terms of an agreement when it was proved that no such agreement existed. That ground also fails. The Court will order as follows: 1. The appeal is dismissed. 2. The appellant pay the respondent's costs of the appeal.

appeal from decision of a federal magistrate misleading and deceptive conduct harassment and coercion whether appellant denied natural justice whether federal magistrate failed to give proper effect to ss 52 and 60 of the trade practices act 1974 (cth) held: appeal dismissed no error of law trade practices

On 14 November 2008, that Court made an order that the appellant's application for constitutional writs directed to the Refugee Review Tribunal ("the Tribunal") be dismissed. The appellant is a national of Egypt. He arrived in Australia on a student visa on 10 May 2005, having left Cairo on 9 May 2005. On 23 June 2005, the appellant made an application for a Protection (Class XA) visa ("protection visa"). On 30 September 2005, a delegate of the then Minister for Immigration and Multicultural and Indigenous Affairs refused the appellant's application for a protection visa. On 2 November 2005, the appellant applied to the Tribunal for a review of the delegate's decision. On 28 January 2006, the Tribunal decided to affirm the delegate's decision not to grant a protection visa to the appellant. The appellant made an application to the Federal Magistrates Court for constitutional writs directed to the Tribunal. By consent, the Federal Magistrates Court issued constitutional writs setting aside the Tribunal's decision and it remitted the matter to the Tribunal to be determined according to law. On 5 February 2008, the Tribunal (differently constituted) once again decided to affirm the decision of the delegate not to grant a protection visa to the appellant. The appellant again made an application to the Federal Magistrates Court seeking constitutional writs directed to the Tribunal and it is the decision of the Federal Magistrates Court on that application which is the subject of the appeal to this Court. On 16 August 2007, the appellant's agent made a detailed written submission to the Tribunal and she annexed to that submission a number of documents. He claims a well-founded fear of persecution owing to his religion (Coptic Christian) member of a social group (proselytiser) and imputed political opinion (anti sharia law). He is outside his country of nationality (Egypt) and is unable and unwilling to avail himself of that country's protection. The appellant appeared before the Tribunal to give evidence and present arguments. He was accompanied by two persons who provided social and emotional support. The hearing was conducted with the assistance of an interpreter in the Arabic and English languages. He claims that members of his family, particularly his father, his uncle, his grandfather, his brother, who is a monk, and himself, were 'well known' in the Christian Coptic church in their area for helping people who converted from Islam to Christianity, or back to Christianity after being forced to embrace Islam. He claims his uncle and grandfather were killed in direct response to their activities within the church. He claims he, his brother and father became involved with a number of individuals, some of them coming from one family, who were either converts to Christianity, or potential converts to Christianity or seeking to return to Christianity after being forced to embrace Islam. He claims these activities, coming to a head in September 2004, were centred around his father's evidently well-known bible study sessions. He claimed that these activities led to the police and Muslim fundamentalists seriously harassing him, his brother and his father. He claims that his father was forced or felt obliged to end his Bible study sessions. He claims his brother retreated to a monastery, avoiding further arrest. One of the documents which accompanied the written submission made by the appellant's agent to the Tribunal was a letter from a Father Isshaq AbdilMasseeh dated December 2006. It is convenient to refer to this letter as Father Isshaq's letter. In the letter, Father Isshaq states that the appellant is a member of "our parish" and an Orthodox Copt. Father Isshaq states that the appellant "has observed, attended and participated in our church practices regularly" and that he had helped the Christian community in as much as he could. He states, it seems on behalf of the church, that the appellant had assisted Christians who were under "coercive conversion duress away from Christianity". He states that, as a result of that, the appellant faced "immense problems and difficulties" and that he was detained more than once with the knowledge of the security establishment. Father Isshaq states that the appellant faced torture and harm at the hands of the security forces as well as Al Jama'at al-Islamia which had infiltrated the ranks of the security apparatus. He states that the appellant faced harm and attempts at his life by Al Jama'at al-Islamia "beyond detention both where he was narrowly rescued and taken into hiding until he managed to travel outside Egypt". Father Isshaq states that despite having left Egypt, the appellant was still wanted by Al Jama'at al-Islamia which had issued a Fatwa against his life as well as imposing Jizya. He states that that organisation has forced his family into divulging his whereabouts and to work on bringing him back to Egypt, and, as a consequence to that, "his father died because of the torture he was subjected to where he suffered brain haemorrhage". Father Isshaq states that the church stresses that the life of the appellant will be in grave danger should he return to Egypt "as he is strongly wanted by Al Jama'at al-Islamia which are abetted by many in the ranks of the security establishment". The Tribunal member made a number of observations about the letter. He said that it provided no detail as to the nature and extent of the assistance provided by the appellant or as to the church's involvement in it. He also noted that the letter presented the appellant and his family "in a vacuum, as it were, from which the priest appears entirely quarantined, and for which he does not appear to have been obliged to account as the spiritual leader of the people assisting the 'apostates'". The Tribunal member said that Father Isshaq's letter caused him "many concerns". The Tribunal member noted that Father Isshaq did not refer to the appellant's father as a central figure, and yet, on the appellant's story, he would have been a far more central figure than the appellant. The Tribunal member said that "Father Isshaq's view of the matter is simply that the police are harassing the father (family) to get to the son". The Tribunal member said that Father Isshaq appeared to speak from "a safe or unaffected periphery to the claimed events" whereas on the appellant's evidence, he also was a central figure in the claimed controversy. The Tribunal member said that the appellant's evidence, and that of a Mr Morcos, as to why the priest may have appeared in that way, lacked logic. Mr Morcos had completed a statutory declaration in which he explained some background to the situation in Egypt, addressed the attitude towards Coptic priests and commented on medical reports where a person has died following police brutality. His statutory declaration was provided to the Tribunal by the appellant. The Tribunal member said that the appellant's evidence about Father Isshaq and his role was "confused and selective". The Tribunal member said that he could not understand why, if the appellant's account was correct, Father Isshaq himself was not at risk of harm from the Muslim fundamentalists and the police. He considered that the appellant's suggestion that the priest would keep any events to himself was implausible, and that the suggestion of Mr Morcos that he could keep his problems to himself was "somewhat fanciful". The Tribunal member considered a claim by the appellant that he would be severely mistreated in Egypt for reasons of imputed "political opinion" by reason of the fact that he had sought asylum in Australia. With the assistance of Mr Morcos, the appellant made reference to the Egyptian penal code. The Tribunal member said that the information provided by the appellant was "largely speculative". The Tribunal member said that he was satisfied that the appellant was an Egyptian Coptic Christian who had been absent from Egypt for a long time. Later in his reasons, the Tribunal member made it clear that he accepted that the appellant had been diagnosed with depression, anxiety and sleeplessness consistent with post-traumatic stress disorder. The Tribunal member said that he did not accept that the appellant would face a real chance of persecution in Egypt simply for being a Coptic Christian. He made the point that the appellant effectively acknowledged as much because he started his own story in 2003 with the reaction against assistance he claimed he and his family had given to certain individuals in their home village. The Tribunal member said that the appellant had not provided sufficient evidence of Coptic Christians facing persecution in Egypt just for being Coptic Christians. The Tribunal member said that the idea of families being involved in rescuing relatives who were obliged to convert to Islam and about parishes welcoming Muslims who were curious about Christianity was "generally plausible". The question was whether these things happened to the appellant himself. The Tribunal member then turned to address evidence about the proselytising activities of the appellant's grandfather and his uncle. The Tribunal member appears to have accepted that the appellant's grandfather was involved in the conversion, or attempted conversion, of a Muslim boy and that the boy's family killed the appellant's grandfather. However, the Tribunal member took the view that that event was an isolated and "individualised" matter that occurred a long time ago. He found that the appellant's grandfather was not killed for being a Christian but rather for involving himself in the conversion of a Muslim boy. The appellant did not claim to be facing persecution because his grandfather's killers in 1988 viewed their response as incomplete. The appellant did claim that his grandfather's actions helped to characterise his family to local Muslims as proselytisers and friends of apostates. The Tribunal member noted that the appellant did not claim that he had been harassed before 2003-2004, when he became directly involved in "very similar activities". The appellant claimed that his uncle and his wife became involved in the "rescue" of a family member (his wife's niece) and that, as a result, they came into conflict with a Muslim family. The Tribunal member said that the story of the conflict itself was generally plausible but, on the evidence, he did not accept that it escalated beyond being an individual family conflict. The Tribunal member said that he was not satisfied on the evidence before him that the appellant's uncle died in 2001 of injuries inflicted on him either by the police or by other adversaries in relation to the conflict over the niece. He appears to have been prepared to accept that the uncle's death may have been caused in part by the conflict, but he went on to say that he was not satisfied that his uncle's activities had any significant bearing on the appellant's own chance of persecution in Egypt. The Tribunal member then considered what he called "the potential cumulative relevance of the evidence regarding the [appellant's] grandfather and uncle". The Tribunal member said that he was not satisfied that the appellant's situation in Egypt was "significantly affected by his grandfather's or uncle's situation". The Tribunal member said that the appellant had not provided a consistent, plausible and credible story of the interest of the Muslin fundamentalists and the police in his father or of his father's profile. The Tribunal member said that the appellant's account of how his brother came to be left alone by the police and fundamentalists was "unconvincing and inconsistent". The Tribunal member said that the appellant had given inconsistent and implausible evidence about himself during the time he remained in Egypt as a fugitive. The Tribunal member said that the appellant had given inconsistent evidence as to the kind of assistance he received in the matter of the issuing of his passport. He was "generally inconsistent" as to the extent of interest in him on the part of the authorities. The appellant's father died at home in November 2006. This was between the hearing conducted by the first Tribunal and the hearing conducted by the second Tribunal. The Tribunal member said that on the evidence before him "the claimed circumstances of the applicant's father's death [were] concocted". Finally, the Tribunal member addressed the claim by the appellant that there was the potential for him to be punished for harming the reputation of Egypt simply by having lodged a protection visa application. The Tribunal member said that there was not enough evidence before him to support the claim made by the appellant that he faced a real chance of being persecuted through the implementation or invocation of the Egyptian penal code. In his conclusions, the Tribunal member said that he took into account the appellant's psychological disorders. Nevertheless, he concluded that the appellant was not a witness of truth. He said that he did not accept that the appellant faced a real chance of persecution in Egypt, "even cumulatively" for reasons of being a Coptic Christian, notwithstanding that his grandfather and uncle died in, or as a result of, conflicts with Muslim families. The Tribunal member concluded that the appellant did not face a real chance of Convention-related persecution in Egypt and decided to affirm the delegate's decision not to grant a protection visa to him. The first ground was that the Tribunal fell into jurisdictional error by ignoring relevant information concerning the deaths of the appellant's father, grandfather and uncle. It is not a question of their deaths not having been considered, it is a question of the Tribunal not finding them to be matters to which significant or any weight should be attached in grounding the application for refugee status. The federal magistrate said that the matters advanced by the appellant were relevant to weight and credibility findings and did not raise matters of jurisdictional error. The federal magistrate addressed the second and third grounds together. Those grounds were that the Tribunal failed to make findings as to the likelihood that the appellant would be persecuted as a member of a social group of "Christian proselytisers in Egypt attracting Muslim apostates" or of a social group of "a family of Christian proselytisers in Egypt attracting Muslim apostates". The federal magistrate noted that the Tribunal member had made a finding that the appellant did not face significant relevant harm from Muslim fundamentalists in his community. The federal magistrate noted that the appellant, on his own account, had said that his difficulties with the authorities had "come to a head" in September 2004. The federal magistrate addressed a matter raised by the appellant, namely, that a claim which he had made to the Tribunal being that he suffered torture at the hands of the police in 2004, had not been addressed by the Tribunal. The federal magistrate said that it could not be doubted that the appellant's account of arrest and torture in 2004 had been rejected by the Tribunal. The federal magistrate rejected the suggestion that the "what if I am wrong" test should have been applied. The fourth ground of the application is not relevant on the appeal before me because its rejection by the federal magistrate is not challenged on the appeal. I am not reviewing the decision on merits. I can see the issue as being a matter that properly drew the attention of the Tribunal, even if I disagree about the weight given to it. More weight is given to it than seems appropriate. But the matter itself is not an irrelevant consideration. They were not isolated credit criticisms. Many other aspects of the applicant's case were also rejected on credit grounds. The fifth ground of appeal is no longer pressed by the appellant. Some of the grounds of appeal were reshaped in the appellant's written and oral submissions. The first ground of appeal is that the federal magistrate erred in concluding that the Tribunal's treatment of the significance to the appellant's claim for refugee status of the deaths of the appellant's grandfather and uncle was not erroneous. The findings made by the Tribunal member in relation to the activities and deaths of the appellant's grandfather and his uncle are summarised in [17] to [19] above. His principal conclusion was that he was not satisfied that the appellant's situation in Egypt was "significantly affected" by his grandfather's situation or his uncle's situation. The federal magistrate said that there was nothing before the Tribunal to indicate that the deaths of the appellant's grandfather and uncle had any "consequences" for the appellant. The appellant submits that the approach of the Tribunal member involved jurisdictional error and that the federal magistrate erred in law in failing to so conclude. First the tribunal needs to determine whether the group or class to which an applicant claims to belong is capable of constituting a social group for the purposes of the Convention. That determination in part at least involves a question of law. If that question is answered affirmatively, the next question, one of fact, is whether the applicant is a member of that class. There then follow the questions whether the applicant has a fear, whether the fear is well-founded, and if it is, whether it is for a Convention reason. The Tribunal member rejected the suggestion that merely being a Coptic Christian could give rise to a well-founded fear of persecution and, as I understand it, it is not suggested that jurisdictional error arose in relation to that conclusion. The Tribunal member reached the same conclusion after he added to the appellant's status as a Coptic Christian the activities of his grandfather and uncle. The Tribunal member also rejected the appellant's account of his proselytising activities. As the Tribunal member said, he rejected "various constituent details of [the appellant's] account" and he was not satisfied that the appellant faced or faces significant relevant harm from Muslim fundamentalists in his community. As far as the two particular social groups set out in [45] above and on the assumption in relation to the group identified in (a) that the appellant is one of the prominent proselytisers, the Tribunal member approached the matter by going straight to the second question, namely, whether the appellant was a proselytiser of Muslims. He found that he was not. In those circumstances, it was not necessary for the Tribunal member to formulate and consider a precise social group because an element of each formulation is that the appellant was a proselytiser of Muslims. The Tribunal member did make a reference to whether proselytisers of Muslims in local Christian communities could face persecution by reason of those activities, but he did not directly address the first question identified by Gummow and Callinan JJ in Dranichnikov . Nevertheless, for the reasons I have given, that did not lead to jurisdictional error. It is not clear to me whether the appellant is submitting that the Tribunal member failed to address, as an alternative to his principal claim, a claim that he feared persecution not as a result of his own activities, but as a result of his membership of his family and the activities of his grandfather and uncle. If he is making that submission, I would reject it because I think the Tribunal did address that possibility. The appellant's own claim that his problems did not begin until 2003-2004 meant either that his family was not a relevant particular social group or, in the circumstances, membership of it did not give rise to a well-founded fear of persecution. The second ground of appeal is linked to the first. It is that the federal magistrate erred in not concluding that the Tribunal member erred by addressing the wrong question in that the Tribunal member concluded that the appellant had not been drawn into the conflict involving his uncle and that he was not significantly affected by his grandfather's situation or his uncle's situation. I do not think the Tribunal member erred in approaching the matter in that way. He was saying no more than that the appellant's membership of his family, which included his grandfather and uncle, did not give rise to a well-founded fear of persecution. That was a finding open to the Tribunal member on the evidence. The third ground of appeal is that whilst the Tribunal member analysed the role of the appellant as a Coptic Christian and as a relative of two proselytisers, he ignored the critical issue of "whether the appellant had a well founded fear of persecution for reason of belonging to a social group, being proselytisers of [or member of a family of proselytisers of] Muslims". It may be that the Tribunal member took the view that had the appellant established that he was a proselytiser of Muslims in his local Christian Church then he would have established a well-founded fear of persecution for reason of religion, or for reason of membership of a particular social group. The fact is that he did not pause to consider those questions because he reached the clear view that the appellant had not established the proselytising activities he alleged. The Tribunal member could have approached the matter in a different way, but I do not think the approach he adopted resulted in jurisdictional error. This ground seemed at times, in the course of argument, to overlap with the fourth ground of appeal and, at this point, two submissions were made. The first submission was that the Tribunal member did not apply, or properly apply, what the federal magistrate referred to as the "what if I am wrong test". The second submission was that the Tribunal member's conclusion that the claimed circumstances surrounding the death of the appellant's father were concocted was illogical. The "what if I am wrong test" was discussed by Brennan CJ, Dawson, Toohey, Gaudron, McHugh and Gummow JJ in Minister for Immigration and Ethnic Affairs v Guo [1997] HCA 22 ; (1997) 191 CLR 559 at 576. If, for example, a Tribunal finds that it is only slightly more probable than not that an applicant has not been punished for a Convention reason, it must take into account the chance that the applicant was so punished when determining whether there is a well-founded fear of future persecution. That is, the Tribunal appears to have taken the view that the probability of error in its findings was insignificant. Once the Tribunal reached that conclusion, a finding that nevertheless Mr Guo had a well-founded fear of persecution for a Convention reason would have been irrational. Given its apparent confidence in its conclusions, the Tribunal was not then bound to consider whether its findings might be wrong. The Tribunal "must take into account the chance that the applicant was so [persecuted] when determining whether there is a well-founded fear of future persecution" . However, given the nature of the prosecutor's claim, the Tribunal was entitled --- indeed bound --- to start its inquiry by considering her claim that she had been arrested by government officials for political reasons. The Tribunal, having found that it could not rely on her evidence of arrest, was not then required to act on her allegations of detention and rape, allegations which were dependent on her claim of being arrested and taken into custody for reasons of political opinion. The Tribunal was not bound therefore to make any express finding as to whether she had been raped. Nor given the nature of her claim and the Tribunal's finding that she was not a credible witness was it required, as it might have been in other circumstances, to determine whether there was a real chance that she had been arrested as she claimed. In my opinion, there are two answers to the appellant's submission. The first is that the Tribunal member did not, it seems to me, have any real doubt about his conclusions. He found that, even making allowance for the appellant's medical condition, he was not a witness of truth. He made the point on a number of occasions in the course of his reasons that he did not believe the appellant's account of events and that he found particular claims made by the appellant to be inconsistent and implausible. The second answer to the appellant's submission is that the Tribunal member did address the ultimate questions of whether the appellant faced or faces significant relevant harm from Muslim fundamentalists in his community and whether he faced a real chance of persecution in Egypt (see [19] and [22]). The Tribunal accepts that the Applicant's father died at home at 49 years from a 'brain haemorrhage' or stroke. The Tribunal is prepared to accept in principle that a person could die hours after a serious beating from internal bleeding, for example, in the head or in the torso. On the evidence before it, the Tribunal does not accept the claim that the Applicant's father died as a result of police brutality or that he was detained and mistreated by the police shortly before dying. On the evidence before the Tribunal, the claimed circumstances of the Applicant's father's death are concocted. This is to a significant extent because the Tribunal does not accept as factual the key events that led to the Applicant going into internal exile, or the circumstances in which he returned to the farm, or the facts about how he obtained his passport. The Tribunal does not accept the Applicant's claim that the authorities adopted a stance or pattern of detaining and beating his father to get to or at him, the Applicant, or to extract information about him. The Tribunal also finds that in view of the Applicant's overall credibility problems up to this point, it does not accept that the authorities, supposedly acting in the interests of violently angered fundamentalists, adopted a stance or pattern of detaining and beating the Applicant's father to punish him for his own actions or to deter him from similar actions in the future. I do not think that there is anything illogical in the Tribunal member's reasoning. In essence, the conclusion is reached that the story is concocted by the appellant because key elements of his account cannot be accepted. The fifth ground of appeal is not pressed by the appellant. The sixth ground of appeal is that the federal magistrate erred in failing to uphold the fifth ground of the appellant's application for constitutional writs. That ground is set out above (at [35]). The ground focuses on the Tribunal member's questioning of the appellant and his findings. Two particular matters are identified. They are the circumstances surrounding the death of the appellant's father and the findings made in relation to Father Isshaq's letter. In connection with this ground of appeal, the appellant referred to three doctrines of law each of which leads to a conclusion of jurisdictional error. First, the appellant submitted that the conduct of the review and the findings made by the Tribunal member should lead to the conclusion that the Tribunal did not conduct the review required by the Act. The appellant referred to NAQS v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 1137 ; (2003) 77 ALD 424 , a case in which Hill J reached the conclusion that the Tribunal had not conducted the review required by the Act. Without being exhaustive, features of that case which led to that conclusion were a refusal by the Tribunal member to allow the applicant to call a witness, the Tribunal member acting in a rude manner and the Tribunal member cutting the applicant off in the course of his answers and refusing to hear explanations from the applicant. Secondly, the appellant submitted that the conduct of the review and the findings made by the Tribunal member should lead to the conclusion that the Tribunal was guilty of apprehended bias. The appellant referred to NADH at 266-285 [10]-[125], a case in which the Full Court of this Court held that the Tribunal was guilty of apprehended bias. A singular feature of that case was that a number of letters and documents were in effect put to one side by the Tribunal member as not establishing any fact without any real reasons being given for adopting that course. For example, a number of letters were dismissed by the Tribunal member as being of no weight on the grounds that they were vague or did not establish certain matters without any real reasons being given for those conclusions. Thirdly, the appellant submitted that the Tribunal's result was so unreasonable that the Tribunal must have proceeded under a misconception which amounted to jurisdictional error. The appellant referred to Avon Downs Pty Ltd v Federal Commissioner of Taxation [1949] HCA 26 ; (1949) 78 CLR 353 at 360 per Dixon J and The Queen v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd [1953] HCA 22 ; (1953) 88 CLR 100 at 120 per Dixon CJ, Williams, Webb and Fullagar JJ. I have read the transcript of the hearing before the Tribunal on 30 November 2007 and, of course, I have read the Tribunal's reasons for decision carefully. The Tribunal member's questioning of the appellant was not at any stage rude or offensive. He gave the appellant the opportunity to answer the questions he asked. In fact, he was quite frank in telling the appellant the matters which were of concern to him. In a number of areas his questioning was persistent, but not excessively so. The Tribunal member was entitled to test the appellant's evidence. I would not have put the emphasis the Tribunal member did on the appellant's lack of knowledge about how long his father had been detained at the police station, but that does not bring the case anywhere near the three doctrines referred to above. The other areas where there was fairly persistent questioning by the Tribunal member were the role of Father Isshaq, the activities and death of the appellant's father and the appellant's nocturnal visits to his father's farm. They were all legitimate matters for questioning. The Tribunal member made findings about a number of matters. It cannot be said in relation to any of the findings that there is a lack of reasons or evidence or that they show a pre-conceived bias such that one of the three doctrines referred to above is engaged. Another person might have approached the matter differently but the differences are differences of weight and emphasis. Again, I would not have been disposed to have put as much weight as the Tribunal member did on the appellant's lack of knowledge of the circumstances surrounding his father's death and, this is a question of degree only, the appellant's explanation as to the reasons why Father Isshaq was not subject to harassment. However, as the federal magistrate correctly concluded, these conclusions are not matters which establish jurisdictional error. Fr Isshaq's letter repeats the broad position of the Applicant: simply that the stroke was an after effect of police brutality. Fr Isshaq's apparent presumption is not argued in any convincing detail . Whilst the Tribunal accepts that the Applicant's father died in November 2006 of the medical cause identified, it gives no weight to his death in the present matter. I think that probably what is meant by the Tribunal member is that there is no detail of the statement in the letter. That is a legitimate observation but not one, I would have thought, of great significance. In any event, it is not such as to constitute jurisdictional error. I certify that the preceding sixty-nine (69) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.

appeal from orders made by federal magistrate dismissing appellant's application for review of decision of minister's delegate refusing appellant protection visa decision of minister's delegate affirmed by refugee review tribunal where appellant claimed fear of persecution for convention reason because he was member of social groups consisting of a family of coptic christians with prominent members that proselytise muslims in egypt and coptic christian proselytisers of muslims in egypt where appellant claimed his father, grandfather and uncle had been killed for proselytising muslims in egypt whether tribunal committed jurisdictional error by deciding that death of appellant's grandfather and uncle did not affect appellant's position in egypt or by deciding that appellant's version of his father's death had been concocted or by failing to consider question of social group or by failing to conduct hearing in unbiased manner as evidenced by findings in relation to appellant's father's death and letter provided by appellant's priest migration

In substance, however, he attacks a decision made by the respondent (Minister) on 22 June 2006 cancelling his visa that entitled him to be in Australia. There are three issues in the proceeding: first, whether it is competent; second, if so, whether the cancellation decision is infected by jurisdictional error; and third, if so, whether relief should be refused in the exercise of the Court's discretion. He returned to Australia in March 1999. On 11 July 2001 he was granted a permanent spouse Class AS subclass 801 visa on the basis of his relationship with an Australian woman. By that time he and his partner had one child, a son born in 1999. Subsequently they had a second son born in 2002. In December 2001 Mr Rinka was charged with two serious offences. On 5 September 2003 he was convicted. He was sentenced to concurrent terms of imprisonment of two years and four years and six months respectively. The non-parole period expired on 4 June 2006 and the sentence expired on 4 March 2008. On 20 February 2006 an officer of the Department of Immigration and Multicultural Affairs (Department) sent Mr Rinka a notice that cancellation of his visa was to be considered. He received that notice on 25 February 2006. On 8 March 2006 Mr Rinka replied stating, inter alia, that if he were sent back to Kenya it would be more than likely that he would never see his two sons again and would not get a job enabling him to support them financially. On 18 May 2006, the Department received a report in respect of Mr Rinka from a Probation and Parole Officer. That report was sent to Mr Rinka for comment. By facsimile on 31 May 2006 Mr Rinka provided comments to the Department. On 21 June 2006 he sent a further letter to the Department by facsimile enclosing a letter from his eldest son. On 22 June 2006, the Minister decided to cancel Mr Rinka's visa. Mr Rinka was notified of that decision on 23 June 2006. On 16 August 2006 a Departmental officer handed Mr Rinka a copy of the Minister's reasons for her decision. On 27 November 2006 Mr Rinka applied for a protection visa. A delegate of the Minister refused that application on 5 February 2007. On 4 April 2007 the Refugee Review Tribunal affirmed that decision. Mr Rinka unsuccessfully applied to the Minister for a more favourable decision: see s 417 of the Migration Act 1958 (Cth) (the Act). Mr Rinka filed the application commencing this proceeding on 1 May 2009. On 5 May 2009, Jagot J granted an interlocutory injunction restraining the Minister from removing Mr Rinka from Australia pending further or other order: see Rinka v Minister for Immigration and Citizenship [2009] FCA 465. This Court has the same jurisdiction in relation to the decision as the jurisdiction of the High Court under para 75(v) of the Constitution ; see s 476A(1)(c) and s 476A(2) of the Act. However, an application to this Court for a remedy to be granted in exercise of that jurisdiction must be made within 35 days of the date of the decision: see s 477A(1) of the Act as amended by the Migration Legislation Amendment Act (No. 1) 2009 (Cth) (2009 Amending Act). The 2009 Amending Act contains transitional provisions. They are found in cl 7 of Schedule 2 to that Act. Clause 7(2) provides, relevantly, that if an application under s 477A relates to a migration decision that was made before the commencement of Schedule 2, for the purposes of applying s 477A the date of the decision is to be taken as the date of that commencement. Schedule 2 commenced on 15 March 2009. Therefore, the thirty five day period expired on 19 April 2009. Mr Rinka made his application to this Court by filing his present application on 1 May 2009 --- twelve days out of time. The Court has a discretion under s 477A(2) to extend the thirty five day period if: an application for the extension order has been made in writing to the Court specifying why the applicant considers that it is necessary in the interests of the administration of justice for the order to be made; and the Court is satisfied that it is necessary in the interests of the administration of justice to make the order: see s 477A(2) as substituted by the 2009 Amending Act. Mr Rinka did not apply in writing (or otherwise) for an extension of time. The Minister therefore submits that the Court lacks power to extend time and Mr Rinka's application is incompetent and should be dismissed. Pursuant to a referral under O 80 of the Federal Court Rules , Mr Leonard Karp of counsel made written submissions on behalf of Mr Rinka, in which, inter alia, he applied for an extension of time. In the Minister's submission in reply, Mr Justin Smith of counsel for the Minister indicated that the Minister accepted that, apart from the merits of the substantive application, it was in the interests of the administration of justice that an extension be granted. His submission was, however, that it should not be because the substantive application would be dismissed because there was no jurisdictional error in the Minister's decision providing a basis for the grant of substantive relief, and, in the alternative, because substantive relief would be refused in the exercise of the Court's discretion. The sensible approach taken by counsel for the parties enables me to proceed immediately to the second of the issues outlined at [2]. Section 501(2) provides that the Minister may cancel a visa that has been granted to a person if (a) the Minister reasonably suspects that the person does not pass the "character test", and (b) the person does not satisfy the Minister that the person does in fact pass the "character test". Subsection (6) of s 501 provides that for the purposes of s 501 a person does not pass the character test if, relevantly, the person has a "substantial criminal record", as defined by subsection (7). Subsection (7) provides that for the purposes of the character test, a person has a substantial criminal record if, relevantly, the person has been sentenced to a term of imprisonment of 12 months or more. Mr Rinka was sentenced to a term of imprisonment exceeding 12 months. Therefore, the Minister's suspicion that Mr Rinka did not pass the character test was reasonable and there was no error in the Minister's not being satisfied by Mr Rinka that he did in fact pass the character test. Mr Rinka attacks the exercise of the Minister's discretion to cancel the visa. Mr Rinka's submission is that jurisdictional error infected the Minister's decision because the Minister did not, in the exercise of her discretion, give proper, genuine and realistic consideration to the best interests of Mr Rinka's children. Mr Rinka's argument rests on the ground that there was a denial of procedural fairness. That ground arises from the following considerations. Australia ratified the United Nations Convention on the Rights of the Child , opened for signature 20 November 1989, 1577 UNTS 3, (entered into force 2 September 1990) (the Convention) on 17 December 1990. The Convention entered into force for Australia on 16 January 1991. The reason was that ratification by Australia of an international convention engendered a "legitimate expectation" that administrative decision makers would act in conformity with that convention. Mr Karp has drawn attention to the fact that the expression has perhaps fallen into disuse since Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam [2003] HCA 6 ; (2003) 214 CLR 1 , see especially at [61]-[64] and [81]-[83] per McHugh and Gummow JJ, [121] per Hayne J, [148] per Callinan J. In view of the way in which the present case was argued, I need say no more of this. On 23 August 2001 the then Minister for Immigration and Multicultural Affairs gave a written direction under s 499 of the Act in relation to visa refusals and cancellations under s 501 of the Act (Direction). The Direction was headed "Direction No 21". Its preamble stated that the Direction provided guidance to decision makers in making decisions to refuse or cancel a visa under s 501. The Direction was divided into Part 1 ("Application of the Character Test") and Part 2 ("Exercising the Discretion"). Part 2 was divided under the headings, "Primary Considerations", "Other Considerations" and "Other International Obligations". Part 2 of the Direction addressed the exercise of the discretion to refuse or cancel a visa in the case of a non-citizen who did not pass the character test. Paragraph 2.2 stated that a decision maker should have regard to three primary considerations as well as to a number of other considerations. Paragraph 2.15 stated that, in general terms, the child's best interests would be served if the child remained with its parents, while setting out certain countervailing considerations which may suggest otherwise. Paragraph 2.16 stated that when considering the best interests of the child, decision makers should have regard to the matters listed in that paragraph. Quite apart from Teoh , the Direction provided a basis for a legitimate expectation that the Minister would treat the best interests of the child as a primary consideration when deciding whether to cancel Mr Rinka's visa. This expectation was created by the fact that the letter of 20 February 2006 notifying Mr Rinka of the Minister's intention to consider cancelling his visa stated that the decision-maker would have regard to the Direction in coming to a decision. I will first address the question whether the best interests of Mr Rinka's children were in fact treated as a primary consideration by the Minister. Since it was plain that Mr Rinka failed to pass the character test, there was little discussion of that matter. The Minister's "Discretion" was considered under the headings "Primary Considerations", "Other Considerations" and "Other International Obligations". Three Primary Considerations were discussed: "Protection of the Australian Community", "The Expectations of the Australian Community" and "The Best Interests of the Child". Under this last heading the briefing paper referred to Mr Rinka's two sons aged 7 years and 4 years, stating that they were both born in Australia and were Australian citizens. The briefing paper quoted from Mr Rinka's faxed letter of 8 March 2006 and from the report made by his parole officer. The briefing paper also referred to Mr Rinka's facsimile dated 21 June 2006 enclosing his first letter from his older son. The paper recounted Mr Rinka's contention that although he and his former partner were unlikely to live together upon his release, his former partner's having addressed the envelope which enclosed his son's letter showed that she was happy for Mr Rinka to remain in contact with his sons. The briefing paper referred to various findings that it would be open to the Minister to make, including a finding that each child would be significantly affected by a decision to cancel Mr Rinka's visa under s 501(2) of the Act. Under the heading "Best Interests of the Child", which appeared under the heading "Primary Considerations", the Minister stated as follows: I also gave primary consideration to the best interests of any children. Mr Rinka has 2 sons ... aged 7 and 4 years old respectively, through his former relationship with Ms Kaye Ireson. I noted that Mr Rinka's children were born in Australia and are Australian citizens. I considered the interests of Mr Rinka's two children ... and took into account their young age. I accepted that both children may benefit from the guidance of their father during their formative years and may benefit from growing up in an environment with both of their parents present. I accepted that both children may suffer hardship if Mr Rinka were to return to Kenya. I found that maintaining a relationship with their father would be difficult if he was in another country. I gave these considerations great weight. I also considered Mr Rinka's children in the event that they accompany Mr Rinka to Kenya. I found that it was reasonable to assume that they would not have access to educational opportunities and a health support system that are of a comparable standard to those available in Australia. I also found that if they did accompany Mr Rinka to Kenya, they may face separation from their mother who has been their main care provider. Therefore I found that Mr Rinka's children would suffer considerable hardship and disruption if they accompanied Mr Rinka to Kenya. I accepted that the cancellation of Mr Rinka's visa would cause hardship to his two children. I gave these matters great weight. In making these submission, Mr Rinka relies on Wan v Minister for Immigration and Multicultural Affairs [2001] FCA 568 ; (2001) 107 FCR 133 ( Wan ) (see, particularly, [26]-[27], [31]). Mr Rinka submits that the concept of the best interests of the children involved consideration of their relationship with Mr Rinka. He submits that the Minister had before her the older son's letter saying that he misses his father and speaking of his exploits at soccer, yet she did not refer to this material in her statement of reasons. Counsel for Mr Rinka accepts that this alone does not show jurisdictional error, but submits that, in combination with the "speculative" comments made by the Minister in para 81 of her statement of reasons, it does suggest that she did not give proper, genuine and realistic consideration to the material that was before her. If she did not, it would follow that the best interests of the children also could not have been given proper, genuine and realistic consideration. She also found that maintaining a relationship with their father would be difficult if he was in another country. No doubt the Minister advisedly expressed herself in those terms: the briefing paper, in addition to summarising what Mr Rinka had said, made the point that his parole officer advised that his former partner had claimed that since the breakdown of the relationship, Mr Rinka had had limited contact with his sons. The parole officer's report revealed a conflict between Mr Rinka's estranged partner's account of his contact with his children and that of Mr Rinka himself. Mr Rinka stated that when he was first taken into custody he used to telephone his children but that the telephone calls would inevitably end with him and his estranged partner arguing, as a result of which he had ceased telephoning his sons and had had no contact with them for several years. Faced with the conflicting accounts of the relationship between Mr Rinka and his sons, what could the Minister do, it may be asked rhetorically, other than use such expressions as "may benefit" and "may suffer hardship" as she did in para 81? Paragraph 82 of the statement of reasons is more definite. The Minister there concluded that Mr Rinka's children would suffer considerable hardship and disruption if they were to accompany him to Kenya. In para 83 of her statement of reasons the Minister accepted that the cancellation of Mr Rinka's visa would cause hardship to his two sons and said that she gave those considerations great weight in arriving at her decision. The effect of paras 81, 82 and 83 is that the Minister concluded that the best interests of the children required that they not accompany Mr Rinka to Kenya, and that his visa not be cancelled so that they might have the prospect of enjoying the benefits and avoiding the hardship described in para 81. That is to say, standing alone the best interests of the children required that Mr Rinka's visa not be cancelled. Wan , on which Mr Rinka relied, concerned an appeal to the Court from a decision of the Administrative Appeals Tribunal (AAT) affirming a decision of the Minister to refuse to grant a permanent residence (general-spouse) visa on character grounds. It was also a "best interests of the child" case. There were provisions of the Administrative Appeals Tribunal Act 1975 (Cth) governing the procedure of the AAT that have no relevance in the circumstances of the present case. Nonetheless, the Full Court's holding in Wan that in order to treat the best interests of the child as a primary consideration, a decision maker must identify what those interests indicate the decision should be, is applicable. The Full Court held that the AAT did not do so. An alternative ground for the Full Court's decision was that the conclusion was inescapable that the AAT had not treated the best interests of the child as "a primary consideration". As indicated earlier, although the Minister's statement of reasons does not say in terms that "the best interests" of Mr Rinka's children dictated that his visa not be cancelled, that is the effect of para 83. Moreover, the Minister did say that she was treating the best interests of Mr Rinka's children as a primary consideration, and it is not shown that her statement to that effect should not be accepted. In the result, in my opinion the Minister's statement of reasons shows that the Minister treated the best interests of Mr Rinka's two children as a primary consideration, as she said she did in the first sentence of para 80. In these circumstances I need not consider whether a failure to do so would have constituted jurisdictional error. The application for the extension of time should be refused and the proceedings should be dismissed as incompetent with costs. The Court appreciates the assistance it has received from Mr Karp in accepting the referral under O 80. His written submissions and those of Mr Justin Smith of counsel for the Minister have aided the Court. I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren.

minister's cancellation of visa under s 501(2) of migration act 1958 (cth) on "character test" ground person had substantial criminal record challenge made to minister's exercise of discretion on ground of breach of natural justice alleged that without advance notice to visa holder of her intention not to do so, minister failed to treat "the best interests of" his children as a primary consideration discussion of what is required to treat best interests of child as a primary consideration. held on the facts minister did treat the best interests of the children as a primary consideration. migration

As it transpires all of the claims of privilege were resolved between the parties without the necessity for the Court's intervention. 4 Once those issues were resolved, the only substantive matter which remained related to documents and other materials which had been seized and which were said to fall outside the scope of the warrants. 5 On the first return date the first respondent gave an undertaking to the Court that he would not undertake any forensic examination of the images taken from the hard disks that had been seized on 31 July 2007. That undertaking was progressively extended up to and including 15 September 2008 or further order. It has now been extended up to and including judgment on the Further Amended Application filed 29 August 2008, which is presently before the Court, or further order. 6 The character of the matter has changed quite significantly in recent times. On 27 May 2008 an Amended Application was filed and on 29 August 2008 a Further Amended Application was filed. In the Further Amended Application J Karam was named as the second respondent, he being the Justice in and for the State of New South Wales located at The Downing Centre Local Court who issued the two search warrants on 30 July 2007 which were executed on 31 July 2007. 7 The search warrants were issued under s 3E of the Crimes Act 1914 (Cth) ('the Crimes Act '). That section made provision for the issue of warrants in relation to premises and warrants in relation to persons. This case concerns two warrants in relation to premises. (5A) The time stated in the warrant under paragraph 3E(5)(e) as the time at which the warrant expires must be a time that is not later than the end of the seventh day after the day on which the warrant is issued. (6) The issuing officer is also to state, in a warrant in relation to premises: (a) that the warrant authorises the seizure of a thing (other than evidential material of the kind referred to in paragraph (5)(c)) found at the premises in the course of the search that the executing officer or a constable assisting believes on reasonable grounds to be: (i) evidential material in relation to an offence to which the warrant relates; or (ii) a thing relevant to another offence that is an indictable offence; or (iii) evidential material (within the meaning of the Proceeds of Crime Act 2002 ) or tainted property (within the meaning of that Act); if the executing officer or a constable assisting believes on reasonable grounds that seizure of the thing is necessary to prevent its concealment, loss or destruction or its use in committing an offence; and (b) whether the warrant authorises an ordinary search or a frisk search of a person who is at or near the premises when the warrant is executed if the executing officer or a constable assisting suspects on reasonable grounds that the person has any evidential material or seizable items in his or her possession. The primary difference related to the identification of the premises at which the searches were to be undertaken. In one case the search warrant related to the home of the second and third applicants at 2 Silex Road, Mosman, NSW ('Mosman'). In the other case the relevant premises were those of the first applicant at 119/26-32 Pirrama Road, Pyrmont NSW ('Pyrmont'). The other difference was, perhaps as a result of an inadvertent oversight, that in the Pyrmont warrant the names '• Linda DANIEL' and '• PKF Vanuatu' were included (twice), after the name '• Lynda MEEK', under the heading 'SECOND CONDITION', whereas in the Mosman warrant these two names did not appear at all. One suspects that the two pages bearing the number '3' in the search warrants became transposed at some stage. There is no issue in these proceeding as to whether the transposition, if there was one, occurred before or after the warrants were issued. 9 It is common ground that, at all material times, the second applicant, who is the wife of the third applicant, was the sole director and shareholder of the first applicant, although the first respondent has reserved the right to argue that the third applicant was in fact a shadow director of the first applicant. That between about 30 January 2003 and 30 July 2007, Clarissa Elizabeth MATTINLGY (sic) and Andrew David MATTINGLY with others at Sydney, in the State of New South Wales and elsewhere through an entity trading as Different Solutions, did conspire to deal with money, worth $100,000 or more, contrary to Sections 400.4(1) and 11.5 (1) of the Criminal Code Act 1995. If things, including any storage medium or storage device which contains any of the above things and any manual, instruction, password or other thing which is needed to gain access to or interpret or decode any of the above things, satisfy the three conditions set out above, this warrant also gives authority to seize those things on the basis that the things satisfy the above three conditions. A statement of the rights of the occupier of premises is attached to this warrant. Penalty: Imprisonment for 10 years. Penalty: Imprisonment for 20 years, or 1200 penalty units, or both. 16 In s 400.1(1) the expression 'deals with money or other property', which appears in s 400.4(1)(a), was defined to have 'the meaning given by section 400.2'. A declaration that the two search warrants purportedly issued under section 3E of the Crimes Act 1914 (Cth) ("the Crimes Act " ) by the Second Respondent and dated 30 July 2007 ('the search warrants") were invalid for the reason that the Third Condition of the warrants failed to specify the alleged offence or offences with sufficient particularity, specified an offence or offences not known to the law, or failed to disclose the nature of the offence or offences so as to indicate the area of the search or set the bounds to the area of the search. A declaration that the seizure and/or retention of some or all of the electronic materials, or some or all of the images of the electronic materials from materials seized by Australian Federal Police agents at the premises of the Applicants pursuant to two search warrants each issued under section 3E of the Crimes Act 1914 (Cth) by J Karam and dated 30 July 2007 under the search warrants was unlawful, on the basis that materials allegedly satisfying the three conditions of the search warrants did not do so, for the reason that the Third Condition of the search warrants was void and, alternatively, was not authorised by the search warrants, or at all. A declaration that the First Respondent, his officers, employees, servants and agents, are not, and each of them is not, entitled to use the communications and documents and other materials referred to in paragraphs 2(a) and 2(b) and 3 above . An order that the First Respondent by himself, his officers, employees, servants and agents be restrained from using the communications and documents and other materials referred to in paragraphs 2(a) and 2(b) and 3 above . An order that the First Respondent, his officers, employees, servants and agents return to the Applicants the communications and documents and other materials referred to in paragraphs 2(a) and 2(b) and 3 above. 21 At about 7:35am a team headed by Federal Agent Serrano of the Australian Federal Police, as the relevant executing officer, arrived at Pyrmont from which premises the members of the team departed at about 1:06pm. Another team led by Federal Agent Rebecca Miller, as the executing officer, arrived at Mosman at about 7:48am and departed therefrom at about 3:10pm. 22 Federal Agent Serrano's team included Federal Agents Phun, Randall and Wolkowski. They were assisted by, amongst others, an Australian Federal Police Computer Forensic Technician known as 'George' Bruce. Whilst Federal Agent Serrano was the executing officer named in the Pyrmont warrant, Federal Agent Phun was in fact the senior officer of the Australian Federal Police within the Pyrmont team. 23 Federal Agent Rebecca Miller's team included Federal Agents Fox, Scott Miller, Sperling and Gordon. Notwithstanding that Federal Agent Miller was the executing officer named in the Mosman warrant, the senior officer of the Australian Federal Police within the Mosman team was Federal Agent Fox. Another member of the Mosman team was a member of the Australian Federal Police's computer forensic team, Michael Banach. 24 The search warrants contemplated action being taken by the relevant executing officer and also by 'constables assisting'. A094427, A094428, A094429, A094431, A094432 and A094433. 27 The property apparently included originals or copies of letters, invoices, bank statements, financial accounts, tax records, corporate records, mobile telephone account records, credit cards and other documents along with two IBM Thinkpad laptop computers and a 'Seagate 250gb hard drive S/N SNDOT954' taken from the inside of a Dell Mini Tower P/C located on a desk in an upstairs office at Mosman. 28 The documents included some in which Edgecumbe Finance Ltd, Centurian Technology & Marketing Inc, International Finance Trust Company Ltd and/or Owen T Daniel & Co were mentioned, along with the first applicant and/or the second applicant and/or the third applicant. 29 At or about 9.07am on 31 July 2007 Federal Agents Sperling and Rebecca Miller spoke with the second applicant. Do you agree with that? 32 The Seagate hard drive was removed from Mosman and taken to the first respondent's office in Sydney where it was imaged. Following the imaging of the Seagate hard drive, the Seagate hard drive was itself returned to Mosman. 33 The first respondent is presently in possession of the image of the Seagate hard drive made at Police Headquarters in Sydney from the Seagate hard drive and also the TALON copy of the Western Digital hard drive made by Mr Banach. The Western Digital hard drive was not itself removed from Mosman. 34 A distinction is to be drawn between 'imaging' and 'copying'. What has been described as the TALON 'copy' of the Western Digital hard drive is more accurately described as an image of that hard drive. An image of a hard drive is a 'bit-stream' copy of the whole hard drive. A bit-stream copy or image will take data from every part of a drive. 35 'Imaging' amounts to forensic copying. It captures current data, data which has been deleted and spare disk space. 'Copying' is the word commonly used to describe the making of a copy of a file or a folder which you might see within a software program such as 'Windows Explorer'. 36 When he was at Mosman on 31 July 2007, Mr Fox gave an instruction to Mr Banach to image the Dell PC i.e. the Seagate hard drive (item (a)) and the Western Digital hard drive referred to in item (b). This instruction was given before Mr Banach operated the Dell PC. 37 At no time on 31 July 2007 did Mr Banach perform a key word search on the Seagate hard drive (item (a)) or the Western Digital hard drive referred to in item (b). A key word search involves the use of a software program such as 'Microsoft Find' which would locate any file or folder in the relevant hard drive containing the key word that had been entered. Relevantly for this case, a key word search might involve entering one of the names stated in the 'SECOND CONDITION' in the search warrant. 38 Before attempting to image the Seagate hard drive (item (a)) and the Western Digital hard drive referred to in item (b) Mr Banach 'looked at the Dell computer and noticed that it was powered on'. By clicking on 'My Computer' he was able to identify which hard disk drives were in the computer. 39 Between 11:03am and 12:02pm on 31 July 2007 Mr Banach effected the image capture of the Western Digital hard drive referred to in item (b) thereby creating the TALON copy (item (b)). 40 Mr Banach proceeded to set the TALON device to image the Seagate hard drive (item (a)). At 12:10pm he commenced the imaging process in respect of that hard drive. At 2:36pm Mr Banach noted that the TALON screen showed 'jumbled and abnormal output' which caused him to believe that the image was corrupted and that there must have been an error in the operation of the equipment used for the copying. How long will that take? She won't want to wait another two or so hours while that's going. 41 During the course of the execution of the Mosman warrant on 31 July 2007 Federal Agent Rebecca Miller had a conversation with Mr Banach the detail of which she cannot now recall. She did, however, form the belief that the computers which had been identified by the second applicant as being in the upstairs study might contain evidentiary material. During the search I had been shown documents apparently found in the upstairs study which purported to be tax returns which appeared to be created using a computer. Can you please make an image of it? the Seagate hard drive (item (a))) and the Western Digital hard drive referred to in item (b) would contain relevant evidence which fitted the three conditions of the Mosman search warrant. 45 On 30 July 2007 Federal Agent Fox had attended an operational briefing conducted by Federal Agents Miller and Phun. Information was provided to those present which suggested that the applicants were involved in a round-robin transaction scheme which was being investigated as part of 'Operation Starlifter' which itself involved an investigation into the chartered accounting firm known as Owen T Daniel & Co and 19 of that firm's clients. 46 Federal Agent Fox instructed Mr Banach to image the relevant hard drives as he held the belief that evidential material would be contained on the drives of the computers. A133572, A133573, A133574, A133575 and A133576. 48 On 31 July 2007 Federal Agent Rebecca Miller purported to appoint a number of persons, who were not constables, as constables assisting. One such person was Josephine Balen, a Compliance Officer in the Australian Taxation Office. 49 When engaged in the search and seizure of material at Pyrmont, Ms Balen identified a CD in a drawer which was labelled 'Payment Summary Report 1/7/04-30/6/05' ('the CD') which was seized on 31 July 2007 and placed in an Australian Federal Police evidence bag. 50 The property seized apparently included originals or copies of accounting records, tax records, cheque butts, invoices, bank statements, handwritten notes, wages records, cash flow records, company minutes, correspondence and other documents along with the CD seized by Ms Balen, another CD, a Lacie external hard drive marked 00140706180600C353U253, another Seagate external hard drive, two Hewlett Packard PC hard drives serial numbers TW01901007 and TW02508427 and a Dell Power Edge Server 4VVRFIS. 51 The documents included some in which Owen T Daniel was mentioned, along with the first applicant and/or the second applicant and/or the third applicant. 53 Each of the Dell server, the Lacie external hard drive device and the two Hewlett Packard E-Vectras were removed from Pyrmont and taken to the first respondent's office in Sydney where they were imaged. Following the imaging, they were returned to Pyrmont. 54 The CD remains in the possession of the first respondent. 55 Shortly before 9:09am on 31 July 2007 Mr Bruce accessed the Dell server (item (c)) to determine how many drives or other sources of data were connected or associated with it. He observed that it was physically connected to the Lacie hard drive (item (d)) and also a Seagate hard drive (not to be confused with item (a)). 56 At about 9:09am Mr Bruce commenced a key word search of 'computer disk volume labelled as 'Archive' connected to the server named 'Rex''. He electronically located files for the search term 'Owen T Daniel' on an external drive. Because of the complicated cabling connected to the server, Mr Bruce couldn't discern which external drive --- the Lacie (item (d)) or the Seagate hard drive --- was the one which was identified as 'Archive' electronically. 57 Mr Bruce conducted a superficial search. He considered that any hits which fell within the three conditions of the Pyrmont search warrant would indicate the likelihood of evidentiary material being stored on the server and its attached drivers. 58 The way the server was set up led Mr Bruce to form the belief that it would not be practicable to copy the server and the drives attached to it other than at the Australian Federal Police's Sydney headquarters. 59 Mr Bruce had assisted in the execution of five search warrants as part of Operation Starlifter prior to 31 July 2007 and was aware of the nature of the Operation Starlifter investigation. He had also been provided with a copy of the Standard Tactical Plan for Operation Starlifter. In this context, he formed the opinion that the data contained within the 'Archive' drive fell within the three conditions of the warrant. 60 Mr Bruce proceeded to say to Federal Agent Serrano words to the effect 'I have found files matching the keywords that I'd searched for. ' He identified the key words as being 'Owen T Daniel'. 61 At about midday Mr Bruce became aware that two Hewlett Packard E-Vectras had been discovered at Pyrmont in a box behind the staircase. He formed the view that they had previously been part of the network connected via the Dell server but had since been 'retired'. 62 On the basis that computer equipment is generally 'retired' every three years, Mr Bruce formed the belief that the two Hewlett Packard E-Vectras (item (e)) would have been part of the office network associated with the Dell server in the time period covered by the third condition of the Pyrmont search warrant. He considered that it would not be practicable to copy the two Hewlett Packard E-Vectras at the Pyrmont premises because they were likely to contain old and deleted data, the search and recovery of which, for the purposes of copying, was considered to be a complicated and slow process. 63 Mr Bruce's involvement in Operation Starlifter was such that he had an understanding that it was targeting Owen T Daniel & Co Chartered Accountants and 19 of that firm's clients in relation to tax fraud. 64 Federal Agent Serrano had a similar understanding in respect of Operation Starlifter. He attended a briefing on 30 July 2007 in relation to the first applicant's apparent involvement. 65 During the course of the morning on 31 July 2007 Federal Agent Serrano conducted an interview with Michelle Forrester, the first applicant's Financial Services Officer. During the course of the interview Ms Forrester was shown a number of handwritten notes which had been found in the 'disposal bin'. Ms Forrester described the notes as being 'from a board meeting that I have typed up'. So it's in Outlook regardless. She identified the handwriting as being 'my notes from my meeting with Kevin [referring to the first applicant's accountant, Kevin Zerafa] and other internal events'. Ms Forrester confirmed that she had typed up notes in her Outlook in respect of the manuscript notes which had been shown to her. 66 Mr Serrano gave evidence that Ms Forrester's responses confirmed his belief that the electronic equipment identified at Pyrmont contained material which fell within the three conditions of the Pyrmont search warrant. In relation to the hard drives which were seized at Pyrmont, Federal Agent Serrano's evidence was that at the time when they were seized he had formed a belief that they contained information which fell within the conditions of the Pyrmont search warrant and information which was no longer available on the server. The fact that we had formed a belief that the server may have been tampered with by somebody externally earlier that morning with the intention of trying to destroy evidence added value to the external hard drives as they may have contained evidence unable to be retrieved from the server. Insofar as I may have misread serial numbers it should be understood that I have endeavoured to identify the relevant items of property listed in the Property Seizure Records which have been referred to in the relevant table, with the applicants' description thereof. Hereafter I will endeavour to refer to the items in issue as the items identified by me above as (a), (b), (c), (d), (e) and (f). The first Court Attendance Notice related to an alleged offence between 3 February 2003 and 10 October 2006 under s 400.4(1) of the Criminal Code . The offence was described as 'Deal in Proceeds of Crime --- Money or Property worth $100,000 or more', the short particulars of which were described as 'Clarissa Elizabeth Mattingly, through an entity trading as Different Solutions, did deal with money worth $100,000 or more and that money was an instrument of a crime'. 69 The second Court Attendance Notice served upon the second applicant alleged four separate offences of 'Obtaining Financial Advantage by Deception' under s 134.2(1) of the Criminal Code . The first such offence was alleged to have been committed between about 1 July 2002 and 11 May 2004, the second between about 1 July 2003 and 27 May 2005, the third between about 1 July 2004 and 18 July 2006 and the fourth between about 1 July 2005 and 26 July 2007. The four offences alleged were said to relate to income tax returns for the financial years ended 30 June 2003, 30 June 2004, 30 June 2005 and 30 June 2006. The 'Short Particulars' in each case were to the same effect. Particulars of the deception Submitted an income tax return for the financial year ended 30 June 2003 which contained false company expenses. Particulars of the financial advantage Did not pay any tax on income that would normally be taxable. 71 In relation to the third applicant two Court Attendance Notices were also served upon him on 30 April 2008 alleging in the first case an offence under s 400.4(1) of the Criminal Code and in the second case four separate offences under s 134.2(1) of the Criminal Code . The several offences particularised mirrored those referred to in the two Court Attendance Notices served upon the second applicant. 72 The Court Attendance Notices directed to the third applicant were also endorsed by the Downing Centre Local Court as having been received on 2 May 2008. 1.2 Background The Australian Taxation Office has been looking into scheme activity involving Australian residents and foreign tax havens. A primary focus has been the country of Vanuatu. It is a low tax jurisdiction and Australia does not have a double tax agreement with this country. The ATO identified what appeared to be 'round robin' transactions involving 19 taxpayers who were all clients of the one tax agent, Owen T Daniel & Co, located at 30 Burwood Road, Burwood NSW. Audits have been conducted on three taxpayers who were clients of Owen T Daniel & Co. It was identified that all of the foreign companies involved in the round robin were owned or controlled by Robert Francis AGIUS. He is an ex-pat Australian now resident in Vanuatu. He is a partner of the accounting firm PKF Vanuatu. AGIUS has been identified as the promoter of these arrangements and frequently travels to Australia to meet with clients. 1.3 Outline of Scheme The scheme is basically a round robin, where funds are transferred out of the bank accounts of Australian resident companies to a bank account in New Zealand. The form of the payment is usually for "consulting fees" but can also include "insurance premiums" and "interest". These payments are claimed as tax deductions in the tax returns of resident Australian companies. A few days after the initial fund transfer to New Zealand the funds are invariably transferred back to the Australian taxpayer from a separate New Zealand bank account as "loans". This amount is deposited into the Australian bank accounts of either the original company or to the owner and controller of that company. The New Zealand bank accounts are all controlled by the partners of PKF Vanuatu. The accounts are in the name of companies incorporated in non tax haven companies (sic) such as the UK, USA and Ireland. These companies are also controlled by the partners of PKF Vanuatu. The primary reason for the arrangement is to reduce the tax payable by the Australian resident company. Some arrangements also have the secondary benefit of getting the company profits to the directors in a tax free manner. For the purpose of addressing the issues in relation to the Seagate hard drive (item (a)) it is also necessary to focus upon the provisions of s 3L(2) and s 3F(1)(c) of the Crimes Act . 75 In relation to the TALON copy of the Western Digital hard drive (item (b)) it is necessary to focus upon s 3L(1A) of the Crimes Act . 76 In relation to the Dell server (item (c)) and the 500GB Lacie external hard drive (item (d)) it is necessary to focus upon s 3L(2) of the Crimes Act and also s 3F(1)(c) and (d). 77 In relation to the two Hewlett Packard E-Vectra hard drives (item (e)) it is necessary to focus upon s 3L(2) of the Crimes Act and also s 3F(1)(c). 78 Finally, in relation to the CD it is necessary to focus upon s 3F(1)(c). The amendments included amendments to s 3L(1) and the insertion of s 3L(1A). 83 In s 3C of the Crimes Act a series of expressions and words are defined for the purposes of Part IAA of the Act which includes ss 3C --- 3ZX. A computer file is a subset of a larger body of data (per Branson J in Kennedy v Baker at [56] and [62]). 86 In s 3(1) of the Crimes Act other words and expressions were defined including 'thing relevant to an indictable offence' and 'thing relevant to a summary offence'. The statute draws a distinction between the seizure of a thing from the premises and the taking away of a thing brought on to the premises. The corollary of this distinction is that information in electronic form downloaded onto a device brought on[to] the premises is not treated as itself the subject of "seizure". Proposed subsection 3L(1) would clarify that the existing power to operate electronic equipment on premises to find evidential material includes material physically located away from the premises. ... As most business computers are networked to other desktop computers and to central storage computers, files physically held on one computer are often accessible from another computer. In some cases these computer networks can extend across different office locations. Accordingly, it is critical that law enforcement officers executing a search warrant are able to search not only material on computers located on the search premises but also material accessible from those computers but located elsewhere. Proposed subsection 3L(1A) would enable law enforcement officers executing a search warrant to copy data held on any electronic equipment or associated devices at search premises to a storage device where there are reasonable grounds for suspecting that the data contains evidential material. This will permit officers to copy all data held on a computer hard drive or data storage device if some of the data contains evidential material or if there are reasonable grounds to suspect the data contains evidential material. The existing provision [see s 3L(2)(c)] only allows evidential material to be copied ... . Electronic equipment, such as a computer hard drive, can hold large amounts of data. It is often not practicable for officers to search all the data for evidential material while at the search premises and to then copy only the evidential material which is found. The proposed provision would allow officers to copy all the data on a piece of electronic equipment (by imaging a computer hard drive for example) in situations where an initial search of the data uncovers some evidential material or where the officer believes on reasonable grounds that the equipment might contain evidential material. It may be noted that the form of clause 3L(1A) as contained in the Cybercrime Bill 2001 was the same as it was in the subsection as enacted. 91 The ordinary meaning conveyed by s 3L(1A)(a) is that if the executing officer or constable assisting believes on reasonable grounds that data from a particular source accessed by operating a computer might constitute evidential material, he or she may copy the data from that source to a disk, tape or other associated device brought to the premises. Furthermore, a computer hard drive is a single source of data within the meaning of that paragraph (per Branson J in Kennedy v Baker at [66] and [70]). 92 When s 3L(1A) was inserted into the Crimes Act by the Cybercrime Act 2001 (Cth), s 3L(2)(c) was repealed at the same time. All that is required is that the executing officer or constable assisting 'believes' on reasonable grounds 'that any data accessed by operating the electronic equipment might constitute evidential material'. This of course, does not preclude an executing officer or constable assisting from operating the relevant electronic equipment if he or she holds the requisite belief under s 3L(1) on reasonable grounds. 94 In Trimboli v Onley (No. 3) (1981) 56 FLR 321 ('Trimboli'), a case under the former s 10 of the Crimes Act (see below), Holland J asked himself the rhetorical question --- at what time must the required belief be held for a seizure and subsequent detention to be lawful? When the draftsman of the statute intends to refer to "evidential material" as defined, he is careful to use that term. The storage device is intended as a surrogate for the original disk, tape or other associated device, and the explanatory memorandum confirms that a duplicate disk was intended. In that context, a Full Court comprising Bowen CJ, Lockhart and Jackson JJ in Parker v Churchill [1986] FCA 88 ; (1986) 9 FCR 334 made declarations that certain search warrants were outside the powers conferred by s 10 of the Crimes Act insofar as they contained a paragraph (d) and so much of paragraph (b) as referred to the possible offence by Parker and Carson of falsely representing that they were registered persons for the purposes of the Sales Tax Assessment Act (No 1) 1930 (Cth). The Court held that the warrants in that case were otherwise valid (see at 336 and 352). 99 Jackson J was of the opinion that a search warrant should state the description of the offence in question with a particularity sufficient to enable the person whose premises are being searched to know the exact object of the search (see Parker v Churchill at 348; see also The Queen v Tillett; Ex parte Newton (1969) 14 FLR 101 ('Tillett') at 113; Crowley v Murphy [1981] FCA 31 ; (1981) 34 ALR 496 ('Crowley v Murphy'); Brewer v Castles [1984] FCA 47 ; (1984) 1 FCR 55 and Australian Broadcasting Corporation v Cloran (1984) 4 FCR 151 ('Cloran') at 153). As Fox J said in Tillett 'the search must have a purpose and what may be searched as relevant to one purpose may, or may not, be as extensive as that which has to be searched as relevant to another purpose'. It simply alleges in the broadest terms that "at various times" over a period of more than six years Parker and Carson had evaded payment of income tax and it is impossible in these circumstances, in my view, to regard par (d) as stating with sufficient particularity the offences. If the courts were to insist upon the invalidation of a warrant for a legally incorrect formulation of an offence, although the substance of the offence could plainly be understood, they would not be interpreting the will of the Parliament but subverting it. For the Parliament cannot have intended lay justices to be held to such a standard, when it entrusted the task of issuing warrants to them. ... ... In my opinion, the conclusion emerges clearly that there is no justification for an "exact object" test. The matter should be viewed broadly, having regard to the terms of the warrant in the circumstances of each case. The question should not be answered by the bare application of a verbal formula, but in accordance with the principle that the warrant should disclose the nature of the offence so as to indicate the area of search. The precision required in a given case, in any particular respect, may vary with the nature of the offence, the other circumstances revealed, the particularity achieved in other respects, and what is disclosed by the warrant, read as a whole, and taking account of its recitals. What is significant, however, is that the warrant disclose the nature of the offence in question so as to indicate the area of search. 103 There is no room for a notion that if separate offences are rolled up in a search warrant, the warrant is in some way invalidated on grounds analogous to duplicity (per Hely J in Williams v Keelty [2001] FCA 1301 ; (2001) 111 FCR 175 at [142] ). 104 A reference in a search warrant to an incorrect section will not of itself invalidate a search warrant (per Jackson J in Parker v Churchill at 340). If a reference to an incorrect section has the result that the warrant does not specify any offence, or makes the warrant ambiguous so that it is not possible to tell what offence is referred to, it may invalidate the warrant. To avoid invalidity, a search warrant must disclose the nature of the offence/s sufficiently to indicate the permissible area of search in relation to which s 3E of the Crimes Act is capable of operating, in otherwise intelligible terms (see generally per Jackson J in Parker v Churchill at 340; see also Burchett J in Beneficial Finance at 543 and Harts at 152). 105 The administration of the criminal law requires that search warrants be issued for the purpose of obtaining evidence for legitimate use in criminal proceedings (per Lockhart J in Cloran at 154). But that consideration must be weighed against the interference with privacy that is the inevitable consequence of the execution of a search warrant. 106 It must be remembered that the entry, search and seizure authorised by the Crimes Act is not confined to the premises of a person suspected of committing a crime. The owner or occupier of the premises may be quite unconnected with the commission of any crime. This illustrates the necessity for search warrants, which are intrusions into the sanctity of a person's domain and concomitantly an interference with his privacy, to define with reasonable particularity all relevant matters: the premises, the things liable to be seized and the offences which were committed or suspected to have been committed (per Lockhart J in Cloran at 154). 107 As crime corrupts our society and undermines the very liberties we value so highly, some judgments rightly attach great importance to the prevention, detection and punishment of crime. That is a dirty, difficult, often dangerous and, more often, thankless task which we are very ready to dump upon the shoulders of our police force. It has to be remembered that the war against crime is a war to protect and preserve our liberties. The search warrant is a valuable and frequently essential weapon in that fight. Obviously, like all weapons, it can be a danger to society if misused; but there can be no valid objection in the name of liberty to the proper use of a search warrant. It is said in the cases that the courts must be vigilant and have a duty to see that our liberties are not invaded by an abuse of the power to issue and execute search warrants. As it has to be recognized that the use of search warrants can serve the public good it is said that the task of the court is to find a satisfactory and workable compromise of the conflicting public interests that are involved. As cases and circumstances vary infinitely, that is easier said than done. However, it is important in approaching problems in relation to search warrants not to overlook or underrate the value to the welfare of society of the use of the search warrant as an instrument against crime (per Holland J in Trimboli at 332-333). 108 Although a warrant must comply strictly with the statutory conditions for its issue (see George v Rockett [1990] HCA 26 ; (1990) 170 CLR 104 at 110-111 and State of New South Wales v Corbett [2007] HCA 32 ; (2007) 230 CLR 606 at [1] , [3], [18]-[19], [87] and [95]-[100]), it should, like other documents, be read fairly and not perversely. The language used need not be elegant (see per Burchett in Beneficial Finance at 544 and 546; see also per Hely J in Williams v Keelty at [135]-[139]). Section 86(1) of the Crimes Act 1914 (Cth) to wit, conspiracy to commit an offence against a law of the Commonwealth, to wit, s. 49 of the Sales Tax Assessment Act No. 1 , 1930. Section 86(1)(e) of the Crimes Act 1914 (Cth), to wit, conspiracy to defraud the Commonwealth. Section 49 of the Sales Tax Assessment Act No. 1 , 1930, to wit, by any wilful act, default or neglect, or by any fraud, art of contrivance whatsoever, avoids or attempts to avoid taxation. In the present case, three offences are nominated, notwithstanding that the description of the second offence is necessarily general in terms. But, in my opinion, the description of the apprehended offences in the subject warrant is sufficiently definite to indicate the nature of the documents, if any, to be seized. In my view, the proper construction of the warrant calls for a consideration of the instrument as a whole. ... in my opinion, it is appropriate to employ language in the operative portion of the warrant which incorporates by reference material in the recitals, provided the process gives a result which is reasonably clear to the ordinary reader and is sufficiently specific in terms of identifying a particular offence... In my opinion, the present warrant is reasonably clear in its operation and it does achieve the degree of specificity thus required. That would be impossible, and indeed to attempt it would be irrational, bearing in mind the stage of the investigation at which a search warrant may issue. The purpose of the statement of the offence in a search warrant is not to define issues for trial, but to set bounds to the area of search which the execution of the warrant will involve, as part of an investigation into a suspected crime. The appropriate contrast is not with the sort of error which might vitiate an indictment, but with the failure to focus the statutory suspicion and belief upon any particular crime, with the result that a condition of the issue of the warrants is not fulfilled (per Burchett J in Beneficial Finance at 533 which was cited with approval by Heerey J in Chong v Shultz [2000] FCA 582 ; (2000) 112 A Crim R 59 ('Chong v Shultz') at [7]). 112 What the rule requires is identification (and so limitation) of an area of search by reference to a suspected offence, not the formulation of a pleading before the offence is capable of prosecution (per Burchett J in Beneficial Finance at 533-534). As to [i], he submitted that there is no such offence as "redirecting income tax" derived by a person. As to [ii] he pointed out ... that there is no s 276A in the Bankruptcy Act 1966 (Cth). However, there is a s 267A which makes it an offence for a bankrupt to give a statement to a trustee under s 139U that is false or misleading in a material particular. The penalty provided is imprisonment for 12 months. I think a reasonable reading of the paragraph in question would indicate that the word "tax" where secondly appearing has been inserted in error. Such a reading is confirmed by looking, as one is entitled to do, at the context of the warrant as a whole, including the nature of the documents sought in the first condition and the persons identified in the second condition. All this suggests to the reader that the subject of the warrant is a particular kind of category of the offence of defrauding the Commonwealth, namely defrauding in relation to income tax. 117 In respect of paragraph (ii) Heerey J followed Parker v Churchill in relation to the misdescription of the section by reference to which the offence had been identified and generally applied what Jackson J said in that case. His Honour considered the observation of Jackson J at 340 to be applicable to s 3E(5)(a) as it then stood. The offence of giving false information to a trustee in bankruptcy, which is undoubtedly an offence, is clearly stated. However, the power of enforcing a search warrant must, firstly, be exercised in good faith. Secondly, it must be exercised for the purpose for which it was conferred. It must not be used for some ulterior purpose. Thirdly, it must be exercised fairly, having regard to all the circumstances. Fourthly, it must be exercised having regard to the rights of those affected by its exercise and, fifthly, the officer executing the warrant must strictly follow the directions contained in it and must not exceed the limits of the authority conferred by it (see generally per Lockhart J in Crowley v Murphy at 521). 120 The overriding obligation of the searcher is to do no more than is reasonably necessary to satisfy himself or herself by search that in all the circumstances of a particular case he or she has whatever documents or things are necessary to answer the terms of the search warrant. Plainly this will vary from case to case. What is permissible on one occasion may be impermissible on another. Much must be left to the sense of responsibility of the police officers executing the warrant and the person whose premises are to be searched (see per Lockhart J in Crowley v Murphy at 525 --- 526 (when addressing a search warrant issued under the former section 10)). The notion of reasonable grounds for a suspicion imports an objective test, but "reasonable" involves a value or normative judgment (Greiner v Independent Commission Against Corruption (1992) 28 NSWLR 125 at 167), and there may well be legitimate differences of opinion as to what falls within the term, particularly when it is used in relation to a nebulous expression such as "suspicion". A court is not entitled to substitute its own opinion on that question for the opinion of the executing officer or constable assisting. 123 In relation to the 'first offence' the putative accused were identified, the time period in which the wrongdoing was said to have occurred was clearly stated and the general nature of the offences to which the warrants related, was provided. 124 This case is probably not the proper vehicle in which to address the niceties associated with the determination of the true construction of s 134.2 of the Criminal Code and its application, if any, to financial advantages that may have been derived by a shareholder or shareholders, or a director or directors of a company, from the lodgement of company income tax returns containing false claims for allowable deductions. 125 The description of the 'Australian Taxation Office' as a 'Commonwealth entity' in the first offence as recorded in the Third Condition of the search warrants would appear to have been misconceived. (See, inter alia, s 255 - 5 of Schedule 1 to the Taxation Administration Act 1953 (Cth) ('the Administration Act'), s 166 of the Income Tax Assessment Act 1936 (Cth) ('the 1936 Act'), s 23(2) of the Income Tax Rates Act 1986 (Cth), s 250-10 of the Administration Act and the Table thereto and s 204 of the 1936 Act). 129 Another complication in relation to the first offence as recorded in the third condition of the search warrants is the reference to the second and third applicants obtaining a financial advantage in the form of a reduction in 'their' taxable income. 130 In addition, the first offence charges that the second and third applicants, dishonestly and by deception, obtained a financial advantage in the form of a reduction of their taxable income 'by submitting false Tax Returns for the financial years ending 30 June 2003 to 30 June 2006 inclusive for [ unspecified ] Australian companies and individuals by claiming false deductions for management fees and loans'. The reference to 'Australian companies and individuals' is seemingly limitless, but the words 'thereby reducing their taxable income' introduced a connection between the activities of the second and third applicants through an entity trading as Different Solutions Pty Ltd and the submission of false tax returns. 131 Reading the warrants fairly and not perversely and putting to one side inelegant language that may have been employed, I consider that, consistent with the authorities referred to above, the search warrants sufficiently state the first offence in accordance with the requirements of s 3E(5)(a) of the Crimes Act . 132 The material recorded in the third condition in respect of the first offence is sufficient to allege that the second applicant, by a deception, dishonestly obtained a financial advantage from the Commonwealth and that the third applicant, by a deception, dishonestly obtained a financial advantage from the Commonwealth, albeit in the somewhat curious manner described in the first offence. 133 In relation to the 'second offence', the second and third applicants are clearly identified, 'with others', as alleged conspirators and the offence they allegedly conspired to commit was identified, at least by the reference to s 400.4(1) of the Criminal Code . The time period in respect of which the conspiracy was said to have been committed was also clearly stated. The reference to money 'worth $100,000 or more' is curious unless, perhaps, some sort of foreign currency was involved, but then, s 400.4(1)(c) requires that where there is a dealing with money falling within the subsection, and in this regard see [15]-[17] above, 'the value' of the money must be $100,000 or more. 134 No mention was made of whether the conspiracy to deal with money was in relation to money believed to be the proceeds of crime on the one hand, or money intended to become an instrument of crime on the other. Nor was there any clear identification as to whether the 'Different Solutions' referred to was intended to identify a business carried on under that business name or the company identified as Different Solutions Pty Ltd in the statement of the first offence. 135 Again, this case is probably not the proper vehicle in which to address the niceties associated with the determination of the true construction of s 400.4(1) and s 11.5(1) of the Criminal Code , when taken with s 400.1(1) and 400.2(1), and their application, if any, to dealings with money, if any, upon which the alleged conspirators may have agreed. 136 However, reading the search warrants fairly and not perversely and putting to one side the inelegance of the language chosen, part of which can be attributed to the inelegance of the language in which s 400.4(1) of the Criminal Code was itself expressed, I consider that the second offence referred to in the search warrants was sufficiently identified to satisfy the requirements of s 3E(5)(a) of the Crimes Act . 137 I am unable to accept the submission of the applicants that the second respondent erred by issuing search warrants that weren't sufficiently tight to comply with the requirements of the Crimes Act . 138 Having rejected the submission of the applicants in relation to alleged deficiencies in the statement of the offences to which the search warrants related, it is now necessary to consider the execution of the warrants on 31 July 2007. Did the execution of the search warrants exceed the relevant powers? 140 Before doing so I should say that if (say) a search warrant authorised the search for and seizure of cheque butts referable to cheques drawn on a particular bank account with identified serial numbers or made payable to identified payees in relation to (say) a suspected taxation fraud offence, I would consider it quite improper for the executing officer, and/or constable assisting, to dismember any book of cheque butts that may be found so as to permit seizure of a particular butt. It would be incumbent upon the relevant officer or constable to seize the entire book even though the remaining butts may not answer the description of the search warrant. Similarly, if (say) a search warrant authorised the search for and seizure of a manuscript ledger account referable to a particular class of income or expenditure or a subset thereof, such as 'accounts receivable from customer X', I would again consider it quite improper for the executing officer or constable assisting to dismember a bound book containing ledger accounts by tearing out or otherwise removing the relevant page or pages. It would, in my opinion, be incumbent upon the relevant officer or constable to seize the entire book, even though the remaining folios may not answer the description of the search warrant. 141 The point that I am endeavouring to make is that if a particular item of stored information, recorded in documentary form, is itself to be found in a medium that contains other information, recorded in documentary form, then the search warrant would, in my opinion, permit seizure of the medium itself. 142 Logically, one would expect that if a particular item of stored information, included in a mass or body of characters or symbols, capable of being processed into accessible form by the operation of electronic equipment, was to be found in a medium that contained other information similarly accessible, the host medium could itself be seized or copied and taken away. 143 However, the power to seize or to copy and take away can only be exercised if the relevant statutory prerequisites are met. In the circumstances, it becomes necessary to consider the application of s 3L(2) and s 3F(1)(c) to the seizure of item (a). 145 With a measure of frankness, for which he is renowned, senior counsel for the first respondent, without abandoning his case under s 3L(2) , acknowledged that it was 'a bit thin' and that his primary case in respect of item (a) was under s 3F(1)(c). 146 Whilst Mr Banach noticed that the Dell Mini Tower P/C was 'powered on' and clicked 'My Computer', to see if he could identify which hard disk drives were in the computer, he did not perform any key word searches to locate files or folders in the hard drives containing any of the relevant key word/s. In the circumstances, I am unable to find that 'after operating the equipment' Mr Banach found that 'evidential material', within the meaning of the Crimes Act , was 'accessible by doing so'. Accordingly, s 3L(2) did not confer power on Mr Banach or Federal Agents Rebecca Miller or Fox to seize item (a). 147 The question then becomes whether the Mosman warrant authorised seizure of item (a) as an item of evidential material specified in the warrant. This begs the question 'what were the kinds of evidential material (things relevant to an indictable offence or things relevant to a summary offence, including such things in electronic form) specified in the warrant?'. 148 It cannot be doubted that item (a) was a 'computer storage device' or other type of 'storage medium or storage device' within the meaning of the preamble in the first condition of the Mosman warrant. However, authority for its seizure can only be found in s 3F(1)(c) of the Crimes Act if, in relation to it, all three of the conditions specified in the Mosman warrant were satisfied. There is no evidence to establish these matters in respect of item (a). What data the item contains and what information may be accessed through such data being processed by an appropriate piece of electronic equipment is unknown, given the undertaking of the first respondent referred to at [5] above. In my opinion, s 3F(1)(c) did not authorise the seizure of item (a). 149 Whether the image from the hard drive that was made at the first respondent's office in Sydney following the removal of the hard drive from the Mosman premises, should be destroyed or delivered up to the second and third applicants, if that be possible, or may be retained by the first respondent as potential evidence, illegally obtained, in relation to the offences with which the second and third applicants have now been charged, is a matter for later consideration. 151 The belief of Mr Banach referred to at [44] above was, in the context of the search and his communications with Federal Agents Fox and Rebecca Miller, sufficient to constitute a belief on reasonable grounds that any data accessed by operating the Dell Mini Tower P/C might constitute evidential material within the meaning of the Crimes Act . Furthermore, the belief of Federal Agent Fox referred to at [46] above was, in the context of the search and his communications with Federal Agents Rebecca Miller and Phun, the Standard Technical Plan for Operation Starlifter and his prior involvement in the execution of Operation Starlifter search warrants, sufficient to constitute a belief on reasonable grounds that any data accessed by operating the Dell Mini Tower PC might constitute evidential material within the meaning of the Crimes Act . That belief, coupled with Federal Agent Fox's instruction to Mr Banach to image the Dell Mini Tower P/C (i.e. relevantly items (a) and (b)) brought the making and taking of the TALON copy of the Western digital hard drive within the power conferred by s 3L(1A) of the Crimes Act . 153 Unlike Mr Banach at Mosman, Mr Bruce at Pyrmont conducted a key word search of the computer disk volume labelled as 'Archive' connected to the server named 'Rex'. He electronically located files for the search term 'Owen T Daniel' on an external drive but was unable to identify which of the external drives was the one which was identified as 'Archive' electronically. 154 The authority conferred by s 3L(2) of the Crimes Act to seize the equipment did not require Mr Bruce to find that 'evidential material specified in the warrant ' was accessible by operating the equipment. All that was necessary was that he find, after operating the equipment, that 'evidential material is accessible by doing so'. Relevantly that required him to find something as to which there were reasonable grounds for suspecting that it would afford evidence as to the commission of an indictable offence. 155 Given the matters referred to at [56], [57], [59], [60] and [63] above there were reasonable grounds for Mr Bruce suspecting, as I find that he did, that there were things on the hard drives which would afford evidence as to the commission of an indictable offence against a law of the Commonwealth. 156 I am satisfied that it was not practicable to copy the data within items (c) and (d) at the Pyrmont premises and infer that it was not practicable to put the evidential material in documentary form by using facilities at the Pyrmont premises. Accordingly items (c) and (d) were lawfully seized within the power conferred by s 3L(2) of the Crimes Act . 157 If I were in error in reaching the conclusions which I have in relation to the application of s 3L(2) to items (c) and (d), I would conclude that seizure of the two items was within the power conferred by s 3F(1)(c) or (d), in any event. 158 Items (c) and (d) were undoubtedly computer storage devices or other types of storage media or storage devices within the meaning of the preamble in the first condition of the Pyrmont warrant. The authority for their seizure under s 3F(1)(c) of the Crimes Act required that in relation to each of the items all three of the conditions specified in the Pyrmont warrant were satisfied. In my opinion, the evidence of Mr Bruce (and in this regard see, inter alia [56], [59], [60] and [63] above) provided sufficient justification for the seizure of items (c) and (d) under s 3F(1)(c) of the Crimes Act on the basis that the three conditions had been satisfied. 159 Alternatively, if the three conditions were not satisfied, the matters referred to at [65]-[66] above provided a proper basis for the seizure of items of (c) and (d) at Pyrmont in accordance with s 3F(1)(d) of the Crimes Act . In this context, Federal Agent Serrano's belief that the Dell Power Edge Server known as 'Rex' may have been tampered with by somebody externally earlier in the day on 31 July 2007 with the intention of trying to destroy evidence, is important. Federal Agent Serrano undoubtedly believed, on what I consider to have been reasonable grounds, that evidential material in relation to one or other or both of the offences to which the Pyrmont warrant related was to be found stored in the items (c) and (d). It is said that the two hard drives, together item (e), which were discovered in a box behind the staircase at Pyrmont on 31 July 2007, were covered by the words 'and any disk, tape or other associated device' in s 3L(2)(a) of the Crimes Act . 161 The phrase in question clearly provides authority for detached items customarily used in or in relation to computers to be exposed to seizure in the same way as the computers themselves. 162 Given the evidence summarised at [61]-[62] I am of the opinion that the two hard drives covered by item (e) were covered by the expression 'and any disk, tape or other associated device' and, as such, properly seized along with items (c) and (d) under s 3L(2) of the Crimes Act . 163 Were I in error in concluding that item (e) was properly seized under s 3L(2) of the Crimes Act , I would conclude that the power contained in s 3F(1)(c) did not authorise seizure of the two hard drives for reasons akin to those recorded in relation to item (a) and the application of s 3F(1)(c) thereto. What data the two hard drives comprising item (e) contain and what information may be accessed through such data being processed by an appropriate piece of electronic equipment is unknown, given the undertaking of the first respondent referred to at (5) above. 165 It may be inferred from the label 'Payment Summary Report 1/7/04-30/6/05' and the location of the CD in a drawer at the premises of the first applicant at Pyrmont, that the CD includes 'Accounting documents and working papers' referable to the first applicant, sufficient to satisfy the first condition and the second condition. However, there is no evidence to establish that the CD satisfies the third condition. There was no evidence to establish reasonable grounds for suspecting that information accessible via the CD would afford evidence as to the commission of one or other or both of the offences mentioned in the third condition. 166 In my opinion, s 3F(1)(c) did not authorise the seizure of item (f). 168 Insofar as prayer for relief 2(a) is concerned, there can be no basis for the grant of declaratory relief in circumstances where the issues relating to legal professional privilege were resolved between the parties on terms which were never disclosed to the court. 169 Under prayer for relief 2(b), no issues arose in respect of 'documents' that were seized on 31 July 2007. As to 'other material', my findings in relation to the seizure or copying and taking of such material do not warrant the making of any declarations, except perhaps in respect of items (a) and (f). In relation to those items, there remains the question as to whether the first respondent may use the image of the hard drive (item (a)) and/or the CD (item (f)) which were illegally obtained. 170 Section 138 of the Evidence Act 1995 (Cth) confers a discretion to exclude improperly or illegally obtained evidence. However, it contemplates that evidence that may be contained in the image of the hard drive (item (a)) or the CD (item (f)) could become evidence in, relevantly, the proceedings instituted against the second and third applicants. 171 In Gedeon v Commissioner of the New South Wales Crime Commission (2008) 249 ALR 371 the High Court addressed what it referred to as 'fragmentation of the criminal process'. This is that power to make declaratory orders should be exercised sparingly where the declaration would touch the conduct of criminal proceedings. The fragmentation of the criminal process is to be actively discouraged. True that may be, but, in the present case the quite significant amendments to the Application were not made until after the relevant Court Attendance Notices had been served whereby the prosecutions of the second and third applicants were commenced and more importantly the applicants did not adduce any evidence to establish that neither the image of the hard drive (item (a)) nor the CD (item (f)) contained any evidence that could be admissible on the prosecution of the charges laid against the second and third applicants. On balance in this case, the greater interest lies in preserving the evidence; the question of admissibility may properly be left to the trial judge. Accordingly, I would not be prepared to make any order for the return of items seized pursuant to the invalid warrant if they are required for the prosecution of the first applicant .... There is however, no material presently before me as to the evidentiary value of the seized items. I would be prepared to receive further material and hear argument, should the parties so wish, as to whether any or all of the material seized does in fact afford evidence of an offence. 175 In Puglisi v Australian Fisheries Management Authority (1997) 148 ALR 393 Hill J addressed the question of whether items seized pursuant to an invalid warrant should be returned to the parties from whom they were seized. At 403 his Honour expressed the opinion that prima facie the applicants in that case were entitled to an order against the Commissioner of Police directing that the goods seized under the invalid warrant be returned. His Honour then went on to consider whether or not he should refuse to grant the relief sought. While the court would not wish to be seen to be rewarding members of the police who obtain possession of material without lawful authority, there is to be weighed against that a public interest in the administration of and non-interference with justice. Should the court order that material, albeit invalidly obtained, to be used in evidence in a pending prosecution be delivered up to those from whom it was taken the prosecution, which might otherwise succeed, could be frustrated . 177 In the exercise of my discretion in this case, I am disinclined to prohibit the use by the first respondent of the stored information accessible by the operation of electronic equipment in relation to the Seagate hard drive (item (a)) and the CD (item (f)). It is not as if the search warrants were invalid in this case or that the seizure of the items in question concerned a stranger to the persons referred to in the offences identified in the third condition of each of the search warrants. Were the first respondent to come to the view that there was no evidential material referrable to the offences now charged or any other offences that are indictable offences in items (a) and/or (f), I would expect the image of the hard drive (item (a)) to be destroyed and the CD returned to the first applicant. However, on the material presently before the Court I would not be disposed to grant any declaratory or injunctive relief as sought. 178 In my opinion the Further Amended Application should be dismissed with costs. I certify that the preceding one hundred and seventy-eight (178) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham.

search warrants judicial review of issue of construction of warrants whether a broad approach should be taken toward the requirement that a warrant contain a sufficient indication of the offence by reference to which it authorises seizure of particular things what matters a warrant should disclose whether a search warrant should be 'read fairly, and not perversely' practice and procedure court's discretion to refuse declaratory and injunctive relief in respect of the use of material said to fall outside the reach of a valid search warrant criminal law

He claims to have produced the work in 1987 for use on shirts in order to promote a restaurant called "The Hog's Breath Saloon" in Florida. 2 In proceedings commenced in this Court on 24 October 2006 Mr Lamb sought declarations that his copyright had been infringed by the respondents. He sought injunctive relief and damages and an account of profits. He alleged, in substance, that from 1996 onwards companies controlled by Mr Donald Algie, a former employee of the Hog's Breath Saloon in Florida, had infringed his copyright in the Wave Hog Work in various ways. These have involved the application of the cartoons to various articles including articles of clothing and in connection with restaurant services supplied by Hog's Breath cafes in Australia. The applicant is to file and serve a substituted statement of claim on or before 26 March 2007. 2. 4 In argument prior to the delivery of that judgment counsel for Mr Lamb said that he did not have a clear picture of the respective functions of the respondent companies within the Hog's Breath group. In the original statement of claim it was said that HB Investments Pty Limited (HB Investments) held registered trade marks and that the principal case against it was that it had authorised infringement of Mr Lamb's copyright in the Wave Hog Work by licensing to the other corporate respondents the right to use those trade marks. What trade marks were licensed to which respondents did not appear. A significant obstacle in the way of a more precise pleading on Mr Lamb's part was the absence of information about which of the companies took that role within the Hog's Breath group and which was responsible for the production and marketing of the various articles said to bear infringing productions of the work or of a substantial part thereof. As noted in that judgment want of knowledge does not of itself excuse a pleading which does not identify which cause of action is raised against which respondent or which fails to identify the material facts constituting each such cause of action. Although O 15A of the Federal Court Rules may well have been available to enable Mr Lamb to identify the persons against which he might have a cause of action, or the causes of action he might have, it was not availed of. 5 A substituted statement of claim was filed on 10 April 2007. It was a much more substantial document than its predecessor and was settled by senior counsel. It identifies Hog's Breath Company Pty Ltd (Hog's Breath Company) as the master franchisor, since 24 October 2006, of a franchised chain of restaurants around the world known as "Hog's Breath Cafes". A list of Australian franchisees is scheduled to the statement of claim. Hog's Breath Cafe (Australia) Pty Ltd (Hog's Breath Cafe (Australia)), the second respondent, is identified as the master franchisee of the Australian franchisees since at least 24 October 2006. HB Investments is said to be the registered owner of Australian registered trade mark numbers 701388 and 1013512, both of which involve the image described, inter alia, as "Hog, cartoon wears sunglasses & crossed bandages, adhesive on body". Hog's Breath Clothing Co Pty Ltd (Hog's Breath Clothing) is said to be the owner and operator of a business selling merchandise under the name "Hog's Breath Clothing" through a website and through the Australian franchisees. The fifth respondent, Mr Algie, is said to be a director, secretary and majority shareholder of Hog's Breath Company and to have been a director of Hog's Breath Cafe (Australia) between September 1995 and April 2000. He is also said to be a director, secretary and majority shareholder of HB Investments and a director, secretary and majority shareholder of Hog's Breath Clothing. 6 Paragraphs 7 to 12 assert subsistence and ownership of copyright in the Wave Hog Work by Mr Lamb. Paragraphs 13 and 14 plead and particularise Mr Algie's access and exposure to the Wave Hog Work and his knowledge that the respondents are not, and have not, been the owners of copyright in that work. It is alleged that the work depicted in Schedule B to the application is a reproduction of the whole or a substantial part of the Wave Hog Work ([15]). Paragraphs 16 to 21 deal with the conduct of the Australian franchisees asserting, inter alia, that they have displayed the infringing work on restaurant signage and on banners and have distributed or offered for sale or exhibited to the public various items depicting that work. These items are set out in a schedule to the substituted statement of claim. 7 The substituted statement of claim then sets out the bases of Mr Lamb's copyright claim against Hog's Breath Company ([22]-[38]), Hog's Breath Cafe (Australia) ([39]-[54] inclusive), HB Investments ([55]-[66] inclusive), Hog's Breath Clothing ([67]-[83] inclusive) and Mr Algie ([84]-[103] inclusive). There are allegations of a common design entered into by the various respondents ([104]) and pleading of facts relied upon to support a claim for additional damages under s 115(4) of the Copyright Act 1968 (Cth) and conversion damages under s 116(1) of that Act ([105]-[106]). Moral rights claims are also raised against the respondents ([107]-[175]). The substituted statement of claim concludes with allegations that the registration by HB Investments of the Australian registered trade marks was and remains unlawful. 8 The day following the filing of the substituted statement of claim, the matter came back for directions and the hearing was adjourned to 24 April 2007. The parties were directed to confer with a view to agreeing so far as was possible further programming orders. 9 On 24 April 2007 orders were made extending the time which had been permitted for the applicant to file his substituted statement of claim to 10 April 2007. A stay of proceedings caused by Mr Lamb's failure to provide security for costs within a time limit previously fixed was lifted as security had been provided. The respondents were directed to serve any requests for particulars by 16 May 2007 and Mr Lamb to provide a response to any request by 31 May 2007. The parties were also required to confer on or before 31 May 2007 with respect to categories of documents to be discovered and Mr Lamb by that date to file and serve a request for discovery by reference to agreed categories and otherwise by reference to such categories as he might specify. The directions hearing was adjourned to 22 June 2007. 10 The purpose of the order for leave to interrogate made on 24 April 2007 was to enable Mr Lamb to identify with precision the respective functions of the respondent companies in the Hog's Breath group in Australia, their roles in the use of the alleged infringing works and/or registered trade marks and the ways in which these had been used in respect of the classes of goods and services to which they related. 11 On 13 June 2007 a notice to answer interrogatories was filed on behalf of Mr Lamb directed to the various respondents. The scale and detail of those interrogatories went well beyond what I contemplated in making the orders in [6.1] of the orders made on 24 April 2007. Interrogatories were also delivered late and without the benefit of any extending order by the Court. This delay was explained in Mr Mallon's affidavit. Draft interrogatories, completed by 24 May 2007, were provided to junior counsel in Sydney on 25 May 2007 and submitted to senior counsel who informed Mr Mallon on 31 May 2007 that he would require further time to settle the interrogatories. It appears that the solicitors for the first and third to fifth respondents consented to the further time. As to that I note that an agreement between the parties is not effective to dispose of the obligation imposed by the Court's directions. 12 On 15 June 2007 the first, third, fourth and fifth respondents filed the motion presently before the Court asking that the orders relating to the filing of interrogatories be vacated and that they proceed directly to file their defences. They submitted that now that Mr Lamb has delivered a detailed and comprehensive statement of claim the appropriate course would be for the usual interlocutory steps to take place, ie pleadings followed by discovery, including interrogatories if necessary, and inspection of documents. They submitted that the mechanism put in place for conferral, early interrogatories and disclosure was largely designed to facilitate the resolution of issues concerning generalised allegations in the former statement of claim in the context of the vertical inter-relationship of each of the respondents. It was submitted that the delivery of their defences will assist in defining the real issues and necessarily limit the ambit of discovery and thereby reduce its burden. It would also mean that the interrogatories would not be necessary. Interrogatories recently served on behalf of Mr Lamb were said to contain 90 separate questions. 13 It was submitted on behalf of Mr Lamb that he still does not have a clear picture of the respective functions of the respondents in the group that they collectively constitute. Since the judgment given on 26 February 2007 no new information has emerged which changes this nor have the respondents elected to provide any information to him despite repeated requests on his behalf. The substituted statement of claim was filed and served on 10 April 2007, providing the respondents with two weeks prior to the directions hearing to review it and form the view apparently now held that Mr Lamb had delivered a detailed and comprehensive statement of claim such that the appropriate course would be for the usual interlocutory steps to take place. 14 Having regard to the procedural history of the matter to date and the extent to which the proposed interrogatories seem to go into a level of detail beyond what was contemplated under order 6, it is preferable that the respondents now be afforded the opportunity to file their defences before the question of discovery and interrogatories is revisited. 15 Having regard to the fact that the applicant did not comply with the time limit specified in the orders made on 24 April 2007 and that no extension was granted, there is no need to vacate those orders. The interrogatories that were filed, were filed without leave because the leave had expired. I will make orders accordingly for the filing of defences and replies. This does not of course prevent applications for leave to interrogate and for discovery after the close of pleadings. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French.

interrogatories pleadings whether interrogatories should be permitted prior to filing of defence no point of principle practice and procedure

2 These notices of motion were heard on 3 February 2006 and orders were made that the sole director/shareholder of the first applicant, Mr Alan Duncan furnish various undertakings to the Court. The notices of motions were otherwise dismissed and the first applicant was ordered to pay the costs of the 'first and second respondents and the third and fourth respondents on the notice of motion and re-amended notice of motion respectively': see Pedra Holdings Pty Ltd v Westfield Shoppingtown Carousel Pty Ltd [2006] FCA 205. This was understood to apply only in respect of the first applicant's costs. Orders were then made for the parties to file written submissions in relation to the outstanding costs, that is, in relation to the second, third and fourth applicants. 3 The first and second respondents' notice of motion as filed sought, amongst other things, that the applicants' amended statement of claim be struck out and security for costs be given by all applicants. At the hearing on 3 February 2006 only [3] of the notice of motion remained before the Court, that is, the portion seeking security for costs having by then being only directed to the first applicant. 4 The third and fourth respondents' notice of motion as filed sought, amongst other things, that parts of the applicants' amended statement of claim be struck out, for deconsolidation of the proceeding and for security for costs from the first applicant. At the hearing on 3 February 2006 only [4]-[5] of the motion remained, that is, the portion seeking security for costs but only in respect of the first applicant. 5 This proceeding has an extensive interlocutory history and it is necessary to outline this background to understand the parties' submissions. Date Event 17 September 2004 Applicants commenced proceeding in the Federal Magistrates Court. 7 October 2004 McInnis FM ordered the proceeding continue on the pleadings and makes directions. The applicants filed an amended application and an amended statement of claim. 23 December 2004 The third and fourth respondents' notice of motion dated 21 December 2004 filed. 3 February 2005 The first and second respondents' notice of motion of the same date filed. 7 February 2005 The applicants filed a further amended statement of claim. 15 April 2005 Raphael FM ordered the transfer of the proceeding to the Federal Court, referring the questions of strike out, deconsolidation and security for costs. Raphael FM said that the respondents' has been substantially successful and ordered that costs of the application be the respondents' costs in the cause. 6 May 2005 The applicants filed a notice of appeal against the order for transfer. 27 May 2005 The applicants filed a notice of discontinue of the appeal against the order for transfer. 10 June 2005 The applicants filed a notice of motion to transfer the proceeding back to the Federal Magistrates Court. 19 July 2005 The applicants' notice of motion dismissed as incompetent and the applicants ordered to pay the respondents' costs of the motion. 4 November 2005 The notices of motions of the first and second respondents and the third and fourth respondents listed. 8 February 2006 At the directions hearing the first and second respondents advised the Court they will proceed with the application for security for costs against the first applicant only. The third and fourth respondents advised they no longer seek deconsolidation of the proceeding and will continue with their application for security for costs against the first applicant. Orders made dismissing pars of the notices of motion to reflect the advice of the parties and costs in relation to the second, third and fourth applicants reserved in relation to each notice of motion of the respondents. The remaining portions of the notices of motion are listed for 3 March 2006. 3 March 2006 The first applicant ordered to provide security by way of undertaking or bank guarantee and the first applicant ordered to pay the respondents' costs of the respondents' motions. The notices of motion of the first and second respondents and the third and fourth respondents were otherwise dismissed and parties ordered to file submissions on outstanding costs. 7 It is submitted by the first and second respondents that the outstanding costs relate to (1) strike out (all, other than those of 4 November 2005 including those thrown away); (2) deconsolidation (all); and (3) security for costs (in relation to the second, third and fourth applicants). The third and fourth respondents submit the applicants should pay all of their costs of the notice of motion both up to and including 4 April 2005 and thereafter. In support, Raphael FM's judgment dealing with the transfer of the proceeding to this Court, is referred to (see Pedra Holdings v Westfield [2005] FMCA 475 at [19] - [23] ). The pleadings as they presently stand do give cause for concern. It is also submitted that had the applicants improved their pleadings to the extent requested by the first and second respondents in a letter from its solicitors dated 6 October 2004, their application for strike out would not have been made. 9 The submissions of the third and fourth respondents also refer to Raphael FM's reasons. The third and fourth respondents' notice of motion sought (amongst the other things referred to above) that the proceeding be transferred to the Western Australian District Registry of the Federal Court. In particular [25] is relied on to demonstrate that his Honour intended to award the third and fourth respondents the costs of their notice of motion. In regard to the costs of the motion I am of the view that the respondents were substantially successful. It may well be that before the matter receives it [sic] first directions in the Federal Court the applicants take some steps to deal with the matters referred to in this judgment. If that was the case then the hearing before me would have been of some considerable utility. I believe the appropriate order in those circumstances is that the costs of the application shall be the respondent's [sic] costs in the cause. These were on 2 August 2005 when by consent, it was ordered that they be listed on a date and time to be fixed and the directions hearing listed for the same date be vacated with costs in the cause, 4 November 2005, 8 February 2006 and 3 March 2006 (details of what occurred on this dates be obtained from the table above at [6]). The third and fourth respondents only withdrew the parts of its notice of motion seeking to strike out parts of the statement of claim at the outset of the listing on 8 February 2006 in light of substantive amendments that had been made to it. The substantive amendments, it is said, significantly affected the merits of the strike out application. 11 Further the third and fourth respondents contend that the strike out application was properly and reasonably made and was withdrawn without any concession or admission as to its merits. Like the first and second respondents, it is submitted that the strike out application would not have been made if the applicants had properly pleaded their statement of claim at the outset of the proceeding. In support, correspondence sent to the applicants' solicitor dated 11 October 2004 and 20 October 2004 is referred to. The correspondence agreed with the letter of the first and second respondents dated 6 October 2004 and drew attention to other perceived difficulties with the statement of claim. 12 The third and fourth respondents refer to two authorities to support the submission that when the Court exercises its discretion in relation to costs on an interlocutory application it should look at all the circumstances and should not order costs against the party bringing the application merely because it is withdrawn. It is said that if the Court is satisfied that the party bringing the application acted reasonably, and effectively caused the other party to take action which effectively resolved the issue at the heart of the application in the moving party's favour (as it is claimed occurred in the present circumstances) then the Court should order costs of the application in favour of the party who brought the application: Dodd & Dodd Pty Ltd v Shire of Swan [1999] WASC 206 , at [2] and [8] and Homestyle Pty Ltd v Western Australian Builders, Labourers, Painters & Plasterers Union of Workers [2002] WASC 57 at [7] . The third and fourth respondents submit the Court should exercise its discretion to award in its favour any un-awarded costs. 13 In response, the applicants submit that as the orders of 3 March 2006 dealt with only the security for costs application and costs were ordered against the first applicant so the only outstanding costs relate to the costs of the second, third and fourth applicants in 'resisting' the application of the first and second respondent for security for costs. 14 The applicants' primary submission is that the costs of the respondents are not recoverable (as discussed under the 'security for costs' heading). Alternative submissions are made in relation to its pleadings. The Federal Magistrates Court, it is submitted, is not a court of pleadings, with the consequence that pleadings are not the primary documents rather the affidavits filed prior to a hearing are the primary documents. See Peterson v Chubb Security Australia Pty Ltd [2003] FMCA 172 at [14] - [18] . The applicants state that they accepted, prior to the order transferring the proceeding from the Federal Magistrates Court, and at all times since, that the 'case' would need to be pleaded to a higher standard in the Federal Court. It is said this is reflected in correspondence between the parties. It follows that the applicants did not file substituted statements of claim because the respondents caused them to, but rather because the new jurisdiction required it. 15 In submissions in reply, the first and second respondents submit that the standard of pleadings in the Federal Magistrates Court is not inferior to that required by this Court. The applicants chose to commence their application supported by pleadings when the ordinary procedure in the Federal Magistrates Court is to file an application supported by an affidavit and further, on 7 October 2004 an order was made that the proceeding continue on pleadings. At all times the applicants had the obligation to comply with the rules of pleadings and to state their case with clarity and to allow the respondents to know what case they had to meet: Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (1998) ATPR 41-633. The first and second respondents do not accept that the substituted statements of claim were filed only to accord with the higher standard of pleadings in this Court. 16 In its submissions in reply the third and fourth respondents state that the applicants' submission that the Federal Magistrates Court is not a court of pleadings ignores the fact the rules of that Court allow a proceeding to commence by pleadings, that the applicants chose to file a statement of claim with the application when they commenced the proceeding and that there was an order that the proceeding continue on pleadings. Merely because a court is set up to be speedier, cheaper and more informal does not mean that its judgments should not follow the settled law. If a case is determined to be heard on pleadings then those pleadings must be as good as they would be in any other court. Informality does not mean that a case is subject to a lower standard of proof or that suspect assertions of law will be accepted without demur. 19 In my view, the weight of submissions and circumstances substantially favours the respondents. The proceeding having been commenced by pleading, the strike out applications were legitimately brought and had a significant effect on the formulation of all of the applicants' cases. The respondents are entitled to their costs in respect of the applications for strike out so far as those costs relate additionally to the second, third and fourth applicants. 21 The third and fourth respondents' submissions in support of their seeking the outstanding costs in relation to its deconsolidation application are the same as that relating to its strike out application. That is, the deconsolidation application was only withdrawn after the pleadings had been substantively amended and the merits of the application were thus significantly affected, the application was withdrawn without any concession or admission as to its merits, the application was properly and reasonably made and would not have been made if the applicants had properly pleaded their statement of claim from the outset. Finally, it is submitted that its actions have caused the applicants to amend their statement of claim in a manner which ultimately resolved the issues. 22 Although their notice of motion did not seek an order for the deconsolidation of the applicants' pleadings, the first and second respondents make some brief submissions. First, the first applicant on the one hand, and the second, third and fourth applicants on the other, chose to bring their application together although they do not have a common claim. This is best exemplified by the fact that they were able to file separate substituted statements of claim on 15 December 2005. Second, the applicants sought a 'short-cut' by making one application without seeking the Court's direction whether it was appropriate to do so. It was incumbent upon the applicants to seek such direction without there being a need for the respondents to raise it. Third, even though the third and fourth respondents decided to not pursue its application in this regard, this only occurred once the applicants had made their claims clear. As the applicants failed to 'adopt the proper procedure in the first place' they should bear the costs incidental to the third and fourth respondents' application including those of the first and second respondents. 23 I agree with these submissions for the third and fourth respondents. As the first and second respondents did not bring a deconsolidation application they cannot properly be included in the costs order in that respect. It is said that a substantive response was not received from the applicants with respect to their financial affairs and therefore it was not possible to make a proper assessment of the need for security until the affidavits as ordered on 4 November 2005 had been received attesting to the assets and liabilities of each applicant. On the basis of the information contained in the affidavit of the third applicant sworn 18 November 2005, the first and second respondents decided to not proceed with their application for security against the second, third and fourth applicants. It is submitted this information should have been provided to the respondents without an order of the Court and therefore the second, third and fourth applicants should be liable for the costs of the application for security for costs up to 8 February 2006 as attributable to them. 25 The portion of the third and fourth respondents' notice of motion seeking security for costs related only to the first applicant. Accordingly, the listings on 8 February 2006 and 3 March 2006 did not concern the second, third and fourth applicants. It is submitted that no order was made on the hearing of the notice of motion on 8 February 2006 as between the first applicant and the third and fourth respondents, presumably because the Court intended that those costs would follow the hearing of the remaining part of the notice of motion, that is, the security for costs application. The third and fourth respondents submit that, subject to the submission as described above at [7], the only costs which are outstanding are the costs of the hearing on 8 February 2006 as between the first applicant and the third and fourth respondents. In this regard, the outstanding costs should follow the event on the remaining parts of the notice of motion on which they were successful on 3 March 2006. 26 It has already been mentioned that the applicants submit the only outstanding costs relate to the costs of the second, third and fourth applicants in 'resisting' the application of the first and second respondents for security for costs. The applicants submit the usual order, that costs follow the event should be made and the first and second respondents pay the second, third and fourth applicants' costs of the security for costs application. It is submitted no evidence was filed to suggest that the second, third and fourth applicants did not have sufficient assets to meet a costs order, being necessary for the first and second respondents to enliven the discretion to order security for costs. This issue was raised on prior occasions, it is said, and on this basis, the application was unsustainable at all times. 27 The third and fourth respondents did not bring any motion for security for costs against the second, third and fourth applicants so they have no foundation for an order for costs in that regard. 28 The first and second respondents sought security but it was considered by them to be unsustainable when the second, third and fourth applicants provided appropriate information. However, those applicants had failed to do so when requested earlier. The first and second respondents resorted to the application because of the unresponsiveness of the relevant applicants. In those circumstances I consider the second, third and fourth applicants should pay the costs relating to them in respect of the application for security of costs by the first and second respondents. Given the delay, the respondents should not be held out of any further costs and in relation to the first applicant, it is felt that the respondents are required to monitor the costs situation overall and the determination of the outstanding costs will assist in an adequate assessment of sufficiency of the security already provided in the future. In response, the applicants submit that the delay since the institution of the proceeding is not attributable to them and there is no reason to depart from the normal practice that costs of interlocutory proceedings are not recoverable until the proceeding is complete. 30 I am not satisfied that the case is made out for the payment of the outstanding costs forthwith. No such order was made against the first applicant. The applicable circumstances are not such as to make an order to that effect applicable against the second, third and fourth applicants. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholson.

outstanding costs costs

Her application was refused by a delegate of the respondent and the refusal was affirmed by the Refugee Review Tribunal ('the RRT'). The appellant then applied unsuccessfully to the Federal Magistrates Court ('the FMC') to review the decision of the RRT. She has now appealed to the Court against the dismissal by the FMC of her application for review. 2 Before the RRT, the appellant claimed to have a well-founded fear of persecution because she is a Hindu Tamil, a single woman and holds different political views to those of her employer. The appellant claimed that she was falsely accused of stealing from her employer and had suffered discrimination in the course of her studies. The RRT found that the appellant had been accused of stealing from her employer, but found that neither this nor any animosity from fellow students during her studies constituted persecution. The RRT did not believe the appellant's claim that police had visited her home or written to her asking her to attend at the police station in respect of the theft from her workplace. Further, the RRT did not accept that any harm suffered by the appellant occurred for a Convention reason. I do not accept however that this was related in any way to her race, religion, or political opinion, or that the treatment by police amounted to persecution. Her evidence in this regard was vague and contradictory, and changed when I pointed out implausibility. For example, she initially said in her evidence that she received a letter from her employer, and then said it was from the police. Her evidence about how she came to receive or know about the letter was particularly vague. I find it difficult to accept that the applicant would not consider seeking help from her family or legal advice if she had been pursued in this way, and believed that she would be charged with theft and imprisoned. I consider it implausible that the applicant would not bring the letter with her to Australia when this was the alleged reason for her leaving the country. The applicant was not physically mistreated when in custody, and was released after a few hours questioning. I consider this does not amount to serious harm as required by section 91R(b) of the Act. This also does not constitute persecution. On the applicant's evidence, she was questioned about the theft only. No mention was made of her race, religion, or her claimed support for the Keadilan party by police. I find that she was and will be treated no differently by the law enforcement authorities than any person suspected of a theft from their employer would be, and that any punishment imposed would not be unduly harsh for any Convention reason. It may be the case that her employer showed some personal animosity towards her on account of her Indian ethnicity or her support for a different political party. However, she was dismissed from her employment because of the theft. Her race and/or religion did not prevent her from obtaining employment, and on the country information set out above, would not prevent her from obtaining employment if she returned to Malaysia. Many of the observations and findings that it made in its reasons for judgment are the subject of the current grounds of appeal. In particular, the FMC regarded the RRT's finding that the questioning of the appellant by the police was not related to her race, religion or political opinion as 'a significant finding in this matter'. It may be that it is unlikely that the police, arresting a person of the applicant's background...would refer to her race, religion or support of a political party but, nevertheless, a reference to those issues by the Tribunal does not itself constitute, in my view, an error of law. Whether it made a wrong finding of fact or otherwise would not, as the authorities clearly indicate, justify this Court in holding that there has been a jurisdictional error of a kind that would permit judicial review. For not only did it betray an incorrect interpretation of the decision relied upon but it also failed to consider the applicant's claims in the context of the convention. In those submissions the appellant essentially sought to re-agitate matters of fact that were determined by the RRT, such as its finding that the implication of the appellant in the theft from her employer did not occur for a Convention reason. Such a course is not permissible. In my view, the findings made by the RRT were reasonably open to it on the evidence before it. I have considered the decision of the RRT and have been unable to discern any jurisdictional error on its part. In particular, I am not satisfied that there is any proper basis for the appellant's contention that the RRT addressed the wrong question or failed to address the correct question. The FMC carefully considered the RRT's decision, and found that jurisdictional error had not been established. I am not satisfied that any error was made by the RRT or the FMC. The RRT was entitled to find, as it did, that the appellant did not suffer harm for a Convention reason and that any harm that she did suffer did not constitute persecution. In the circumstances of the present case, those findings were dispositive of the appellant's claim to be a refugee for the purposes of the Convention. 7 It follows that the appeal should be dismissed and the appellant should pay the respondents' costs of and incidental to the appeal.

appeal attempt to re-agitate factual findings by the tribunal whether jurisdictional error migration

Mr James Sutton was the manager and owner of Finlay Engineering. Mr Adam Sutton was a director and the secretary of the company. The company had nine employees whose employment was regulated by the Metal, Engineering and Associated Industries Award 1998 and by successive certified agreements. 2 On 5 April 2006 Mr James Sutton presented these employees with Australian Workplace Agreements ("AWAs"). He told them that, if they signed the agreements, there would be no change to their terms and conditions of employment. Each employee signed an AWA on that day. None would have done so had he known that the AWA contained a term which reduced the quantum of redundancy payments to which the employees were entitled under the certified agreements. Had the employees been aware of this and the misstatement made to them by Mr James Sutton, they would not have entered into the AWAs. 3 The employees were not provided with the AWAs for the seven day period prescribed by s 337(1) of the Workplace Relations Act 1996 (Cth) ("the Act "). Nor were they provided with an information statement as required by s 337(2) of the Act . Both respondents were responsible for these contraventions of s 337(8) and (9) of the Act . These contraventions deprived the employees of the opportunity to ascertain the true position relating to their respective redundancy payment entitlements under the AWAs. 4 None of the AWAs was witnessed as required by the Act : see ss 340(1)(b) and 341 . Mr Adam Sutton later signed the AWAs on behalf of the company. Mr James Sutton was aware that he had done this. These contraventions did not contribute to the decision of any employee to enter into an AWA. 5 Not long after the AWAs were signed the company appointed administrators. On 27 June 2006 it went into liquidation. This resulted in all the employees being made redundant. Most of them were long serving employees who would have been entitled to much higher severance payments under the certified agreement which had regulated their employment prior to them signing the AWAs. This was because the certified agreement provided for an entitlement to three weeks pay for each year of service. The AWAs provided for a less generous entitlement for each year of service and the amount payable was capped at 12 weeks. 6 The applicant is a Workplace Inspector appointed under s 167(2) of the Act . An investigation was conducted into the conduct of the respondents. They were initially disposed to deny liability but, at a point before serious expense was incurred by the applicant in preparing for trial, they admitted their liability. Agreement was reached between the applicant and the respondents as to the penalties which they considered it would be appropriate for the Court to impose in respect of the various contraventions. 7 The Court is not bound to accept and impose these proposed penalties but will do so if persuaded that, in all the circumstances, they fall within the permissible range: cf NW Frozen Foods Pty Ltd v Australian Consumer and Competition Commission (1996) 71 FCR 285 at 290-1. In Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 at 565 Jessup J expressed the view, with which I respectfully agree, that the phrase "permissible range" in this context "refers to a range which would be permitted by the court, that is, a range within which the penalty is neither manifestly inadequate nor manifestly excessive. 10 It is proposed that a penalty of $6,000 be imposed on each respondent in respect of their respective contraventions of ss 337(8) and 337 (9) of the Act . 11 It is proposed that no penalties should be imposed in respect of the contraventions of s 341. 12 I have concluded that it is appropriate to impose the proposed penalties. • The monetary penalties imposed distinguish between the contraventions of s 401(1) of the Act on the one hand and the contraventions of ss 337(8) and 337 (9) on the other having regard to the higher maximum penalty applicable for contraventions of s 401(1) and the fact that the contravention of s 401(1) of the Act , was, in each case, the major contributing factor to the employees becoming parties to AWAs. • The consequences for each of the employees were serious. The longer serving members of the group suffered the most. As a group they were deprived of an amount in the order of $149,000 which represented the difference between what would have been payable had their redundancy entitlements been calculated under the certified agreement and the amount to which they were collectively entitled under the AWAs. • There is a strong need for general deterrence of the type of conduct engaged in by the respondents in the present case. • The conduct complained of undermines the legislative objective that AWAs should be the product of free bargaining between the parties. • The totality principle which I explained in greater detail in Kelly v Fitzpatrick [2007] FCA 1080 at [30] and the appropriateness of fixing a total penalty for a course of conduct: as to which see McIlwain v Lamsay Food Packaging Pty Ltd (No 4) (2006) 158 IR 181 at 216-7. • Their early admission of liability has saved a considerable amount of time and money which would otherwise have had to be expended in the preparation for and the conduct of a trial. Under s 841 of the Act the penalties can be paid to the Commonwealth or to organisations or persons nominated by the Court. 15 The parties had, initially, proposed that the $44,000 in penalties should be paid to Consolidated Revenue. I raised with the parties the prospect of paying part of the total penalty sum to each of the employees such as to make good, in each case, the shortfall in their redundancy payments, that shortfall being calculated by deducting from each employee's redundancy entitlement under the certified agreement the amount to be paid to him by the liquidator by way of redundancy entitlements under the AWAs both figures calculated on a pro-rata basis by reference to the sum available to the liquidator for distribution. The parties agreed that this would be an appropriate order and the necessary calculations were undertaken and agreed upon. There was a surplus after provision was made for these payments. 16 The respondents have admitted that, but for the contraventions of the Act in which they engaged the employees would not have entered into the AWAs and, as a result, been deprived of the more beneficial level of redundancy payment provided for in the certified agreement. That being so I consider that it is appropriate that part of the penalties imposed on the respondents should be used to compensate partially the individual employees for their losses. The balance should be paid to the Commonwealth. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice TRACEY.

conduct of employer where employees told if they signed australian workplace agreement there would be no change to their terms and conditions of employment where australian workplace agreements reduced the quantum of redundancy payments to which the employees were entitled under certified agreement where multiple breaches of workplace relations act 1996 (cth) arose out of single course of conduct where respondents admitted liability before serious expense was incurred by the applicant relevant considerations in determining level of penalty penalty imposed ' permissible range' workplace relations words and phrases

Under s 36(2) of the Act the criterion for a protection visa is that the applicant for the visa is (relevantly) a non-citizen in Australia to whom the Minister is satisfied Australia has protection obligations under the Refugees Convention as amended by the Refugees Protocol (meaning, in accordance with s 5(1) , the 1951 Convention relating to the Status of Refugees and the 1967 Protocol relating to the Status of Refugees). Section 474 of the Migration Act protects "privative clause decisions" (defined to include decisions with respect to protection visas) from challenge other than on the grounds of jurisdictional error. 2 The appellant is a citizen of India. He arrived in Australia on 22 March 2007. He applied for a protection visa on 10 April 2007. The respondent Minister's delegate refused the application on 16 May 2007. The appellant applied to the Refugee Review Tribunal for a review on 12 June 2007. The Tribunal affirmed the decision on 28 August 2007. The appellant appealed to the Federal Magistrates Court on 17 October 2007. In his amended application the appellant claimed that the Tribunal's decision was void for jurisdictional error on numerous grounds most of which related to his claim of a fear of persecution in India by reason of his membership of the Khalistan movement which aims to form a Sikh homeland. The Federal Magistrates Court dismissed the appeal on 22 July 2008. 3 In his notice of appeal to this Court the appellant claimed that the Federal Magistrates Court erred by: - (i) not considering the appellant's fear of persecution by police and authorities in India due to his membership of the Khalistan movement, (ii) not considering the appellant's claim that the Tribunal ignored his evidence, (iii) not following the procedures required by the legislation, (iv) not asking the appellant for additional information about some of his claims, (v) the Tribunal not giving the appellant an opportunity to give another interview in support of his claims, (vi) failing to consider the relevant facts, (vii) failing to consider that the appellant did not have legal representation, (viii) not considering documents before the Tribunal, (ix) failing to consider that the Tribunal had erred, and (x) failing to find that the Tribunal had incorrectly interpreted and applied the law to the facts. 4 The primary judge noted that the appellant forwarded a letter to the Court dated 28 April 2008 advising that he would be in Perth and unable to appear at the hearing. The appellant requested that the Court consider his written submissions and determine the application in his absence. The respondent Minister applied to dismiss the proceedings because of the appellant's failure to appear (rule 13.03A(c) of the Federal Magistrates Court Rules 2001 (Cth)). The primary judge refused this application. Because the respondent Minister's written submissions dealt with the original rather than the amended notice of appeal, the primary judge granted the respondent Minister leave to rely on supplementary submissions. The primary judge also gave the appellant leave to reply to these supplementary submissions. The appellant filed submissions which the primary judge described as "an attempt to re-open his case". The primary judge said he had disregarded these submissions but, in any event, they added nothing of substance. 5 A similar situation has arisen today. The appellant has not appeared. Instead he forwarded a facsimile to the Court yesterday stating that he could not appear due to health problems and requesting that the appeal be dealt with in his absence. He asked the Court to have regard to his written submissions and affidavit in support. Neither the Court's file nor the respondent's inquiries have disclosed any affidavit in support of the submissions. 6 The respondent Minister sought summary dismissal of the proceedings under s 25(2B)(bb) of the Federal Court of Australia Act 1976 (Cth). There is also a power to hear and determine the appeal in the appellant's absence under Order 52 rule 38A(1)(d) of the Federal Court Rules . I propose to adopt the latter course. 7 The appellant's first claim that the primary judge failed to consider the appellant's fear of persecution by police and authorities in India due to his membership of the Khalistan movement cannot be sustained. The primary judge recorded the appellant's claims of persecution both as made in his protection visa application and before the Tribunal. The primary judge also identified the Tribunal's consideration of the appellant's claims including that the Tribunal found that the appellant had not been truthful about matters central to those claims. Accordingly, the primary judge considered the matters that the appellant alleged were not considered. 8 The appellant's second claim that the primary judge failed to consider the fact that in his written submissions the Tribunal ignored his evidence also cannot be sustained. The appellant has not identified in his written submissions the evidence the Tribunal is said to have ignored. The Tribunal considered the information that the appellant put forward in his application and before the Tribunal. For this reason the primary judge found that the Tribunal's approach was "logical and reasoned and clearly took into account the evidence proffered by the applicant". I agree. 9 The appellant's third claim that the primary judge erred by not following the procedures required by the legislation also confronts difficulties. The appellant has not identified any particular procedural error said to have been made by the primary judge. None is apparent on the material before me. 10 The appellant's fourth claim that the primary judge erred by not asking the appellant for additional information about some of his claims is misconceived. The primary judge was not the original decision-maker. The primary judge's function was limited to review of the Tribunal's decision for jurisdictional error. 11 The appellant's fifth claim that the primary judge erred because the Tribunal did not give the appellant an opportunity to give another interview in support of his claims is equally misconceived. The Tribunal invited the appellant to appear at the hearing on the basis that it was unable to make a favourable determination on the information the appellant had provided. The appellant said he was sick and unable to attend the hearing. The Tribunal deferred the hearing until the appellant could attend. The appellant gave evidence and attended the hearing on 9 August 2007. 12 The appellant's sixth claim that the primary judge erred by failing to consider the relevant facts does not rise above a generalised assertion. The primary judge's reasons show a detailed consideration of the Tribunal's decision-making process. 13 The appellant's seventh claim about his lack of legal representation does not give rise to any error warranting intervention by an appellate court. 14 The appellant's eighth claim that the primary judge erred by not considering documents before the Tribunal suffers from the same problem as his fourth claim. Neither the Federal Magistrates Court nor this Court is the original decision-maker. The function of this Court is appellate review of the decision of the Federal Magistrates Court. 15 The appellant's ninth claim that the primary judge erred by failing to consider that the Tribunal had erred is nothing more than a complaint about the fact that the primary judge dismissed the appeal. 16 The appellant's tenth claim that the primary judge erred by failing to find that the Tribunal had incorrectly interpreted and applied the law to the facts cannot be sustained. The claim is a generalised assertion of error. It is apparent that the Tribunal did not accept the appellant's version of events because it found his evidence inconsistent and implausible. It found that his documentary evidence, even if accepted, did not assist his claims. As the primary judge found, the Tribunal is empowered to determine the facts. 17 For these reasons the appeal must be dismissed. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.

application for a protection visa appellant did not appear migration

Reliance is placed on all aspects of the rule so that what is in issue is whether the application discloses no reasonable cause of action; is frivolous or vexatious; or is an abuse of the process of the Court. In the event that any of those requirements are satisfied, the Court has a discretion to stay or dismiss the application generally or in relation to any claim for relief in the proceeding. 2 In the alternative the respondent seeks an order pursuant to FCR O 15 r 8 that the applicant file and serve an affidavit of discovery in respect of certain identified documents, being documents relating to the facts pertaining to the circumstances concerning payments made by the applicant as an employer to an employee benefit trust as described in the respondent's statement of facts, issues and contentions ('the statement'). 3 The respondent supports the motion by reference to an affidavit of M/s Kowalewska, sworn on 14 March 2006. The applicant relies upon both the affidavit of M/s Kowalewska and an affidavit of Mr Romano, sworn on 21 April 2006. The objection decision in issue is that made on 11 February 2005 in respect of the applicant's notice of assessment for the year ended 30 June 1998 issued on 10 April 2003. 5 The application by way of appeal is brought pursuant to s 14ZZ of the Taxation Administration Act 1953 (Cth). Section 14ZZO of that Act provides that, in the case of the taxation decision concerned being an assessment (other than a franking assessment), the applicant has the burden of proving that 'the assessment is excessive'. Rangdon Pty Ltd, (the Employer), claimed a deduction for the contributions to an Employee Benefit Trust (EBT) of $200,000 and costs of $4225 in its income tax return for the year ended 30 June 1998. The EBT loaned an amount of $199,000 to the Employer. It was conceded by the respondent on the hearing of the motion that this should have been a reference to s 8-1 of the Income Tax Assessment Act 1997 (Cth) ('the ITAA 97') given that the payments in issue occurred during the 1998 income year. Secondly, it was said that the Tax Office considered that Pt IVA of the ITAA 36 applied to the arrangement. 7 The grounds upon which the applicant relied in its notice of objection were that the sum of $200 000 was 'not an allowable deduction under section 8-1 of the Income Tax Assessment Act 1997 ' to it as confirmed by Kiefel J in Essenbourne Pty Ltd v Commissioner of Taxation (2002) 51 ATR 629. Therefore the provisions of Pt IVA of the ITAA 36 have no application to disallow that sum or any part of it, as a deduction against the applicant's assessable income. Further it was contended that the respondent was not authorised to issue the notice of assessment under s 170 of the ITAA 36, it having been served more than four years after the date on which the original assessment became due and payable. The original assessment was deemed to have been issued on 21 January 1999 pursuant to s 166A of the ITAA 36. 8 On 30 May 2005, the respondent filed the statement. In it he stated that he relied on s 14ZZO of the Taxation Administration Act and, save for any facts expressly agreed or admitted in writing, put the applicant to proof of all the facts on which it seeks to rely to establish that the assessment the subject of the appeal is excessive. Further he stated that none of the facts contained in the statement constituted an admission of proof by him. 9 In the statement at [4]---[15], the respondent set out facts which it considered to be material concerning the subscriptions to employer units and related costs and expenses. In [18]---[29] the statement recited the facts of the notice of objection and the objection decision. • Whether, by reason of Pt IVA of the ITAA 36, the amount of $200 000 is not allowable to the applicant. • Whether the amount of additional tax by way of penalty was correctly imposed. Second, the respondent wishes to contend that the four year time period under s 170(2)(b)(ii) of the ITAA 36 for the amendment of the assessments does not apply here. Third, that if the applicant was entitled to a deduction pursuant to s 8 - 1 of the ITAA 97, in relation to the amount of $200 000 (or any lesser sum), by reason of Pt IVA of the ITAA 36 and the respondent's determination, the amount was not allowable to the applicant. The Applicant agrees with paragraph's [sic] 4 --- 15 and 18 --- 29 of the Respondent's Statement of Facts, Issues and Contentions dated 25 May 2005. The amount of $200,000 claimed by the Applicant as a deduction in its 1998 tax return was not an allowable deduction under section 8-1 of the Income Tax Assessment Act 1997 ("ITAA 1997") in the 1998 year. The amount of $200,000 not being an allowable deduction under section 8-1 of the ITAA 1997 the Applicant did not obtain a tax benefit within the meaning of section 177C of the Income Tax Assessment Act 1936 ("the Act ") and therefore Part IVA of the Act does not apply to the Applicant. Pursuant to section 166A of the Act the Respondent is deemed to have made an assessment and served it on the Applicant on 17 December 1998 being the date the Applicant lodged its 1998 income tax return referred to in paragraph 17 of the Respondent's Facts Issues and Contentions. The notice of assessment issued to the Applicant on or about 10 April 2003 referred ot [sic] in paragraph 19 of the Respondent's Facts, Issues and Contentions ("the amended assessment") was issued more than four years after the original assessment referred to in paragraph five herein and was therefore not authorised under section 170(2)(b)(i) of the Act . Section 177G of the Act does not apply to authorize the amended assessment as Part IVA of the Act does not apply to the Applicant. Section 170(2)((a) does not apply to authorise the amended assessment as there has been no fraud or evasion on the part of the Applicant. This claim for a deduction had been disallowed by the respondent and in the alternative the respondent had made the determination under Pt IVA of the ITAA 36 disallowing the amount if otherwise allowable. The respondent says that the question for the Court is whether the amounts assessed as taxable income and penalty are excessive, as to which the applicant has the burden under s 14ZZO(b) of the Taxation Administration Act . To discharge this burden of proof, the applicant must establish, affirmatively, on the balance of probabilities, that the taxable income and penalty assessed for the 98 year is greater than the taxable income and penalty which ought to have been assessed: see, for example, McCormack v FCT [1979] HCA 18 ; (1979) 143 CLR 284 at 303; FCT v Dalco [1990] HCA 3 ; (1990) 168 CLR 614 at 620-1; FCT v Australia and New Zealand Savings Bank Ltd [1994] HCA 58 ; (1994) 181 CLR 466 at 479; FCT v Munro 97 ATC 5041. It is a matter of characterisation whether a loss or outgoing satisfies the criteria for deductibility: Fletcher v FCT [1991] HCA 42 ; (1991) 173 CLR 1; so too it is for the applicant to show that the criteria for the application of Part IVA did not exist (see, for example, FCT v Peabody [1994] HCA 43 ; (1994) 181 CLR 359; FCT v Sleight [2004] FCAFC 94 ; (2004) 136 FCR 211); and that the necessary statutory preconditions to the imposition of penalty by the operation of the relevant sections did not exist: BRK (Bris) Pty Ltd v FCT 99 ATC 4725 at [17]. These are all matters of objective fact to be determined by the Court based upon material that is logically probative of the existence of facts that emerge from the evidence before it. In the absence of evidence, the Court is not able to infer facts in favour of the applicant: McCormack v FCT at 303. An inference will only be reasonably open if there is probative evidence to support it: see, for example, Australian Broadcasting Tribunal v Bond [1990] HCA 33 ; (1990) 170 CLR 321 at 356; 359-360; FCT v Munro. Therefore the facts will not be known or capable of being ascertained. The consequence, it is submitted, is that the applicant will not be able to discharge the burden of proof cast upon it by s 14ZZO(b) of the Taxation Administration Act so that its appeal must fail. It is submitted the continuance of the proceeding is an abuse of process because there is nothing which the Court is capable of resolving. 15 Concurrently with these submissions is the submissions made orally, that it is not open to the applicant to agree with the respondent's statements of facts because the burden of proof lies upon the applicant. Furthermore, the applicant by such an agreement cannot confine the issue to one of law because again this neglects the discharge of the burden of proof. Rather, the onus in accordance with s 14ZZO of the Taxation Administration Act is to establish that 'the assessment is excessive'. 17 The applicant contends that there are two issues which it wishes to raise to show that the assessment is excessive. The first is that it was not issued in the right time, an issue involving the interpretation of s 166A of the ITAA 36. The second is that Pt IVA has no application when there are no allowable deductions. 18 The respondent says that it is not precluded from agreeing with the applicant that the payments made by an employer to an employee benefit trust are not allowable deductions under s 8 - 1 of the ITAA 97. It claims that at the time the deductions were claimed there was a belief that they were valid deductions. However, following the decision in Essenbourne Pty Ltd the applicant is no longer of that view. Further, it is a view held by the respondent demonstrated in press releases issued since 2003. 19 Given that the respondent does not say there was any fraud or evasion in the making of the claim, it is said that the discharge of the burden of proof cast upon it by s 14ZZO of the Taxation Administration Act does not require the applicant to bring facts to the Court to support the claim made in the return of deductibility for the payments to the relevant trust. That being the case, it is said that the section cannot be applied so as to make the applicant contend for a position it does not hold and bring documents to Court to support a view it has renounced. 20 In support of these submissions, the applicant relies particularly upon what was said by the High Court in Federal Commissioner of Taxation v Dalco [1990] HCA 3 ; (1990) 168 CLR 614. The relevant passage appears in the reasons for judgment of Brennan J. The reference which he makes to s 170(2) is to the subsection imposing the four year time limit and the reference to s 190(b) is a reference to a predecessor provision in respect of the present s 14ZZO of the Taxation Administration Act . It was held that s. 170(2) creates a condition precedent, the satisfaction of which was not protected from challenge in appeal proceedings by s. 177(1). As the amount of the amended assessment would be shown to be excessive if the requirements of s. 170(2) were not satisfied, s. 190(b) imposed on the taxpayer the burden of showing that the requirements had not been satisfied. The applicant therefore contends that the respondent has not complied with time limits; that is, that within the notion of showing the assessment to be 'excessive' lies the opportunity to refer to relevant condition precedents. 2 of Pt V of the Act [ITAA 36] against an assessment made under s. 167(b) , does the taxpayer discharge the burden of proving that the assessment is excessive where (a) he does not prove that the amount assessed as his taxable income in fact exceeds his taxable income, but (b) he shows that the Commissioner formed a judgment as to the amount of his taxable income on a wrong basis? After all, the purpose of the procedure of assessment, objection and appeal or review is to ascertain the true tax liability of the taxpayer under the substantive provisions of the Act . Oftentimes, the grounds of an objection and the Commissioner's notice of decision thereon will define the issues for the determination by a court entertaining an appeal against the assessment; but not necessarily so. It is not the grounds of the objection against an assessment but the objection itself which is treated as an appeal and forwarded to a Supreme Court for hearing and determination: ss. 187(1)(b), 197, 199. It would be inappropriate for a court determining an appeal to make an order altering the tax liability assessed (s. 199) unless the court were satisfied that the amount to which it proposed to alter the assessment represented the true tax liability of the taxpayer . Although the grounds of objection limit the grounds of appeal, the ultimate question for the court hearing the appeal is not whether the grounds have been made out but whether the amount assessed as taxable income is wrong . The burden which rests on a taxpayer is to prove that the assessment is excessive and that burden is not necessarily discharged by showing an error by the Commissioner in forming a judgment as to the amount of the assessment. If the Commissioner and a taxpayer agree to confine an appeal to a specific point of law or fact on which the amount of the assessment depends, it will suffice for the taxpayer to show that he is entitled to succeed on that point. Absent such a confining of the issues for determination, the Commissioner is entitled to rely upon any deficiency in proof of the excessiveness of the amount assessed to uphold the assessment, though the taxpayer is limited to the grounds of his objection. In Gauci v. Federal Commissioner of Taxation [(1975) [1975] HCA 54 ; 135 C.L.R. Nor is there any statutory requirement that the assessments should be sustained or supported by evidence. The implication of such a requirement would be inconsistent with s. 190(b) for it is a consequence of that provision that unless the appellant shows by evidence that the assessment is incorrect, it will prevail. Ltd. v. Commissioner of Taxation [(1979) 53 A.L.J.R. 362 at pp. 366, 371, 381. ]; McCormack's case [(1979) 143 C.L.R. at pp. 303, 306, 323]. It is from that passage that it become apparent that the High Court has held that '[I]t is not the grounds of the objection against an assessment but the objection itself which is treated as an appeal'. The appeal having activated the jurisdiction of the Court, the Court must be satisfied that the assessment is excessive. Consequently, it is not open to a taxpayer to confine the jurisdiction of the Court by the selection of the grounds of objection or some of them. 26 Here the applicant submits that on authority of the reasoning in McAndrew v Federal Commissioner of Taxation [1956] HCA 62 ; (1956) 98 CLR 263 accepted by the High Court in Dalco , that non-compliance with the statutory condition precedent to the imposition of liability is encompassed within the notion of showing an assessment is 'excessive'. Given that Dalco was a case not involving the issue of condition precedent the dicta in it needs to be understood as relating to a position distinguished from that in McAndrew . 27 However, even though the contention concerning non-compliance with statutory conditions precedent (such as that raised in the applicant's two principal remaining grounds) would be arguable in discharge of the applicant's burden to establish that the assessment was excessive, it is clear from the emphasised reasoning of Brennan J accepted by the High Court that the grounds of objection as so formulated cannot limit the Court from considering the ultimate question of whether the amount assessed as taxable income is wrong; that is, excessive. If the applicant succeeded on the two remaining principal issues it may nevertheless not succeed if the Court was not satisfied on this ultimate question. That is entirely consistent with what was said by Mason J in Gauci v Federal Commissioner of Taxation [1975] HCA 54 ; (1975) 135 CLR 81 at 89. 28 The sections relied upon by Brennan J in the above emphasised passage were ss 187(1)(b), 197 and 199. The equivalents of these sections are now found in the Taxation Administration Act . The equivalent of s 187 of the ITAA 36 is found in ss 14ZZ and 14ZZN of the Taxation Administration Act . Section 199 of the former Act is now in s 14ZZP of the latter. Section 190 is now in s 14ZZO. There is no express equivalent of s 197 as the appeal now is brought to this Court in its original jurisdiction. However, the provisions of s 14ZZO ensure the applicability of the reasoning of Brennan J and the other members of the High Court in Dalco . This is because s 14ZZO(b) enunciates that the burden an appellant bears is to establish in the case of an assessment (other than a franking assessment), that 'the assessment' is excessive. While s 14ZZO(a) limits the appellant to the grounds in the taxation objection to which the decision relates (unless the Court otherwise orders), neither it nor any of the other relevant provisions as they now stand impinge on the reasoning that 'the ultimate question for the court hearing the appeal is not whether the grounds have been made out but whether the amount assessed as taxable income is wrong'. 29 That being the case, the question then becomes whether the respondent is entitled to succeed in his motion for summary dismissal. FCR O 20 r 2 is discretionary in its terms. In the circumstances here the Court is not aware whether or not the applicant has evidence to produce in support of establishing 'the ultimate question'. From the circumstances of the case it appears there are grounds for belief some such documents may exist. Until it is known whether or not that is the case, I do not consider the applicant should be precluded from the opportunity to discharge its burden of proof. Accordingly I consider that an order for discovery should be made against the applicant pursuant to FCR O 15 r 8 in terms of the alternative order sought by the respondent. Failing compliance with that order within 28 days, the respondent should be entitled to having the application dismissed on the ground the application, being unsupported as required by law, is an abuse of process of the Court. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholson.

appeal whether assessment excessive whether applicant can adopt facts stated by respondent without production of evidence and without respondent's concurrence effect of adoption to confine appeal to issues of compliance with statutory preconditions applicant not discharging burden of proof respondent entitled to grant of motion for summary dismissal if non-compliance with discovery order taxation

The application for an order transferring the proceedings to the Supreme Court of Queensland is made pursuant to s 5(4) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth). The application for an order transferring the proceedings to the Queensland District Registry of this Court is made pursuant to s 48 of the Federal Court of Australia Act 1976 (Cth) ( the Act ) and the Federal Court Rules . During argument, Counsel for the third respondent frankly conceded that the basis upon which he sought to have the matter transferred to the Supreme Court of Queensland did not justify the making of that order. In essence, the ground relied upon was that there are proceedings in the Supreme Court of Queensland brought by a company unrelated to the present applicant but against the third and fourth respondents in these proceedings and others which, to some extent, raise questions of fact which are also raised by the applicant in these proceedings. Those questions, in substance, concern the health of the Intabill business and its associates at various times between September 2008 and March 2009. It is apparent that there are some questions of fact which seem to be common to both sets of proceedings. However, it is not possible, at this stage, on the material before me, to come to a firm view that those common questions would be sufficient to lead to orders being made for the two sets of proceedings to be heard together. It is for this reason that I am not persuaded that an order should be made transferring these proceedings to the Supreme Court of Queensland. The alternative order sought, however, has considerably more merit. In support of that order Counsel emphasised the following matters: It seems to me that the most important factor which is to be taken into account in the present case is the cost and inconvenience that will be visited upon the third and fourth respondents if the proceedings remain in the New South Wales District Registry of the Court. Those considerations will become more significant as the proceedings get closer to trial. The third and fourth respondents have retained solicitors based in Brisbane and, in one case, Counsel who is also based in Brisbane. Whilst it is true that this Court has sophisticated video conferencing and telephone conferencing facilities which would enable Queensland lawyers satisfactorily to attend to many matters associated with the preparation of the trial, there is no substitute, as Mr Lucarelli pointed out, for face-to-face conferences, particularly in complex matters such as the present matter where significant time will be required. In addition to the considerations which I have already mentioned, the third and fourth respondents are entitled to point to the other proceedings in the Supreme Court of Queensland, to which I have already referred, in aid of a submission that the existence of those proceedings, running in tandem, as they do, with these proceedings, is another factor relevant to cost and convenience which is in their favour. They will be required to defend those proceedings and to devote time and effort to doing so. I am conscious of the fact that, at the present time, the Supreme Court of Queensland has entered judgment by default against the third respondent although the fourth respondent has filed a Defence and Cross-Claim. The third respondent has applied to set aside that default judgment. It is likely that the third respondent will be a witness in those proceedings in any event. He will be closely following the progress of those proceedings, come what may. It cannot and should not, in our opinion, be defined more closely or precisely. The relevant guiding principles are the same under the Rules as under s 48 of the Act. In Bourke v State Bank of New South Wales (1988) 22 FCR 378 (at 394), Wilcox J held that the expression " the interests of justice " in s 5(4) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) ought to be read widely. In summary, it seems to me, there is in reality no connection at all with New South Wales. There is nothing else which can fairly be weighed in the balance in favour of keeping the proceedings in this Registry of this Court. There are, on the other side of things, substantial reasons based upon the cost and inconvenience to individual litigants which would justify a transfer to the Queensland District Registry of this Court and I propose to make an order accordingly. The third respondent has not persuaded me that such an order should be made. On the other hand, the applicant did resist the making of any orders. In those circumstances each of the relevant parties has experienced some success and some failure. It seems to me that the appropriate order as to the costs of the motion for transfer brought by the third respondent is that those costs be costs in the proceedings. Earlier this morning, I made some further directions in the matter. When I did so, I indicated to the parties that there would be a need to make further directions in light of whatever decision I came to in respect of the third respondent's Motion. I will make appropriate additional directions when I pronounce the formal orders of the Court in a moment. I should add that I have not yet determined the objections to these proceedings being in the fast track made by the third and fourth respondents. I have not done so because I am of the view that there is insufficient material before the Court, at the moment, to sensibly permit an assessment of those objections to be made. The question of whether the proceedings should remain in the fast-track in the Queensland District Registry of the Court is a matter which should be dealt with by the judge into whose docket the proceedings are allocated in that Registry. If the third and fourth respondents wish to press their objections, they should do so in February 2010 when the matter is next listed. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.

application by one party for an order that the proceedings be transferred to the supreme court of queensland or, alternatively, to the queensland district registry of the federal court of australia relevant principles and considerations discussed proceedings transferred to the queensland district registry of the federal court practice and procedure

They claimed entitlement to protection visas on the basis of a well-founded fear of persecution on that account. Because of the history of this matter, the Refugee Review Tribunal (the Tribunal) came to consider its decision in 1995 and so was bound by the Migration Act as it then stood. The first respondent, the Minister for Immigration and Multicultural Affairs (the Minister) by his delegate, had declined the applications for visas. An adviser to the appellants made a significant written submission to the Tribunal dated 13 December 1993 and received by the Tribunal on 21 December 1993. After referring to political events which led up to the coup in December of 1993, prevailing problems in Fiji were analysed under 11 stated headings. The adviser attached a number of documents and press clippings which he said supported the arguments advanced. 2 The Tribunal invited the attendance of the appellants and the English language transcript of the proceedings was in evidence before the learned Federal Magistrate and is before the Court on this appeal. That transcript shows that the Tribunal member said he had been through the file and had seen the Department's decision, and he then said 'this is a chance for you to make those claims as well as any additional claims which you wish to make'. The Tribunal member then asked a series of questions and on various occasions referred in terms to 'your application to the Department' as being the source of the topic being discussed. Some topics which were discussed were not sourced in that express fashion. I do not have before me, and the learned Federal Magistrate did not have before him, the original application and the material provided in support of it. 3 During the course of the hearing the adviser, who had been present, made some remarks about the 'current circumstance and situation in Fiji'--current being November 1994--and offered to support his statement with some clippings and materials. He also asked for a short time in order to supplement the material. The Tribunal gave him until 8 December 1994. On or about that date, a bundle of material including press clippings and other sources was forwarded to the Tribunal. 4 The Tribunal's decision was dated 28 June 1995, which is a little more than seven months after the hearing. The reasons are in conventional form. One section is headed 'Claims and Evidence', and that is then followed by a heading 'Reasons'. In the Claims and Evidence section there is no reference to the adviser's submission or to any material provided by the adviser. There is a reference to the primary application at one point. Other than that, the only reference to claims and evidence is to what the applicant told the Tribunal at the hearing. The reasons for decision do not refer in terms to any material provided by the adviser, or to any argument advanced by the adviser, but rather refer to a number of pieces of country information, one important one dated 17 March 1994, but other sources dated on their face in 1995. On the basis of that information, the Tribunal rejected the claims of well-founded fear of persecution because of ethnicity and religion. 5 The essence of the application for relief pursuant to s 39B of the Judiciary Act 1903 (Cth), which was made to the Federal Magistrates Court, was that the Tribunal member had not considered the case put forward on behalf of the appellants. In essence, the learned Federal Magistrate, apart from not being persuaded of that, held that the real basis for the Tribunal's decision in any event was the material current at the time of the Tribunal's decision in 1995, which effectively superseded that which went before ( SZGLQ v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FMCA 670). In the appeal to this Court, the appellants pursued three grounds for appeal, attacking the approach of the learned Federal Magistrate to the arguments advanced to him. I will not trouble to set out the detail of the grounds of appeal. 6 When the matter came on for hearing today, the solicitor for the appellants indicated that he wished to amend the notice of appeal to raise the question of natural justice or procedural fairness, because the material relied upon by the Tribunal member, and regarded as critical by the learned Federal Magistrate, had not been disclosed to the appellants or the adviser prior to the decision. That material, or certainly the bulk of it, is now in evidence, but was at no stage provided to the appellants. 7 Objection was taken to the amendment, first of all on the general ground that it is not appropriate to take new points at this stage of a case in this Court. There was also a suggestion that the way the case had been presented before the Federal Magistrates Court may have led to some unfairness to the first respondent in the way things developed if the amendment were now allowed. I need not go through all of that as I think it is now accepted that there is no special point that can be made about that. It is not suggested, for example, that if this point had been taken before the learned Federal Magistrate there could have been evidence led to counter it. That is plainly correct because the circumstances appear from the face of the record, or are otherwise very clear. 8 The fundamental objection, however, was that the point had no merit and would not succeed. In my view, the point does have merit, and in the very unusual circumstances of this case, it seems to me that an amendment should be permitted along the lines read onto the record by the solicitor for the appellants. The argument has merit based upon the decision of the High Court in Re Minister for Immigration and Multicultural Affairs; Ex parte Miah [2001] HCA 22 ; (2001) 206 CLR 57, where in very similar circumstances, (that is, a change of position in the country of origin prior to the decision due to reliance by the delegate on new material and the appellant being given no opportunity to respond), the High Court had no difficulty in finding that there had been a breach of the rules of natural justice and procedural fairness. The main issue in that case was that by then there had been amendments to the Act which enabled an argument to be put that there was then a code for dealing with the situation and that the ordinary common law natural justice rules did not apply. That argument is not available in this case, because the amendments had not been made, so the common law rules clearly do apply. 9 The answer which is made on behalf of the Minister is that in this case, all the issues raised in the later material to which reference was made by the Tribunal member were traversed in the earlier material and that the late material really amounted to pieces of evidence which were not required to be put forward for particular comment. There is also, I might say, always the argument that it is the visa applicant's case, and if circumstances change in the country of origin, then it is up to the applicant to keep on top of things and keep the Tribunal informed. 10 It seems to me that the approach of the High Court in Miah, and indeed in Kioa v West [1985] HCA 81 ; (1985) 159 CLR 550, which was applied in Miah , makes this all too plain a case of a breach of the rules of procedural fairness. The material was crucial to the decision. Whilst it may not have been new in concept it did relate to a later period and amounted to the reason why the applications failed. 11 It is also my opinion that the first ground of appeal relating to the failure by the Tribunal to advert to the material put forward on behalf of the appellant is made out in this case. Both sides have referred to authority as to the circumstances under which this ground may be established. Undoubtedly, it is a difficult ground to establish because it is not the role of the Court to insist that a tribunal mention every piece of evidence that is before it. Section 430 of the Act does not impose that obligation. It imposes an obligation to explain what was decided and why it was decided. On the other hand, it is the duty of the Tribunal under the Act to consider the application. 12 In this case, the Tribunal was given a coherent and detailed submission in favour of the applications, supported by some material and later supported by other material. Counsel for the Minister has submitted that, when you look at this material bit by bit, it is relatively unimportant and does not establish much. It is in the form of press clippings. However, it is, to my mind, quite striking that there was no reference by the Tribunal member to any of it at all. Bearing in mind that one of the segments of the reasons is headed 'Claims and Evidence' and yet there is absolutely no mention of these matters in that section, it seems to me to indicate that when the Tribunal member came to making his decision, the adviser's submission and the material produced both before and after the hearing had simply gone from his mind and that he instead relied upon the transcript of the proceeding, perhaps supplemented by the original application. 13 Whilst I accept that this may be a borderline case, the omission is so striking as to amount to a failure to carry out the obligation to have regard to all of the information which was provided and to properly consider the application. Furthermore, as I have indicated, the manner in which the matter was dealt with by the learned Federal Magistrate gives special point to the submission, made on more than one occasion by the solicitor for the appellants, that as the learned Federal Magistrate did not really explain why he did not accept the first ground--there is no indication that the Tribunal did consider the material--but held that any such failure was trumped by reference to the later material only emphasises the key importance of that later material. 14 I, therefore, propose to make orders which dispose of the matter. I am a little concerned about the question of costs. It is true that I have found that the learned Federal Magistrate was in error in relation to a ground which was put before him, but I cannot help but think that if this natural justice point had been put and the authorities referred to, that the learned Federal Magistrate would never have made that mistake. I do not think that the appellants can succeed here as if there were nothing untoward. It is very late in the process to be raising a very significant point. 15 The appeal is allowed. The orders of the Federal Magistrates Court of 14 June 2006 are set aside. The decision of the Refugee Review Tribunal of 28 June 1995 is also set aside and the matter is remitted to the Refugee Review Tribunal for determination according to law. I order that the respondent Minister pay the costs of the proceedings before the Federal Magistrates Court. I make no order as to the costs of the appeal to this Court.

failure of decision-maker to give appellants the opportunity to comment on change of circumstances indicated by country information obtained by tribunal between hearing and decision pre introduction of s 424a of migration act 1958 (cth) appeal allowed migration law

On 9 January 2007, the Refugee Review Tribunal ('the Tribunal'), constituted by Tribunal Member Robert Wilson, handed down its decision of 21 December 2006, affirming the decision of the Minister's Delegate not to grant the appellant a Protection (Class XA) visa. 4 In SZBYR v Minister for Immigration and Citizenship (2007) 235 ALR 609 ('SZBYR'), which was handed down on 13 June 2007, the High Court gave close attention to the circumstances in which s 424A was engaged. The Court's consideration was primarily directed at s 424A(1)(a) of the Act. Whilst it did not deal expressly with s 424A(1)(b) , it made a number of general observations in respect of s 424A which demonstrate that the scope of the 'it' referred to in s 424A(1)(b) , namely the 'information that the Tribunal considers would be the reason, or a part of the reason, for affirming the decision that is under review' is limited. In their joint reasons for judgment, Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ commenced their consideration of s 424A by observing that firstly, its effect was mandatory, in that a breach of it constituted jurisdictional error, and secondly, that its temporal effect was not limited to the pre-hearing stage, referring to the Court's earlier judgment in SAAP v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 24 ; (2005) 215 ALR 162 ('SAAP') (see SZBYR at [13]). However broadly "information" be defined, its meaning in this context is related to the existence of evidentiary material or documentation , not the existence of doubts, inconsistencies or the absence of evidence. 9 At [14] their Honours pointed out that the 'information' in SZBYR , if indeed there was information to which s 424A applied, consisted of the appellants' own prior statutory declaration, to which the Tribunal explicitly drew their attention during the course of the Tribunal hearing. However, they pointed out, following SAAP , that once s 424A was engaged, only written notice would suffice. 10 In the appellants' written submissions in SZBYR they appeared to have focussed on the requisite 'information' as being the 'inconsistencies' between their statutory declaration and oral evidence. However, as their Honours pointed out at [15], in oral argument they focussed on the provision of the relevant passages in the statutory declaration itself, from which the inconsistencies were later said to arise. 11 At the end of the day their Honours found that s 424A was not engaged at all. They pointed out that the appropriate criterion in respect of a protection visa was to be found in s 36(1) of the Act. The "reason, or a part of the reason, for affirming the decision that is under review" was therefore that the appellants were not persons to whom Australia owed protection obligations under the Convention. When viewed in that light [the operation of s 424A(1)(a) having to be determined in advance --- and independently --- of the tribunal's particular reasoning on the facts of the case] , it is difficult to see why the relevant passages in the appellants' statutory declaration would itself be "information that the tribunal considers would be the reason, or a part of the reason, for affirming the decision that is under review". Those portions of the statutory declaration did not contain in their terms a rejection, denial or undermining of the appellants' claims to be persons to whom Australia owed protection obligations . A Tribunal Member conducting the enquiry is not an adversarial cross-examiner but an inquisitor obliged to be fair. In an application for review before the Tribunal it is for the applicant to advance whatever evidence or argument he wishes to advance, and for the Tribunal to decide whether his claim has been made out; it is not part of the function of the Tribunal to seek to damage the credibility of an applicant's story in the manner a cross-examiner might seek to damage the credibility of a witness being cross-examined in adversarial litigation. The Tribunal, conducting an inquisitorial hearing, is not obliged to prompt and stimulate an elaboration which an applicant chooses not to embark on (see per Gummow and Heydon JJ in Re RUDDOCK (in his capacity as Minister for Immigration and Multicultural Affairs); ex parte APPLICANT S154/2002 (2003) 201 ALR 437 at [57] --- [58]). 14 Whilst the present case focuses upon the statutory requirements of s 424A of the Act, it is not inappropriate to refer to what Gleeson CJ, Kirby, Hayne, Callinan and Heydon JJ said in SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs [2006] HCA 63 ; (2006) 231 ALR 592 ('SZBEL') in relation to matters of procedural fairness at a Tribunal hearing, especially since Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ had said in SZBYR at [14], '... given the presence of s 422B , it might be surprising if s 424A were interpreted to have an operation that went well beyond the requirements of the hearing rule at common law'. It is not necessary (and often would be inappropriate) for the tribunal to put to an applicant, in so many words, that he or she is lying, that he or she may not be accepted as a witness of truth, or that he or she may be thought to be embellishing the account that is given of certain events. The proceedings are not adversarial and the tribunal is not, and is not to adopt the position of, a contradictor. But where, as here, there are specific aspects of an applicant's account, that the tribunal considers may be important to the decision and may be open to doubt, the tribunal must at least ask the applicant to expand upon those aspects of the account and ask the applicant to explain why the account should be accepted. If this were a rule of natural justice only the most talkative of judges would satisfy it and trial by jury would have to be abolished. On the contrary, to adopt such a course would be likely to run a serious risk of conveying an impression of prejudgment. He also submitted documents purporting to be police documents involving a charge against him. Many members of the Awami League are prepared to offer such documents on request in a humanitarian way to help former supporters. They are worded in a way to offer support to obtain economic refugee status, rather than to verify any particular status within the Awami League. The purported police documents do not match with the original case documents held at the Moulvibazar Additional District Magistrates Court and are not authentic. That advice included advice that the letters were genuine. The decision of the Tribunal to give no weight to the letters was based on a conclusion that, notwithstanding that the letters were genuine, the content of the letters was false (see per Branson, Finn and Bennett JJ at [39]). The Minister's appeal was dismissed, the Full Court concluding that the Tribunal had failed to comply with its statutory obligations under s 424A(1)(b). No practical or other difficulty stood in the way of the Tribunal telling the respondent that the information which it had received about his letters of support caused it to disbelieve or doubt the content of those letters. Yet the s 424A letter did not explicitly tell the respondent that the relevance to the review of the information which it had received about his letters of support was that the information indicated that the content of the letters was false. For this reason he may not have understood that the relevance of the information to the Tribunal's review was that it caused the Tribunal to disbelieve or doubt the content of his letters of support. 20 On 15 July 2002 he was issued with a Nepalese passport. He left Nepal in January 2003 and moved to live in the United Arab Emirates under visas, one of which appeared to remain current until 21 April 2009. On or about 3 July 2006 he secured an Australian visa in Abu Dhabi in the United Arab Emirates. Travelling on his Nepalese passport and using his Australian visa he arrived in Australia from the United Arab Emirates on 10 July 2006. 21 By an application dated 16 August 2006 he applied for a Protection (Class XA) visa. His application was refused by the Minister's Delegate on 30 August 2006. On 20 September 2006 he applied to the Tribunal for review of the Minister's Delegate's decision. 22 The appellant attended a lengthy hearing before the Tribunal on 20 November 2006 having been invited to a hearing to give oral evidence and present arguments in support of his claims by letter dated 3 November 2006. 23 On 3 November 2006 two other letters were sent to the appellant. One such letter sought information from the appellant in accordance with s 424 of the Act. The third letter, which is central to this case, was the Tribunal's 's 424A letter'. ) Your passport, issued on 15 July 2002, states your next of kin is Mr [name of a person included who was later identified by the appellant as his father] of Bhulbhule --- 1 Lanjung (sic) , Nepal. Your Application for a Protection visa stated that you lived at this address from 1981 to 2000, and that you were born there. You have not included any details regarding your father. In your typed statement accompanying your Application for a Protection visa you stated that your father was killed in 2001 in Kathmandu by miscreants. ) In your Application for a Protection visa you stated that you do have a right to enter or reside in the UAE, temporarily or permanently. Your passport shows a current UAE Residence visa from 22 April 2004 to 21 April 2009. It is the UAE visa from 24 March 2003 to 23 March 2006 which has been marked 'cancelled'. In your application for a visa to travel to Australia it was noted that you have a right of return to UAE in the form of an emirate visa valid until 21 April 2009 (recently renewed). ) In your typed statement filed with your Application for a Protection visa, you stated 'There is no difference between staying in Nepal and India coz its basically same country. ' You also stated that 'I was planning to go to India coz we don't need any visa to stay over there. ' Country information indicates that as a citizen of Nepal you can enter, re-enter and live in India with all the rights and privileges available to nationals of India without any fear that you will be returned to Nepal. County information indicates that India has a population in excess of one billion persons, and is a functioning democracy, where the state is willing and able to protect persons there. ) Your Application for a Protection visa states at Q. ' s 45 - 48 that you legally left Tribhuban airport on 29 January 2003, and you did not have any difficulties in obtaining a travel document (such as a passport). In your typed statement you stated 'I left Nepal to avoid attack and sure death from the anger of the Maoist ...' In answer to Q.32 you stated that you travelled to the UAE to 'work as well as to avoid attack and death. ' There is no indication that you have returned to Nepal before travelling to Australia. You indicated in answer to Q.55 that you have never applied for refugee status in a country other than Australia. ) In your visa application to travel to Australia you stated that the purpose of travel to Australia was family reunion. You had strong representation and support from an Australian permanent resident and citizen, a strong employment record and a return right. In this regard you were going to visit your cousin and sister-in-law in Sydney. You stated that you were a line leader with a scaffolding and construction company, Scaffco, in Abu Dhabi. You arrived in Australia on 10 July 2006, and applied for a Protection visa on 17 August 2006. In your Application for a Protection visa and typed statement you stated that you were a machine operator/welder at Saffco Ltd in Abu Dhabi (UAE), you were seeking protection as a refugee, and that your then existing UAE visa had been cancelled, because the 'employer reported to the responsible authority of my failure to return to the job on time. It is their rule. ) Country information indicates that internal flight is viable. Further, you have 12 years of education, have a trade(s), have worked overseas, have a solid work record, you are single, can speak read and write Nepali and English, and you are relatively young (born 1981). ) Country information indicates that there is peace in Nepal. You have 12 years of education, trade skills (Machine welder), overseas work experience, young age (dob 24/2/81), solid work history, ability to speak, read and write English and Nepali, and your marital status is single. ) If Mr [name of a person included who was later identified by the appellant as his father] is your father, then there is an inconsistency in your evidence in that he could not have died in 2001 and still be your next of kin in 2002. This may reflect negatively on your credibility. Further, if the Tribunal were to accept the evidence that your father is not dead, then it may consider that Kathmandu is a safe place, and not at all like you describe it in your written statement. Further, your comments regarding the inability of the Nepalese authorities to protect you as they did not protect your father would also become irrelevant if he is still alive. ) As you appear to have this right, then Australia does not have any protection obligations to you. ) As you appear to have this right, then Australia does not have any protection obligations to you. ) As you did not seek refugee protection in the UAE, this would indicate that you had no fear of persecution in Nepal, but rather, you travelled to the UAE in order to work. ) The information provided in the two applications is inconsistent and suggests that your evidence is not plausible. Further, your delay in applying for a Protection visa in Australia may indicate that you had no real fear of persecution in Nepal (and/or UAE if that is your claim). Moreover, if the UAE employer's rule is as you stated, then you were aware of that rule and its consequences. It could therefore be considered that by remaining in Australia you deliberately created a situation where you could not return to the UAE, thus cutting off your legal right to enter into and reside there. This may also be considered as a deliberate attempt to create a sur place claim. ) This information suggests that you could successfully relocate in Nepal. ) This information suggests that you would not have a real fear of persecution if you were to return to Nepal. Your comments are to be in writing and in English. They are to be received at the Tribunal by 17 November 2006. )' ), the Tribunal ensured, as far as was reasonably practicable, that the appellant understood why it was relevant to the review. In the statutory declaration of the appellant made on 17 November 2006 he confirmed that the person who had been identified as his next of kin in his passport, and whose name had been included in the Tribunal's s 424A letter of 3 November 2006 in two places, was indeed the appellant's father. 27 Counsel for the respondent Minister, Mrs S A H Sirtes, submitted that the Court was not required to consider whether the Tribunal had complied with s 424A(1)(b) because the appellant, himself, provided his passport to the Tribunal at the Tribunal hearing on 20 November 2006 and had given the information concerning the identity of the person, identified as the appellant's next of kin in his passport, to the Tribunal in the appellant's statutory declaration. The submission was that s 424A did not apply to the relevant information because it was information that the appellant had given to the Tribunal for the purpose of the application for review in accordance with s 424A(3)(b) of the Act. 28 I do not accept this submission. Once the Tribunal considered that the information contained in the appellant's passport issued to him on 15 July 2002 would be the reason, or a part of the reason, for affirming the Minister's Delegate's decision to refuse the appellant a protection visa, as it plainly did on or before 3 November 2006, it was obliged by s 424A(1)(a) of the Act to give to the appellant particulars of that information. The section had been engaged. The later provision of the same information by the appellant to the Tribunal could not exonerate the Tribunal from its obligations under s 424A(1)(b) of the Act in circumstances where it chose to write its s 424A letter to the appellant, as set out above, on 3 November 2006. 29 Having said that, it is clear that the Tribunal did not have to send a further s 424A notice to the appellant providing particulars of the information that was contained in the statutory declaration of the appellant made on 17 November 2006 which was forwarded to the Tribunal under cover of Mr Thapa's facsimile of the same date. 30 Given my findings that the information contained in the appellant's passport issued on 15 July 2002 did not fall within the s 424A(3)(b) exception, it became common ground that, whatever may have been thought to be the case at the time when the application for constitutional writ relief was before the Federal Magistrates Court of Australia, the information, particulars of which the Tribunal was required to give to the appellant, was the information contained in the passport issued to him on 15 July 2002. 31 It is apparent that the Tribunal suspected that the person identified as the appellant's next of kin in his passport was in fact his father. Were this to prove to be the case, it would not sit comfortably with the appellant's claim to refugee status. Despite of our relocation (sic) to Kathmandu from Lamjung (Maoist Predominantly Area) coz my father think Kathmandu is the only safe place for us. There is no place to go else where except Kathmandu coz of the capital and very tight security. Relocation to Kathmandu city and my father's restricted movement at one evening, in the end of 2001, on his way back home he was openly, in public hacked to death by some unknown miscreants. My mother knew one day it would happen to our family like his other two colleagues who also lost all their family members, in the hand of Maoist terrorist, shortly after their desertion from the revolution. 33 In my opinion, the Tribunal's s 424A letter of 3 November 2006 worked to discharge its obligations under s 424A(1) in respect of the relevant information, contained in the appellant's passport, in an exemplary manner. ) If Mr [name of a person included who was later identified by the appellant as his father] is your father, then there is an inconsistency in your evidence in that he could not have died in 2001 and still be your next of kin in 2002. This may reflect negatively on your credibility. Further , if the Tribunal were to accept the evidence that your father is not dead, then it may consider that Kathmandu is a safe place, and not at all like you describe it in your written statement. Further , your comments regarding the inability of the Nepalese authorities to protect you as they did not protect your father would also become irrelevant if he is still alive. He stated that he lost faith in the Nepalese authorities who failed to protect his father from the Maoists. He stated that if the Maoists' demands are not met, or one doesn't obey their rules, then the punishment will be very harsh such as kidnapping, torturing, or death. He is sure that eventually he will be the next victim if he goes back to Nepal. He is the target as he refused to join them and expressed an opinion against their ideology to the public. They have branded him as a traitor 'and would warn us in various ways to avenge my father and our family relatives. He stated that the rebels would purposely ask for him to join them knowing that some day he would be killed by the authorities like many other guerrillas. He has no faith in them and he believes they will not be able to protect him from the Maoists' grudge. He stated that it is their rule. It was an error in converting the dates from the Nepali Calendar into English Calendar. My father [name inserted] was killed on Bikarm Sambat (Nepali Calendar) KARTIK 13, 2059, the corresponding date should have been 30 October 2002. The date motioned in my Statement is wrong. He asserted that his father had in fact died on 30 October 2002, after the passport identifying his father as his next of kin, had been issued. 37 It is apparent that the Tribunal doubted the appellant's explanation of his 'mistake'. He stated that when he said the Nepalese date to his friend he translated it incorrectly. He stated that the other dates had been converted correctly. The tribunal stated that it was not sure that it accepted this explanation. It stated that perhaps the fact was that his father was alive. He asked what the tribunal meant. The tribunal stated that it had been explored in a letter to the applicant, but it went through it again with him. The upshot was that it could be that his father was alive on the 15 th of July 2002 when the applicant's passport was issued. The applicant stated there was a mistake in the translation. The tribunal said that in his statement he had said that at the end of 2001 his father had been hacked to death. The applicant said that this was definitely due to a mistake of translation, and that when the passport was issued to him his father was alive and in October (2002) his father was killed. It used it in the very manner that it foreshadowed that it may have to use it, were it to transpire that the person named as the appellant's next of kin in his passport was, in fact, the appellant's father. 39 The Tribunal's 'FINDINGS AND REASONS' are recorded on four closely typed pages. The passage in the reasons on which the appellant places the greatest reliance is that contained in the paragraph commencing 'The applicant's passport' and ending with 'These findings are supported by the following findings' (see below). The applicant's father reluctantly joined the Maoist revolution group. He was promoted to Regional Lieutenant in the Maoist rebels and was a very well known figure in the group. The father joined the Maoist group to protect the applicant and his mother from them. The Royal Nepalese Army continuously monitored the applicant and his mother all the time and they interrogated them all the time. They received physical abuse and were threatened by the Royal Nepalese Army. Later with the direct assistance and with a hope of safety from the then Prime Minister his father and few of his colleagues in the middle of 2001 deserted the Maoist rebels and surrendered to the Nepalese government. His father and his colleagues were pardoned by the Nepalese Authority and were repeatedly assured that he and his family would receive an extra measure of protection from the Maoist rebels. The family relocated to Kathmandu city and one evening, in the end of 2001 (later this date was changed to October 2002 by the applicant, who stated that there had been a mistake in converting from the Nepali calendar) , on his way back home, the applicant's father was openly, in public, hacked to death by some unknown miscreants. The two other colleagues lost all their family members at the hands of Maoist terrorists, shortly after their desertion from the revolution. Initially the applicant and his mother received sympathy and financial compensation from the Nepalese government for the loss of their family due to his father's assassination but eventually they withdrew their assistance and advised them to return to the village where they came from. They were afraid of future attacks from the Maoists because they never let live anyone's family who betrayed or deserted them. Since his father's death the Maoists keep pressuring and threatening him [the appellant] to join their Group, which he rejected. During his time in Kathmandu in mid 2002 the applicant was suddenly attacked by some musketeers who wanted him to join them. In his typed statement accompanying his Application for a Protection visa the applicant stated that his father was killed in 2001 in Kathmandu by miscreants. There is an inconsistency in the applicant's evidence in that his father could not have died in 2001 and still be his next of kin in 2002. The applicant stated that a mistake was made in converting the dates from the Nepali Calendar into the English Calendar regarding the date of his father's death. He stated that his father was killed on 30 October 2002 and the date mentioned in his Statement, 'in the end of 2001', is wrong. The Tribunal does not accept the applicant's explanation that there was a mistake in translation. The Tribunal finds that he forgot that his father was named as his next of kin in the passport, and when this was brought to his attention by the Tribunal, he tried to cover up the mistake by stating there was a mistake in the translation. As a result, the Tribunal finds that the applicant's evidence in this regard is not credible and makes the following findings. The Tribunal finds that the applicant's father was alive at the time of the issue of the applicant's passport, and that he was not killed by Maoists, or at least not in the circumstances described by the applicant. The Tribunal does not accept the applicant's claims in relation to his father being a Maoist, and that he then deserted the Maoists who then killed him and harassed his family. As such, the basis of the applicant's claims based on his father being a Maoist is removed, and the Tribunal rejects those claims, and accordingly makes this finding. Therefore the Tribunal also rejects the applicant's claims that a local MP helped the applicant's father surrender his weapons to the government and assisted the applicant get to the UAE. Further, the applicant's claims that he was a member of a particular social group described as an able bodied person, overseas returnee, and son of the active member of United Marxist and Leninist (UML) political opinion (member of student Union called All Nepal National Free Students Union which is a brother organisation of UML), are rejected as the Tribunal finds that his father was not a member. Further, the Tribunal considers that the applicant's evidence that Kathmandu is not a safe place is placed in question. Moreover, the applicant's comments regarding the inability of the Nepalese authorities to protect him, because they did not protect his father, are rejected by the Tribunal. These findings are supported by the following findings. The Tribunal finds that the information provided in the two applications [one for a visitor visa to Australia and another for the protection visa] is inconsistent and, as a result, he is not a credible witness. ... Moreover, the applicant stated in his Statutory Declaration that he was residing in the UAE on a temporary basis, and did not have legally enforceable rights to enter the UAE, but he had a visa to stay in the UAE until 21 April 2009. ... The Tribunal finds that by remaining in Australia the applicant attempted to deliberately create a situation where he could state that he could not return to the UAE, thus putting himself into the position of stating he had no legal right to enter into and reside there. The Tribunal finds that this reflects negatively on his credibility. 42 It is undoubtedly true to say that the Tribunal could not rely upon a rejection or lack of satisfaction with a person's evidence in respect of a particular fact to found a finding, absent any other evidence, that the true fact was the very opposite of that which had been asserted in the person's evidence which it had rejected or found did not satisfy it. There is a difference between the rejection of a person's evidence and a finding that he or she deliberately lied. ... In some cases, a rejection of evidence may lead to a finding that that person lied on another occasion. The Tribunal has also used the word 'rejects' or 'rejected' on about three occasions. In addition, the Tribunal has used the expression 'does not accept' on a couple of occasions. Importantly, the Tribunal did not accept the appellant's explanation that there had been a mistake in the translation from the Nepali calendar to the Gregorian calendar which resulted in the timing of his father's alleged slaying having been incorrectly recorded in the appellant's visa application as having taken place at the end of 2001. His later assertion that it had occurred on 30 October 2002 was rejected. It was open to the Tribunal to find, as it did, that the appellant's father was alive at the time of the issue of the passport and that he had not been killed by Maoists in the circumstances described by the appellant in his protection visa application before the passport was issued. The Tribunal's non-acceptance of the appellant's claims in relation to his father being a Maoist and his father's desertion of the Maoists and that the Maoists killed his father and harassed his family was open to it. 46 Once having rejected the appellant's claims concerning the appellant's father, it was open to the Tribunal to also reject the appellant's claims concerning help said to have been afforded to the appellant's father in respect of the surrender of weapons to the government and also in respect of help said to have been afforded to the appellant to get to the United Arab Emirates. 47 It was open to the appellant to reject, as it did, the appellant's claims that he was a member of a particular social group as, amongst other things, the son of an active member of United Marxist and Leninist. 48 The Tribunal made a finding that the appellant's father was not a member of the United Marxist and Leninist political opinion. It may be that this was a finding which transgressed the rule limiting the scope to which rejection of an appellant's claims may be put but, it is plain from the reasoning of the Tribunal that it was immaterial whether the appellant's father was or was not, in fact, a member of the United Marxist and Leninist political opinion. 49 The Tribunal's findings which led to the conclusion that the decision of the Minister's Delegate should be affirmed all turned upon findings of credibility in relation to the appellant's account of what had transpired that was said to lead to him having a well-founded fear of persecution. The Tribunal was not satisfied on the evidence before it that the appellant had a well-founded fear of persecution for any Convention related reason. This it was entitled to do for the reasons which it indicated. 50 It was also open to the Tribunal to find that any suggestion by the appellant that Kathmandu was not a safe place was open to doubt in circumstances where the appellant's evidence, concerning the history of his father's alleged involvement with the Maoists and what thereafter happened to him, did not find favour with the Tribunal. 51 It was also open to the Tribunal to reject the appellant's suggestion that the Nepalese authorities were unable to protect the appellant when that inability was predicated upon the Nepalese authority's inability to protect the appellant's father. The Tribunal was entitled to reject the appellant's claim that the Nepalese authorities had been unable to protect the appellant's father. 52 It is important to note that the findings of the Tribunal referable to the appellant's lack of credibility were supported by like findings in relation to a number of other matters detailed in the Tribunal's reasons for decision apart from those which flowed from the information contained in the appellant's passport issued on 15 July 2002. 53 Given the manner in which the Tribunal ultimately decided the review it is apparent that it ensured, as far as was reasonably practicable on 3 November 2006, that the appellant understood why the information in the appellant's passport issued 15 July 2002 would be the reason, or a part of the reason, for affirming the decision under review, was relevant to the review. No considerations were taken into account in respect of the information in the passport which had not been telegraphed in the Tribunal's s 424A letter. No considerations from 'left field' were taken into account. At the heart of the matter was the appellant's credibility. Given that s 65(1) of the Act called for a determination either of satisfaction that the relevant criterion had been satisfied or of non-satisfaction, the appellant's credibility was critical. Once his credibility was destroyed it was apparent that a finding that the appellant's father had been slain in late October 2001 could not, having regard to the information contained in the passport, be made. In these circumstances the underlying basis for the appellant's claimed well-founded fear of persecution was rendered nugatory. 54 It is apparent that the Tribunal did not fall into jurisdictional error. Accordingly, the appeal should be dismissed. I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham.

alleged jurisdictional error in respect of compliance with s 424a(1)(b) of the migration act 1958 (cth) scope of requirement migration

2 During the course of the hearing there was a potential issue of statutory construction raised as to whether, under the Crimes (Local Courts Appeal and Review) Act 2001 (NSW), section 63 operated, upon the filing of an appeal against the severity of his sentences, to stay the automatic disqualification provided by section 206B. The applicant gave evidence that his counsel and solicitor told him that that was the effect of the section and he continued to manage the Transtar Group until the Chief Judge of the District Court heard his appeal against severity and allowed it, by reducing the sentence, on the one appeal with which he proceeded. Mr Lahood, the applicant's solicitor, at both this hearing and the criminal matter, gave evidence supporting the applicant's account. 3 I had the opportunity of observing the applicant in the witness box for a considerable period while he was cross examined and formed the view that he was a person who was responsible, diligent and capable. I accept his evidence that he would not have continued to manage the group during the period after his initial conviction on 18 January 2005 in the Local Court had he received advice that it was not appropriate to do so. I am satisfied that he conducted himself in accordance with the legal advice he received. Whatever may be the true position under the Crimes (Local Courts Appeal and Review) Act 2001 (NSW). I do not think it matters in terms of considering the applicant's fitness to be granted the leave which he seeks, to ascertain the correct answer to that question. This is because I find that he acted in an entirely reasonable and sensible fashion on legal advice, which he was given, which provided him with no reason to think that he was not entitled to act as he did. 4 The circumstances of the offences have been set out in the judgment of Chief Judge Blanch, in his remarks on sentence on 7 March 2005. The evidence of the applicant before me supplemented the circumstances. It indicated that one of the reasons he filled the forms in which led to the conviction and contained the false statements was that he was given those by the longstanding accountants of the Transtar Group who told him, in effect, that it was appropriate so to act. The two circumstances relied on in support of the convictions were, first, that the form seeking the deregistration of the company, Aluform Express Pty Ltd ('Aluform') asserted that that company had no outstanding legal liabilities and, secondly, that that company was not a party to any legal proceedings. 5 The falsity of the first of those statements consisted in the fact that there were debts owed to the New South Wales State Debt Recovery Office in respect of outstanding parking and other motoring offences committed by drivers of various vehicles which were registered in the name of Aluform but operated in the overall business structure of the Transtar Group. The evidence before me reveals that somewhere in the order of just over $30,000 including penalties and interest, was due to the State Debt Recovery Office and outstanding at the time that the applicant signed the forms. 6 There is evidence before me which I accept, that the applicant considers on a basis that appears to me to be reasonable, that the State of New South Wales, through the Roads and Traffic Authority or some other instrumentality owes an offsetting amount, perhaps not in the same sum, in respect of the cancelled registrations of vehicles that had been registered in Aluform's name and that some reduction in the outstanding debt should be given in respect of that. Hence, in the short minutes of order that have been agreed by the parties, there is provision made for that matter to be investigated in the proposed condition 2(h). 7 The other issue of falsity was the statement that the company was not a party to any legal proceedings when in fact there were proceedings on foot that had been the subject of a subrogated action defended by an insurance company under third party or other motor vehicle accident insurance. While the applicant was aware of those proceedings, he believed that, in accordance with the normal understanding people would have of insurance companies taking over proceedings on behalf of insureds, the matter was in the hands of the insurer and was of no significant consequence. In respect of that matter, Chief Judge Blanch allowed the appeal against severity and reduced the fine that the Magistrate in the Local Court had imposed from $3000 to $300. 8 There was no appeal in the end against the severity of the other fine of $3000 in respect of the outstanding liabilities false statement. 9 The question for the court was succinctly stated by Bowen, CJ in Eq in Re Magna Alloys and Research Pty Ltd (1975) 1 ACLR 203 at 205. His Honour noted that an applicant who came seeking relief bore an onus of establishing that the general policy of the legislature laid down in an analogue of section 206B ought be made the subject of an exception in his or case. Where, as here, the applicant seeks leave to become a director and to take part in the management of particular companies the court will consider the structure of those companies, the nature of their businesses and the interests of their shareholders, creditors and employees. The offence involving the false statement about the company not being a party to any legal proceedings is one which, in its true context, does not appear to me to involve any serious issue of lack of probity or anything other than a clear and wrong, but, in all the circumstances, unfortunate slip by the applicant in filling in and signing a form on advice. 11 The other conviction, which was the one that attracted the more serious penalty, is of a different order and involved an attempt, on one view, to avoid paying a substantial sum of money due to the State by making a false statement that there were no outstanding liabilities. I have considered the evidence on this matter and the applicant's attitude that he has now clearly set out to resolve this issue and to pay what is due to the State Authorities subject to, what seems to me to be not unreasonable, trying to find from the State Authorities any offsetting amounts that might be due back to Aluform. The evidence before me shows that Mr Lahood has made some considerable efforts to ascertain from the relevant New South Wales Authorities the amount of registration moneys which ought be refunded but has not even received the courtesy of a reply to any of his attempts to find this information out. Hopefully that situation will remedy itself in the period allowed in the proposed orders. 12 I have formed the view that the applicant is genuinely contrite and remorseful for the errors which he committed and recognises that what he did was wrong. It seems to me to be a lapse in an otherwise clean and good record. The applicant has managed these companies with his family for over 20 years. The transport industry is one which is notoriously difficult in economic terms and yet the evidence shows that the companies in the Transtar Group have over 70 employees and also engage something in the order of about 10 contractors. They appear to be otherwise well managed. There are no matters which the Australian Securities and Investments Commission ('the Commission'), which intervened in the proceedings, was able to bring to attention as to the business practices of the applicant or the Transtar Group which might give any rise to concerns that there was a risk to the public or to those in the companies from the applicant being allowed to be a director, once again, as he seeks. 13 At the conclusion of the oral evidence I inquired of counsel for the Commission whether it was the Commission's position that the disqualification should remain and that there be no leave granted. Counsel, on instructions, said that that was not the Commission's position and that the Commission considered that appropriate conditions could be imposed. 14 I expressed some preliminary thoughts as to conditions that appeared to me to have some relevance which the parties might wish to consider. After some debate during the course of the day on which the hearing occurred, the parties were able to prepare an agreed position which in my opinion is an appropriate one and is reflected in the short minutes of order which have been provided to the court for the hearing today. 15 It appears to me that the interests of the companies as revealed in the evidence, their shareholders, who are the applicant's family and himself, the creditors and the employees would be best met by allowing him to resume a position in the management, as a director of the companies, but under the overall supervision of his father who has agreed to the proposed conditions involving him in the management during the period of the balance of the disqualification to which the applicant would otherwise have been subject under section 206B. 16 For these reasons, which I have necessarily stated shortly because the matter is not contested and because the Commission, which represents the public interest (cf: Associated Minerals Consolidated Ltd v Wyong Shire Council [1975] AC 538 at 560A-C; [1974] 2 NSWLR 681 at 692B-D), has itself considered the orders appropriate, it appears to me to be a proper exercise of my discretion that I make orders in the terms proposed by the parties. I certify that the preceding seventeen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.

application for leave to manage a corporation under section 206g of the corporations act 2001 (cth) where the australian securities and investments commission intervened in the proceeding where the australian securities and investments commission did not object to the granting of leave but sought the imposition of appropriate conditions on the applicant where applicant and intervenor agreed on appropriate conditions whether court should exercise discretion to grant leave corporations

The case against the party posting the publications is straightforward. The case against the website "host" is novel. He is the Managing Director of the Housing Industry Association Limited (the HIA), a peak representative body of residential builders in Australia. 3 The first respondent, The Builders Collective of Australia Inc (the Collective), is an incorporated association, the primary purpose of which is the reform of builders' warranty insurance in the residential building industry. Mr Phillip John Dwyer is described as the National President of the Collective. The Collective conducts an Internet website with the address "http://www.builderscollective.org.au". The Collective is registered as the proprietor of the domain name "builderscollective.org.au". The site includes what is described as the Builders' Collective Discussion Forum (the Forum) with the purpose of enabling members of the public to discuss and debate issues relating to the building industry, particularly the reform of warranty insurance in the residential building industry. The Forum is available for access to all members of the public, both in Australia and overseas, who have an Internet connection and an Internet browser. All messages posted on the Forum can be accessed and viewed without restriction. Only a registered user can post messages on the Forum. Whilst a registered user is required to provide a username, password and email address, there is no requirement to disclose the user's true identity. In practical terms, users may be anonymous. 4 The terms and conditions of the Forum are contained in what is described as a Privacy Statement that requires pressing the "Agree" button to proceed to registration. You are fully responsible for any information or file supplied by this user. You also agree that you will not post any copyrighted material that is not owned by yourself or the owners of these forums. In your use of these forums, you agree that you will not post any information which is vulgar, harassing, hateful, threatening, invading of others privacy, sexually oriented, or violates any laws. Dwyer was responsible for the administration of the website but there were also others involved. It was said to be the policy of the Collective to delete objectionable material upon becoming aware of it. It was also said not to be practicable to review and approve each posting before it is available to the public due to the number of users and the number of messages posted. It was also said that prior approval would detract from the 'real-time' interactive nature of the Forum as a venue for further discussion of issues of significance. That in itself explains the monetary push in the HIA. He does not for one moment give a rats 'wrinkly donut' for any of the HIA members, with the exception of the hierarchy under his control and subsequently controlling you and your businesses. Dwyer was cross-examined as to other entries on print outs of the relevant pages of the Forum in order to establish that the administrators of the Forum, and Dwyer in particular, were aware of the content of the Second Message well before it was removed. "Phil" posted a reply to the Second Message at 9.43 am on 25 January 2006. "Phil" is obviously Dwyer. The reply was moved to another part of the site by "Phil" at 11.32 am that same day. The content of the reply is not in evidence. Dwyer accepts that he probably posted the reply and could have removed it. 9 The applicant submits that by posting a reply to the Second Message it should be found that Dwyer read the Second Message within a day of it appearing on the site. The Collective submits that the removal of the reply to another part of the site suggests it had been posted beneath the Second Message in error and, when the error was realised two hours later, it was moved to a part of the Forum to which it was more relevant. The Collective therefore submits that the reply was not referable to the Second Message. However, a further inference that might be open is that Dwyer only knew his reply was not referable to the Second Message because he had read that Message including the offending material. However, I am not inclined to make a positive finding against the Collective on this basis as the reasoning is too speculative. 10 A person referred to as "admin" posted a reply on the same forum page as the Second Message on 1 July 2007. That posting contains two quotes about the rates of commissions paid by insurers to HIA and concludes "Dr of Economics Silberberg strikes again! " There is no evidence as to the identity of "admin". The evidence is that there are a number of volunteer administrators of the Forum. There is no evidence as to who was acting as an administrator on the night of 1 July 2007. 11 The applicant submits that the reference in "admin's" reply to "Dr of Economics" picks up the content of the Second Message and that this reference and the fact that it is on the same page and follows on from the Second Message establish that "admin" was aware of the contents of the Second Message. The Collective submits that "admin's" reply was posted on the same page as the Second Message not because it related to it but because it was on broadly the same topic. I am satisfied that the posting of a reply on the same page as the Second Message by "admin" indicates that "admin" had read the Second Message. I am also satisfied that a reader of that message would have picked up the offensive racial imputation. The reference to "Dr of Economics" in the reply provides independent support for those conclusions. Those entries also underline the ability of the Collective to vet the contents of messages. Indeed, the conduct of the Forum in permitting the posting of anonymous messages that are automatically available for display without prior checking is entirely the choice of the Collective. At that time the applicant did not know the identity of "ozken" and was only aware of the Second Message. On 3 August 2006, after receiving an email from Buckley identifying himself as "ozken", the applicant amended the complaint accordingly. The complaint was again amended by letter dated 22 August 2006 when the applicant learned about the First Message. 13 The Commission attempted to conciliate the complaint, but was unsuccessful. On 27 November 2006, a Delegate of the President of the Commission terminated the complaint under s 46PH(1)(i) of the HREOC Act. On 18 December 2006, the applicant commenced these proceedings pursuant to s 46PO of that same Act. He did not give evidence by way of affidavit or otherwise, but tendered a copy of a communication dated 23 January 2006 addressed to the applicant. And again offer my deepest and sincere apologies for this circumstance to have evolved. 19 At all material times, the Messages on the Forum were able to be downloaded and received by any member of the public without restriction. The uploading or posting of the Messages by the second respondent was an act of publication done by him. That act plainly caused words to be communicated to the public within s 18C(2)(a) and so was not in private. (See also Conti J in Jones v The Bible Believers' Church [2007] FCA 55. As the Act does not define the words "offend, insult, humiliate or intimidate", they are to be given their ordinary meanings: see also Toben (2002) 71 ALD at [90]. The applicant saw an imputation of each Message as being that he was motivated by greed because of his Jewish background. He found that suggestion deeply offensive and distressing. It is submitted for the applicant that the First Message conveys an imputation that the applicant's Jewish ethnicity is, in itself, the cause for an excessive monetary focus within the HIA and that the Second Message repeats this imputation but with a further imputation that, again primarily because of his Jewish ethnicity, the applicant has exercised control over the building industry as a means of making money for himself and his rich friends at the expense of the membership of the HIA. 21 The test or standard in s 18C(1)(a) of the Act is objective: see Jones v Scully [2002] FCA 1080 ; (2002) 120 FCR 243 at 268-269; Hagan v Trustees of Toowoomba Sports Grounds Trust [2000] FCA 1615 ; Creek v Cairns Post Pty Ltd [2001] FCA 1007 ; (2001) 112 FCR 352 at [12] . It is for the Court to determine whether the act, in all the circumstances in which it was done, would be reasonably likely to offend, insult, humiliate or intimidate another person or a group of people of a particular racial, national or ethnic group: see Hagan [2000] FCA 1615 at [15] . It is not so clear that the further alleged imputation is conveyed by the Second Message. However, in my opinion, a fair reading of the Second Message would give rise to the imputation as pleaded. I find that each Message was reasonably likely, in all the circumstances, to offend and insult the applicant or (if it be necessary) other persons of Jewish race or ethnicity. 23 It is then necessary to determine whether the act of publishing the offensive part of the Messages was an "act done because of the race, colour, or national or ethnic origin" of the applicant. Section 18B of the Act provides that if the race, colour, or national or ethic origin of a person is one of the reasons an act is done, then for the purposes of Pt IIA of the Act, the act is treated to be done for that reason. This is so even if this is not the dominant or a substantial reason for doing the act. It is abundantly clear that the applicant's Jewish race and ethnicity was a reason for the second respondent's decision to publish the Messages in the form that he did. The offensive parts of the Messages are quite explicit. The explanation by the second respondent in the communication of 23 January 2007 is not credible and is rejected. In any event, intention is not a necessary element. The defence provided by s 18D(c)(ii) was faintly referred to. The applicant accepts that a purpose of the Forum is to facilitate discussion on a matter of public interest, namely, builders' warranty insurance. However, inclusion of the offensive portions of the Messages was neither reasonable nor in good faith by the second respondent and, in any event, did not constitute fair comment. It is contended that it did, because it published or allowed to be published the two Messages on the website Forum. 25 The Collective denies that it published, or allowed to be published, the Messages. It contends that, as owner and manager of the website, it merely provided a facility --- the Forum --- by which the second respondent published the Messages. It contends that, in any event, "allowing" publication is not a breach of the section. Further, the Collective contends that it did not know of the existence of the Messages in the Forum until it was advised by the applicant's solicitor's letter. In the absence of this knowledge, it cannot be said to have published the Messages, or allowed them to be published. In the alternative, the Collective contends that it did not allow the Messages to be published on the Forum, because the Collective expressly prohibited the posting of material such as the Messages through the Forum's Privacy Statement. It also relies upon the defence provided by s 18D(c)(ii). 26 There is little difficulty in applying s 18C to the author of a message posted on an Internet website, as has been seen in relation to the second respondent. The position of others involved in the chain between author and ultimate reader is not so clear. 27 The applicant submits that the decision in Godfrey v Demon Internet Ltd [2001] QB 201, [1999] 4 All ER 342; [2000] 3 WLR 1020 should be applied. In that case, the defendants carried on business as an Internet Service Provider and received and stored on their news server an article, defamatory of the plaintiff, which had been posted by an unknown person using another service provider. The plaintiff informed the defendants that the article was defamatory and asked them to remove it from their news server. They failed to do so and it remained available for some 10 days until its automatic expiry. It was held that the defendants were liable at common law as the publisher of the posting --- they were not merely the passive owner of an electronic device through which postings were transmitted but actively chose to receive and store the news group exchanges containing the posting which could be accessed by their subscribers and could have chosen to obliterate the posting complained of, as they later did. Thus every time one of the defendants' customers accesses soc.culture.thai and sees that posting defamatory of the plaintiff there is a publication to that customer. Horatio Bottomley, Editor and Embezzler') and Sun Life Assurance Co of Canada v WH Smith & Son Ltd (1933) 150 LT 211 (the case about newspaper posters announcing 'More grave Sun Life of Canada disclosures'). I do not accept Mr Barca's argument that the defendants were merely owners of an electronic device through which postings were transmitted. The defendants chose to store soc.culture.thai postings within their computers. Such postings could be accessed on that newsgroup. The defendants could obliterate and indeed did so about a fortnight after receipt. For the purposes of the law of defamation, publication is regarded as a bilateral, complete at the time of downloading Dow Jones & Company Inc v Gutnick [2002] HCA 56 ; (2002) 210 CLR 575 at [25] ---[27], [40] and [44]). As counsel for the interveners pointed out it may be useful, when considering where something is published to distinguish between the (publisher's) act of publication and the fact of publication (to a third party), but even that distinction may not suffice to reveal all the considerations relevant to locating the place of the tort of defamation. He established the site and thereby invited disparaging comments. He maintained some control over the site. He said that he, along with anyone else, could remove any of the comments from the site. The extent of his control over what was, or was not, published, was not fully explored, but it is seriously arguable that he was at least as much in control of the site and responsible for what appeared on it as was the internet service provider in Godfrey v Demon Internet Ltd [2001] QB 201 ; [1999] 4 All ER 342, or the proprietors and secretary of a golf club which allowed a defamatory statement to remain on a notice board in Byrne v Deane [1937] 1 KB 818; 2 All ER 204. In Godfrey v Demon Internet Ltd , it was held that an internet service provider was a publisher at common law of the defamatory comments posted on the site by an unknown user. The principal claims were based on infringement of copyright by a website that facilitated the free downloading of certain sound recordings. The first respondent was the registered owner and operator of the website. It contained hyperlinks to thousands of sound recordings which were located on remote websites and downloaded directly from those websites to the computer of the Internet user. The music file was not sent to, downloaded on, transmitted through or saved to the first respondent's website. The second to fifth respondents hosted the website and were responsible for maintaining the connection to the Internet. They were unaware of the contents of the website and took no steps to inform themselves of that content. Tamberlin J held that the first respondent infringed copyright by authorising the infringing acts of Internet users who accessed the website and the owners or operators of the remote website from which the infringing recordings were downloaded. He permitted and approved the infringements and had sufficient control over his website to prevent the infringements (150 FCR 1 at [77]---[102]). The second to fifth respondents infringed the copyright by authorising the infringing acts (150 FCR 1 at [103]---[132]). They had an active role in relation to the website, were aware of the content of the website and had the power to prevent the infringing acts. Those findings were substantially upheld on appeal, although an employee of the Internet service provider was let out ( Cooper v Universal Music Australia Pty Ltd [2006] FCAFC 187 ; (2006) 156 FCR 380 particularly per Branson J at [28]---[52], [61]---[65] and Kenny J at [136]---[165]). 31 It was held in Bunt v Tilley [2006] 3 All ER 336; [2006] EWHC 407 (QB) that an Internet service provider that performed no more than a passive role in facilitating postings on the Internet and did not "host" the relevant website was not deemed to be a publisher at common law any more than a telephone company would be liable for defamation over the telephone. Godfrey [2001] QB 201 was distinguished. 32 The ability to prevent publication or the continuance of publication in the context of defamation as applied in Godfrey [2001] QB 201was based in part upon Byrne v Deane [1937] 1 KB 818. That case concerned liability of a golf club for a defamatory note on the golf club notice board. That principle, as it applied in defamation, was analysed with some care by Hunt J of the Supreme Court of New South Wales in Urbanchich v Drummoyne Municipal Council (1991) Aust Torts Reports 81-127. It was concluded that it was necessary for the plaintiff to establish that the defendant had, in fact, accepted responsibility for continued publication by consenting to, approving of, adopting or promoting or in some way ratifying the continued publication. Such accepted responsibility could be established by inference. That case involved someone else's defamatory statement being attached to the defendant's property. (See also Bishop v State of New South Wales [2000] NSWSC 1042 and Frawley v State of New South Wales [2006] NSWSC 248 . That case concerned the liability of a television station that took to air a direct "feed" of a live current affairs show from another television station. The argument that it was a mere conduit failed. Emphasis was placed upon the choice made by that station to take a live current affairs program likely, to be controversial, directly to air without any editing or scrutiny. For an earlier, brave but unsuccessful, attempt to argue that a television station which puts a debate to air is not responsible for statements by participants --- see Australian Broadcasting Corporation v Comalco Ltd (1986) 12 FCR 510. 34 Based on these authorities it is clear enough that failure to remove known offensive material would be caught by s 18C(1)(a) bearing in mind s 3(3). I have found that an unidentified administrator of the Collective's website had knowledge of the offensive portion of the Second Message on 1 July 2006. I am satisfied that the administrator was an employee or agent of the Collective so that s 18E of the Act would apply. I was not able to make any wider findings as to actual knowledge. Is the Collective responsible without actual knowledge of the offensive contents of the messages? If the question arose in defamation or breach of copyright, the answer is likely to be in the affirmative. The Collective chose to conduct an open anonymous forum available to the world without any system for scrutinising what was posted. The party controlling a website of such a nature is in no different position to publishers of other media. In my opinion, failure to remove the offensive material within a reasonable time of it having been posted was an act caught by s 18C(1)(a). The issues which arise in relation to more passive participants such as Internet service providers do not arise in this case. The fact that the material was said to be posted in breach of the user conditions does not affect that conclusion. In one sense it underlines the fact that the Collective took no steps to ensure that its conditions were obeyed. 35 However, there is substance to the argument that the failure to remove the offensive material has not been shown to have any relevant connection with race or ethnic origin of the applicant or indeed any other Jewish person as required by s 18C(1)(b) of the Act. The failure of the unidentified administrator to remove the Second Message on and after 1 July 2006 was the clearest case of failure to act. I cannot conclude that such failure was attributable, even in part, to the race or ethnic origin of the applicant. If Dwyer is accepted, the message should have been removed if its offensive nature was understood. However, failure to do so is just as easily explained by inattention or lack of diligence. Drawing the necessary causal connection would be speculation rather than legitimate inference. The same reasoning would be more obviously applicable to the systematic failure to monitor and remove offensive postings. Absent the necessary causal connection there is no breach of Pt IIA by the Collective. 36 For the sake of completeness I should add that although vicarious liability provided by s 18E was referred to, I cannot see that the second respondent was an agent of the Collective having duties as such so as to bring that section into play. I should also add that if, as I think, the second respondent cannot avail himself of the exemption provided for by s 18D, neither could the Collective if it were relevant. It is well within the relief available pursuant to s 46PO(4)(a) of the HREOC Act, is well justified by the findings and is consistent with previous cases. The case against the Collective will be dismissed with costs. Those costs will be limited to out-of-pocket expenses properly incurred by the Collective or Mr Dwyer. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles.

where messages posted on to an internet discussion forum contained material causing offence and distress to the applicant because of his jewish race and ethnicity the party posting the offensive material did so in breach of pt ii of the racial discrimination act 1975 (cth) whether organisation which controls and manages the internet website also acted unlawfully by publishing or allowing material to be published organisation's failure to remove material was an 'act' reasonably likely to offend the applicant but cannot be shown to be attributable to his race or ethic origin racial discrimination

That Application seeks both leave to appeal and " an order that compliance with Order 52, subrule 5(2) be dispensed with ". Leave to appeal is required because the Federal Magistrate dismissed the application before that Court pursuant to Rule 44.12(1)(a) of the Federal Magistrates Court Rules 2001 (Cth). In addition, and as the Application itself recognises, the Application as filed in this Court was filed outside the time prescribed by O 52 r 5(2) of the Federal Court Rules 1979 (Cth). If the Application for Leave to Appeal is to be entertained, an extension of time is thus required for a period of seven days. Order 52 r 4 should also be noted. But that Affidavit fails to comply with r 4(2). It is in inadmissible form but, more relevantly, it is more in the nature of a submission and challenges the factual conclusions made by the Refugee Review Tribunal which affirmed the decision not to grant a protection visa. But such deficiencies may presently be left to one side. Non-compliance with r 4(2) should not, as in other proceedings where an applicant has been unrepresented (e.g. Lawrance v The Commonwealth of Australia [2007] FCA 1524 at [26] ; Croker v Commonwealth of Australia [2007] FCA 1593 at [6] ), of itself necessarily impede a proper consideration of such merits as an application may present. The Applicant in the present proceeding appeared before this Court this morning unrepresented --- albeit with the benefit of an interpreter. It is not considered that any order should be made pursuant to O 52 r 5(3) that compliance with O 52 r 5(2) be dispensed with. Notwithstanding the fact that the present Applicant is not legally represented, some assistance has obviously been obtained in respect to the drafting of the Application for Leave to Appeal . The Applicant has obviously received advice from some source that he requires leave and an order dispensing with compliance with O 52 r 5(2). Some assistance may also have been provided in respect to the drafting of the proposed Notice of Appeal . But there the assistance seems to have ended. No explanation is provided in the Applicant's Affidavit as to why any application for leave to appeal was not filed within the time prescribed. In such circumstances a proceeding may be dismissed: e.g. MZXME v Minister for Immigration and Citizenship [2007] FCA 767. Before any order is made pursuant to r 5(3) there must be a rational basis upon which any such order may be made. Notwithstanding the difference in language as between O 52 r 5(3) and O 52 r 15(2), namely the constraint in r 15(2) that the Court may give leave to file and serve a notice of appeal " at any time " where there are " special reasons ", principles relevant to the exercise of that discretion have been applied when considering r 5(3): SZMFT v Minister for Immigration and Citizenship [2008] FCA 1725. There appears to be no valid reason why such considerations should not also apply to an application seeking an order of the Court that dispenses with the 21 day time limit prescribed by O 52 r 5(2) of the Rules. See also: Nguyen v Pascoe [2006] FCA 719 at [41] . The grant of an extension of time under this rule is not automatic. The object of the rule is to ensure that those Rules which fix times for doing acts do not become instruments of injustice. The discretion to extend time is given for the sole purpose of enabling the court or justice to do justice between the parties: see Hughes v National Trustees Executors & Agency Co of Australasia Ltd [1978] VR 257 at 262. This means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant. The first is whether a sufficient explanation for the delay has been forthcoming; the second is whether the proposed appeal would enjoy any prospect of success, such that it ought be allowed to proceed. Concurrence is expressed with the observations of both Spender J and Buchanan J. Normally some explanation for non-compliance should thus be forthcoming from an applicant --- the greater the delay, the more compelling may be the explanation required for non-compliance; the shorter the delay, the less may be any prejudice to a respondent and the less fulsome may be the explanation advanced. But, even where a delay is short, some explanation should normally be provided. Here no explanation was provided in the Affidavit filed in support of the Application . The Applicant this morning, however, has stated that he thought the time permitted was either 25 days or 30 days and not 21 days. Even had the time prescribed been 25 days, the Application would remain out of time. The Respondent Minister, however, correctly accepts that some explanation has now been provided, albeit an inadequate explanation. No prejudice is claimed by the Minister if an extension of time were to be granted. Even if it be accepted that an adequate explanation for the delay has been provided, it is considered that the only rational basis upon which any order could potentially be made in the present proceeding pursuant to r 5(3) must be found --- if at all --- in the reasons for decision of the Federal Magistrate and/or the proposed Notice of Appeal . If there emerges from the reasons for decision of the Federal Magistrate a basis upon which an appeal may have some prospects of success or where there is sufficient doubt as to the correctness of that decision, it is not considered that any failure to provide an explanation (or an adequate explanation) for a comparatively short delay should normally operate so as to preclude that basis being considered by this Court on appeal. Although the status of an applicant as unrepresented confers no licence to place to one side or to disregard the procedural requirements imposed by the Federal Court Rules , there remains the duty upon the Court to ensure that justice is done as between the parties to any litigation. In the present proceeding, however, neither the reasons for decision of the Federal Magistrate nor the proposed Notice of Appeal expose any basis upon which an appeal would have any prospects of success. Even if an order were to be made pursuant to O 52 r 5(3), leave to appeal would in any event be refused: see SZDGN v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 1543. Such a conclusion may be relied upon as a reason for an adverse exercise of the discretion conferred by O 52 r 5(3). Justice in such circumstances does not require a dispensation from compliance with O 52 r 5(2). When exercising the discretion conferred by s 24(1A) of the 1976 Act to grant leave to appeal, it may be accepted that that provision confers on the court " an unfettered discretion " in " unqualified terms ": Decor Corp Pty Ltd v Dart Industries Inc [1991] FCA 655 ; (1991) 33 FCR 397 at 399 per Sheppard, Burchett and Heerey JJ. Considerations relevant when deciding whether leave to appeal should be granted are: whether in all the circumstances the judgment of the primary judge is attended by sufficient doubt to warrant it being reconsidered by the Full Court; and whether substantial injustice would result if leave were refused supposing the decision were wrong. Nor is it considered that the Applicant would suffer substantial injustice. His application for a protection visa has been considered on its merits by both a delegate of the Minister and by the Tribunal. His application filed with the Federal Magistrates Court has been carefully considered and no legal error discerned. No injustice is exposed in such circumstances. The Federal Magistrate, in his reasons for decision, recounted the facts relevant to the Applicant's claim for a protection visa. Those reasons record that " [n]o supporting evidence " for the claims being advanced by the Applicant was provided to the Department and also record the rejection of the claim. Those reasons further record that the Applicant was subsequently invited to attend a hearing before the Refugee Review Tribunal but that he declined that invitation. Express reference is made by the Federal Magistrate to some of the findings made by that Tribunal. The applicant only made the briefest of claims. The applicant claims he belongs to a minority group in Pakistan, the 'Mohanjir' community who are Muslims by religion. Without further information from the applicant I am unable to accept that he belongs to the 'Mohanjir' community. Without further information from the applicant I am unable to be satisfied that he and his family have been persecuted by the majority community in Pakistan for several years. ... But the independent evidence before me ... does not suggest that the applicant would not receive the protection of the Pakistani authorities or that such protection would be ineffective, if the applicant were to be harmed. Without further information from the applicant I am unable to be satisfied that if he returns to Pakistan he will be killed, harmed or persecuted for a Convention related reason. The mere fact that a person claims fear of persecution for a particular reason does not establish either the genuineness of the asserted fear or that it is "well-founded" or that it is for the reason claimed. The reasons for decision of the Federal Magistrate then outline the manner in which he approached his task. The Federal Magistrate observed that " the applicant's original application made unparticularised contentions of ' gross violations of the Regulations and the Act '...". An amended application was apparently filed from which the Federal Magistrate discerned " four essential points ". No error is discernible in the reasons of the Federal Magistrate in the manner in which he resolved those four points. To the extent that it is possible to give content to the Grounds of Appeal as formulated in the proposed Notice of Appeal , it would appear that the Applicant seeks to again agitate those issues previously canvassed before the Federal Magistrate. In the absence of any reason to doubt the conclusions of the Federal Magistrate, he should not be permitted that further opportunity before this Court. Although one of the Grounds seeks to contend that " the Respondents did not [apply] the proper law and procedure ", neither the " law " nor the " procedure " were further identified in any meaningful way. Each of the three proposed Grounds , it is considered, can properly be characterised as an impermissible attempt to challenge such factual conclusions as have been made by the Refugee Review Tribunal. When considering the present Application , the Court had available to it the Court Book prepared for the purposes of the hearing before the Federal Magistrates Court. An independent review of that Book, it should be noted, disclosed no discernible error in the manner in which either the Tribunal or the Federal Magistrate proceeded. Neither the Applicant nor the Respondent Minister contended that recourse should be had to contents of that Book for the purposes of resolving the present Application . Other than also reviewing the reasons for decision of the Tribunal, the resolution of the present Application has thus ultimately been confined to a consideration of the Application, the Affidavit filed in support and the reasons for decision of the Federal Magistrate. The Application is to be dismissed. The Respondent Minister initially sought an order for costs in a fixed sum but ultimately submitted that he only sought the usual order that costs should follow the event. It is appropriate that such an order should be made. The Applicant is to pay the First Respondent's costs. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick.

interlocutory decision of federal magistrate application filed outside 21 day period application 7 days out of time application for extension of time and for leave to appeal no explanation provided for non-compliance application for extension of time refused factors relevant to exercise of discretion to do justice between the parties migration

In early 2002 he received advice that his application to migrate to Australia in the Business Owner visa subclass 127 had been approved and that the visa approval covered his wife and their three children. Mr Koosasi and his family subsequently entered Australia in reliance on the visas granted pursuant to this approval. 2 The Australian company Great Bamboo Pty Ltd was registered on 23 January 2003. Mr Koosasi and his wife are the sole shareholders of Great Bamboo. Between 3 October 2003 and 5 April 2005 Great Bamboo entered into four transactions by which it exported Australian food products to Indonesia. 3 On 17 May 2005 a delegate of the respondent cancelled Mr Koosasi's visa in reliance on s 134 of the Migration Act 1958 (Cth) ('the Act'). That decision was affirmed on review by the Administrative Appeals Tribunal. Mr Koosasi has exercised his right to appeal to this Court from the decision of the Tribunal on a question of law. The dispute between the parties is whether the answer to the question of law the subject matter of this appeal demonstrates that the decision of the Tribunal is affected by error. That dispute has arisen because the written reasons for decision of the Tribunal fail to make clear the material findings of fact upon which its decision is based. 6 It was not contended by the Minister that the parties' agreement as to the answer to the question of law means that the Court's jurisdiction under s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) has not been properly invoked. It is not necessary for me to decide whether every appeal to this Court under s 44(1) where the answer to the question on which the appeal is brought is not contentious will engage the Court's jurisdiction. It will presumably be a rare case in which an appeal under s 44(1) is brought on a question of law the answer to which is not in dispute. In this case it only became apparent that the answer to the question of law was not in dispute when the written submissions of the parties were exchanged shortly before the proceeding was listed for hearing. In the circumstances I am satisfied that the Court has jurisdiction to hear and determine the appeal. (2) if satisfied that Mr Koosasi had obtained a substantial ownership interest in Great Bamboo, did that constitute a substantial ownership interest in a business? The Tribunal's reasons for decision at [40] record its finding on the first of the above material questions of fact; it found that Mr Koosasi had obtained a substantial ownership interest in Great Bamboo. However, the reasons for decision do not identify as issues for its determination either the second or either aspect of the third material questions of fact. Rather they identify the next question for the Tribunal's determination as 'whether that substantial ownership interest is in "an eligible business in Australia"'. It is clear that the Tribunal answered this question in the negative but the process of reasoning which led the Tribunal to its negative answer is not clear. 11 Mr Koosasi drew attention to the evidence before the Tribunal which showed that, as at the date of the cancellation decision, Great Bamboo had exported Australian goods (see the outcome identified in (c) of the definition of 'eligible business' ). He submitted that the Tribunal determined that he did not obtain a substantial ownership interest in an 'eligible business' without asking itself whether the business activity of Great Bamboo, as at the date of the cancellation decision, was resulting (as opposed to would result) in one or more of the outcomes identified in (a)-(f) of the definition of 'eligible business' . 12 In response the respondent submitted that the Tribunal was not required to determine whether the activities of Great Bamboo were resulting in the export of Australian goods as at the date of the decision to cancel Mr Koosasi's visa because it implicitly found that Great Bamboo was not carrying on a business. Alternatively, the respondent submitted that the Tribunal found both that the business of Great Bamboo was not resulting, and would not result, in one or more of the outcomes identified in (a)-(f) of the definition of 'eligible business' . 13 It is thus necessary for this Court to determine by reference to all of the material before it which is capable of throwing light on the proper understanding of the Tribunal's reasons for decision, what process of reasoning led to the Tribunal's conclusion that Mr Koosasi's substantial ownership interest in Great Bamboo did not constitute a substantial ownership interest in an 'eligible business' . 14 The material before this Court includes the respondent's statement of facts and contentions before the Tribunal. This document at [27] advanced the contention that 'Great Bamboo Pty Ltd was not an eligible business because it was not a business in the necessary sense' . In support of this contention it made reference to Mason J's consideration in Hope v Bathurst City Council [1980] HCA 16 ; (1980) 144 CLR 1 of the meaning of 'business' in a phrase such as 'carrying on a business' . There his Honour stated that in the context of the rating provisions of the Local Government Act 1919 (NSW) the phrase 'carrying on a business' denoted activities 'engaged in for the purpose of profit on a continuous and repetitive basis' (at 8-9). The respondent's statement of facts and contentions before the Tribunal argued that Mr Koosasi's business did not appear 'to have been carried out on an ongoing or repetitive basis' . 15 At [28] the same document advanced the alternative contention that Great Bamboo was not an eligible business because it did not meet any of the requirements listed in the definition of 'eligible business' in s 134(10). In support of this contention the document made reference to the absence of evidence that Mr Koosasi had developed business links with the international market. It also noted that Great Bamboo had not created and was unlikely to create employment, that it had not introduced new or improved technology into Australia nor had it increased commercial activity or competitiveness in the Australian economy. None of the four customers placed any repeat orders and no contracts were entered into for future transactions. The problems that the applicant said had obstructed further dealings by Great Bamboo, such as the exchange rate and shelf life restrictions, were not matters within the applicant's control. His approach to dealing with the exchange rate was simply to hope that it would improve, which might have been understandable but was not productive. Nothing in the evidence gave any reason to believe that Great Bamboo would continue to trade in a repetitive or continuous manner. For the above reasons I find that it is not an eligible business. There is no record of any such finding in the Tribunal's reasons for decision. Had the Tribunal made such a finding, s 43(2B) of the Administrative Appeals Tribunal Act obliged it to include it in its written reasons for decision (see [10] above). Moreover, it seems to me that if the Tribunal had determined that the enterprise of Great Bamboo was not a business, it would have referred to this finding in the context of its consideration of whether it was satisfied that Mr Koosasi had made a genuine effort to utilise his skills in 'participating at a senior level in the day-to-day management of that business' (s 134(2)). I also consider it to be significant that in later paragraphs of its reasons for decision the Tribunal uses the phrase ' the business ' in reference to Great Bamboo without any qualification or comment. 22 If the Tribunal had found that the enterprise of Great Bamboo was not a 'business' as at the date of the cancellation decision there would have been no need for it to give any further consideration to the content of the definition of 'eligible business' ; Mr Koosasi's case that his substantial ownership interest in Great Bamboo was a substantial ownership interest in an 'eligible business' would have failed at the first hurdle. However, as the Tribunal assumed (as I find that it did) that the enterprise of Great Bamboo was a 'business' , any determination that it was not an 'eligible business' required the Tribunal to ask itself whether the enterprise of Great Bamboo, as at the date of the cancellation decision, was resulting in one or more of the outcomes identified in (a)-(f) of that definition. 23 In my view, a fair reading of the Tribunal's reasons for decision indicates that it did not ask itself whether the enterprise of Great Bamboo, as at the date of the cancellation decision, was resulting in one or more of the outcomes identified in (a)-(f) of that definition. 24 The respondent submitted that the Tribunal's reference in [41] to the absence of repeat orders and contracts for future transactions and to the lack of evidence suggesting that Great Bamboo would continue to trade in a repetitive and continuous manner addressed the position both at the date of cancellation and prospectively from that date. I am unable to accept that submission. As I read [41] of the Tribunal's reasons for decision, the sentence 'nothing in the evidence gave any reason to believe that Great Bamboo would continue to trade in a repetitive or continuous manner' records a conclusion reached by the Tribunal on the basis of the factors earlier identified by it at [41]. It is a conclusion which looks to the future; Great Bamboo had, as the Tribunal had earlier noted, been a party to an export transaction on 5 April 2005. As that was only approximately five weeks before the date of the cancellation decision it required consideration in the context of any finding that the enterprise of Great Bamboo was not resulting in, for example, the export of Australian goods (outcome (c) of the definition of 'eligible business' ). If, as I have found, the above conclusion was not a conclusion relied on by the Tribunal to support a finding that the enterprise of Great Bamboo was not a 'business' , it could only have been relied on to support a finding as to the likely future activity of Great Bamboo. 25 A fair reading of the Tribunal's reasons for decision suggests that it is more likely than not that the Tribunal overlooked the need to determine whether it was reasonable to believe that the enterprise of Great Bamboo was resulting in one or more of the outcomes identified in (a)-(f) of the definition of 'eligible business' . The Tribunal's reasons for decision do not record any such determination. As stated above, had the Tribunal made such a determination or finding, s 43(2B) of the Administrative Appeals Tribunal Act obliged it to include it in its written reasons for decision together with a reference to the evidence or other material on which it was based. The question of law the subject matter of this appeal (see [4] above) must therefore be answered in the affirmative. 27 For the reasons given above I have concluded that the Tribunal overlooked the requirement to determine whether Mr Koosasi held a substantial ownership interest in a business that, as at the date of the decision to cancel his visa, was an 'eligible business' as defined by s 134(10) of the Act. For this reason, the answer to the question of law which constitutes the subject matter of the appeal leads to an entitlement in the applicant to have the decision of the Tribunal set aside. 28 The appeal will be allowed, the decision of the Tribunal set aside and the matter remitted to the Tribunal to be determined according to law. The respondent must pay the applicant's costs.

cancellation of business visa pursuant to s 134(1) of the act finding by tribunal that the enterprise was not an 'eligible business' within the meaning of the act whether tribunal asked itself the right questions whether tribunal found the enterprise was a 'business' whether tribunal looked to state of affairs of the enterprise as at the date of cancellation of the visa in determining whether it was an 'eligible business' held: tribunal overlooked the requirement to determine whether it was reasonable to believe the enterprise was resulting in one or more of the outcomes identified in the definition of 'eligible business' . migration

In opening the appellant's case her counsel frankly conceded that the appellant was 'not a model employee' throughout the whole of her 23 years as an employee of the Council. She was counselled on numerous occasions and it is said that on each occasion she was counselled she improved her performance, but with the passage of time she lapsed back into her old ways, hence the need for further counselling. The appellant submits that she did not at any material time suffer from a disability by reason of a disorder, illness or disease that affected her thought processes, perception of reality, emotions or judgment or that resulted in disturbed behaviour on her behalf within the meaning of paragraph (g) of the definition of 'disability' in s 4(1) of the Act. However, she insists that she suffered from a disability within the meaning of paragraph (g) of the definition of 'disability' by reason of paragraph (k) of that definition. She submits that the respondent imputed to her a disorder, illness or disease that affected her thought processes, perception of reality, emotions or judgment or that resulted in disturbed behaviour on her behalf within the meaning of paragraph (g) of the definition. Provision was made in the Act for situations where there were multiple reasons for action being taken. SYG 393/2007) from which this appeal arises were brought under s 46PO of the Human Rights and Equal Opportunity Commission Act 1986 (Cth) ('the Human Rights Act'). Section 46PO of the Human Rights Act is to be found in Part IIB of that Act which is headed ' Redress for unlawful discrimination '. The first section in the Part, section 46P, provided for the lodgement with the Commission of a written complaint alleging unlawful discrimination. Sections 46PE and 46PH made provision for the termination of complaints by the President of the Commission in certain circumstances. The proceedings against the second respondent were resolved shortly before the hearing commenced in the Federal Magistrates Court on 5 May 2008. The proceedings were heard by the learned Federal Magistrate on 5-9 May and 14-16 July 2008, with his primary reasons for judgment being delivered on 19 September 2008 (see Varas v Fairfield City Council [2008] FMCA 996) and his reasons for judgment on costs being delivered on 26 February 2009 (see Varas v Fairfield City Council [2009] FMCA 63). The claim under that Act was not pressed. It would appear that Further Amended Points of Claim dated 5 May 2007 (sic) were filed by the appellant in the Federal Magistrates Court of Australia. Presumably these points of claim were filed on 5 May 2008, the first day of the hearing. The respondent's Points of Defence to the Amended Points of Claim were filed in the Court below on 13 May 2008 i.e. after the fifth and before the sixth day of hearing. $5,200 medication, $4,750 twelve months psychiatric treatment and $9,500.00 psychological treatment) for breach of the DDA. This section has effect subject to Chapter III of the Constitution . I conclude that the termination of Ms Varas' appointment (while it might arguably have been unfair, or unlawful on some other basis) was not unlawfully discriminatory pursuant to the DDA [the Act] . He observed that prior to the institution of her proceedings in the Federal Magistrates Court of Australia, the appellant had brought unfair dismissal proceedings against the Council under State law immediately after her dismissal. Those proceedings may have had merit, but it is unnecessary and inappropriate for this Court to make any finding of unfair dismissal. The primary judge should have found that the Respondent imputed a disability to the Appellant from 30 April 2006. The primary judge should have found that the Appellant's behaviour had not significantly changed during the period of her employment and that behaviour should have formed the basis for part of the test referred to in the paragraph directly above. The primary judge should not have made any finding that the directions were reasonable. The primary judge should have found that the Appellant's behaviour had not significantly changed during the period of her employment and that behaviour should have informed the construction of the hypothetical comparator. The primary judge should have found that the Appellant's sick leave record was either not a reason giving rise to the termination, or in the alternative, was one of the reasons for terminating the Appellant's employment, including the imputed disability. The primary judge should have found that the only reason, or one of the reasons for terminating the Appellant's employment was the imputed disability. Mr and Mrs Purvis were the foster parents of Daniel Hoggan who had been born on 8 December 1984. At an early age he suffered severe encephalopathic illness, resulting in brain damage. He had intellectual and visual disabilities and suffered from epilepsy. His disabilities were sometimes manifested by disinhibited and uninhibited aggressive behaviour, such as hitting and kicking, which was not planned or motivated by ill intent. In 1996, Mr and Mrs Purvis sought to have him enrolled as a pupil at a State High School in 1997. He began school on 8 April 1997. Between 24 April 1997 and 18 September 1997, he was suspended 5 times for acts of violence against staff or students. He did not return to the school after 18 September 1997. Mr Purvis complained to the Human Rights and Equal Opportunity Commission that Daniel had been discriminated against by the State, contrary to the Act. He alleged that Daniel had been suspended and later excluded from school and had been subjected to various detriments in his education, on the ground of his disability. A Commissioner inquired into and determined the complaint, finding that the State had discriminated against Daniel on the grounds of his disability and declared that the State should pay Mr Purvis an amount of $49,000. On an application for an order of review of the Commissioner's decision under the Administrative Decisions (Judicial Review) Act 1977 (Cth) the decision of the Commissioner was set aside by a judge of this Court. A Full Court dismissed an appeal by Mr Purvis and a further appeal to the High Court was also dismissed. The circumstance that gave rise to the first respondent's treatment, by way of suspension and expulsion, of the pupil, was his propensity to engage in serious acts of violence towards other pupils and members of the staff. In his case, that propensity resulted from a disorder; but such a propensity could also exist in pupils without any disorder. What, for him, was disturbed behaviour, might be, for another pupil, bad behaviour. Another pupil "without the disability" would be another pupil without disturbed behaviour resulting from a disorder; not another pupil who did not misbehave. The circumstances to which s 5 directs attention as the same circumstances would involve violent conduct on the part of another pupil who is not manifesting disturbed behaviour resulting from a disorder. ... The required comparison is with a pupil without the disability; not a pupil without the violence. The circumstances are relevantly the same, in terms of treatment, when that pupil engages in violent behaviour. The law does not regard all bad behaviour as disturbed behaviour; and it does not regard all violent people as disabled. ... it [s 5] requires a comparison with the treatment that would be given, in the same circumstances, to a pupil whose behaviour was not disturbed behaviour resulting from a disorder. Such a comparison requires no feat of imagination. There are pupils who have no disorder, and are not disturbed, who behave in a violent manner towards others. They would probably be suspended, and, if the conduct persisted, expelled, in less time than the pupil in this case. Attention is invited to how the discriminator 'treats or would treat a person without the disability '. The 'comparator' identified by s 5(1) is 'a person without the disability' (per Gummow, Hayne and Heydon JJ in Purvis at [213]; see also per Callinan J at [273]). The necessary comparison to make under s 5(1) is with the treatment of a person without the relevant disability. In requiring a comparison between the treatment offered to a disabled person and the treatment that would be given to a person without the disability, s 5(1) requires that the circumstances attending the treatment given (or to be given) to the disabled person must be identified. What must then be examined is what would have been done in those circumstances if the person concerned was not disabled. The circumstances referred to in s 5(1) are all of the objective features which surround the actual or intended treatment of the disabled person by the person referred to in the provision as the 'discriminator'. It would be artificial to exclude from consideration some of these circumstances because they are identified as being connected with that person's disability. Where it is alleged that a disabled person has been treated disadvantageously, all of the circumstances of the impugned conduct can be identified and that is what s 5(1) requires. Once the circumstances of the treatment or intended treatment have been identified, a comparison must be made with the treatment that would have been given to a person without the disability in circumstances that were the same or were not materially different (per Gummow, Hayne and Heydon JJ in Purvis at [222]-[224]; see also per Callinan J at [273]). What constitutes subjecting an employee to 'any other detriment'? O'Callaghan v Loder [1983] 3 NSWLR 89 ('O'Callaghan') was a decision of Mathews DCJ (later a judge of this Court and of the Supreme Court of New South Wales) sitting as a Judicial Member of the Equal Opportunity Tribunal. Her Honour's judgment was concerned with questions of law which she alone determined pursuant to the Anti-Discrimination Act, 1977 (NSW). Subject to that, it is difficult to define the limits of a concept which is ... essentially a matter of fact to be determined in each individual case. The Board followed the approach suggested by Mathews DCJ as appropriate in O'Callaghan . It also opined that the test as to whether conduct amounted to 'detriment to the employee' was an objective one. It suggested that the test was not that the worker subjectively believed that he had been subjected to a detriment (at page 78,651). Jessup and Gordon JJ, Gray J dissenting, held that the appeal should be dismissed. The only point that fell for consideration under the appeal was a contention by the appellant, Ms Zhang, that the University constructively terminated the appellant's candidature as a graduate student pursuing a doctorate of philosophy on the basis of an imputed psychological disability and that by the conduct, the University discriminated against the appellant in contravention of the Act. [The appellant] has provided evidence of potentially serious psychological problems and is also finding considerable difficulty in adapting to the social demands of life as a post-graduate student in this university. To continue would not be in her best interests. I also recommend that we urgently seek professional counselling for [the appellant] . By a letter dated 8 November 1999 to Ms Zhang Professor Denholm indicated that supervision could no longer be offered under the same conditions as before. A suggestion was made that continuation of Ms Zhang's studies within the School of Management at the University may not be feasible and she was invited to consider transferring to another Australian University capable of offering supervision in her field. Ms Zhang was given 14 days within which to provide written comments to Professor Denholm about the recommendation which he had made. Jessup and Gordon JJ held that Ms Zhang's discrimination claim would fail, apart from other considerations, because it could not be said that the University would have treated a person without her 'disability' any differently. The reason was that the relevant comparator was a person displaying the same behaviour as Ms Zhang but without the disability, not a person without the disability and without the behaviour (at [63]). The relevant comparator is therefore another PhD candidate manifesting disruptive behaviour to the extent that there was a worsening of relations between her and other university members generally and eventually a breakdown of relations with her supervisor. They proceeded to refer to the paucity of evidence in that regard but noted the evidence of the relevant University personnel to the effect that they would have done the same thing with any other student in the same circumstances. There was no suggestion in any of the evidence to support an allegation that the University would in fact have treated another disruptive graduate student more favourably than it treated Ms Zhang. Accordingly, it cannot be said in the circumstances that the trial judge was plainly wrong (and here it must be acknowledged the deference that is due to the trial judge in matters of fact, particularly where his Honour had the benefit of seeing the Appellant give evidence viva voce and assessing her demeanour ... Warren v Coombes [1979] HCA 9 ; (1978) 142 CLR 531 at 551; Annand & Thompson Pty Ltd v Trade Practices Commission [1979] FCA 36 ; (1979) 25 ALR 91 at 97 and 110; Devries v Australian National Railways Commission (1993) 177 CLR 472 at 479-83; SS Hontestroom v SS Sagaporack [1927] AC 37 at 47) in accepting UTAS's evidence, which his Honour did implicitly in finding that there was no factual basis for a finding of discrimination: Zhang v University of Tasmania [2008] FCA 516 , [3], [52]. If the appellant was treated no more or less favourably than would have been another student manifesting the same or similar behaviour but without the disability then there is no relevant treatment which can be said to have been caused by the imputed disability. In or about February 2006, Ms Nolan provided a report to the respondent about the Applicant ... Ms Nolan purported to diagnose the Applicant with a mental illness known as Histrionic Personality Disorder. The learned Federal Magistrate has provided a detailed summary of the evidence and his observations in relation to the witnesses at [4]-[50] of his primary reasons for judgment. Much of it related to the appellant's use of language and her conduct over the last five years of her employment with the Council. A convenient starting point, for present purposes, is a letter dated 3 October 2001 from the Council to the appellant, the receipt of which was acknowledged by the appellant on 10 October 2001. The Council's letter signed by Anne Hall as Manager, Library and Museum Services, bore the heading ' SECOND AND FINAL WARNING LETTER --- UNSATISFACTORY WORK PERFORMANCE --- CUSTOMER SERVICE '. You were given counseling on how to improve and a written record in the form of a memo dated 22 nd June was given to you about this matter. The first problem was that you overcharged the gentleman ... However the real problem was that you stated to the gentleman that you were simply too busy to photocopy the article and that he would have to do it himself. He was affronted by your rudeness and how you would not serve him in the manner that he has come to expect from this library service. This incident again does not show me that you are using your knowledge and your high level of skills and competencies to serve our customers the best way you can. As a result of a complaint and previous counseling and warning, you are given this second and final warning. when confronted responds by saying 'why don't you get the police and have me taken away in handcuffs'), demanding immediate attention (e.g. for IT problems that she is quite capable of handling herself and refusing to log the problem via normal channels) Sexual harassment --- discusses her participation in homosexual and bi-sexual chat rooms on the internet with colleagues, also her writing activities which are of a sexual nature. These writings are shown to others to shock them --- particularly religious colleagues. Tells customers she is bi-sexual to get a reaction. Constant complaining about and verbal abuse of casuals. Misuse of grievance procedures, anti-discrimination and employee rights, including threats to use these against others. 'Silent Treatment' --- has been known to refuse to speak to colleagues and managers for up to a few weeks at a time if believes there has been negative comments made --- often the conversation was witnessed by Monica between two people but she was not the topic of the conversation. Inappropriate intimacy to gain information and then use it against the person --- often does this with new staff or quiet more vulnerable staff. Paranoia --- constantly asking if people are talking about her, also spying and eaves-dropping (e.g. goes out one door of the library and in another in order to appear behind a colleague to listen to what they are saying) Invasion of privacy --- especially when she worked in IT area --- hacking into other people's emails and sending inappropriate emails from a generic login to cause trouble for others. It is recommended though that action to remove Monica from the workplace is necessary due to the extremely adverse negative effects she has upon others and that all attempts at performance management have failed to date. Unfortunately it appears that Monica is not capable of changing her approach and the workplace is not an appropriate setting in which to do this in any case. Excessive absenteeism Intimidation to other staff members Extremely manipulative of both management and staff Alienation of staff in that there were very few managers or staff that would work with her. These issues were brought [to] ahead (sic) in the early part of 2006 when council advised that Monica should undergo psychological assessment. I had spoken with HR and it was decided that this was the only way in which council as an employer could assist Monica going forward. ... Monica apologised to Vanvilay, which was accepted, however Vanvilay said that Monica often used the F word in general conversation in the public area (news to me) and that she was not prepared to accept it any more and wouuld report it if she continued to do it. I told Monica swearing of any kind was unacceptable in the workplace and not to do it anymore. She agreed she wouldn't and said she was under strain at present. That paragraph picked up Ms Nolan's report which was part of Exhibit MV27 to the affidavit. During the course of the appellant's cross-examination on 7 May 2008 counsel for the appellant informed the learned Federal Magistrate 'we will read paragraph 54 which will include reliance on the annexures which are MV27'. One infers that without marking the exhibits to the appellant's affidavit as exhibits in the proceedings in the Federal Magistrates Court of Australia, they were treated as if they were annexures to the affidavit. MV27 in fact comprised a series of reports concerning the appellant. The first report (four pages) was Ms Nolan's report of 30 April 2006. The second report was an 18 page report of Henry Luiker, a clinical psychologist, of 28 May 2006 which contained a psychological assessment of the appellant as at 10 May 2006. The third report was a two page psychological assessment of Ms Nolan of 5 June 2006 to which Mr Luiker's assessment report would appear to have been attached. The fourth report would appear to have been a one page 'FEEDBACK RE: PSYCHOLOGICAL ASSESSMENT' prepared by Mr Luiker in relation to the assessment carried out on 10 May 2006. The fifth report was a three page 'UPDATE REPORT RE: MONICA VARAS' of Ms Nolan dated 28 June 2006. It is alleged that these reports, whether true or false, and it is alleged to be a false diagnosis, state what they state and that what is in those reports supports the contention that because the respondent knew of them, or must have known of them, that it formed the view either that Ms Varas had the medical conditions referred to, or that the reference to those conditions was a convenient pretext. If [the appellant] can prove that these reports exist, they say what they say and, if she can prove that in some way the respondent's used them in order to treat her less favourably than a comparator, then she gets there. Following the transmission by Ms Hall of her email to Belinda Reardon of 5 May 2006 reporting on the two incidents involving the appellant of Friday 21 April 2006, a meeting apparently took place between the appellant and Ms Hall on the following Monday, 8 May 2006. You should bring a support person to the meeting. According to the learned Federal Magistrate Mrs Joannidies said that at the meeting Ms Hall asked the appellant to see a psychologist to be assessed. Ms Hall said that she had received a number of complaints from staff about the appellant's behaviour. At the meeting a letter from the Council to the appellant dated 8 May 2006 which identified Belinda Reardon as the relevant 'Contact' within the Council was handed to the appellant. Should you wish to discuss this process please contact Belinda Reardon, Human Resources Business Partner ... . Please note that you will not be required to attend work during this process and you will continue to remain on full pay until further notice. It is envisaged that we will receive the report by Friday 19 May 2006, at which time we will contact you to arrange a meeting to discuss the outcome. This summary report provides more detail in relation to the inappropriate workplace behaviours that have been discussed with you on a number of occasions and have been detailed in the letter of 25 February 2005. His 18 page report on the assessment was dated 28 May 2006. You are to spend 1 hour with Mr Luiker in private discussing the report. Mr Luiker was said to have explained to the appellant that she had a 'histrionic personality disorder and hypochondriasis'. After some 20 minutes Mr Luiker and the appellant were joined by Ms Reardon and Mrs Joannidies. This letter was written by Ms Reardon as the Council's Human Resources Business Partner. ... Please note that you are still not required to attend work during this process and you will continue to remain on full pay until further notice. Once we have received the report from Dr Korner we will contact you to arrange a meeting to discuss the outcome. The Council's letter apparently signed by Ms Reardon referred to the meeting on 8 May 2006 which was called 'to discuss a number of concerning behaviours that you have been demonstrating in the workplace over a period of time', the request that the appellant attend Mr Luiker for assessment on 10 May 2006 and the Council's indication in its letter of 8 May 2006 that a summary report of the Council's concerns as discussed with the appellant on 9 May 2006 would be outlined in writing and mailed to her. Inappropriate comments --- There have been several instances where you have threatened to sue or take people to EEO. These comments are unacceptable and need to stop. If you have any concerns regarding inappropriate comments/behaviour from staff then the process in the first instance is to tell the person to stop. If the comments/behaviour does not stop then seek assistance from me [a reference to Andrew White, the Manager of the Cabramatta Library] or lodge a complaint. Also the 'in confidence' discussions, puts me in a difficult position if the information is given and I can't act upon it. It is advised that you attempt to deal with the situation or if you choose to raise the matter with me, then I need to be able to act upon it by following the appropriate procedure. I suggest that you cancel the appointment forthwith. Ms Vara's refusal to attend will only hamper her return to work. The copy of the Council's letter to the appellant's lawyers of 6 July 2006 would appear to have been attached to a letter to the appellant bearing date 5 July 2006. It seems to me that there were only two appointments. The confusion may well have arisen from the fact that the Council's letter to the appellant of 28 June 2006 had the heading ' SECOND MEDICAL ASSESSMENT ' and the later letter of 5 July 2006 had the somewhat unusual heading ' ATTENDANCE OF SECOND MEDICAL ASSESSMENT '. The reference in the Council's letter to the appellant of 28 June 2006 to the confirmation of 'your secondary assessment which will be conducted by Dr Tony Korner' was a reference to a second assessment of the appellant, on this occasion by a medical practitioner, subsequent to the primary opinion, attributed to the Clinical Psychologist, Mr Luiker. On 14 August 2006 the Council wrote to the appellant's solicitors referring to its request for the appellant to attend the appointment with Dr Korner on Friday 7 July 2006 at 3:45pm. Council is not in a position to resume Ms Varas' employment until such time as proof of a second opinion is received. So here I am. But I am not going to discuss anything with you. Also I do not give you permission to talk to anybody outside this room about anything that happened within this meeting. There should be doctor-patient confidentiality between you and me. On that day the Council wrote to her terminating her employment. The ability for Council to communicate with you direct and the requirement that you obey any reasonable direction by Council are essential conditions of your employment contract and your actions indicate a clear intention to no longer be bound by that contract. As these difficulties relate to your dealings with fellow employees and members of the public and to your attendance for employment generally it is not possible to modify your position to accommodate these difficulties. Consideration has been given to the availability of any alternative suitable employment however as no such employment is available (nor likely to become available) the only remaining alternative is to recognise your employment as being at an end. We wish to make it clear that whilst it is unnecessary to rely on these matters for the purpose of this correspondence you should not regard the fact of these matters not being included in this correspondence as indicating that Council resiles in any way from the action it has previously taken in respect of those issues. Madgwick J observed that such terms were essential for compliance by an employer with the employer's occupational health and safety duties. To like effect, Goldberg J in Thompson held (at [49]) that it was reasonable for an employer to direct an employee to attend a medical examination to determine whether the employee was fit to perform his or her duties and whether he or she could do so safely. In the circumstances of that case his Honour found that it was reasonable, and probably necessary, for the respondent to find out more about the applicant's condition, which included the obtaining of a report from a psychiatrist, especially having regard to unexplained absences (at [54]). At [110] he observed that the Council's letter of 4 October 2006 confused the appellant's refusal to attend appointments with Dr Korner with the assumed refusal to sign an authority for the Council to obtain a report from the doctor. He observed that Ms Sandars sought to broaden this complaint into an alleged refusal to provide 'relevant correspondence and/or communication' relating to the appellant's medical condition and absence from work. He then found at [110] that a reason for the termination, so expressed, was also 'contrived'. At [111] et seq the learned Federal Magistrate proceeded to deal with the other possible reason for the appellant's termination, namely inappropriate behaviour in the workplace and excessive sick leave as identified in the letter of 4 October 2006. (b) The Council imputed to the appellant a histrionic personality disorder [within paragraph (g) of the definition of disability] on and from 26 May 2006 (at [87] --- see also [101]). [This date appears to have been derived from Ms Nolan's chronological 'Summary' as set out in her ' UPDATE REPORT RE: MONICA VARAS ' of 28 June 2006. In that chronology reference was made to Mr Luiker's assessment of the appellant including psychometric testing of the appellant on 10 May 2006 the results of which indicated that the appellant had a histrionic personality disorder and hypochondriasis. Mr Luiker's report of 28 May 2006 upon his psychological assessment of the appellant of 10 May 2006 did not mention hypochondriasis. It simply reported that the appellant appeared to 'suffer from a chronic psychological condition', the relevant type being 'a histrionic personality disorder'. Be that as it may, Ms Nolan's chronological summary recorded that on 26 May 2006 she discussed the results of Mr Luiker's formal assessment of 10 May 2006 with Dianne Lucas, the Council's Human Resources Manager and Belinda Reardon, the Council's Human Resources Business Partner. ] The learned Federal Magistrate found (at [100]) that Ms Nolan provided a copy of Mr Luiker's signed report of 28 May 2006 to the Council by letter dated 5 June 2006. He then said 'As noted earlier, it was at this point that the diagnosis of a histrionic personality disorder was made known to the Council'. [This observation does not sit comfortably with the learned Federal Magistrate's earlier finding that the Council imputed to the appellant a disability in the form of a histrionic personality disorder on and from 26 May 2006. ] Later, at [114] the learned Federal Magistrate said 'She was not imputed with the disability before June 2006'. The outcome of the assessment indicates that Monica has a histrionic personality disorder that originated in childhood years and well before her employment at Fairfield City Council. She was not motivated by any particular belief about the appellant's mental condition (at [91]-[92]). Ms Hall did not act as she did on 9 May 2006 because she had imputed to the appellant a violent personality (at [92]). As at 9 May 2006 no particular personality disorder affecting the appellant had been identified (at [92]-[93]). The appellant was not suspended on 9 May 2006 because of any imputed disability. Rather, she was suspended because of her behaviour, its impact on other staff and the Council's perceived duty to protect its staff (at [93]-[94]). Jennifer Harris, a co-worker at the Whitlam Library during 2005, had been seriously disturbed by the appellant's 'highly inappropriate and unpredictable behaviour'. (e) The Council's purpose in requesting the appellant to attend upon Mr Luiker, a Clinical Psychologist, was to obtain a further report in order to gain additional insight into her condition (at [98]). (f) The Council's referral of the appellant to Mr Luiker was not because of a disability of histrionic personality disorder imputed to her by the Council. Rather it was action taken by the Council because of its concerns about the appellant's behaviour (at [99]). (g) After receiving Mr Luiker's opinion that the appellant suffered from a histrionic personality disorder, being a chronic psychological condition which predated the commencement of her employment at the Council, the Council did not terminate her employment or propose to terminate her employment. As the learned Federal Magistrate said it had 'made no decision to retire Ms Varas'. Rather, the Council sought the security of a psychiatric assessment from a Consultant Psychiatrist, Dr Tony Korner before acting on a recommendation for the appellant's medical retirement (at [101] see also [105] and [111]). (h) The medical evidence available as at 19 September 2008 (the date of his Honour's primary judgment) did not support the diagnosis made by Mr Luiker, a Clinical Psychologist, that the appellant suffered from a histrionic personality disorder (at [101]). (i) The Council's 'directions' for the appellant to attend upon Dr Korner, the Consultant Psychiatrist, were 'because the Council had imputed to [the appellant] a histrionic personality disorder (and hypochondriasis)' (at [105]) however, no finding was made in this context that the Council treated or proposed to treat the appellant less favourably than, in circumstances that were the same or were not materially different, the Council treated or would have treated a person without a disability. (j) The Council's directions/requests that the appellant attend upon Dr Korner did not amount to subjecting the appellant to 'any other detriment' within the meaning of s 15(2)(d) of the Act. Directing or requesting an employee to attend upon a doctor in the circumstances in which the appellant was called upon to attend upon Dr Korner was nothing other than a normal incident of employment. Paraphrasing Goldberg J (see Thompson at [54]), it was reasonable for the Council to find out more about the appellant's condition, including the obtaining of a report from a psychiatrist (at [105]). (k) The Council dismissed the appellant from her employment because it imputed to her a disability in the form of histrionic personality disorder and hypochondriasis, and was of the view that the appellant was frustrating the procedure which the Council had put in place to confirm her disability and to decide upon her possible medical retirement (at [111]). (l) The question remained whether the Council's treatment of the appellant was discriminatory within the meaning of s 5(1) of the Act (at [112]). As the Federal Magistrate said at [114] the critical question was whether, in terminating her employment, the Council treated the appellant any less favourably than she would have been treated if she had not had the disability imputed to her. (m) Had the Council not gone down a path of medical assessment, it was reasonable to assume that the Council would have considered further disciplinary action against the appellant because of its concerns about her behaviour, based upon the complaints of staff (at [116]). (n) In light of the earlier counselling and warnings given to the appellant, it is extremely likely that further disciplinary action would have culminated in her dismissal in 2006. The outcome would have been the same (at [116]). (o) The appellant was not, because of the disability imputed to her by the Council, treated less favourably than, in circumstances that were the same or were not materially different, the Council would have treated a person without the disability. Indeed the Council would not have treated the appellant less favourably if she were without the disability that had been imputed to her (at [116]). (p) The termination of the appellant's appointment was not unlawfully discriminatory pursuant to s 15(2)(c) of the Act (at [117]). The relevant circumstances are all of the objective features which surrounded her actual treatment. What must then be examined is what would have been done in those circumstances if the appellant was not disabled or a person to whom a disability had been imputed by the Council. It seems to me that this was appropriate, provided that the subjective features which surrounded her treatment were put to one side as I consider they were. It is at this point that the comparator chosen by Ms Varas (namely herself) presents difficulties. Ms Varas was not dismissed prior to 2006 when she was not imputed with a disability, although she was subjected to disciplinary action that might have resulted in dismissal. She was dismissed in 2006 after she was imputed with a disability and because of it. On Ms Varas' analysis of the facts she was thus treated less favourably because of the imputed disability, on the basis that her behaviour and work performance did not change significantly over time. That comparison is, however, too simplistic. The comparison must be by reference to the same time period and the same (or not materially different) circumstances. There were important events in 2005 and 2006 that need to be considered in the comparison. Ms Varas' behaviour did vary over time, for better or worse. So did her work performance. Both declined significantly during 2005. A crisis was reached early in 2006 that compelled some action by the Council. In my opinion the evidence referred to by his Honour coupled with the matters referred to above provide ample justification for the conclusion that a crisis had been reached early in 2006 that compelled some action by the Council. The learned Federal Magistrate concluded in effect that the appellant's behaviour prior to the Council's receipt of Mr Luiker's report and its awareness of the opinions expressed therein warranted disciplinary action which would lead to her dismissal. In like circumstances or circumstances that were not materially different, a person without a disability within paragraph (g) of the relevant definition or without such a disability imputed to that person, would have been treated just the same. Hence, the learned Federal Magistrate's conclusion that the appellant was not treated less favourably in the circumstances that transpired because of the disability that was imputed to her. Whilst in a case such as this much of the story may be found in the documentary evidence, nevertheless in relation to matters of primary fact, deference must be shown to the findings of the learned Federal Magistrate, especially in circumstances where he had the benefit of seeing the appellant and other Council officers give evidence viva voce and an opportunity to assess their demeanour. One only has to look at findings, such as that referred to above, in respect of the witness Jennifer Harris, who gave evidence before his Honour. His Honour found her evidence to be 'compelling'. In my opinion, it cannot be said that the learned Federal Magistrate was plainly wrong in finding that the appellant was not treated less favourably than the Council would have treated the appropriate comparator, in the same or not materially different circumstances, because of the disability that was imputed to the appellant by the Council on 26 May 2006 or shortly thereafter. Whilst the learned Federal Magistrate found that, on the basis of Ms Nolan's investigation report of 30 April 2006, the Council imputed to the appellant a personality disorder 'of some kind' it does not follow that, on learning of that report, the Council imputed to the appellant a disorder that affected the appellant's thought processes, perception of reality, emotions or judgment or that resulted in disturbed behaviour within the meaning of paragraph (g) of the definition of disability in the Act. In her report Ms Nolan had observed that the appellant's behaviour was 'consistent' with a personality disorder which was very difficult to treat. Had the Council imputed to the appellant a disability within the meaning of paragraph (g) of the definition upon receipt of Ms Nolan's report, it is hardly likely that the Council would have then proceeded to refer the appellant to Mr Luiker, as a Clinical Psychologist, for assessment. The Council's purpose in requesting the appellant to attend upon Mr Luiker was to gain additional insight into her condition. There seems to me to be no proper basis for disturbing the learned Federal Magistrate's finding that, on 26 May 2006 or shortly thereafter, the Council imputed to the appellant the disability which, along with the appellant's actions, in frustrating the Council's procedure to confirm her disability and to decide upon her possible medical retirement, caused it to dismiss her on 4 October 2006. The appellant submitted that the learned Federal Magistrate erred by taking into account the appellant's sick leave record as a reason for the termination of her employment without making a finding on the evidence regarding her use of sick leave. I am unable to accept that his Honour made a finding which linked the appellant's use of sick leave to her dismissal. Whilst he observed that, had the Council gone down the path of disciplinary action against the appellant rather than medical assessment, her 'excessive reliance upon sick leave would have been further investigated' his Honour did not make any finding that the appellant's utilisation of her sick leave would have provided a basis for her dismissal. His Honour's focus was clearly upon an appropriate response to the appellant's behaviour based upon the complaints of staff as summarised above. Some of those matters were viewed by the learned Federal Magistrate as compelling the removal of the appellant from the workplace. Nothing has been advanced by the appellant in the course of her counsel's comprehensive written and oral submissions to demonstrate that the critical findings made by the learned Federal Magistrate were made in error. The circumstance that gave rise to the council's treatment, by way of dismissal, of the appellant, was her propensity to engage in serious acts of discourtesy, rudeness and intimidating and provocative behaviour towards other staff members and members of the public, including her swearing, in public areas of the libraries in which she worked. In her case, that propensity was thought by the Council to have resulted from a disorder; but such a propensity could also exist in other library staff without any disorder. What, for her, may have been thought to have been disturbed behaviour, might, for other library staff have been bad behaviour. Another library staff member 'without the disability' would be another library staff member without disturbed behaviour resulting from a disorder or perceived disorder, not another library staff member who did not misbehave or use inappropriate language in public areas within the relevant library. There are library staff members who are not thought to have any disorder and who are not disturbed, who behave in an inappropriate manner towards other staff members and members of the public and who use inappropriate language to other staff members and in general conversation in public areas in the libraries in which they work. If their conduct persisted they would probably be warned and if it continued they would probably be dismissed in less time than elapsed before the appellant was dismissed in this case, especially if they refused to consult with a medical practitioner to whom they had reasonably been referred for reliable assessment. In my opinion the learned Federal Magistrate did not commit any appealable error. The appeal should be dismissed with costs. I certify that the preceding ninety (90) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham.

discrimination imputed disability appropriate comparator reasonable imposition of requirement on an employee to attend a medical examination to determine fitness to perform duties what constitutes subjecting an employee to 'any other detriment' discrimination law

2 These reasons for decision are directed to the final orders that I have determined to make, having heard submissions from the applicant and the respondents yesterday. The issues that separated the parties narrowed considerably during the course of yesterday's hearing. The remaining differences relate to the form of declaratory relief that is appropriate and the costs orders that should be made. On the other hand, AWB submitted that, where I have determined that documents over which AWB claimed privilege do not attract privilege or that any privilege has been waived, I should not make a declaration to that effect. It submitted that any such declaration was unnecessary and would lack utility. Senior Counsel for AWB said, from the bar table, that the documents in question were being produced to the Commission. The relevance of this is dubious, as it follows the delivery of my reasons for judgment and, presumably, anticipates that final orders will be made that give effect to those reasons. AWB also pointed out that the Commonwealth had not mounted any cross-claim for declaratory relief in its favour. 4 Not surprisingly, the Commonwealth pressed for a declaration that reflected both aspects of my findings, namely that privilege attached to some contested documents and not to others. 5 The making of a declaration and the terms in which it should be framed are in the Court's discretion: Forster v Jododex Australia Pty Ltd [1972] HCA 61 ; (1972) 127 CLR 421 at 437-439 per Gibbs J; and Ainsworth v Criminal Justice Commission [1992] HCA 10 ; (1992) 175 CLR 564 ( 'Ainsworth' ) at 581-582 and 596-597. As a matter of substance, the dispute that AWB submitted to the Court for its adjudication was whether legal professional privilege did, or did not, attach to the documents in AWB's further revised list of privileged documents dated 7 August 2006 (as supplemented by letters from AWB's solicitors to the Court dated 25 August 2006 and 5 September 2006). In my opinion, any declarations made by the Court should reflect the final outcome of this case with certainty and precision. Moreover, it is desirable that there should be an authoritative resolution of the dispute presented to the Court. 6 I have concluded that the Court should make a declaration, reflecting my reasons for judgment, that legal professional privilege attaches to specified documents, and does not attach to other specified documents. Declaratory relief in this form is appropriate because it determines the legal controversy that was before the Court: see Ainsworth at 582 and 596-597; and Bass v Permanent Trustee Co Ltd [1999] HCA 9 ; (1999) 198 CLR 334 at 355-356. As AWB's application makes clear, the controversy includes the question whether the documents at issue are protected from production to the Commission by legal professional privilege. This controversy is only likely to be quelled, completely and finally, by making a declaration in the form I propose. 7 I do not regard the fact that the Commonwealth did not cross-claim for declaratory relief as an obstacle to the declaratory relief I propose to grant. The declaration I propose to make contains positive and negative limbs: in effect, the declaration that AWB seeks will be conditioned by a second limb that gives effect to my decision that other documents are not privileged. 8 AWB also submitted that any declaration that privilege does not subsist in specified documents should distinguish between documents over which privilege was waived and documents where no privilege ever attached. My judgment addresses this distinction, but I do not see why the declaration needs to be expressed in this way. In either case, the result is that no privilege attaches to the documents that would protect them from production to the Commission. 10 AWB sought an order that the respondents pay its costs of the proceedings, including any reserved costs. It argued that the applicant was the successful litigant in material respects. It submitted that, subject to the Court's findings concerning waiver and the fraud exception, it had successfully proven that privilege prima facie attached to all but 25 of the documents over which it pressed its claim. It said that the costly and time-consuming part of the case was proof of the prima facie status of each document as one brought into existence for the dominant purpose of obtaining, or giving, legal advice. AWB also criticised the reasonableness of the Commonwealth's conduct in requiring that AWB prove its claim in respect of each and every document; it asserted that the soundness of many of the claims ought to have been apparent from the description of the documents in AWB's list of privileged documents. 11 These submissions take an exceedingly optimistic view of AWB's level of success in the proceedings. In fact, because of the Court's findings concerning waiver and the fraud exception, AWB's privilege claims wholly failed in relation to approximately 321 of the documents that were in contest. In addition, on the first day of the hearing, AWB withdrew its claim for a declaration that privilege attached to about 24 documents relating to the Tigris transaction. Roughly one-half of the hearing time was devoted to the issues concerning waiver and the fraud exception. 12 AWB submitted that the circumstances do not warrant any departure from the usual approach that an applicant who achieves substantial success should have the costs of the proceedings. The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues. It argued that success in this case cannot be measured purely in numerical terms; rather a judgement ought to be made as to which party has had substantial success in the case, having regard to the significance of the issues decided by the Court in favour of one or other party. It added that a finding that privilege subsists in a large number of technical or peripheral documents cannot be weighed in the same scale. 14 The Court's discretion to order costs under s 43 of the Federal Court of Australia Act 1976 (Cth) is unfettered, except that it must be exercised judicially. The usual order as to costs is that a successful party will have its costs paid on a party and party basis by the unsuccessful party: Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 232-234. As the passage from Cretazzo indicates, the mere fact that a substantially successful applicant fails on particular issues of fact or law along the way may not afford an adequate ground for depriving that applicant of some or all of its costs. On the other hand, it lies within the Court's discretion to make a costs order that reflects the degree of success attained: Ruddock v Vadarlis (No 2) [2001] FCA 1865 ; (2001) 115 FCR 229 at 234-235 [11] and 236 [15]. Depending on the circumstances, it may be an appropriate exercise of the Court's discretion to deprive a party of its costs in respect of an issue which it lost at trial: Cummings v Lewis (1993) 41 FCR 559 at 599-604; and Dias Aluminium Products Pty Ltd v Ullrich Aluminium Pty Ltd (No 2) [2005] FCA 1400 at [3] . Alternatively, the Court can order a successful party to pay some costs in respect of unsuccessful aspects of the case: Hughes v Western Australian Cricket Association (Inc) (1986) ATPR 40-748 at 48,136; Forster v Farquhar (1893) 1 QB 564; and Inn Leisure Industries Pty Ltd v DF McCloy Pty Ltd (No 2) (1991) 28 FCR 172. 15 In many cases, these principles can only be applied sensibly by taking a broad view of the results of the case and the issues that were litigated. An allocation of costs in a case of mixed results can rarely if ever be done with mathematical precision: Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272 per Gummow, French and Hill JJ. 16 Taking a broad and overall view of the outcome of this case, I consider that both AWB and the Commonwealth achieved a substantial measure of success. I cannot agree with AWB's submission that, in material respects, it was the successful litigant. The Commonwealth succeeded on a number of very important issues. It established that privilege did not attach to numerous documents that are likely to be material to the issues being investigated by the Commission. AWB did not merely fail 'along the way' to prove particular issues of fact and law which, in the end, did not prevent it achieving substantial success; rather, AWB lost some of the most substantial issues that were litigated. Those issues involved more than half of the hearing time occupied by this case. 17 In all the circumstances, I consider that the just and appropriate order is that there be no order as to the costs of the proceeding. The result will be that AWB and the Commonwealth must each bear its own costs. 18 I do not consider that there is any substance in the criticisms that AWB directed towards the Commonwealth. The Commonwealth was entitled to put AWB to the proof of its privilege claims. Nor do I agree with AWB's assertion that the description of the documents in AWB's lists was generally sufficient to enable the Commonwealth to form a view about the provenance of each document and the grounds upon which privilege was claimed. 19 AWB also sought the costs of its notice of motion dated 19 June 2006 and the first respondent's notice of motion dated 24 July 2006. I have concluded that there should be no order as to the costs of these notices of motion. 20 By its notice of motion dated 19 June 2006, the applicant sought an interlocutory injunction against the first respondent. Interim injunctive relief was granted by Kenny J on 20 June 2006. I extended that order by consent until the hearing and determination of the proceedings. I accept that AWB was compelled to seek injunctive relief because the first respondent declined to give an acceptable undertaking that he would not exercise his powers under s 6AA of the Royal Commission Act 1902 (Cth) pending the hearing and determination of these proceedings. Ordinarily, this would suggest that the successful applicant should have its costs of the motion for interim injunctive relief. But this is a very special case. The basis upon which AWB sought injunctive relief was an apprehended contempt of Court by the first respondent and/or alleged constitutional invalidity of s 6AA. Had the motion for an interlocutory injunction been contested, these issues would have been considered by the Court. In the result, however, the Court did not need to make any determination concerning the questions of contempt of Court and the constitutionality of s 6AA, either on a final or interlocutory basis. In these circumstances, I consider that the appropriate order is simply one that leaves the costs of the motion where they fall. There will, accordingly, be no order as to the costs of the notice of motion dated 19 June 2006. 21 By notice of motion dated 24 July 2006, the first respondent sought an order vacating a direction I had made that the first respondent should provide certain particulars that would assist in defining the issues in this case. I made this direction at the request of AWB and the Commonwealth. By the time the first respondent's notice of motion came on for hearing, both AWB and the Commonwealth had changed their position. Neither sought to maintain the direction. As a result, I vacated the direction and reserved the costs of the notice of motion. In these circumstances, I consider that there should be no order for costs in relation to this notice of motion. The first respondent did not seek an order for costs in his favour. First, AWB informed the Court that it did not persist with its application for injunctive orders against the first respondent. Secondly, AWB submitted that four additional documents should be included in any declaration that specified documents were the subject of legal professional privilege. Three of these documents (documents 307, 383 and 1031) are not referred to in my reasons for judgment because they were withdrawn by AWB by mistake. Senior Counsel for AWB informed me that they are, respectively, exact copies of documents 306, 381 and 418 which are considered in my reasons for judgment. I am satisfied that this is the case. In addition, AWB submitted that the declaration should include document 704II which is referred to in paragraph [241] (i) of my reasons for judgment. The Commonwealth accepted that any declaration of privilege in favour of AWB should extend to these four documents. There be no order as to the costs of the proceeding. 6. The application otherwise be dismissed.

declarations that documents protected by legal professional privilege form of declarations whether appropriate to grant declaration that certain documents are privileged and others not whether necessary to distinguish between waived documents and documents to which privilege never attached discretion to award where each party achieved substantial measure of success on certain issues no orders as to costs remedies costs

The application before the Court has a background which involves these considerations. On 12 February 2009, Logan J made orders that an application for the adjournment of an application for the winding up of a company called Neo Rock Pty Ltd be refused and that the company be wound up in insolvency pursuant to the provisions of the Corporations Act 2001 (Cth). The primary judge also made orders that Mr Andrew Fielding, an official liquidator, be appointed liquidator of the company and further orders in relation to the question of costs. Consequent upon those orders, a number of Court papers were prepared and sent to the Registry of the Federal Court by or on behalf of Mr Michael John Spencer, a former director of the company. The documents included an application for an extension of time for leave to appeal from the primary judge's orders and an application for leave to appeal. That material was supported by an affidavit sworn by Michael John Spencer and in that affidavit, Mr Spencer sought to advance factual matters which supported the application for leave to appeal. The affidavit annexed a proposed Notice of Appeal. The application also involved an application under s 471A of the Corporations Act 2001 (Cth) for leave to act as a director for the purpose of making an application to the Court for leave to appeal from the orders of Logan J. Ms Cameron appears on behalf of the Deputy Commissioner of Taxation and has made the submissions in opposition to the application on the footing that the Deputy Commissioner received very late notice of the application. I will take account of Ms Cameron's submissions in the course of these observations. Mr Spencer has filed the application under s 471A of the Corporations Act as earlier mentioned, in effect, so as to seek permission or leave of the Court, to act as a director for the purpose of bringing an application for leave to appeal. Mr Spencer in liaising with the Federal Court Registry in correspondence made it plain that he wished the application for approval to act as a director and the application for leave to appeal to be dealt with on the papers without the necessity of an appearance before the Court. It seemed to the Court that that was not a prudent course and that the matter ought to be listed and the papers served on the respondent to the applications so as to enable the respondent to make submissions to the Court on any matter considered relevant. Accordingly, the matter was listed for hearing this morning. Ms Cameron, on behalf of the Deputy Commissioner of Taxation, contends that the papers were served on officers of the Deputy Commissioner on Friday, 31 July 2009 and there is no explanation offered in any of the material for the failure to serve the material at an earlier date. Mr Spencer has written a letter to the Court dated 2 August 2009 in which he says that he did not appreciate that the matter was to be listed for hearing and that he would be required to attend. The Court wrote to Mr Spencer on 16 July 2009 advising him of a number of matters including, by para 2 of the letter in bold emphasis, that the matter would be listed at 10.15 am on Monday, 3 August 2009 to be considered by a Judge of this Court. In any event, in Mr Spencer's letter of 2 August 2009, although he seeks a further adjournment of the applications for a week or so, he concludes the letter by observing that "in the alternative [the Court] may be minded to determine the matter 'on the papers' if [there is] power to do so as appears may be the case. I have no objection to that course". The thrust of that written submission, then, is that Mr Spencer does not wish to make oral submissions in support of the application he has made and is content to have the matter dealt with on the papers. It seems to me that it is not appropriate to adjourn this matter further. It has a history involving the submission of documents to the Registry, which required some engagement with Mr Spencer. The process adopted by Mr Spencer was not correct and the Court advised Mr Spencer that the appropriate way to deal with the matter was to list the application for leave to act as a director, for hearing. The Court would then deal with the application for leave under s 471A of the Corporations Act to act as a director and in considering that application, the Court would take into account the matters raised in relation to the application for leave to appeal and would deal with that application, as the only purpose for the preliminary application is to deal with the application for leave to appeal. Although addressing the application for leave to appeal might be described as dealing with that application on the papers, the matter would be dealt with in the sense that the issues relating to leave to appeal would inform the question of whether permission ought to be granted to enable Mr Spencer to act as a director for the purpose of bringing that application. As to the underlying matters, it is important to say these things. The background to the matter is that the Deputy Commissioner of Taxation issued a statutory demand to the company in respect of a debt which was said to arise out of revenue obligations owed by the company to the Deputy Commissioner under the Act, including matters relating to goods and services tax, PAYG remittances, a superannuation surcharge and also general interest charges, among other things. The statutory demand issued by the Deputy Commissioner of Taxation was unsatisfied and, as a result, for the purposes of the Act, the company was deemed to be unable to pay its debts when they fell due. As a result, an application was made to the Court for the winding up of the company on that ground. The company did not apply to set aside the statutory demand within the time limited for that purpose under the Corporations Act . The application for the winding up of the company came before the Registrar of the Court and the Registrar ordered that the company file any affidavits upon which it proposed to rely, in relation to the winding up application, by 6 February 2009. The application was to be heard on 12 February 2009. The company sought an adjournment of the winding up application before the Registrar. The application was then referred to a Judge of the Court. The matter came before Logan J. The company pressed for the adjournment of the winding up application on the ground that the company intended to, or wished to, contest the debt relied upon by the Deputy Commissioner of Taxation. The point of the application before the primary judge was that the company would wish to file material to enable it to contest the debt. The primary judge considered the authorities on the proper application of the prohibition upon leave under s 459S of the Corporations Act . Section 459S(2) of the Corporations Act provides that leave is not to be granted unless the Court is satisfied that the ground relied upon is material to proving that the company is solvent. The primary judge concluded that a challenge to the debt will be material to proving that the company is solvent if the company is able to demonstrate that if the debt does not exist, then the company will be solvent. That approach is conventionally understood as the "narrow approach" to s 459S of the Corporations Act . In adopting that approach, the primary judge applied the reasoning of Spigelman CJ in Switz Pty Ltd v Glowbind Pty Ltd (2000) 48 NSWLR 661 at 674 and particularly at [56]. The observations of the Chief Justice are consistent with the views expressed by Perram J in Grant Thornton Services (NSW) Pty Limited v St George Wholesale Distributors Pty Limited [2008] FCA 1777 at [19] to [22]. The primary judge also relied upon the authorities of HVAC Construction (Qld) Pty Ltd v Energy Equipment Engineering Pty Ltd (2002) 44 ACSR 169 at 184 and particularly at [53] (per French J) and Web Wealth Pty Ltd v Helimount Pty Ltd [2006] FCA 1376 at [43] to [45] (per Besanko J). Having considered the reasons of the primary judge in relation to the construction and operation of s 459S of the Corporations Act , I am satisfied that there is no error reflected in his Honour's approach to the authorities and his Honour's approach to the construction and application of s 459S of the Corporations Act . In addition to the question of construction of the relevant provision of the Act, his Honour also turned to some of the affidavit material and the facts reflected in those affidavits. There is no evidence which touches upon the assets and liabilities of the company generally, its profit and loss, its balance sheet, or its solvency, either having regard to the debt as it presently stands (which has its origins in that which supported the statutory demand) or otherwise howsoever. The focus of the affidavit material which has been read is on dealings as between Neo Rock and the Australian Taxation Office (the ATO) in the context of an as yet unresolved audit of that company's taxation affairs by the ATO. Mr Vicca expressed certain opinions about the balance debt due to the Deputy Commissioner. The Deputy Commissioner in response filed affidavit material which suggested that the present indebtedness of the company to the Deputy Commissioner and therefore payable as a debt due to the Commonwealth was $24,132.01. The company contests aspects of that assertion and did so before the primary judge. The primary judge also noted at [13] that the company had failed to lodge income tax returns for the financial years ending 30 June 2005, 2006, 2007 and 2008. It simply failed to do so. The company did not file affidavits in accordance with the direction of the Registrar and failed to file any affidavits from the directors which identified a basis for concluding that the company was solvent. Moreover, the primary judge noted that the company appears to have suffered a systemic failure to formulate and lodge its taxation returns as required as a matter of law in respect of the financial years that I have just mentioned. In support of the applications that are now made for permission to act as a director and for leave to appeal, an affidavit has been filed by Mr Michael Spencer in which assertions are made to this effect. Firstly, the directors "believe that the company is solvent and should not have been wound up". Unfortunately, no affidavit material is filed which supports that proposition. Secondly, by paragraph 10 of his affidavit, Mr Spencer observes that when the winding up application was heard by Logan J an audit was occurring in relation to returns to be lodged by the company concerning Business Activity Statements. Nevertheless, the company ought to have filed affidavit material which was directed to the precise matter in question, namely, the solvency of the company. The company ought to have complied with the directions of the Registrar. Thirdly, Mr Spencer deposes to the belief of the directors that in these circumstances the hearing of the application for a winding up order and the "continuance of the proceedings" and the "decision to wind up the company" was an "abuse of process". Plainly enough, there was no abuse of process. The application came on for hearing in the proper way against the background of directions made by the Registrar. The directors were obliged to meet their obligations to put on material which explained the failure to make the application to set aside the statutory demand within the time limited by the Corporations Act , and also to explain the materiality of the debt to the question of solvency and to demonstrate solvency. For all of these reasons, I am satisfied that there is no miscarriage in the exercise of the discretion by the primary judge in applying s 459S of the Corporations Act . In relation to the applications before me, I refuse the application for approval to Mr Spencer to act as a director to make the application for leave to appeal and I refuse the application for leave to appeal on the basis that no arguable question has been raised concerning the application of the relevant test or the exercise of the discretion. Accordingly, the application for leave to act as a director is refused and the application for leave to appeal is refused with an order that the applicant, Mr Spencer, pay the costs of and incidental to the application. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.

consideration of an application for leave pursuant to s 471a of the corporations act 2001 (cth) for leave to act as a director for the purpose of making an application for leave to appeal from an order for the winding up of a company of which the applicant was a director consideration of an application for leave to appeal from orders of the primary judge consideration of an application for leave to appeal from orders of the primary judge for the winding up of a company consideration of the application of s 459s of the corporations act 2001 (cth) practice and procedure taxation and revenue

The applicable principles for determining whether the relief sought should be granted, are not in issue. They have recently been restated by a Full Court in The Community and Public Sector Union v Commonwealth of Australia [2006] FCAFC 176 and, in particular, at [14] - [19]. There is no significant dispute about many of the facts and, in any event, it is inappropriate to endeavour to resolve finally factual issues at this stage of the proceedings. While affidavits were read, the evidence was not tested in cross-examination. 2 The essential facts are these. The applicant commenced employment with the respondent in about 1991. In about 1998 he became a delegate of the National Union of Workers ("NUW"). He was employed as a storeman and packer at the Minto warehouse of the respondent. In 2006, the applicant's employment and that of certain others employed by the respondent was covered by a collective agreement. In early 2006 discussions commenced between the respondent and the NUW about a new collective agreement. The applicant was involved in those discussions as the delegate representing union members at the warehouse. In June 2006, the respondent wrote to employees including the applicant about the possibility of being employed on an Australian Workplace Agreement ("AWA"). This remained a live issue into 2007, with the respondent writing to the applicant on 22 March 2007 providing a draft AWA for him to consider. It appeared not to be in issue that presently 15 of the 30 employees at the warehouse have signed AWAs. In furtherance of the desire of union members to renegotiate the collective agreement, an application was made to the Australian Industrial Relations Commission for an order permitting the conduct of a ballot in relation to industrial action. In the result, on 7 June 2007, the NUW gave notice to the respondent that there would be an indefinite strike commencing at 6 am on 18 June 2007. 3 Early in the morning on 18 June 2007 the industrial action commenced. As a matter of fact, a picket was established outside the Minto warehouse. The applicant participated in that picket. On 19 June 2007 a Mr Sharma and a Mr Simmonds sought to enter the warehouse premises. There is a factual dispute about what precisely occurred. For present purposes, it is sufficient to note that the applicant accepts that he said to Mr Sharma words to the effect of "go lick the boss's arse". Mr Sharma's account of this incident is slightly different but the substance is the same, namely that the applicant spoke in an offensive and abusive way towards him as he sought to enter the warehouse premises. The position is slightly different in relation to Mr Simmonds. The applicant denies saying anything on 19 June 2007 to Mr Simmonds which was offensive and abusive. He also denies being involved in an incident in late August or early September 2007. Mr Simmons has given evidence in an affidavit that as he approached the warehouse in his car 19 June 2007, the applicant said to him "you are a fucking cunt". Mr Simmonds also gave evidence of an incident in late August or early September 2007. He said that on that day, when he had entered the warehouse site in his car and was driving along the driveway, he was approached by Mr Cochrane, an organiser for the NUW, who spoke to him. Mr Cochrane told Mr Simmonds was not going to work and had to find another job. Five people approached Mr Simmonds' car and started kicking and bashing it. The applicant then spoke to him indicating that he, Mr Simmonds, should get out of his car as he wanted to fight with him. The applicant accused him of being a "scab" and, presumably sarcastically, accused him of being "a real big hero". 4 On 19 June 2007, Mr Reidy, whose responsibilities include managing the warehouse, sought to give the applicant a letter though the applicant refused to accept it. It was dropped at the applicant's feet. You hold a responsible role within your union at the site being the delegate. It would be my expectation that you would behave in a more responsible and considerate way. The purpose of this letter is to provide you with an opportunity to respond to these allegations. Once you have had an opportunity to respond to the allegations, a decision will be made with respect to your ongoing employment. On a number of occasions on Monday 18 June 2007, you stood across the driveway of the site preventing access of vehicles to the site. On Monday 18 June 2007, you were involved in a number of attempts to intimidate and mislead employees of [the respondent] in relation to the industrial action. Also on the morning of 19 June 2007, you stopped another employee of [the respondent] at the driveway. Preventing access to the site in these circumstances is simple misconduct on your part. Threatening employees with foul and obscene language is also misconduct on your part. You are now invited to a meeting at a time suitable to you on Wednesday 20 June 2007. Alternatively you may wish to provide a written response. Another letter to similar effect was provided to the applicant on 21 June 2007. If you choose not to respond to this letter, a decision will be made with respect to your ongoing employment without any further correspondence. Accordingly, I would appreciate a response in writing to this letter prior to 4.00p.m on Friday 22 June 2007. The letter noted that the applicant denied preventing vehicles from accessing the site 19 June 2007. The letter denied that the applicant attempted to intimidate or mislead employees of the respondent. The letter denied that the applicant stopped Mr Simmonds or that he said the words about which there had been complaint. The letter denied that the applicant stopped Mr Sharma and that he said the words about which there had been complaint. The letter also denied that the applicant had been involved in the letterbox drop of the neighbours of Mr Reidy. The letter concluded by saying that any attempt by the respondent to dismiss the applicant would be in breach of s 448 of the WRA and that the NUW would not hesitate to commence proceedings on his behalf. 8 The respondent did not act in the way clearly suggested by the letters to the applicant. That is, the respondent did not then make a decision whether to dismiss the applicant. There was some evidence that in early August 2007, when the parties were on the verge of settling the dispute, Mr Reidy indicated that the respondent had decided to wait until the end of the industrial action to deal with the applicant. On 5 September 2007 Mr Reidy wrote to the applicant inviting him to attend a meeting on 10 September 2007. In that letter, Mr Reidy referred to the letter of 19 June 2007 and stated that the response received from the NUW was not adequate, that the respondent believed that the conduct alleged did occur and that termination of the applicant's employment may be appropriate. The meeting took place and on 12 September 2007 the respondent, through Mr Starr, wrote to the applicant informing him that his employment was being terminated for misconduct. We have respected your legal right to engage in protected industrial action. Your behaviour, however, constitutes completely inappropriate dealings with your fellow workers... In the circumstances, I believe that you have engaged in serious and wilful misconduct and that your employment should terminate immediately. The applicant gave evidence that having been at the strike from the beginning, a number of employees on strike said things to people going to work and some of those who went to work said things back to them. He said that in his observation a number of the striking employees were upset with those employees who were going to work and not supporting them. He said that words were said by many people who were on strike as well as those who did not go on strike. While it is not said directly, the import of this evidence is that the applicant was not alone in remonstrating with employees who were not on strike and who were crossing the picket line to attend work. This is addressed more directly by Mr Cochrane in his evidence. His evidence was that a number of the employees who were participating in the industrial action were voicing their concerns and feelings towards those employees who are driving past the protest and continuing to work during the strike. He added that some of the people who went to work for the respondent during this period would say offensive things to those employees on strike as well. I would ask you to ask your members to cease abusing those people coming to work and ask them to stand over there (pointing to the other side of the road) so that they are not near those people coming to work. That the respondent believed a number of picketing employees had been abusing those who were attending for work is reinforced by some of the correspondence from the respondent. In an open letter of 9 July 2007 to the striking employees, Mr Reidy said that "some of our employees have chosen to engage in activities... including" followed by four dot points. One of the dot points was "intimidating staff members who have chosen to work". To similar effect was an earlier email from the lawyers acting for the respondent to the NUW alleging that "some" of the 11 employees engaging in industrial action had engaged in unlawful activities including, as one of two matters mentioned in the email, "intimidation of employees and contractors to take part in industrial action". While these documents might be construed in various ways, one obvious interpretation is that they both complain about more than one employee engaging in intimidation. Such a conclusion would be entirely consistent with Mr Cochrane's evidence of what Mr Reidy said on 21 June 2007. 12 The importance of this is as follows. The applicant submits that an inference might be drawn that the applicant was not alone amongst the striking employees in making offensive and abusive remarks to other employees who remained at work as they sought to cross the picket line. If this inference was drawn, then it raises the question of why only the applicant, and not the other employees, was alleged to have engaged in serious misconduct and, in the result, dismissed. The applicant submits that an inference might be drawn that the reason why this was so was that the applicant was a delegate of the union who, in fact, was at the forefront of the unsuccessful negotiations of the new enterprise agreement, resisting the introduction of AWAs and engaging in the industrial action. The applicant submits that support for drawing that inference is found in the failure of the respondent to act in accordance with its apparent intention in its correspondence of 19 and 21 June 2007 by dealing promptly with the question of whether the applicant should be dismissed not only for the conduct relied on ultimately but also for the other conduct specified in the letter of 19 June 2007. In my opinion, such inferences might be drawn from this evidence. There is evidence which would support a finding that the applicant was singled out for disciplinary action leading to his dismissal arising from his remonstrations with Mr Sharma and Mr Simmonds and that other employees had engaged in similar conduct but not dealt with in the same way or, indeed, at all. The evidence would also support a finding that the respondent ultimately was selective in identifying the grounds on which the termination was to take place by abandoning its reliance on the other matters (for example, standing across the driveway and misleading employees) which it had earlier said constituted serious misconduct. That is, it made a decision not to rely on the other matters, perhaps because it apprehended that they might fall within the proscribed territory marked out by s 448 as alluded to by the union in its letter of 22 June 2007. If so, it would reinforce the view (capable of being formed by the adamant way the respondent said in the dismissal letter that the grounds identified were the only grounds) that the respondent had reasons beyond the stated reasons for dismissing the applicant. This finding would support a conclusion that at least one of the reasons for dismissing the applicant was that he was a union delegate. While Mr Starr, the decision maker, has denied reasons other than the stated reasons and, in particular, denied that the applicant being a delegate was a reason for dismissal, a finder of fact at the trial might conclude that this evidence should be rejected in the face of inferences to be drawn from all the events leading up to and surrounding the dismissal. I am satisfied that there is a serious question to be tried on the issue of whether the respondent dismissed the applicant for a prohibited reason or for reasons which include a prohibited reason, namely that he was a delegate of the union (see s 793(1)(a) of the WRA). It is unnecessary to consider whether there is also a serious question to be tried in relation to the alleged contravention of any other provision of the WRA. I note that counsel for the applicant accepted that the applicant could not rely on the reversal of the onus of proof under s 809(1) because of s 809(2) of the WRA. Accordingly it is unnecessary to address the difficult question of what precisely are the boundaries created by that latter subsection. 13 I turn now to consider the balance of convenience. I should first observe that I consider that the case of the applicant is a comparatively strong one, though accepting that the evidence before me has not been tested. That is relevant when considering the balance of convenience and the exercise of the discretionary power to grant or refuse interim relief. In substance, three issues were raised concerning the balance of convenience. The first was whether the applicant would suffer any material financial detriment if he was not reinstated pending a final hearing. The second, and related question, was whether damages (perhaps in this context, it is best described as compensation which is the statutory formulation) will ultimately be an adequate remedy both in relation to the period between the dismissal and the final hearing and, if the applicant is successful, thereafter. The third concerned the effect of reinstating the applicant, pending the final hearing, into a comparatively small workplace where three of the employees working there full-time (Mr Reidy, Mr Sharma and Mr Simmonds) and one who regularly attends the Minto site (Mr Starr) have expressed concerns about working with the applicant and being apprehensive or fearful about how the applicant might treat them. 14 As to the first matter, while the applicant presently has a job with another employer, it is a job he has had for some time when employed by the respondent (it was a second job). There is a material difference between his present net income and the net income he received while working for the respondent (even putting to one side the second source of income). If one takes into account his former total income (derived from working for the employer and in his second job) the difference is much greater. It is true that the applicant and his wife appear to have over $30,000 in savings. However in circumstances where the case against the respondent appears to me to be strong, it is inappropriate, in my opinion, to proceed on the basis that the applicant should dissipate some of his savings to maintain himself and his wife (and indirectly one child whose mortgage he pays). It is also true that the applicant has been paid of the order of $17,000 by way of termination pay. However it is probable that most if not all of that sum will have to be repaid if he is successful at the final hearing and he is reinstated. The respondent has indicated that, in the alternative to dismissing this application for interim relief, I could make an order requiring it to pay the applicant an amount equivalent to the income he would receive if reinstated, though not in fact reinstating him. It is not clear whether it was proposed these payments would be repayable in the event that the applicant is unsuccessful. Even if they were not (and I think it is tolerably clear that the Court would have power to make an order requiring these payments unconditionally) this is not, in my opinion, an appropriate order to make if, as I consider to be the case, the balance of convenience generally favours the grant of interim relief in the form of the reinstatement order. 15 As to the question of whether compensation is an adequate remedy (both on an interim and final basis), in this case I do consider that at least arguably, it is not. For the reasons given in relation to the alternative order proposed by the respondent, compensation is not an adequate remedy on an interim basis. On a final basis, it is also likely not to be an adequate remedy. If the applicant is successful on the ground that I accept raises a serious issue to be tried, he will have established that he was dismissed for a reason which included that he was a union delegate. Plainly the legislative provision proscribing that as a reason for dismissal is intended to provide protection for those who assume that role in a workplace. The substantial protection is afforded by denying an employer the right to dismiss an employee because a person is a delegate and that would ordinarily be achieved by granting the remedy of reinstatement. 16 As to the concerns of Mr Simmonds, Mr Sharma, Mr Reidy and Mr Starr, even accepting that they are real, they may well be overstated. The conduct of the applicant about which complaint was made occurred in the context of industrial action involving picketing. As is evident from what occurred in this case, picketing can quickly create an emotionally charged environment both on the part of those engaged in the picketing and on the part of those resisting the picket and asserting a right to attend their workplace and work. In this matter, the industrial dispute has been settled. The picket is gone. While it may be accepted that some ill-will might continue between those who picketed and those who did not, I do not consider that it is likely to result in any inappropriate behaviour on the part of the applicant. I accept also that the particular relationship between the applicant and Mr Simmonds may well remained strained (each has made serious complaints about threats from the other) but again I do not consider it is likely that it would result in inappropriate conduct on the part of the applicant. However, in any event, the applicant is prepared to offer an undertaking to the Court not to harass, intimidate or otherwise act aggressively towards the four employees. It is probably unnecessary, in the circumstances, to require that undertaking to be given. However as the applicant is prepared to give it, it is appropriate it should be accepted as it will provide the respondent and the four employees with additional comfort about how the applicant will conduct himself in the workplace. 17 The applicant has been an employee of the respondent for 16 years or thereabouts. This is a significant period. The loss of such employment is a significant event. In my opinion, the balance of convenience favours the making of an interim order for reinstatement. 18 I should note that the NUW has offered an undertaking as to damages. I have some doubt that it is necessary, but as it was volunteered, it can be accepted. No issue was raised about NUW not being a party. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore.

application for interim relief where applicant a union delegate dismissed by respondent for conduct during strike whether serious case to be tried as to whether applicant was terminated for being a union delegate or for engaging in protected industrial action balance of convenience and relevance of income derived from second job industrial law

In that judgment, her Honour dismissed an application to review a decision of the Refugee Review Tribunal rejecting the appellant's claim to a protection visa. 2 The basis upon which the Federal Magistrate dismissed the application to review was the failure of the appellant to appear on the day of the hearing. Her Honour invoked r 13.03A(c) of the Federal Magistrates Court Rules 2001 . She included in the orders dismissing the application a notation to the effect that pursuant to r 16.05(2)(a) the Court may vary or set aside a judgment or order made in the absence of a party. She did not consider the case on its merits. 3 The respondent Minister has filed a notice of objection to competency. That notice contends that the decision given on 21 February 2007 is an interlocutory judgment and accordingly not subject to appeal as of right. Further, pursuant to O 52 r 5 of the Federal Court Rules leave to appeal must be sought within 21 days of the pronouncement of the interlocutory decision, and the appellant must also obtain an extension of time. No application for leave to appeal has been sought. 4 Attempts have been made to contact the appellant in recent weeks. Save for the provision of a letter addressed to an officer of the Court, faxed on 17 May 2007, there has been no communication from the appellant. In particular, in breach of directions given on 19 March 2007, no written submissions have been filed on behalf of the appellant. 5 When the matter was called on for hearing this morning, there was no appearance by the appellant. The explanation may lie in the letter dated 17 May 2007 which says that the appellant is unable to come to the hearing today. It refers to a medical certificate as being attached for the attention of the Court and requests that the matter be adjourned to another date. There was, however, no medical certificate attached to the letter. 6 Curiously, the appellant is not alone in being unwell, and unable to attend Court this morning. Two other persons, each of whom is associated with the appellant, and whose cases were dealt with by the Federal Magistrate at the same time as that of the appellant, have also failed to comply with Court directions, and have also provided letters indicating that they are sick, and unable to attend Court today. Those letters again referred to medical certificates as being attached, but only one of the letters in fact provided such a certificate which was pro forma in nature and, as I have found, worthless. 7 Having regard to the history of this matter, I am not persuaded that I should adjourn this proceeding. The objection to competency is plainly well taken. A decision to dismiss an application by reason of the absence of the applicant is a decision of an interlocutory nature. Pursuant to s 24(1A) of the Federal Court Act 1976 (Cth) an appeal from the Federal Magistrates Court cannot be brought from such a decision without leave. See generally NACA v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 659 at [15] per Hely J; MZWQH v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 1491 at [26] per Kenny J; and MZWXC v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 172 at [9] per Young J. 8 It follows that the objection to competency will be allowed. The purported notice of appeal filed on 9 March 2007 will be struck out as incompetent. The appellant will pay the first respondent's costs. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice WEINBERG .

purported appeal from judgment of federal magistrate dismissing application by reason of failure to appear objection taken to competency federal magistrate's judgment interlocutory appellant failed to appear at federal court hearing appeal dismissed as incompetent migration

1 '). Since the facts and legislation are set out in that decision, the present decision should be read in conjunction with Tran No. 1 . In Tran No. 1 the Court found that s 261A of the Migration Act 1958 (Cth) ('the Migration Act ') operated to effect an automatic forfeiture of the ship Hao Kiet BL91693TS ('the ship') on or about 1 July 2003 when the ship entered Australia carrying persons who held no valid Australian visas. To answer the specific questions the Court was provided with an agreed statement of facts. The determination of such questions did not finally resolve the rights of the parties since an automatic forfeiture brought about by s 261A of the Migration Act remains contestable: see Tran No. 1 at [45]. The continuation of the hearing in respect of which this judgment is now delivered provided the applicant with the opportunity to provide any evidence upon which he relied to dispute that forfeiture of the ship had occurred. In Tran No. 1 the Court referred to the automatic forfeiture as ' the purported forfeiture ' (at [49]), only as a means of indicating that in these proceedings the applicant could challenge the forfeiture under the mechanism explained in that decision, that is, through the condemnation process. The Further Amended Application also seeks declarations relating to claims for damages arising from the alleged unauthorised destruction and/or loss of possession of the ship. A Further Amended Statement of Claim was also filed on 9 September 2008. The officers who seized and destroyed the Ship were not "authorized officers" within the meaning in sections 5 and 261B of the Migration Act nor were they officers who acted under an order by such an "authorised officer" within the meaning in the said sections. By reason of its unauthorised destruction and/or possession of the Ship, the Respondent has trespassed against the right of possession vested in the Applicant for its own use and without authorisation under law. By reason of its unauthorised destruction and/or possession of the Ship, the Respondent has converted the right of possession vested in the Applicant for its own use and without authorisation under law. Further and in the alternative, by reason of its unauthorised destruction and/or possession of the Ship, the Respondent has breached its duty to the Applicant as an involuntary bailee of the Ship without authorisation under law. The Applicant is entitled to damages for trespass and/or conversion and/or breach of its duty as involuntary bailee. On 12 September 2008 the respondent ('the Commonwealth') filed a cross-claim seeking the following: A DECLARATION that title in the ship with the markings Hao Keit [sic] BL91693TS passed to the Commonwealth on and from 1 July 2003 and all rights and title to that ship were vested in the Commonwealth on and from 1 July 2003. The Commonwealth also filed an Amended Defence to the further Amended Statement of Claim on 16 October 2008 disputing the factual allegations of the applicant and disputing the quantum of damages claimed in respect of the loss of the ship. Evidence has been adduced by both parties and further submissions made in support of the Further Amended Statement of Claim and of the cross-claim of the Commonwealth. The parties rely upon the agreed facts which are stated at [5] in Tran No. 1 . Each party has filed one affidavit. The affidavit of Farid Varess, filed by the applicant, attaches documentation relating to the detention of the ship and of the condition of the vessel at the time of its destruction. The affidavit of Neil Sugget, filed by the Commonwealth, provides details of the apprehension of the ship, and of the decision to destroy it. In support of its submission the applicant relies upon the text of the heading of Division 13A of Part 2 of the Migration Act entitled ' Automatic forfeiture of things used in certain offences ' and submits that the Court must consider whether an offence of the relevant kind has been committed. The applicant also refers to the headings of ss 261A and 261B of the Migration Act entitled respectively ' Forfeiture of things used in certain offences ' and ' Seizure of things used in certain offences '. The applicant submits that pursuant to ss 13(1) and 15AB (2)(a) of the Acts Interpretation Act 1901 (Cth), both the heading of the Division as well as the heading of the section can be considered when construing the operation of s 261A. The applicant relies upon the headings and the use of the words ' in contravention of this Act ' in s 261A(1)(a) as evincing Parliament's intention that s 261A effects forfeiture in situations arising from more than a mere failure to abide by any rule or norm, and that only contravention of sections of the Migration Act creating offences will be sufficient to result in forfeiture. The applicant relies upon the decision of the Full Court of the Supreme Court of South Australia in Dimella Constructions Pty. Ltd v Stocker and Stocker (1976) 14 SASR 215 in which the Court at 221-222 considered the meaning of the word 'contravention'. Additionally, the applicant submits that the principle of interpretation that Parliament is not taken to deprive persons of property rights without expressing its intention in unmistakable and unambiguous terms applies: see Coco v R (1994) 179 CLR 427 at 437-438. The applicant refers to extrinsic material, being the Second Reading speech of the Border Protection Legislation Amendment Bill 1999 (Cth) ('the Border Protection Bill '), in which the Immigration Minister referred to the forfeiture and disposal of ships and aircraft ' used in people smuggling operations '. The applicant submits that while such speech reveals the intention that vessels used in the commission of criminal offences such as people smuggling may be liable to forfeiture, forfeiture cannot occur where the commission of an offence has not been established. The applicant relies on the result of the charges brought under the Migration Act against those on board the ship. The applicant was charged with a breach of s 232A of the Migration Act and following his conviction in the Supreme Court of Western Australia he appealed. The Crown conceded the appeal and the conviction was quashed. The applicant was subsequently acquitted on a retrial after establishing the defence of sudden or extraordinary emergency as provided by s 10.3(1) of the Criminal Code Act 1995 (Cth) ('the Criminal Code '). Charges under the Migration Act were also brought against other persons on the ship, namely Mr Hoang Thanh Lai and Mr Van Hoa Nguyen. The claim against Mr Lai was dismissed. Mr Nguyen successfully appealed his conviction in the Court of Criminal Appeal of Western Australia, and in consequence his conviction was quashed and a retrial ordered. However, the Crown thereafter filed a notice of discontinuance in respect of the charges. The applicant argues that the defence of sudden and extraordinary emergency applies to the relevant offence provisions of the Migration Act , namely ss 229(1) , 232 (1), 232A and 233 . The applicant argues it must follow that the applicant cannot be found liable for any offence under the Migration Act . The applicant also relies upon the fact that every person on the ship has been granted a protection visa or refugee visa. The applicant accordingly submits that the Court could not be satisfied that any contravention of the Migration Act exists arising from the entry of the ship into Australia For these reasons the applicant submits that there is no relevant contravention of the Migration Act , and that in the absence thereof there has been no forfeiture and accordingly the Court should not confirm the automatic forfeiture. The applicant invites the Court to revisit its findings in Tran No. 1 in light of its further submissions. The applicant claims that there has been a trespass to his property or intentional or negligent interference with his property and that just terms are payable under the Customs Act 1901 (Cth) in respect of the loss of the ship. The claim for damages is itemised in the amount of $307,274.85. The public interest in maintaining the finality of litigation necessarily means that the power to reopen to enable a rehearing must be exercised with great caution. Generally speaking, it will not be exercised unless the applicant can show that by accident without fault on his part he has not been heard. 2) [1993] HCA 6 ; (1993) 176 CLR 300 at 303 said that the power of the Court to reconsider judgments would not be exercised for the purpose of ' re-agitating arguments already considered by the Court ', nor ' because the party seeking a rehearing has failed to present the argument in all its aspects or as well as it might have been put '. In view of such authority, there can be no scope for the Court to reconsider the questions it has already answered unless it is found by the Court that ' it is incontestable that the earlier decision is wrong ': see McMullin and Another v ICI Australia Operations Pty Ltd and Others (No 7) [1999] FCA 1814 ; (1999) 169 ALR 227 at [20] . The applicant drew the Court's attention to Perpetual Trustee Co Ltd v Valuer General (No 2); Trust Co of Australia Ltd and Another v Valuer General (No 2) [2007] SASC 340 ; (2007) 99 SASR 251 as supporting its proposition that the findings in Tran No. 1 could be reconsidered. In that decision Debelle J found that such principle that findings cannot be reconsidered should not ' apply to an interlocutory judgment determining a question of statutory construction ' where no evidence had been led and where the assumptions upon which the preliminary questions were argued were later found to be erroneous. While such authority refers to a basis for reviewing an earlier decision where the Court, still possessing jurisdiction in a proceeding, later considers its decision to be erroneous, this Court considers that the principle referred to in Autodesk and McMullin applies generally and should guide this Court in the present circumstances. Is forfeiture dependent upon conviction or commission of a criminal offence? The applicant's submission concerning this aspect of the claim partially repeats the applicant's submissions made in relation to the specific questions raised in Tran No. 1 . Despite this, the Court will address the applicant's submissions. In Olbers Co Ltd v Commonwealth of Australia and Another [2004] FCA 229 ; (2004) 136 FCR 67 at 79, French J, referring to s 106A of the Fisheries Management Act 1991 (Cth) ('the FMA'), addressed the question whether a conviction for an offence was necessary before forfeiture could occur under the provisions of that section. Such section provides for the forfeiture to the Commonwealth of boats, traps and other things used in offences against various provisions of that Act. As a matter of construction this proposition cannot be sustained. Where there has been a conviction for an offence forfeiture can be ordered by the convicting court under s 106. Section 106A does not require any judicial determination to give effect to the forfeiture for which it provides albeit a judicial determination may be made if the occurrence of the forfeiture is contested in later proceedings. In such proceedings a civil court may make a finding whether the boat has been used in one of the specified offences. Absent the institution of such proceedings within 30 days of a notice of seizure under s 106C the asserted forfeiture will be put beyond question by operation of s 106E. That process requires no conviction to have been recorded. I reject the contention that s 106A depends for its application upon a conviction for one or more of the offences mentioned in it. As to the condemnation procedure provided by s 106B to s 106G of the FMA, the Full Court in Olbers [2004] FCAFC 262 ; 143 FCR 449 , adopting the reasoning in Whim Creek Consolidated NL v Colgan [1991] FCA 467 ; (1991) 31 FCR 469 at 477-478, determined that such provision enabled the recording of the forfeiture having already occured: see Olbers [2004] FCAFC 262 ; 143 FCR 449 at [16] - [17] ; Tran No. 1 at [43]. Section 261A of the Migration Act adopts the term 'contravention' in its text as enlivening the automatic forfeiture, rather than the word 'offence', as used in s 106A of the FMA. The word 'contravention' may mean a breach of the law, but 'contravention' ' does not necessarily involve the commission of an offence unless the Act or law otherwise makes it so ': see Re Venice Nominees Pty Ltd (Receiver and Manager appointed) (In liquidation) (1992) 108 FLR 237 at 242 referred to in Tran No. 1 at [28]. Conduct may be proscribed by Parliament, and the finding that such conduct has occurred may lead to the conclusion that a contravention of the law has occurred without an offence having been committed. However, facts may exist to satisfy a court that conduct constitutes not only a contravention, but simultaneously an offence. The text of the relevant statute must be considered in order to decide whether contravention means merely a breach of its provisions or commission of an offence. The applicant invites the Court to find that because the word 'offences' is used in the heading of s 261A, the conclusion must be reached that the word 'contravention' used in s 261A should be limited only to a contravention of those sections of the Migration Act which create offences. Pursuant to s 15AB(1)(b) of the Acts Interpretation Act extrinsic material can be considered as an aid to interpretation where the text of the provision itself is ' ambiguous or obscure '. By s 13(3) the heading to a section does not form part of the statute. However, by s 15AB(2)(a) of the Acts Interpretation Act the headings to sections comprise extrinsic material. Therefore, the pivotal consideration is whether the text of s 261A is ambiguous or obscure, so as to enable the Court to refer to the heading of s 261A when interpreting that section. Section 261A applies to ' a vessel used or involved in a contravention of this Act ...' (emphasis added). Such phrasing indicates the Migration Act at large and thus does not limit s 261A to being activated only by specific sections of that Act. Of course not every contravention of the Migration Act will lead to a forfeiture of a vessel. The relevant contraventions enlivening s 261A are limited by the use of the words ' (where the contravention occurs in Australia) ' and the text of ss 261A(1)(a)(i) and (ii) which require the bringing in of persons who become unlawful non-citizens on entry or the proposed entry of such persons into Australia. The provision itself provides terms of limitation and there is no occasion to import a further limitation from extrinsic material. For these reasons the applicant's submission that 'contravention' must be read to refer only to offences is rejected. The applicant's submission might have had substance if s 261A only provided 'a vessel used or involved in a contravention' without the additional words 'of this Act. ' However, extrinsic material cannot be used to create ambiguity where no ambiguity exists in the text of a section of an Act. Extrinsic material may be used to resolve ambiguity, not to create it. Different considerations apply to the heading of Division 13A of Part 2 of the Migration Act which also contains the word 'offences. ' Pursuant to s 13(1) of the Acts Interpretation Act a heading of a Division is part of the Act. In Silk Bros. ) [1908] HCA 50 ; (1908) 7 C.L.R. 372 at 383). The section speaks of the contravention of the Migration Act as a whole. Ambiguity might arise when that section is read with the heading to the Division, but as observed by Latham CJ, the headings may provide guidance only when the provision itself is ambiguous. Following from the finding that the provision is unambiguous the text of the heading must give way. It may be assumed that if Parliament had intended automatic forfeiture to occur only where 'offences' existed, it would have been a simple matter for the draftsperson to have so provided, taking into consideration the choice of the word 'offences' in the heading of Division 13A of Part 2. It follows that the operation of the automatic forfeiture provision in s 261A of the Migration Act is not limited only to contraventions of the offence provisions of that Act nor is it dependent upon a conviction for an offence. The Court reiterates its finding at [31] of Tran No 1 . Has there been a contravention of the Migration Act ? As has been outlined in [18]-[20] of this judgment, ordinarily the Court cannot revisit a previous judgment that it has made. In Tran No. 1 at [31] the Court found that the Migration Act had been contravened by the applicant. However, a reading of that paragraph also records that the Court provided such answer within the context of a submission by the applicant that 'contravention' in s 261A should be made to be equated with 'offence' in order to enliven an automatic forfeiture. This Court, as stated at [33] of this judgment, finds that the word 'contravention' in s 261A means contravention of the Migration Act generally and not only of the offence provisions, and that contravention is not to be interpreted as being confined to conviction for an offence. The applicant has made a different submission at the subsequent hearing. The applicant now submits that, as a consequence of the acquittals or discontinuance of actions against the applicant, Mr Lai and Mr Nguyen, the automatic forfeiture never took place because the facts giving rise to automatic forfeiture under s 261A , namely contravention of the Migration Act , were never present. Such a submission does not depend on contravention being equated to an offence, nor to conviction of an offence. As was stated at [30]-[31] of Tran No. 1 , following the decision of French J in Olbers , for the automatic forfeiture to arise the Court ' must be satisfied to a high degree of probability ' that contraventions of the Migration Act exist. In Tran No. 1 the Court stated that it was so satisfied but only in the narrow context of that which was submitted relating to the meaning of the word contravention. The new submissions justify the Court considering the new submissions separately to the decision already made even though a different interpretation of the same facts may result in a conclusion incompatible to the answers already given in Tran No. 1 . The applicant submits that one cannot contravene the Migration Act unless some specific section has been contravened, and every section in the Migration Act which creates an offence and which could have been contravened (as discussed at [27] of Tran No. The applicant points to the fact that the acquittals and discontinuances against the applicant and others as discussed at [14] of this judgment demonstrate that such defence was available to all persons on the ship. The conduct of the charged party satisfied the descriptions of such offences, but the Court found that he was adequately protected by the defence of honest and reasonable mistake of fact because he believed himself to be licensed. The meaning of a statutory provision depends not only upon the language used but on the context in which it is used... The context and apparent purpose of the statutory provision might be all important. The word has been defined in cases other than Dimella to mean ' a failure to obey a statutory command...by doing something that a statute says must not be done ': see Re Centennial Coal Co Ltd (2006) 226 ALR 341 at 346 per Barrett J; ' an infringement or violation of a rule or standard or norm ': see Re Venice Nominees at 242 per Miles CJ; '" infringe (law); (of things) conflict with"' per Owen J in Elkington v Vockbay Pty Ltd; Vockbay Pty Ltd v Elkington (1993) 10 ACSR 785 at 803; and ' an act or omission which is blameworthy and may lead to civil or criminal consequences ' per Young J in NRMA Ltd v Gould and Others (1995) 18 ACSR 290 at 293. The word has been defined in various UK statues as ' failure to comply ': see, for example, ss 5(1) and 37(1) Misuse of Drugs Act 1971 (UK); s 53(1) Food and Safety Act 1990 (UK). Generally, authorities show that in ascertaining the meaning of the word the most important consideration is the statutory framework within which the word operates. In Zecevic v Director of Public Prosecutions (Vict. ) [1987] HCA 26 ; (1987) 162 CLR 645 Wilson, Dawson and Toohey JJ discussed the origins of the modern law of self defence. They observed that such defence arose out of a context in which two kinds of defence to homicide, a defence of 'justification' and one of 'excuse', were available. The difference between the defences considered above demonstrates that, at the common law at least, one might be said to a have contravened the law even if a defence to a charge were available. The common law defence of necessity, from which the defence of sudden or extraordinary emergency in s 10.3 of the Criminal Code has its origins, has been seen as a defence both of excuse and of justification: see, for example, R v Loughnan [1981] VR 443 which proceeded upon the assumption that such defence was an excuse and In Re A (children) (conjoined twins: surgical separation) [2000] EWCA Civ 254 ; [2001] 2 WLR 480 in which Lord Brooke treated the defence of necessity as a justification. Unfortunately the history of the defence provides little firm guidance so resort must be had to the Criminal Code itself to discern whether one will still contravene an offence provision even if a defence is available. There can be no doubt that the Criminal Code was intended to provide a principled and logical analytical regime for Commonwealth criminal law and thus substantially remove inconsistencies found in the common law. For example, the defence of necessity at common law did not apply to murder: see R v Dudley and Stephens (1884) 14 QBD 273. However, the defence of sudden or extraordinary emergency is not so limited in the Criminal Code and it applies to all Commonwealth offences. The Criminal Code codified a basis for criminal responsibility distinct from that at common law as discussed in R v Oblach [2005] NSWCCA 440 ; (2005) 65 NSWLR 75. This structure differs from the position at common law in which it is appropriate to treat certain matters as "defences", for example, self defence is "exculpatory". ( Zecevic (at 658-659)). Though all elements of an offence are established against a defendant, guilt may be defeated by reliance on a defence. Chapter 2 [of the Criminal Code ] adopts a binary structure in which "responsibility" is a compound resulting from proof of all elements of the offence, combined with disproof or failure of all defences that are open on the evidence... There are, it should be said, significant departures from the common law in the articulation of a number of offences. All the offences under the Migration Act incorporate the defences under the Criminal Code by virtue of s 4A of the Migration Act . The structure of the Criminal Code requires a Court hearing a charge for an offence against the Migration Act to consider the existence of a defence when considering whether there has been a contravention of the Migration Act . The Court has concluded that a contravention of a statute may occur in the absence of a commission of an offence or without a finding of guilt. The Court does not conclude that one must be convicted of an offence for there to be an automatic forfeiture. Further, the Court does not consider that events subsequent to the entry of the ship into Australia are relevant to deciding whether a contravention of the Migration Act occurred. However, it does not necessarily follow from such findings that the outcome of any criminal charge cannot be relevant in considering whether the facts that gave rise to the automatic forfeiture occurred in the first place, that is, whether there was a contravention of the Migration Act . Such conclusion arises from the fact that the Court in a criminal trial will be inquiring into the facts at the time of the alleged contravention, which is precisely the enquiry which this Court must undertake when forfeiture is challenged. The formulation of the Criminal Code , as considered by Spigelman J, suggests that within the Criminal Code , criminal responsibility is not found and then absolved (or 'exculpated') but rather criminal responsibility cannot arise at all if a relevant defence is proved. As an analogy, it would be as if facts giving rise to the criminal act never occurred. In that circumstance it could not be suggested that an Act had been contravened. In view of the applicant's further submissions, the decision in Dimella Constructions and the preceding discussion, the Court finds itself unable to ignore the judicial findings which have had the result that all those charged with offences under the Migration Act have been acquitted. Contravention may not always equate to a criminal offence. However, due to the structure of the Criminal Code it must follow that a failure to find criminal responsibility must also lead to finding that a contravention of the relevant provisions of the Migration Act creating offences does not exist. The defence upon which the acquittals or discontinuances of the charges against the applicant and others was based, namely sudden or extraordinary emergency as provided by s 10.3 of the Criminal Code , applies equally to any offence with which the applicant or any other person on board the ship could be charged. As has been stated, the relevant question is whether the Court is satisfied to a high degree of probability that a contravention of the Migration Act has occurred. The Court can no longer be so satisfied that contraventions have occurred in respect of any offences under the Migration Act . 1 at [48]. Thus they intended to enter in contravention of the Migration Act , not in the sense of being in breach of an express provision to do so --- I note s 42 relates to travelling to Australia without a visa rather than entering Australia without a visa --- but in the sense of disregarding the visa requirements of the Act. The Sri Lankans did not in fact commit any offence created by the Act, nor did they intend to commit any offence created by the Act. They nonetheless intended to contravene the Act in the sense I have mentioned, that is, to enter in disregard of the visa requirements of the Act. His Honour's finding in relation to s 42 is unambiguous and the Court respectfully follows the finding of Angel J. As has been stated, s 261A does not require a section of the Migration Act creating an offence to have been contravened for forfeiture to occur. All that it requires is that the Migration Act be contravened in such a way as to satisfy s 261A(1)(a). Travelling to Australia without a visa is a contravention of s 42 of the Migration Act , and such act in the circumstances constituted a convention sufficient to satisfy s 261A(1)(a). Pursuant to the text of s 4A of the Migration Act the defences under the Criminal Code only apply to offences under the Migration Act , and thus cannot apply to a contravention of s 42 which is not framed as an offence. It was submitted by the applicant that a breach of s 42(1) cannot be a relevant contravention for s 261A. The applicant argued that since s 42 says '... a non-citizen must not travel to Australia without a visa that is in effect ', it must follow that s 42 cannot be relevant to s 261A because it deals with events antecedent to arrival in Australia, while s 261A(1)(a) requires the contravention to occur in Australia. Such interpretation of the Migration Act is not reasonable. In order to ' travel to Australia ' one must actually arrive in Australia at some point. On the applicant's interpretation of s 42 , it could not be breached before one reached Australia because one would not have ' travelled to Australia ' yet it could not be breached when one arrived in Australia either. Such construction leads to an absurd result. As found at [24]-[26] of Tran No. 1 , the ship entered Australia. From the moment of the ship's entry in Australia (completing the 'travel' for the purpose of s 42) s 42 was contravened, and that contravention must necessarily have occurred in Australia, satisfying s 261A. 1 , the Court considers that its observations that contraventions of sections ss 229, 232, 232A and 233 have occurred for the purpose of enlivening the automatic forfeiture provisions in s 261A must be revised. Nevertheless, the applicant has contravened s 42 of the Migration Act and the ship was forfeited from the time it entered Australia, as was found in Tran No. 1 . Is forfeiture dependent upon conviction for people smuggling? Although this issue has also been addressed by the Court's answers to the questions of law asked of it (see Tran No. 1 ) and the Court has indicated that the wording of s 261A is sufficiently clear and accordingly does not require reference to extrinsic material or other rules of construction, the Court will address the further submissions of the applicant. Within constitutional constraints, this would operate regardless of whether prosecution action were taken or a conviction obtained and penalties imposed. Such a scheme would result in the forfeiture of the vessel, vehicle or aircraft immediately upon its arrival in Australia with prohibited non-citizens on board. It would complement legislation to be considered by parliament on stronger penalties against people smuggling. While the term ' people smuggling ' is used in the Second Reading speech which might suggest that forfeiture is intended to operate in relation to criminal offences only, other extrinsic material such as the Explanatory Memorandum and Report suggest that forfeiture is intended to operate more broadly. At the very least, most of the extrinsic material suggests that Parliament intended that forfeiture would occur when a conveyance carrying unauthorised persons entered Australia and that forfeiture occurred at that time irrespective of conviction for an offence. The applicant submits that the word 'contravention' used in s 261A of the Migration Act should be construed narrowly and confined, in accordance with the Second Reading speech of the Act inserting s 261A into the Migration Act , to those cases where forfeiture of the vessel occurs as a penalty in relation to 'people smuggling' criminal offences and not in respect of those instances where persons seek asylum. In answer to the applicant's submissions lie the words used in s 261A of the Migration Act . The words providing for the forfeiture are clear and unequivocal. The principles relied upon by the Commonwealth concerning forfeiture of property are not in contest, and the concept is clearly recognised: see for example Customs and Excise Commissioners v. Air Canada [1991] 2 QB 446. In that decision the Court upheld the validity of a forfeiture of an aircraft which was involved in the carriage of cannabis resin, even though the owners of the aircraft were unaware of that fact. Whilst the law providing for forfeiture may appear harsh, that is the necessary consequence of its operation regarding property rights. In the present circumstances forfeiture occurred when the vessel was used or involved in a ' contravention of this Act '. Such contravention occurred by the bringing in or coming into Australia of one or more persons who were or became unlawful non-citizens, contrary to s 42 of the Migration Act . The text of s 261A of the Migration Act is unambiguous. In these circumstances the authorities relied upon by the applicant have no scope for application. There are two primary problems with this submission. This status must positively be found, and it must be found according to the standards set by the particular state, in this case, Australia. Such concept is consistent with international law only having effect within Australia by virtue of its positive adoption into municipal law. Accordingly, the passengers on the ship were not refugees until such time as they were granted that status from the Australian authorities pursuant to s 36 of the Migration Act (dealing with protection visas), and that was not until well after the facts giving rise to the contravention had occurred. At their time of entry into Australia (and thus the time when the forfeiture occurred) the ship's passengers were no more than unlawful non-citizens by force of s 14 of the Migration Act . Therefore it could not be said that forfeiture of the ship would punish the applicant as a refugee, because at the relevant time he was not a refugee, and nor was anyone else on the ship. After the fact events such as the granting of refugee status cannot affect the validity of the forfeiture. Secondly, the passage relied upon by the applicants at [89] of NAGV states, ' where the words of a statute are susceptible to an interpretation that is consistent with international law, that construction should prevail over one that is not . ' The key word is ' susceptible '. Section 36 is clearly intended to operate subsequently to s 261A because s 261A will occur automatically the moment a vessel enters Australia. There is nothing in s 261A that suggests that it should be limited in its operation by s 36 of the Migration Act so that it has no application to people to whom s 36 applies. Whether s 36 applies to an unlawful non-citizen may not be known until years after a vessel's entry in Australia, and s 261A is phrased as to operate instantaneously. Reading s 261A in the way the applicant submits completely ignores the wording of the section. It must therefore be concluded that it is not a provision which can be said to be ' susceptible ' in the manner discussed by Kirby J. 1 at [50]-[54] the Court reiterates that no compensation is payable since s 51(xxxi) of the Constitution does not operate in respect of the forfeiture. The ship was validly forfeited. No question of payment of compensation arises where the forfeiture results from the incidental exercise of power under the Migration Act since s 51(xxxi) ' applies only to acquisitions of a kind that permit of just terms ': see Newcrest Mining (WA) Limited and Another v The Commonwealth of Australia and Another [1997] HCA 38 ; (1997) 190 CLR 513 per Gummow J at 595; see authorities referred to in Tran No. 1 at [51]-[53]; see also Mutual Pools & Staff Pty. Limited v The Commonwealth of Australia [1994] HCA 9 ; (1994) 179 CLR 155 per Brennan J at 177; The Commonwealth of Australia v WMC Resources Limited [1998] HCA 8 ; (1998) 194 CLR 1 per Brennan CJ at [10]-[13]; Gaudron J at [75]-[79]. The concept that compensation might be payable in circumstances where forfeiture has resulted from a contravention of a Commonwealth statute is incongruous: see Theophanous v The Commonwealth [2006] HCA 18 ; (2006) 225 CLR 101 at [55] - [61] ; Re Director of Public Prosecutions; Ex parte Lawler and Another [1994] HCA 10 ; (1994) 179 CLR 270 at 289. 1 . Since these proceedings have been tantamount to a condemnation procedure the Court is now able to confirm the forfeiture. The Court declares that the title in the ship was forfeited to the Commonwealth on and from 1 July 2003 and all rights and title to that ship were vested in the Commonwealth on and from 1 July 2003. Accordingly, there is no occasion to consider the challenges made by the applicant to the decision by the Commonwealth to destroy the ship, nor to deal with any issue concerning damages claimed by the applicant.

automatic forfeiture of fishing vessel engaged in transportation of unauthorised persons to australia meaning of word 'contravention' whether contravention of s 261a of migration act 1958 (cth) requires conviction of offence whether contravention of s 261a limited to contravention of provisions within migration act creating offences whether offence section contravened if a defence were available whether s 42 of the migration act contravened grounds under which court can depart from a previous judgment reference to headings to divisions in aid of interpretation use of extrinsic material ss 13 , 15ab acts interpretation act 1901 (cth) 'contravention of this act' migration practice and procedure interpretation words and phrases

Nonetheless I invited submissions on costs. Needless to say each party sought a costs order. Mr Duncan relies upon what he contends was Centrelink's demonstrated "disdain for the law" although, as the costs of his pro bono counsel are not being sought, any costs order in his favour would in any event be limited to out-of-pocket expenses: see Cachia v Hanes [1994] HCA 14 ; (1994) 179 CLR 403 ; and see generally Dal Pont, Law of Costs (2003) [7.24] ff. Centrelink's claimed entitlement to a costs award was founded upon the principle that, ordinarily, costs follow the event. It contends that it did not unreasonably provoke the litigation: cf Cummings v Lewis (unreported, Wilcox J, 29 May 1992); the defensive postures it took, though unsuccessful in some degree, were not unreasonable: Australian Conservation Foundation v Forestry Commission (1988) 81 ALR 166 at 169; and the applicant was wholly unsuccessful. The principles that inform the exercise of the Court's discretion to award costs under s 43 of the Federal Court of Australia Act 1976 (Cth) are well accepted. That discretion is absolute and unfettered but must be exercised judicially and cannot be exercised on grounds unconnected with the litigation: see Cretazzo v Lombardi (1975) 13 SASR 4 at 11; Re Wilcox; Ex parte Venture Industries Pty Ltd (1996) 141 ALR 727 at 732. Neither can the power to award costs be used to punish either a successful or an unsuccessful party: cf Latoudis v Casey [1990] HCA 59 ; (1990) 170 CLR 534 at 566-567. Equally well accepted are the principles informing the proper exercise of the s 43 discretion. In this sense 'issue' does not mean a precise issue in the technical pleading sense but any disputed question of fact or law. See generally Dal Pont, Laws of Cost (2003) ch 8. Only the first of these is presently relevant. Notwithstanding the ordinary principle of costs following the event, there are two considerations of potentially present relevance of which account properly can be taken in justification of a departure from that principle. These are the reasonableness of the applicant in bringing the application and where the respondent, as in this case, is a public authority, the general importance both of the clarification of the law for such an authority and of securing proper compliance with it: see eg Perrett v Commissioner for Superannuation (1991) 29 FCR 581 at 594; see also Wilderness Society Inc v Hon Malcolm Turnbull, Minister for Environment and Water Resources [2008] FCAFC 19 at [7] . In the principal proceeding I concluded that the application should be dismissed, not because the respondent properly understood and complied with its obligations to the public under the Freedom of Information Act 1982 (Cth) or the Administrative Decisions (Judicial Review) Act 1977 (Cth), but because there would be no utility in granting the relief sought in the events which had happened. It is not unfair to say that Mr Duncan's requests and in the event this litigation have been instrumental in leading Centrelink to an understanding of its responsibilities under the two Acts and of its compliance obligations. Though Centrelink wrote to Mr Duncan on 4 October 2006 giving reasons why it considered it need not provide him with a statement of reasons given it had furnished him with a copy of the FOI manual he sought, I consider it likely that he did not receive that letter until after he commenced the present proceedings. If it be thought that by providing Mr Duncan with the manual Centrelink had complied with its obligation to the public under s 9 of the FOI Act, the contrary was the case. It was only in September of 2007 that public notification was given that the manual was available for inspection and purchase. This was long after the first hearing in this matter. I equally am not satisfied that, if the respondent CEO had complied with the statutory obligations imposed by s 13(3) of the AD(JR) Act in responding to Mr Duncan's requests, Mr Duncan would not have desisted from taking the litigious course that he did even though it was as I found ultimately doomed. There has, in my view, been an important benefit secured by this proceeding in the administration of the FOI Act by Centrelink notwithstanding Mr Duncan's lack of success. While I do not consider that no order as to costs should be made --- two of Mr Duncan's three claims were struck out at the first hearing --- I am satisfied that it would be appropriate to limit the costs to be recovered by the respondent. In the circumstances, I am satisfied that an order that Mr Duncan pay 60 per cent of the respondent's costs on a party/party basis should be made. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn.

s 43 federal court of australia act 1976 (cth) discretion to award costs circumstances justifying departure from the general rule practice and procedure

The respondents are the State of Queensland, the Cairns City Council, the Eacham Shire Council and Ergon Energy Corporation Limited. 2 The claim area comprises approximately 13 287 hectares of land and waters within various reserves, environmental parks and national parks around Atherton, Mareeba and Cairns in Far North Queensland, including the southern portion of Wooroonooran National Park, including Broken Nose, the South Peak, the North Peak and the Northwest Peak of the Mt Bartle Frere, the Topaz Road National Park, the Malanda Falls Conservation Park, two parcels of land reserved for quarry purposes, and an island in the middle of the Russell River. The claim area is comprehensively defined as the 'Determination Area' in Schedule 1 of the Minute of Consent Order, filed 14 November 2007. That application was amended pursuant to an order of the Court on 19 June 2006 and an amended Claimant Application was filed on 29 June 2006. That amended Claimant Application forms the basis of the consent determination proposed to be made today. 4 The agreement reached between the parties and filed in the Court on 14 November 2007 confers exclusive and non-exclusive rights on the Ngadjon-Jii People to use and enjoy the land and waters in the determination area. 5 The agreement between the parties is subject to the Court being satisfied that it has the power to make orders in terms of those sought and the Court being satisfied that it is proper to do so. Part 3 of the Act sets out the rules for making such applications to the Court. 7 Part 4, Division 1C of the Act provides that some or all of the parties involved in a native title proceedings may negotiate an agreed outcome for that application or part of that application. Section 87 of the Act allows the Court, if it is satisfied that such an order is within its power, to make an order in, or consistent with, the terms of the parties' written agreement without holding a hearing. 8 Where the Court makes an order in which a determination of native title is made, s 94A of the Act requires the Court to set out details of the matters mentioned in s 225. That summary document of Dr Pannell's earlier anthropological report material was prepared at the request of the solicitor for the applicant and the North Queensland Land Council to assist the Court in considering the agreement between the parties. 10 In order to establish that there are today native title holders, it must first be established that, at the time of sovereignty, a society of persons bound together by observance of traditional laws and customs existed. The 'tribe' consists of two sub-groups or 'clans', the Barron River and the Russell River clan groups, which, at any given moment in time, are also associated with specific family names. While each of the two riverine groups is traditionally associated with different areas within Ngagjon-Jii territory, the claimants identify their traditional rights and interests as communally vested in the group at the tribal level. Whether a 'people' or a 'tribe', the Ngadjon-Jii claimants also see themselves as quintessentially 'rainforest Aborigines'. Thus, while some individuals lived at Top Camp and Gulkagulka , other Ngadjon-Jii people, during the same period, occupied camp sites in 'the Jungle' (in Malanda), at the junction of the Ithaca and North Johnstone Rivers, on farms at Glen Allyn, at Bunjabilli (aka 'Bottom Camp' in reference to Top Camp, at Lamins Hill) at Butcher's Creek, and at the camp at the Malanda Falls. For example, based upon fieldwork with Ngadon-Jii informants in the 1930s and again in the 1970s, including several of the claimants' immediate forebears, Norman Tindale, recorded that "Ngatjan territory was virtually all in rainforest extending from Atherton in the west to near Innisfail on the coastal plains". Knowledge of the claimant group's traditional language is actively transmitted to younger generations of Ngadjon-Jii people through daily instruction, and through the production of written texts. Claimants, whether old or young, posses language names, which, among other things, refer to rainforest faunal or floral species or to named places on Ngadjon-Jii country. The language-named Storytime or 'Dreamtime' places acknowledged and protected by the Ngadjon-Jii people point to the claimants' belief that their traditional lands and waters constitute a sentient landscape, forever occupied by both Dreaming and ancestral spirits. Prior to lodging the native title determination application, senior Ngadjon-Jii people convened several meetings with elders from neighbouring groups, including, Mamu, Majaanji, Kairi Yidindji, Gordonvale Yidindji, Dulabed Yidindji, Dugulbara Yidindji, Malanbara Yidindji, Barbaram and Jirrabal tribal people. At these meetings, senior Aboriginal members from each of these groups agreed that the claimants possessed a traditional connection to the areas claimed by them. On the basis of these interviews, and also based upon the outcome of the group meetings, it is the opinion of the research anthropologist that there is a widespread consensus in the regional Aboriginal community, that the claimants are; (1) Ngadjon-Jii, and (2) that they are the 'Traditional Owners' of the lands and water under claim by the claimant group. These include: occupying the remnant forests or otherwise utilizing them to avoid being taken to missions that operated during the first half of the twentieth-century; working on local farms whilst occupying traditional dwellings; engaging in occupations carried out on the country, such as timber cutting or fossicking; and in some cases, returning to Ngadjon-Jii country upon release from government missions. 20 The proposed orders further recognise other interests in the determination area and the relationship of those interests with the native title interests. The proposed order contains other provisions, required by the Act, which it is unnecessary for me to set out here. 21 It is a cause of great satisfaction when native title claims are settled through agreement rather than through protracted litigation. I am most pleased to observe that the number of native title determinations by this Court, which have been reached by consent, has dramatically increased in recent years. This suggests that governments and other parties are increasingly aware of the benefits of negotiated settlements of native title claims, which otherwise have the potential to be lengthy, costly and divisive in the community. 22 I am satisfied that the Court has power to make a determination in the terms proposed by the parties by agreement. Such an order determines under the laws of Australia that native title exists in the determination area according to the traditional laws and customs of the Ngadjon-Jii People. This is recognition of what has long been held by the Ngadjon-Jii People. 23 For the above reasons, I have concluded that it is proper to make the order sought by the parties to give effect to their agreement, and I now make that order. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender.

consent determination whether order under s 87 native title act appropriate native title

A popular type of mobile crane is that known as a "pick and carry" crane. These are designed to operate without "outriggers". They present the advantage of permitting the ready movement of a crane from a lifting task at one site to one at another site without the need on each occasion to deploy and then retract stabilising outriggers. 2 It is matter of history that there were once two principal suppliers of "pick and carry" mobile cranes in the Australian market, a company known as Franna and another, Linmac Pty Ltd ("Linmac"). 3 Franna still carries on business in the Australian market. In June 1996, Linmac went into receivership. The demand for "pick and carry" mobile cranes has continued unabated. That demand has manifested itself in a waiting list of some two years for mobile cranes produced by Franna and in a second hand market for Linmac cranes. 4 The First Applicant, ACM Services Pty Ltd ("ACM") initially conducted a crane hire business in Rockhampton and in Brisbane. In that business it used cranes manufactured by Linmac. On occasion, when these cranes needed repair, it was supplied by Linmac under licence with copies of relevant plans for the limited purpose of facilitating the undertaking of those repairs. 5 More recently, and its seems, as a result of a perception of a gap in the Australian market for the supply of "pick and carry" mobile cranes, ACM has come to acquire from a United States company, Ground Force Manufacturing LLC ("Ground Force") a used Linmac crane, parts for Linmac cranes and what it now asserts to be copyrighted materials and allegedly confidential information said to have been originally owned by Linmac and vested in Ground Force in a way which permitted a transfer of ownership to ACM. 6 In turn, ACM has entered into negotiations with the Second Applicant ("Dellgale") to sell to Dellgale, materially, the manufacturing drawings for certain types of Linmac cranes. At the time of these negotiations Dellgale was selling cranes made by a Chinese manufacturer, Zoomlion. In the course of these negotiations it was put to one of ACM's officers, Mr Austin, that another had been dealing with Zoomlion in China with a set of Linmac manufacturing drawings and had made a request that Zoomlion manufacture mobile cranes in accordance with those drawings. 7 The present proceedings are a manifestation of a suspicion then formed on the part of ACM that what it conceived to be its copyright in the Linmac drawings and its confidential information was being used without its authority by the Respondents. The Respondents have sought to meet that claim for interlocutory injunctive relief not by the giving of particular undertakings but rather by submitting that, having regard to the principles which attend the granting of interlocutory injunctive relief, no claim for such relief is made out. Those principles are not in doubt. The second inquiry is ... whether the inconvenience or injury which is the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted. SERIOUS QUESTION TO BE TRIED? 12 At present, what is said to be the subject copyright works is described in vague terms as "the Linmac Crane drawings". There are said to be some 960 such drawings. It may readily be accepted that the manufacture of a sophisticated item of industrial machinery such as a "pick and carry" mobile crane would require many different technical design drawings. Which, if any, of these drawings is said to have been reproduced by the Respondents, or some of them, is entirely conjectural on the present state of the evidence. Mr Rouhan deposes that the Third Respondent, Mr O'Connell, showed Zoomlion's factory manager in China certain drawings for a "Franna type" crane. Mr Austin on the other hand, as a matter of hearsay, describes this event as entailing "a set of Linmac drawings". There is no direct evidence from any officer or employee of Zoomlion as to what that company was shown by or on behalf of the Respondents. On the other hand, Mr O'Connell and the Second Respondent, Mr Speziali depose that what was taken to China was not Linmac crane manufacturing drawings but only a Linmac brochure which included information in the public domain but no manufacturing drawings. 15 The other principal factual basis for the alleged reproduction is to be certain statements by Mr O'Connell and the Fourth Respondent, Mr Broadhurst at a meeting in Toowoomba on 4 June 2007. What was said at that meeting is controversial. Even if the Applicants' version is accepted it does not establish which drawings, if any, any of the Respondents have or had and neither does it establish that any such drawings were reproductions of the Applicants' alleged copyright works. 16 It is not the Applicants' case that ACM is the original owner of any of the alleged copyright works. Rather, the Applicants' case is that ACM became the owner of the alleged copyright works. The Applicants' evidence as to its title to the alleged copyright works is presently wanting in terms of a demonstration of a prima facie case of a chain of title from Linmac to it in respect of those works. 17 The original owner of most of the alleged copyright works is said to be Linmac. 19 It is necessary to state that Linmac is said to be the original owner of "most of" the alleged copyright works, because on the Applicants' own materials, some drawings were created by or on behalf of Forward. 20 There is force in the Respondents' submission that certain critical links in the chain of assignment are not established prima facie upon the present state of the evidence. 21 At all material times s 196(3) of the Copyright Act 1968 (Cth) has provided that an assignment of copyright (whether total or partial) does not have effect unless it is in writing signed by or on behalf of the assignors. On the evidence, Linmac's principal place of business was in Western Australia. The effect of that State's Property Law Act 1969 (WA), by s 34(1)(c), is that an assignment of an equitable interest in copyright must also be in writing. There are provisions to like effect in Queensland's Property Law Act 1974 (Qld). No written agreement as between Linmac or its receivers and Forward in respect of the assignment of copyright is in evidence. There is no affidavit from the receivers. All that is offered is hearsay from an unidentified source at Forward that "they had purchased the Linmac crane manufacturing business from the receivers, including the intellectual property in the Linmac cranes". In the absence of any evidence of a written assignment, one is left with the possibility, grounded in shadowy evidence, that Forward acquired for value, an equitable interest in certain drawings in respect of Linmac cranes that Linmac owned at the time of its being placed in receivership. 22 I have already mentioned that, on the Applicants' case, Forward undertook some drawing work itself. Precisely which of the alleged copyright works owe their provenance to Forward's endeavours is not established. Neither is there any evidence of a written assignment of copyright as between Forward and Westrac. For the Applicants, Mr Austin has deposed that Forward was "acquired" or "taken over" by Westrac. Company searches call this into question as they do not demonstrate any ownership ever of shares in Forward by Westrac. 23 Within Pt V, Div 4, of the Copyright Act 1968 (Cth) are to be found certain statutory presumptions which assist in the proof of facts in civil actions in respect of copyright. Materially, it is conceivable that presumptions as to subsistence and ownership of copyright found in s 126 and presumptions relating to ownership of copyright found in s 126B might in the course of the proceedings come to the assistance of the Applicants. The evidence though at present does not engage either these presumptions. 24 What I have said is sufficient to demonstrate present weaknesses in the state of the evidence in respect of ACM's asserted ownership of copyright in the drawings. Dellgale's position is no stronger; a stream cannot run higher than its source. See Coco v A.N. Clark (Engineers) Limited [1969] RPC 41 at 48; Corrs Pavey Whiting & Byrne v Collector of Customs (1987) 14 FCR 434 at 443. 27 Copies of certain drawings were exhibited to affidavits on behalf of the Applicants. An inspection of these discloses title blocks in which Linmac's name and ownership is stated. There is though, no overt claim of confidentiality or even copyright on the face of the drawings. Neither is there evidence of any written confidentiality agreement ever used at any stage by an alleged owner of the drawings in dealings with third parties. 28 There is evidence of a practice adopted by Linmac of allowing third parties to have copies of such drawings of its plans as where necessary in order to effect repairs. At best, it might perhaps be inferred that, as a matter of business practice, it was mutually understood as between Linmac or its alleged successive assignees and third parties that the drawings contained at least some confidential information. 29 Even assuming this is in favour of the Applicants, it is still necessary that there be some evidence of a misuse of the information. It must be something more than a mere assertion. The Courts are therefore careful to ensure that the plaintiff gives full and proper particulars of all the confidential information upon which he intends to rely in the proceedings. If the plaintiff fails to do this the Court may infer that the purpose of the litigation is harassment rather than the protection of the plaintiff's rights and may strike out the action as an abuse of process. That is not to say that the sentiments voiced in the passages just quoted are irrelevant. The First Respondent is certainly embarked upon a path that may see it come to be a competitor of the Applicants. It is a serious thing to allege that persons have breached a duty of confidence in respect of confidential information. There is force, in my opinion, in the Respondents' submission that there is no evidence that any of them have misused or are going to misuse any confidential information of the Applicants. It must be observed as well that similar difficulties to those which I have highlighted in relation to the breach of copyright claim attend the proof of the Applicants' ownership of the allegedly confidential information. Further, just what is said to constitute the information having the necessary quality of confidence is not identified with precision on the present state of the evidence. That in itself is telling as a person to whom injunctive relief is granted ought not be put in a position of doubt as to what is enjoined. 32 In short then it seems to me that, on the present state of the materials, the basis for there being a serious question to be tried is at least weak but better regarded as wanting. As matters presently stand, I am unconvinced that this is so. 34 The Respondents have not yet entered the market in Australia for the supply of "pick and carry" mobile cranes. It seems likely that the substantive proceeding will be able to be heard within 6 months from and before the Respondents enter the market. On the other hand, the Applicants are much further advanced in the path to the manufacturer and supply of such cranes in Australia. The Respondents submit, and I agree, that a consequence of this, is that, it is likely that it will be easier for the Applicants to determine the quantum of their loss and damage if the Respondents are not restrained than if a restraint were imposed on the Respondents who then came ultimately to succeed in the proceedings and thereafter needed to call upon Applicants' undertaking as to damages. I find this factor more persuasive than a further submission made on behalf of the Respondents in which it was asserted that there had been unexplained delay by the Applicants in the seeking of interlocutory relief. 35 It is true that as between June 2007 when there was an exchange of correspondence initiated by a letter of demand sent on behalf of the Applicants and December 2007 the Applicants did not further press upon the Respondents their asserted rights. Whether the Respondents' response to the initial letter of demand was received is moot. The Respondents' evidence is that in the interval they incurred expense in trying to establish their business. This may be accepted and it is not irrelevant although, in so doing, they were on notice at least of an asserted breach of the Applicants' rights in so doing. Had the Applicants' case in respect of a serious question to be tried not been as I have found it, then delay per se would not, in my opinion, have told against the grant of interlocutory relief. 36 There is an interplay so far as the grant of interlocutory relief is concerned between the strength an applicant's claim that there exists a serious question to be tried and the balance of convenience: see for example Sabre Corporation Pty Ltd v Laboratories Pharm-a-Care (1995) 31 IPR 445 at 455. That interplay does not, in my opinion, tell in favour in the Applicants. 37 For these reasons, I decline the application for interlocutory injunctive relief. I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.

interlocutory injunction principles to be applied practice and procedure

The application was founded on an alleged contravention of s 52 of the Trade Practices Act 1974 (Cth) ('the Act') and the applicant claimed damages against the respondents under s 82 of the Act and other orders under s 87 of the Act. 3 In general terms, the applicant alleged that the first respondent was one of a number of tenants at The Colonnade Shopping Centre in Subiaco who had retained him as their solicitor to conduct an action in the Supreme Court of Western Australia against their common landlord. It was alleged that the second respondent, a director of the first respondent, had represented that the respondents would provide financial assistance to the other tenants in the group who may face financial difficulty in supporting the conduct of the action. The applicant alleged further that the respondents, far from supporting the conduct of the action, privately negotiated a settlement of their claim against the landlord, and that this led to the other tenants also settling their claims against the landlord. The result was that the action did not go to trial. The applicant pleaded that he thereby suffered a loss because he had given up opportunities to take on other work. The applicant's pleaded claim is more fully described in the reasons of French J in Lashansky v Bruvecchis Pty Ltd [2004] FCA 837. 4 On 26 May 2004, the respondents filed a notice of motion under O 20 r 2 of the Rules to strike out the applicant's statement of claim as disclosing no reasonable cause of action and to dismiss the application. At the hearing of the motion before French J the respondents were represented by senior counsel. The applicant appeared on his own behalf. On 11 June 2004, French J struck out the statement of claim and dismissed the applicant's application with costs. 5 On 20 August 2004, the respondents filed a bill of costs for taxation. It consisted of 68 items. The amount claimed in the bill of costs, including disbursements, was $7753.70. On 27 July 2005, Deputy District Registrar Stanley ('the taxing officer') taxed the bill of costs. The taxing officer disallowed a number of items of costs claimed by the respondents' instructing solicitor including items relating to the preparation for the first directions hearing, conferring with the respondents and attending Court for the hearing of the strike out application as instructing solicitor. The taxing officer allowed the sum of $5254.60 including disbursements. The major component of the amount allowed was the sum of $2600 for counsel's fees. 6 On 10 August 2005, the applicant filed a motion for the taxing officer to reconsider four items of the bill of costs which had been accepted by the taxing officer. On 20 December 2005, the taxing officer issued a Certificate of Taxation on reconsideration pursuant to O 62 r 43(1) of the Rules in the amount allowed at the original taxation. The taxing officer delivered written reasons on 20 December 2005. 7 At the hearing, the parties referred to the debate, recorded in various decisions of this Court, as to the appropriate approach that the Court should take to the question of reviewing a taxing officer's decision under O 62 r 44 of the Rules. The debate is well described in the decision of Hely J in Cachia v Westpac Financial Services Limited [2003] FCA 817 ('Cachia') . On one view, an applicant is entitled to a review de novo by the Court. On the other view, the Court is to apply the approach set out in the observations of Jordan CJ in the case of Schweppes' Ltd v Archer (1934) 34 SR (NSW) 178 at 183. Under that approach, the Court is reluctant to interfere unless the applicant shows that there was an error of principle by the taxing officer or, in respect of a matter involving the taxing officer's discretion, it appears that the taxing officer has not exercised his or her discretion at all or exercised it in a manner which is manifestly wrong; and where the question is one of amount only, the Court will only interfere in extreme cases. 8 It is not necessary to contribute to the debate because the respondents said that they were prepared to deal with the application on the basis that the applicant was entitled to a review de novo . I will proceed on that basis. 9 The applicant referred specifically to O 62 r 19 and O 62 r 36 of the Rules. 13 I will deal with each of the items. The instructing solicitor discussed with senior counsel the merits of the application and senior counsel's role in responding to the application. The item was claimed pursuant to Item 31 of the Scale of Costs ('the Scale') --- an attendance that requires an attendance of a solicitor or managing clerk and involves skill and legal knowledge and is charged in quarter hour increments. 15 The applicant submitted that the item was not properly recoverable as a party and party cost. The item could not be viewed as a 'necessary or proper' expense that ought to be recoverable from an unsuccessful party. 17 In my view, the applicant's submission is not to be accepted. The discussion of the response to an application and role that senior counsel will play in that response is a matter which entails the use of skill and legal knowledge. It is properly to be characterised as a telephone call which is assessable under Item 31 of the Scale. The fact that senior counsel did not charge for the telephone call does not mean that the other party to the telephone call is thereby disabled from rendering a charge in relation to the telephone call. The taxing officer has grouped these items under the heading of 'Preparing Brief to Counsel'. The applicant objects to the aggregation, because it includes some items not related to the briefing of counsel. It is true that there are items included within the aggregated category which do not relate directly to the briefing of counsel. These items comprise a telephone call, perusing a copy facsimile from the Federal Court and taking instructions. The total sum claimed in relation to those three items is $77. There is also an amount of $68 which is claimed in relation to the filing of a notice of appearance. The amounts claimed in relation to those items are proper. I would allow those items. 19 As to the other items which are directly related to briefing of counsel, the applicant contends that the amount is excessive because it was not necessary to brief senior counsel. This was, said the applicant, because it should have been obvious that his claim was so 'hopeless', that it was not necessary to brief senior counsel to appear on the notice of motion. The applicant submitted that in briefing senior counsel the respondents were being 'overcautious'. 20 I do not accept the submission by the applicant that the matters at hand did not justify engaging senior counsel. The statement of claim will be struck out in its entirety. In my opinion, the respondents should not be exposed to the further cost and inconvenience that would inevitably arise if I were to permit Mr Lashansky to replead. I propose therefore to dismiss the application with costs. The respondents were justified in briefing senior counsel to try and terminate at an early stage a claim which has had such menacing potential. The applicant's view that his application was 'hopeless' was not a view which the applicant held at the time of commencing the proceeding and resisting the strike out application. The respondents cannot be criticised for taking the claim seriously and taking proper steps to seek to bring the claim to an early end. 23 The applicant also submitted that the brief included work on the question of whether the application was statute barred. The applicant submitted that par 17 of the judgment of French J showed that the work undertaken on the limitation point fell within the purview of O 62 r 19(a) and O 62 r 36(2) of the Rules. It is neither necessary nor appropriate to deal with that point as the pleading is simply too confused to enable any reasonable assessment of how a limitation issue would arise. I read French J to be saying that it is neither necessary nor appropriate for him to deal with the limitation point in his judgment, in light of the poor quality of the statement of claim and the conclusions he had reached in relation thereto. In any event, the limitation point was not at the forefront of the respondents' case before French J. It was contained as one and a half pages of a supplementary written submission, and senior counsel's argument on the point occupied half a page of transcript. 26 In my view, the respondents were justified in seeking to resist the applicant's application by taking proper steps in the circumstances of the case. This included briefing senior counsel to try and strike out the statement of claim and the application, and to get up an argument in relation to limitation. The justification lay in the substantial savings in costs and inconvenience to the respondents if their application was successful. It follows that I do not find that the briefing of senior counsel, nor the raising of the limitation point in the manner in which it was done, was conduct which was over-cautious; or improper, unreasonable or negligent. I would not make any adjustment to the amount allowed under this heading. Senior counsel's fee included considering the brief, reviewing the statement of claim and submissions, preparing for the hearing and attending the hearing of the application to strike out the statement of claim and telephone attendances upon the respondents' instructing solicitors. The taxing officer reduced that fee to $2600. 28 The applicant submitted that the fees were excessive because they did not follow the National Guide to Counsel's fees ('the National Guide'). The applicant submitted that the sum allowed of $2600 was 'particularly irksome' when compared to the scale provided for in the National Guide of $250-$1500 for junior counsel's fees for short interlocutory motions that last for less than two hours. The motion, so the applicant says, was no more than a 'simple interlocutory application' that lasted no more than an hour. The applicant also repeated his argument as to the raising of the limitation point by senior counsel referred to above. 29 In my view, the applicant's submission should be rejected. The applicant's submission as to the National Guide is based on the premise that the respondents were not justified in engaging senior counsel to appear at the hearing of the notice of motion. I have already found that the respondents were justified, in engaging senior counsel, given the importance of an early termination of the litigation to the respondents. Further, and in any event, I would not accept the description of the strike out application as being a 'simple interlocutory application'. It does not follow from the fact that a court may have struck out a statement of claim, as not disclosing a reasonable cause of action, that the preparation for the hearing of the strike out application is a simple matter. The pleadings were confused and the claim made was unusual. The National Guide in relation to senior counsel's fee provides a scale of $350---$2500 for an appearance at the hearing of motions of less than two hours duration. It also provides an hourly rate of between $350-$600 per hour in relation to matters such as preparation time, settling submissions and other matters not provided for. In my view, the hearing of the strike out motion was of such significance to the parties as to warrant allowance of senior counsel's fee at the upper end of the scale. However, even if one was to treat the hearing of the strike out motion as only warranting an allowance at the mid range of the scale of, say $1500, it would leave the amount of $1100 of counsel's fees to cover settling of written submissions and preparation. This would reflect about three hours of work by senior counsel - based on the fee that senior counsel charged of $400 per hour --- which is at the low end of the scale. In my view, this amount of time spent in settling submissions and preparing for the hearing would be very reasonable. It is apparent from these calculations that the fees allowed in respect of counsel's fees were well within the range of the National Guide. 30 I have already set out my findings in relation to the raising by senior counsel of the limitation point. 31 I would not make any adjustment to the amount allowed for counsel's fees. The period from the filing of the application to dismissal was two months and one week. It is generally accepted that unless a matter is so routine and straightforward as to not merit a loading, an amount for care and attention is appropriate. This matter, albeit that it did not last long, could not be described as routine. The allegations made, insofar as they claim a loss caused to a solicitor by a client settling litigation, were unusual. The pleadings were confused. Further, as I have previously said, the application was of importance to the respondents because it afforded them the opportunity to terminate litigation which had the potential to cause considerable cost and inconvenience. I also take into account that the strike out application resulted in the application itself being dismissed and that the taxing officer disallowed a number of specific items of the instructing solicitor's bill of costs which went to the care and attention which a solicitor should be expected to give to a matter, including attending Court for the hearing of the application. In my view, it is appropriate to recognise these factors by applying the loading of 15 per cent which was allowed by the taxing officer. 36 I, accordingly, dismiss the applicant's application for review with costs. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.

review of taxation by judge whether counsel's fees properly incurred whether an amount allowable for care and attention costs

The circumstances in which the receiver came to be appointed are explained in my judgment in Australian Prudential Regulation Authority v Siminton (No 6) [2007] FCA 1608. Mr Nicol entered on his task promptly. He has discovered various funds which are additional to those which are identified in Schedule A of the order made on 7 November 2007. He has also identified a large number of persons who claim to have made deposits in the Terra Nova Cache. He has sought the co-operation and assistance of the respondent in identifying depositors and the whereabouts of moneys contributed by them. He has received very little assistance from the respondent in response to these requests. 2 By an Amended Notice of Motion dated 4 February 2008 Mr Nicol seeks various orders to assist him in the performance of his duties. I heard argument on the Amended Notice of Motion on 6 February 2008. Following argument I indicated that I would make orders in the terms of paragraphs 1, 2 and 3 of the Amended Notice of Motion and would publish reasons for doing so at a later date. I reserved judgment on whether orders in the terms proposed in paragraphs 4, 5 and 6 of the Amended Notice of Motion should be made. What follows are my reasons for making orders 1 to 3 and my reasons, following further consideration, for determining that orders in the terms proposed in paragraphs 5 and 6 (with some minor variations) should be made. 3 The first order sought by Mr Nicol is the addition of a number of funds to those identified in Schedule A of the order which I made on 7 November 2007. The evidence established, in each case, a reasonable basis for the conclusion that the source of the moneys in those funds was contributions made to the Terra Nova Cache or the Principality of Camside. Counsel for the respondent did not direct any specific argument to the question of whether order 1 should or should not be made. It is appropriate that the order should be made. 4 Proposed Order 2 sought an extension of the period of Mr Nicol's appointment to 7 April 2008. Mr Nicol sought a third order extending the time within which he was required to prepare and file a report to 10 March 2008. Mr Nicol deposed that he needed the additional time sought in order properly to perform his duties. Counsel for the respondent did not take issue with Mr Nicol's evidence as to his reasons for requiring additional time. Rather he contended that the extension should not be granted because the receiver had failed to perform his duties. 5 When asked to identify the duties which it was alleged that Mr Nicol had failed to perform counsel referred to three matters. 6 Had I been persuaded (which I was not) that any of these complaints had substance, they may have warranted the termination of the appointment of the receiver. They would not have justified a refusal of an extension of time within which the receiver is required to prepare his interim report and complete the important work committed to him. I will, nevertheless, deal briefly with the submissions which were made on behalf of the respondent. 7 The respondent's objection to the retention of solicitors to advise the receiver was, in part, founded on the assertion that the receiver should be sufficiently familiar with relevant legal issues as not to require the advice of solicitors. There was also a suggestion that the use of solicitors would incur unnecessary expense. A significant issue on which solicitor's advice has been sought by the receiver is one which has been raised repeatedly by the respondent, namely, whether the respondent can refuse to co-operate with the receiver by answering questions and producing documents on the ground that to do so would or might incriminate him. The issue is one on which the receiver was plainly entitled to seek appropriate advice. It cannot reasonably be objected that he chose to engage a firm with acknowledged expertise in advising receivers in the performance of their duties. 8 The allegation of a lack of impartiality on the part of the receiver was advanced on the basis of a perceived asymmetry in the manner in which the receiver dealt with the Australian Prudential Regulation Authority ("APRA") and the respondent in the course of performing his duties. The receiver had sought certain information relating to depositors in the Terra Nova Cache from APRA. APRA had advised the receiver that it could not provide the information because of undertakings it had given to individuals who had claimed to have made deposits. APRA had advised the depositors that they should contact the receiver directly should they wish to make any claims. The receiver had obtained the additional information which he had sought from APRA from third parties. Counsel for the respondent contended that the receiver should have pursued APRA and required it to supply the information even though to do so would have involved APRA in a breach of the undertakings given to the depositors. This failure was compared with what was said to be the receiver's pursuit of information from the respondent notwithstanding his repeated claims that he was entitled to the protection of the privilege against self incrimination. 9 The allegation of partisanship lacks substance. The receiver respected APRA's claim that it had given undertakings which should not be breached and obtained the information which he required from other sources. The receiver has also respected the respondent's privilege claims and has done nothing to override such claims. What the receiver has done, on a number of occasions, has been to request the respondent to identify with precision the documents and information in respect of which the privilege claim is made and, in each case, an explanation of why it is said that the answering of questions or the production of documents would constitute an impermissible undermining of the privilege. 10 The unsubstantiated and intimidatory allegations which were said to be made by the receiver against the respondent's solicitor were contained in a preliminary report, made to the Court, by the receiver which is dated 3 December 2007. In notes, subjoined to a table appearing in paragraph 2.2 of that document the receiver stated that two named accounts held by Technocash Pty Ltd "had been set up by Hardy Erhardt of Erhardt & Associates via notification by electronic mail.". This was said by counsel to amount to an allegation that Mr Erhardt had been complicit in criminal offences which had been committed by the respondent. The criminal offences were said to be contraventions of ss 7 and 66 of the Banking Act 1959 (Cth) ("the Banking Act "). Section 7 makes it an offence for an unauthorised person to conduct any banking business. Section 66 makes it an offence for a person who "carries on a financial business" to assume or use the word "bank" in relation to such a business. Technocash Pty Ltd provided a service which enabled account holders to transfer electronically funds held in their accounts. Mr Siminton held an account with the trading name "Principality of Camside" into which funds received from depositors were placed. The fact that Mr Erhardt had opened two other accounts with Technocash Pty Ltd at a later date can not reasonably be understood as suggesting that he played any part in assisting the respondent in the conduct of a banking business or in the misuse of the word "bank". There is no substance in this contention. 12 I reserved my decision on whether such orders should be made. I did so in order to consider various authorities on which counsel for the respondent had relied in opposing the making of such orders. 13 Counsel for the receiver argued that these orders should be made because the respondent had, during the period of the receivership, failed to respond to requests made by the receiver that he provide relevant documents to the receiver. In particular the receiver relied on the failure of the respondent to comply with paragraph five of the orders made on 7 November 2007 which required the respondent to provide to the receiver "all bank statements, books of accounts, receipts, invoices, correspondence or other documents in his possession, custody, power or control relating to monies received from members of the public for deposit in the Terra Nova Cache. " The receiver's solicitor had written on numerous occasions to the respondent requesting that he comply with the Court's order. The respondent had not done so. He had, through his solicitors, made general claims that he could not be required to produce any documents because of the protection afforded him by the privilege against self incrimination. In one letter the respondent acknowledged that he had three documents (bank statements) which fell within the terms of the order. He also provided the receiver with a copy of documentary evidence tendered in the course of the trial of the principal proceeding in which the order appointing the receiver was made: see Australian Prudential Regulation Authority v Siminton (No 6) [2007] FCA 1608. The respondent has failed to advise the receiver whether there are additional documents, which although not in his possession, are within his power or control. 14 Counsel for the respondent opposed the making of the proposed orders. He made what he described as "an in limine objection" to the making of any order that would require the respondent to swear an affidavit of documents or discover any documents on the ground that to do so would infringe his right to protection against self incrimination. It has been alleged that with respect to the Principality of Camside and Terra Nova Cache, I am in breach if the Banking Act , sections 7 and 66 , which are respectively an indictable offence and an offence. Such allegations have already been tried herein and found proven on a civil basis, and it has been maintained by APRA, a Commonwealth instrumentality, that the right to bring criminal charges against me with respect of the alleged breaches of the relevant sections remains extant. The documents requested clearly relate to the alleged breaches of the Act and, accordingly, I object to producing the same pursuant to the right against self incrimination. He does not identify the documents for which a privilege claim is made. He does not explain why their production would tend to incriminate him. Moreover he offers no reason why he should not be required to swear an affidavit of documents. 16 Counsel acknowledged that the circumstances in which an in limine objection to making an affidavit of documents, in a case such as the present, might be upheld are extremely rare. He contended that the circumstances of the present case brought it within the rare exception, the existence of which was recognised by Deane J in Refrigerated Express Lines (A/asia) Pty Ltd v Australian Meat and Live Stock Corporation (1979) 42 FLR 204. In Refrigerated Express Deane J held that, in a criminal proceeding or a proceeding in which the imposition of a pecuniary penalty was sought, a Court should not order a respondent to give discovery or produce documents for inspection. In other forms of proceeding his Honour recognised that the general rule was that a party ought not to be excused, in limine , from giving discovery on the ground that production might tend to expose him to a penalty. His Honour held that there might exist "exceptional" cases in which "the only means of protecting the right against self incrimination ... [would be] to excuse a party in limine from discovery ..." (at 211) (Emphasis added). His Honour said that such cases would be "rare indeed. In the first situation, the court should, in the absence of statutory provision to the contrary, refuse to make any order for discovery, production of documents or the provision of information for the reason that an intended consequence of the discovery, production of documents or provision of information is the imposition of the penalty, this being the object of the action ... But in the second situation the order will be made and the party against whom the order is made may object to the production of particular documents or to the provision of particular information on the ground that it may tend to expose him to a penalty. Judgment was given in the principal proceeding on 26 October 2007 and the receivership order was made on 7 November 2007 following submissions as to the form of relief which should be granted. The orders presently sought by the receiver, whilst being made in the proceeding, are sought to facilitate the performance of his role in remedying the mischief which the respondent has been found to have perpetrated. It follows that the present circumstances are not such as to admit, in the normal case, the making of an in limine objection to an order of the kind which is being sought by the receiver. 19 As already noted counsel for the respondent sought to argue that the circumstances which confronted the respondent in this case were such as to bring it within the exceptional category which Deane J referred to in Refrigerated Express. I invited counsel to articulate with precision the rare and exceptional circumstances which rendered the present case one which fell within the exception to the ordinary rule. He submitted that his client had been found, in Siminton (No 6) , to have contravened ss 7 and 66 of the Banking Act . These findings had been made on the civil standard. His client apprehended that he might, at some time in the future, be charged with having committed criminal offences by contravening those provisions. He contended that the mere acknowledgement by the respondent that he had in his possession, custody or control documents of the character referred to in the proposed order could be used in evidence against him in such a criminal proceeding. 20 I do not consider that the making of the orders sought and compliance with them would expose the respondent to self incrimination. The proposed orders require no more than that the respondent swears and files an affidavit which lists documents in his possession, custody or power which relate to moneys received from members of the public for deposit in the Terra Nova Cache. If there are such documents that are not in his possession, custody or power any longer he is asked to identify them and indicate (if he is able) where they are presently located. The order would also require him to identify any claims of privilege he might wish to make in respect of any of these documents. The orders do not require him to produce any document for which a claim of privilege is made. 21 What the proposed orders will achieve is substantial compliance with the requirements of paragraph five of the orders made on 7 November 2007. The receiver will be made aware of whether or not the respondent holds documents which may assist the receiver in performing his duties. The respondent will be able to identify any documents or any part thereof in respect of which he wishes to make a privilege claim. The receiver will be appraised of the reason why the claim is made in respect of any particular documents (or part thereof). 22 It is possible that an issue may arise as to whether the description of a particular document or documents in the proposed affidavit might, if particularised in too much a detail, tend to expose the respondent to self incrimination. If those advising him exercise care I doubt that such a problem will arise. However, the orders should make provision for the respondent to have liberty to apply if such a problem arises. 23 The receiver sought the making of a further order under O 33 rule 13 of the Federal Court Rules that the respondent be required to attend before him for the purpose of being examined by the receiver's solicitors. I was told, from the bar table, that the respondent had attended before the receiver to answer questions on 5 February 2008. As I indicated at the hearing I do not consider that the making of such an order at this stage is warranted. There was no evidence before the Court as to whether or not the receiver had received the assistance which he sought from the respondent during the oral examination. Moreover, the making of the affidavit of documents which I have determined to order may well obviate the need for a further oral examination. I specifically reserved the right of the receiver to make application for an order for oral examination at a later time should that be necessary. 24 I will hear the receiver and the respondent on the question of what, if any, orders should be made as to the costs of the receiver's notice of motion. I certify that the preceding twenty four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice TRACEY.

notice of motion on behalf of the receiver application seeking further funds to be included in the receivership, an extension of time of the receivership and for the respondent to attend for examination and file an affidavit of documents whether respondent should be excused in limine from swearing affidavit or attending for examination whether examination or affidavit of documents would expose respondent to self incrimination application granted in part " in limine objection" practice and procedure words and phrases

Each notice primarily sought documents and information for an alleged price fixing agreement, arrangement, or understanding in relation to international air cargo services, purportedly contravening s 45 of the Act. Relief is sought under a variety of provisions, including s 16 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ('the ADJR Act'), ss 21 and 23 of the Federal Court of Australia Act 1976 (Cth) and s 163A of the Act. To the extent any extension of time was required to bring an application under s 16 of the ADJR Act, I would have granted such an extension of time if the application was otherwise meritorious. The applications of Emirates and Singapore Airlines are not identical, and do not raise the same grounds in relation to all the notices issued by the ACCC. Nevertheless, it is convenient to deal compendiously with all grounds relied upon by the applicants, including the grounds relating to the alleged burden imposed upon the applicants by some of the notices and the alleged unreasonableness of the decisions to issue those notices. Emirates received three s 155 notices and Singapore Airlines received five s 155 notices. While the notices were not identical in form and content, the differences in wording were not considered as being material on the primary argument of Emirates and Singapore Airlines relating to the validity of the notices and, for the purpose of this judgment, I will refer to them collectively as the Notices unless otherwise specified. As a prefatory matter, a few words must be directed to the question of the reach of the Act. Initially, it appeared that these proceedings were going to concern the extent to which the Act extended to extraterritorial conduct. It has long been accepted in the United States that a court may assert jurisdiction under the Sherman Act 15 USC § 1 for anticompetitive conduct occurring wholly outside the territory of the United States, provided that the conduct has effects felt in the United States: see F Hoffmann-La Roche Ltd v Empagran S.A. [2004] USSC 2381 ; 542 US 155 (2004); Hartford Fire Insurance Co v California [1993] USSC 100 ; 509 US 764 (1993). That s 45 of the Act should be read similarly, at least with respect to corporations carrying on business in Australia, was considered by Merkel J in Bray v F Hoffmann-La Roche Ltd [2002] FCA 243 ; (2002) 118 FCR 1 , at 15-16, and affirmed by the Full Court in Bray v F Hoffmann-La Roche Ltd (2003) 130 FCR 317. The Notices are said by the applicants to relate to the supply of all international air cargo services. Such services include wholly international flights and flights inbound to, and outbound from, Australia. The applicants accepted that services on routes from Australia in respect of outbound flights are supplied in a market in Australia. It can be readily appreciated that pricing arrangements with respect to wholly international flights and inbound flights may be capable of having the likely effect of controlling the prices for outbound flights. That such a likely effect may arise is explained by way of a hypothetical. Imagine that a person in Australia wants to ship computers by air from Sydney to Bangalore. The applicants conceded that the price for the supply of that service will be negotiated, set, and contracted for wholly within in Australia. However, the evidence shows that there are no direct flights from Sydney to Bangalore---in fact, there are no direct flights on Singapore Airlines from anywhere in Australia to anywhere other than Singapore. Thus, in order for Singapore Airlines to transport the computers from Sydney to Bangalore, it would have to route them from Sydney to Singapore and then from Singapore to Bangalore. Now imagine further that, somewhere outside of Australia, Singapore Airlines and other parties arrange to fix cargo rates from Singapore to Bangalore (on the evidence, this arrangement would most likely occur in Singapore). No detailed evidence was adduced on the issue of how the prices in Australia for various cargo services are in fact determined. However, any price-fixing arrangement on the Singapore-Bangalore route will likely have the effect of controlling the overall price that is offered in Sydney for the shipment of the computers from Sydney to Bangalore, because goods freighted from Sydney to Bangalore on Singapore Airlines must travel via Singapore and thus the total price set in Sydney will be a composite of, (or at least affected by), the price for the intermediate legs. To complete the analysis for purely international services, repeat the hypothetical for every airline and every destination. It must be accepted that goods being shipped out of Australia can, and will, travel through multiple intermediate ports before reaching their final destination. Therefore, the price for each intermediate leg of the journey will affect the whole price quoted at the point of origin in Australia. It follows, then, that price fixing between two international points in relation to the supply of international air cargo services, wherever engaged in, may have the likely effect of fixing the price of outbound international services set in Australia. To see the relevance of inbound services (ie, the supply of international air cargo services from a point outside Australia to a point in Australia), imagine that the same person wanted to arrange for the round trip air shipment of the computers from Sydney --- perhaps because they are being sent to Bangalore for repair. Again, the evidence was that the airline would set one price for the services at the port of origin. Here too, the total price in Sydney would be determined by reference to the price for each intermediate leg of the journey, including the price of the final inbound leg from Singapore to Sydney. Accordingly, that collusive conduct with respect to pricing on routes between Bangalore-Singapore and Singapore-Sydney could control the price that is set in Sydney for the supply of roundtrip air cargo services outbound from Sydney-Bangalore-Sydney. However, no further analysis is required on this approach. The confined scope of these proceedings has been clearly identified by the applicants. The proceeding is confined to a challenge to the validity of the instant Notices on the discrete basis that the "matters" the subject of them extend beyond conduct that could ever constitute a contravention of the Act. Evidence may be admitted to show conclusively that, even without all of the facts, the particular conduct as described in a s 155 notice would not be capable of constituting a contravention of the Act. However, evidence could not be led to show that there is in fact no contravention, assuming the particular conduct as described in a s 155 notice was capable of constituting a contravention of the Act. I accept that evidence that was not before the decision-maker may be admissible if it is relevant to a particular ground of review, such as unreasonableness: see, eg, Australian Retailers Association v Reserve Bank of Australia [2005] FCA 1707 ; (2005) 148 FCR 446 , 564-66 per Weinberg J; but see Aronson M, Dyer B, and Groves M, Judicial Review of Administrative Action (4 th ed, Lawbook Co, 2009) at 256-58. In addition, sometimes it will also be necessary to have established the facts upon which legal issues can be resolved. Unless stated otherwise, the facts are applicable as at all relevant times, being the period 1 January 2000 to date. Singapore Airlines Ltd (SIA) is incorporated in Singapore. The hub of SIA's international passenger services is in Singapore. Air freight is transported either in the 'bellyhold' or lower deck of passenger aircraft or in cargo 'freighters', i.e. planes dedicated to carrying cargo. Prior to 1 July 2001, SIA's Cargo Division supplied international air freight services using both passenger aircraft and cargo freighters. It is incorporated in Singapore. With effect on 1 July 2001, SIA transferred to SIAC the assets, liabilities, cargo-related contracts, operations and business activities of the Cargo Division of SIA. With effect on 3 July 2001, employees of the Cargo Division of SIA ceased to be employed by SIA and were transferred to SIAC. Since that time, only SIAC has supplied international air transport services for cargo within the Singapore Airlines group of companies. SIAC or its general sales agents operate out of 76 stations located at international airports to or from which SIAC will carry or arrange for the carriage of cargo. A list of those countries and stations is annexed and marked "A". Each station provides services in relation to the airport at which it is located. The stations that SIA previously operated at Cairns and at Darwin were closed in March 2001. The operating fleet of SIAC as at 31 March 2007 comprised 14 B747-400 cargo freighters. SIAC also purchases cargo space from other carriers, or carriage services by road transport operators. Typically SIAC will do this in order to deliver freight to airports which are not serviced by either SIA or SIAC aircraft or to allow stations to access available cargo space on SIA or SIAC aircraft which are operated from another station. Charts depicting the routes flown by SIAC freighter aircraft and SIA passenger aircraft as at March 2007 are shown in the routing charts annexed and marked "B". SIAC can offer a freight service from any of its origin ports to Australia, routed through Singapore. Carriers offer different types of air freight services from different locations in order to meet the requirements of the particular types of freight that are transported from those locations. For example, much of the freight shipped out of Melbourne is perishables such as meat, fruit and vegetables. This type of freight may need to be transported quickly and kept at special temperatures. Evidence received in each proceeding was to be treated as evidence in the other. Some objections were taken to certain evidence sought to be tendered by the parties, which in light of the approach I adopt, need not be ruled upon. No attack was made upon the credit of any witness, although the ACCC submitted that the evidence was far from conclusive and should not be relied upon as contended for by the applicants. Some of the evidence was of a confidential nature and appropriate orders were made under ss 17 and 50 of the Federal Court of Australia Act 1976 (Cth). In giving these reasons for judgment I have not found it necessary to refer to this evidence other than in a general way. The primary purpose of the evidence led was to provide the factual background concerning the markets in which international air cargo services are ordinarily supplied. Such evidence was said to support the argument that the Court could be satisfied that international air cargo services on routes into Australia, and between two points outside Australia, are not competitively provided in a market in Australia. Evidence was also led concerning what became known as the 'burden issue'. That evidence dealt with the steps required to be taken by Singapore Airlines and Emirates to comply with some of the notices. It also concerned the manner and extent to which Mr Samuel had regard to the burden imposed on the recipients, and what considerations he took into account in deciding to issue the Notices. By the operation of s 45(3) "competition" relevantly means 'competition in any market in which ... [the corporation in question or a related corporation] supplies or acquires, or is likely to supply or acquire, goods or services ...'. By operation of s 45A(1), a provision of an arrangement caught by s 45 is deemed to have the purpose, effect or likely effect of substantially lessening competition if the provision has the purpose, or has or is likely to fix, control or maintain 'the price for ... goods or services supplied or acquired or to be supplied or acquired by the [corporations or related corporations], in competition with each other'. While it is not mandatory to apply s 45A(1), it is necessary and proper to do so in these proceedings because the ACCC has effectively incorporated the language of s 45A into the Notices. Reference must then be made to s 4E. In s 4E, 'market' means a market in Australia and, when used in relation to any goods or services, includes a market for those goods or services and other goods or services that are substitutable for, or otherwise competitive with, the first-mentioned goods or services. It then remains to interpret s 45(2) in light of the deeming provision as adapted to the circumstances of the present case. In my view, when one does so, s 45(2) relevantly provides that: a corporation shall not make or give effect to an arrangement if a provision of the arrangement has the purpose, or has or is likely to have the effect, of fixing the price for international air cargo services supplied by the parties to the arrangement or by any of them in competition with each other in any market in Australia in which a corporation that is a party to the arrangement supplies those services. The services the subject of the unlawful provision must be the services supplied by the relevant party to the arrangement in competition with the other party in any market in Australia. Put another way, the area of competition has to coincide with the area of restriction imposed by the unlawful provision: see ss 45A(8), 4D(1)(a) and 4D(2); Eastern Express Pty Ltd v General Newspapers Pty Ltd (1991) 30 FCR 385 at 419-20 per Wilcox J; and South Sydney District Rugby League Football Club v News Limited [2000] FCA 1541 ; (2000) 177 ALR 611 at 657 per Finn J. There is a plethora of case law regarding the meaning of that term, but the High Court has warned that attempts to define 'market' too precisely are dangerous. Certain provisions of the Act, particularly in Pt IV, necessarily turn to a significant degree on expressions which are not precise or formally exact. One example is "market": there can be overlapping markets with blurred limits and disagreements between bona fide and reasonable experts about their definition, as in this case. Other examples are "substantial", "competition", "arrangement", "understanding", "purpose" and "reason" (which need only be a "substantial" purpose or reason: s 4F). It is not appropriate to subject the application of this type of legislation to a process of anatomising, filleting and dissecting... . It involves fact finding together with evaluative and purposive selection. In any given application it describes a range of economic activities defined by reference to particular economic functions (eg manufacturing, wholesale or retail sales), the class or classes of products, be they goods or services, which are the subject of those activities and the geographic area within which those activities occur. In its statutory setting the market designation imposes, on the activities which it encompasses, limits set by the law for the protection of competition. It involves a choice of the relevant range of activity by reference to economic and commercial realities and the policy of the statute. To the extent that it must serve statutory policy, the identification will be evaluative and purposive as well as descriptive. A market is an area in which the exchange of goods or services between buyer and seller is negotiated. It is sometimes referred to as the sphere within which price is determined and that serves to focus attention upon the way in which the market facilitates exchange by employing price as the mechanism to reconcile competing demands for resources: see Stigler and Sherwin, "The Extent of the Market", (1985) 28 Journal of Law and Economics vol 28 (1985) 555 at p. 555. In setting the limits of a market the emphasis has historically been placed upon what is referred to as the "demand side", but more recently the "supply side" has also come to be regarded as significant. The basic test involves the ascertainment of the cross-elasticities of both supply and demand, that is to say, the extent to which the supply of or demand for a product responds to a change in the price of another product. Cross-elasticities of supply and demand reveal the degree to which one product may be substituted for another, an important consideration in any definition of a market. A question of degree is involved --- at what point do different goods become closely enough linked in supply or demand to be included in the one market --- which precludes any dogmatic answer. See Times-Picayune v United States . The application of the metaphor may be informed by economic analysis, provided it is rooted in commercial realities. ... Within the bounds of a market there is substitution --- substitution between one product and another, and between one source of supply and another, in response to changing prices. So a market is the field of actual and potential transactions between buyers and sellers amongst whom there can be strong substitution, at least in the long run, if given a sufficient price incentive". However, the question whether a notice discloses the necessary "relatedness" is not to be approached in an "over-technical or hypercritical way": Pyneboard v TPC at 376. Moreover, the "relatedness" is to a proper inquiry into the suspected offences: Panelboard Pty Ltd v Trade Practices Commission [1981] FCA 98 ; (1981) 59 FLR 395 at 407, per Fox J. The Chairperson must, however, have reason to believe that the relevant person is capable of furnishing information relating to the matter specified in the notice: WA Pines v Bannerman at 179, per Brennan J (with whom Bowen CJ agreed); TNT Australia Pty Ltd v Fels [1992] HCA 55 ; [1992] ATPR 40 ,595 (41-190) at 40,598-40,599, per Gummow J. It follows that the Chairperson or other officer must believe that the person to whom the notice is directed is capable of furnishing information relating to the facts known or suspected: WA Pines v Bannerman at 180. In addition, there must be facts in existence which are sufficient to induce that belief in a reasonable person: George v Rockett at 112. It refers to a body of facts which constitutes or may constitute a contravention of the TP Act. Whether or not the relevant body of facts constitutes a contravention is a matter of law and does not turn on the perception or knowledge of the ACCC or its officers: WA Pines v Bannerman at 179. The words "may constitute" enable a court to judge from the material in the notice whether, if other facts which may or may not have occurred come to light, the whole body of facts would constitute a contravention: SA Brewing v Baxt at 370. It is not necessary for the Court to determine whether a contravention has occurred; but equally it will not "idly speculate" or "draw on improbable circumstances" to uphold a notice: SA Brewing v Baxt at 370. An alternative formulation is that the Court can take account of facts which may "reasonably be suspected" to have occurred: WA Pines v Bannerman at 179. It follows that an inquiry under s 155 may relate to a defence or possible defence available to the suspected person: WA Pines v Bannerman at 180. This is because the recipient could not know that any document required to be produced is a document to which the ACCC is entitled to, nor that any document does in fact relate to a relevant (as distinct from irrelevant) matter. Whether the matter is defined too widely is dependent on the particular contravention alleged and the body of facts which may constitute such a contravention. This conclusion derives from the principles referred to in Seven Network [2004] FCAFC 267 ; 140 FCR 170 , and accords with the reasoning of Bowen CJ and Neaves J (at 586-87) and Davies J (at 590-91) in Bannerman v Mildura Fruit Juices Pty Ltd [1984] FCA 156 ; (1984) 2 FCR 581 , the views expressed by the Full Court (Northrop, Deane and Fisher JJ) in Pyneboard Pty Ltd v Trade Practices Commission [1983] HCA 9 ; (1982) 57 FLR 368 at 373-74 and the comments of Griffith CJ in Melbourne Steamship Co Ltd v Moorehead [1912] HCA 69 ; (1912) 15 CLR 333 at 344. There was no definition of 'international air cargo services' in this notice, and the definition of 'Fuel Surcharge' was different from other notices, whilst the 'Fuel Price Component' definition appeared for the first time. At least for the purposes of considering the primary argument of Emirates and Singapore Airlines, no point of principle was made as to these distinctions. Some stylistic or drafting criticisms may be made in respect of some expressions in the Notices. However, I have adopted a practical and common sense approach to construing the Notices, not being excessively critical where the sense of the Notices would be apparent to the applicants as the recipients of the Notices. A preliminary attack was made on the use of the concept of point of origin or destination of a service as a reference point able to be used in the Notices. It was contended that the Notices (even if confined to outbound services) did not sufficiently describe a matter involving a contravention of the Act, particularly in failing to describe the market in Australia. I accept that just because services cover the movement of goods in or out of Australia, does not necessarily indicate that there is a relevant market located in Australia in respect of those services: see Auskay International Marketing & Trade Pty Ltd v Qantas Airways Ltd [2008] FCA 1458 at [19] and [21] per Tracey J. However, as I mention later, the Notices when properly construed adequately describe matters capable of involving a contravention of the Act and by reference to a market in Australia. I make one further observation as to the Notices. The identified matters concern the alleged contravention of s 45 of the Act and concentrate on the supply of the international air cargo services. However, as I have alluded to earlier, it is important to observe that the description of the matters in the Notices concern price fixing as defined by s 45A of the Act, and it is upon that provision attention should be focussed in interpreting the Notices. ARE THE MATTERS IDENTIFIED IN THE NOTICES CAPABLE OF CONSTITUTING A CONTRAVENTION OF SECTION 45 OF THE ACT? As noted by Sackville and Emmett JJ in Seven Network [2004] FCAFC 267 ; 140 FCR 170 '[u]ltimately, the question is whether the matter identified in the Notices "may constitute" a contravention of the [Act]' (at 184). Those matters concern alleged agreements or understandings relating to the supply of air cargo services on routes into Australia and routes between two or more points outside Australia. Such services are not supplied in competition in a market in Australia. By virtue of s 45(3) and 4E of the [Act] , it is only services supplied in competition in a market in Australia that can possibly found a contravention of s 45(2). It was accepted by Emirates and Singapore Airlines that the evidence adduced in these proceedings was not intended to, nor would it enable, the Court to conclude whether all international air cargo services are supplied in a single global market or in many different markets and the boundaries of those markets. As I have indicated, it was accepted by the applicants that an arrangement containing a provision fixing the price at which those services are supplied in Australia to acquirers in Australia would satisfy the elements of s 45A and could be a contravention of s 45 of the Act. The applicants accepted that if the Notices were properly framed that a matter relating to the supply of international air cargo services on routes from Australia would be cognizable under the Act. However, the applicants rely upon the proposition that where a notice defines a matter in such a way as to include things that are incapable of being a contravention of the Act, then the whole notice is invalid. I have accepted this proposition: (see [30]-[31] above). If the Notices were properly framed and only referred to services in relation to outbound routes, then on the applicants' case, the fact that there may be acquirers of those services outside Australia would not affect the validity of the Notices on this primary ground of attack. It would be accepted there is a market in Australia. No suggestion would be made that the Notices are enquiring into a matter not the subject of the Notice in reliance of the principles outlined in Bannerman [1984] FCA 156 ; 2 FCR 581 , Pyneboard [1983] HCA 9 ; 57 FLR 368 and Melbourne Steamship Co Ltd [1912] HCA 69 ; 15 CLR 333. The applicants are required to demonstrate that, in relation to inbound services and overseas destinations, the supply of services only involves the supply of services outside Australia to acquirers outside Australia, and not in a market in Australia. There was some debate before me as to the meaning to be given to the Notices, particularly the scope of the enquiry and the phrase 'including on routes to and/or from Australia'. As such, the Court does not need to become involved in a minute analysis of the wording of the notices. However, if the Court was to undertake such a task it is apparent that the notices in the case are, in fact, not as broad as the Applicants contend (or as broad as they could be, taking into account the breadth of s 45). First the words between the commas "two or more of which were carrying on business in Australia" is a totally self-contained phrase. The phrase "competitors or potential competitors for the supply of international air cargo services including on routes to and from Australia" relates to all of the named and unnamed airlines and not just the "two or more" who are said to be carrying on business in Australia. As noted, each of the named and unnamed airlines are said to be "competitors or potential competitors for the supply of international air cargo services including on routes to and from Australia". The phrase "including on routes to and from Australia" does have important (albeit limited) work to do. It means that the barrister practices in trade practices law amongst other unspecified areas of law. In the same way the notices make it plain that each of the relevant airlines are competitors or potential competitors in the supply [of] international air cargo services on routes to and/or from Australia, as well as being competitors elsewhere. The territorial nexus of the competition to Australia is thus made out. The phrase ("including routes to and/or from Australia") has excluded those airlines that do not fly to or from Australia and which do not have any genuine potential to do so. This excludes airlines and services which have no actual or potential connections whatsoever with Australia. This will not destroy the sense of the notices or even have any effect on the schedules which are almost all limited to documents relating to routes to and from Australia. Even those documents that are not so limited (the third notice to Emirates, the fourth and fifth notices to Singapore Airlines) will still be "related to" routes to and from Australia for the reasons set out in paragraph 43 of the respondents' written closing submissions. In the first paragraph of the notices reference is made to the nature of the market and the competition between the airlines when referring to the airlines. As set out in paragraphs 2 and 3 above, "competition" and the relevant "market" are only relevant where one is considering the services that are being supplied or acquired (that is, in relation to paragraph 3(c)), not specifically in relation to the corporations themselves (that is, paragraph 3(a)). international air cargo services) are being supplied in a market in Australia (i.e. "including routes to and/or from Australia"). The words "in competition with each other" reflect the words at paragraph 3(c)(i) above and at the end of in [sic] s 45A(1) and clearly relate to the nature of competition referred to in the first paragraph. The clear meaning is so apparent that the point would not be a good one even if the issue was raised in the context of a pleading complaint, let alone a s 155 notice. Whilst the proverbial 'blue pencil' may be appropriately used in the schedules, the definition of the 'matter' is essential to the validity of the Notices. However, as will be apparent, my interpretation of the Notices has the effect of construing the Notices as if the word 'including' was deleted. It is important to recall that the Notices should not be read in an overly-technical way: they are to be 'reasonably, not preciously, construed': see Melbourne Home of Ford Pty Ltd v Trade Practices Commission (No 3) [1980] FCA 94 ; (1980) 47 FLR 163 at 175-76 (per Brennan, Keely and Fisher JJ), and S A Brewing 23 FCR 357 at 369 (per Fisher and French JJ). In addition, regard may be had to the identity of, and the knowledge available to, the recipient of the notice: see Seven Network [2004] FCAFC 267 ; 140 FCR 170 , 189 at [75] (per Sackville and Emmett JJ). In the Notices, the phrase 'including on routes to and/or from Australia', where first appearing, identifies those international air cargo carriers alleged to be the parties to the arrangement. While the inclusion of this phrase, where first appearing, would assist in avoiding any issue arising under s 5 of the Act, the phrase does not there define the provision that is alleged contravene, namely s 45(2) of the Act, as read by the incorporation of the deeming provision s 45A. However, in each of the Notices, the reference to 'international air cargo services' (or similar phrase) and the phrase 'including on routes to/and or from Australia', where later appearing in the Notices, does qualify the services as concerning only routes to and/or from Australia. The phrase 'including on routes to and/or from Australia' (used twice in the Notices) applies to the identification of the airlines and to the services that are being supplied. In my view, a similar qualification is to be made to the description of the provision itself said to be the basis of the contravention. Leaving aside the question of whether it is necessary for the Notices to be so confined, in my view, wherever the use of the expression 'international air cargo services' is used in the Notices that expression is qualified by the phrase 'including on routes to and/or from Australia'. This conforms with the submission of the ACCC in the context of the identification of the airlines and the services that are supplied. This has been expressly achieved by a definition of 'the Services' in the notice to Emirates dated 26 March 2008, and has been achieved by the context in which the reference and qualifying phrase appears in the other Notices. Therefore, the reference to 'international air cargo services' is limited to those services on routes to and/or from Australia. Whilst the Notices do not specifically then go on to describe the matters in terms of the market in Australia, I do not consider that this is necessary in the circumstances. The sense of the Notices concerns competitors carrying on business in Australia, being competitors for the supply of services only in respect of routes to and/or from Australia, and concerns services supplied in and from Australia. I do not consider the Notices need then to 'plead' the elements of the market in Australia. The Notices on a reasonable and sensible construction only envisage a possible contravention where the allegedly unlawful provision has the purpose or the effect of fixing prices in respect of services supplied on routes to and/or from Australia, and in a market in Australia. On this basis, the Notices do not specifically refer to an arrangement containing provisions that have the purpose or the effect of fixing the price of international air cargo services supplied by the parties throughout the world without any connection to Australia or otherwise than in a market in Australia. The arrangement is alleged to contain a provision fixing the price at which international air cargo services are supplied in a market in Australia, to the extent that the airlines actually or potentially provide international air cargo services in Australia. The reference to journeys to Australia is to be properly read as a reference to these international air cargo services supplied in a market in Australia, just as the reference to journeys from Australia. Therefore, I construe the Notices as referring to international air cargo services only to the extent that they are outbound and inbound services, supplied in a market in Australia. However, the fact that the Notices are properly framed and are construed as relating only to outbound and inbound services, still does not dispose of the applicants' complaints. It is necessary to consider the potential market for these services. The same is true, they say, for the supply of air cargo services between two points wholly outside Australia (for example London to New York). To put it another way, competitive activity between airlines offering cargo service takes place at the point of origin of the cargo. The applicants rely on Heydon J D, Trade Practices Law (Lawbook Co., subscription service), which states (at [3.258]) that for a market to be in Australia, 'the buyers and sellers must engage in transactions in Australia' and that (at [3.510]) 'if a market extends beyond the limits of Australia the court would apply the [Act] in reference to that part of it which falls within Australia'. Also underpinning the applicants' submissions were the propositions that a market must be taken to be located at the place of contracting (as opposed to the place or places where the services are provided) and the place of contracting is the place where the air way bill is cut (ie, the port of origin). It was said by Singapore Airlines, and this applied to Emirates as well, that international air cargo services are marketed, negotiated and contracted between carriers and freight forwarders in the city or country where the freight to be transported is located. Whilst I accept for the purposes of these proceedings that, other than in respect of outbound services, the actual place of contracting is not in Australia, I do not regard the evidence as conclusively justifying a finding that necessarily no marketing or negotiating occurs in Australia in respect of all international air cargo services. I make the following findings on the basis of the unchallenged evidence before me. Even accepting the evidence of the applicants and without recourse to the evidence led in chief by the ACCC, the evidence does not demonstrate that there is no possibility of competitive activity in a market in Australia in relation to inbound services to Australia. I will return later to the specific issue of whether a market in Australia is limited to the circumstance where the buyers and sellers actually engage in transactions or contract in Australia. The applicants' evidence does not eliminate (as it must) any reasonable hypothesis which is inconsistent with the contention that the market is wholly outside Australia even if one focuses on the inbound services in isolation: see S A Brewing 23 FCR 357 at 370 and Seven Network [2004] FCAFC 267 ; 140 FCR 170 at [9] and [52]. There are many reasons for this, but I provide a non-exhaustive list: It is also not possible to conclude that the market for air cargo services into Australia is not part of the international air cargo market, of which the Australian market is, or may be, a part of. It is certainly not idle speculation, even after taking into account the facts so for adduced by the applicants, that the relevant competitive activities did occur in a market in Australia as part of an international air cargo market. Further, it seems to me that inbound and outbound services (putting aside international services for the moment) are sufficiently connected to be at least possibly complementary services. It is possible that the carriage of the outbound cargo from Australia and inbound cargo to Australia are really to be identified together, putting aside where the individual transactions actually occur in relation to each other. It may be that the inbound services are in the same market as the outbound services, then on the basis of the applicants' acceptance that outbound services are in a market in Australia, inbound services would similarly be capable of being part of that market. Therefore, I cannot be satisfied that the applicants have demonstrated on the above basis that the matter identified in relation to inbound services is not capable of being in contravention of the Act. The applicants also contended that the place of entering into the contract for the inbound services determines the location of the geographic market, and in the case of inbound services, this is outside Australia. In my view, the place of contracting is not determinative of the geographic locality of the relevant market. The references relied upon in Heydon J D, Trade Practices Law (Lawbook Co., subscription service) do not, in context, stand for such a proposition. As the authorities referred to previously indicate, the concept of a 'market' refers to a range of 'competitive activities' relating to the field of actual or potential activities between buyers and sellers among whom there is, or can be, close competition. It involves the 'field of rivalry', not just referrable to the place of contracting. With the advent of modern telecommunications any other approach may fail to give protection to, and enhance the welfare of, Australians who use and obtain services in Australia. After all, the focus of s 45 is on the supply of the services. His Honour said (at [21]) that the fact that a market was global did not signify that there could not be a market in Australia for the same products. As the Commission points out, a contrary view would considerably reduce the efficacy and utility of the competition law provisions of the Act, especially in the modern telecommunications era. As other aspects of the decision in Qantas [2008] FCA 1976 proceeded upon agreed facts, however, that case provides little assistance in determining the other issues raised before me which involved 'a concrete dispute reached after contest in argument': see Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75 ; (2003) 216 CLR 53 at [62] (per Gummow, Hayne and Heydon JJ). In my opinion, Hill J in Riverstone Computer Services Pty Ltd v IBM Global Financing Australia Limited [2002] FCA 1608 was correct in concluding that the fact that a market was global did not signify that there could not be a market in Australia for the same products (or services). However, I do not take the reference by Hill J to a global market which includes Australia as arguably a market in Australia 'if sales are made [in Australia]' ([2002] FCA 1608 at [22] ) as making it a requirement that the contract under which services are supplied in Australia must be entered into in Australia or that the transactions themselves must be entered into in Australia. In my view, Hill J was simply proffering an example of how one might identify the possible location of competition, and was not providing a definitive statement that buyers and sellers of services must enter into transactions in Australia. Justice Tracey in Auskay FCA 1458 did observe that '[b]uyers and sellers of goods and services must negotiate and enter transactions in an area in which suppliers are engaged in close competition with each other' and '[t]hat area must be located within Australia' (at [19]). However, his Honour also referred to the importance of the place where the relevant competition takes place, and where parties compete to obtain contracts (at [21]). I do not read his Honour's comments (made in the context of a pleading dispute) as dictating that in determinating the geographic location of the market one is confined by the location of the making of the contract for the subject services. Once it is accepted that the place of contracting is not determinative, then in view of the above reasoning, it cannot be concluded that the particular conduct complained of is not capable of constituting a contravention of the Act. We are not then dealing with a market that is wholly outside Australia, but rather, with a possible contravention s 45 of the Act in relation to inbound and outbound services in a market in Australia. Therefore, upon construing the Notices in the manner indicated, I do not regard them as invalid on the ground that the matters the subject of them extend beyond conduct that is capable of constituting a contravention of the Act. (b) This ground of review can only be made out if the decision-maker fails to take into account a consideration that they are bound to take into account in making the decision. (c) The factors a decision-maker is bound to take into account in making a decision are determined by construction of the statute conferring the power. Where the matters to be taken into account are not expressly stated in the statute, they must be determined by implication from the subject matter, scope and purpose of the Act: see Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40 ; (1986) 162 CLR 24 at 39-40 per Mason J. (d) A decision-maker may not have had proper regard to a relevant consideration if they merely make a formalistic reference to the consideration: see Azriel v NSW Land & Housing Corporation [2006] NSWCA 372 at [49] per Basten JA (with whom Santow and Ipp JJA agreed at [1] and [3]). (e) A decision-maker is required to give proper, genuine and realistic consideration to a relevant consideration: see Deloitte Touche Tohmatsu v Australian Securities Commission (1996) 136 ALR 453 at 468 (per Lindgren J); Bruce v Cole (1998) 45 NSWLR 163 at 185-6 per Spigelman CJ and the authorities cited therein. (f) The mere failure to refer expressly to a matter will not necessarily give rise to the inference that it was not taken into account: see Australian Conservation Foundation v Forestry Commission (1988) 19 FCR 127 at 132 (per Burchett J). However, it is open to the Court to infer that a matter was not taken into account where no reference is made to it: see, eg, Sullivan v Department of Transport (1978) 20 ALR 323 at 349 (per Deane J). They contended that the Notices themselves were not limited to, and do not refer to, the supply of international air cargo services in a market in Australia. The applicants contended that the papers given to Mr Samuel recommending that the Notices be issued (the 'Reason to Believe' papers) did not refer to the statutory requirement that s 45 is limited to arrangements concerning the supply of services in a market in Australia, and did not consider or discuss whether the arrangements being investigated by the ACCC concerned the supply of international air cargo services in a market in Australia. The applicants further submitted that the failure of the ACCC to refer to the requirement in s 45 of the Act that an arrangement must concern the supply of services in a market in Australia in any of the Reason to Believe papers, or in the Notices themselves, gives rise to an inference that this issue was not considered by the ACCC and Mr Samuel. It was then submitted that the failure by the ACCC and Mr Samuel to consider this fundamental element of s 45 means that the purported exercise of power under s 155 of the Act was an abuse of power entitling the applicants to have the Notices set aside. The simple answer to this submission is that on my construction of the Notices, reference has been made to the supply of services (both inbound and outbound) in a market in Australia. The Notices are to be read as referring to inbound and outbound services, and in context, refer to those services being supplied in a market in Australia. The applicants accept that outbound services may give rise to a possible contravention of the Act. I am satisfied that, having regard to the terms of the Notices themselves and the Reason to Believe papers, there has been consideration of whether, and in what circumstances, the applicants supplied or offered to supply inbound and outbound services in a market in Australia, at least to the extent necessary for the purpose of deciding to issue the Notices. I now turn to the second alleged failure to take into account another relevant consideration, namely the burden imposed upon the recipient of a notice. The Notices do not merely require the production of information and documents, they also require that these be furnished within a specified time. The time for compliance specified in a notice is an aspect of the notice which affects the extent of the burden imposed on the recipient. I accept that Mr Samuel must consider the time for compliance when considering the burden on the recipient. The applicants submitted that the scope of certain of the Notices was such that they imposed a severe burden on the applicants if they were to comply with them. This I readily accept, without recourse to the evidence sought to be relied upon by the applicants. I also accept that the greater the burden that is imposed by a notice to be issued under s 155, the greater the obligation to consider that burden when deciding whether a notice should be issued. I find on the basis of the objective circumstances that the original time for compliance by the applicants, taking into account what was required by certain of the Notices, was objectively oppressive and harsh. A number of matters support this finding: the expansive scope of the applicants' international air cargo operations throughout the world; the fact that the information sought spanned a period of some seven years; the fact that information and documents were sought concerning surcharges and general freight rates applying to international air cargo services supplied by the applicants from any destination in the world to Australia; the fact that detailed information and documents was sought concerning every charge and change in charge imposed by the applicants that was attributed to a change in certain costs (which could require the applicants to investigate the reasons for every single charge imposed by them over an extensive period); the fact that two notices sought information and documents concerning surcharges applying to international air cargo services supplied by the applicants between every destination in the world; the fact that the nature of the information and documents sought would require the applicants to search records and conduct interviews of employees, in every location from which they supplied international air cargo services; and the fact that each of the notices said to be burdensome sought production of the information and documents within a period of approximately four or five weeks. Irrespective of the resources available to a recipient (whether measured in personnel or monetary terms), and irrespective of whether the applicants could in fact undertake the task demanded within the period of time originally allowed, the objective harshness and oppressiveness derives from the original restrictive time limit imposed in which to carry out the tasks required for compliance with a notice. However, this is not the end of the enquiry. The first question raised by the applicants was whether Mr Samuel failed to take into account the burden and the extent of the burden imposed upon the applicants. There was no direct evidence from Mr Samuel that he had regard to the burden imposed on the applicants when deciding to issue the Notices. In proceedings of this nature I would not expect Mr Samuel to provide direct evidence: see eg Korean Air Lines v Australian Competition and Consumer Commission (No 3) [2008] FCA 701 at [116] per Jacobsen J. The only available evidence suggesting that Mr Samuel might have taken into account the effect of issuing the Notices on the applicants is derived from the Reason to Believe papers, and the objective matters available to Mr Samuel at the time of the issuing of the Notices, including the Notices themselves. Many identical s 155 notices were issued at the same time to many airlines. The Reason to Believe papers seemed to be prepared in standard form for each such notice. This also applied to the 'burden' of the Notices. No allowance seems to have been made for the different burden that may have been imposed on different airlines by reason of the fact that their operations differed in scale and geographic scope. It seems to me that the 'burden' sections of the Reason to Believe papers were pro-forma statements. This is not necessarily to be unexpected. The use of such standard paragraphs is not fatal in itself. However, if a verbal formula is used 'to cloak the decision with the appearance of conformity with the law', the use of that formula will not save the decision from invalidity: see Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259 at 266 per Brennan CJ, Toohey, McHugh and Gummow JJ. The 'burden' sections of the Rason to Believe papers in dealing with the time for compliance specifically refer to the magnitude of the burden imposed and to the time in which the recipient could provide the information and documents. Consideration was then given to the burden generally and, specifically, to the time in which a recipient would need to make the necessary searches and enquiries, collate the material necessary and obtain legal advice. Significantly, Mr Samuel was reminded that he needed to consider the magnitude of the burden. This indicates that the Reason to Believe papers did not contain the only information relied upon by Mr Samuel, although they contained recommendations. I am not satisfied that the requirement to comply within a certain limited time was imposed without regard to the ultimate burden which it would impose on the recipient, even on the facts as I have found as to the burden objectively imposed. In my view, Mr Samuel had regard to the effect that his exercise of power to issue the Notices would have on the recipients, including those notices said to be burdensome. The use of standard paragraphs in the recommendations to Mr Samuel was not cloaking the decision of Mr Samuel with the appearance of conformity with the law. It is the decision of Mr Samuel that should be considered and this should be viewed in the context of the objective matters known by Mr Samuel. This is not a situation where a decision-maker is required to give reasons, or is required to set out all the considerations going to his belief. The Reason to Believe papers brought to Mr Samuel's attention the need for him to consider the magnitude of the burden and the time for compliance. Mr Samuel would have been obviously aware of the geographic scope of the applicants' business operators, the language difficulties involved in gathering documents and information, and the extent of the enquiry itself having regard to the Schedules to the Notices themselves. I do not think Mr Samuel needed to consider every considerable factor that may impact upon the task of any recipient in complying with a notice. He was certainly not bound to consider (because he could not know) the extent of the work required to comply as described by the applicants in evidence sought to be tendered in these proceedings. Mr Samuel did know that the applicants might have collated relevant information in response to earlier overseas requests and he might have reasonably expected the applicants to have gathered some information prior to the issue of the Notices. Mr Samuel was obviously aware that an extension of time could be granted if required. It was not contended he did not have this power. Whilst not fully aware of the state of preparation of a recipient and what resources the recipient has available, in this case, Mr Samuel could assume some state of preparedness. Of course, by the time the fourth and fifth notices were issued to Singapore Airlines, there had been extensive correspondence as to the earlier notices and compliance therewith in set time frames, which I infer Mr Samuel would have been well aware. There was evidence in the form of correspondence between the ACCC and the applicants regarding the burden and the insufficiency of time for compliance, with Mr Samuel extending the time for compliance by varying the original notices. This shows a preparedness on the part of Mr Samuel to do so, and an understanding by the applicants (at least after the first extension) that Mr Samuel would be prepared to so extend upon a request by the applicants. I do not think it was contended by the applicants that even before the first of the Notices they did not have this understanding. Therefore, in my view whilst the burden imposed was objectively harsh and oppressive, it was relevantly considered. Mr Samuel properly considered the burden imposed by the Notices. He did adopt the recommendations put to him as for the time for compliance. Whether Mr Samuel was correct in his assessment of the burden and the ability of the recipients to comply within the time set is not germane to the attack made by the applicants. It then remains to address the application of the principles enunciated in Pyneboard [1983] HCA 9 ; 57 FLR 368 . 3) ; Riley McKay Pty Ltd v Bannerman ). Nor will objective harshness, unreasonableness or oppressiveness of a requirement in such a notice constitute an independent ground of invalidity. If invalidity by reference to these qualities is to be established, it must be by reference to the implied general limitation upon the power conferred by s 155(1) of the Act to which reference has already been made, namely, that it is a condition of a valid exercise of the power that it be used in good faith for the purpose for which it was conferred and with regard to the effect that the exercise of the power will have upon those affected thereby. It is only if the harshness, oppressiveness or unreasonableness of a requirement in a s 155 notice is, in all the circumstances, such as to warrant the conclusion that the requirement could not have been imposed in good faith or could only have been imposed to achieve a collateral purpose or without regard to the burden which it would impose upon the recipient, that harshness, oppressiveness or unreasonableness will result in invalidity. It now remains to consider the question of good faith, and a possible separate issue of unreasonableness. To a certain extent, the issues of failing to take into account the burden, good faith and unreasonableness overlap. Obviously, a requirement may be harsh, unreasonable and oppressive, and still not result in invalidity. Bad faith normally involves a lack of an honest or genuine attempt to undertake the statutory function allocated to the decision-maker: see, eg, SCAS v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 397 at [19] per Heerey, Moore and Kiefel JJ. There is a very heavy burden upon any applicant seeking to demonstrate bad faith. Undoubtedly, where a large number of documents or extensive information is sought within a short period of time, and where an extension of time is not possible, the specification of a short period of time may reflect upon whether the power was exercised in good faith, for a collateral purpose or was unreasonable: see, eg, A. B. Pty Limited v Australian Crime Commission [2009] FCA 119 at [65] per Flick J. In fact, it was alleged that the burden imposed on the applicants was of such a magnitude that no reasonable person exercising the power under s 155 would have made the decisions giving rise to the issue of certain of the Notices. Reliance was placed on the principles stated by Lord Greene MR in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 and s 5(2)(g) of the ADJR Act. The applicants attacked the breadth of the information and documents sought to support their argument as to burden, in conjunction with the time frame allowed for compliance. I do not regard the breadth of documents or information as being improperly requested under the Notices or as giving rise in itself to harshness or oppressiveness. Even on the basis of the interpretation of the Notices given by the Court as applying to inbound and outbound services, the information and documents sought are, in my view, relevant and sufficiently identified, and answer the description of 'information relating to' or 'documents relating to' the matters referred to in the Notices. It is important to keep in mind that it is an investigative power which is under consideration in these proceedings. The power may properly be exercised to ascertain facts which may merely indicate a further line of inquiry, or which may tend to prove circumstances from which an inference can be drawn as to the existence of other facts which have a more immediate and proximate relationship to the matter under investigation. The conduct of the applicants wherever occurring could be relevant to the investigation of the matter as defined in the Notices. It is not for this Court to confine or restrict the course of an investigation if the powers conferred by s 155 have not been exceeded. In relation to the interpretation of the Notices, the applicants allege that the definition of 'Fuel Surcharge' is wide and unclear. However, to the extent that the applicants have responded to the Notices, they appear to have had no difficulty at all in understanding the meaning of the term. It seems to me that the applicants should be, and in fact are, well versed in the concept of 'Fuel Surcharge'. The applicants also alleged that in certain of the Notices (the third notice to Emirates and the fought and fifth notices to Singapore Airlines) reference has been made to various meetings without there being any necessary linkage to Australia. The Notices are seeking to investigate possible collusion between various airlines and the documents sought to be obtained need only 'relate to' such an arrangement. If the ACCC sought all documents recording correspondence or conversations between one airline and another airline about cargo then it could be 'relevant to' the alleged infringement. It would be apparent to a participant in the airline industry who reads the Notices that the reason why the respondents were interested in these documents was because any price fixing arrangements may have been discussed or agreed at these meetings. Insofar as documents are sought for overseas meetings of airline representatives that are not necessarily restricted with respect to air cargo to and from Australia, these may be records of meetings with representatives of airlines in competition in Australia, from which there may be reason to believe certain evidence was relevant (in the broad sense) to the investigation. I raise these matters now, relevantly to burden, to indicate that the range of information sought does not lead to the conclusion that there was a lack of good faith or a collateral purpose, or that the burden was not properly considered. The fact that there may be instances where a Schedule to the Notices includes one or two items that may not be "relevant" or may not relate to the matter, does not necessarily invalidate the Notices. In my view, it cannot be said that the information and documents sought are excessive in the circumstances of the investigation and the nature of the alleged contravention of the Act. The issue, is then, only one of timing for compliance. I have found that the original time for compliance was objectively a harsh and oppressive burden, but nevertheless, an issue actually considered by Mr Samuel. This conclusion alone does not lead to invalidity. Should I then conclude that the original time restriction was imposed in bad faith or was otherwise unreasonable? In my view, there is no basis for doing so. Bad faith involves an element of dishonesty. Mr Samuel may well have made an error in his assessment of the burden, but I do not conclude on the evidence before me that he lacked honesty or did not make a genuine attempt to undertake the statutory function imposed on him. In focusing on the time for compliance, there is no reason to assume that at the time of the decision to issue the Notices, Mr Samuel would not agree if appropriate for an extension of time to comply with the Notices. This aspect is relevant to whether the original time for compliance was imposed in bad faith. For instance, if there was evidence Mr Samuel deliberately chose a short period for compliance knowing it could not be complied with, knowing the nature of the request for information and documents, and was minded in no circumstances to grant an extension if necessary, this may reflect on the reasonableness of the exercise of the power, or whether it had been exercised in good faith. This is not the situation in these proceedings. Here Mr Samuel was entitled to make his own assessment of the burden, but to also reason that if the recipient of any of the Notices could not respond, it could request a variation to extend the time for compliance. In my view, there is no warrant for the conclusion that the requirements set forth in the Notices were not imposed in good faith or without regard to the burden. As observed by Gibbs CJ in Pioneer Concrete (Vic) Pty Ltd v Trade Practices Commission [1982] HCA 65 ; (1982) 152 CLR 460 , '[t]he power [under s 155] is a drastic power and is capable of abuse and must be exercised with care' (at 468). The time for compliance has statutory significance. The recipient is obliged to furnish the information sought within the time specified in the notice, and must produce the documents sought in accordance with the notice: subs 155(1). It is an offence to fail to comply: subs 155(5) and (6A). These are matters that needed to be considered by Mr Samuel, as they undoubtedly were, as part of the statutory context of issuing the Notices and as part of the consequences of non-compliance. Once one reaches the conclusion that the decision to issue the Notices was exercised with care, took into account the relevant considerations, and was not to be impugned on the basis of the principles in Pyneboard [1983] HCA 9 ; 57 FLR 368 , then the reference to the statutory significance of compliance takes the argument no further. Mr Samuel did have a duty to consider properly the scope of the information and documents sought, and make a realistic estimate of the time that would be required to produce the information and documents. However, it is permissible for the decision-maker to impose a time frame he considers appropriate, in the further knowledge that the time frame can be extended by a variation to the notice. I now turn to the separate ground relied upon of unreasonableness. It may be that the concept of unreasonableness is caught within the principles of Pyneboard [1983] HCA 9 ; 57 FLR 368. Nevertheless, I do not consider that approaching the matter on the basis of unreasonableness, even if a separate ground to consider apart from the approach taken in Pyneboard , further advances the arguments of the applicants in support of their applications. Any separate allegation of unreasonableness, particularly in the statutory context of s 155 of the Act, needs to be approached with caution. If it is suggested that there is a legal consequence, it may be necessary to be more precise as to the nature and quality of the error attributed to the decision-maker, and to identify the legal principle or statutory provision that attracts the suggested consequence. It is not the function of the court to substitute its own decision for that of the administrator by exercising a discretion which the legislature has vested in the administrator. Its role is to set limits on the exercise of that discretion, and a decision made within those boundaries cannot be impugned: ( Wednesbury Corporation , at 228). Even if I looked to the question of 'proportionally', it seems to me that having regard to the very nature, breadth and extent of the investigation, the consequences of the burden were not such as to demonstrate unreasonableness so as to impugn the decision: see discussion in Bruce 45 NSWLR 163, at 184-5 per Spigelman CJ. I would reach this conclusion even on the basis of the evidence sought to be tendered by the applicants on the burden issue, although its relevance may be questionable---see above [13]. That such variations have occurred is not in contention. The only attack of the applicants is on the decision to issue the Notices and the Notices in their original form. No complaint is now made as to the extended time frame, there being no attack on the decisions varying the Notices. Whilst unnecessary for me to consider in view of my upholding the validity of the decisions to issue and the Notices, I would not make any of the substantive orders sought by the applicants as a matter of discretion if the applicants only succeeded on the burden issue. In my view, the Court does have a discretion to refuse relief in such circumstances, even to the extent the application is brought under s 163A of the Act: see, eg, Re Tooth & Co Ltd [1978] FCA 9 ; (1978) 31 FLR 314. As I have said, time for compliance has been extended. This time frame is not in dispute. Documents have been delivered by the applicants to the ACCC by reason of some or all of the Notices. The applicants did not challenge the decision to issue the Notices or the Notices before supplying those documents. Some delay occurred before the applicants brought their applications in this Court. There is no suggestion that any prosecution is intended based upon the Notices and the original time frame for compliance. These would all be reasons for refusing as a matter of discretion the substantive relief sought by the applicants. I will make orders to facilitate the parties reaching an agreement as to costs. In the event that no agreement is reached, then orders will be made as to the exchange of submissions on the issue of costs.

investigative function validity of s 155 notices 'matter' under investigation relevance of information sought burdensome unreasonableness of decision to issue s 155 notice market definition market in australia trade practices

The Tribunal had affirmed an earlier decision of a delegate of the Minister to refuse to grant Protection (Class XA) visas to the appellants under s 65 Migration Act 1958 (Cth) ("the Act"). They arrived in Australia on 26 March 2002 and applied to the Department of Immigration and Multicultural Affairs for Protection (Class XA) visas on 24 April 2002. The appellants contend that they are refugees who fear persecution in India because of their support of and membership of the All India Sikh Students Federation ("the AISSF"). The visa application of the appellant wife is substantially dependent on the appellant husband's claim, in that although the appellant wife also claims membership of the AISSF she primarily relies on her husband's fear of persecution as supporting her claim to refugee status. The appellant husband's claims to refugee status are based primarily on the following assertions: The appellant wife's claims to refugee status are also based on the following assertions: On 22 August 2002 a delegate of the Minister refused to grant protection visas to the appellants. The appellants sought review of the delegate's decision and the Tribunal affirmed the decision of the delegate on 12 January 2004. The appellants then sought review of the Tribunal's decision by the Federal Court and on 1 May 2006 the Court set aside the decision and remitted the matter to a differently-constituted Tribunal to be determined according to law. The decision before Wilson FM is the decision of the differently-constituted Tribunal in relation to these appellants. Although the appellant husband claimed to have had telephone contact with the AISSF during the time that he had been in Australia, he had not been politically active, nor had he supported the AISSF financially or in any other way. The Tribunal accepted that the appellant husband had been a member of the AISSF since 1984 or 1985. The Tribunal accepted that the appellant husband had been arrested and abused on a number of occasions by the Punjab police in the late 1980's and mid 1990's, and that he was again beaten and tortured for 3 days in November 2001 and subsequently hospitalised. The Tribunal noted the delay of several months between the release of the appellant husband from hospital and the departure of the appellants from India. The Tribunal was satisfied that, if the appellants had held a well-founded fear of serious harm amounting to persecution due to the appellant husband's involvement in the AISSF and his previous treatment by the police, they would have left India even if this involved leaving by a land border. The Tribunal noted that appellants did not even try to leave until March 2002, by which time they were apparently able to get visas and tickets to come to Australia. The Tribunal accepted that the appellant husband had an arrest warrant issued against him on 14 February 2003 but found that the documents provided by the appellant husband did not satisfy the Tribunal that the warrant was for false charges or otherwise Convention related. This finding was in part because the appellant had had only limited political involvement and profile with the AISSF. The Tribunal did not have any recent country information indicating that Sikhs were being persecuted in India or were experiencing any Convention-related problems. The Tribunal noted the more recent claims of the appellants that, inter alia , they wanted to educate their children in Australia and that their children had no future in India. The Tribunal was satisfied that these were essentially humanitarian claims and not Convention related. The Tribunal was not satisfied that there was a real chance the appellants would experience serious harm amounting to persecution for a Convention reason if they returned to India, either now or in the foreseeable future. In light of these findings the Tribunal affirmed the decision of the delegate. The appellants sought judicial review of the decision of the Tribunal in the Federal Magistrates Court. The Federal Magistrate erred by not finding that the Refugee Review Tribunal made jurisdictional error as it relied on the delegates adverse information without giving the applicants opportunity to comment upon the information given to the delegate and adversely used against the applicants pursuant to section 424A of the Migration Act . Federal Magistrate erred by not finding that the Refugee Review Tribunal made jurisdictional error as it misapprehended the law/erred in law in stating that there ought to have been a convention reason in particular circumstances in which the applicant suffered harm instead of directing its enquires (sic) as effective state protection. The appellants sought the following orders: That the judgement of Federal Magistrate Wilson handed down on 22 February 2008 be set aside and the matter remitted to the Refugee Review Tribunal differently constituted to be dealt with according to law. An order that the Respondent pay the Appellant's costs of the proceedings. Court make a declaration that the decision of the Federal Magistrate and the Tribunal was invalid and of no effect. Such other orders as the Court deems fit. The three grounds of appeal raised by the appellants reflect, respectively, Grounds 4, 2 and 3 of review before his Honour. At the hearing before me the appellants were self-represented, however they filed written submissions and made oral submissions. The Minister was represented by Ms Kidson of Counsel, and written submissions were filed on the Minister's behalf. I form this view for the following reasons. First, in relation to the first ground of appeal, his Honour dealt comprehensively with the issue of whether the appellants were members of a particular social group (or had indeed raised this issue before the Tribunal) in his judgment at [36]-[52]. In particular, his Honour observed that: I see no fault in his Honour's reasoning. I also note that whether or not a person is a member of a particular social group is immaterial unless the person claims to be at risk of persecution by reason of their membership of that group (cf s 91S of the Act). While the appellants have referred to issues such as poverty and lack of education, I accept the submission of the Minister that these characteristics were put forward by the appellants at the Tribunal hearing as the harm they feared rather than the reason for being at risk of harm. In particular, the employment of the applicants in particular the first applicant is critical to the decision. The information is used to impeach the credit (see page 8 of the decision) where the member talks of "contradictions" at page 8.3. The Applicants submit that the Tribunal breached section 424 of the Act. In this case his Honour found that the passage in the Tribunal's reasons referred to by the appellants in the particulars: Further, his Honour noted that the Tribunal in these proceedings said in its decision that it accepted the appellant husband's claims. The Tribunal did not, contrary to the submission of the appellants, use the "inconsistency" referred to to impeach the credit of the appellant husband. I see no fault in his Honour's reasoning in relation to this ground of appeal. There is no demonstrable error in his Honour's findings with respect to the findings of the Tribunal and the Tribunal's view of any alleged discrepancy in the appellant husband's evidence. Indeed, it is clear from the Tribunal decision that the Tribunal accepted most of the appellants' evidence --- the Tribunal was simply not satisfied that the appellants had demonstrated a well-founded fear of persecution for a Convention reason. Finally, in relation to the third ground of appeal, I note that his Honour disposed of a similar contention in that Court by finding that the issue the Tribunal was required to address was whether the appellants were persons to whom protection obligations were owed. I see no fault in his Honour's reasoning. The question for the Tribunal in assessing entitlement to a protection visa is whether the applicant is a person to whom protection obligations are owed within the meaning of the within the meaning of the Refugees Convention as amended by the Refugees Protocol. Once that finding is made, the appellants are not "refugees". However the Tribunal found that, notwithstanding this evidence, the appellants did not have a well-founded fear of persecution as contemplated by the Refugees Convention and the Act. The Tribunal noted that considerable time had passed since the original protection visa application was lodged, and that no country information had been submitted by the appellants or identified by the Tribunal indicating that Sikhs or persons of the appellants' religion were being persecuted in India or were more recently experiencing Convention related difficulties. The findings of the Tribunal were available on the material before it, and I identify no jurisdictional error affecting the Tribunal decision, and no error in the decision of the learned Federal Magistrate. The appropriate order is that the appeal be dismissed with costs. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier.

migration act 1958 (cth) s 65 protection (class xa) visa application appeal from decision of federal magistrate whether jurisdictional error in decision of refugee review tribunal migration

2 In her application for a Protection (Class XA) visa, which was lodged on 3 December 2004, it was indicated that her relevant language was Mandarin. Her application for a Protection (Class XA) visa was refused by a delegate of the Minister on 8 February 2005. 4 The appellant applied to the Refugee Review Tribunal ('the Tribunal') for review of that decision, her application having been filed on 14 March 2005. 5 The appellant was invited to attend a hearing of the Tribunal, following advice that the Tribunal had considered the material before it in relation to her application, but was unable to make a decision in her favour on that information alone. The appellant completed the 'Response to Hearing Invitation', indicating that she wished to attend a hearing. In response to the question 'Do you need an interpreter? ' her response was in the affirmative. The language specified was 'Mandarin' and no dialect was indicated. 6 It would appear that the appellant was originally notified of a Tribunal hearing which was to take place on 27 May 2005. 7 Following a discussion between the appellant's husband and an officer of the Tribunal on 18 May 2005, it was indicated that the appellant's hearing would be rescheduled to a date on which both her application for review, that of her husband and that of a son, could all be dealt with by the Tribunal on the one day. The revised date for her hearing was 9 June 2005. The court book includes a file note of 18 May 2005 that noted a conversation between an officer of the Tribunal and the appellant's husband. 10 A further 'Response to Hearing Invitation' provided by the appellant indicated that she needed a Mandarin interpreter and no dialect was nominated. 11 The Tribunal's hearing record of 9 June 2005 discloses that a hearing commenced at 12.55 pm and an interpreter was provided. The interpreter's name was recorded in the record, along with his agency. The language recorded was, 'Mand', which has been crossed out, followed by 'Fuzhou-Mandarin'. There was also an indication 'Lvl --- 3 Mand. The Applicant claims to be a Christian and to have organised religious gatherings at her home. She claims that for these reason (sic) the authorities in China sought to arrest her and she fears arrest should she return to China. The Tribunal finds as follows. Not being satisfied in respect of these aspects of her claims, which are discussed below, leads the Tribunal to conclude that the Applicant is not in genuine fear of persecution nor is there a real chance of persecution on her return to China. She was unable to provide any meaningful detail on her claimed religious convictions or her religious associations such that the Tribunal cannot be satisfied that the Applicant is a Christian. The Tribunal does not accept as plausible the Applicant's claim that her inability to elaborate on her claimed religious beliefs is for reasons that she easily forgets things, is illiterate and that she was unable to participate in the religious gatherings in her home because she was busy preparing refreshments and therefore has limited religious knowledge. 14 It would appear that by an application filed 12 August 2005 the appellant applied to the Federal Magistrates Court of Australia for constitutional writ relief in respect of the decision of the Tribunal. An Amended Application dated 11 October 2005 was apparently filed on 13 October 2005. That application was the subject of some adjournments before it was heard on 9 August 2007 by Federal Magistrate Barnes. 15 On 23 August 2007 the learned Federal Magistrate ordered that the application be dismissed and that the appellant pay the first respondent's costs fixed in the sum of $5,500. 16 A Notice of Appeal was filed in this Court on 11 September 2007. I clarify all my points at the hearing of the Federal Magistrates Court, but the Judge did not give me a chance to provide more document. The Judge refused my application on my hearing date. It is not fair. I am Christian. I will be persecuted if I return to China. I believe that my application was not considered reasonably by the Judge at the Federal Magistrates Court. She indicated that she was very nervous and one can understand her circumstances in that regard. She said in relation to ground 1 words to the effect 'I am a Christian. I told the truth in the hearing. ' In respect of ground 2 she really pleaded for the Court to give her a 'fair judgment', indicating that she was a Christian. In relation to ground 3, she indicated that she had told the Tribunal Member the truth and that because of her limited education she could not express herself well. 18 She indicated that whilst the matters of herself, her son and her husband had all been before the Tribunal at the one time they 'went inside separately'. When asked by me whether she was able to understand the interpreter's interpretation of English she said 'I was able to understand some of it, some of it I was unable to understand'. She then made an observation about her lack of education and lack of knowledge of the law. 19 Her observation that she was able to understand some of the interpreter's interpretation from the English language and that she was unable to understand some of it is not a matter in respect of which she provided any evidence in the hearing before the learned Federal Magistrate. 20 There is one aspect of this case which causes me concern. The interpreter spoke both Mandarin and Fuzhou dialect. At the commencement of the hearing the interpreter raised some concerns about in which language he would be interpreting. He stated that he had already spoken with the Applicants and he did not feel that Fuzhou dialect is their particular dialect. The Tribunal then raised with the Applicants the possibility of the hearings being conducted in Mandarin. The Tribunal noted that the Applicants had, in lodging their protection visa application, each listed that their language was Mandarin, and in their application for review had also stated that their language was Mandarin. Also, in their response to the hearing invitation, both the Applicant husband and the Applicant wife had requested an interpreter, and had stated that they wished to have a Mandarin interpreter, and did not nominate any particular dialect. The Applicant husband and wife agreed that they could conduct the hearing in Mandarin and it was agreed that if the Applicants experienced any difficulties with interpreting, then questions could be repeated and they were invited to raise their concerns as the hearing progressed. What concerns me about the present case is not one of interpretation so much as one of comprehension. There is also the added difficulty that the hearings of the husband and the wife and the son proceeded together. 22 In the Tribunal's reasons the Tribunal Member pointed out that because the husband, wife and son had lodged separate applications for review they were each entitled to a separate and distinct hearing. The Applicants each stated that they were happy to do the hearing jointly. The Tribunal suggested that it could conduct the initial stages of the hearing -that is the explanation of the Refugee Convention and the process that the Tribunal will follow in the hearing with all three present but would then take evidence distinctly and individually from each Applicant with out the presence of the other two Applicants. The Applicants agreed to this process. An Albanian interpreter was present. The applicant had asked for a Tosk dialect Albanian interpreter, and the interpreter present did not speak that dialect well. The hearing was adjourned. It next took place on 18 February 2005. Again, the interpreter was said by the applicant not to be specifically a Tosk dialect speaker, although the interpreter said he commonly interpreted in the Tosk dialect. The Tribunal observed that the applicant and her husband appeared to be speaking fluently with the interpreter, and that the interpreter had previously in a number of other matters interpreted in the Tosk dialect. In the course of the discussions about the competence of the interpreter, the applicant in English said she wished to proceed with the hearing. Thereafter, at her election, she conducted the hearing in English, although on a number of occasions she sought the assistance of the interpreter, and the interpreter appears to have interpreted parts of the course of the hearing to the applicant's husband. The applicant had her migration agent present during the hearing. It provided an Albanian interpreter, and there is nothing to indicate the interpreter could not effectively interpret the applicant's statements, or the Tribunal's statements to the applicant, using the Tosk dialect. Indeed, the applicant herself said she could understand the interpreter, and that the difficulty arose only in the case of her husband. The transcript of the hearing does not demonstrate any apparent difficulties in interpretation. It flows naturally, and there are no obvious examples of inappropriate answers to questions or answers which are not responsive or meaningful so as to suggest there was any misunderstanding between the applicant and the Tribunal, either when she was speaking in English or when she was speaking through the interpreter. The particular references to the transcript to which I was taken by the applicant do not indicate any interpretation difficulties. It is true that she has offered no evidence of any misinterpretation. 25 Procedural fairness in the present case required a fair hearing. The particular content to be given to the requirement to accord procedural fairness will depend upon the facts and circumstances of the particular case (see SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152 at [25]-[26]). 28 Section 425 was considered by the High Court in its recent decision in SZFDE v Minister for Immigration and Citizenship (2007) 81 ALJR 1401 ('SZFDE'). In that case the High Court held that the fraud of a migration agent upon his clients, which resulted in a non-attendance before the Tribunal, merited the description of 'the practice of fraud' on 'the tribunal'. Given the significance of procedural fairness for the principles concerned with jurisdictional error, sourced in s 75(v) of the Constitution , the subversion of the processes of the tribunal in the manner alleged by the present appellants is a matter of the first magnitude in the due administration of Pt 7 of the Act. However, in my opinion a fair hearing requires that there be no doubt at the outset that an applicant seeking review can comprehend that which is being spoken and interpreted. 30 The very fact that the Tribunal found it necessary to record that the interpreter in this case had concerns about which language he would be interpreting and about the fact that he did not feel that the Fuzhou dialect was the dialect of the appellant casts doubt upon any agreement which may thereafter have been made to the hearing before the Tribunal proceeding in Mandarin, with any difficulties in interpretation to be resolved by inviting questions to be repeated and concerns to be raised. 31 It would appear that the relevant dialect with which the appellant was conversant was the Fuqing dialect. On 30 January 2007 the applicant's husband told the Court that while he spoke a little Mandarin he had not understood the Tribunal questioning and that he had told the Tribunal that he needed an interpreter who spoke his dialect, which he said was "Fuqing". The same issues were said to arise in relation to his wife, the applicant in these proceedings. It is also apparent that the appellant's husband appears to have been the main spokesman for the applicants in the hearing before her Honour. 33 Orders had previously been made for the provision by the first respondent of copies of the relevant Tribunal tapes and these were duly provided; no transcription was made nor were the tapes tendered and played on the hearing before the learned Federal Magistrate where the appellants appeared in person. There was some playing of one of two tapes before the Federal Magistrate but that was for the purpose of confirming that the tape was indeed one in which the voice of the appellant's husband had been recorded. There was no suggestion by the applicant or by her husband that any interpretation or comprehension difficulties were raised with the Tribunal at any time by either of them. Insofar as the conduct of the hearing is recorded in the Tribunal reasons for decision it is not established that there were any difficulties in interpretation, comprehension or communication through the Mandarin-speaking interpreter. In all the circumstances, on the evidence before me I am not satisfied that the use of an interpreter who spoke Mandarin and Fuzhou meant that the interpretation was inadequate or that it could be said that the applicant was effectively prevented from giving evidence at the Tribunal hearing. No breach of s.425, actual or apparent bias or other jurisdictional error arising out of use of the Mandarin-speaking (rather than Fuqing dialect) interpreter is established. I am not satisfied that by proceeding with the available interpreter, in the face of his concern about the language to be interpreted and his feeling that the dialect which he spoke was not the appellant's dialect or that of her husband or of her son, a fair hearing could ensue. 37 In my opinion the appellant was denied procedural fairness in circumstances where, in the light of the interpreter's comments, an adjournment was not ordered to facilitate the provision of an interpreter who could make himself understood in the appellant's own dialect. The possibility of difficulties of comprehension could not properly be addressed by proceeding with an interpreter who did not speak the relevant dialect on the basis that if there were any difficulties experienced the appellant could ask for questions to be repeated and could raise her concerns as the hearing progressed. 38 In my opinion, the appeal should be allowed and the matter should be reconsidered by the Tribunal. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham.

procedural fairness whether a tribunal hearing should have proceeded where a real doubt existed as to the ability of the applicant to comprehend what was being said migration

On 23 March 2007 the applicants Robert Hine and CPR Property Pty Limited, filed an Application seeking relief against 'NSW Department of Housing' as the respondent. That application was accompanied by a Statement of Claim also filed on 23 March 2007. 3 CPR Property Pty Ltd was a company with which Mr Hine was concerned, which in the past had contracts with the New South Wales State Government. Mr Hine, if I may refer to him alone, has a grievance in respect of his exclusion from government contracting since about 2004. 4 At no stage has Mr Hine had a solicitor representing him, at least on the record. Following orders made pursuant to Order 80 rule 4 of the Federal Court Rules assistance has been provided by Mr Lancaster of counsel for the applicants. When the matter was before the Court on 10 May 2007 I granted leave to the first applicant, Mr Hine, as a director of the second applicant CPR Property Pty Ltd to represent the second applicant in the proceedings until further order. No further order has, as yet, been made in relation to the question of representation of the second applicant. 5 The original Application and original Statement of Claim were not in the form one might have expected if the documents had been drafted by a legal practitioner. For present purposes it is sufficient to note that the Application sought damages of $12.5 million from the respondent 'AS A RESULT OF PERSONAL INJURY/DAMAGE TO ROBERT HINE AND HIS FUTURE EARNING CAPACITY AND CPR PROPERTY PTY LTD'. 6 The Application referred to claims under various provisions of the Trade Practices Act 1974 (Cth) ( ' Trade Practices Act ' ), claims under the Fair Trading Act 1987 (NSW) and claims identified as 'STATEMENT OF CLAIM --- DIRECT V INDIRECT TORTS'. 7 The Statement of Claim provided something of a narrative of Mr Hine's grievances in respect of his exclusion from government contracts. 8 On 10 May 2007 leave was granted to the applicants to file and serve an Amended Application and an Amended Statement of Claim on or before 6 June 2007. An Amended Application was filed on 4 June 2007 along with an Amended Statement of Claim. The Amended Application identified the respondents as 'The Land and Housing Corporation and the State of New South Wales'. On 28 June 2007 I ordered that the name of the first respondent be changed from 'The Land and Housing Corporation' to 'New South Wales Land and Housing Corporation' and also ordered that 'State of New South Wales' be added as a second respondent. 9 Once again the Amended Application and Amended Statement of Claim sought relief for the applicants by way of damages in the sum of $12.5 million. The Respondent committed the tort of unlawful interference with the Applicant and in doing so breached sections 46(1), (a), (b) and (c) of the Trade Practices Act (1974) (Cth). On 30 October 2007, a Further Amended Application was filed, together with a Further Amended Statement of Claim. Had those been the only claims in an original pleading filed in this Court, the proceedings would not have raised a federal issue and the Court would not have had jurisdiction in the matter. However, the March 2007 pleadings and the June 2007 pleadings each asserted federal causes of action: see, in particular, paras 5 and 8 of the Amended Application and para 4 of the Amended Statement of Claim. Those pleadings included bona fide claims made under the Trade Practices Act 1974 (Cth). He submitted that the matter had never attracted federal jurisdiction. Mr Tyndall does not submit that the references to the Trade Practices Act in the original Application, the original Statement of Claim, the Amended Application and the Amended Statement of Claim were colourable in the sense that they were made for the improper purpose of 'fabricating' jurisdiction. 12 In the circumstances, the weight of authority seems to me to be against the respondent's case on the present motion. This court's jurisdiction has been defined by the Federal Court of Australia Act 1976 (Cth), which was enacted in accordance with s 77(i) of the Constitution . The word has a wide meaning and is of particular relevance to understanding the width of federal jurisdiction as exercised by any relevant court and to understanding what is referred to as the accrued jurisdiction of any federal court, including the Federal Court. It is not the cause of action or the causes of action brought by the plaintiff. A justiciable controversy is identifiable independently of proceedings brought for its determination. It is not characterised by the form of the proceedings. It is the whole controversy in respect of which it is the function of the court (State or federal) exercising the judicial power of the Commonwealth to quell. It is the 'subject matter for determination in a legal proceeding'. 76(ii. ) so as to attract the exercise of federal jurisdiction. The cases establish that federal jurisdiction is attracted if the right or duty based in a federal statute is directly asserted by the plaintiff or defendant, but not if the federal question arises only in some incidental fashion. ... If a federal matter is raised on the pleading federal jurisdiction is exercised, notwithstanding that the court finds it unnecessary to decide the federal question because the case can be disposed of on other grounds. It could not be suggested that the claims as formulated by Mr Hine and CPR Property Pty Limited were fabricated for the improper purpose of attracting federal jurisdiction. There is no evidence to suggest that Mr Hine had any understanding that claims brought by him, under the Trade Practices Act sections that he relied upon, would be hopeless or would prove to be hopeless. 19 The cases make it clear that federal jurisdiction will not be attracted where the federal claim is 'colourable' (see Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212 at 219; Unilan Holdings Pty Limited v Kerin (1993) 44 FCR 481 and Beck v Spalla at 560 [26]). I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham.

jurisdiction federal claims hopeless but not colourable, in the sense that they were made for the improper purpose of fabricating jurisdiction once federal jurisdiction attracted, it remains, even though federal matters abandoned courts

2 The appellant appeals to this Court from the Federal Magistrate's decision and seeks leave to rely on a ground of appeal not raised below, which is opposed by the first respondent. In order to understand and evaluate the grounds of appeal raised before me, including the application for leave to argue a matter not raised before the Federal Magistrate, it is necessary to consider the basis of the Tribunal's decision. It would seem that the appellant did not receive personal notification of the hearing before the Tribunal. The appellant does not challenge the finding of the Federal Magistrate at [2] that the requirements of the Migration Act 1958 (Cth) ('the Act') for notification were complied with. 4 In accordance with the relatively standard way in which these decisions are set out the Tribunal dealt with the matter under a series of headings. Under the heading ' CLAIMS AND EVIDENCE ' the Tribunal described the procedural history of the application for review and set out the factual matters raised by the appellant in her written application to the Tribunal and also in the written material submitted by the appellant to the Department in support of her application for a protection visa. The Tribunal also referred to the Delegate's decision and certain country information that had been referred to in that decision. 5 Under the heading ' FINDINGS AND REASONS ' the Tribunal reminded itself that it was for the appellant ' to satisfy the Tribunal that all of the statutory elements [of a well-founded fear of persecution] are made out ' and that the decision-maker is not required to make out that case nor required to accept uncritically any and all of the allegations made. 6 The Tribunal stated that it accepted that the appellant was a citizen of Mongolia as claimed and recited the relevant parts of her claims, in particular her claim to have been persecuted in the past and to fear a repeat of that persecution for reason of her membership of a particular social group. The Tribunal described the particular social group as ' an unnamed support group which informed and educated women [in Mongolia] about life overseas '. It can be taken from the context of the Tribunal's decision that those women the appellant was informing and educating were women at risk of people trafficking in Mongolia by organised crime groups. 7 The Tribunal then stated that, having considered the appellant's evidence, it was not satisfied that she has a well-founded fear of persecution within the meaning of the Convention if she returns to Mongolia. The Tribunal explained that it was not so satisfied because it found her claims to be ' extremely vague and lacking in useful detail '. The Tribunal then gave some examples of the kind of information that was missing such as ' useful information about the un-named support group or about the Applicant's actual activities with that group '. The Tribunal referred to further claims on the part of the appellant, noting that they had been found ' vague and unsupported ' by the Delegate and that the Tribunal had no further information from the appellant. 8 It is clear that the Tribunal did not reach the requisite level of satisfaction that the appellant had actually experienced persecution. It followed that, as a matter of logic, the Tribunal was not required to consider whether her fear of persecution was well-founded. The ground was raised before the Federal Magistrate and is said to arise from that part of the sentence set out at [9] above which identified the appellant as being ' of interest to the traffickers because she opposed their business... rather than for reasons of her membership of a particular social group ' (emphasis added). 11 The sentence is a curious inclusion in the Tribunal's decision, because the Tribunal seems to have accepted that it was her membership of a particular social group (the unnamed support group which informed and educated women about life overseas) upon which the appellant relied to establish a well-founded fear of persecution for a Convention reason. 12 However, as I have stated above, the Tribunal was not satisfied that the appellant had actually experienced persecution. In this case the Tribunal was unable to reach such a state of satisfaction, for the reasons expressed and set out herein and in the Tribunal's own decision . The most that can be said from the country information to which the appellant referred is that it included a statement that ' A LACK OF RESOURCES CONSTRAINS THE MONGOLIAN GOVERNMENT IN IMPLEMENTING POLICY INITIATIVES IN WOMEN'S ISSUES '. 14 A mere lack of resources does not of itself give rise to the kind of lack of state protection that is necessary to establish a well-founded fear of persecution for a Convention reason. Leave is required for the appellant to raise this ground as it was not argued before the Federal Magistrate. 16 It is submitted by the appellant that s 424A(1) of the Act applies in this case in two ways. First, there was a reference in the Tribunal's reasons to country information that had been before the Delegate. The country information included the response of the Department of Foreign Affairs and Trade to a series of questions apparently asked by the Tribunal concerning the status of women trafficking in Mongolia ('the response'). 17 The appellant accepts that if the response was information of a kind to which s 424A(3)(a) of the Act applied it did not need to be disclosed to the appellant. However, the appellant submits that because the response commenced with the words ' SEVERAL FEMALE APPLICANTS CLAIM TO HAVE PARTICIPATED IN PROTESTING AGAINST WOMEN TRAFFICKING IN MONGOLIA ON BEHALF OF A LOCAL WOMENS SUPPORT GROUP ' (emphasis added), the information must be ' specifically about the applicant or another person ' and not ' just about a class of persons of which the applicant or other person is a member ' (s 434A(3)(a)). 18 It is clear to me that when one looks at the response in its totality, the information relates only to a class of persons. All of the answers to the questions and the questions themselves relate to a class of persons, being victims of women trafficking or persons participating in protests against women trafficking, and not to any individual. Accordingly, even if that did form part of the information upon which the Tribunal relied, the Tribunal was not obliged to disclose the response to the appellant. 19 The second way in which the appellant relies on s 424A(1) of the Act is the assertion that the Tribunal did not inform the appellant that it ' relied upon [the] finding of the Delegate '. In particular, attention is drawn to a sentence in the Tribunal's decision in the ' FINDINGS AND REASONS ' section that says '[t] he delegate noted that the Applicant's claims were very vague and unsupported '. It is said that that constitutes information within s 424A(1). 20 I do not accept that submission. It is clear to me that, reading the Tribunal's decision as a whole, it was the absence of information alone that led to the Tribunal being unable to reach the requisite degree of satisfaction and that the Tribunal was simply explaining its thought processes in that regard. Not all information or material to which the Tribunal refers necessarily becomes information that leads to a factual finding based upon its terms nor does it necessarily form part of the reasons for the decision. 21 The basis for the Tribunal's decision was that it was the unsatisfactory nature of the evidence before the Tribunal alone that was the reason for affirming the decision of the Delegate. That such information does not come within s 424A(1) has been reaffirmed in SZEEU v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 2 ; (2006) 150 FCR 214 at [223] to [224] and again in SZCIA v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 238 at [12] . I grant leave to the appellant to amend the notice of appeal to rely upon the new ground of appeal. 23 I find that there has been no contravention of s 424A(1) of the Act. 24 The fact that the Tribunal did not consider whether a lack of effective state protection was available to the appellant was not jurisdictional error in circumstances where the Tribunal was not satisfied that the appellant had experienced persecution. 25 As the appellant has failed to demonstrate either jurisdictional error on the part of the Tribunal or error on the part of the Federal Magistrate I have no alternative but to dismiss the appeal. 26 I order the appellant to pay the first respondent's costs.

protection visa tribunal not satisfied that appellant experienced persecution no jurisdictional error in failure to consider absence of state protection country information that responded to questions about the class of "several female applicants" is information within s 424a(3)(a) appeal dismissed migration

In that decision the Tribunal affirmed the decision of a delegate of the first respondent refusing to grant to the applicant a subclass 853 Remaining Relative visa. 2 The Tribunal is joined as second respondent on the basis it will abide the decision of the Court. References in these reasons to 'the respondent' are therefore to be understood as referrable to the first respondent. On 6 September 1998 the applicant entered Australia as the holder of a subclass 976 Visitor visa. On 7 April 1999 he was granted a subclass 457 visa, valid until 21 October 2001, as a dependent associated with an application and grant of visa to his father, Mr Gary Elliott. 4 The applicant has not left Australia since his arrival on 6 September 1998. On 19 October 2001 the applicant's father applied for a subclass 856 visa. The secondary applicants included the applicant's father's spouse, Ms Dianne Gleghorn, their son Thomas and the applicant. On the same date, the applicant was granted a Bridging A visa valid until 16 October 2002. On 11 October 2002 the applicant was granted a further Bridging A visa. 5 On 1 September 2002 the applicant's father advised the Department of Immigration and Multicultural and Indigenous Affairs ('the Department') that the applicant could not be classified as a dependent child and the applicant withdrew from his father's application for a subclass 856 visa on 18 September 2002. 6 On 17 October 2002 the applicant applied for an Other Family (Residence) (Class BU) visa seeking a subclass 835 Remaining Relative visa. In the section of the application form requiring details of the applicant's family members, the applicant included his mother, Cathy Payton, and two half-sisters, Kerry Payton and Nicola Swarbrick. The applicant gave their country of current residence as England. 7 A delegate of the first respondent made a decision on 17 February 2004 refusing to grant the applicant a subclass 853 Remaining Relative visa. The delegate concluded that because the applicant usually resided in Australia, he did not satisfy the requirements of subreg 1.15(1)(c)(i) of the Migration Regulations 1994 (Cth) ('the Migration Regulations '), and therefore could not be a remaining relative. On 10 March 2004 the applicant lodged an application with the Migration Review Tribunal ('the Tribunal') seeking review of the delegate's decision. 8 The Tribunal hearing was held on 30 August 2004 at which the applicant and his father gave oral evidence. The decision affirming the delegate's decision adverse to the applicant was made on 22 November 2004. In making or purporting to make the decision the Tribunal acted without or in excess of jurisdiction in that it failed to understand and to apply the definition of remaining relative in Regulation 1.15 of the Migration Regulations 1994 ("the Regulations ") made applicable by Item 1123B in Schedule 1 to the Regulations and Part 835 of Schedule 2 to the Regulations , and thereby asked itself the wrong question or failed to ask itself the right, or a right, question. If (which is denied) the Tribunal did as part of its decision-making process ask itself the question of whether the Applicant had not had contact with his overseas near relatives within a reasonable period before making his application, and to address that matter, in so doing the Tribunal acted without or in excess of jurisdiction. The particulars further allege that in relation to subreg 1.15(1)(c)(ii) the Tribunal failed to ask itself the right question, wrongly directed itself as to certain matters, and addressed the wrong question. 11 The hearing of the application on 29 June 2005 was adjourned to 19 October 2005 to enable the parties to file further written submissions following the delivery of the decision of the Full Court in relation to the Minister for Immigration and Multicultural and Indigenous Affair's appeal from the decision of Spender J in Minister for Immigration and Multicultural and Indigenous Affairs v Hidalgo [2005] FCA 437 , which was listed for hearing on 22 August 2005. 12 On 22 August 2005 the Full Court heard the Hidalgo appeal and on that same date the Court ordered that the appeal be dismissed: Minister for Immigration and Multicultural and Indigenous Affairs v Hidalgo [2005] FCAFC 192. The Full Court's reasons for judgment were published on 12 September 2005. 13) SR No. 259. Prior to those amendments, subreg 1.15(1) provided that an applicant was a remaining relative if the applicant had a relative of the same kind as is specified in the present subreg 1.15(1)(a) who was usually resident in Australia, unless the applicant was disqualified under subreg (2). 19 As a result of the Full Court's decision in Hidalgo , the respondent concedes that the Tribunal erred in its construction of subreg 1.15(1)(c)(i). As the Tribunal was satisfied that the applicant was usually resident in Australia at the time of his visa application and at the time of the Tribunal's decision and that his overseas near relatives were usually resident in the United Kingdom at the time of application and at the time of decision (at [43] and [44]), the applicant met the requirements of subreg 1.15(1)(c)(i). Accordingly, ground 1 of the application is made out. The Tribunal concluded that the applicant did not satisfy subreg 1.15(1)(c)(ii). The respondent contends there was no jurisdictional error by the Tribunal in reaching that conclusion. 21 The Tribunal said that in order to satisfy subreg 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. He gave evidence that apart from a birthday card in 1998 or 1999 he had not heard from his mother and half-siblings and that he believed it had been 4-5 years since he had last spoken to his mother. When questioned by the Tribunal why the visa applicant had not had any contact with his mother, given that he had always lived with her until the age of 16 years, he responded that he had not got on well with his mother for a number of years and he believed it was just a matter of time before contact between them would have ceased in any event. ... Mr Elliott [the applicant's father] also told the Tribunal that during the sixteen years the visa applicant had lived with his former spouse, she had been involved in a number of abusive relationships where the visa applicant had been required to step in to stop the physical abuse of his mother by one of his [sic] partners. However, Mr Elliott stated that the visa applicant's mother had failed to provide him with any ongoing support in the circumstances and therefore it was not surprising that the visa applicant had not maintained contact with his mother. Mr Elliott also claimed that one of the visa applicant's half-siblings had also left her mother and returned to live with her natural father for the same reason. ... The visa applicant has claimed to have had only single instances of contact with his mother and half-siblings in the United Kingdom since 1998 or 1999 in the form of birthday cards. He claims not to have had any social contact with his mother because their relationship had effectively been difficult prior to his arrival in Australia. The Tribunal has taken into account that the policy guidelines require the visa applicant to demonstrate that he has not had any contact with his overseas near relatives and observes that proving a negative fact can be difficult for an applicant. However, the Tribunal also notes that despite his claims regarding the nature of his relationship with his mother, apart from his oral evidence and that of his father, no other evidence, such as statements from the [sic] his mother or half-siblings, custody documents or the like have been provided to the Tribunal to support his claim. On the other hand, the visa applicant's evidence to the Tribunal was that he had lived with his mother for the first sixteen years of his life before he arrived in Australia. He was also somewhat vague in describing to the Tribunal when he had last had contact with his mother and half-siblings. In the circumstances of this particular case, the Tribunal sees no cogent reasons to depart from policy in relation to the onus of proof regarding lack of contact with an overseas near relative. In addition, the Tribunal notes that the claims regarding lack of contact with his overseas near relatives were only raised by the visa applicant at review, after the visa applicant had become aware of the importance of this particular issue in relation to the definition of a remaining relative. In the circumstances, the Tribunal gives less weight to the claim that the only contact that took place with the visa applicant's mother in relation to his visa application was between his father and his mother. The Tribunal had said that the applicant stated his father had asked his mother to send this letter to the Department and that had been confirmed by his father. 27 The Tribunal was therefore not satisfied on the balance of probabilities that the applicant had not had any social contact with his mother or half-siblings within a reasonable period before making his visa application. Therefore, it found that at the time of the application he did not satisfy subreg 1.15(1)(c)(ii) and therefore cl 835.212, so that the application failed. The applicant claims that as a consequence of these errors the Tribunal wrongly concluded that he was not a remaining relative: see particular (d) to ground 2. 30 In support of these contentions the applicant relies particularly on the decision of the Full Court (French, Sackville and Hely JJ) in Lobo v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 168 ; (2003) 200 ALR 359. There, Mrs Lobo had applied for a Business Skills (Residence) (class BH) visa subclass 845 (established business in Australia). Her husband and their daughters were included in the application as secondary visa applicants. The application was refused by a delegate of the Minister for Immigration and Ethnic Affairs on 8 March 2001. The Tribunal in that case affirmed the decision on 6 November 2002. At first instance, Giles J dismissed an application for review on the basis that relief was not available because of the operation of the privative clause s 474 of the Migration Act 1958 (Cth) ('the Act'). He also found, however, that the Tribunal erred in applying a Departmental policy to the visa application which was narrower it its terms than the relevant criterion which it should have applied. A question before the Full Court was whether misconstruction of a visa grant criteria under the Act was amenable to judicial review. The Full Court held that the Tribunal having failed to apply the relevant criterion for the grant of a subclass 845 visa, that failure constituted a jurisdictional error and the decision made under it was not be protected by s 474 of the Act. The Full Court held that the Tribunal had treated assessment according to the Departmental policy as assessment for the purposes of the provision in cl 845.216. It said that in so doing, the Tribunal had erred and its error was jurisdictional because it did not address the question which s 65(1) of the Act required it to address. 31 Consistently with the particularisation in his application, the applicant here contends that in his case the Tribunal applied a different set of criteria than that required by the regulations so that it regarded itself as too rigidly bound by the policy and failed to apply the regulatory provision. It is contended the Tribunal did address this question and it concluded that it was not so satisfied. Further, the Tribunal did not wrongly direct itself that if any contact at all had been made, it would have to be assumed in the absence of evidence to the contrary that such contact had been in the context of a social relationship and had occurred throughout the period in question. 33 In support of its contentions and in opposition to the applicant's contentions the Tribunal relied upon two authorities. The first was Braganza v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 170. There it was in issue whether the Tribunal had inflexibly applied Departmental policy and failed to give real and genuine consideration to the merits of the appellant's case. It was contended there that the Tribunal had failed to give proper genuine and realistic consideration to the merits of the appellant's case because it had slavishly followed the terms of a policy statement MSI205. The issue arose in relation to a claim by that appellant that he was a 'Special Need Relative' of another person who was a 'settled Australian Permanent Resident' as required by cl 806.213. The relevant definition in Migration Regulation 1.03 of the 'settled' in relation to an Australian citizen was that it meant lawfully registered in Australia for a reasonable period. 34 The Full Court in Braganza (also constituted by French, Sackville and Hely JJ) identified the threshold question on the appeal as whether the Tribunal had inflexibly applied Departmental policy or failed to give genuine and serious consideration to the merits of the case. The Full Court found that in some respects the Tribunal's language was somewhat loose. However, it said that those defects did not demonstrate that the Tribunal had inflexibly applied Departmental policy or failed to consider the merits of the case. Furthermore, as had been accepted for the appellant there that although the Tribunal was required to have regard to Departmental policy, that policy was not binding on it: Re Drake v Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634. It was open to the Tribunal, in the interests of consistency, to apply the Departmental policy unless there were cogent reasons for departing from it. The Full Court referred to the two reasons which occasioned the Tribunal to conclude it should not depart from the general rule stated in the Departmental policy. 35 The Full Court held that the Tribunal's reasons showed that it had correctly understood the role of Departmental policy; asked itself the correct question in terms of the statutory criteria; considered the facts put forward by the appellant as justifying departure from the Departmental policy and concluded those facts did not warrant such a departure. Therefore the Full Court concluded that it could not be said the Tribunal slavishly followed the terms of the statement of policy MSI 205, nor that the Tribunal failed to consider the merits of the appellant's case. It said that its conclusion that she had not been resident for a reasonable period was essentially evaluative in character. The Full Court considered that there may have been some virtue in the Tribunal stating the reasons for its evaluation judgment more fully. However, its failure to do so did not establish that it inflexibly applied Departmental policy or that it failed to consider the merits of the appellant's. 36 In view of that conclusion the Full Court saw no need to consider whether an inflexible application of Departmental policy, or a failure to give proper, genuine and realistic consideration to the merits of an application would give rise to jurisdictional error. In this respect it cited comparatively Lobo at [42]. 37 The second authority on which the respondents' contentions relied was that of Djalic v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 151 ; (2004) 206 ALR 488. There the Full Court at [79] cited Braganza at [37] and stated that it was an unresolved question whether a failure to giver proper genuine and realistic consideration to the merits of an application is, of itself, a jurisdictional error. In the case of the applicant, the question was referrable to his mother and/or half-siblings. (2) Since his arrival in Australia in September 1998 the applicant has not left Australia: [10]. (3) Subsequent to his application for a visa, copies of the applicant's half sisters school reports and a letter from his mother were received. In the letter his mother confirmed the applicant is her son and that he is a half-brother of his half-sisters: [12]. (4) In an interview on 12 February 2004 the applicant confirmed the place of residency of his mother and two half-sisters: [12]. (5) It was submitted at the interview that the only contact the visa applicant had with his mother or half-sisters was a birthday card in 1998 "and" 1999: [14]. (6) The applicant's father stated that the applicant had experienced physical violence by his mother's de facto spouse: [14]. (7) At the hearing on 30 August 2004 the applicant stated that he had lived with his mother in England his entire life until the age of 16 years: [16]. (8) The applicant also stated that after he came to Australia he had little contact with his mother or half-sisters in England. He said that apart from a birthday card in 1998 "or" 1999 he had not heard from his mother or sisters in England and he believed the last time he spoke to his mother was 4-5 years ago: [19]. [The transcript of this evidence shows that the applicant's father referred to 'probably 1998 "and" 1999' but the respondents do not dispute the applicant's contention from listening to the tape that "and" should read "or"]. (9) The Tribunal asked the applicant why he had not any contact with his mother, given that he had always lived with her until the age of 16 years. He responded that he had not got on well with his mother for a number of years and he believed it was just a matter to time before contact between them would have ceased in any event: [19]. (10) The Tribunal observed that the applicant's mother had sent the Department a letter and the applicant had said that his father had asked his mother to do so: [19]. His father confirmed this was so: [20]. (11) The applicant's father gave evidence (described by the Tribunal as explaining in part why they had ceased to have any contact once the applicant came to Australia). He told the Tribunal that the applicant's mother had been in three de facto relationships in the 16 years that the applicant had lived with her, some of which had been physically abusive. On a number of occasions the applicant had been required to step in and stop physical abuse of his mother by one of her partners but she had failed to provide him with any ongoing support. Therefore he said it was not surprising that the applicant had not maintained contact with his mother: [20]. In themselves they belie the contention of the applicant that the Tribunal applied the policy with disregard to the requirements of the Act. 41 However, the applicant contends that an examination of [62] of the Tribunal's reasons discloses an important misconception. This is said to become apparent from the composite phrase 'the Tribunal sees no cogent reasons to depart from policy in relation to the onus of proof regarding lack of contact with an overseas near relative'. It is said this discloses that the Tribunal thought that its task could be discharged by it forming an inchoate view that the evidence presented by the applicant would be given less than full weight, without being rejected and by application of the onus of proof. 42 The onus of proof referred to by the Tribunal must be taken to be a reference to item 18.5 in PAM 3. This placed the onus on the applicant to satisfy the Tribunal that, as there had been contact (in the form of a birthday card) it was not in the context of a 'social relationship' and was in the nature of a single instance. There was evidence before the Tribunal which may have supported a finding of fact by it in those terms. 43 The Tribunal arrived at a contrary view. [The letter from the applicant's mother was confined to an attestation of the applicant as her son and that he is the brother of his half-sisters]. (B) The applicant was 'somewhat vague' in describing to the Tribunal when he had last had contact with his mother and half-siblings. (C) The claims regarding lack of contact with his overseas near relatives were only raised by the visa applicant at review, after the applicant had become aware of the importance of the issue. [It is difficult to see why this should have been an adverse consideration to the applicant. [The applicant makes the submission that this was irrelevant because the contact was of a non-social nature]. 44 When the elements of the Tribunal's reasoning process are thus viewed, it is apparent that the Tribunal was engaging in a fact finding as it was required to do. The issue is whether it was in error of law in the manner in which it did so. Rather, the passage in [61] indicates that the Tribunal considered that policy placed a requirement on a visa applicant to demonstrate (i.e. to satisfy the Tribunal) that there had not been contact of a social nature with his or her overseas near relatives throughout a reasonable period before the applicant made his or her visa application. The Tribunal in that passage is reflecting the policy's beneficial aspect that an applicant will not fail to satisfy subreg 1.15(1)(c)(ii) merely because of a single instance or single instances of contact of a non-social or unavoidable nature. That policy statement in turn reflects the amendments to reg 1.15 by which the disqualifying elements in the former subreg 1.15(2) (which required a positive finding by the Tribunal - see Minister for Immigration and Multicultural Affairs v Hughes [1999] FCA 325 ; (1999) 86 FCR 567) have now become matters in respect of which the visa applicant must satisfy the Minister, or on review, the Tribunal. 47 The Tribunal did not wrongly direct itself that the applicant 'bore a burden of proof'. The Tribunal's statements in relation to 'onus' and 'onus of proof' at [61] and [62] are a reflection of the Tribunal's view (reflected in the policy set out in the Department's PAM 3 guidelines and by the provisions of subreg 1.15(1)(c)(ii)) that the applicant had an 'onus' in the sense that he was required to satisfy the Tribunal that he had not had social contact with his mother and half-sisters within a reasonable period before making his visa application. Accordingly, those references do not demonstrate that the Tribunal wrongly directed itself that the applicant bore a burden of proof. 48 There is also the question, arising by analogy from the reasoning in Lobo , whether the Tribunal in these passages nevertheless addressed the criteria in the policy and, in so doing, failed to address the criteria in the subregulation. I do not consider it did so with respect to that aspect of policy addressing onus of proof. Seen in its proper context, the Tribunal's reference to 'onus of proof' is no more than a reflection of the policy statement that it is for an applicant to demonstrate or otherwise satisfy the decision-maker that there has not been contact of a social nature with overseas near relatives throughout a reasonable period prior to the making of the visa application. 49 Furthermore, the statement of policy is a reflection of the legislative requirement in subreg 1.15(1)(c)(ii) that provides that a visa applicant is a remaining relative if the applicant satisfies the Minister for Immigration and Multicultural and Indigenous Affairs, or on review the Tribunal, that he or she has not had contact with an overseas near relative within a reasonable period before making the visa application. As the policy is a reflection of the legislative requirement expressed by subreg 1.15(1)(c)(ii), the Tribunal was in any event not free to depart from the requirement even if cogent reasons did exist. This contention is also advanced on the basis of analogy with Lobo . That is, it is contended that the Tribunal applied the policy by focussing on three years and thereby failed to apply the criteria of the subregulation referring to a reasonable period. I agree with the respondents that the Tribunal's reasons for decision demonstrate that it did not ask such a wrong question. 51 In the passages cited above under the sub-heading 'whether Tribunal failed to ask itself the right question', the Tribunal's reasons for decision show that it was fully aware that subreg 1.15(1)(c)(ii) required the applicant to satisfy it that he had not had contact with his overseas near relatives within a reasonable period before making his visa application. While the Tribunal applied the policy under the Department's PAM 3 guidelines to the effect that a reasonable period is three years preceding the visa application, there was no error by the Tribunal in following the policy in this regard. 52 Further, it is necessary to consider whether, in light of the applicant's claims and evidence, it was reasonable for the Tribunal to take three years as the reasonable period for the purposes of subreg 1.15(1)(c)(ii). The applicant lodged his visa application with the Department on 17 October 2002. His birthday is on 26 October. The only evidence of contact by the applicant with an overseas near relative was in 1998 or 1999. The period of three years back from the date of application just encompassed the contact by card having occurred on his birthday in 1999. The period of three years back from the same date would not have encompassed that contact if it occurred in 1998. In the latter case, the Tribunal would have had to consider a case where there was no relevant evidence of contact. Neither of these considerations, however, made unreasonable the choice of the three year period. 53 The respondent contends that, in any event, it is clear from the Tribunal's reasons that even if it had adopted some lesser period such as two years, or even one year, before the making of the applicant's visa application, this could not have affected its conclusion that it was not satisfied that the applicant had not had any social contact with his overseas near relatives within a reasonable period before making his visa application. The respondent contends that the reasons of the Tribunal should be understood to conclude that there would have been no basis for the Tribunal to have reached a contrary conclusion in respect of any period whether a two year period or a one year period or some other period. The respondent maintains it follows that even if the Tribunal was somehow in error in taking a reasonable period to be three years prior to the making of the visa application in accordance with the Department's PAM 3 guidelines, that did not have any effect on the Tribunal's ultimate decision, and accordingly would not have amounted to jurisdictional error: see Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30 ; (2001) 206 CLR 323 per McHugh, Gummow and Hayne JJ at 351, at [82]. 54 I do not accept this submission. The selection of a two or one year period or some other lesser period would necessarily have excluded from consideration the evidence of contact in 1998 or, relevantly, 1999. The Tribunal would therefore have been bound to approach the issue on that basis. For instance, in terms of the policy it would have been open to it to conclude that the applicant had demonstrated that there had been no contact. It would not necessarily therefore have resorted to the absence of the type of evidence which it referred to in (A) above. 55 None of those considerations, however, make unreasonable the choice of three years as a reasonable period. However, in order to meet the criterion in subreg 1.15(1)(c)(ii), the applicant had to satisfy the Tribunal that he had not had such contact. In concluding that on the evidence before it was not so satisfied (at [63]), the Tribunal could not be said to be applying policy without considering the merits of the applicant's case. To the contrary, the Tribunal's reference to 'the evidence before it' shows clearly that the Tribunal had regard to the merits of the applicant's case. However, the Tribunal was not bound, as a matter of law, to reach a conclusion that the applicant had satisfied it that he had not had contact with his mother and half-sisters within a reasonable period before making his visa application, and there was no jurisdictional error by the Tribunal in not reaching that prescribed state of satisfaction. 57 It is further argued for the applicant that, in any event, the Tribunal misconstrued the applicable policy and so misapplied it. The applicant accepts that the Tribunal was not bound by the policy but could take such policy into account: Gray at 205. Further, where the original decision-maker has properly paid regard to some general government policy in reaching the decision (as occurred here), the existence of that policy will be a relevant factor for the Tribunal to take into account: Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577 at 590-591. It is submitted that therefore the Tribunal was bound to consider the policy but not to apply it. If the Tribunal seriously misconstrued the terms of the policy that may constitute a failure to take into account a relevant factor and result in an improper exercise of power. It must be accepted, as counsel for the Minister submitted, that Ministerial policy is not to be construed and applied with the nicety of a statute. Policies are not statutory instruments. They prescribe guidelines in general, and not always very precise, language. To apply them with statutory nicety is to misunderstand their function. On the other hand, where the existence and content of such a policy is to be regarded as a relevant fact which the Tribunal is bound to consider, a serious misconstruction of its terms or misunderstanding of its purposes in the course of decision-making may constitute a failure to take into account a relevant factor and for that reason may result in an improper exercise of the statutory power. If a decision-maker, not bound to apply policy, purports to apply it as a proper basis for disposing of the case in hand but misconstrues or misunderstands it so that what is applied is not the policy but something else, then there may be reviewable error. In a limiting case a policy may be so broadly stated as to cover all considerations properly brought to bear on the exercise of the discretion. In such a case misconstruction of the policy may reduce to misconstruction of the statute or misunderstanding of its purpose. 60 The relevant part is subreg 1.15(1)(ii). The applicant being single, it relevantly required that the Tribunal be satisfied by the applicant that he had not had contact with any overseas near relative within a reasonable period before making the application. 62 The respondent disputes that the Tribunal misconstrued or misunderstood the policy. It is submitted that the fact the Tribunal correctly understood the policy in items 18.3, 18.4 and 18.5 of PAM 3 and the applicant's claims is exemplified by the statements in [61] of the Tribunal's reasons. According to the policy guidelines contact 'within a reasonable period' means the three years preceding the visa applicant's application. In this case this would mean during the period approximately 17 October 1999 to 17 October 2002. Policy also requires that the contact be of a social nature throughout this period, rather than single instances of contact. The visa applicant has claimed to have had only single instances of contact with his mother and half-siblings in the United Kingdom since 1998 or 1999 in the form of birthday cards. He claims not to have had any social contact with his mother because their relationship had effectively been difficult prior to his arrival in Australia. In relation to the letter from the visa applicant's mother dated 20 March 2003 the visa applicant stated that this letter was initiated by his father, not by him. At [62] the Tribunal set out a number of matters which then led it to conclude in [63] that it was not satisfied on the balance of probabilities that the applicant 'had not had any social contact with his mother or half-siblings within a reasonable period before making his visa application'. 63 Additionally, the respondents contend that the reference at the end of [62] concerning the giving of 'less weight to the claim that the only contact that took place with the visa applicant's mother in relation to his visa application was between his father and his mother' was not demonstrative of any misconstruction or misunderstanding of the policy. Rather the statement attributes such weight to a specific claim by the applicant's father which required weighing by the Tribunal in conjunction with the other matters. 64 In Gray the majority found that the Tribunal had misconstrued and misapplied the relevant policy (the criminal deportation policy) by not recognising that it was necessary to weigh the collective welfare of the Australian community against hardship to the offender. Additionally, the Tribunal had failed to correctly apply the policy when it determined the level of acceptable risk by reference to factors adverse to the applicant and without reference to the level of rehabilitation achieved and potential as a role model. 65 There is no comparable evidence of misconstruction here. I agree with the submission for the respondents that it is apparent from the Tribunal's reasons that it did not misconstrue the policy in PAM 3. 66 In the end the Tribunal was simply not 'satisfied' of the issue on which the applicant was required to satisfy it. In my view the respondent is correct when she submits there was no error of law in the reasoning of the Tribunal. Accordingly, the Tribunal did not wrongly conclude that the applicant was not a remaining relative as contended by the applicant in particular (d) of ground 2 of his application. The application must be dismissed with costs. I certify that the preceding sixty-eight (68) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholson.

remaining relative visa tribunal affirmed delegate's decision to refuse application for review tribunal accepted effect of full court decision was to negate previous ground of review tribunal found applicant had not satisfied it he had not had contact with his overseas near relatives within a reasonable period no failure to ask right question no misapplication of the requirement of 'contact' no misapplication of onus of proof no wrong choice of three years as a reasonable period no failure to consider merits no application of policy to preclusion of regulatory provision no misconstruction of policy migration

The applicant, Geoffrey Harper, owns a Piper Navajo Chieftain, registration number VH-ONC (aircraft ONC). Mr Harper holds a pilot's licence but his principal business is running a coach company. After purchase in February 2005 Mr Harper brought aircraft ONC to Bankstown airport. The third respondent, TS Air Charter Pty Ltd (TS Air Charter), owns a Piper Navajo Chieftain registration number VH-TSO (aircraft TSO). Aircraft TSO is also located at Bankstown airport. The second respondent, Steven Hobson, is the director of both TS Air Charter and the first respondent, Reg-Air Pty Ltd (Reg-Air). Mr Hobson is a licensed aircraft maintenance engineer (referred to as a LAME in the aircraft industry). He is employed as chief engineer by a company known as AirAg Aviation Services Pty Limited (AirAg). AirAg operates out of Bankstown airport. AirAg is not a party to this proceeding. During the hearing, Mr Harper accepted that Mr Hobson was in fact "an authorised aircraft engineer". (2) In reliance on the express representations Mr Harper agreed to retain Reg-Air to provide services for repair, maintenance and servicing of aircraft ONC (the agreement). (3) In breach of the express representations Reg-Air failed to get aircraft ONC into the air within four months or at all. (5) In breach of the implied representation, Reg-Air and Mr Hobson did not comply with all of the requirements of the Civil Aviation Act and Civil Aviation Regulations (including by reason of tampering with aircraft ONC and keeping inadequate records). (7) In breach of the implied warranty the services were not rendered with due care and skill and the materials supplied in connexion with those services were not reasonably fit for the purpose for which they were supplied. (9) Alternatively, by the express representations and implied representation, Reg-Air falsely represented (within the meaning of s 53(aa) of the Trade Practices Act ) that the services to aircraft ONC would comply with the Civil Aviation Act and Civil Aviation Regulations when they did not and by which Mr Harper suffered loss and damage compensable under s 82 of the Act. (10) By Reg-Air's conduct in breach of the implied warranty, Mr Harper suffered compensable loss and damage. (12) Mr Hobson, as director, servant and agent of Reg-Air and/or TS Air Charter, unlawfully and without the consent of Mr Harper, removed about 500 litres of fuel from aircraft ONC. (13) The respondents are thus liable to Mr Harper for damages by reason of the torts of trespass to and conversion of parts of aircraft ONC. (14) Further, by reason of this conduct, the respondents ensured aircraft TSO remained serviceable and capable of earning income by the supply of charter services, whilst placing aircraft ONC in a condition so that it was not airworthy. The respondents thereby deprived Mr Harper of the capacity to use aircraft ONC to maintain his pilot's licence and otherwise for pleasure and enjoyment, as well as to earn income from supplying aircraft ONC for charter services. The respondents should thus be found liable to pay exemplary damages. Mr Hobson never made the express representations to Mr Harper (other than to the extent that he was, and could have said, he was an aircraft engineer). Mr Hobson and Mr Harper had different conversations from those claimed by Mr Harper including conversations in which Mr Hobson spoke about the provision of services for the repair, maintenance and servicing of aircraft ONC in his capacity as employee and chief engineer of AirAg. Those discussions did not include a time frame for making aircraft ONC airworthy. Further, as an employee of AirAg, Mr Hobson recommended more extensive works than those required for the issue of a 100 hourly maintenance release (to the effect that aircraft ONC was airworthy) in order to make aircraft ONC suitable for charter work. (2) There was no agreement between Mr Harper and Reg-Air as Mr Harper claimed. Rather, Mr Harper failed to provide AirAg with the required written authority to carry out the work necessary either for aircraft ONC to obtain a 100 hourly maintenance release or to make the aircraft suitable for charter purposes. Apart from that, Reg-Air sourced certain aircraft parts for Mr Harper on or about 27 September 2005 and provided tools and manuals allowing Mr Harper to install those parts on aircraft ONC, but no more. (3) Mr Hobson did remove certain parts from aircraft ONC but did so with Mr Harper's knowledge and consent. Mr Hobson re-installed some parts but others were not re-installed at Mr Harper's request. (4) Mr Hobson did not take 500 litres (or thereabouts) of fuel from aircraft ONC. On occasions he drained a small amount of fuel from the aircraft to clean his tools (which Mr Harper also used on aircraft ONC), to clean his hands, and to run the towing vehicle used to tow aircraft (including aircraft ONC) around the hangar. (5) Mr Harper, for his own reasons, effectively dismantled aircraft ONC. In so doing he used Mr Hobson's tools and manuals and sought Mr Hobson's advice as, at the same time, Mr Hobson was working on aircraft TSO in the same hangar. Mr Harper's dismantling of aircraft ONC meant that significant time and expense had to be incurred in obtaining a fresh maintenance release for aircraft ONC to certify it as airworthy. Mr Harper's principal claims are based on disputed conversations which occurred more than three years ago. His claims involve serious allegations against Mr Hobson. In this context certain observations of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 are relevant. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. Such satisfaction is "not ...attained or established independently of the nature and consequence of the fact or facts to be proved" including the "seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding": Helton v Allen [1940] HCA 20 ; (1940) 63 CLR 691 at 712. On or about 24 February 2005 Mr Harper purchased aircraft ONC at an auction in Brisbane for $230,000. Aircraft ONC, a Piper Navajo Chieftain, is a twin engine aircraft with a capacity to seat nine passengers. Mr Harper intended to make aircraft ONC suitable for use for the purposes of charter. Aircraft ONC had a maintenance release that expired on 26 August 2005. Maintenance releases are regulated by Div 9 of Pt 4A of the Civil Aviation Regulations . Insofar as relevant to the present proceeding, an aircraft may not be flown without (amongst other things) a current maintenance release. Generally, maintenance to an aircraft may only be carried out by a person who holds an aircraft maintenance engineer licence covering the maintenance and if the person either holds a certificate of approval covering the maintenance or is employed by, or working under an arrangement with, a person who holds a certificate of approval covering the maintenance or under the supervision of such a person. To sign a maintenance release such a person must also either hold a certificate of approval covering the maintenance or be employed by, or working under an arrangement with, a person who holds a certificate of approval authorising the maintenance. On or about 10 March 2005, Mr Harper (with another pilot) flew aircraft ONC to Bankstown airport and placed it in a hangar. By April 2005 Mr Harper was looking for a new hangar in which to store aircraft ONC. Mr Hobson was an aircraft engineer (to be precise, a LAME). Mr Hobson was employed by AirAg as its chief engineer. Mr Hobson was working on restoring his own Piper Navajo Chieftain (aircraft TSO) in a hangar at Bankstown airport, known as hangar 273. AirAg holds a certificate of approval authorising it to issue maintenance releases. Reg-Air, TS Air Charter and Mr Hobson do not hold a certificate of approval authorising the issue of maintenance releases. Reg-Air had once held such a certificate but it was cancelled in mid 2001. In April 2005 Mr Harper and Mr Hobson spoke to each other. In or about May or June 2005, Mr Harper removed aircraft ONC from its old hangar and placed it in hangar 273 where aircraft TSO was also located and being restored by Mr Hobson. Aircraft TSO became airworthy in March 2006. On or about 17 October 2006 Mr Harper requested Bankstown Aircraft Maintenance Pty Ltd to carry out certain work to aircraft ONC, which it did. Aircraft ONC was removed from hangar 273 for this purpose. On or about 19 February 2007 Harbour City Aviation Pty Ltd also carried out work to aircraft ONC involving checking and refitting the avionics. By mid 2007 Bankstown Aircraft Maintenance's work on aircraft ONC remained incomplete. Repairs and maintenance to aircraft ONC ceased for a month or two in late 2007 when Mr Harper contacted the Civil Aviation Safety Authority. In or about December 2007, when Mr Harper took aircraft ONC back to Bankstown Aircraft Maintenance its engineer had resigned and it could not continue to work on the aircraft. Later in December 2007, Mr Harper took aircraft ONC to Australian Aerial Surveys Pty Ltd, also located at Bankstown airport. Australian Aerial Surveys was working on another plane and did not start working on aircraft ONC until August 2008. Mr Harper entered into an arrangement with Australian Aerial Surveys under which the cost of repairs and maintenance to aircraft ONC would be paid for by Mr Harper making aircraft ONC available to Australian Aerial Surveys for charter. Mr John Skidmore, a LAME employed by Australian Aerial Surveys, signed a maintenance release for aircraft ONC on 27 March 2009. I deal with other facts in the context of Mr Harper's specific claims. Mr Harper's claims about the express representations are based on conversations with Mr Hobson. I am AirAg Aviation Service's Chief Engineer. I will be happy to help you with your Aircraft when I get mine flying which will only take three months. It won't take long to do yours, all it needs is a fresh 100 hourly and the fuel units fitted, about one month. I can do it and sign it off and all you will have to pay AirAg is a commission to use their licence, probably about $400 to $500. Further, that the agent's conduct must be considered as a whole (at [39]). The same approach must be applied in the present case. In the present case the conduct in question is the statements of Mr Hobson said to convey the express representations (being those two statements quoted above). I turn now to the circumstances surrounding those statements (for this purpose, assuming they were made as Mr Harper recollected). I am satisfied from the evidence about the following matters of fact. In early 2005, Mr Harper had known Mr Hobson for about 10 years. At all times Mr Harper knew that Mr Hobson was AirAg's chief engineer. He also knew that neither Mr Hobson nor Reg-Air held a certificate of approval authorising the issue of maintenance releases. He knew that AirAg did hold such a certificate of approval. He knew that Mr Hobson was working on aircraft TSO (which Mr Harper correctly viewed as, in effect, Mr Hobson's aircraft) and that aircraft TSO, like aircraft ONC, was a Piper Navajo Chieftain. He knew that Mr Hobson was restoring aircraft TSO to make it suitable for charter work and had available tools and manuals for that purpose. He knew that, with modifications, aircraft ONC could be suitable for charter work. Mr Harper held a pilot's licence but was not an aircraft engineer. Mr Harper did not have much experience in flying a Piper Navajo Chieftain and next to no experience in maintaining or running such an aircraft for charter purposes or otherwise. In about March 2005, before the disputed statements alleged to have been made by Mr Hobson and immediately after aircraft ONC arrived at Bankstown, Mr Harper arranged for AirAg to carry out certain work to aircraft ONC involving the fuel units and temperature probes, as well as the replacement of the nose wheel bearings. At this time Mr Harper delivered aircraft ONC's log books to Mr Tony Pitt of AirAg. These log books remained at AirAg until at least November 2005. Mr Harper was unhappy with the hangar in which aircraft ONC was first located at Bankstown airport because he thought they were moving his aircraft around too much. He wanted to store his aircraft elsewhere. In early April 2005 Mr Harper discussed with Mr Pitt the possibility of AirAg taking aircraft ONC into AirAg's hangar and carrying out a 100 hourly maintenance service for aircraft ONC. Mr Harper thought AirAg's hangar was full and that they were too busy to work on aircraft ONC at this time. Before AirAg started this work, Mr Harper had discussions with Mr Hobson in which, according to Mr Harper, Mr Hobson made the statement referred to in Mr Harper's first affidavit. Mr Harper did not say that the conversation referred to in the second affidavit occurred at this time. From Mr Harper's second affidavit, I infer that this conversation occurred some time after aircraft ONC moved into hangar 273. Also in or in about April 2005, Mr Harper and Mr Hobson had discussions about what might be required to make aircraft ONC suitable for charter work. Mr Hobson told Mr Harper that to make good money from chartering the aircraft, it had to look good and that Mr Harper should install certain new equipment, put new side windows in, put in new interior plastics, and repaint the plane. Aircraft ONC did not "look good" at this time. The side windows were difficult to see through, the paint was old and unattractive and the aircraft's navigational and piloting systems were old. Mr Harper wanted to charter aircraft ONC (indeed, he had bought the aircraft for that purpose) and had obtained a quote for an avionics upgrade also in or around April 2005. In these circumstances, do the statements of Mr Hobson (assuming, for the purposes of this discussion, that they were made) convey the express representations as pleaded? Take the statement in the first affidavit. The representation (as relevant, given that Mr Hobson is in fact an authorised aircraft engineer) is said to be that Reg-Air would have aircraft ONC flying within four months (the representation having been made in April 2005). According to the statement in which the representation was made, Reg-Air would do so in circumstances where, for the next three months, Mr Hobson would be working on aircraft TSO. In other words, according to the statement attributed to Mr Hobson, it would only take one month's work to get aircraft ONC "in the air". Mr Harper's affidavits identified Mr Hobson's statements and nothing else (such as Mr Harper's response or any other part of the conversation or its context). The context, however, is important and may be inferred from the evidence as a whole. The statement attributed to Mr Hobson in Mr Harper's first affidavit was made in a conversation between two people who had known each other for 10 years. Each (effectively) owned the same or similar aircraft. Each aircraft required work to be suitable for charter purposes. Mr Hobson, a LAME for some 20 years, had been working on his aircraft for a considerable time. Mr Harper, a pilot, had just purchased his aircraft, wanted it to be suitable for charter purposes, but had little, if any, experience in flying (let alone chartering) such an aircraft. Mr Hobson was aware of available space in the hangar where his aircraft was located and advised Mr Harper to that effect. In so doing Mr Hobson also said that he was AirAg's chief engineer (which was true and, in any event, which Mr Harper already knew), and that he would be "happy to help" Mr Harper with aircraft ONC once he had got "mine flying". The surrounding circumstances and language used in the statement attributed to Mr Hobson strongly suggest, at best, an informal arrangement where one aircraft owner (with relevant qualifications, experience, tools and manuals) expressed a willingness to assist another (without relevant qualifications or experience). The references in the statement that it would only take three months to get aircraft TSO flying and that it would not take long to do aircraft ONC "as all it needs is a fresh 100 hourly and the fuel units fitted, about one month" do not alter the context of the conversation from that described above. Mr Hobson, as Mr Harper knew, was working on aircraft TSO in his own time. Mr Hobson's statement is to the effect that he wanted to complete the restoration of aircraft TSO before helping Mr Harper with aircraft ONC. Mr Hobson's estimate of three months to complete the work on aircraft TSO was simply an estimate. Given that Mr Harper knew Mr Hobson was working in his spare time, Mr Harper must also have appreciated that the progress of work would depend on how much spare time Mr Hobson had available and what problems he encountered in carrying out work on aircraft TSO. Similarly, the reference to one month being required for the completion of the fresh 100 hourly maintenance release and to have the fuel units re-fitted was also an estimate made in the context described. Mr Harper must have known that, when making the estimate, Mr Hobson had not inspected aircraft ONC and thus assumed that only minor work was required. As noted, the context and language of Mr Hobson's statement indicate nothing more than one aircraft owner holding relevant qualifications and experience being willing to give assistance to another unqualified and inexperienced aircraft owner. Nothing in the context or substance of the statements suggests that Mr Hobson was speaking at that time as the agent of Reg-Air. The conversation, in context, is incapable of conveying a representation that Reg-Air would have aircraft ONC in the air within four months. Different difficulties confront the conversation to which Mr Harper referred in his second affidavit. Mr Harper made no mention of this statement as in any way relevant to his decision to move aircraft ONC into hangar 273 in his first affidavit. In his second affidavit Mr Harper was replying to Mr Hobson's evidence that, over the two to three months following Mr Harper moving aircraft ONC into hangar 273, Mr Hobson asked Mr Harper for a signed purchase or work order to be provided to AirAg. Mr Harper denied that Mr Hobson had done so and said that, instead, Mr Hobson had made the statement referred to in Mr Harper's second affidavit (quoted at [27] above). The context indicates that the second statement (if made) must have been made some months after Mr Harper moved aircraft ONC into hangar 273 (that is, two to three months after May or June 2005) and thus after the alleged express representations. The statement in the second affidavit is ambiguous. The "work" to which Mr Hobson was referring in his affidavit was a complete repaint and interior refurbishment of aircraft ONC including replacement of all 14 windows, complete replacement of instrument panel wiring, avionics and navigation instruments and, thereafter, the issue of a maintenance release at a cost of $150,000 to $200,000. The work to which Mr Harper was referring in his second affidavit could not be this work. Yet Mr Harper definitely wanted to have work done that was unnecessary for the issue of a 100 hourly maintenance release. Mr Harper wanted the internal plastics and windows replaced as Mr Hobson recommended. In fact, Mr Hobson obtained the parts necessary for some of this work and billed Mr Harper for them and labour costs as Reg-Air on 27 September 2005. These events are inconsistent with Mr Harper having understood Mr Hobson to have represented that Reg-Air would have aircraft ONC in the air within four months of April 2005. Further, in his oral evidence, Mr Harper gave a different (or, at least, additional) version of events. Mr Harper said that after aircraft ONC had been in hangar 273 for about a month Mr Hobson suggested "that we might as well do a fresh 100 hourly and put it back into service with a clean 100 hourly that would allow him to check the plane out properly, make sure it was all okay". Mr Harper said (I infer in relation to the same work) that Mr Hobson "undertook a gentleman's agreement with me to carry out this work". If this statement is part of the context of the statement attributed to Mr Hobson in the second affidavit (and I infer it must be), then it supports my inference that Mr Harper knew that, at the time of the statement referred to in the first affidavit, Mr Hobson had not inspected aircraft ONC and thus was not aware of its condition other than from a cursory external look. In these circumstances none of the statements are capable of conveying a representation that Reg-Air would have aircraft ONC in the air within four months of April 2005. Other factors are also inconsistent with Mr Harper having understood the express representations to have been made by Mr Hobson as agent for Reg-Air. Mr Harper knew that for aircraft ONC to fly after 26 August 2005 it needed a fresh maintenance release. He knew that Reg-Air and Mr Hobson did not hold certificates of approval authorising either to issue maintenance releases. Mr Harper knew that Mr Hobson was AirAg's chief engineer and that any maintenance release would be an AirAg document issued under AirAg's certificate of approval. Reg-Air is not mentioned in either (indeed, any) of the statements which Mr Harper attributed to Mr Hobson. For these reasons I am not satisfied that the express representations, as pleaded, were conveyed by either of the statements which Mr Harper attributed to Mr Hobson (other than the true statement that Mr Hobson is an authorised aircraft engineer). Accordingly, I do not need to consider s 51A of the Trade Practices Act (representations as to future matters) which, in any event, neither party mentioned. Even if I am incorrect in this conclusion, I am not satisfied that Mr Harper relied on a representation that Reg-Air would have aircraft ONC in the air within four months of April 2005. The statement in which this representation is said to have been conveyed included Mr Hobson working for three months on aircraft TSO and then one month thereafter on aircraft ONC, with the relevant work being that necessary for the issue of the 100 hourly maintenance release and the re-installation of the fuel units. However, Mr Harper himself, in about May to July 2005 and thus relatively soon after aircraft ONC was moved into hangar 273, undertook a course of action inconsistent with this objective. Even if, as Mr Harper's case proposed, he took apart the dashboard of aircraft ONC under Mr Hobson's supervision as part of the alleged agreement with Reg-Air, Mr Harper also undertook other substantial work that had nothing to do with obtaining a 100 hourly maintenance release. Mr Harper, in cross-examination, agreed that he had removed all of the aircraft's control surfaces (ailerons, flaps, rudder on the tail fin, and re-stabiliser elevator). Mr Harper did this work with Mr Hobson's assistance. Mr Harper did about two thirds of this work and Mr Hobson about one third. Some control surfaces need two people to handle them. Mr Harper did this work in anticipation of having aircraft ONC repainted in accordance with Mr Hobson's suggestion. Mr Harper also removed the pilot's and co-pilot's seats. He removed the passenger seats. In doing so, Mr Harper had to remove the internal plastic trim of the aircraft's cabin. Mr Harper agreed that he always intended to replace the internal plastics and the windows. The work Mr Harper did meant aircraft ONC appeared to have been "gutted". Mr Harper obtained quotes for repainting and an avionics upgrade. Mr Harper also purchased a particular fuel control management unit for the purpose of installing in aircraft ONC because Mr Hobson had one in his aircraft and recommended it to Mr Harper. Throughout all of this work, Mr Harper used Mr Hobson as a source of advice and used Mr Hobson's (as well as his own) tools. Further, in May 2006, Mr Harper sought refinance for the purpose of refurbishing the interior and exterior of aircraft ONC. These facts are inconsistent with Mr Harper having relied on a representation to the effect that Reg-Air would have aircraft ONC in the air within four months of April 2005. In about June or July 2005 another relevant event occurred. With Mr Harper's permission, AirAg borrowed the nose gear doors from aircraft ONC. AirAg did so for the purpose of modelling some nose gear doors for another aircraft where doors could not be found to fit. Allowing these parts to be borrowed is consistent with Mr Harper not being particularly concerned whether aircraft ONC was airworthy or not at that time or, indeed, for the whole period during which the nose gear doors were off the aircraft. As it turned out, these doors were not re-installed until January 2007 (an earlier attempt in October 2006 disclosed that the wrong door had been returned). These circumstances too are inconsistent with Mr Harper having relied on the express representations. I consider these facts, particularly the work Mr Harper carried out and intended to carry out to aircraft ONC, inconsistent with Mr Harper having relied on a representation that Reg-Air would have aircraft ONC in the air within four months of April 2005. As noted, the statement on which Mr Harper relied is one in which Mr Hobson said he would continue to work on his own aircraft TSO for three months and spend the next month on aircraft ONC re-installing the fuel control units that Mr Harper had removed and carrying out such work as necessary for the issue of a 100 hourly maintenance release. Yet within a month or so of arriving in hangar 273, Mr Harper commenced works which had the effect of practically gutting aircraft ONC. I consider that the work Mr Harper did made it impossible for aircraft ONC to obtain a maintenance release within four months of April 2005 or by a mere month's work (which was all that Mr Hobson, on Mr Harper's version of the conversation, anticipated). As such, Mr Harper could not have relied on the express representations. The actions Mr Harper took effectively ensured that the express representations, if they were made, could not be fulfilled. It is not strictly necessary for me to make any finding about the reasons Mr Harper undertook the course of action he did. Nevertheless, it is apparent that Mr Harper's actions are irreconcilable with him having relied on the express representations (if they were made) and consistent with Mr Hobson's version of what happened between him and Mr Harper between about April and September 2005. Counsel for Mr Harper submitted that nothing Mr Hobson said should be accepted without independent corroboration. I deal with this submission about Mr Hobson's credit below. I have concluded that the submission should not be accepted. Apart from one matter (concerning the cancellation of Reg-Air's certificate of approval in 2001), Mr Hobson was a frank, albeit taciturn, witness. Mr Hobson frequently referred to the length of time which had passed since his conversations with Mr Harper and the likely adverse effect of this on his memory. Mr Hobson was comfortable with the shortcomings in his own memory. He was willing to accept that he had said something like he was AirAg's chief engineer and would be happy to help Mr Harper after he had finished with his own aircraft. He was open about the restrictive attitude he took towards discovery of documents and his answers to interrogatories. According to Mr Hobson, he told Mr Harper that if Mr Harper wanted to charter aircraft ONC extensive works were required (that is, a complete repaint and interior refurbishment, replacement of all 14 windows, complete replacement of instrument panel wiring, avionics and navigation instruments and, thereafter, the issue of a maintenance release) and that the cost of this work would be $150,000 to $200,000. The work Mr Harper carried out from about May 2005 onwards which had the effect of gutting aircraft ONC is consistent with Mr Harper, at least at that time (even if he subsequently changed his mind), starting the process of these extensive works. So too are the quotes Mr Harper obtained and the reason he gave for refinancing the aircraft. Contrary to the submissions on behalf of Mr Harper, I do not find the fact that Reg-Air issued an invoice on 27 September 2005 supportive of Mr Harper's case. The invoice appears to relate to items which Mr Hobson agreed that he had recommended as part of the more extensive works to make aircraft ONC suitable for charter work and which Mr Harper denied wanting to carry out at this time. Yet, as discussed, Mr Harper took many steps consistent with the intention of carrying out these more extensive works and inconsistent with any belief that Reg-Air would have aircraft ONC in the air within four months of April 2005. Mr Pitt was an impressive witness with no direct interest in the outcome of the proceeding. While Mr Harper may have had this understanding at some time, I prefer Mr Pitt's evidence about this issue. (2) Mr Harper did not retrieve aircraft ONC's log books from AirAg until November 2005. If, as was submitted, he did so because Mr Hobson was going to do the work and not AirAg, then the period of four months said to have been conveyed as part of the express representations had already passed. On the basis of the express representations (if made), the work should have been completed by the end of August or perhaps September 2005. Yet during that period Mr Harper was dismantling aircraft ONC and had left his logbooks with AirAg. (3) Mr Hobson's estimate of a cost of $10,000 to $15,000 for aircraft ONC to obtain a 100 hourly maintenance release (which he accepted he might have given before any inspection) clearly did not extend to any of the works Mr Harper carried out in dismantling aircraft ONC. This must be so given that Mr Harper attributed to Mr Hobson, as part of the statement said to convey the express representations, a description of the required work as being limited to "a fresh 100 hourly and the fuel units fitted", taking only about one month to complete. (4) Mr Hobson's acceptance that he may well have had conversations with Mr Harper about when he might be able to help Mr Harper with aircraft ONC is consistent with Mr Hobson's version of these events in 2005, particularly given the work Mr Harper had carried out to aircraft ONC. (5) The fact that Mr Harper re-installed the fuel control units under Mr Hobson's supervision is also consistent with the fact that Mr Hobson gave substantial advice and assistance to Mr Harper without charge. The lack of any invoice from Reg-Air or Mr Hobson to Mr Harper (other than the single invoice of 27 September 2005 referred to above) supports my findings about the character of the statements attributed to Mr Hobson when considered with regard to the overall context. (6) Mr Hobson did not agree that the windows had to be done to obtain a 100 hourly maintenance release. However, he said that the work, if it were to be done, had to be done under a certificate of approval or as part of the 100 hourly maintenance release (which is different). In other words, I do not accept that this work was necessary for a maintenance release to be issued. Rather, this work appears to have been part of the more extensive works to aircraft ONC which I consider Mr Harper intended to undertake in 2005 (even if, as it seems, he subsequently changed his mind). (7) Mr Hobson's capacity to do private work (that is, on his own time and not in his capacity as an AirAg employee) requires consideration of all of the evidence relevant to that issue. In closing submissions, counsel for Mr Harper relied on one part of that evidence (Mr Hobson agreeing it was possible that he could do side work and use AirAg's certificate of approval if required). However, Mr Hobson, in another part of his evidence, was adamant that if a maintenance release was required he only worked for AirAg and such releases were only issued by AirAg. Mr Pitt gave evidence about the practice of work on the side or private work consistent with that of Mr Hobson. I am satisfied that the evidence should be understood as follows: - (i) Mr Hobson could carry out private work provided that it did not involve the issue of a maintenance release, and (ii) if any work required the issue of a maintenance release, Mr Hobson only carried out that work as chief engineer of AirAg. These facts are also consistent with Mr Harper, at least in or around April to near the end of 2005 or some time thereafter, wanting to make aircraft ONC more attractive for charter by carrying out far more extensive work than that contemplated by the express representations. For these reasons I do not accept that Mr Harper relied on the express representations if they were made. Further, and if it be necessary so to find, I prefer Mr Hobson's version of his dealings with Mr Harper about work on aircraft ONC, at least in the period from April 2005 to the end of that year (that is, a period including that to which the express representations relate). Consistent with the findings above, Mr Hobson's version of these events better reflects the objective circumstances. Mr Hobson's concessions about the frailty of his memory (particularly about disputed conversations years after the events in question) also support, rather than undermine, his evidence. The fact that Mr Hobson was not forthright about one matter (the circumstances surrounding the cancellation of Reg-Air's certificate of approval in 2001), does not undermine the credibility of the balance of his evidence. Mr Hobson's approach to the cancellation of the certificate (that he had surrendered the certificate by reason of his withdrawal of the appeal against cancellation) is plausible from a layperson's perspective. In any event, this matter is also peripheral to the substantive issues in dispute. Mr Harper's evidence about the express representations, in contrast to that of Mr Hobson, was difficult to reconcile with the objective circumstances. Although Mr Harper said he had a clear memory of certain statements, his evidence provides little or no information about the context in which they were alleged to be made. For example, in his first affidavit Mr Harper referred to a conversation in September 2006 in which he allegedly said to Mr Hobson words to the effect "I'm fed up with this. My plane has been gutted and you still haven't put the magneto on". In fact (as emerged during cross-examination), Mr Harper had himself substantially dismantled aircraft ONC by August 2005. Despite Mr Harper's apparently firm recollections, allowance must be made for the ordinary human process by which statements in a longer conversation are somewhat artificially reconstructed, particularly where (as in this case): - (i) the participants in the conversation have subsequently fallen out to the extent that litigation has ensued, (ii) the statements said to convey the representations have been reconstructed in an affidavit largely in isolation from the surrounding context including the balance of the conversation, (iii) more than three years have passed since the statements were said to have been made, and (iv) the evidence of both Mr Harper and Mr Hobson supports an inference that (unsurprisingly given that their aircraft were in the same hangar) they had numerous conversations only some of which have been elicited through this proceeding. Having regard to these matters significant weight must be given to the evidence of the objective circumstances. Those circumstances are not readily reconcilable with Mr Harper's version of the course of events. This conclusion does not involve any inference adverse to Mr Harper's credit but recognises the force of observations to the effect of those made in Watson v Foxman (quoted at [9] above). Accordingly, Mr Harper's claims based on the express representations cannot be sustained. Mr Harper contended that that this agreement included an implied term that the services Reg-Air provided to aircraft ONC would comply with all requirements of the Civil Aviation Act and Civil Aviation Regulations . Further, that Reg-Air breached the implied representation carried by this implied term by not complying with these legislative requirements. For the reasons given above, I do not accept that there was any agreement between Reg-Air and Mr Harper to the effect claimed. Accordingly, there cannot be an implied term of the agreement, functioning as an implied representation, as claimed. While this conclusion is sufficient to dispose of this aspect of Mr Harper's claims there is another difficulty which these claims confront. Specifically, Mr Harper has not established that Mr Hobson, in his capacity as director of Reg-Air, undertook any work on aircraft ONC that did not comply with the Civil Aviation Act or Civil Aviation Regulations . It is true that Reg-Air invoiced Mr Harper on one occasion (27 September 2005) for the procurement of parts and labour. Mr Hobson explained that the labour charge on this invoice in fact related to Mr Harper using Mr Hobson's tools and manuals to carry out the work, albeit under Mr Hobson's supervision. As neither Mr Hobson nor Reg-Air held a certificate of approval authorising them to issue a maintenance release, I infer that Mr Hobson's supervision of Mr Harper's work in this regard must have been in Mr Hobson's capacity as the chief engineer of AirAg. Even if this inference is not drawn, Mr Harper's allegations about breaches of legislative requirements did not relate to this work. In fact, there are no invoices from Reg-Air (or Mr Hobson or TS Air Charter) in connection with the work Mr Harper alleged that Mr Hobson, as agent for Reg-Air, carried out to aircraft ONC in breach of the legislative requirements. Mr Harper identified ten components of work to which the allegations of breach of the implied representation related: - (i) removal of the turbo charger air intakes for both engines, (ii) removal of the left hand engine magneto, (iii) dismantling components associated with the auto pilot, (iv) dismantling the switch dial dashboard component, (v) dismantling the centre console components, (vi) dismantling the left hand steering column multi-function switch, (vii) removing inspections ports and panels from the wings and fuselage, (viii) removing and substituting the electric elevator servo trim motor and substituting a defective the electric elevator servo trim motor, (ix) removing about 500 litres of fuel, and (x) removing the stall warning delay timer and cutting its wires. Mr Hobson admitted that he personally removed or used the turbo charger air intakes for both engines, the left hand engine magneto, the electric elevator servo trim motor and the battery (the latter not being the subject of complaint but relevant as part of the context). Mr Hobson admitted that he had supervised works by Mr Harper to the fuel control unit and the electric fuel boost pumps (neither of which are the subject of complaint) and by Mr Dean Mackey of Harbour City Aviation to the electric trim (or multi purpose) switch. Mr Hobson also noted that Mr Pitt of AirAg had borrowed the nose gear doors from aircraft ONC with Mr Harper's permission. He otherwise denied the allegations. The works identified in Mr Hobson's admissions provide an important part of the context for the determination of these claims (particularly when it is remembered that the claim is breach of an implied representation by Reg-Air arising from an agreement between Reg-Air and Mr Harper pursuant to which Reg-Air, through Mr Hobson, would provide services of maintenance and repair to aircraft ONC). I consider the evidence about those works below. Mr Harper permitted these parts to be borrowed. They were ultimately returned in January or February 2007 after an earlier attempt in October 2006 disclosed that one of the doors was not the original part. Mr Harper appears not to have demanded any earlier return of these parts. The evidence does not support any inference that Reg-Air was involved in these works. (2) The fuel control units : Cross-examination of Mr Harper disclosed that Mr Harper removed the fuel control pumps from aircraft ONC under the supervision of Mr Pitt of AirAg. Mr Harper also re-installed the pumps under Mr Hobson's supervision. Mr Hobson was qualified to perform this supervision function (which Mr Harper accepted in cross-examination). In context, I infer that Mr Hobson performed this function either as AirAg's chief engineer or in his personal capacity (as a friendly acquaintance of Mr Harper's of some 10 years' standing and who, according to Mr Harper, wished to see aircraft ONC in good condition and readily provided assistance to Mr Harper as and when required). The evidence does not support any inference that Reg-Air was involved in these works. (3) The battery : Mr Hobson used the battery from aircraft ONC and installed it on another aircraft (not aircraft TSO) that was due out on a charter flight and had a battery failure. The battery was out of aircraft ONC on a charger and the other aircraft had passengers on board ready for flight. Mr Hobson said he called Mr Harper for permission to use this battery and return it to the charger. Mr Harper said he was not aware of the use of his battery but had no concern about it. I prefer Mr Hobson's evidence about this as he (rather than Mr Harper) had some reason to recall this event (Mr Hobson being at the airport while the other aircraft was ready to take off when its battery failed). The evidence does not support any inference that Reg-Air was involved in this event. (4) Turbo charger air intakes : Mr Hobson removed the turbo charger air intakes from aircraft ONC and installed them on aircraft TSO in or about February 2006. At that time the turbo charger air intakes from aircraft TSO were being "re-bushed". Mr Hobson returned the parts on 3 April 2006 but Mr Harper refused to allow him to re-install them. In other words, Mr Hobson took the parts for the purpose of temporary use on aircraft TSO (which had become airworthy in March 2006). TS Air Charter owns aircraft TSO. The evidence does not support the inference that Reg-Air had anything to do with the taking of these parts. Moreover, the implied representation is said to arise from an agreement between Reg-Air and Mr Harper for the provision of services by Reg-Air to aircraft ONC (that is, to get aircraft ONC in the air within four months of April 2005). The taking of these parts did not have anything to do with the provision of services to aircraft ONC. They were taken to assist aircraft TSO. Whether they were taken with or without permission is a separate issue (dealt with under the common law claims below). But as these facts disclose, the taking of these parts had nothing to do with Reg-Air providing services to aircraft ONC as claimed by Mr Harper and thus could not be subject to the implied representation alleged. (5) Left hand engine magneto : Mr Hobson removed the left hand engine magneto from aircraft ONC on 14 May 2006. The magneto was taken to Albury where aircraft TSO had developed a problem apparently with the intention of using the magneto to get aircraft TSO back to Sydney. However, aircraft ONC's magneto was damaged in transit and could not be used. Mr Hobson later arranged to have this magneto repaired and "zero timed" so that it had a full service life. He returned the part to Mr Harper in October 2006 with a release note for the repair. Again, whether or not Mr Hobson had permission to borrow the part is a separate issue. On the same basis as the turbo charger air intakes discussed above, these facts disclose that the taking of this part had nothing to do with Reg-Air providing services to aircraft ONC as claimed by Mr Harper and thus could not be subject to the implied representation alleged. (6) Electric elevator servo trim motor : Mr Hobson removed this part from aircraft ONC in about June 2006 intending to install the part into aircraft TSO for the purpose of flying aircraft TSO to Adelaide for the auto-pilot components to be checked. After repairs to the components of the auto-pilot were complete and when aircraft TSO returned to Bankstown, Mr Hobson took the trim servo motor then on aircraft TSO and installed it on aircraft ONC. Leaving aside the many disputes concerning the trim servo motor (discussed below in respect of the common law claims), the relevant fact for present purposes is that nothing Mr Hobson did was for the purpose of servicing aircraft ONC. The work was done to assist aircraft TSO. On the same basis as discussed above, these facts disclose that the taking of this part had nothing to do with Reg-Air providing services to aircraft ONC as claimed by Mr Harper and thus could not be subject to the implied representation alleged. (7) Multi-purpose switch : Mr Hobson engaged Mr Mackey of Harbour City Aviation to carry out work on aircraft TSO in February 2006. Mr Mackey said that during that work he noticed that there was a broken tab on a little micro switch on the column of aircraft TSO. According to Mr Mackey, Mr Hobson told him to remove the tab from the switch on aircraft ONC and install it on aircraft TSO to replace the broken one. Those switches are readily available and cost about $7 or $8. Aircraft ONC was not airworthy at that time. Mr Mackey said he was not, at that time, carrying out any work on aircraft ONC. Mr Hobson said that they needed to check the wiring configuration on aircraft ONC to ensure that the work on aircraft TSO had been done correctly. When Mr Mackey inspected the wiring on aircraft ONC, he told Mr Hobson that it had perished and was a fire risk and would need to be replaced before the aircraft could be flown. Mr Hobson instructed Mr Mackey to leave the wiring exposed so that the wiring problem would be obvious to the person next carrying out maintenance on aircraft ONC (which he described as a requirement of his obligations as a LAME). Irrespective of the inconsistencies in this evidence one thing is clear --- Mr Hobson and Mr Mackey were working on aircraft TSO. If Mr Hobson caused a tab on a switch to be taken from aircraft ONC, he did so to assist aircraft TSO. On the same basis as discussed above, these facts disclose that the taking of this part had nothing to do with Reg-Air providing services to aircraft ONC as claimed by Mr Harper and thus could not be subject to the implied representation alleged. (8) Other works : Mr Hobson denied involvement in the other matters identified by Mr Harper. As to the aircraft parts, insofar as Mr Hobson agreed that panels had to be removed to access the trim servo, I infer that he must have removed those panels. Otherwise I do not accept that other panels had to be removed to access the trim servo motor as Mr Harper alleged. Consistent with the findings above, these works were not done by Reg-Air for the purpose of servicing aircraft ONC but by Mr Hobson for the purpose of assisting aircraft TSO. Accordingly, these works had nothing to do with Reg-Air providing services to aircraft ONC as claimed by Mr Harper and thus could not be subject to the implied representation alleged. (9) The fuel issue : Mr Hobson admitted draining small amounts of fuel (into a tin container) from aircraft ONC for the purpose of cleaning tools and running the towing equipment which moves aircraft (including aircraft ONC) around the hangar. This evidence was consistent with the observations of Jeffrey Criddle (general manager of Australian Aerial Surveys Pty Ltd and who gave evidence in the proceeding). Mr Hobson denied taking about 500 litres of fuel from aircraft ONC to use in aircraft TSO or otherwise. There are two difficulties with Mr Harper's claims about the missing fuel. First, insofar as Mr Harper's case is based on the implied representation (with which I am presently dealing), the taking of fuel to use in aircraft TSO as alleged has nothing to do with Reg-Air servicing aircraft ONC. Second, the allegation is effectively one of theft by Mr Hobson in circumstances where: - (i) Mr Harper only checked the fuel when aircraft ONC first arrived at Bankstown in March 2005 and again in October or November 2006, some 19 months later, (ii) in this period of 19 months aircraft ONC was in three different hangars, (iii) all people who had access to those hangars also had access to aircraft ONC, (iv) the people who had carried out work on aircraft ONC during that period, such as AirAg personnel, also had access to aircraft ONC, including the fuel (because the fuel tanks are not lockable), (v) Mr Harper moved the aircraft from the first hangar to hangar 273 because he was unhappy with the treatment of his aircraft in that hangar, and (vi) Mr Hobson denied the allegation other than to the (minor) extent of fuel used noted in circumstances where Mr Harper used Mr Hobson's tools on aircraft ONC without Mr Hobson demanding payment and Mr Harper benefited from the towing equipment in the hangar. The evidence, in these circumstances, cannot sustain a finding that Mr Hobson drained a large amount of fuel from aircraft ONC for the purpose of using it in aircraft TSO or otherwise. As the discussion above discloses, the reasoning underlying Mr Harper's claims about the implied representation has a number of difficulties. In particular, on the one hand, Mr Harper alleged, in effect, that Mr Hobson cannibalised aircraft ONC for the benefit of aircraft TSO. On the other hand, in order to found an allegation of breach of the implied representation, Mr Harper said these works were part of the agreement for Reg-Air to service aircraft ONC and get it flying within four months of April 2005. The two concepts are not readily reconcilable. Finally, it must also be remembered that aircraft ONC's log books remained in AirAg's office from about March until November 2005. Mr Harper never gave the log books to Mr Hobson either personally or in his capacity as an agent of Reg-Air. Neither Mr Hobson nor Reg-Air sent any invoice to Mr Harper for any work carried out on aircraft ONC apart from the invoice of 27 September 2005 discussed above. Mr Harper carried out extensive works which effectively gutted aircraft ONC. These facts are inconsistent with the agreement alleged by Mr Harper and thus also undermine his claim insofar as it was based on an agreement including an implied term founding the implied representation. For these reasons I do not accept Mr Harper's claims based on the alleged implied representation. This claim thus depends on the existence of a contract for supply of services by a corporation. I have found above that there was no agreement between Reg-Air and Mr Harper as Mr Harper alleged. No other agreement was pleaded in the second amended statement of claim. Accordingly, this claim must also be rejected. In any event, because this claim depends on the same facts as the implied representation claim, it suffers from the same difficulties which would require its rejection. In oral submissions counsel for Mr Harper proposed a different basis for liability, namely, that if (as he claimed) Mr Hobson had taken the parts with Mr Harper's permission on the basis that Mr Hobson alleged (namely, that as part of a general quid pro quo for use of tools, manuals and access to Mr Hobson's advice, Mr Harper agreed either expressly or impliedly that Mr Hobson could take parts from aircraft ONC for temporary use provided he re-installed them) then, nevertheless, there was a contract for supply by a corporation within the meaning of s 74(1) of the Trade Practices Act . I do not accept this argument. First, it was never pleaded. Second, there is no basis for inferring that any such agreement involved Reg-Air as opposed to Mr Hobson either in his personal capacity or as an agent of TS Air Charter. Third, it is difficult to see how Reg-Air was doing anything (let alone supplying services) in the course of a business when Mr Hobson borrowed parts from aircraft ONC. For these reasons I am not satisfied that the circumstances relied upon by Mr Harper fit within s 74(1) of the Trade Practices Act . It follows that Mr Harper's claims for statutory damages (s 82) and breach of the implied warranty under s 74(1) cannot be sustained. It also follows that the claims of accessorial liability on the part of Mr Hobson under s 75B of the Trade Practices Act must be rejected. The torts of trespass to and conversion of goods protect against any "direct interference with possessory rights in chattels" (Fleming, John G. The Law of Torts (9 th ed). Law Book Company: Sydney (1998) p 58). Neither tort can be committed if the person with the possessory right consents to the interference. I will deal with the claim relating to the removal of the fuel from aircraft ONC immediately. As discussed above, the evidence does not establish that Mr Hobson, in any capacity, removed fuel from aircraft ONC other than small amounts for the purpose of cleaning his tools and hands as well as filling the towing device which moved aircraft around the hangar. In circumstances where Mr Harper used Mr Hobson's tools and had the benefit of the towing equipment in the hangar, I do not characterise such conduct as a sufficiently serious interference with Mr Harper's possessory rights to amount to the torts of trespass or conversion. Alternatively, I consider that the circumstances give rise to implied consent from Mr Harper to Mr Hobson to access small amounts of fuel from aircraft ONC for these limited purposes. Otherwise, and as noted, an unknown number of other people had access to aircraft ONC over the 19 month period between fuel readings. The aircraft was situated in three different hangars. Mr Harper thought his aircraft was being moved around too much in the first hangar and thus removed the aircraft from that hangar. Mr Hobson denied the allegations other than with respect to the minor amounts of fuel used for the limited purposes of tool cleaning, filling the towing equipment and cleaning his hands. The evidence is a manifestly inadequate basis upon which to found a conclusion that Mr Hobson took some 500 (or 450 or thereabouts) litres of fuel from aircraft ONC for use in aircraft TSO or otherwise. Apart from the fuel, Mr Hobson said Mr Harper permitted certain parts to be borrowed provided they were returned. He denied any involvement with the balance of the items the subject of Mr Harper's allegations. Mr Hobson said that he recalled a conversation in February 2006 in which Mr Harper said Mr Hobson could borrow the turbo charger air intakes from aircraft ONC because those on aircraft TSO were being "re-bushed". According to Mr Hobson, Mr Harper said "No problem, as long as they're returned and put back on the aircraft". Mr Hobson said the same process occurred in relation to the trim servo motor. Aircraft TSO had ongoing problems with the auto pilot. Mr Hobson approached Mr Harper in about June 2006 to borrow the trim servo from aircraft ONC so aircraft TSO could be "hand-flown" to Adelaide. Mr Hobson and Mr Harper had a discussion, possibly in the hangar. Mr Hobson asked to borrow the trim servo motor and Mr Harper replied in words to the effect "No problem, as long as they're returned and put back on the aircraft". Mr Hobson could not recall the details of the discussion about the magneto but recalled telling Mr Harper about the problem with aircraft TSO in Albury and a conversation including words to the effect of Mr Hobson saying "I require one and a half hours of flying time and need to ferry the aircraft to Bankstown" and Mr Harper responding "Yes, you can borrow that magneto, as long as it's returned and refitted to the engine". In cross-examination Mr Hobson denied that he had assumed Mr Harper's approval to borrow parts from aircraft ONC because of Mr Harper having agreed to AirAg borrowing the nose wheel doors. Mr Hobson agreed that he had not put the details of the conversations in his affidavits because he thought he had dealt with the issue of consent by his general statement that Mr Harper had given permission for the parts to be borrowed. He accepted that his memory of these conversations was not clear as he could not remember the day or month on which they occurred. For example, in respect of the trim servo motor he recalled asking to borrow the part but not the details of the conversation. He agreed that in the normal course of his business he would ask to borrow a part of he wanted to do so. Further, he agreed that his evidence of the conversations with Mr Harper was based on his usual practice of requesting permission to borrow parts. He said he recollected the conversations but not the details of them. Mr Harper denied all of these conversations. He said that he gave no permission to Mr Hobson to borrow parts except for the nose gear doors. According to Mr Harper, he noticed the missing magneto and trim servo motor and various switches in September 2006. Mr Harper also alleged conversations with Mr Hobson in which he questioned the removal of parts from his aircraft culminating in Mr Harper accusing Mr Hobson of gutting aircraft ONC on or about 25 September 2006 and instructing him not to touch aircraft ONC on or about 17 October 2006. Mr Hobson denied each of these conversations. As noted, Mr Harper's counsel submitted that Mr Hobson's evidence should not be accepted unless corroborated by independent evidence. This submission placed significant weight on an AirAg additional worksheet and the events surrounding the trim servo motor to support this challenge to Mr Hobson's credit. The AirAg additional worksheet identified works to aircraft ONC including with respect to the nose gear doors, the battery, the turbo charger air intakes, the left-hand engine magneto, and the trim servo motor. The worksheet refers to these parts being variously removed, returned and loaned. Mr Hobson said he prepared the worksheet from various notes he had made over time in respect of work he did to aircraft ONC (including yellow post-it notes stuck to his tool box). Mr Hobson wrote up the worksheet in one go in February 2007. Mr Harper's case was to the effect that Mr Hobson created the worksheet much later (October 2008 at the earliest) as a defence to Mr Harper's claims, including his claims about inadequate record keeping. I do not accept the submissions for Mr Harper that the additional worksheet was created in circumstances other than those asserted by Mr Hobson. The fact that the worksheet is in the same pen is neutral. Mr Hobson said he had prepared the worksheet from notes on one occasion in February 2007. From the evidence of Mr Richard Best and David Morgan (independent experts), as well as that of Mr Pitt, Mr Skidmore and Mr Hobson, I infer that the preparation of worksheets may, but need not, be done at the time individual items of work are carried out. Rather, depending on the practice of the individual, records must be prepared at the completion of each stage of maintenance or the maintenance overall. From the evidence, I am not satisfied that Mr Hobson had to create a worksheet for each item he borrowed from aircraft ONC at the time of borrowing. Further, it is not clear to me that Mr Hobson had any obligation to sign the document at any time before completion of a maintenance release. Given that aircraft ONC was not airworthy at any time when Mr Hobson borrowed the parts or said he created the document I am not satisfied that he acted in breach of any legislative requirement. Further, the fact that there is a date error in the document (a reference to "16/10/08" rather than "16/10/06") does not suggest to me that the document was written after 16 October 2008. If Mr Hobson had intended to create a document after 16 October 2008 and falsely claim he had written it in February 2007 then I would have expected him to exercise great care in his references to date. The fact that the "16/10/08" date is inconsistent with the balance of the document tends to indicate that it is an error as Mr Hobson said. Nor do I find the circumstances of disclosure of the document surprising. One of the features of this case is that AirAg is not a party. Mr Hobson did not have an obligation to discover documents held only by AirAg. The allegations against Mr Hobson in relation to the worksheet are serious and, as Dixon J noted in Briginshaw , this seriousness affects the answer to any question concerning the alleged suspect nature of the worksheet. Mr Hobson denied the allegations. The evidence relied on to cast doubt on his denials is at best equivocal. I accept Mr Hobson's evidence about the worksheet. I do not accept that it provides a basis for any general conclusion undermining Mr Hobson's credit. I have reached a similar conclusion about the circumstances surrounding the trim servo motor. Mr Hobson said (and I accept) that he borrowed the trim servo motor from aircraft ONC because aircraft TSO had auto-pilot problems and he needed to take the components of the auto-pilot on aircraft TSO to Adelaide for inspection and repair. He removed components of the auto-pilot from aircraft TSO for this purpose. He took the trim servo motor from aircraft ONC intending to install it on aircraft TSO to allow it to be "hand-flown" to Adelaide. However, the release note for the trim servo motor repaired in Adelaide and dated 13 June 2006 relates to the overhaul in Adelaide of trim servo motor 5096. This is the trim servo motor from aircraft ONC. In other words, the release note shows that Mr Hobson had aircraft ONC's trim servo motor inspected and certified in Adelaide and not the trim servo motor from aircraft TSO. It is also clear from Mr Skidmore's evidence that he removed trim servo motor 3262 from aircraft ONC in November 2007. Records show that this trim servo motor belongs to aircraft TSO. Mr Harper's case was to the effect that Mr Hobson took the trim servo motor from aircraft ONC and deliberately substituted it with the faulty trim servo motor from aircraft TSO. Mr Hobson's case was that there must have been a mistake which he could not explain but which was entirely innocent. Mr Hobson's trip to Adelaide was prompted by his need to have all components of the auto-pilot on aircraft TSO removed, checked, repaired as required, certified and re-installed on aircraft TSO. There is no rational reason apparent on the evidence as to why Mr Hobson instead would choose to take the trim servo motor from aircraft ONC and have it checked, repaired as required, certified and re-installed on aircraft TSO. However, there is an explanation consistent with the records and Mr Hobson having made a mistake. It is that Mr Hobson had both trim servo motors out of each aircraft. He intended to use the trim servo motor from aircraft ONC to fly to Adelaide so the trim servo motor from aircraft TSO could be checked and repaired. However, he fitted the wrong part to aircraft TSO, gave the wrong part to the repairers in Adelaide and thus re-fitted the wrong part in aircraft ONC on aircraft TSO returning to Sydney. This sequence of events is consistent with the AirAg additional worksheet that Mr Hobson prepared in which he said (incorrectly) that part 5096 had been re-installed in aircraft ONC. I consider this the most likely explanation for the circumstances relating to the trim servo motors. This explanation is consistent with Mr Hobson's evidence. I should also record that I do not draw any inference adverse to the credit of either Mr Hobson or Mr Harper by reason of matters that emerged in oral evidence but which had not been mentioned in their respective affidavits. Mr Hobson, in particular, was criticised on this account. However, Mr Harper's affidavits suffered from the same type of deficiency. For example, Mr Harper did not mention the work he had carried out to aircraft ONC which gave the aircraft the appearance of having been gutted. This evidence was elicited in cross-examination and put a different light on Mr Harper's allegation that Mr Hobson "gutted" aircraft ONC. It seems to me that the deficiencies in the affidavits of both Mr Hobson and Mr Harper should be accepted as products of poor affidavit preparation. Apart from the disputed conversations between Mr Harper and Mr Hobson, the other evidence relevant to the credibility of each is of limited assistance. Mr Mackey gave evidence about Mr Hobson instructing him to take a tab off a switch on the column of aircraft ONC and installing it on aircraft TSO. Such tabs were readily available and cost about $7 or $8. Mr Hobson gave a different version of these events which was not put to Mr Mackey. Nevertheless, if Mr Hobson's evidence that Mr Harper agreed that parts could be borrowed from aircraft ONC provided they were replaced is true, then Mr Mackey's evidence is not necessarily inconsistent with that of Mr Hobson. Mr Criddle gave evidence of having seen Mr Hobson drain fuel from aircraft ONC into a tin of about 500 mL which is consistent with Mr Hobson's evidence. Mr Criddle also said he had seen Mr Hobson inside the cockpit of aircraft ONC and accessing panels on that aircraft. That too is consistent with Mr Hobson's evidence. Samuel Perry, a pilot of Australian Aerial Surveys, gave evidence that after he flew aircraft TSO to Albury on 12 May 2006 he contacted Mr Hobson about the problem with the left hand engine magneto. Mr Hobson said he had a spare magneto and came down to Albury with the spare on 14 May 2006. Mr Perry also saw Mr Hobson in and around the tail section of aircraft ONC on occasions. Mr Hobson agreed that this conversation with Mr Perry occurred and could not see the difference between telling Mr Perry he had a spare magneto (being that from aircraft ONC) or that he had "access to" a spare magneto. While part of the surrounding circumstances, none of this evidence undermines Mr Hobson's credibility or particularly assists in resolving the dispute between Mr Harper and Mr Hobson. Accordingly, I have two witnesses (whose general credibility I accept) alleging that each said things the other denies. As such, this aspect of the dispute also must be resolved by reference to the nature of the matters in dispute, the onus of proof, and the surrounding circumstances capable of assisting in resolution of the issues. I deal with these considerations relevant to the common law claims next. If Mr Harper's claims are true, then Mr Hobson has engaged in serious misconduct. For example, it is part of Mr Harper's case that Mr Hobson tampered with aircraft ONC in such a way as to threaten the safety of the aircraft in breach of s 24 of the Civil Aviation Act . A breach of that section is a criminal offence punishable by two years imprisonment. It is also part of Mr Harper's case that Mr Hobson breached numerous provisions of the Civil Aviation Regulations , most of which create criminal offences for breach. Apart from these legislative obligations, Mr Harper's case is that Mr Hobson deliberately engaged in a course of conduct involving taking aircraft parts from aircraft ONC to benefit himself without having any permission from Mr Harper (whether express or implied) to do so. That in itself is a serious accusation. Insofar as Mr Harper's allegations relate to parts that Mr Hobson admitted borrowing from aircraft ONC, Mr Hobson had the onus of proving consent (G E Dal Pont (general editor). Halsbury's Laws of Australia , LexisNexis Butterworths: Sydney. Looseleaf service last updated April 2009, [415-455]). Contrary to Mr Harper's submissions, I do not characterise Mr Hobson's defence as limited to express consent. Consent may be express or implied. Either way consent is a defence to the torts of conversion and trespass. Insofar as Mr Harper's allegations relate to parts that Mr Hobson denied any involvement in removing, dismantling or otherwise tampering with, Mr Harper had the onus of proving the interference by Mr Hobson. In both cases, the assessment of the likelihood of facts relevant to the issues having occurred or not is affected by the "the nature and consequence of the fact or facts to be proved" ( Watson v Foxman ) and the effect of the passage of time and subsequent events on the reliability of human memory. From his oral evidence it was apparent that he was familiar with the terms and conditions of his licence and the requirements of the Civil Aviation Act and Civil Aviation Regulations governing his work as a LAME. Mr Pitt, his employer, considered Mr Hobson to have a "very high standard" in carrying out work to aircraft. Although Mr Pitt did not know about the cancellation of Reg-Air's certificate of approval there was no reason for Mr Hobson to have so informed him, particularly given the fact that this occurred in 2001. (2) Mr Harper was unhappy with the treatment of his aircraft in the first hangar and relocated the aircraft to hangar 273 where Mr Hobson was working on aircraft TSO. Until the falling out between Mr Harper and Mr Hobson (which appears to have first arisen in about September 2006), Mr Harper felt free to use Mr Hobson's tools to work on aircraft ONC and to seek Mr Hobson's advice. Mr Harper accepted that their relationship was a friendly one (at least before September 2006). Mr Harper said he had known Mr Hobson for about 10 years in 2005. Before their falling out, Mr Harper also considered that Mr Hobson wanted aircraft ONC to be in good condition. Given the lack of invoices (bar the one referred to) it appears that Mr Harper had the benefit of a significant amount of free advice from Mr Hobson. (3) Mr Harper agreed that aircraft ONC had more hours on its airframe than aircraft TSO. (4) Mr Harper wanted to use aircraft ONC for charter purposes and sought Mr Hobson's advice (amongst others) about making the aircraft suitable for that purpose. Mr Hobson said that he told Mr Harper extensive works were required which Mr Harper agreed to do. Mr Harper denied agreeing to do those works. However, he obtained quotes relevant to such works and agreed that he had dismantled parts of aircraft ONC himself such as to give it an appearance of being gutted. He started those works in the month or two before aircraft ONC's maintenance release expired. Those works meant that aircraft ONC was not airworthy from about May to June 2005. (5) In November 2005 Mr Harper agreed that AirAg could remove the nose wheel doors. The doors were not re-installed until January 2007 by Bankstown Aircraft Maintenance. Mr Harper did not demand re-installation earlier. Without the nose gear doors aircraft ONC was not airworthy. (6) Mr Harper denied that there was any agreement (express or tacit) between him and Mr Hobson by which Mr Harper could use Mr Hobson's tools and manuals and obtain free advice and Mr Hobson could use parts from aircraft ONC (which was not airworthy) provided he returned and re-installed the parts. Yes. Were you aware of that? No. I wasn't distressed over it but I wasn't aware of it. Is that because - the reason you're saying you're not distressed sir, is because there was a general understanding that on the basis that your aircraft wasn't fit to fly, parts that would assist other aircraft owners could be used provided they were reinstalled? Yes, but what point do you go to - they're going to remove my undercarriage and give to someone. There's a bit of a difference with a battery, same with a nose wheel door. There's a bit of difference between a nose wheel door or pulling an engine off or pulling trim motor outer cables and that, there's a significant difference there. Having regard to this evidence I infer that, irrespective of his current recollections, it is more likely than not that Mr Harper, immediately after buying aircraft ONC, was keen to have the aircraft refurbished and upgraded to make it suitable for charter work. Further, that Mr Harper recognised that this would require a substantial investment of money. Mr Harper thus attempted to do as much of the work he could himself using Mr Hobson, whom he knew reasonably well and who was a LAME, as a free or cheap source of assistance (knowledge, tools, manuals and help) insofar as possible. To that end, Mr Harper dismantled the parts of the aircraft thereby giving it a "gutted" appearance. Mr Harper did this work in the month or two before the aircraft's maintenance release expired. I infer that Mr Harper must have known that the work he wanted to do would take some time, with the aircraft not being airworthy during the work. I infer also that during this period Mr Harper had many discussions with Mr Hobson, and regularly drew on Mr Hobson's expertise, tools and (perhaps) manuals. In these circumstances I consider it more likely than not that, by his words and conduct (whether or not in the words attributed to him by Mr Hobson, which Mr Hobson acknowledged he could not recall clearly), Mr Harper generally consented to Mr Hobson borrowing parts from aircraft ONC while it was not airworthy provided the parts were re-installed. Mr Harper appears not to have expected this arrangement to involve parts he considered significant but Mr Hobson, as a LAME, may well have had a different expectation. Either way, I consider the evidence supports an inference that (at the least) Mr Harper impliedly consented to Mr Hobson allowing Mr Hobson to borrow parts from aircraft ONC while it was not airworthy and subject to the parts being returned and re-installed. Accordingly, Mr Hobson has discharged his onus of establishing consent to the borrowing of those parts which Mr Hobson admitted borrowing. It is true that Mr Hobson did not return one part (the trim servo motor) whereas all other parts were returned. As discussed, I accept that Mr Hobson re-installed the incorrect part into aircraft ONC. Mr Hobson accepted his responsibility for this error and offered to pay the cost of overhauling the trim servo motor installed into aircraft ONC (of $671 according to an invoice). The evidence does not establish that Mr Hobson intended to keep aircraft ONC's trim servo motor. Nevertheless, I am satisfied that, by his error, Mr Hobson deprived Mr Harper of his right to possession of trim servo motor 5096. Mr Hobson thus, by his mistake, converted trim servo motor 5096 to his own use. These facts do not constitute trespass to the trim servo motor because, at the time of the mistake of converting the motor to his own use, Mr Hobson in fact had possession of the part, not Mr Harper (see Penfolds Wines Pty Ltd v Elliott [1946] HCA 46 ; (1946) 74 CLR 204 at 226). Nevertheless, they do amount to conversion (because installing the trim servo motor from aircraft ONC into aircraft TSO was a serious interference to Mr Harper's right to possession of that part and, obviously, not authorised by the consent I have found Mr Harper to have given). In Butler v Egg & Egg Pulp Marketing Board [1966] HCA 38 ; (1966) 114 CLR 185 at 191 Taylor and Owen JJ observed that the principle governing damages for conversion, in common with all torts, is that "the injured party should receive compensation in a sum which, so far as money can do so, will put him in the same position as he would have been in if the contract had been performed or the tort had not been committed". In most cases of conversion it is, of course, obvious that its application will result in the injured plaintiff recovering the full value of the property converted since that will usually represent the loss that he has sustained by the defendant's wrongful act. Hence the statement which appears so often in the books that the general rule is that the plaintiff in an action of conversion is entitled to recover the full value of the goods converted, but this statement should not be allowed to obscure the broad principle that damages are awarded by way of compensation. I consider that this amount represents the proper assessment of Mr Harper's damage having regard to the applicable principles of compensation (and it should be noted in this regard, that Mr Harper did not suggest he had made any demand for the return of the part). This is consistent with the approach that, in effect, subjects a person who has converted goods to a forced purchase of them at their full value. In submissions, Mr Hobson's counsel accepted that the amount of $1500 would be the appropriate sum by way of damages with respect to this part. Insofar as Mr Harper's allegations related to parts with which Mr Hobson denied any interference, I am not satisfied that Mr Harper has discharged his onus of proof. Mr Harper himself undertook substantial works to aircraft ONC. Many other people also had access to aircraft ONC over a long period. Mr Hobson admitted borrowing some parts. It is difficult to understand why he would deny having interfered with other parts (such as switches and panels) given his case that Mr Harper generally permitted parts to be borrowed from aircraft ONC, provided they were returned. For these reasons I do not accept Mr Harper's common law claims of trespass and conversion against Mr Hobson other than in respect of the trim servo motor which Mr Hobson inadvertently converted to his own use on aircraft TSO. It also follows that Mr Harper's claim for exemplary damages cannot be sustained. A number of submissions for Mr Harper referred to Mr Hobson having contravened the Civil Aviation Act and Civil Aviation Regulations in various respects (particularly in relation to record-keeping). The pleadings, however, identify the limited role which these legislative requirements played in Mr Harper's case. According to the second amended statement of claim, these legislative requirements were relevant to the claims about the implied representation (which I have rejected because the making of such a representation was founded on the existence of an agreement between Mr Harper and Reg-Air that I do not accept existed) and the implied warranty (which I have also rejected for various reasons). Nor do I accept his claims based on trespass to, and conversion of, parts from aircraft ONC other than in one respect. Despite the fact that I accept Mr Hobson did not intend to keep the trim servo motor from aircraft ONC, I am satisfied that he installed that trim servo motor into aircraft TSO and, in so doing, committed the tort of conversion. Damages to compensate Mr Harper for that conversion are assessed in the sum of $1500. Otherwise Mr Harper's claims against the respondents are dismissed. For the purpose of making final orders the parties are to file agreed orders reflecting the reasons for judgment within 7 days (including any costs order if agreed). If the costs order or other terms of the orders cannot be agreed, the parties are to file their competing orders within 7 days and, within the same period, are to nominate an agreed date for a short hearing on costs at 9.15 am or 9.30 am within a further 7 days thereafter.

express representation whether agreement to repair, maintain and service aircraft within certain timeframe whether representation made capacity in which representation made whether reliance on the representation implied representation whether representation to repair, maintain and service aircraft in compliance with the civil aviation act 1988 (cth) and civil aviation regulations 1988 (cth) whether implied that services would be rendered with due care and skill whether trespass to or conversion of certain parts of aircraft whether defence of consent made out trade and commerce trade and commerce torts

In January 2006, the University and Professor McAleer were bound by an agreement certified under the Workplace Relations Act 1996 (Cth) (the Workplace Relations Act ). The certified agreement is referred to as "The University of Western Australia Academic Staff Agreement 2004" (the 2004 Agreement). Schedule D of the 2004 Agreement set out a detailed disciplinary procedure which provided for the investigation and handling of allegations of misconduct by members of the University's staff. 2 By a letter dated 6 January 2006, the University advised Professor McAleer that a committee of the University, the Sexual Harassment Review Panel, had upheld allegations of sexual harassment against him and recommended that the University invoke the disciplinary procedures in Sch D of the 2004 Agreement. It comprised three members of the academic staff of the University. During March 2006, the Misconduct Investigation Committee held a number of hearings which Professor McAleer attended. There was before the Misconduct Investigation Committee an affidavit made by each of Dr Voola and Dr Le, who were members of the academic staff in the Economics Department. These affidavits described a number of incidents and conversations involving the deponents and Professor McAleer. Not all of the incidents and conversations described in the affidavits related to matters which could potentially be regarded as sexual harassment. 5 Professor McAleer requested that the University provide particulars of the allegations that were made against him and which were the subject of investigation by the Misconduct Investigation Committee. The University did not provide particulars in a form which satisfied Professor McAleer. On 17 March 2006, Professor McAleer commenced a proceeding in this Court (WAD 71 of 2006) for a declaration as to the proper construction of the 2004 Agreement and for a penalty. I granted an interim injunction enjoining the further conduct of the investigation. 6 In May 2006, a new certified agreement, which bound the University and Professor McAleer, became effective. It was called the "The University of Western Australia Academic Staff Agreement 2006" (the 2006 Agreement). Schedule D of that agreement contained a disciplinary procedure which was substantially different to that contained in Sch D of the 2004 Agreement. 7 At the trial of Professor McAleer's application in October 2006, the University did not contest Professor McAleer's claim that it had breached the terms of the 2004 Agreement in failing to provide proper particulars. The University also agreed to abandon the proceedings before the persons then comprising the Misconduct Investigation Committee. However, the University advised that it still intended to pursue the allegations it had made against Professor McAleer. The University contended that on the proper construction of cl 6.6 of Sch D of the 2006 Agreement it was required to pursue those allegations under Sch D of the 2006 Agreement. The University cross-claimed for a declaration to that effect. 8 On 2 February 2007, I delivered judgment ( McAleer v The University of Western Australia (2007) 159 IR 96 ( McAleer (No 1) ). I rejected the contention of the University. Upon the proper interpretation of cl 6.1.1 of Sch D of The University of Western Australia Academic Staff Agreement 2004 ("the 2004 certified agreement"), the respondent breached the terms of that clause in that it failed, in its letter of 6 January 2006 to the applicant, to notify the applicant of the allegations of serious misconduct made against him in sufficient detail to enable the applicant to understand the precise nature of the allegations and to properly consider and respond to them. 2. Upon the proper interpretation of cl 6.6 of Sch D of The University of Western Australia Academic Staff Agreement 2006, the allegations of serious misconduct made against the applicant by the respondent, in the respondent's letter dated 6 January 2006 to the applicant, are required to be dealt with in accordance with the provisions of Sch D of the 2004 certified agreement. The respondent is to pay to the applicant, the sum of $20,000 as a penalty in respect of the respondent's breach of cl 6.1.1 of Sch D of the 2004 certified agreement. 4. The respondent is permanently restrained from taking any further steps to pursue the allegations of serious misconduct, made against the applicant in its letter to the applicant dated 6 January 2006, before the Misconduct Investigation Committee, appointed in February 2006 and comprised of Ms Robyn Carroll, Professor Mark Bush and Dr Bruce Stone. The applicant's application is otherwise dismissed, and the respondent's cross-claim is dismissed. 6. The question of costs is adjourned to a date to be fixed. 10 Professor Seares went on to say that in accordance with the judgment in the Federal Court proceedings (at [8] above), the allegations would be dealt with in accordance with Sch D of the 2004 Agreement. She said that it was inappropriate to resolve the allegations in accordance with cl 2.1 of Sch D of the 2004 Agreement. 11 Professor Seares also stated that pursuant to cl 3.1 of Sch D of the 2004 Agreement, she had considered the report and independently determined that the allegations warranted further investigation. She said that she had appointed Deputy Vice-Chancellor, Professor Don Markwell as the Academic Member of the Executive to deal with the matter. Professor Seares said further that Professor Markwell would in due course consider the allegations contained in the report and determine whether the report warranted further investigation. If he did so determine, he would notify Professor McAleer to that effect in writing. 12 In addition, by a letter dated 30 May 2007, the Vice-Chancellor, Professor Alan Robson, advised Professor McAleer that in view of the serious nature of the allegations contained in the report referred to in Professor Seares' letter, the University had determined to suspend Professor McAleer without pay pending the determination of the investigation. 13 On 30 May 2007, Professor Seares wrote a second letter to Professor McAleer. In this letter, Professor Seares said that she had been provided with a written report detailing a number of allegations of misconduct and serious misconduct. The letter stated that Professor Seares had considered the report and determined that given the nature and seriousness of the allegations, it was inappropriate to resolve the allegations in the report in accordance with cl 2.1 of the 2006 Agreement. 14 Professor Seares went on to say that she had considered the report and independently determined that the allegations warranted further investigation. Professor Seares stated that she had appointed Professor Doug McEachern, Deputy Vice-Chancellor, as the Academic Member of the Executive to deal with the matter. The letter went on to say that Professor McEachern would in due course consider the allegations contained in the report and determine whether the allegations warranted further investigation; and if so, he would notify Professor McAleer in writing of the allegations and require Professor McAleer to submit a written response. 15 The letter also stated that Professor McAleer's employment was suspended without pay pending the determination of the investigation. 16 Accordingly, by the end of May 2007, the University had informed Professor McAleer that it had decided to invoke the disciplinary procedure set out in the 2004 Agreement to investigate the allegations of serious misconduct set out in the University's letter of 6 January 2006; and to invoke the disciplinary procedure set out in the 2006 Agreement to investigate the as yet unspecified "misconduct and serious misconduct" referred to in the second letter from Professor Seares. He then set out what he referred to as "the precise nature of the allegations" which occupied 16 pages of the letter. The letter went on to say that the conduct alleged, if proven, amounted to "sexual harassment" and amounted to serious misconduct. Under the second heading, the letter described conduct which it was alleged showed that Professor McAleer wilfully and repeatedly disobeyed the University's Information Technology Regulations and the University's policy on use of computer facilities. He went on to say that he believed the allegations set out in his letter, if proven, would constitute misconduct or serious misconduct under the 2006 Agreement and warranted further investigation. Professor McEachern said that he intended to commission an investigation as provided for in cl 6.1 of Sch D of the 2006 Agreement in respect of the allegations. 20 Professor McEachern went on to say that the person conducting the investigation which he intended to commission would be required to consider the most appropriate means of conducting the investigation into the allegations, and would be required to hear from the University and Professor McAleer in that regard. 22 This letter also stated that it would be necessary for the investigation to determine whether the conduct, if proven, was in breach of Professor McAleer's contract of employment. 23 The letter identified four categories of allegations which were to be investigated. The letter runs to 25 pages and is detailed. I set out below a general description of the allegations made in respect of each of the categories. 25 In respect of the first category, the letter describes a considerable number of incidents involving Professor McAleer and members of the academic staff and students including, but not limited to, Dr Voola, Dr Leong and Dr Le, in which Professor McAleer is alleged to have made insulting and derogatory comments about other members of the academic staff, and to have subjected members of the academic staff and students to overbearing conduct. 26 In relation to the second category, the letter refers to allegations that Professor McAleer subjected a PhD student to pressure to describe Professor McAleer as a co-author of a paper which was solely authored and researched by the PhD student; and that Professor McAleer had on other occasions acted improperly in describing himself as a co-author of work which was undertaken by a PhD student who he was supervising. 27 The third category contains allegations that Professor McAleer accessed websites in breach of the University's Information Technology Policy. The fourth category contains allegations that Professor McAleer claimed expenses in relation to trips he had undertaken, which he had not incurred. 28 By a letter dated 12 December 2007, Professor McEachern advised Professor McAleer's solicitors that he had appointed Mr Richard Hooker, a barrister, as the investigator to investigate the matters referred to in his letter of 4 December 2007. 29 There is a distinction evident between the nature of the allegations referred to in each of the University's letters of 5 September 2007 and 4 December 2007 respectively. The former refers to allegations of language and actions capable of founding claims of sexual harassment, whereas the allegations set out in the latter relate to alleged misconduct of a different nature. Accordingly, so it was contended, if the University intended to pursue those allegations, it was required to pursue them pursuant to the disciplinary procedure described in Sch D of the 2004 Agreement. 32 The letter went on to say that there were a number of factors which made the pursuit by the University of the disciplinary charges against Professor McAleer oppressive and an abuse of process. These were the delay by the University in the prosecution of the disciplinary proceedings, the failure of the University to raise with Professor McAleer the matters now raised at the time that the incidents occurred and the refusal of the University adequately to frame or particularise the disciplinary charges in the previous disciplinary proceedings and the current disciplinary proceedings. 33 Professor McAleer's solicitors required the University to give an undertaking that it would not pursue the disciplinary proceedings referred to in the letters of 5 September 2007 and 4 December 2007. The University declined to give that undertaking. The University raised a number of points of law which, it says, are fatal to the success of Professor McAleer's claim. It contends that Professor McAleer's claim should be dismissed at this stage without the parties having to go to trial. It is this motion which I now consider. And, one must be mindful that in Hocking [v Bell] (1945) [71 CLR 430] at 487, Dixon J said that, in effect, every judge who had heard the matter (through four trials, two Full Court appeals and, to that point, the appeal to the High Court) would have formed the view that the plaintiff should have failed had they been able to decide the facts, yet the Privy Council restored the second jury verdict in her favour and so concluded the litigation. This raises a very real question, as to what reasonable prospects are for present purposes. I am of opinion that in assessing what reasonable prospects of success are for the purposes of s 31A, the court must be very cautious not to do a party an injustice by summarily dismissing the proceedings where, in accordance with the principles in Hocking [v Bell] (1947) [75 CLR 125], contested evidence might reasonably be believed one way or the other so as to enable one side or the other to succeed. As soon as the evidence may have such an ambivalent character prior to a final determination, I am of opinion that then, as a matter of law, at that point there are reasonable prospects of success within the meaning of s 31A. Unless only one conclusion can be said to be reasonable, the moving party will not have discharged its onus to enliven the discretion to authorise a summary termination of the proceedings which s 31A envisages. 37 The gravamen of these observations is premised on there being disputed questions of fact at the summary judgment stage. Rares J only makes a passing and tentative reference to disputes of law. In my view, these observations are not apposite to the University's application which is founded purely on questions of law. 38 There are observations in other cases as to the proper approach to applications made under s 31A of the Act on disputed questions of law, which are more appropriate to the disposition of the University's application. If the judge is satisfied that he (or she) is able to resolve any contested legal issue at a summary hearing and without undue delay, it may be better all around if that be done. If not, then at least the merits must be tested. That will then give s 31A a substantial operation, which is what, it seems to me, was intended. 39 More recently, in the case of Bradken Resources Pty Ltd v Lynx Engineering Consultants Pty Ltd [2008] FCA 1257 ( Bradken ), Emmett J made observations to similar effect. Section 31A requires the Court to consider the question of whether there is a real issue of law or fact to be decided. The Court must conduct an enquiry into the merits of the issues of law. While the enquiry should not necessarily be for the purpose of resolving the legal questions, that can be done. The object is not simply to determine whether the argument is hopeless, but whether the argument is sufficiently strong to warrant the matter going to trial. If the Court can resolve contested legal issues at a summary hearing, without undue delay, it may be preferable to do so in the interests of saving costs and time. Where there is a real issue of law, the Court can hear and decide it without the need for a trial or evidence. Once the issues of law are resolved, it may be clear, one way or the other whether the matter should be allowed to go to trial (see Jefferson Ford Pty Ltd v Ford Motor Company Australia Limited [2008] FCAFC 60 at [23] and [131]). 40 I have had the benefit of full argument on the points of law in issue. There are no disputed questions of fact raised by the University's application. I am in no worse a position to determine those points of law than I would be at the end of a trial. I, accordingly, intend to apply the observations of Emmett J in Bradken to the resolution of the issues in this case. 42 First, whether on the proper construction of the Court's orders of 2 February 2007, the University is precluded from pursuing the allegations in the letter of 4 December 2007 under Sch D of the 2006 Agreement. I interpose to say that at the hearing, the parties accepted that it would be appropriate for me to decide this matter finally. 43 Secondly, whether the Court would grant a permanent stay of the disciplinary proceedings on the basis that the pursuit of the proceedings is an abuse of process. 44 Thirdly, whether the Court would grant a permanent injunction restraining the University from pursuing the disciplinary proceedings on the grounds that the University has engaged in an anticipatory breach of contact by including among the allegations to be investigated in the disciplinary proceedings, conduct which it has condoned. 45 Fourthly, whether the Court would impose a penalty under s 719 of the Workplace Relations Act in respect of alleged breaches by the University of the 2004 Agreement and the 2006 Agreement. This was because, when the declaration was considered by reference to parts of the judgment, it was unclear whether the ambit of the allegations that had to be dealt with under the 2004 Agreement were confined to the allegations in the University's letter of 6 January 2006, or were to include all the matters deposed to in each of the affidavits of Dr Voola and Dr Le. As I have said previously, not all the events and incidents described in the affidavits related to the matters that could potentially be regarded as going to the sexual harassment allegations referred to in the letter of 6 January 2006. 47 The University contended that there was no ambiguity in the order and the judgment and that the effect of the declaration was that the ambit of the allegations to be pursued under the 2004 Agreement was confined to allegations referred to in the letter of 6 January 2006, namely, the allegations which related to sexual harassment. The disciplinary proceedings commenced on 6 January 2006; well prior to the lodgement date of the 2006 certified agreement of 26 May 2006. The consequence is that, any further pursuit by the University of the allegations, the subject of the "disciplinary proceedings", is to be dealt with under Sch D of the 2004 certified agreement. [82] As to the ambit of the matters which were the subject of the disciplinary proceedings taken under the 2004 certified agreement, in my view, these are comprised by the allegations of misconduct which are referred to in the letter of the Vice Chancellor to the applicant on 6 January 2006. The evidence, derived from the University's letter of 2 March 2006, referred to at [39] above, is that the University's case is "largely" based on the affidavits of the two deponents. I find, therefore, that the ambit of the disciplinary proceedings is comprised by the allegations contained in the letter of 6 January 2006, which include, but are not confined to, the facts and circumstances referred to in affidavits of the two deponents. [83] I will, therefore, not make the declaration sought by the University in its counterclaim. Instead, I will make a declaration that the allegations of serious misconduct made against the applicant as set out in the University's letter of 6 January 2006, are to be dealt with in accordance with the provisions of Sch D of the 2004 certified agreement. In my view, there is no need to grant an injunction sought by the applicant, precluding the University from dealing with the allegations of misconduct, the subject of the disciplinary proceedings, other than by reference to Sch D of the 2004 certified agreement, as there is no suggestion that the University would not give effect to the terms of the declaration made by the Court. Both deponents have been distressed by the whole issue. Dr Le has made it clear that she does not wish to be interviewed. Dr Voola is currently overseas and not due to return until 13 March 2006. It would be my suggestion that if the Committee has any questions that arise, that the Committee's questions be posed and further affidavits provided. I find, therefore, that the ambit of the disciplinary proceedings is comprised by the allegations contained in the letter of 6 January 2006, which include, but are not confined to, the facts and circumstances referred to in affidavits of the two deponents. 52 Professor McAleer says that he understands that the declaration was intended to be read subject to [82] of the judgment so that the ambit of the disciplinary proceedings to be dealt with under the 2004 Agreement, was to include all of the facts and circumstances set out in the affidavits of the two deponents, notwithstanding that those facts and circumstances went beyond the allegations contained in the eight dot points in the 6 January 2006 letter. 53 Professor McAleer also contends that in the letter of 2 March 2006, the University referred to certain of the paragraphs in the affidavits of Dr Voola and Dr Le in support of the allegations in the letter of 6 January 2006 which it now refers to in the support of allegations raised in its letter of 4 December 2007. That may be so. However, my only reason for referring to the 2 March 2006 letter of the University, was that that letter contained the statement that the University's case rested "largely" on the content of the affidavits of the two deponents, Dr Voola and Dr Le (see [39] of McAleer (No 1) ). I took that to mean that the University may also wish to bring other evidence to support its allegations in the letter of 6 January 2006. It was in that context that I said that the ambit of the disciplinary proceedings was to "include but not be confined to the facts and circumstances referred to in the affidavits of the deponents". Although my language was imprecise, I intended to convey that the University would not be confined to the facts and circumstances deposed to by the two deponents in supporting the allegations made in the letter of 6 January 2006. In other words, the effect of what I intended to declare, was that the University would be required to use the procedure in Sch D of the 2004 Agreement to pursue the allegations made in the letter of 6 January 2006, but could rely upon evidence to support its allegations in addition to the evidence comprised by the affidavits of Dr Voola and Dr Le. I did not, thereby, intend to amplify the scope of the disciplinary proceedings to be dealt with under the 2004 Agreement beyond the allegations set out in the eight dot points in the letter of 6 January 2006. 54 It follows, that the manner in which the University has interpreted the declaration and reasons is the manner in which I intended that they be interpreted. 55 In his further amended particulars Professor McAleer has stated that the relief sought in para 2(a) and para 2(b) of his application is to complement the declarations sought in para 1 of the application. Therefore, the relief sought in para 2(a) and para 2(b) is founded upon the assumption that Professor McAleer's contention in respect of the proper construction of my order, was accepted. The same is true in respect of Professor McAleer's claim for the penalty in para 2(c) of his application on the grounds particularised at para 13(b) of his further amended particulars. 56 In light of my finding set out above, it follows that I dismiss Professor McAleer's claims for the declarations in para 1.1 and para 1.2 of his application, his claims for the orders set out in para 2(a) and para 2(b) of his application and his claim for a penalty based on the breach of the 2006 Agreement alleged at para 13(b) of the further amended particulars. 58 In support of this contention, Professor McAleer said that some of the allegations in the letters of 5 September 2007 and 4 December 2007 related to events which went back to 1992. Further, Professor McAleer said that the University has known about the allegations for a long time and had delayed in bringing and progressing disciplinary proceedings. Also it was said that the University had failed to provide Professor McAleer with sufficient information. It was also said that in suspending Professor McAleer without pay, the University has acted harshly and interfered with his work and damaged his career prospects. In short, it was said the commencement and conduct of the disciplinary proceedings has been so oppressive, unfair and vexatious as to amount to an abuse of process. 59 The University contends that para 2(d) and para 2(e) of Professor McAleer's application should be summarily dismissed on the basis that there is no power in this Court to grant the relief claimed. 60 Professor McAleer contended that it is open to this Court to grant relief by way of a permanent stay of the disciplinary proceedings. Professor McAleer said that the power to grant a stay of disciplinary proceedings was founded upon the "inherent jurisdiction" of a superior court. Nevertheless a statutory court which is expressly given certain jurisdiction and powers must exercise that jurisdiction and those powers. In doing so it must be taken to be given by implication whatever jurisdiction or powers may be necessary for the exercise of those expressly conferred. The implied power for example to prevent abuse of its process, is similar to, if not identical with, inherent power. 61 Professor McAleer also relied upon s 22 and s 23 of the Act and the accrued jurisdiction of the Court. 62 Professor McAleer referred particularly to the cases of Walton v Gardiner [1993] HCA 77 ; (1993) 177 CLR 378 ( Walton ) and Burns v TAFE Commission of New South Wales (unreported, Supreme Court of New South Wales, Spender AJ, 15 November 1994) ( Burns ) as examples of cases where the Court had permanently stayed disciplinary proceedings on the grounds of an abuse of process. In Walton , the New South Wales Supreme Court granted a permanent stay of disciplinary proceedings brought against a medical practitioner in the Medical Tribunal which was established under the Medical Practitioners Act 1938 (NSW). In Burns , Spender AJ in the New South Wales Supreme Court granted a permanent stay of a number of disciplinary charges brought by the TAFE Commission against a Senior Head Teacher at the Hunter Institute of Technology. 63 The Walton case went to the High Court. The High Court refused to allow the appellant to reopen a finding of the Court of Appeal of New South Wales in Herron v McGregor (1986) 6 NSWLR 246 ( Herron ) that the New South Wales Supreme Court had jurisdiction to stay disciplinary proceedings before the Medical Tribunal. Herron was also a case involving disciplinary proceedings before the Medical Tribunal. 64 It is necessary, therefore, to examine the reasoning in Herron to understand more about the jurisdiction of a superior court to stay disciplinary proceedings of a non-curial body on the grounds of abuse of process. The jurisdiction of this Court extends to the supervision and protection of proceedings in inferior courts and tribunals: John Fairfax & Sons Pty Ltd v McRae [1955] HCA 12 ; (1955) 93 CLR 351 at 363. 65 In John Fairfax & Sons Pty Ltd v McRae [1955] HCA 12 ; (1955) 93 CLR 351 ( McRae ) the issue was whether the New South Wales Supreme Court had power to deal summarily with a contempt of an inferior court. Nor, as we think, is there anything unreal in the connection asserted in R v Davies between a jurisdiction to issue prohibition or certiorari to inferior courts and a jurisdiction to punish for contempts of inferior courts. If, indeed, it is put, as Griffith CJ put it, as a connection between a power to correct and a duty to protect, then it is true that the connection is not obvious. But, although the jurisdiction is "protective" in a sense, it has been said again and again that the court punishes contempts not in order to protect courts or judges or juries but in order to safeguard and uphold the rights of suitors and ensure that justice be done. So regarded, the power to punish for contempt of inferior courts and the power to issue mandamus or certiorari to inferior courts are seen as in truth but different aspects of the same function --- the traditional general supervisory function of the King's Bench, the function of seeing that justice was administered and not impeded in lower tribunals. (Footnote omitted; Original emphasis. 67 It follows that McHugh JA found that the source of the court's power to intervene to prevent an abuse of process of the Medical Tribunal was based upon the supervisory jurisdiction of the court, which was identified in McRae as consisting in the power to exercise judicial review. 68 In the case of McClaren v Home Office [1990] ICR 824, the Court of Appeal considered the question of when judicial review in relation to disciplinary proceedings may be available in an employment context. This will arise where there exists some disciplinary or other body established under the prerogative or by statute to which the employer or the employee is entitled or required to refer disputes affecting their relationship. The procedure of judicial review can then be appropriate because it has always been part of the role of the court in public law proceedings to supervise inferior tribunals and the court in reviewing disciplinary proceedings is performing a similar role. As long as the "tribunal" or other body has a sufficient public law element, which it almost invariably will have if the employer is the Crown, and it is not domestic or wholly informal, its proceedings and determination can be an appropriate subject for judicial review. 69 In my view, the cases of Walton, Herron and Burns relied upon by Professor McAleer, were each cases where there was a "sufficient public law element" to attract the supervisory jurisdiction of the court and the attendant judicial review remedies. 70 In Walton and Herron the disciplinary proceedings were brought before a Medical Tribunal which was a statutory inferior tribunal established under a New South Wales statute . Accordingly, as McHugh JA said, the New South Wales Supreme Court had, as an incident of its supervisory jurisdiction, the power to protect the processes of this statutory tribunal from abuse. 71 In Burns , the public law element is to be found in the fact that disciplinary offences with which Mr Burns was charged were defined by s 83 of the Teaching Services Act 1980 (NSW) and it was common ground that the regulations in Pt 7 of the Technical and Further Education Teaching Service Regulation 1981 (NSW) applied to Mr Burns. Further, the Technical and Further Education Commission (Savings and Transitional) Regulation 1993 (NSW) identified the persons who were to deal with the breaches of discipline of the nature alleged against Mr Burns. 72 The question is whether there is a sufficient public law element in relation to the disciplinary proceedings commenced by the University under each of the 2004 Agreement and the 2006 Agreement, such as would empower this Court to intervene by way of judicial review. 73 Professor McAleer relied upon the case of Quickenden v O'Connor [2001] FCA 303 ; (2001) 109 FCR 243 ( Quickenden ) in support of his submission that there was a sufficient "public law element" in this case. In Quickenden , Black CJ and French J observed at 265, that the certified agreement in that case, "created rights and obligations which were statutory in character and could operate in addition to the rights and obligations under his contract and, where inconsistent, no doubt displace them". 74 In my view, however, the "statutory character" of a certified agreement does not contain a "sufficient public law element" such as would render decisions made, or actions taken, under those agreements subject to judicial review and the supervisory jurisdiction of this Court. 75 First, it is the Workplace Relations Act which provides the statutory character to terms of an agreement which has been privately agreed by the parties to the certified agreement. In so doing, the Act defines and limits the relief available in respect of the agreement. In Actew Corporation Ltd v Pangallo [2002] FCAFC 325 ; (2002) 127 FCR 1 ( Actew ), the Full Court upheld the principle in Josephson v Walker (1914) 18 CLR 691 that the statute which creates the right also regulates the means by which it is to be enforced. The Workplace Relations Act does not contemplate relief in the nature of judicial review in respect of decisions made, or acts undertaken, by an employer or indeed any person, bound by the terms of the certified agreement. 76 Secondly, a certified agreement has its origin in terms agreed between private parties in an industrial context. It is then registered under the certification process provided by the Workplace Relations Act . Once registered the certified agreement attracts the operation of the statutory regime. Whitlam and Gyles JJ at 18, at [33] in Actew , eschewed the consensual origin of a certified agreement as being relevant to the question of whether private law remedies could operate in relation to a breach of the terms of a certified agreement. However, the Full Court has recognised that the private consensual origin of a certified agreement is a material consideration in another aspect of the law relating to certified agreements. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. 77 In my view, the private consensual origin of a certified agreement is also a relevant consideration in determining whether there is a sufficient public law element in relation to certified agreements to attract the availability of judicial review remedies. The consideration is relevant because, by contrast with the private consensual origin of a certified agreement, the disciplinary offences and the terms of the disciplinary code in the Burns case had their sole origin in, and were solely the product of, the public legislative process. 78 Accordingly, I reject Professor McAleer's contention that this Court has a supervisory power in respect of decisions made or actions taken under a certified agreement. It follows that I also reject his contention that the Court has power to grant a permanent stay of the disciplinary proceedings in this case. I, therefore, dismiss Professor McAleer's claim in para 2(d) and para 2(e) of the application. In the amended particulars of the application, Professor McAleer has described the anticipatory breach as comprising "conducting disciplinary proceedings which may lead to dismissal in relation to misconduct which [the University] has condoned". 80 The relief sought is a permanent injunction restraining the University from "proceeding with investigation and prosecution" of Professor McAleer "in relation to allegations which the respondent knew about and condoned". 81 In my view, there is no reasonable prospect of success for this cause of action. 82 First, Professor McAleer has not specifically identified the term or terms of the contract of employment in respect of which there has been an anticipatory breach. 83 Secondly, in support of this claim Professor McAleer referred to the case of Rankin v Marine Power International Pty Ltd (2001) 107 IR 117. In that case, Gillard J recognised that condonation by an employer of serious misconduct could amount to the waiver by the employer of the right to summarily dismiss the employee on the basis of the condoned conduct. In my view, that is the proper context in which the question of condonation or waiver is to be considered. In this case, there is a distinction made in Sch D of both agreements between the investigatory phase and the phase when disciplinary action may be taken on the basis of the findings made in the investigatory phase. At this stage the University has gone no further than to attempt to initiate the investigatory phase. It will be open to Professor McAleer during the investigatory phase and the disciplinary phase to raise any issues of condonation. However, the fact that the disciplinary proceedings are at such a preliminary stage means that there is no reasonable prospect of Professor McAleer obtaining a permanent injunction, even if his application for such a quia timet injunction was made on a wider basis than anticipatory breach of contract, because the internal processes of the disciplinary procedures in each of the agreements have not been exhausted and there is, accordingly, no imminent threat that he will be dismissed or disciplined on the basis of conduct that was condoned. 85 Professor McAleer claims that the University has breached both express and implied terms of the 2004 and 2006 Agreements. 88 In my view, there is no reasonable prospect of Professor McAleer succeeding on this claim at trial. The evidence shows that after the University sent Professor McAleer the letter of 5 September 2007 there was correspondence between the solicitors for Professor McAleer and the University. Professor McAleer's solicitors complained in that correspondence that there were inadequacies in the particularity of the allegations and the University responded to the complaints. 89 In its 16 page letter of 5 September 2007, the University has set out in detail the factual allegations which are made against Professor McAleer. The University has also stated that the conduct, if proven, could comprise serious misconduct under the 2004 Agreement on the basis that it could constitute a serious impediment to the carrying out of an employee's duties, or to an academic's colleagues carrying out their duties, or serious dereliction of duties required of the academic office. The University has also advised Professor McAleer that the conduct could also comprise a breach of Professor McAleer's implied common law duties which the University has identified with specificity. Further, the University has linked each of the factual allegations with the breach of duty, and/or instance of serious misconduct, which it alleges could be found against Professor McAleer. Further, insofar as the University has alleged that Professor McAleer's conduct breached a University policy, the University has identified the policy. 90 In my view, the level of detail which has been provided to Professor McAleer is more than adequate to permit him to make the response which is contemplated under cl 6.1.1 of Sch D of the 2004 Agreement. There is no reasonable prospect of Professor McAleer succeeding on this claim at trial. I, accordingly, dismiss this claim. It is also alleged that the University breached cl 43.5 of the 2004 Agreement and cl 41.5 of the 2006 Agreement by failing to give Professor McAleer the right to respond to concerns raised at the time they were raised so that they could be resolved amicably and swiftly. The objective at this stage is to resolve the matter amicably and swiftly. An allegation(s) of misconduct should, where practical and reasonable, be resolved by the academic supervisor through guidance, counselling, conciliation, or other appropriate action that may include staff development. The report shall provide information about the nature and details of the misconduct allegation(s), and what steps were taken to resolve the issue, if any. This is because cl 43.7 provides that "serious concerns" are to be dealt with in accordance with, relevantly, Sch D which relates to misconduct. The nature of the allegations which have been made against Professor McAleer comprise, in my view, "serious concerns". Accordingly, it is cl 2 of Sch D, and not cl 43, which applies as the process for any early resolution of these misconduct issues. However, cl 2.2 of Sch D recognises that it would be inappropriate in some cases to seek to invoke early resolution as a means of dealing with the alleged misconduct. In her letter of 30 May 2007, Professor Seares invoked cl 2.2 and advised Professor McAleer that it was not appropriate that the allegations be resolved by reference to cl 2.1 of Sch D of the 2004 Agreement. 96 The same considerations apply mutatis mutandis in relation to Professor McAleer's contentions in respect of breaches of cl 41.1 and cl 41.5 of the 2006 Agreement. 97 Accordingly, Professor McAleer's application for a penalty on the grounds of alleged failure to comply with cl 43.1 and cl 43.5 of the 2004 Agreement and cl 41.1 and cl 41.5 of the 2006 Agreement is dismissed. 99 First, it was said that there was an implied term in Sch D of the 2004 and 2006 Agreements that the disciplinary proceedings must be conducted within a reasonable time. The University, it was contended, had breached this term by not commencing the disciplinary proceedings within a reasonable time. 100 Further, it was said that there was an implied term that the University would deal with the serious concerns referred to in cl 43.5 and cl 41.5 in accordance with Sch D of the respective agreements within a reasonable time of the University becoming aware of the serious concerns. It was alleged that the University had failed to do so. 101 It is also alleged that there was an implied term of the 2004 and 2006 Agreements that the University was obliged to pay Professor McAleer's accrued leave entitlements within a reasonable time in accordance with cl 5.1.2 of Sch D of the 2004 and 2006 Agreements, when he was suspended without pay. 102 Professor McAleer relied upon the case of Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Skilled Engineering Ltd [2003] FCA 260 ( Skilled Engineering ) in support of his contention that a term may be implied into a certified agreement by applying the contractual test. 103 Finkelstein J also referred to the case of Construction, Forestry, Mining and Energy Union v Henry Walker Eltin Contracting Pty Ltd (2001) 108 IR 409 ( Eltin ) where the question of implication of a term in a certified agreement by applying the contractual test had been considered. For example, it was accepted in Ali v Christian Salvesen Food Services that there was a gap in the agreement which produced unfairness. However, this was not sufficient to convince the court that the gap should be filled. As a collective agreement is usually a carefully negotiated compromise between parties who have equal bargaining power, the tendency is to assume that the omission is intentional. 105 Finkelstein J used the contractual test to imply terms into the certified agreement. In determining whether and, if so, on what basis, a term could be implied into a certified agreement registered under the Workplace Relations Act , Finkelstein J considered the juridical nature of a certified agreement. However, in discussing the juridical nature of a certified agreement, Finkelstein J made no reference to the Full Court decision in Actew . On this view the ordinary rules according to which a term can be implied into a contract will apply to a certified agreement. Terms can then be implied as a rule of law, as representing the imputed intention of the parties or by custom. 106 Further, Ali was an English case and the Court of Appeal did not refer to any statutory underpinning of the collective agreement it considered in that case. In fact, it was accepted by the Court of Appeal that the collective agreement had become part of each of the employee's individual contracts of employment. Also, Eltin , the other case referred to by Finkelstein J, was decided before Actew . Accordingly, it may be necessary to approach the Skilled Engineering decision with some caution. 107 However, even if one was to apply the approach in Ali , approved by Finkelstein J, in my view, there is no reasonable prospect of Professor McAleer succeeding on this claim at trial. 108 This is because the terms of the certified agreement make it clear that the parties intended the provisions of Sch D to be exhaustive of the question of termination at the instance of the employer on grounds of misconduct. This case is stronger than that contemplated in the observations of Waite LJ in Ali which dealt with the position where the collective agreement is silent on a matter. Here, each agreement is not silent, rather each agreement makes it clear that Sch D is intended to be exhaustive. 109 The fact that the parties intended Sch D of the 2004 Agreement to be exhaustive is evident from the following clauses of the 2004 Agreement. 113 The relevant clauses in the 2006 Agreement are to the same effect. 114 In McAleer (No1 ), I held that cl 60 of the 2004 Agreement operated to exclude any modification to the express terms of Sch D by the implied common law contractual term that each party would not act to destroy the mutual trust and confidence necessary for the employment relationship. 115 It follows from this ruling that I would also dismiss Professor McAleers's application for a penalty based on alleged breaches of the implied terms of the 2004 Agreement and the 2006 Agreement for which he contended. 116 It also follows that I dismiss Professor McAleer's application dated 11 April 2008. I will hear the parties on costs. I certify that the preceding one hundred and sixteen (116) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.

disciplinary proceedings brought under a disciplinary procedure in a certified agreement application to stay disciplinary proceedings whether sufficient public element whether federal court has power to stay the disciplinary proceedings summary judgment application s 31a of federal court of australia act 1976 (cth) proper approach where summary judgment application based on question of law interpretation of previous orders industrial law practice and procedure judgment and orders

He claims that he was persecuted in Egypt because of his religion, because he was a member of a particular social group (namely Christian lawyers) and because he was a member of the liberal political opposition. His application for a protection visa was rejected by a delegate of the respondent and by the Refugee Review Tribunal. His application for review of this decision to the Federal Magistrates Court was dismissed. 2 In his evidence given to the Refugee Review Tribunal, the appellant made graphic claims of persecution in the form of beatings and threatened torture as well as more generally discriminatory conduct from both the community and police officers. The appellant claimed that he was the deacon of his Coptic church and, in late 2000, was also acting as its legal adviser in relation to the proposed purchase of adjoining property that the church wished to acquire for expansion. He claimed that in December 2000 he was beaten by a group of men who were attempting to prevent the sale of the adjoining land to the church. He suspected that they were motivated by Muslim fanaticism. 3 The appellant claimed that shortly after this incident, the local mosque began broadcasting sermons and prayers as well as a Muslim radio station at very high volume from a loud speaker only four metres from his balcony . At the same time, his Muslim neighbours also began tuning in to the same Muslim radio station and loudly playing its broadcasts. The noise was so loud that the house shook and he could not hear his phone calls. He claims that this behaviour was directed at him and that his Christian neighbours knew this and declined to get involved. 4 In 2001, the appellant became active in an opposition political party and began to complain publicly, including by writing numerous letters of complaint about the inequality between Christians and Muslims in Egypt. He also lodged a complaint with the Minister for Religious Houses about the loudspeaker outside his home. In June 2001, the appellant claims he was detained by Egyptian police for three days without food or water and that he was periodically beaten in this period. The appellant claimed that following his complaint about this conduct to the Egyptian authorities a police officer called him and told him that the problems he was experiencing would stop if he would convert to Islam. The appellant claims that in July 2001 police took him from his home to a police station where they held him for some days and attempted unsuccessfully to torture him by electrocution. He said that he was released after he paid a bribe of five hundred Egyptian pounds and told the officer that he wanted to convert to Islam but needed some time so that he could persuade his parents to convert as well. The Tribunal expressly noted that it considered the appellant's application on the basis of the oral testimony he gave at the hearing. The Tribunal regarded the appellant as having given this evidence, 'fully, frankly and coherently'. The Tribunal noted that the appellant did not mention at the hearing some matters referred to in his visa application however, because that application had been prepared with the assistance of a lawyer who no longer acted for the appellant, the Tribunal disregarded those claims. 6 It is clear that the Tribunal had significant misgivings about some aspects of the appellant's account of his experiences in Egypt, describing some aspects as 'implausible' and others as 'quite incredible'. The Tribunal rejected the appellant's claim that Coptic Christian lawyers were a particular social group in Egypt. The Tribunal also did not accept that the appellant faced persecution because of his membership of the liberal political party. From the appellant's account of his experiences the Tribunal found that his political activities were generally directed towards religious issues and concluded that any persecution that the appellant may have suffered would have been because of his religion rather than his political affiliation or profession. For that reason the Tribunal stated that it would deal with the application on the basis that the appellant claimed to fear persecution based on his religion. 7 The Tribunal accepted that the appellant had been assaulted in the street and that this incident could have been associated with the proposed purchase of land for the Church but was satisfied that this was an isolated incident. While he may genuinely believe that he was a victim of a conspiracy involving the mosque ... and all the Muslim residents of the street, I cannot accept that the events occurred as the applicant described them. It is simply implausible that anyone in the street could bear the noise created if these events had in fact occurred. It said, for instance, that it accepted that the appellant 'may have' embarked on a campaign of letter writing and that it 'is possible' that this led to his unlawful detention in June 2001. The Tribunal also accepted that he 'may have' been beaten as claimed. Perhaps the Tribunal did not feel it needed to make a firm finding on these claims because it was of the opinion that 'the police were acting as rogue individuals, and not in a manner sanctioned by the state'. In particular the Tribunal found the notion that he was able to stall the police for four months on the pretext of attempting to convert his parents 'inherently implausible' and did not accept that these events 'happened as he claims'. It is not clear from this statement whether the Tribunal rejected the whole of this account or only some of the details. 11 Ultimately the Tribunal did not accept very much of the appellant's account. I accept that his religion may have been an element in this victimisation. This gives the question of relocation greater significance than it would otherwise have had. In any event, the Tribunal was satisfied that the appellant could avoid these local problems by relocating within Egypt. He did not suggest that he would attract new harassment by continuing to engage in the same kinds of activity as he had in the past. On the applicant's own evidence, he has not broken any law, so no question arises of him facing any legal sanction applicable anywhere in Egypt. Given that the applicant is well educated, a lawyer, and a male with family support, and in the absence of any information put forward by the applicant as to why he would be unable to relocate within Egypt, I am satisfied that it would be reasonable for him to do so. I am also satisfied that he would thereby be able to avoid any problems he has faced in Giza, which I am satisfied are locally based and confined to local individuals. I do not consider that the applicant has established for himself a national profile as a political or religious activist by his work in Giza, his membership of the Liberal Party, or his letter writing. I find that he obtained a reputation, locally, as a troublemaker. I do not consider that the local police or authorities would pursue the applicant to another city, or inform the authorities there of his presence. First, it was submitted, the Tribunal erred in failing to address the appellant's claims, in particular of persecution for his membership of the Liberal Party, for his membership of the particular social group made up of Coptic Christian lawyers and for his alleged apostasy. Secondly, it was submitted that the Tribunal erred in misapplying the test for relocation. 14 The Federal Magistrate rejected the appellant's first submission, noting that the Tribunal did not regard Coptic Christian lawyers as a particular social group and referring to the Tribunal's finding that the appellant's problems emerged as a result of the religious focus of his political activities and its findings about the circumstances surrounding the appellant's detention and alleged attempted torture. 15 In respect of the second ground of appeal, the appellant submitted that the Tribunal merely asked whether the applicant might be able to relocate, rather than whether he could or whether it would be reasonable to do so. The Tribunal records that the appellant gave evidence that he was arrested twice in 2001 (in June and July) and that he left Egypt some four months after the second arrest, that is in late October 2001; however the material in the appeal book shows, and the Tribunal's opening paragraph records, that the appellant arrived in Australia on 25 October 2002 and that his application for a protection visa was lodged on 9 January 2003. There is no suggestion that the appellant came other than directly to Australia. Although the Tribunal mentioned that a psychologist who examined the appellant referred to the appellant's account as being one of detention and torture in 2002 the Tribunal did not dwell on this point and, as mentioned above, the Tribunal specifically stated that it was relying only on the account that the appellant gave at the hearing; see [5] above. 18 The appellant's primary submission in this Court is that the Federal Magistrate erred in failing to find that the Tribunal misapplied the test for relocation, and in doing so made a jurisdictional error. I agree with this submission and, in general, with the submissions made by counsel for the appellant, Mr O'Donnell. 19 The Tribunal's assessment that the appellant's problems were localised coupled with his level of education and family support led the Tribunal to conclude that it would be reasonable for the appellant to relocate to another part of Egypt; see [12] above. The Tribunal thought it likely that the appellant had been perceived locally as a trouble maker and, in the passage quoted at [12], above the Tribunal made the important finding that 'the local police or authorities would [not] pursue the applicant to another city, or inform the authorities there of his presence'. 20 In the appellant's submission, this approach demonstrated that the Tribunal was distracted from the question that is at the heart of any enquiry as to whether a person is a refugee, namely does the person have a well-founded fear of future persecution should that person be returned to their own country. This is the crucial issue and, as Gummow and Hayne JJ have noted, persecution in the past is neither necessary nor sufficient for an affirmative answer to that question. A person could have a well-founded fear of persecution even if there is no likelihood that those responsible for past persecution would be able to mete out similar treatment in the future or even if there had been no persecution in the past; Appellant S395/2002 v Minister for Immigration and Multicultural Affairs [2003] HCA 71 ; (2003) 216 CLR 473 at [72] - [74] . 21 It must be emphasised here that it is the prospect of return to the applicant's own country not to a particular part or parts of that country that must be considered; Randhawa at 440. Provided that it is reasonably practicable for the person claiming refugee status to relocate with safety to another part of that country then it cannot be said that the person has a well-founded fear of persecution in that country. In such a case a finding that relocation meets these criteria will be a (or the) critical element in the determination of the application. Irrespective of the Tribunal's scepticism about aspects of the appellant's claims, is clear that the Tribunal's view as to the appellant's ability to relocate within Egypt with comparative ease was a critical element in its decision that the appellant did not have a well-founded fear of persecution. (b) Had the appellant's persistent campaigning against religious inequalities given him a national profile, such that others in Egypt would persecute him even if he relocated ? (c) If the appellant relocated elsewhere in Egypt, would he continue to engage in campaigns against religious inequality? If so, would this conduct lead others in Egypt (or even just in the area to which he relocated) to persecute him? He replied that the police and the law about conversion is the same all over Egypt. I suggested that this assumed that the police in Giza would find out where he was and notify the local police. He said that wherever he goes they will get him. They were focused on the consequences of past conduct. As reported by the Tribunal there was nothing in the exchange that would have directed the appellant's mind to his future activities and their consequences. 26 The Minister urged a 'beneficial' construction of the Tribunal's reasons and referred to comments made in Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259, in particular at 271-272. The phrase 'beneficial construction', as used in Wu Shan Liang has a specific meaning, and was certainly not intended to mean that any ambiguity in the Tribunal's reasons be resolved in the Tribunal's favour. Rather, the construction of the Tribunal's reasons should be beneficial in the sense that the Tribunal's reasons would not be over-zealously scrutinised, with an eye attuned to error. In this sense a 'beneficial' approach to the Tribunal's reasons does not require this Court to assume that a vital issue was addressed when there is no evidence of this and, indeed, the general thrust of the Tribunal's comments suggest that the issue was overlooked. 27 The Minister did not accept that the Tribunal had overlooked an essential issue and submitted that the scope of the Tribunal's obligation to consider future persecution of an applicant if relocated is determined by the appellant's claims and the material before the Tribunal. This is, with respect, a somewhat disingenuous submission. The appellant was not engaged in writing social letters; the Tribunal described him as embarking on 'a campaign of letter writing' which included letters of complaint to government departments. 29 Here, the questions of whether the appellant would continue his campaign of letter-writing in the future, and whether this conduct would lead to persecution elsewhere in Egypt, necessarily arose on the material before the Tribunal. It was the appellant's letter writing that the Tribunal accepted may have led to his unlawful detention by Giza police for three days. The Tribunal accepted that the appellant may have been beaten during this detention. It is no answer to say that letter writing per se is not an activity that tends to provoke violence --- the Tribunal had accepted that this was a possibility. 30 The Tribunal found that the appellant had a reputation as a troublemaker and that it was likely that this was at the root of his past treatment. That being so it was not sufficient to find that those responsible for that treatment would not seek him out in other parts of Egypt. It was necessary for the Tribunal to ask if the appellant is likely to continue with the conduct that marked him as a troublemaker in the past and, if so, whether that conduct would, in the future, evoke a similar response from others. The Tribunal is not entitled to base its prediction on an expectation that the appellant will modify his behaviour on his return to Egypt; Appellant S395/2002 at [40] per McHugh and Kirby JJ and at [80]-[82] per Gummow and Hayne JJ. 31 The appeal must be allowed with costs. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone .

appeal relocation principle whether tribunal applied the correct test in finding that the applicant did not have a well-founded fear of persecution for a convention reason relocation whether tribunal considered the possibility of future persecution ambit of the tribunal's obligations to consider future persecution upon relocation migration

The matter has had an exceptional history considering that the applicant arrived on 1 September 1990 and applied for refugee status on 19 September 1990. As from September 1994, the application was deemed to be an application for a protection visa. On 30 April 1997, a delegate of the Minister refused to grant a protection visa, and on 26 May 1997, the applicant sought review of that decision. Thereafter, there were a series of other proceedings which I need not set out in these reasons. 2 The Tribunal affirmed the decision of the Minister's delegate not to grant a protection visa. In the amended application filed by the applicant on 13 July 2006, the only ground stated is that the Tribunal did not properly consider each basis on which the applicant asserted a well-founded fear of persecution, and thereby constructively failed to exercise its jurisdiction. Four paragraphs of particulars are outlined on the amended application. The substance of these paragraphs is an allegation that during the hearing, the applicant articulated a claim that he feared persecution on the basis that a political opinion relating to assumed connections with Pakistan would be imputed to him if he were returned to India. He submitted that he feared being returned to Punjab because he would be accused of having connections with Pakistan due to his long absence from India, and he said that he may be detained and tortured. The applicant contended that this political opinion would be attributed to him simply because he has been absent from India for a very long period of time. 3 The applicant submits that this claim was completely distinct from the claim that he feared persecution as a result of imputed political opinion on account of activities in India. He submits that the claim related to imputed connections with Pakistan was not considered by the Tribunal. There are two possible constructions of this claim, which was summarised by the Tribunal in its reasons at page 14. The applicant claims that if he were to return to Punjab he would also be accused of having connections with Pakistan because he has been out of the country for so long and may be detained and tortured. The Tribunal pointed out to the applicant that his passport would show that he had been in New Zealand and Australia and not in Pakistan. He claims that the police would not wait to see his passport they would just want an immediate bribe to stop their harassment. Counsel argues that on the contrary, this claim was simply part of the evidentiary material presented to the Tribunal as a basis for substantiating the applicant's primary claim that he would suffer persecution if returned to India. It is submitted that the applicant's claim in relation to imputed opinion due to long absence is in actual fact part of the primary claim, and that this has been dealt with by the Tribunal. 5 The second possible construction is that the claim based on imputation by absence is in fact a distinct claim. I am inclined to take the broader view that this is a distinct claim from the other claims which were made by the applicant. 6 It is necessary to consider whether the Tribunal failed to deal with or consider the claim as alleged. As noted by Counsel for the Minister, after stating the claim in the terms which I have quoted above, the Tribunal pointed out to the applicant that his passport would show that he had been in New Zealand and Australia and not in Pakistan at all. The applicant claimed in response that the police would not wait to see his passport, they would just want an immediate bribe to stop their harassment. On a fair reading of this sentence, it appears that the substance of the applicant's claim is that he could get back into India but that this would necessitate a bribe being given. This is not, however, a Convention reason. 7 Quite distinct from this point, there are also indications in the Tribunal's reasons that the Tribunal did not consider that the applicant had a profile sufficient to attract the attention of the authorities. The Tribunal noted that at the time of its judgment in July 1998, the applicant had been out of India for over eight years. On the evidence, the Tribunal found that the applicant would be relatively unknown. 8 The Tribunal also found the applicant's evidence to be unsatisfactory due to the presence of several inconsistencies, a number of which are listed in five paragraphs at page 28 to 29 of the Tribunal's reasons. The Tribunal also found that the applicant was not politically active or perceived to be so. It found that the applicant could not now be considered to have political connections that would cause him to be at risk on return to India. 10 In considering the country information and publications, the Tribunal found that given the applicant's low profile and the changed conditions in India since his departure, the chance that he would face persecution upon return to India was remote. Therefore, the Tribunal was not satisfied that the applicant had a well-founded fear of persecution in India for any Convention reason. 11 In my view, having regard to a fair reading of the reasons of the Tribunal read as a whole, I am satisfied that the question now sought to be raised in relation to imputed connections with Pakistan was adequately dealt with by the Tribunal. There is no substance in the claim that the Tribunal has fallen into jurisdictional error due to a failure to deal with a distinct claim raised by the applicant in this matter. Although there is some doubt as to whether the claim related to imputed connections with Pakistan is, in fact, a distinct claim, I have proceeded on the basis that the applicant should be given the benefit of the doubt in that respect. I dismiss the application for review with costs. 12 The consequence of my reasoning is that the application for an order nisi is dismissed. I should say in this case that the period of time that the applicant has been in Australia - a period of over 16 years - is a matter of concern. It is quite obvious that over that period of time, it is likely that the applicant has established substantial roots in Australia and accordingly, this is a special matter which should be brought to the attention of the Minister with a view to giving further consideration to the applicant's position. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.

ministerial delegate refused application for protection visa decision affirmed by refugee review tribunal application for order nisi claim that refugee review tribunal failed to consider a distinct claim made by the applicant application dismissed. migration

The section relevantly provides that an employer must not dismiss an employee for a prohibited reason or for reasons which include a prohibited reason. Despite these amendments, pursuant to reg 7.4.53 of the Workplace Relations Regulations 2006 (Cth) the application is to be determined under s 298U of the Act as if it had not been amended. 3 The first applicant, the Automotive, Foods, Metals, Engineering, Printing and Kindred Industries Union (the union) is an organisation of employees registered under the Act, and is entitled to bring this application (s 298T). 4 The second applicant (Mr Coon) is a boilermaker who was employed by the respondent on 20 September 2005 and was dismissed on 21 December 2005. 5 The third applicant (Mr Kemmis) is a welder who was employed by the respondent on 20 October 2005 and was dismissed on 12 December 2005. 6 The fourth applicant (Mr Taylor) is a welder who was employed by the respondent on 26 September 2005 and was dismissed on 21 December 2005. Together the second to fourth applicants inclusive are referred to in these reasons as "the applicant employees". 7 The respondent is a company which conducts a steel fabrication business in Geelong. The business was founded by Mr Andrew Thornton about 30 years ago. It originally only operated in Penshurst, Victoria. Then, in about 1999, it built a large factory in Geelong. By 2005, Mr David Thornton (Mr Thornton), the son of Mr Andrew Thornton, had taken over the day to day running of the business and was the sole director of the respondent. The staff who assisted him and who played roles in the events relevant to this case are Mr Thalib Sathaar, the Operations Manager, Mr Craig Kelly, the Fabrication Manager, Mr Ken Hewitt, the beamline day shift leading hand, and Mr Matt Coon, the beamline afternoon shift leading hand. 8 From about 2001, Mr Brendan Whelan was the organiser employed by the union responsible for the respondent's workplace in Geelong. There was a mutual antipathy and distrust between Mr Whelan and Mr Thornton. The relations between the respondent and the union will be detailed later in these reasons. 9 In about 2005, the respondent installed a sophisticated steel fabrication production line in the Geelong factory. This was called the beamline. Initially it was operated by a day shift only. In about September 2005, the respondent introduced an afternoon shift for the beamline. The afternoon shift was also referred to as the night shift at times by the parties, but both refer to the identical shift. As a result of the introduction of the beamline, the respondent's staffing levels increased. The Geelong site also had an older facility called the Plate Shop. Mr Coon worked there when he started work with the respondent. 10 During this period in late 2005, Mr Whelan focused his attention on attempting to negotiate a collective agreement with the respondent in response to the changes in workplace relations legislation known as WorkChoices proposed by the government. Mr Whelan began to hold meetings with employees of the respondent throughout November and December, at some stages once a week. As will be detailed later in these reasons, this build up of union activity at the respondent culminated in large union meetings on the site of the respondent on 9, 16 and 21 December 2005. 11 The applicants claim that the applicant employees were dismissed for reasons which included, firstly, that they were union members (s 298L(1)(a)) and, secondly, that the union was seeking better conditions and the applicant employees were dissatisfied with their conditions (s 298L(1)(l)). 12 The parties agreed that the Court would first determine whether the respondent had contravened the Act and, later, if necessary, determine what orders, if any, should be made if contraventions were found to have been committed. This judgment addresses the first of those issues. 14 The applicants argued that section 298V operated in this case to establish that the respondent dismissed the applicant employees for reasons which included, on the one hand, that they were union members, and, on the other hand, that the union was seeking better conditions and they were dissatisfied with their conditions. Unless the respondent proved that these reasons played no part in the decisions to dismiss the applicant employees, the presumption would have the effect of establishing the applicants' case that the respondent had contravened the Act. 15 The respondent sought to rebut these presumptions by establishing positive cases that the reasons for dismissing Mr Kemmis and Mr Taylor were that there was a general reduction in the workforce as the result of the closure of the afternoon shift on the beamline and the loss of a large job being undertaken for Technip Oceana Pty Ltd (Technip), and the reason for the dismissal of Mr Coon was that he proved unsuitable for a job as a quality inspector. It was implicit in the respondent's positive case that the reasons proposed were the only reasons for the dismissals. 16 Alternatively, in relation to the case alleging dismissal for reasons including union membership, the respondent contended that there could be no contravention if the respondent did not know that the applicant employees were union members. It argued that the onus of proof of that knowledge lay on the applicants because s 298V only gave rise to a presumption about the reason for the dismissal and not a presumption about the respondent's knowledge of union membership. It contended that the applicants failed to prove on the balance of probabilities that the respondent knew that the applicant employees were union members, and hence the respondent was not shown to have dismissed them for reasons which included that reason. 17 In a further alternative argument, the respondent submitted that, even if the onus was on the respondent to rebut the presumption, on the whole of the evidence, the respondent demonstrated on the balance of probabilities that the dismissals were not for reasons which included that the applicant employees were union members. 18 Then, in relation to the case alleging dismissal for reasons including that the applicant employees were dissatisfied with their conditions, the respondent contended that s 298L(1)(l) required that there be an identity between the conditions sought by the union and the conditions about which each employee was dissatisfied. The respondent contended that the onus of proof of the identity of the conditions lay upon the applicants because, again, the presumption applies to the reason for the conduct not to the factual foundation upon which the presumption operates. The respondent submitted that the applicants did not establish that the conditions sought by the union were the same as those about which each applicant employee was dissatisfied and, hence, the presumption did not operate. Alternatively, even if the onus was on the respondent, it had established by the positive denials of Mr Thornton that the respondent did not dismiss the applicant employees for reasons which included their dissatisfaction with conditions. Each of these arguments will now be examined. 20 The high point of this case for the respondent was in the evidence of Mr Thornton in examination in chief on 2 October 2007, given with leave in order to supplement his affidavit sworn on 27 July 2006. Mr Thornton drew up his affidavit without legal assistance. At the trial Mr Rinaldi of counsel appeared for the respondent and sought leave to supplement the affidavit. In these circumstances the respondent was given leave to address some oral evidence in chief. In that evidence Mr Thornton explained that the respondent introduced the beamline in July 2005. This involved a large investment for the respondent and a major increase in staffing. After three months, in September 2005, the respondent introduced an extra shift on the beamline. However, the production level was so low, and the quality so deficient that it was decided to close down the afternoon shift. The staff level on the afternoon shift was reduced through December 2005. The shift was closed down by about January 2006. 21 Mr Thornton said that the staffing was reduced by 15 people. Mr Kemmis and Mr Taylor, who worked on the afternoon shift, were dismissed as part of this overall staff reduction. They were selected because they were still in their three month trial period. Mr Thornton made the decision to dismiss, and he told Mr Sathaar to implement this decision by indicating to Mr Sathaar that the trial periods were not to be extended. This was, Mr Thornton said, the only reason for the dismissals of Mr Kemmis and Mr Taylor. 22 It became clear during cross examination that Mr Thornton could not sustain the case that the respondent had already decided to close down the beamline afternoon shift at the time when Mr Kemmis and Mr Taylor were dismissed on 12 and 21 December 2005, respectively. For instance, Mr Thornton accepted that he referred to the afternoon shift as operating at the time he swore his affidavit on 27 July 2006. A document was tendered by the respondent which showed, among other things, who was employed on the afternoon shift on the beamline and the times during which they were so employed. The document was compiled by Mr Thornton to show that the employment of both union and non-union employees was terminated in this period. Significantly for the present argument, the document showed that people were employed on the afternoon shift on the beamline at least until the end of June 2006. Eventually Mr Thornton conceded that he did not know exactly when the afternoon shift was closed down. The respondent has not established that Mr Kemmis and Mr Taylor were dismissed at the time the afternoon shift on the beamline was eliminated. 23 Then, Mr Thornton modified his argument by saying that there had been a process of reduction in the staffing levels on the afternoon shift on the beamline in response to poor quality and low output and that Mr Kemmis and Mr Taylor were dismissed as part of that process of reduction, rather than as a result of a decision to end the afternoon shift on the beamline. 24 This argument required the respondent to demonstrate that the process of reduction of staff had been in operation on 12 and 21 December when Mr Kemmis and Mr Taylor were respectively dismissed. However, the evidence did not support that contention. Rather, it suggested that the reduction commenced in about March 2006. For instance, on 1 August 2006, Mr Thornton wrote to his bank to explain the problems encountered in the previous financial year and how they had been addressed for the future. At this time we thought we were making so much money that despite the errors and what in hindsight was overstaffing we were clearly so efficient that we could absorb these items. It is only at the end of March 06 that we realised we were not so clever and that most of the work we had to complete in April 06 had already been invoiced. It didn't take long to find out where the problem was; we had night shifts producing almost nothing, union activity creeping in, moral [sic] at rock bottom, weekend overtime at extreme levels and almost completely uncontrolled employment by managers. ... ... In March 06 when we realised April 06 would be bad we spent 3 straight weeks analysing every process in the line from sales to accounts, quality checks, procurement, client liaison, quality control documentation, production planning etc. ... This was then used to form an organisational structure. We then identified exactly what staff we needed and who they would be, wrote revised job scopes, rolled out the system and reduced unneeded staff and overtime. Almost immediately moral [sic] lifted, errors stopped and wages dropped. (Emphasis added. It is noteworthy that the respondent did not rely on company records of employment levels as part of its own case initially. A payroll record was produced by the respondent's accounts officer on Mr Thornton's instructions but only in response to a notice to produce served by the applicants. Ultimately it was tendered by the respondent in re-examination of Mr Thornton. The value of the document as proof of the employment numbers at particular times depended on an understanding of the various codes used to categorise the employees listed in the document. Mr Thornton was asked to explain the meaning of the codes and, in a number of instances which involved significant numbers of employees, he was unable to say whether the categories related to the beamline or not. Any utilisation of the document in these circumstances would be no more than guess work. Further, it was apparent that a number of pages were missing from the document. If anything could been gleaned from the document it would be that whilst there was a dip in the size of the workforce about the time when Mr Kemmis and Mr Taylor were dismissed, there was a return to the previous numbers within a few weeks. 26 A similar pattern might be shown from a spread sheet attached to the letter sent by Mr Thornton to the bank. The spread sheet showed that the wages for productive staff, as distinct from administrative staff, increased significantly in February and March 2006. No analysis was made of these figures in the oral evidence and it is evident that the wages figures cover several different sites operated by the respondent. They are not a reliable indicator of the beamline workforce size or any variations of it. 27 On 4 March 2006, the respondent placed an advertisement in the Geelong Advertiser seeking experienced boilermakers and welders for immediate start at the Geelong plant. People get very --- think they're on a downward spiral. So sometimes we'll advertise to make people feel a bit better as well --- that we're not, you know, getting smaller and smaller to the point of not being there. This explanation is improbable and is not accepted. The placing of the advertisement is consistent with other evidence that the respondent had not embarked on a reduction in the staff on the afternoon shift on the beamline until later in March 2006. 28 Further, there was other evidence which showed that new staff were engaged after Mr Kemmis and Mr Taylor were dismissed. Mr Thornton prepared a list of persons who were terminated between July 2005 and April 2006 and which showed the starting and finishing dates of their employment. It shows that six such people, Anand, Brown, Hewitt, Jacka, Metri and Owens, commenced employment on the beamline between 17 January 2006 and 16 March 2006. The list probably does not show all the people who commenced employment in that period because it was prepared only to show those people whose employment ended before the end of April 2006. 29 The evidence does not therefore establish that Mr Taylor and Mr Kemmis were dismissed in the process of a reduction of staff levels on the afternoon shift on the beamline as part of a winding down leading to the elimination of that shift. But even if that were accepted, the respondent faced a further obstacle in establishing a positive case. 30 Some employees who commenced employment at about the same time as Mr Taylor and Mr Kemmis retained their jobs after Mr Taylor and Mr Kemmis were dismissed. Examples include Devine, Leder, and Mark Ryan who worked with Mr Taylor. If Mr Kemmis and Mr Taylor were dismissed in December 2005 as part of a reduction in the afternoon shift on the beamline then they had to be selected for dismissal from a larger group who were, like them, still in their trial period. The need for a general reduction in staff could not completely explain the choice of these particular individuals. ?---We would take to the, well, I guess anyone that is on a trial or a temporary basis - - - Well, they are all on trial?---Yes. Well, I guess that is our first thing to try and make sure we don't get guys that have been there for 18 months, that is our number one thing. Number two is we try and work out where we can move people to and we did move as many as we could to the day shift and shuffled people around as much as we possibly can but the problem was we were losing money and we were over staffed so we had to do something very fast. I am accepting that but that leaves us with the problem, and I am trying to understand how you addressed it because we seem to have got to a position where you have let's say for arguments sake two, four, six, eight employees. You have got to downsize to get let's say to four?---Yes. Now, how do you choose the four to go when they all started at the same time, they are all on trial? I mean did you have a process whereby you made that selection?---I guess they would take, there is a team leader there like a foreman working with them and he would say which ones he thought were the best people for the job and fitting in the best. Well, did you do that?---Yes, I believe so, yes. And who was the team leader involved, for instance, in this grouping?---I think probably what they would have done is gone back, there was a guy David Barry who worked there for a while as a foreman and then Mr Hewitt for a short period so he would have probably given us some feedback on who was good and who was not fitting in as well. And who had the discussion or would have had the discussion with the foreman, you or Mr Sathaar?---I would have been involved in that, yes. Well, do you recall having those discussions?---I might sound a bit silly but I think I have said it before as well. There was a large amount of things going on in our company at that time. Like I say not just this problem, I had quality problems and bank problems and supply problems and pretty much all the problems you can possibly have and we were perhaps a little less systematic and a little less then we probably should be, it could have been more of a case you can only have eight blokes on that shift because we are losing money and that wouldn't be an awful lot of coaching through that and analysis beyond who do you want who don't you want. 31 It was clear from the way in which Mr Thornton responded that he was not recalling an actual process of selection which had been undertaken but rather constructing a possible way in which the decision could have been made. The evidence was not a convincing account of a selection process which had actually occurred. It did not establish that the process referred to by Mr Thornton had been undertaken. 32 For the same reason the evidence did not establish a positive case sufficient to rebut the presumption that the loss of the Technip job was the reason for the dismissal of Mr Kemmis and Mr Taylor. The Technip job was expected to continue for 6 months from October 2005. The job involved staff of the respondent working 140 --- 180 hours per week in October, November, and December 2005. Mr Thornton said that the job was cancelled unexpectedly in early December 2005, even though work continued to be performed until the end of December. Mr Thornton originally stated in his affidavit sworn on 27 July 2006 that the cancellation of the Technip job meant that staff would need to be relocated or made redundant. However under cross-examination he admitted the loss of the Technip job was not a major consideration regarding staffing because the respondent was able to absorb that degree of labour fluctuation. Even if loss of the Technip job required a reduction in staff levels, there was no convincing explanation of the way in which Mr Kemmis and Mr Taylor were selected as the individuals to be dismissed to establish a positive case, or alternatively to rebut the presumption which arose under s 298V. 34 A few weeks after starting work with the respondent as a boilermaker Mr Coon injured his hand in a lawn mower accident at home. Shortly before he was due to return to work in December the respondent was having problems with the quality of work being produced at the plant. Mr Sathaar had formed a positive view of Mr Coon's capacity as a boilermaker and as a cooperative employee. He recommended to Mr Thornton that the respondent employ Mr Coon on his return to work to inspect the quality of the work being produced. In October Mr Coon had lodged a WorkCover claim with the respondent but which related to a hearing loss resulting from a previous employment. The claim was made on legal advice and Mr Coon withdrew it after contact with the respondent because he did not think it was right to make the claim on his present employer. 35 Mr Coon accepted the offer to return to work as a quality inspector and began that work on 9 December 2005. This was the day on which the union held a meeting on site. The details of that meeting will be described later in these reasons. Mr Coon's task on that day was to check steel beams lying in the yard ready for dispatch to a customer in Mackay. " I've got a new factory that's not making any money at all. I had a bank manager on the phone that day saying, "You guys better sort this out, you'd better sort it out fast. " I had suppliers that wouldn't deliver steel to us any more to continue operation, and I had this client in Mackay withholding money from us ... I was extremely anxious, to try and make this investment work. (Emphasis added. I spent most of the day looking at, saying is that steel getting checked before it goes on the truck because the temptation was to just put it on the truck. And Mr Coon was out checking and I was continually being reassured by Mr Sathaar that Mr Coon would be fine and he'll certainly be able to check the steel. Then we went out and Mr Coon was missing all day, he never seemed to actually be at the job, even though this was his --- I believe either his first day back or one of his first couple of days back. He was never actually in the area doing the checking, and the truck wasn't being loaded and the truck driver I believe was on our back and the client was on our back, and in frustration and desperation we went out and started checking it ourselves. And then we found errors, so then we were really in a bit of a --- then we knew the steel that had been checked was still incorrect, so Mr Coon hadn't really checked it anyway and that we had to get a truck loaded. 38 Mr Thornton said that he did the checking together with his father and with Mr Sathaar in the early afternoon. They were in the yard for about an hour. This coincided with the time in which the union meeting was held. The meeting was held within view of the yard where Mr Thornton undertook the checking. Mr Thornton said that Mr Coon failed to complete the work after the union meeting although he had undertaken to return for that purpose. 39 Mr Thornton said that he had been "blatantly let down", and "in your face let down" by Mr Coon because he had been persuaded to give Mr Coon the job to help him financially over the period of his injury and despite the fact that Mr Coon had made an unjustified WorkCover claim against the respondent. 40 Mr Thornton directed Mr Sathaar to dismiss Mr Coon on the basis that Mr Coon's trial period had not ended and it should not be extended. 41 The evidence of Mr Coon about his work on the 9 December 2005 as a quality inspector contradicted the evidence of Mr Thornton on central points. He said that he started work at 7.00 a.m. His work required him to go through the plate shop and not remain in the yard for the whole time. The union meeting occurred in the time between the day and afternoon shifts. Mr Coon spoke at the meeting but returned to the yard and continued checking the loads to be dispatched after the meeting. It's saved us a lot of freight expenses for reworks. If that work got to Mackay and had to come back, that would cost us a lot of money. When he was dismissed on 21 December 2005 by Mr Sathaar the reason given was that the quality inspection work was to be outsourced. I'm thinking about sending a couple of people up to do some quality control work and there may be a position for you. 43 The separation certificate provided to Mr Coon stated the reason for termination as "shortage of work or redundancy". 44 The evidence of Mr Thornton exhibited his strong sense of betrayal by, and disappointment with, Mr Coon at the time. This emerges from the passages extracted earlier in these reasons and was evident in the way in which Mr Thornton gave this part of his evidence. Had the reason for such a strong reaction been Mr Coon's failure to perform satisfactorily on 9 December, it is unlikely that Mr Thornton would have waited until 21 December to dismiss him, and would not have allowed him to do the same type of work on the days following 9 December. 45 And, again, if Mr Coon failed to do the work properly on 9 December 2005 when Mr Thornton was extremely anxious to satisfy the customer, it is likely that Mr Thornton would have complained to him. No such complaint was made. 46 On the contrary, the evidence which I accept is that Mr Sathaar, to whom Mr Coon answered, praised Mr Coon for his work on 9 December 2005. Mr Sathaar is still employed by the respondent and was available to give evidence. He was not called. There were a number of allegations made by Mr Thornton against Mr Coon which were so extravagant or so lacking in detail as to make them improbable. There were sufficient occasions of such evidence as to indicate that Mr Thornton's accusations against Mr Coon should not be relied upon. The respondent was served with a notice to produce which sought production of any documents relating to these costs. The respondent produced a credit note dated 30 June 2007, for $50,000 in favour of Monodelphous Pty Ltd. This represented the amount accepted by the respondent for rectification costs of the dispatch of steel on 9 December 2005. When this document was put to Mr Thornton in cross examination he said that he did not mean the contentions to say that Mr Coon was responsible for the whole $250,000 rectification costs. He said that the paragraph was just poorly worded and was prepared by him without assistance. Having regard to the centrality and seriousness of the allegations made, these explanations were, and came across in the witness box as, unconvincing. Further, the credit note came into existence well after the dismissal and could not have been the reason for it. Perhaps sensing these shortcomings Mr Thornton took the opportunity shortly afterwards and following a lunch break to use a question in cross examination as a means to seek to retrieve the situation. He didn't, but he was working for about two weeks prior in the beamline as a QO man, effectively letting errors go through, I believe, intentionally. When do you say he was working for two weeks in the beamline as a QO man?---You might need to ask Mr Coon exactly, but I spoke to Mr Sathaar at lunch time. He said, "No, he worked for about two weeks in the beamline as a --- like a QO person in the same role. " You went and telephoned Mr Sathaar in the lunch break?---Am I not allowed to do that? Well - - -?---Sorry, I didn't realise that was something I wasn't allowed to do. It was explained to you, I think before the --- before we broke --- when we broke for lunch by your counsel that you weren't to be having any discussions over the break, wasn't it?---He said I couldn't talk to him. All right, but you thought you were at liberty to go off and speak to Mr Sathaar to find out the situation?---Well, if you want clarity on what happens, isn't that the best thing? 49 The suggestion that Mr Coon intentionally let errors pass in the two weeks prior to 9 December 2005 was an entirely new allegation. It placed Mr Coon at work at a time when he had a medical certificate stating that he was unfit for work. And there was no basis stated for the accusation that Mr Coon was acting intentionally. The incident demonstrates a propensity in Mr Thornton to raise unfounded allegations in an attempt to support the case of the respondent. 50 Further, the information was obtained over lunch from Mr Sathaar. Mr Thornton said, in effect, that this was the obvious thing to do because Mr Sathaar had the relevant information. And yet Mr Sathaar was not called to give evidence. He was supervising Mr Coon in the job as quality inspector and was present in the yard when, as Mr Thornton alleged, the errors were found. Mr Sathaar was involved in correcting the errors also. Mr Coon denied each of these facts. Mr Thornton also said that he and Mr Sathaar discussed Mr Coon's unsuitability for the job and the reasons for dismissing Mr Coon at the end of his trial period. It can be concluded from the failure of the respondent to call Mr Sathaar that he would not have assisted the respondent's case on these issues: Jones v Dunkel . 51 Another obstacle faced by the respondent in its argument that Mr Coon caused significant cost to the respondent by failing to inspect the steel in the yard properly was that Mr Thornton said that he, his father, and Mr Sathaar had to do the job which Mr Coon had failed to do. If this were so, and they had done the inspection, one would expect that there would have been no faulty steel dispatched on that day. Consequently, there would have been no rectification costs incurred. I'm not sure we rechecked everything. 52 The lack of certainty expressed in this answer is at odds with Mr Thornton's evidence of his extreme level of anxiety arising from the circumstances of the day which Mr Thornton had previously described. 54 There was no attempt at trial to support this allegation. In re-examination Mr Thornton conceded that it was "exaggerating it a bit". 55 Another instance of a serious allegation made without detail was evident in [6.9] of Mr Thornton's affidavit sworn on 27 July 2006. There he said that a number of long term staff complained about working with Mr Coon and that they said that he was a potential troublemaker for the respondent. In his evidence Mr Thornton also said that other staff had said that Mr Coon was threatening to them. However, Mr Thornton said he could not remember who made these complaints, how many staff had complained, the specific nature of the complaints and he said that the respondent had kept no record of the complaints. Furthermore, the content of the alleged complaints was expressed in the most general terms. 56 For these reasons, I do not accept that Mr Coon was, or that Mr Thornton believed that Mr Coon was, unsatisfactory as a quality inspector. In the result, the respondent has not established on the balance of probabilities the positive case that the reason for dismissal of Mr Coon was that he was unsuitable for employment as a quality inspector. 57 Even though I have not accepted the positive cases contended for by the respondent, it is still open to the respondent to establish the negative case, namely, that the prohibited reasons did not play any part in the decision to dismiss the applicant employees. It is to that matter which I now turn. Alternatively, even if the onus lay on the respondent, it argued that it had discharged the onus by the denial by Mr Thornton that he acted for the reason of the applicant employees' union membership. The respondent also relied on some evidence of the applicant employees that they did not tell Mr Thornton that they were union members, and asked the Court to conclude that the respondent did not therefore know of the union membership of the applicant employees. The respondent did not contest that the applicant employees were in fact members of the union. 59 The applicants disputed the construction of s 298V proposed by the respondent. But, even accepting that construction, they argued that Mr Thornton's denials should be rejected on the evidence as a whole. The Court, they submitted, should draw the inference from the events of November and December 2005, against the background of Mr Thornton's anti-union attitude, that he knew that the applicant employees were members of the union, and that he dismissed them for reasons which included that reason. 60 It is convenient to review the evidence on the assumption in favour of the respondent that the applicants carried the onus of establishing that the respondent knew the applicant employees were union members, without presently determining the construction issue. On that basis, in this section the evidence of Mr Thornton's attitude to the union will be examined. Then the events of November and December 2005 will be considered. The separate circumstances of each of the dismissals will be discussed in the context of these events, and in view of Mr Thornton's attitude to the union. Mr Thornton accepted that his conduct towards the union was hostile and obstructive. Although at times in his evidence he sought to draw a distinction between his attitude to crazy or extreme activist unionists and others, the proper conclusion from his evidence as a whole is that he holds and held in December 2005, a deep seated antagonism to the union, union membership, and any meaningful role of unions in his workplace. 62 At this point in the proceeding it is not relevant to determine whether Mr Thornton's attitude was justified or whether his account of the events which gave rise to his antagonism is true, but rather to understand how he viewed the role of the union and union membership. This understanding may throw some light on whether union membership was a reason for the dismissals. 63 Mr Thornton explained the various factors which influenced his attitude to the union. In about 1999 or 2000 when the respondent built the factory at Geelong, a dispute arose between the respondent and the union over union membership. According to Mr Thornton the union tried to force the respondent into making the site a closed shop. Mr Thornton and/or his father resisted the union demands. The union and other unions in the area mounted a picket. It was violent and involved about 100 people shouting, waving pieces of wood at people trying to enter, and urinating on locks. Threats were made by the Construction, Forestry, Mining and Energy Union in support of the union including threats that it would not be safe for Mr Thornton, his family, or his workers to live in the area. The respondent took steps which resulted in some restraining orders being made by "the High Court" and the picket ended after two weeks. 64 Mr Thornton viewed himself as promoting employment in Australia and believed that the union was just trying to bring him down. I mean, they continually try to prevent us from doing business so I don't see what bit I would like about the union. So you had a negative view of the union 2001 to 2004? --- Yes. 65 An example given by Mr Thornton was that initially the union kept pressing for an agreement which gave the union the right to determine who was to be employed by the respondent and thereby completely control the company. I mean, they should be allowed to choose, at least, if they want to be in the union. We're not going to be dictated --- we're not going to have --- effectively, the --- it seemed to us the list of conditions they had were so horrendous that any operator that took it on would be destined to be a one- or two-man operation, five-man operation, almost completely controlled by the union. Which is what's happened in Geelong. The Geelong area agreement has effectively meant there's hardly any fabricators of any size at all in Geelong, because the union can just choose who works there, no matter how hopeless they are, and they can choose who --- what jobs they get, and they can stop your clients --- you know what I mean? So I guess that's the background to the history of caution when dealing with a union. 66 Mr Thornton explained that if this agreement had been accepted by the respondent many customers would not have dealt with the respondent. They would have feared that if they had a dispute with the union, their orders would be blackbanned by workers employed by the respondent. 67 Mr Thornton gave evidence that he had dealt with Mr Whelan from about 2000. He had a dim view of Mr Whelan. Mr Thornton believed that Mr Whelan had been responsible for placing bans on steel fabricated by the respondent, and for threatening customers of the respondent to put pressure on it. We had to talk to them about who we were going to put on and so work from their list. We had to --- we had to pay --- our company itself had to pay the union dues on behalf of the people. We had to train, send people to union training. We had to actually commit to make it a closed shop and not particularly let people that weren't unionist or didn't want to be in the union to come and work there and that's the bit that we thought wasn't fair, so, and that's where it's been. 70 In his affidavit sworn on 27 July 2006 Mr Thornton said that Mr Whelan went to employees of the respondent "attempting to use them to threaten us". He explained that this was a reference to several meetings held off site prior to the union meeting held on 9 December 2005. He said that it was one of a number of methods "Mr Whelan went about trying to infiltrate our company". What the Court needs to know is upon what basis you made that statement on oath, other than a guess as you have presently suggested? --- I don't have any other basis other than that. 71 The explanation given by Mr Thornton of the basis for making this allegation shows that Mr Thornton was suspicious of the actions of Mr Whelan. 72 On 9 December 2005, Mr Whelan held a meeting outdoors but on site at the change of shift in the early afternoon. More about this meeting will be discussed later in these reasons. At present it is sufficient to note that nearly half of the respondent's workforce attended and Mr Thornton observed the meeting from a distance. Following the meeting the union initiated a bargaining period with the respondent. In consequence of this meeting Mr Thornton formed a committee of elected employee representatives as a vehicle for communication between the workforce and the respondent. He held several meetings within days of the union meeting for the purpose of electing the representatives. 73 At about the same time as the employer convened meetings, on 16 December 2005, Mr Whelan served a notice that he wished to visit the site on 21 December 2005 in exercise of his right of entry as a union official. Mr Thornton agreed that he treated the request with hostility. - Should you attempt to gain entry unlawfully we will immediately lodge a complaint against you and reinitiate old complaints against Garry Robb in an effort to have your permit revoked. Therefore no communication will be entered into with the AMWU or any other union. 74 Mr Thornton said that he wrote the letter after receiving advice from Mr Ironmonger of the Victorian Employers' Chamber of Commerce and Industry (VECCI), whose advice was "write this. This will really bloody make it difficult". After the exchange of several faxes throughout the day between the respondent and the union in which the union contended that Mr Thornton had no legal basis for his position, Mr Thornton did not pursue his objection. He blocks us out of jobs and threatens us and I --- if he tried to give me the stuff I try to make it as difficult as I can to do it back, which I think he understands and --- but I can only do what I can do so I just --- you know what I mean. I like to make sure that if I can, to not be a soft touch, you know. 75 In about March 2006, Mr Thornton wrote an analysis for his bank describing the causes of the problems which had faced the business in the previous financial year and the changes which addressed those problems. In the letter to the bank he described union activity as one of the causes of the problem which faced the respondent. (Emphasis added. The document listed interview questions to be asked of applicants for employment and of their past employers. • Would you wish to remain a member if working at a non-union factory? • Would you be happy working with a non-union agreement? • If we ever had a picket would you be prepared to continue coming to work (cross a picket line)? (eg shop steward or organizing [sic] strikes etc? Mr Thornton was pressed in cross examination and by the Court about the conflict between the last explanation and the express wording of the document. He seemed to explain it as written in a moment of anger. 78 Mr Thornton sought to explain his actions as motivated not by antagonism towards the union but in accordance with the policy of the respondent to allow free choice to individual employees to decide whether or not to be members of the union. Mr Thornton said that the respondent resisted making an agreement with the union for that reason, namely to ensure freedom of choice for employees was protected and the respondent did not become a closed shop. 79 However, the evidence established that Mr Thornton had a negative view of the union and Mr Whelan, that he was suspicious of union membership and activity amongst employees and that he obstructed and sought to circumvent the involvement of the union in the respondent's workplace. 81 Mr Whelan held three meetings with employees of the respondent in November and early December 2005. About 12 employees attended the first meeting held on 17 November 2005 at the Lara Pub. About 15 mainly different employees attended the same place on 28 November 2005, and about 10 employees including Mr Coon, attended the third meeting at the Norlane Hotel on 1 December 2005. At each of the meetings some of the employees spoke about improving certain terms and conditions of their employment. Mr Taylor could not attend the meetings because he worked on the afternoon shift and the meetings were held in the afternoon. But he was told that the meetings were held to formulate the terms of a collective agreement between the respondent and the union. 82 In his affidavit sworn on 5 January 2006 Mr Taylor referred to a meeting of both shifts in mid to late November called by Mr Kelly, the Fabrication Manager. The employees discussed their employment conditions and what they wanted included in an enterprise agreement. Mr Taylor raised the issues of annual leave loading and the number of sick days allowed. Mr Kelly said that the employees should discuss their demands and give him a list of what they wanted in an enterprise agreement. In cross examination Mr Taylor explained that the employees wanted the same terms in an agreement as applied generally in the Geelong area. He said that Mr Kelly "was stepping in for management to organise the EBA [enterprise bargaining agreement]". 83 Mr Taylor gave evidence that the afternoon shift met subsequently to write up the list of demands and the meeting agreed to seek the Geelong area conditions. Mr Kemmis took notes of the conditions to be included in the agreement. Mr Taylor thought that the demands were conveyed to Mr Thornton. Mr Kemmis said that the meeting was called by Mr Matt Coon, the afternoon shift leading hand. Mr Kemmis believed that Mr Matt Coon had been asked to convene the meeting by Mr Ken Hewitt, the day shift leading hand, who was compiling a list of conditions to be discussed with management. Mr Kemmis understood that management wanted to negotiate an agreement directly with the employees. 84 Mr Kemmis was not cross examined on these matters. Mr Taylor was briefly cross examined on them, and confirmed his evidence. 85 Mr Thornton in cross examination denied that he knew if any of the applicant employees were involved in the process of seeking an enterprise agreement. This evidence was inconsistent with his affidavit in which he said that Mr Matt Coon had told him in relation to the afternoon shift meeting that Mr Kemmis "had organised this unauthorised stoppage of work". Mr Thornton also said that at about this time he spoke to Mr Hewitt who said that the day shift were happy but the afternoon shift would not do anything without the union involved. 86 In his affidavit affirmed on 3 January 2006 Mr Kemmis described his activities in the workplace at about the time of the afternoon shift meeting. He raised a number of safety concerns with Mr Matt Coon and Mr Kelly including several issues relating to the safety of the operation of a crane. As a result of these actions his fellow employees saw him as an active union member and began to approach him with issues which concerned them, and in particular about claims for leave loading on annual leave and income protection in times of sickness. 87 In his affidavit in response, Mr Thornton said that Mr Kemmis was critical of the respondent from the start and appeared constantly unhappy. He was aggressive and threatening to other employees. He seemed to have a hatred for the respondent. Mr Thornton spoke to Mr Matt Coon when problems arose on the beamline and Mr Matt Coon said that Mr Kemmis was continually attacking him and it was too much to bear. Mr Thornton said that Mr Matt Coon was almost at breaking point at the meeting. Mr Thornton further said at [9] of his affidavit that he and Mr Sathaar had discussed Mr Matt Coon's problem with Mr Kemmis on or about 10 December 2005. 88 In cross examination Mr Thornton repeated the allegations that employees had complained that Mr Kemmis was threatening, very difficult, very unhappy, and that Mr Matt Coon was terrified of him, found him hard to bear and was at breaking point. Mr Thornton said that he did not know Mr Kemmis personally. He was pressed for details about the threats and aggression alleged and was given a number of opportunities to amplify the accusations. He responded that he did not know or could not remember the detail. He also said that the complaints had not been investigated by the respondent. These answers were given with deliberation and control. But there came a point in cross examination after Mr Thornton had been pressed quite long and hard about the specifics of his allegations against Mr Kemmis when he lost some of that control. --- I mean, do I know exactly what he said to people, that I could verify and have tape recordings and affidavits, no I don't but was he threatening and angry and aggressive yes, I understand, but I didn't say that --- I didn't list that what he actually did to be threatening. And you couldn't say in what way he had threatened any particular person? --- Well, Mr Coon just said that he kept complaining, complaining, complaining, all the time. I further find that Mr Thornton was kept informed in discussions with Mr Matt Coon and Mr Kelly of matters relevant to the functioning of the workplace including Mr Kemmis' activities. I infer from the circumstances that Mr Thornton was informed that Mr Kemmis was actively promoting involvement of the union for the purpose of negotiating a collective agreement with improved terms and conditions of employment. I do not accept Mr Thornton's evidence that Mr Kemmis was threatening or aggressive to other employees. Rather Mr Thornton's stance against Mr Kemmis reflected his own antagonism to Mr Kemmis' actions in support of union involvement, and an attempt to discredit Mr Kemmis to justify that antagonism. He called a meeting of all employees for 2.30 p.m. The meeting was held at the change of shift and lasted for about half an hour. Mr Whelan spoke about negotiating better terms and conditions of employment through the union. Mr Coon spoke strongly in favour of the union and argued that the employees should have the same conditions as in the Geelong area agreement. He particularly referred to the need for income protection and used his own recent accident as an illustration of the need for such a condition. Mr Kemmis also spoke at the meeting. He said that the union would be able to negotiate better conditions for the employees. About 40 --- 50 employees attended. Mr Thornton said that it seemed that nearly everybody was there. In fact those numbers represented just over half of the workforce. The meeting voted in favour of the union negotiating an enterprise bargaining agreement on behalf of the employees. Consequently, at the end of the day Mr Whelan instituted a bargaining period with the respondent by leaving a written notice with a receptionist on site. 91 An important question is what impact this meeting had on Mr Thornton. He knew the meeting was to be held. He thought the purpose was to get new members to join the union. Whilst it was being held he was nearby. There was evidence, which he did not contradict, that he observed the employees on their way to the meeting as they passed by where he was standing. He knew that Mr Coon was at the meeting and did not contest that Mr Taylor and Mr Kemmis were there also. He estimated that he was standing about 100 metres from where the meeting was held. He said his view was blocked by trees or bushes about 2 metres high and he did not hear what was said. Mr Sathaar and Mr Thornton's father were with him at the time. Mr Thornton said that he "really didn't care that much about what they said at the meeting". His evidence was that he was in the vicinity because he, his father, and Mr Sathaar had to rectify the errors made by Mr Coon in checking the steel lying in the yard ready to be dispatched to Mackay. 92 In view of Mr Thornton's hostility towards the involvement of the union and Mr Whelan in the workplace it is improbable that he "didn't care that much" about what was said at the meeting. No previous meeting called by the union had attracted such a large attendance. His response to the meeting was to call his own meeting within a few days to try to render unnecessary any further involvement of the union. And several days after the meeting he sought to prevent the exercise of Mr Whelan's right of entry on 21 December 2005. These responses and actions were consistent with the past history of relations between the union and the respondent and point to a high level of concern by Mr Thornton over the development of union activity on the site. 93 Mr Kemmis, Mr Coon and Mr Taylor all placed Mr Thornton, his father and Mr Sathaar, 30 metres or closer to the meeting. Mr Taylor and Mr Whelan both said they thought Mr Thornton could hear what was said. Mr Coon said that Mr Thornton was loitering in the area. Mr Taylor said that the speakers made sure that Mr Thornton could hear what they said. He said Mr Whelan is "a bit loud" and Mr Thornton must be "pretty deaf" if he did not hear. While Mr Whelan said that 9 December 2005 was a "very windy" day, he made this remark in relation to an attempt to procure the lunch room for the union meeting earlier that day and did not state whether it was in fact windy during the meeting. No other witness could confirm whether it was windy. Mr Coon said that the only beams which were to be checked that day in the area from which Mr Thornton observed the meeting were two 18 metre beams. Mr Whelan and Mr Taylor generally agreed that there were 2 metre high trees or bushes at the edge of the car park between the meeting area and where Mr Thornton stood. 94 Both Mr Sathaar and Mr Thornton's father could have given evidence as to how far away from the meeting they were standing, whether they were checking steel as Mr Thornton said, and whether the speakers were audible to them. Both men were available to the respondent and are in its camp. Their absence from the witness box leads to the conclusion that their evidence would not have assisted the respondent: Jones v Dunkel . 95 I prefer the evidence of Mr Kemmis, Mr Coon and Mr Taylor that Mr Thornton was no more than 30 metres from the meeting. In particular Mr Taylor had a recollection of the location of the management group by reference to a particular door of the plate work factory. This was a level of detail not found in Mr Thornton's recollection. I also accept the evidence of Mr Taylor that the speakers aimed to have Mr Thornton hear what was said and that it was said loudly for Mr Thornton to hear. 96 I find that the evidence positively establishes that Mr Thornton was present within 30 metres of the meeting for the purpose of observing and listening to what was said. I further find that he heard Mr Coon and Mr Kemmis speak at the meeting in favour of union involvement in negotiating a collective agreement with the respondent, and he observed workers at the meeting vote in favour of this course. 97 It is convenient to deal with the dismissal of Mr Kemmis on 12 December 2005 at this point and return to the flow of events between 12 --- 21 December 2005, thereafter. The timing follows closely on Mr Kemmis' activities to promote the union in November and his address to the meeting on 9 December 2005. In view of my findings expressed in [80] --- [96], and against the background of Mr Thornton's anti-union attitude described in [61] --- [79], and from the timing of the dismissal it is positively established that at least one of the reasons for it was that Mr Kemmis was a union member. He held a meeting of the day shift employees in order to initiate a workers' committee composed of employees elected by fellow workers. 100 Mr Thornton gave evidence that Mr Coon was a major participant at that meeting and was cooperative and constructive during it. Mr Thornton said that Mr Coon's participation was limited to seeking clarification of the effect of the proposed industrial relations changes on the respondent. However, notes taken during the meeting show that the major topics of discussion were suggested improvements to industrial conditions rather than protection of existing conditions. 101 Again, on 12 December 2005 Mr Whelan phoned Mr Thornton to discuss the dismissal of Mr Kemmis, and also the dismissal of another employee, Mr Troy Rose. 102 On the next day, 13 December 2005, he met with the afternoon shift for the same purpose. Mr Taylor volunteered to serve as a worker representative. Mr Taylor's activities as a workers' representative are the basis for the applicants' argument that Mr Thornton must have known that Mr Taylor was a union member and that he was dismissed for reasons including that he was a union member. 103 On 14 December 2005, Mr Thornton held a meeting of the newly formed committee of employee representatives, but the afternoon shift representatives were not present. Mr Taylor as one of the representatives received conflicting reports of the outcome of the meeting held on the previous day and so he tried to arrange a meeting with Mr Thornton to ascertain the outcome in order to report to the union meeting due to take place on 16 December 2005. Mr Sathaar finally offered him a meeting with Mr Thornton on 19 December 2005. Mr Taylor replied to Mr Sathaar that this time was unsatisfactory as he "wanted to know what happened before our union meeting on Friday so I could tell everybody else I work with". (Emphasis added. ) Mr Sathaar then phoned Mr Thornton and a meeting was arranged for later on 15 December 2005. Mr Ryan, another afternoon shift representative and two other employees attended. 104 From the reference to "our union meeting" in the conversation between Mr Taylor and Mr Sathaar, and against the general background of Mr Thornton's hostility to the union, the applicants contended that Mr Thornton must have known that Mr Taylor was a union member and the Court should not accept his denial that he dismissed Mr Taylor for reasons which included that reason. 105 The evidence establishes that Mr Sathaar asked Mr Thornton for a meeting with Mr Taylor to take place earlier than 19 December 2005. I infer that Mr Thornton was told that the earlier time was needed to allow for a report back to the union meeting to be held on 16 December 2005. Mr Thornton recalled little of the detail of the meeting. However he remembered that Mr Taylor was involved as one of the elected employee representatives and that they discussed issues which had arisen at the meeting called by Mr Thornton on 14 December 2005. I find that Mr Thornton did not identify Mr Taylor as a union member in the context of this meeting. 106 On 16 December 2005 Mr Whelan held a further mass meeting of employees of the respondent as had been decided at the meeting on 9 December 2005. There was a discussion about the dismissal of Mr Kemmis and Mr Rose. Mr Coon raised concerns at the meeting. At least ten employees joined the union at or shortly after this meeting. Mr Coon signed up about six members. There were about 40 employees then who were members of the union. The meeting decided to hold a further meeting on 21 December 2005. After the meeting Mr Whelan went to see Mr Thornton, who was not available. Mr Whelan arranged a meeting for the following day. He attended the respondent's site, but Mr Thornton was again not available. 107 Also on 16 December 2005, as recorded in [73] --- [74] of these reasons, Mr Whelan sent Mr Thornton a fax in which he sought to exercise his right of entry on 21 December 2005. Mr Thornton did not respond until the day of the proposed entry, and then initially in a way which was designed to frustrate Mr Whelan obtaining access. 108 On 20 December 2005 Mr Coon spoke to employees at lunchtime about health and safety concerns particularly in relation to the use of cranes, and this generated discussion about health and safety issues. He encouraged employees with concerns about these issues to attend the union meeting on the following day. Mr Hewitt said to him "you're really hyping up this union stuff". Then Mr Coon saw Mr Hewitt meeting with Mr Sathaar and Mr Kelly. Shortly thereafter Mr Coon was asked to go to Mr Sathaar's office. Mr Kelly was there. Mr Sathaar said that the quality control function was to be outsourced. Mr Coon assumed he would therefore return to his previous position as a boilermaker. When he raised this prospect he was told by Mr Sathaar that the respondent would not retain him as boilermaker but was dismissing him. 110 Mr Thornton said that Mr Coon had volunteered a number of times that he was not a member of a union. When asked to elaborate, Mr Thornton said that he presumed Mr Coon was not a member because when he first began his employment he was an impressive worker. 111 The evidence establishes that Mr Coon was active in the workplace in advocating a role for the union in negotiating a collective agreement with the respondent to improve employment terms and conditions. He spoke at the 9 December 2005 union meeting, and I have found that Mr Thornton observed and heard him speak at the meeting. Mr Coon addressed the meeting held on 16 December 2005 and spoke at lunchtime to employees on 20 December 2005 about health and safety issues, and encouraged them to attend the union meeting on 21 December 2005. At this time he was actively recruiting union members. Membership increased from about 30 to 40 members during this period. Mr Thornton was strongly opposed to the union gaining influence and had taken steps to prevent this happening. At the time when Mr Coon was dismissed there was an unusually high level of activity by Mr Whelan attempting to organise the workplace, and Mr Thornton correspondingly attempting to hinder the process. From these circumstances I infer that Mr Thornton knew of Mr Coon's activities in support of the union. 112 For these reasons I am satisfied on the balance of probabilities that at least one of the reasons for the respondent's dismissal of Mr Coon was that he was a member of the union. I have found that Mr Thornton did not learn of Mr Taylor's union membership from this incident. Mr Thornton's denial of knowledge of Mr Taylor's union membership is capable, if accepted, to rebut the presumption raised by s 298V. The denial is supported by the evidence of the circumstances which prevailed in the workplace at the time, namely that there was no occasion on which Mr Thornton learned that Mr Taylor was a member of the union. The finding which I have made that Mr Thornton had a hostile and obstructive approach to the union is not sufficient in view of the entire evidence to reject Mr Thornton's denial that he acted at least partly because Mr Taylor was a union member. Further, whilst there are reasons which have been explained for rejecting much of Mr Thornton's evidence, this is no such reason to reject his denial on this issue. Consequently, I find that the respondent has rebutted the presumption that Mr Taylor was dismissed for a reason which included that he was a member of the union. The respondent contended that s 298L(1)(l) required the conditions sought by the union and the conditions about which the applicant employees were dissatisfied to be the same: Heidt v Chrysler Australia Ltd (1976) 13 ALR 365 at 375. Further, the respondent submitted that this fact was a condition precedent to the application of s 298V and, hence, the onus lay on the applicants to demonstrate the coincidence of conditions. Whilst I doubt that the respondent is correct in this second submission concerning the construction of s 298V, nothing turns on resolution of the issue because, accepting for the purposes of argument the approach proposed by the respondent, the facts of the case do not support the conclusion contended for by it. 115 There was evidence that at all times Mr Whelan pursued the aim of having the respondent negotiate a collective agreement with the union. This is what he told the employees who attended the off site meetings in November and on 1 December 2005. Then, at the union meeting on 9 December 2005 he advocated a role for the union in negotiating an agreement with the respondent. That, he told the meeting, was the way to improve terms and conditions of employment. At the end of the meeting there was a vote in favour of the union negotiating a collective agreement with the respondent, and Mr Whelan initiated a bargaining period immediately following the vote. Mr Thornton acknowledged that Mr Whelan constantly tried to get the respondent to negotiate an agreement with the union. 116 There was evidence that the applicant employees also wanted the respondent to negotiate a collective agreement with the union in order to achieve an improvement in conditions of employment. Mr Kemmis and Mr Coon expressly stated their positions at the meeting on 9 December 2005. Mr Taylor described himself as one of the "three amigos" who, together with Mr Kemmis and Mr Coon, were agitating for the respondent to engage with the union to negotiate improved conditions. They were dissatisfied with the situation in which Mr Thornton refused to negotiate with the union. 117 Thus, the condition which the union was pursuing and about which the applicant employees were dissatisfied was the same, namely, representation by the union of the employees of the respondent in the negotiation of a collective agreement to improve the terms and conditions of employment. 118 The respondent then argued that a demand for the union to negotiate a collective agreement containing improved terms and conditions of employment was not an industrial condition within the meaning of s 298L(1)(l). It was submitted that the natural meaning of the expression industrial conditions refers to the type of conditions to be found in awards or employment agreements relating to salaries, wages, superannuation, meal breaks, hours of work and the like. The claim for union representation was a claim anterior to the conclusion of industrial conditions. This submission was not elaborated. The principle which underlies the distinction sought to be made appears to rest on a matter of timing. In other words, industrial conditions are the result of a process involving negotiating parties, and the prior establishment of the elements of that process, including the participants, does not involve the establishment of industrial conditions. 119 This interpretation takes too narrow a view of the meaning of the expression industrial conditions. There is nothing in the natural meaning of the expression which would prevent a requirement for union representation being described as an industrial condition. The statutory context suggests that such a requirement would fall within that description. The purpose of s 298K with s 298L(1)(l) is protective, that is to say, it is designed to prevent employees being prejudiced because they are dissatisfied with their working conditions where their union is taking steps to improve those conditions. Viewed this way the claim for union representation in the negotiation of a collective agreement falls within the statutory description. His Honour based that approach on the judgments delivered in Federated Clerks Union of Australia v Victorian Employers Federation [1984] HCA 53 ; (1984) 154 CLR 472 , which held that the wider term "industrial matters" included a claim that a union be consulted in relation to technological changes. 120 Then, the respondent contended that s 298L(1)(l) required that the respondent subjectively knew that the applicant employees were dissatisfied with their conditions. Accepting this construction for present purposes, in relation to Mr Coon and Mr Kemmis the evidence as a whole does not support the conclusion suggested by the respondent, namely, that Mr Thornton did not know that Mr Coon and Mr Kemmis were dissatisfied with their conditions. I have found that Mr Thornton heard Mr Coon and Mr Kemmis at the meeting on 9 December 2005 articulating their claim for the union to negotiate a collective agreement containing improved terms and conditions. I have also found that Mr Thornton was aware of Mr Kemmis' activities in November 2005 in support of union representation. The evidence as a whole therefore establishes that Mr Thornton knew that Mr Coon and Mr Kemmis were dissatisfied with Mr Thornton's refusal to enter into negotiations with the union about a collective agreement. 121 The position of Mr Taylor must be viewed separately because he did not address the meeting on 9 December 2005 and there was not the same evidence that he took action in support of union representation at the workplace. When it was put to Mr Thornton in cross examination that he perceived Mr Taylor as dissatisfied with his industrial conditions and was campaigning with the union for better conditions to be included in a collective agreement, Mr Thornton answered that he did not know Mr Taylor. 122 This answer was inconsistent with his evidence about the meeting with Mr Taylor on 15 December 2005. Mr Thornton recalled in some detail the way the meeting on 15 December 2005 came about. For instance, he remembered that Mr Taylor was anxious to have the meeting, that it had to be sooner than first suggested and that it arose because Mr Taylor had not attended the earlier meeting on 14 December 2005. I find that at least by the time the meeting of 15 December 2005 ended Mr Thornton knew who Mr Taylor was. 123 The evidence also establishes on the balance of probabilities that Mr Taylor had raised with Mr Thornton his concern for the union involvement in negotiating a collective agreement to improve terms and conditions of employment. You were obviously involved in trying to get this EBA signed up with the ---? --- I was one of the representatives on afternoon shift. And, over that period from, sort of, September to December when this claim for an EBA, and the conditions associated with, were going on, if you were asked who were the main blokes pushing the line, in a sort of public way, with the other employees, who would they have been? I mean, obviously you were one? --- Well, there would have been --- the only other bloke I can't believe didn't get the bullet was Steve Ryan because he is the other union --- the other bloke on afternoon shift with me. So he stayed there. But virtually the three of us amigos here got the flick. But why do you say that was? --- Well, we were the ones out there trying to get the union involved. Why was it the three of ---? --- We wanted the Geelong area agreement up and running. Were there any others other than the three of you who were involved in that project, if you like? --- Not dealing with Mr Thornton, there wasn't. We were virtually the spokesperson on afternoon shift and all that sort of thing. The three of you plus Steve Ryan? --- Yes, Steve Ryan, yes. He was representing with me on afternoon shift. 124 Further, the purpose of the urgent meeting on 15 December 2005 was to bring Mr Taylor up to date on what had occurred at the earlier meeting on 14 December 2005 with the other employee representatives. It is likely that the same issue arose during the meeting between Mr Taylor and Mr Thornton. The item of discussion reflects the dissatisfaction of the applicant employees, namely that the respondent had failed to enter into negotiations with the union about a collective agreement, similar to the Geelong area agreement. 125 I find on the evidence as a whole that Mr Thornton knew by 21 December 2005 that Mr Taylor was dissatisfied with the failure of the respondent to enter into negotiations with the union for a collective agreement to improve the terms and conditions of employment. However, in relation to Mr Taylor the evidence positively establishes that he was not dismissed for the reason or for reasons that include the reason that he was a union member. 127 It also follows from these reasons that the evidence positively establishes that the respondent dismissed Mr Coon, Mr Kemmis and Mr Taylor for reasons which included the reason that the union was seeking better industrial conditions and each of them was dissatisfied with his conditions. 128 The respondent thus contravened s 298K(1)(a) of the Act by dismissing Mr Coon and Mr Kemmis for reasons which included reasons prohibited by s 298L(1)(a) and (l), and by dismissing Mr Taylor for reasons which included the reason prohibited by s 298L(1)(l) of the Act. Declarations will be made accordingly, and the application will be adjourned for a further hearing to consider any orders which should be made under s 298U of the Act. I certify that the preceding one hundred and twenty-eight (128) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North.

whether employer dismissed employees for a prohibited reason or for reasons which included a prohibited reason whether employer dismissed employees because of union membership operation of reverse onus in workplace relations act 1996 (cth) s 298v whether applicants bore onus to prove respondent knew applicants were union members respondent argued positive reasons for dismissal alternative argument that reasons did not include prohibited reasons evidence of hostile attitude to union attempt to thwart increased union activity in workplace whether employer dismissed employees for a prohibited reason or for reasons which included a prohibited reason whether employer dismissed employees because there were members of union seeking better industrial conditions and were dissatisfied with conditions respondent argued positive reasons for dismissal alternative argument that reasons did not include prohibited reasons argument that conditions must be same evidence that union and employees attempted to have union representation in the negotiation of a collective agreement whether representation by a union in collective agreement negotiations is an industrial condition whether subjective knowledge of dissatisfaction required whether subjective knowledge condition precedent to operation of reverse onus in workplace relations act 1996 (cth) s 298v onus of proof workplace relations act 1996 (cth) s 298v whether factual foundation must be established by applicants prior to operation "industrial conditions" industrial law industrial law practice and procedure words and phrases

The applicant, Mr Stoyef, brings the application as a representative party. He and the group members are persons who were clients of the financial services business conducted by the respondent (Masu) between 2003 and late 2005 and who, in reliance on advice given by Masu, invested in one or more "Westpoint Products", as defined in para 2(b) of the amended statement of claim, and suffered loss as a result. Excluded from the definition of the group members are persons who are represented in another specified proceeding against Masu or who have brought any other proceeding against Masu in respect of circumstances similar to those referred to in the preceding sentence. 2 Generally speaking, the Westpoint Products are defined as financial products in the nature of promissory notes issued by Westpoint Corporation Pty Ltd (Westpoint) or by other entities within the group of companies known as the Westpoint Group (Westpoint entities). 3 The promissory notes were apparently issued by five different Westpoint entities. Apparently, the purpose of the capital raising was the development of a site by each issuing Westpoint entity. According to para 10 of the amended statement of claim, at various dates in 2005 and 2006, Westpoint, the Westpoint entities and guarantors (defined to be Westpoint Corporation Pty Ltd and associated entities) went into external administration and/or had a controller appointed, as a result of which investors in the Westpoint Products will either not receive any return or are expected to receive less than 100 cents in the dollar in respect of their investments in the Westpoint Products. 4 By a notice of motion filed on 13 May 2008, Mr Stoyef seeks leave to file and serve a further amended application and a further amended statement of claim in the forms annexed to his notice of motion. 5 By a notice of motion filed on 21 May 2008, Masu seeks an order that paras 38 to 44 of the existing amended statement of claim be struck out (the notice of motion erroneously refers to "48" rather than "44" but the position was corrected on the hearing). By its notice of motion, Masu also sought an order that Mr Stoyef provide particulars of para 21 of the amended statement of claim but that aspect of the motion was not pressed. 6 The reason why Masu opposes Mr Stoyef's application to file the proposed further amended statement of claim is also the same reason for Masu's strike out application --- paras 38 to 44 of the pleading are objectionable, according to Masu. So, although Masu's motion refers to the striking out of paras in the amended statement of claim, the same arguments are also pressed in relation to the further amended statement of claim. 7 For this reason, both motions were heard together, and the issues determined on the basis of whether there is any merit in Masu's objections to paras 38 to 44 as they appear in the proposed further amended statement of claim. If those paragraphs are objectionable, Mr Stoyef will not have leave to file his proposed further amended application and further amended statement of claim and Masu's motion seeking to strike out those paragraphs will succeed. If, on the other hand, paras 38 to 44 of the further amended statement of claim are not objectionable, Mr Stoyef will have that leave and Masu's motion will be dismissed. (I note that the proposed further amended statement of claim amends paras 38 to 44 and adds additional paragraphs falling between paras 38 to 44 of the amended statement of claim. 9 Paragraph 38 (all references to paragraphs are references to paragraphs of the proposed further amended statement of claim) pleads that each of the Westpoint Products constituted a "managed investment scheme" within s 9 of the Corporations Act 2001 (Cth) (the Act) by reason of facts pleaded in that paragraph. (I note that in para 2(b) the Westpoint Products are defined as the promissory notes, whereas elsewhere, such as in paras 38 to 44, those promissory notes are said to be managed investment schemes --- an inconsistency that should be eliminated. Unfortunately, but I think unavoidably, I will have to use the expression with both meanings in these reasons. This pleading has reference to s 601ED(1) of the Act, and leads to a pleading in para 38B that each Westpoint Product was therefore required by s 601ED to be registered with the Australian Securities and Investments Commission (ASIC). 11 Section 601ED(5) of the Act prohibits a person from operating a managed investment scheme that is required to be registered unless it is registered. Paragraph 38C pleads that Westpoint and the Westpoint entities were within that prohibition. 12 Paragraph 38D pleads that since none of the Westpoint Products were registered with ASIC, they were liable to be wound up pursuant to s 601EE of the Act. Section 601EE provides that if a person operates a managed investment scheme in contravention of s 601ED(5) , ASIC, the person operating the scheme or a member of the scheme may apply to the Court to have the scheme wound up. 13 It follows, according to para 39, that each investment in each Westpoint Product was an interest in a managed investment scheme, and was therefore a "financial product" within the meaning of s 764A of the Act. Section 764A is the first section in Subdiv C of Div 3 of Pt 7.1 of the Act. It includes within the expression "financial product", relevantly, an interest in a managed investment scheme that is not a registered scheme (para (ba) of s 764A(1)). 14 It further follows, according to para 40, that advice given by Masu, by itself and through its representatives, to invest in Westpoint Products constituted "financial product advice" within the meaning of s 766B of the Act. Section 766B provides that financial product advice is, relevantly, a recommendation or a statement of opinion, or a report of either of those things, that is intended to influence a person or persons in making a decision in relation to a particular financial product, or class of financial products, or an interest in either, or could reasonably be regarded as being intended to have such an influence. 15 Division 2 of Pt 7.9 deals with "Product Disclosure Statements". I will use the abbreviation "PDS". Of present concern are Subdivs A, B and C of Div 2. Within Subdiv A (which is headed "Preliminary"), s 1011B defines "regulated person" in relation to a financial product to mean, relevantly, "an issuer of the financial product" or "any financial services licensee". The issuer of the Westpoint Products was Westpoint or a Westpoint entity (I will continue to refer to both possibilities as the pleading does, although my understanding is that the issuers were the five Westpoint entities, not Westpoint itself). According to para 6(e) of the proposed further amended statement of claim, Masu was the holder of an Australian financial services licence, that is to say, was a financial services licensee. Accordingly, Masu, as well as Westpoint or the Westpoint entities, was subject to such obligations as the Act imposed upon a "regulated person" in relation to the Westpoint Products. 16 Another definition within s 1011B is that of "responsible person". That expression is defined in relation to a PDS as having the meaning given by s 1013A(3) of the Act. Subsection 1013A(3) defines "responsible person" as the person who, or on whose behalf, a PDS for a financial product is required to be prepared. 17 The distinction between a "regulated person" and a "responsible person" in relation to the Westpoint Products is important. In substance, Mr Stoyef's pleaded case is that, for reasons that will appear, Masu, as a "regulated person", was obliged to give him and the group members a PDS that Westpoint or the relevant Westpoint entity, as the "responsible person", was obliged to prepare. 18 Subdivision B within Div 2 of Pt 7.9 is headed "Requirements for a Product Disclosure Statement to be given". 19 Sections 1012A , 1012B and 1012C within Subdiv B, deal with three situations in which an obligation to give a PDS arises. Mr Stoyef relies only on s 1012A. 20 Section 1012A , the first section within Subdivision B, announces in subs (1) that s 1012A(1) sets out the situations in which giving financial product advice that consists of, or includes, a recommendation to acquire a financial product gives rise to an obligation on a regulated person to give another person a PDS for the product. It is the giving of financial product advice of that kind that is pleaded as having given rise to an obligation on Masu to give Mr Stoyef and the group members a PDS for the Westpoint Products. It will be noted that the obligation imposed by s 1012A(3) is absolute. It is para 41 of the proposed further amended statement of claim that pleads that pursuant to this provision, Masu and its authorised representatives were obliged to give a PDS to Mr Stoyef and group members. 21 Paragraph 42 pleads that Masu, by itself and its representatives, recommended that Mr Stoyef and the group members acquire one or more of the Westpoint Products, but in breach of s 1012A did not give him or them a PDS. 22 Paragraph 42A pleads that "on the assumption that the Westpoint Products were managed investment schemes that were required to be registered", the PDS required would have contained statements that, in summary, the particular Westpoint Product was a managed investment scheme required to be registered with ASIC but was not so registered and was therefore at significant risk of being wound up. 23 According to para 43, Mr Stoyef and the group members have suffered loss and damage because they invested in one or more of the Westpoint Products but will receive little or no return on their investments as a result of Westpoint and the Westpoint entities being placed into external administration and/or having had a controller appointed, yet they would not so have invested if they had been given a PDS that contained the matters referred to at [22] above. 24 Finally, in para 44 it is pleaded that Mr Stoyef and the group members are entitled to recover the loss and damage suffered by them pursuant to s 1022B of the Act. Subdivision C is headed "Preparation and content of Product Disclosure Statements". Section 1013A , the first section within Subdivision C, provides, relevantly, that a PDS that is required to be given by s 1012A "must be a document that has been prepared by the issuer of the financial product". In the circumstances of the present case, the issuer is Westpoint or the relevant Westpoint entity. Subsection 1013A(3) provides that the person who, or on whose behalf, a PDS for a financial product is required to be prepared is, in Div 2, referred to as the "responsible person" for the financial product. 27 A dispute between the parties emerges from s 1013C. That section deals with the required content of a PDS. Subsection (1) of s 1013C provides that a PDS must include, relevantly, statements and information required by s 1013D and the information required by s 1013E. Subsection 1013D(1) provides, relevantly, that a PDS must include information about any significant risks associated with holding the financial product. Section 1013E provides, relevantly, that a PDS "must also contain any other information that might reasonably be expected to have a material influence on the decision of a reasonable person, as a retail client, whether to acquire the product". Mr Stoyef pleads in para 42A (referred to at [22] above) that a PDS in the present case would have referred at least to the fact that each of the Westpoint Products was a managed investment scheme required to be registered with ASIC but not registered with it and therefore liable to be wound up, and in para 43 (referred to at [23] above) that he and the group members, if they had been given such a PDS, would not have invested in the Westpoint Products. On the hearing, however, I think counsel for Masu accepted, as I hold to be correct, that it is the issuer (Westpoint or the relevant Westpoint entity) (or any of its directors), whose knowledge is relevant. Accordingly, on the hearing Masu's submission became a submission that the pleading is deficient for failing to allege actual knowledge on the part of the issuer. 31 Paragraph 42A does not plead facts showing why the PDS, that s 1012A required Masu to give to Mr Stoyef and the other group members, would have contained at least the statements and information referred to in that paragraph (this is not the subject of Masu's complaint). Paragraph 42A does not refer to s 1013A , 1013C , 1013D or 1013E . 32 Mr Stoyef is not required to plead the evidence by which he will attempt to prove that the hypothetical PDS would, as a matter of fact, have contained the statements and information identified in para 42A. Consistently with the pleading, Mr Stoyef will not rely on the operation of the sections mentioned alone. Indeed, if his pleading had referred to them alone, it would certainly have been defective because it would have left open the possibility that the issuer would not have prepared each PDS as required by law. 33 In pleading what the PDS would as a matter of fact have contained Mr Stoyef necessarily pleads what the issuer of the PDS knew (see s 1013C(2)). Mr Stoyef could not prove that the PDS proposed "would have contained, at least, the ... statements and information [referred to]" without proving that the issuer knew that the Westpoint Products were managed investment schemes, that they were required to be registered but were not registered, and that they were therefore vulnerable to being wound up. 34 I do not think that Mr Stoyef was required to plead expressly that Westpoint or the relevant Westpoint entity that issued the Westpoint Product in question had actual knowledge of the matters referred to in para 42A as Masu contends. The pleading of what the PDS would as a matter of fact have contained is an adequate pleading of actual knowledge of those matters on the part of the issuer. Accordingly, on the main issue that was debated on the hearing, Mr Stoyef succeeds and Masu fails. 35 Mr Stoyef makes a further answer to Masu's attack on his pleading. He submits that s 1013C(2) operates as an exception to the general obligation created by ss 1013A(1) , 1013C (1), 1013D (1) and 1013E . According to his submission, the words "Subject to ... subsection 1013C(2)," at the beginning of ss 1013D(1) and "Subject to subsection 1013C(2)" at the beginning of s 1013E indicate this. 36 Mr Stoyef's further answer would require consideration if Mr Stoyef relied exclusively on the terms of the Act, as distinct from relying simply on what would, as a matter of fact, have been contained in the contemplated PDS. The question that would be raised is whether, on the proper construction of the Act, the client of the financial services licensee would bear the onus of pleading and proving actual knowledge of the responsible person (or of any of its directors) referred to in s 1013C(2) , or whether the financial services licensee (being the "regulated person" in this case) would bear the onus of pleading and proving by way of defence that none of them had that knowledge. 37 In view of my holding that Mr Stoyef does plead (implicitly) actual knowledge on the part of the issuer, I do not need to resolve this question, but since it was the subject of detailed submissions, I make the following observations in relation to it. 38 If I had been required to resolve the question, I would have held that it was for Mr Stoyef to plead that the issuer of each PDS had actual knowledge of the matters mentioned in ss 1013D and 1013E , that is to say, I would have held that s 1013C(2) does not operate as an exception but as going to delimit the extent of the obligation created by ss 1013D and 1013E . To my mind, the opening words "Subject to ... subsection 1013C(2)" in s 1013D and "Subject to subsection 1013C(2)" in s 1013E suggest that this is so, as do the opening two lines of s 1013C(2) (set out at [28] above). 39 It will be recalled (see [24] and [25] above) that, pursuant to s 1022B(1)(a) , s 1022B applies to the situation where a person is required to give another person " a " PDS, but does not give that other person " the required product disclosure statement" (my emphasis). Paragraph (a) of s 1022B(2) provides for the recovery of loss or damage if a person suffers loss or damage because the person was "not given the disclosure document or statement that they should have been given " (my emphasis). Mr Stoyef draws attention to the distinction between paras (a) and (c) of s 1022B(1). Para (a) is a "no PDS" case whereas para (c) provides for the situation in which a PDS is given that is defective --- a "deficient PDS" case. Thus, Mr Stoyef distinguishes the present case from one in which a PDS was given which omitted to draw attention to the unregistered status of the Westpoint Products and their consequent vulnerability to being wound up under s 601EE. Mr Stoyef's argument is that in a "no PDS" case like the present one, para (a) in each of subss 1022B(1) and 1022B(2) refers only to a PDS irrespective of its content. Masu, on the other hand, argues that it also refers to the required content of the particular PDS in question. 40 Had it been necessary to resolve this question, I would have held that the words quoted above from the two paras (a) refer to the particular PDS that the Act required to be given, and therefore to its required contents. That PDS must contain the information required by ss 1013D and 1013E subject to s 1013C(2). It would be for Mr Stoyef to plead and prove the extent of the issuer's actual knowledge of the matters mentioned in ss 1013D and 1013E . 41 As noted at [32] above, a mere pleading of the statutory provisions and of actual knowledge on the part of the issuer would be deficient: what would be missing would be an allegation that the issuer would as a matter of fact have included in the hypothetical PDS that which the statutory provisions required, being that which was within the actual knowledge of the issuer. 42 Masu referred to Shipley v Masu Financial Services Pty Ltd [2008] NSWSC 252 , but that case is distinguishable for two reasons. The first reason is that Hammerschlag J noted (at [49]) that the argument before him appeared to proceed on the basis that Masu was a "responsible person" in relation to the Westpoint Products because it was within the notion of "either the issuer of the financial product or the person making the offer to sell the financial product". In the present case, however, Mr Stoyef relies exclusively on s 1012A on the basis that Masu provided financial product advice to Mr Stoyef and the group members, that consisted of or included a recommendation that they acquire the Westpoint Products. Accordingly, the only "responsible person" in the present case was the issuer of the Westpoint Product relevant to the particular investor, being either Westpoint or a Westpoint entity. The second reason is that the statement of claim in that case pleaded what a "proper" PDS of the kind that the defendant or its authorised representatives was required to give to the plaintiffs would have contained. In the present case, the relevant paragraphs of the further amended statement of claim do not use the word "proper" to qualify the PDS that was required to be given. 43 .There are, however, in my opinion, two pleading defects which Masu has identified. First, the words "at least" in para 42A are objectionable. Mr Curtin of counsel for Masu, submitted that his client is entitled to know now, rather than at trial, what is all of the particular information that Mr Stoyef says would have been included in the PDS which would have altered his and the group members' minds, because his client would like to investigate, or at least may choose to investigate, the question whether that information was known to "the responsible person" referred to in s 1013C(2)(a). 44 I agree. The proposed further amended statement of claim should omit the words "at least". If Mr Stoyef later wishes to allege that the hypothetical PDS would have contained further information that would have caused him and the group members not to invest, he will need to seek leave to amend further at that time. 45 The second defect also concerns para 42A. It is surely not intended to assert that the PDS given to, say, Mr Stoyef would have referred to "each of the Westpoint Products". The expression "each of the Westpoint Products" occurs throughout para 42A. Surely the intention is to allege that the PDS would have stated that the particular Westpoint product which was being recommended and in which the particular client invested "was a managed investment scheme ...", and so on. 46 The proposed further amended statement of claim should be amended to make this clear. 47 In para 12 of his written submissions, counsel for Masu raises a further alleged defect of the pleading in so far as it relates to Mr Stoyef, but this was not explored in oral submissions, and it is difficult for me to resolve it. No doubt Mr Stoyef's legal advisers will give attention to the matter if they see any substance in it. 50 If necessary, I will hear argument on costs, but my present view is that since Mr Stoyef succeeded on the main issue that was debated, but Masu succeeded on some minor issues, Masu should be ordered to pay 60% of Mr Stoyef's costs of the two motions. I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren.

pleading managed investment scheme class action against financial services licensee which advised applicant and group members to invest in promissory notes without giving them a product disclosure statement (pds) as (allegedly) required by s 1012a(1) of corporations act 2001 (cth) financial collapse investors suffered loss whether applicant required to plead knowledge that scheme was required to be registered but was not registered and was therefore liable to be wound up so as to displace s 1013c(2) of the act whether, on the other hand, respondent required to plead lack of such knowledge by way of defence whether pleading of what pds would have stated amounted to a pleading of actual knowledge. held: pleading did, properly construed, plead actual knowledge on part of issuer, and was not required to plead actual knowledge in express terms. pleading managed investment scheme class action against financial services licensee which advised applicant and group members to invest in promissory notes without giving them a product disclosure statement (pds) as (allegedly) required by s 1012a (1) of corporations act 2001 (cth) financial collapse investors suffered loss whether applicant required to plead knowledge that scheme was required to be registered but was not registered and was therefore liable to be wound up so as to displace s 1013c(2) of the act whether, on the other hand, respondent required to plead lack of such knowledge by way of defence whether pleading of what pds would have stated amounted to a pleading of actual knowledge. held: pleading did, properly construed, plead actual knowledge on part of issuer, and was not required to plead actual knowledge in express terms. corporations practice and procedure

The applicant, through no fault of his own, was not present on that occasion. He was unwell, suffering from the illness which is the subject matter of the appeal. 2 In any event, counsel for the Repatriation Commission, the respondent to the appeal, made an application for costs. Because the applicant was absent I thought the question of costs should be reserved so that the applicant might be heard if he wished in opposition to the application for costs. The matter was called on again this morning when the applicant appeared and made submissions why, in the circumstances of this appeal, costs should not follow the event. 3 The question of costs is always in the discretion of the Court. However, there are certain rules, none of which bind a Judge which need to be borne in mind in exercising that discretion which, of course, must be exercised judicially. Ordinarily, costs follow the event. There are exceptions; for example, when the conduct of the successful party may disqualify that party. The subject matter of the litigation may make it inappropriate for the usual order to follow. Matters of public interest may mean that the usual order ought not to be made. 4 In this case the applicant has submitted that this appeal was brought not only for the applicant's sake but also for other persons in a similar position to the applicant who do not have the ability to prosecute their own appeals. 5 I have considerable sympathy for the applicant. The applicant, as I noted in my reasons, was conscripted to serve in the Australian Forces in the 1960s and, whilst a conscript, was sent to serve in Vietnam. In the performance of his duties, the applicant contracted serious physical and psychological illnesses which have impacted to a considerable extent on his and his wife's lives. This appeal arose out of the applicant's belief that the Commission had not recognised the seriousness of his disabilities and had thereby under-compensated him for a long period of time. 6 As I explained in my reasons, the question of the merits of the claim was for the Tribunal. The only matter for me was whether the Tribunal had erred in law. In the end result, I found that the Tribunal had not made any error of law. 7 Whilst I have considerable sympathy for the applicant, there seems to me no reason why the usual rule should not take effect in this case. In other words, in the exercise of my discretion acting judicially, I can think of no reason why the Repatriation Commission should not be entitled to its costs and there must be an order accordingly. 8 However, I would ask those advising the Repatriation Commission to bring to the attention of the Commission these reasons so that the Commission might consider whether, having regard to the contribution Mr Sleep has made and to the consequences which he has suffered, it would be appropriate not to enforce the order. However, that is a matter for the Commission. The only order I can make is that there be an order that the applicant pay the respondent's costs on a party and party basis. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander.

application for costs discretion of the court whether costs should follow the event. costs

The Tribunal had affirmed a decision of a delegate of the Minister for Immigration and Multicultural Affairs to refuse to grant a protection visa to the appellants. 2 The appellants are citizens of India who arrived in Australia on 25 January 2004. They entered on short stay visitor's visas. The appellants are respectively husband, wife and infant son. On 25 February 2004 the appellants lodged an application for a protection visa with the Department of Immigration and Multicultural Affairs. Only the appellant husband made claims under the Convention with the appellant wife and son relying on membership of his family unit. As members of the same family unit the outcome of the appellant wife's and and son's applications depended on the outcome of the appellant husband's application. In these reasons the appellant husband will be referred to as the appellant. The appellant claimed to have a well founded fear of persecution because of his religion and political opinion. The appellant claimed to be a secretary of the Muslim Student Federation in Pune and to have been arrested and detained by Hindu extremists and being subject to verbal and physical abuse. The appellant claimed that he had received death threats and extortion threats from rival political parties. The appellant claimed that he had not received assistance from the authorities: being a Muslim in a Hindu area limited the assistance available to him. His family was, he claimed, also in danger. 3 On 27 February 2004 a delegate of the first respondent refused the application for a protection visa and, on 25 March 2004, the appellant applied to the Tribunal for a review of that decision. On 14 April 2004 the Tribunal invited the appellants to attend a hearing. On 7 June 2004 the appellant attended and was assisted by a Hindi interpreter. He gave oral evidence and submitted various Amnesty International Reports to the Tribunal. 4 On 15 October 2004 the appellant was informed that the Tribunal had been re-constituted after the retirement of a member and that the Tribunal would not conduct an additional hearing but that it had before it tapes of the original hearing and the Departmental and Tribunal files. The Tribunal informed the appellant that, if further information was to be submitted, it was to be submitted before 29 October 2004. 5 On 2 November 2004 the Tribunal sent the appellant a letter pursuant to s 424A of the Migration Act 1958 (Cth) ("the Act ") to which the appellant responded in a letter dated 16 November 2004. The departure of the appellant from India on his own passport indicated to the Tribunal that he was not of concern to the Indian authorities. Further, his return to India after earlier travel to Kuwait indicated to the Tribunal that the appellant did not have a subjective fear of persecution. Because of his travel to and from India the Tribunal was unable to accept that the appellant had been detained on numerous occasions. 7 The assertion by the appellant that he was a member of a student federation or a student union was rejected. The Tribunal found that he completed his studies in 1981, he was 38 and that the research by the Tribunal indicated that the only student organisation in Pune was a Students Islamic Movement of India which was a Palestinian organisation. As a result of these findings the Tribunal could not be satisfied that the appellant was a member of a student organisation. As the Tribunal found that he was not a member of any Muslim student organisation it could not accept that he was arrested and detained by non-state agents or state agents by reason of such membership. 8 Independent country information was considered by the Tribunal and it was found that it did not support the claim that police do not accept complaints from Muslims. Similarly, on consideration of independent country information, the Tribunal determined that it was unable to accept that the appellant did not have the practical protection of the Indian state or that the Indian government does not protect Muslim communities. In an amended application the appellant claimed that: the appellants satisfied the Convention definition entitling them to a protection visa; the Tribunal committed legal and factual error in its reliance on independent country information; the Tribunal erred in its factual findings; the Tribunal was limited in its consideration of the matter and did not consider the statements of the appellant; the Tribunal failed to demonstrate how the appellant did not satisfy the criteria in s 36(2)(a) of the Act ; and the Tribunal breached the rules of natural justice. He further relied on the grounds in his initial application. The Tribunal acted on unsubstantiated assumptions. The Tribunal failed to take into account the US Department of State 2003 Country Report on Human Rights. 4. The Tribunal did not give adequate weight to the assertions by the appellants that they would be killed because of their ethnicity and background. They are a minority in India. 5. The assertion that they have a genuine fear for their physical safety. 6. Greater weight should have been given to Amnesty International Annual Reports on India. He held that the choice and assessment of independent country information was a factual matter for the Tribunal and that it was open to the Tribunal to give consideration to this information in the manner which it did. The Federal Magistrate noted that the letter sent to the appellant pursuant to s 424A of the Act advised about independent country information even though the section did not so require. The Tribunal did not err in its use of this information. Moreover, the Federal Magistrate found that the Tribunal did give reasons as required by s 430 of the Act in respect of the appellant's entitlement to a protection visa. 11 In relation to the ground alleging a denial of natural justice the Federal Magistrate found the ground to be so broad and ill particularised that it was rendered meaningless. The appellant was afforded procedural fairness and there was no denial of natural justice. The conduct of the Tribunal was consistent with the requirements of s 422B of the Act . The grounds in the original application were rejected because the Federal Magistrate found that these grounds merely raised factual issues in the nature of merits review and, accordingly, they could not be entertained. The Federal Magistrate erred by failing to recognise the argument that the Tribunal failed to rely on "the real facts" based on the oral evidence given by the appellant at hearing. The Tribunal did not have power to disregard the oral evidence of the appellant. 2. The Federal Magistrate had failed to recognise that the Tribunal had misunderstood the claims of the appellant because of its findings in relation to detention and legal departure from India, findings made contrary to s 414 of the Act . The appellant asserts that these findings were unfair and in breach of principles of fairness as enunciated in Re Minister For Immigration And Multicultural And Indigenous Affairs, Ex parte Lam [2003] HCA 6 ; (2003) 214 CLR 1. 3. The Federal Magistrate failed to accept that the Tribunal failed to analyse the "real chance" test of future harm. The Tribunal "failed to do the s 91R test". 13 At the hearing of the appeal before me the appellant appeared in person. He had the assistance of an interpreter. He had earlier filed detailed written submissions. He told me that his notice of appeal and the submissions had been prepared for him by a lawyer whose name he did not know. I sought to have the appellant explain what was meant by some of his grounds and by some of his submissions. He was not able to assist. 14 A reading of the appellant's grounds and submissions suggest that his real cause of complaint is that he disagrees with the Tribunal's findings that he was not a member of a student federation, that he had not been arrested, detained and harmed in India and that it would be safe for him to return to that country. These were findings that were open to the Tribunal on the evidence before it and, like the learned Magistrate, I can find no jurisdictional error which affected the Tribunal's decision. No appellable error has been demonstrated. 15 The appeal should be dismissed with costs. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice TRACEY.

no point of principle migration

There was one principal question raised for determination in the proceedings, being whether each of the railway services which were the subject of an application filed under s 44F(1) of the Trade Practices Act 1974 (Cth) ('the Act') and dated 11 June 2004 by Fortescue Metals Group Limited ('Fortescue') to the National Competition Council ('the NCC') was a "service" within the meaning of s 44B of the Act. In order to determine that question, the Court needed to consider whether the "production process" exception in para (f) of the definition of "service" applied. 2 On 18 December 2006, I delivered judgment in the proceedings. In that judgment I found in favour of Fortescue and the NCC that each of the relevant services was a "service" within the meaning of s 44B of the Act, and that the services relevantly did not fall within the "production process" exception in that section. I stood over the question of costs, and have now received submissions by the parties on the question of costs. BHPBIO's submissions were directed to the question of whether any cost order made in favour of the successful parties should be discounted. 4 In relation to Fortescue's costs, BHPBIO contended that because I rejected Fortescue's principal argument that the operations of BHPBIO produced a "marketable commodity" prior to the railing by BHPBIO of iron ore from its mine sites, costs associated with that argument should be borne by Fortescue. BHPBIO further contended that in addition to the "marketable commodity" issues, Fortescue put in issue a significant number of facts and matters pleaded by BHPBIO in the proceedings which were really not in contention. It was submitted that as a result BHPBIO needed to adduce a substantial amount of evidence to establish those facts and matters in the proceedings. Accordingly, BHPBIO submitted that, in light of the considerable and unnecessary time and expense incurred by BHPBIO in responding to Fortescue's unsuccessful arguments, Fortescue ought bear its own costs to the extent that those matters identified above were resolved in BHPBIO's favour, being an amount no less than 50% of Fortescue's costs in the proceedings. 5 In relation to the NCC's costs in the proceedings, BHPBIO contended that not less than 50% of the time and costs incurred by the NCC were likely to have been directly attributable to its preparation of material relating to, and the arguing of, the application of the economic test propounded by it as part of its case. The reference to the "economic test" is a convenient way to refer to the positive contentions raised by the NCC in paragraph 16 in the NCC's points of defence dated 8 April 2005 and paragraph 17 in the NCC's amended points of defence dated 25 September 2006 in proceeding VID 1641 of 2004 and paragraph 37 in the NCC's points of defence dated 2 May 2005 and amended points of defence dated 25 September 2006 in proceeding WAD 39 of 2005. BHPBIO submitted that in my rejecting the economic test as formulated by the NCC as irrelevant to the interpretation of the phrase "production process" in s 44B of the Act, the extent to which the NCC's costs related to that test should be borne by the NCC. Accordingly, in BHPBIO's submission, the NCC ought bear 50% of its costs in the proceedings. In support of this percentage, BHPBIO tendered some material indicating the extent of the interlocutory matters concerned with the introduction of the NCC's economic test. Fortescue submitted that this was not a case in which the circumstances required departure from the usual order. It submitted that all the issues contended for at trial were connected to the principal question in the proceedings. 7 Fortescue also submitted that whilst it was unsuccessful on certain questions of fact and law, in the circumstances of the case, this alone was not a reason to deprive Fortescue of any of its costs in relation to the principal question. In particular, Fortescue submitted that the matters contended for at the hearing did not inappropriately lengthen the trial and that given the matters to which the Court had regard in its judgment, these issues were not unreasonably investigated and tested. Fortescue submitted that, on this basis, it could not be said that its conduct of the case in any respect was unreasonable or inappropriate. The NCC submitted that its role was limited to making written submissions concerning the main legal issues, and calling one economic expert witness, Professor Rey. The NCC submitted that, as a successful litigant in the proceedings, it ought to be entitled to its costs in the proceedings, and that no special circumstances existed to warrant a departure from the usual order. 9 The NCC also submitted that whilst the Court did not accept the NCC's proposed construction of the term "production process", the other parties to the proceedings both prior to and during the hearing spent very little time considering the NCC's economic test. It was contended that whilst the Court ruled that Professor Rey's evidence was to be rejected to the extent that it was directed to the proper construction of the term "production process", nevertheless the evidence was admissible, albeit for the limited purpose of informing the Court of the nature of and context in which Pt IIIA was to operate. The NCC submitted that, given the evidence was admitted, albeit for the limited purpose, it was not possible to apportion the costs of and incidental to the expert evidence in respect of the other purpose. 10 Accordingly, the NCC submitted that there were no special circumstances to justify a departure from the usual exercise of the court's discretion to be awarded its costs as a successful litigant. I am content to proceed on this basis: see Aiden Shipping Co Ltd v Interbulk Ltd (1986) 2 All ER 409 and Dr Martens Pty Ltd v Figgins Holdings Pty Ltd (No 2) [2000] FCA 602. 12 The power of the Court to make orders for costs derives from s 43 of the Federal Court of Australia Act 1976 (Cth). As a general rule, the successful litigant in a proceeding is entitled to receive its costs --- ordinarily, costs follow the event. The power to order costs is discretionary, although it must be exercised judicially and not against the successful party except for some good reason connected with the case: Milne v Attorney-General for the State of Tasmania [1956] HCA 48 ; (1956) 95 CLR 460 at 477; Ruddock v Vadarlis (No 2) [2001] FCA 1865 ; (2001) 115 FCR 229 at 234; and Cretazzo v Lombardi (1975) 13 SASR 4 at 11 per Bray CJ. It is well established that the discretion conferred on the Court is very wide, and enables the Court to respond to the wide variety of circumstances that may arise in relation to the making of costs orders. There are decisions, both of Australian and English courts, that throw light on the way in which the discretion is to be exercised. I shall not refer to those decisions in any detail; I shall simply set out in a summary way what I understand to be their effect. Ordinarily, costs follow the event and a successful litigant receives his costs in the absence of special circumstances justifying some other order. Ritter v Godfrey [1920] 2 KB 47. Where a litigant has succeeded only upon a portion of his claim, the circumstances may make it reasonable that he bear the expense of litigating that portion upon which he has failed. Forster v Farquhar [1893] 1 QB 564. A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other party's costs of them. In this sense, "issue" does not mean a precise issue in the technical pleading sense but any disputed question of fact or of law. Cretazzo v Lombardi (1975) 13 SASR 4 at 12. Also it is necessary to keep in mind the caveat by Jacobs J in Cretazzo v Lombardi at 16. His Honour sounded what he described as "a note of cautious disapproval" of applications to apportion costs according to the success or failure of one party or the other on the various issues of fact or law which arise in the course of a trial. The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case. There are, of course, many factors affecting the exercise of the discretion as to costs in each case, including in particular, the severability of the issues, and no two cases are alike. I wish merely to lend no encouragement to any suggestion that a party against whom the judgment goes ought nevertheless to anticipate a favourable exercise of the judicial discretion as to costs in respect of issues upon which he may have succeeded, based merely on his success in those particular issues". 14 The ordinary rule applies even though the losing party may have had good legal grounds for its stance and conducted itself reasonably and appropriately: see Ruddock 115 FCR at 235. In exercising its discretion, the court is looking at the matter primarily from the perspective of the successful litigant: see Latoudis v Casey [1990] HCA 59 ; (1990) 170 CLR 534 at 542-3 per Mason CJ; 564 per McHugh J. 15 Considerations of public policy and, in particular, the need for greater economy and efficiency in the conduct of litigation are relevant considerations in the exercise of the discretion when considering whether a successful party is entitled to all its costs: see, e.g. Dodds Family Investments Pty Ltd (formerly Solar Tint Pty Ltd) Lane Industries Pty Ltd (1993) 26 IPR 261 at 271-272. If parties come to realise that they will not necessarily recover the whole of their costs, even though they have unsuccessfully raised a discrete issue, they are likely better to consider whether the raising of that issue is a justifiable course to take. It is no answer to say that a party is entitled to test the evidence to show that nothing was said which might amount to the representations as pleaded. A party always has that right in litigation. However, the question which is relevant to the issue as to costs is whether or not the exercise of that right, or the manner in which it was exercised, was reasonable in all the circumstances; and, whether the exercise of the right had the effect of unreasonably prolonging the proceedings. It was this issue which Wilcox J found against the respondents and upon which he based his decision. A good reason not to follow the ordinary rule may arise because of the unreasonable or inappropriate conduct of the successful litigant. It may also arise where there is an ability to identify separate issues or inquiries where the successful litigant has failed. 19 There may be other circumstances in which there needs to be some qualification to the starting point of presuming that the successful party is entitled to its costs where justice requires it. Any determination will always depend on the circumstances arising for the decision of the judge who has conducted the trial and who is considering the appropriate order as to costs. 20 However, it is to be observed that ordinarily a discount is applied, or said to apply, because of the inappropriate or unreasonable conduct of the successful party: see Ruddock 115 FCR at 236-237 and Latoudis 170 CLR at 544 per Mason CJ; 565-566 per Toohey J. 21 The fact that a successful party has lost on a particular issue or inquiry does not necessarily mean that the party has acted in the litigation inappropriately or unreasonably. Nevertheless, in certain circumstances, it may be an appropriate exercise of the court's discretion to apportion costs according to success or failure on a particular distinct or severable issue or inquiry irrespective of any inappropriate or unreasonable behaviour on the part of the successful party: see Cummings 41 FCR at 599-604; Hughes [1986] ATPR at 48,136. A court should not be too ready to disallow costs simply because a party has failed upon an issue, unless it be quite a separate and distinct issue from the issues in respect of which it succeeded or unless there be some element of unreasonableness or inappropriate conduct in relation to that issue: cf Verna Trading Pty Ltd v New India Assurance Pty Ltd [1991] 1 VR 129 at 152-154. However, particularly in relation to severable issues, the lesser the strength of the point raised and the greater the proportion it bears to the whole case, the more likely it is that the successful party may be deprived of costs; and if the Court comes to the view that it was unreasonable to raise the issue, then the successful party may have to pay the costs of that issue. 25 I should interpolate that there may not need to be the ability to precisely identify separate costs in respect of particular issues. I do not accept that the appropriate way of exercising the costs discretion is limited to the identification of separate costs of particular issues. It could sometimes be within the scope of a proper exercise of discretion, where the costs of certain evidence was relevant to issues on which a plaintiff succeeded and also to issues on which the plaintiff failed, to decide to allow the plaintiff a proportion only of those costs. The court has the discretion to apportion costs even if it cannot identify separate costs in respect of distinct or severable issues or inquiries on which the successful litigant failed, but the matters on which the party failed must be at least capable of separation from the matters on which the litigant was successful. The question then arises as to whether, by reference to the circumstances of the proceedings, some good reason connected to the case is shown to the contrary. 29 It is significant to recall that all parties needed to confront the principal question in the proceedings on the basis there existed only one previous decision of the Court --- that of Hamersley Iron Pty Ltd v National Competition Council (1999) 164 ALR 203 (' Hamersley ') --- which dealt with the interpretation of the term "use of a production process" within s 44B of the Act and which involved a very similar factual scenario to the proceedings. Fortescue's principal contention was that, applying the "marketable commodity" test to the factual scenario as contended for by Fortescue, a "marketable commodity" was produced in BHPBIO's operations before the iron ore was railed to the port. As an alternative contention, Fortescue sought to distinguish Hamersley on a number of grounds. 30 BHPBIO had good legal grounds for its position and conducted itself in the litigation reasonably and appropriately. Nevertheless, BHPBIO was the losing party, and Fortescue would ordinarily be entitled to its costs. However, despite Fortescue's ultimate success in the proceedings, I did not find in favour of Fortescue on certain factual and legal issues or inquiries. Nevertheless, I do not consider it appropriate in the circumstances to disentitle Fortescue to its whole costs in the proceedings. 31 The conduct of Fortescue in this proceeding was neither inappropriate nor unreasonable. Fortescue structured its case primarily on the basis of the correctness of the decision in Hamersley . Therefore, it seems to me that seeking to apply the "marketable commodity" test as expounded in that decision was an entirely appropriate and reasonable approach. Further, it seems to me that Fortescue seeking in the alternative to distinguish the Hamersley decision on a number of grounds was similarly appropriate and reasonable. In addition, I do not see any inappropriate or unreasonable behaviour on the part of Fortescue in its approach to putting BHPBIO to proof on factual matters or contentions. The Court accepted in essence the actual process and operations as contended for by BHPBIO. However, the conclusions of the Court were determined objectively and not by reference to BHPBIO's own subjective views or characterisations, or by reference to the subjective views or characterisations of the witnesses called on behalf of BHPBIO. Fortescue was entitled to test the evidence put forward by BHPBIO, especially in respect of such subjective views and characterisations. 32 In Hamersley , the learned trial judge held the term "production process" meant "a series of operations by which a marketable commodity is created or manufactured": at 213. The test required, as a question of "fact and degree", a consideration of "the actual operation of the activities in question, considered as a whole": at 213. The evidence as to "marketable commodity", whilst it may be separately identified, was all part of the material the Court needed to consider in determining the actual operation of the activities in question. Accordingly, it does not seem unreasonable for Fortescue to have approached in the way it did the material placed before the Court. The principal question for determination in the proceedings was not a mere matter of statutory interpretation of the term "the use of a production process" that could be dealt with by demurrer. Rather, the Court was required to consider, in detail, the factual evidence of BHPBIO's operations and apply the construction of the term "the use of a production process", whether that construction be the one set out in Hamersley , or the construction for which the Court ultimately found. There does not seem to me to be any element of unreasonableness or inappropriateness in Fortescue directing its evidence, submissions and cross-examination to the application of that test to the facts of this case. 33 This is not the end of the inquiry. As I have indicated, the exercise of the discretion to make an order as to costs is not just limited to a consideration of the reasonableness or appropriateness of the conduct of a party in connection with the proceedings. It may also be appropriate to discount an order in favour of a successful litigant in circumstances where it has lost certain issues or inquiries which can clearly be treated as distinct and severable. 34 At the outset, I do not consider that the matters upon which Fortescue was unsuccessful were relevantly distinct or severable although they can be identified. Rather, the matters on which Fortescue was unsuccessful were alternative arguments in support of the one principal question in the proceedings, that is, whether either of the relevant services was a "service" within the meaning of s 44B of the Act. The matters raised by Fortescue were sufficiently linked to this principal question in the proceedings. Fortescue did not seek to raise a separate matter for determination by way of a positive defence. 35 However, to the extent the issues or inquiries upon which Fortescue lost can be identified, and even if they be relevantly distinct and severable, in my view, none of the matters sought to be addressed by Fortescue were so disproportionate to the whole case, or so lacked merit, or so adversely impacted upon the economy and efficiency of the proceedings, according to case management principles, as to warrant an order to deprive Fortescue of some or all of its costs. As I have said, I was required to consider in detail the factual evidence and apply that evidence to the construction of the term "use of a production process", which Fortescue reasonably contested. The ultimate ends of justice would not be served by Fortescue not recovering its costs because of its failure on some identifiable (or even distinct and severable) issues or inquiries, when those issues or inquiries needed to be canvassed as being material to the reaching of a decision. 36 For these reasons, I do not consider that Fortescue should be deprived of any of its costs in the proceedings. Subject to one matter, it seems to me that the NCC is entitled to its costs of the proceedings as a successful litigant. The NCC adopted an appropriate role in the proceedings consistent with its statutory responsibilities: see National Competition Council v Hamersley Iron Pty Ltd (1999) 167 ALR 109 at 114. The NCC did successfully contend that Hamersley was clearly wrong. 38 However, the court has a general discretion in relation to costs even where a statutory body is acting in a limited role before the court: see generally Re Dr Ken Michael AM; Ex parte Epic Energy (WA) Nominees Pty Ltd [2002] WASCA 231 (S) at [18]. 39 In my view, there was a clear separate and distinct inquiry or issue upon which the NCC was unsuccessful, and which it sought positively to contend, namely the economic test. 40 The NCC sought to tender expert economic evidence on the economic test. On that basis, it is not possible for the Court to construe those words other than in accordance with their most ordinary and natural meaning. It is therefore not permissible to receive the views of witnesses, expert or lay, as to their preferred interpretation or to explain how the words of a statute would be expected to be applied to the circumstances of the case: Royal Insurance Australia Ltd v Government Insurance Office (NSW) [1994] 1 VR 123 at 133-4. Such evidence is nothing more than submission and argument and indeed an attempt to usurp the judicial function. I therefore accept BHPBIO's submission and reject the expert evidence to the extent that it is directed to the meaning to be given by the Court to the term 'production process'. 42 In Australian Conservation Foundation v Forestry Commission (1988) 81 ALR 166 Burchett J noted that the successful first respondent had raised a number of objections on which it failed, which added the last half day to the hearing. At the same time, if he multiplies issues unreasonably, he may suffer in costs. Ultimately, the question is one of discretion and judgment. In my judgment, the competing considerations will be reflected, and justice will be done, if the costs to be recovered by the first respondent are shorn of any amount attributable to the last day of hearing. 44 Similarly, here, a reduction of costs awarded to NCC would be appropriate in view of my rejection of the economic test. This was an issue which could be treated as clearly distinct and severable, it being in effect a positive contention raised by the NCC in its points of defence and amended points of defence, which had little merit and did add to the costs of preparation of the parties for trial. Whilst I do not have sufficient material to assess such costs, I am satisfied they are not merely minimal. 45 Professor Rey (the economic expert called on behalf of the NCC) and the other economic experts before me agreed that the term "production process" had no technical or specialised meaning in economics. In these circumstances, it is difficult to see how the economic test could be relevant to the contention that Hamersley was wrongly decided or could provide an appropriate replacement test. 46 Unlike the position of Fortescue, who was responding to the Hamersley decision, the NCC sought to introduce an economic test which could amount to nothing more than submission and argument. It seems to me that to adduce expert evidence going to the economic test introduced an element into the conduct of the proceedings which was of no utility and unnecessarily added to the time and expense of the proceedings including interlocutory steps in preparation for trial. Whilst BHPBIO and Fortescue also sought to tender economic expert evidence, it was in response to the NCC's evidence, and I do not think this impacts upon the significance of the unnecessary introduction of the economic expert evidence by the NCC for the purposes of considering costs. 47 It is sometimes preferable after apportioning issues as I have done to avoid leaving the quantification and fixing of costs of those issues to taxation. I am mindful that an allocation of costs in the case of a mixed result can rarely be achieved with mathematical precision and such is not necessary: Dodds 26 IPR at 272 per Gummow, French and Hill JJ. Unfortunately, I do not have any appropriate material to estimate the amount of costs or time spent on the preparation and consideration of the economic test prior to trial, and so cannot make any percentage apportionment of the costs to be discounted. I therefore propose to order a deduction in the costs awarded to the NCC by reference to the NCC's points of defence and amended points of defence which will unfortunately leave the quantification and fixing of costs of the economic test issue to taxation in default of agreement between the relevant parties. The costs of the proceeding be assessed and taxed together with proceeding number WAD 39 of 2005. 2. The applicant pay the first respondent's costs of the proceeding, excluding the first respondent's costs solely of or in connection with the positive contentions stated in paragraph 16 in the first respondent's points of defence dated 8 April 2005 and paragraph 17 in the first respondent's amended points of defence dated 25 September 2006. 3. The applicant pay the second respondent's costs of the proceeding. The costs of the proceeding be assessed and taxed together with proceeding VID 1641 of 2004. 2. The first-named second respondent pay the applicant's costs of the proceeding. 3. The first-named second respondent pay the first respondent's costs, excluding the first respondent's costs solely of or in connection with the positive contentions stated in paragraph 37 in the first respondent's points of defence dated 2 May 2005 and amended points of defence dated 25 September 2006.

discretion to award discussion of general principles whether successful party not entitled to costs in respect of those issues or inquiries on which the party failed whether statutory body not entitled to costs in respect of evidence relating to distinct inquiry or issue on which it failed costs

The appeal is principally concerned with the application of s 66-5(1) of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (the 'GST Act'). LeasePlan contends that the GST assessment is excessive because it was entitled to input tax credits under Div 11 of the GST Act, and more particularly because it acquired second-hand goods for a purpose of sale in the ordinary course of business. In the ordinary course of carrying on that business LeasePlan purchased, leased, managed and sold second---hand motor vehicles, each of these activities being integral to the business of motor-vehicle fleet leasing and management. Private individual employees sold the vehicles to LeasePlan. As none of the employees were registered, or were required to be registered, for GST purposes, the sale by each employee to LeasePlan was not a 'taxable supply' for the purposes of the GST Act, and no GST was payable by LeasePlan on the supply. LeasePlan in turn leased the vehicles to the employees under either an operating lease or a finance lease under certain terms and conditions. The Commissioner did not seek to draw any legal distinction in this proceeding between the type of lease documentation employed by LeasePlan. LeasePlan sold the vehicles in the period from 1 July 2000 to 31 October 2006. Each sale constituted a 'taxable supply' of the vehicle, and GST was payable by the purchasers of the vehicles. Leaseplan claimed an input tax credit in respect of each acquisition pursuant to s 66-5(1) of the GST Act. Entitlements to input tax credits arise on creditable acquisitions and creditable importations (s 7-1(2)). Taxable supplies are dealt with in Div 9 of the GST Act. GST is not payable on such a supply. Creditable acquisitions are dealt with in Div 11. Division 66 of the GST Act, however, contains special rules about acquisitions of second-hand goods, which modify the operation of Pt 2-2, including Div 11. It allows the entity that acquires second-hand goods to claim, subject to limitations, input tax credits for that acquisition, even though GST was not payable on the supply of the second-hand goods to the entity. Even if you acquire the goods for a creditable purpose you would not be entitled to an input tax credit under the general rules because the supply to you was not taxable. This also applies if you acquire second-hand goods from someone who is registered but the supply is not taxable, such as the supply of a car that has only been used privately. They were not entitled to an input tax credit. There is therefore some GST included in the price you pay for those second hand goods. If you subsequently supply those goods in a taxable supply, GST is payable on the supply. This would mean that there is GST charged on GST. The amending Act was the A New Tax System (Indirect Tax and Consequential Amendments) Act (No.2) 1999 (Cth). This is not a substantial change because in most cases under the current provisions, a credit only arises when a taxable supply of the goods is made. No issue was pressed as to the ambit of the phrase 'in the ordinary course of business'. Both parties accepted that neither a sole purpose test nor a dominant purpose test applies for the purpose of s 66-5(1) of the GST Act, but rather the test is whether the sale was 'a purpose' for which the vehicles are acquired. In other words, there may be another purpose of the acquisition other than sale, but the words of s 66-5(1) would still be satisfied if a purpose was sale: see eg John v Federal Commissioner of Taxation [1989] HCA 5 ; (1989) 166 CLR 417 at [26] . The question to be asked is: why did the entity make the acquisition of the second-hand goods? It is the purpose existing at the time of acquisition. One looks to what has actuated the acquisition, that is to say, the immediate purpose or reason that attended the acquisition. The sale of each car at the end of each lease was an eventuality that was provided for in the lease agreements, but was no more than an incident of the leasing arrangements entered into by the applicant and the employees. The sale of each car was not the "purpose" for which the car was acquired; it was not the purpose which attended the acquisition, or existed at the time the acquisition was made. The applicant would not have acquired the cars from the employees other than for the purpose of leasing them to the employee. The applicant agreed to buy the cars from the employee only for the purpose of leasing them back to the employee. Or, as it is put by Mr Croes in his affidavit, the employees "sell their own motor vehicles to LeasePlan Australia in order to lease them back". For the reasons set out below I find that Leaseplan acquired the vehicles for the purpose of sale in the ordinary course of business. Evidence was relied upon by each party to show the purpose or purposes of the acquisition of the vehicles from the private individual employees. Both LeasePlan and the Commissioner relied upon the affidavit evidence of Roderick Joseph Douglas Croes (Company Secretary and Finance Director for LeasePlan) sworn on 15 July 2009 ('first affidavit') and on 17 September 2009 ('second affidavit') and also upon documentary evidence in the form of the terms of two finance leases and an operating lease. The finance and operating leases exhibited were treated by the parties as examples of the material terms of the relevant lease documents entered into by LeasePlan with customers. Mr Croes gave evidence that in each contract under which the vehicles were acquired LeasePlan entered into an obligation to sell the vehicle, and that the 'residual value' of the vehicle (determined by LeasePlan using a residual value table) was agreed, with the respective rights and obligations of the parties being determined by reference to the actual sale price of the vehicle only once the vehicle was sold. Mr Croes also said that LeasePlan monitored expected sales proceeds for each type of vehicle proposed to be leased in order to determine before each lease is entered into the residual values for those vehicles, and that each vehicle was in fact sold immediately upon termination of the leases (on average within 19 days). The documentary evidence of the two finance leases and the operating lease was also relied upon by both parties to demonstrate whether the sale was a purpose for which the vehicles were acquired. LeasePlan relied on the documentary evidence to demonstrate that the leases specifically contemplated the disposal of the vehicles by sale and further that the contemplation of net proceeds of sale and residual value of the vehicles, at the time of acquisition, substantiated the claim that sale was a purpose for which the vehicles were acquired. Sale was necessary to provide the forecasted financial returns to LeasePlan's business, either by returning the anticipated proceeds of sale or to trigger the lessee's top-up obligations. I accept that the whole transaction was a composite operation, where the disposal of the vehicles for forecasted valuable consideration was integral to LeasePlan's business. The reliance made by the Commissioner to the statement of Mr Croes in his affidavit as set out above that employees sell their own motor vehicles to LeasePlan in order to lease them back, confuses an employee's perspective with the perspective of LeasePlan. An employee in selling a vehicle certainly has the purpose of leasing it back. However, LeasePlan in acquiring a vehicle from the employee has the purposes of leasing it and selling it to the employee or third parties. This is the very composite transaction envisaged by the documentation. The fact that the documentation refers to a Lease, a Lessee or Hirer does not mean that the only effect of the arrangements between the parties is that of a lease. All the terms and conditions of the arrangements must be taken into account, including the sale provisions and those provisions relied upon by LeasePlan as referred to above. The Commissioner suggested that the immediate purpose of the lease back actuated the transaction, and the sale of the vehicles was a mere incident to the immediate purpose of leasing. The Commissioner relied upon the evidence of Mr Croes that specifically referred to the fact that the customers are only those who sell title to the vehicles and enter into lease agreements, as indicating that without this leasing purpose, the transactions would not have 'got off the ground in the first place'. Whether or not Leaseplan was motivated by an initial motive of leasing, their business being what it is, at least one purpose was to make profit through eventual sale. As I have indicated, this is evidenced by the documentation. I am satisfied that what LeasePlan intended to achieve in acquiring the vehicles was to derive income from allowing the vehicles to be leased and also deriving income from the sale of the vehicles. In my view, the documentary evidence led by LeasePlan and the evidence of Mr Croes identifies that concurrent purposes of lease and of sale existed in the lease arrangements at the time of the acquisition of the goods. Once the conclusion is reached on the evidence that the acquisition was for a purpose of sale that disposes of the principal issue in favour of LeasePlan. Therefore, I do not need to consider the submission that a construction of s 66-5(1) of the GST Act that promotes any anti-cascading purpose of Div 66 is to be preferred, as the construction of s 66-5(1) has not come into contention. Nor do I need to consider the proper legal character of the arrangements between the parties, having reached the conclusion that at least a purpose of acquisition was sale. I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton.

gst input tax credits the application of s 66-5(1) of the a new tax system (goods and services tax) act 1999 (cth) whether sale was 'a purpose' for which second-hand goods were acquired lease-back schemes. taxation

Provident filed a proof of debt for the full value of Kelso's indebtedness to it without estimating the value of its security. A representative of Provident attended a meeting of creditors of Kelso on 21 September 2007 and voted on a number of resolutions. The representative voted on a show of hands or by voices, or orally, no poll being taken. 2 This matter came before me on 16 May 2008 as a matter of some urgency when I was sitting as the corporations duty judge. On that day Provident moved on its originating process filed on 18 January 2008 which seeks an order pursuant to reg 5.6.24(3) of the Corporations Regulations that the action of Provident in voting at the meeting of creditors without estimating the value of its security was inadvertent. 3 On 16 May, during the course of oral argument, counsel appearing for the liquidator of Kelso raised the possibility that the actions of Provident may be seen to amount to an unequivocal election to surrender its security pursuant to s 554E of the Corporations Act 2001 (Cth) and in accordance with the principles stated by the High Court in Sargent v ASL Developments Limited [1974] HCA 40 ; (1974) 131 CLR 634. Provident entered into a deed of charge with Kelso on 2 August 2001. The charge is a fixed and floating charge and was registered on 9 August 2001. Kelso owned a factory and land situated at Wentworthville. That property was subject to Provident's charge. 6 Provident also held a further security in the form of a first registered mortgage over a property known as the Moree Hot Springs Health Resort. 7 The property at Wentworthville was insured by QBE Insurance Australia Ltd. During the currency of the contract of insurance with QBE, Kelso suffered a fire at the Wentworthville premises which caused the total destruction of the property, including the contents, stock and business records. QBE apparently declined to indemnify Kelso, but proceedings were commenced by Kelso in the Supreme Court of New South Wales against QBE on 27 March 2006. The claim sought an amount of nearly $9 million in damages. 8 Some three days later on 30 March 2006, Mr Sherman of Ferrier Hodgson was appointed official liquidator of Kelso by the Supreme Court of New South Wales. The claim against QBE was potentially a major asset of Kelso and Mr Sherman sought expressions of interest from creditors to fund the claim against QBE. 9 Prior to 21 August 2007 there was some discussion between Ms Phillips of Ferrier Hodgson and Mr Tiernan, the solicitor for Provident about the question of funding of the litigation against QBE. The correspondence to which I was taken by counsel for the liquidator demonstrates that there was a live issue as to the security over the Moree property, in particular the value of that security. 10 On 15 August 2007 Ms Phillips had a telephone discussion with Mr Tiernan about a meeting of creditors which was called for 21 August 2007 to discuss the question of litigation funding. Ms Phillips' file note of the discussion records that she advised Mr Tiernan that he needed to complete a proof of debt and a proxy and it was necessary to estimate the value of the security held by Provident. In calculating the claim, your client is required to estimate the value of its security, being the Moree properties. In this respect, we note from our investigations that an offer to purchase the properties for $3.5M was received in January 2007, which was rejected by your client. I would therefore anticipate that the estimated value of the security would be no less than this amount. The attendance register records Mr Tiernan's presence at the meeting and the amount claimed by Provident, which was slightly in excess of $5 million. 13 The minutes record discussion about various alternative courses for the funding of the litigation against QBE. The minutes also record that Mr Tiernan voted, pursuant to his proxy, on various resolutions which were dealt with by a show of hands. 14 Ms Duggan, who is a principal of Ferrier Hodgson, was the chairperson of the meeting. Her affidavit of 16 May 2008, at [44], records what she said about the attendance of Mr Tiernan at the meeting. Ms Duggan states that she informed the meeting that Provident held security over properties at Moree and that her inquiries had indicated that an offer to purchase the properties for $3.5 million was received in January 2007 but was rejected by Provident. She also says that she stated that Provident had not provided an estimate of the value of its securities in the proof of debt lodged with the liquidator for the meeting. The minutes indicate that there was no further discussion about this question. 15 I should add that prior to the meeting Mr Tiernan forwarded the email which he received from Ms Phillips to a director of Provident, Mr O'Sullivan. It appears that the email was sent almost immediately on to Mr O'Sullivan. 16 Mr Tiernan states that he does not recall specifically reading the email from Ms Phillips. He says that if he had realised the significance of voting on the proof of debt at the meeting of creditors without estimating the value of the security he would have obtained instructions from Mr O'Sullivan and would have given an estimate of the value of the security and, pending any instructions from Mr O'Sullivan, would not have voted at the meeting. 17 Mr O'Sullivan has also sworn an affidavit. He says that he signed the proof of debt. He says that in executing that document and the proxy it was not his intention, nor was he authorised, to waive any security then held by Provident over the assets and undertaking of Kelso. 18 Approximately three weeks after the meeting. Provident appointed a receiver of Kelso pursuant to its fixed and floating charge. However, on 5 October 2007, Mr Sherman wrote to the receiver stating inter alia that Mr Tiernan voted on resolutions based on the formal proof of debt. He referred Mr Godfrey, inter alia, to the provisions of s 554E of the Act and to regs 5.6.23 and 5.6.24. The letter concluded with a request for Mr Godfrey to confirm that he would not take any further steps in relation to his "purported appointment" as receiver of Kelso. It follows from what Doyle CJ said that the provisions of reg 5.6.24(3) were not enlivened. This regulation contains a statement of one situation in which a secured creditor is deemed to have surrendered his or her security. However, as I have said, that provision is not enlivened in the present case and it is unnecessary to further consider this issue. 21 I should add that the decision of Gzell J in Young v ACN 081 162 512 (formerly Dallen Design Pty Ltd) (2005) 218 ALR 449, which dealt with the question of inadvertence, does not arise in the present case. This is because the question of inadvertence would only need to be addressed if the creditor voted in respect of the whole debt or claim. It is evident that even if the provisions of the regulations are not applicable, there may nonetheless amount to conduct on the part of a secured creditor which would constitute an election within the principles stated in Sargent v ASL . 23 Such a situation arose in a decision of the Queensland Court of Appeal in Surfers Paradise Investments Pty Limited (in liq) v Davoren Nominees Pty Limited (2004) 1 QR 567. In that case the respondent was a secured creditor who lodged a proof of debt for the full amount of the debt, disclosing a mortgage, but attributing no value to it. Subsequently the secured creditor received from the liquidator a dividend cheque which it banked and retained. The dividend was calculated on that basis of the full amount of the appellant's total indebtedness. The lead judgment was delivered by Dutney J, but there is also a useful statement of the applicable principles in the judgment of Williams JA. (Jerrard JA agreed with both Williams JA and Dutney J). 25 Dutney JA went on to refer to two earlier decisions, one of which ( Re Douglas Homes Qld Pty Ltd (in liq) [1980] Qd R 528) dealt with the submission of a proof of debt. It was observed in Re Douglas Homes that the proof of debt was some evidence of an election to surrender but it is not by itself conclusive evidence. 26 The effect of the reasoning in Surfers Paradise Investments seems to be that something more than the mere submission of the proof of debt is required to constitute an election in the sense referred to in Sargent v ASL . In Surfers Paradise Investments the Queensland Court of Appeal was of the view that there was an election because the receipt of the dividend cheque was unequivocal. At that point in time, as Dutney J observed at [37], the respondent was required to make a choice between accepting the cheque or returning it to the liquidator. The assertion of a right to retain the dividend evidenced by banking the cheque and retaining the proceeds was sufficient to constitute unequivocal conduct amounting to an election. 27 Plainly, that is not what occurred in the present case. Whilst it is true that the submission of the proof of debt for the full amount of the indebtedness to Provident may amount to some evidence of an election, it is not by itself unequivocal conduct. 28 I have considered the evidence disclosed in the affidavits and correspondence and discussions between the parties both before and after the meeting of creditors of 21 August 2007. It seems to me that all of this evidence reveals nothing more than equivocal conduct which does not rise to the extent necessary to amount to an election consistently with the principles stated in the well-known authorities. 29 In particular, I do not consider that what was said in the file note of 15 August 2007 or the email of 20 August 2007 was sufficient, notwithstanding that Mr Tiernan attended the meeting and voted in the circumstances which I have recorded above. Nor does what Ms Duggan said at the meeting take the matter beyond that which is recorded in the emails. Those were the principal issues originally agitated. 31 The issue of election is that which has brought the matter back before the court today and, as I have said, I am satisfied that Provident did not elect to surrender its security at the meeting of 21 August 2007. 32 I therefore propose to declare that by attending and voting at the meeting of creditors on 21 August 2007 Provident Capital Limited did not surrender its security constituted by the deed of charge and the mortgage over the Moree Hot Springs Health Resort. I will make no order as to costs. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.

application for declaration that creditor had not surrendered its security creditor completed proof of debt form without estimating value of security creditor voted at meeting by show of hands or on the voices no poll taken no relevant conduct no question of inadvertence no surrender of security insolvency

The time for compliance with Order 2 of Collier J of 7 September 2007 be varied until 4.00 pm on 26 September 2008. 2. The time for compliance with Order 4 be varied to a date to be fixed. 3. Order 7 of Collier J of 7 September 2007 be vacated. 4. Such further or other orders as the Court considers fit. The notice of motion is opposed by various pastoral interests represented in Court this morning by Mr Boge. Ms Snape for the State of Queensland and Ms Humphris representing various shire councils and other interests neither consented to nor opposed the notice of motion. 3 The native title application, to which this notice of motion relates, has a long history. It was originally registered in 1999. On 2 May 2001 Deputy District Registrar Robson ordered that the composition of the applicant group be changed to include Averil Dillion, Deirdre Daylight, Stephen Warner and Rosemary Bell in accordance with s 66B of the Native Title Act 1993 (Cth) so that Averil Dillion, Deirdre Daylight, Stephen Warner and Rosemary Bell became the applicants for this application. The three names identified in the applicant group of the original native title application were removed because it was found that those three persons were not descended from the identified apical ancestors. A reingrossed application has never been filed. 4 It is common ground in this matter that the native title application in its form is defective. At the very least it is possible that the proper claim group needs to be identified. Both in his affidavit and in Court this morning, however, Mr Hardie said that delays in identifying the claim group were not the fault of the applicant, but rather were because Queensland South has encountered a number of difficulties in advising the applicant to amend the description of the native title claim group and the boundary of the claim. Mr Hardie also submitted that the applicant is prepared to proceed to an authorisation meeting to authorise a new claim. In my view, this claim is fundamentally flawed. Indeed, this is a proposition shared by, realistically, all parties to these proceedings. 5 I made orders last September which recognised that the native title claim was flawed and contemplated that either the applicant discontinue the application or that the application be dismissed in lieu of a notice of motion to amend the application. To date the applicant has not discontinued the application, nor filed a notice of motion to amend the application. It is now June 2008. Indeed, I share with Mr Boge the view that allowing the applicant until the end of September 2008, which is a year from the last time I made substantive orders in these proceedings, would achieve nothing. 6 Mr Hardie has submitted that progress will be made in these proceedings because the applicant has now briefed a senior consultant anthropologist to prepare a further report to establish whether available anthropological evidence supports either a common claim for the region or separate claims for each identifiable family group. However, I note that this arrangement follows a previous conference on 3 December 2007 where a conference of all experts who have done work on or near the Darling Downs area --- six anthropologists and one historian --- was convened. I also note that notwithstanding this conference of experts, a consensual agreement could not be reached among those experts as to the description of the claim group in the Darling Downs region. It is difficult to see any real progress being made in relation to the current claim notwithstanding past and proposed activity. I also endorse Mr Boge's submission that yet another expert report, even by a senior consultant anthropologist, would not endorse the native title application currently filed. 7 My orders of 7 September 2007 gave the applicant ample time to get its claim in order. It has not done so, and in my view is unable to do so because of the flaws of the claim in its current form. The reality is that this claim will need to be substantially amended to comply with the requirements of the Native Title Act , or be withdrawn and refiled. 8 In my view, allowing this matter to continue to limp along is futile. The notice of motion is dismissed. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier.

flawed native title claim applicant seeks further time to amend native title application native title

The SSAT had set aside the decision of the Secretary, Department of Workplace Relations (the "applicant") and returned the matter for reconsideration in accordance with a direction that, for the purposes of calculating her entitlement to a Centrelink parenting payment, the income of the respondent did not include amounts repaid by her to her employer in accordance with the terms of her employment contract. The appeal be allowed. 2. The decision of the AAT be set aside and the decision of the Authorised Review Officer of Centrelink be affirmed. 3. Alternatively, that decision of the AAT and the matter be remitted to the AAT to be determined according to law. 4. Such further orders as the Court sees fit. • At that time the respondent was employed at the Queensport Hotel on a part time basis. On or about 19 September 2003 the respondent advised Centrelink that she had changed employment and was working for the Wellington Point Hotel ("the Hotel") managing the TAB agency there. • It was an oral term of the employment agreement between the respondent and the Hotel that she was to repay to the Hotel any shortfalls in the TAB till that occurred while she was operating it. • The respondent believed that she was obliged to declare to Centrelink her wages after making good any TAB till shortfalls and that this amount would be used to calculate her Parenting Payment from Centrelink. • During the period September 2003 to June 2004 the respondent repaid till shortfalls on eight occasions totalling $1,746.50. This included one occasion where a fraud was perpetrated on the TAB in the amount of $1,300. The person responsible for the shortfall was subsequently prosecuted for criminal conduct, and that person repaid the loss to the Hotel. I understand that the Hotel subsequently reimbursed the respondent the sum of $1,300. • In the financial year ending 30 June 2005 the respondent repaid till shortfalls on a number of occasions in the total sum of $807.75. • In April 2005 an "Employee Payment Summary" was provided by the Hotel to Centrelink indicating that the respondent had been paid wages of $30,600 during the period 20 September 2003 to 9 April 2005. On the declarations of income that the respondent had made to Centrelink her income for that period was stated as $27,761.76 (representing the wages the respondent had received minus till shortfalls repaid to the Hotel). • Because parenting payment varies depending upon income, Centrelink reviewed the discrepancy. • The respondent repaid the amount of $1,341.87 to Centrelink, but appealed the decision to the SSAT. In particular, the SSAT considered that, because the respondent had not made "personal use or obtained benefit from the moneys required to be repaid" pursuant to the definition of "ordinary income" in s 8 of the Social Security Act 1991 (Cth) ("the Act "), these repayments could not be considered separately from her employment contract. 5 The applicant sought a review of the decision of the SSAT by the AAT. Deputy President Hack in the AAT identified the key issue as whether a contractual obligation on the part of an employee to make good till shortfalls should be taken into account in determining the employee's income from that employment. In my view the employment contract between Ms Richards and the Hotel was one where Ms Richards' wages were determined by reference to three factors - the number of hours worked in a week, an hourly rate and any till shortages. It is unnecessary for present purposes to determine whether it was lawful for the employer to oblige Ms Richards to make good the shortfall, rather the question is whether in circumstances where she did make good the shortfall her gross ordinary income was the nominal amount or the actual amount. This meets the public policy requirement that 'public expenditure is directed to those who stand in actual need of the periodic support which income-related pensions provide' - Read v Commonwealth [1988] HCA 26 ; (1988) 167 CLR 57 at 69 (Brennan J). There is no requirement in the Act that such amounts are received in exchange for anything. They may therefore extend to gifts. This is reinforced by the extension of the definition of 'income' to 'a periodical payment by way of gift or allowance. Absent such a requirement a payment of money received by a person for that person's own use or benefit is a payment of an income amount. That is so I consider because the definition of gross ordinary income in s 1072 of the Act incorporates the s 8 definition of income relevantly an amount earned, derived or received by a person for the person's own use or benefit. Thus s 1072 looks at income earned, derived or received for the use or benefit of the person in issue. It is in my view not to the point that s 1072 goes on to speak of 'without any reduction. ' To treat the amounts of shortfall in this way simply recognises the reality that those sums were not received by Ms Richards for her own use or benefit. There was at best a nominal receipt but given that Ms Richards used those sums to satisfy her contractual obligation to make good shortfalls it could not be said that in any real sense she earned, derived or received those sums or that she had the use or benefit of them. [23] The Secretary was unable to identify any benefit to Ms Richards from these amounts beyond the benefit of retaining her employment. I do not think, with respect, that that could be seen as a benefit of the type contemplated by the definition of income in s 8. [24] It follows that in my view the decision of the Social Security Appeals Tribunal was correct and ought to be affirmed. The AAT directed that, when the matter was reconsidered and recalculated, it ought to be on the basis that in mid June 2005, in addition to what other wages may have been declared by the respondent at that time, she received as well a further amount of $1,300 which answers the description of ordinary income (at [26]). The proper construction and operation of ss 8(1) , 8 (2) and 1072 of the Act . 2. Whether the extended definition of "ordinary income" in s 1072 of the Act is of no relevance if the facts do not first satisfy the definition of "income" in s 8(1) of the Act . 3. Whether, on the facts as found by the Tribunal, the Respondent's ordinary income included the sums subsequently repaid by her to the Hotel in respect of TAB till shortfalls within the meaning of s 8(1) and s 1072 of the Act . 4. Whether, on the facts as found by the Tribunal, the Respondent earned, derived, or received for her own use or benefit the sums subsequently repaid by her to the Hotel in respect of TAB till shortfalls within the meaning of s 8(1) and s 1072 of the Act . 5. The proper construction and operation within the legislative scheme of the phrase "without any reduction" in s 1072 of the Act . 6. The proper construction and operation of the phrase "own use or benefit" in s 8(1) of the Act . The application of the "ordinary income" test in Module E of the Rates Calculator does not involve consideration first being given to the definition of "income" in s 8(1). 2. On the facts as found by the Tribunal, the Respondent's ordinary income included the sums subsequently repaid by her to the Hotel in respect of TAB till shortfalls within the meaning of s 8(1) and s 1072 Act . 3. On the facts as found by the Tribunal, the Respondent earned, derived or received for her own use or benefit the sums subsequently repaid by her to the Hotel in respect of TAB till shortfalls within the meaning of s 8(1) and (2) of the Act irrespective of any contractual obligation to make good any TAB till shortfalls. 4. The phrase "without any reduction" in s 1072 of the Act is applicable to the "ordinary income" test in Module E of the Rate Calculator and cannot be circumvented by first applying the definition of "income" in s 8(1). 5. The phrase "own use or benefit" in s 8(1) of the Act denotes income earned, derived or received by a person in the person's own right as distinct from income earned, derived or received by the person for another person's use or benefit and is applicable irrespective of any contractual obligation to make good any TAB till shortfalls. They deal with ground 5 separately. Step 1 of Module E of the Rates Calculator requires the calculation of the person's ordinary income on a yearly basis. • Section 1072 defines "ordinary income" and refers in turn to subs 8(1) for the definition of "income". • Section 1072 , when construed in light of the provisions in s 8(1) and (2) provides in effect that a reference in the Act to a person's ordinary income is a reference to the gross income amount earned, derived or received for the person's own use or benefit by any means and from any source, without any reduction. • The AAT failed to take that approach and in effect ignored the provisions of s 1072 , focusing in isolation on the s 8(1) definition of "income". In other words, the AAT seems to have construed s 1072 only by reference to the s 8(1) definition of income, rather than the provisions of s 1072 itself. • The AAT expressly said, in error, that the words of s 1072 "without any reduction" were "not to the point", and ignored the words "gross" and "from all sources". • The fact that the money may be earmarked to meet a particular obligation does not detract from the fact that the money is for the person's own use or benefit: Kear v Secretary, Department of Social Security [1998] 1087 FCA. • The fact that the repayments were made in respect of tasks performed by the respondent and made to the same entity who paid her wages seems to have clouded the issue. The situation is analogous to an employee who is found liable to the employer for damages for negligence arising out of the employee's actions in the workplace: even if the damages awarded were deducted from wages of the employee it could not be said that the employee's earnings were the lesser sum after the deduction of the damages award. • The circumstances surrounding the payment by the respondent and later reimbursement of $1,300 highlights the error in the AAT's approach. • The AAT appears to have been influenced by the fact that the applicant was unable to identify a benefit to the respondent from the amounts of the shortfalls. This is clearly an irrelevant consideration as the Act provides for the alternative of "use or benefit". The respondent in this case clearly used the amounts to meet her obligations. In any event the respondent did benefit from such amounts in that her superannuation entitlements were calculated on the basis of her gross earnings without deduction for the shortfalls as was apparent from the Employee Payment Summary provided by her employer. So-called questions of law 1, 5 and 6 specified in the notice of appeal are not, in fact, questions of law. 2. The AAT correctly recognised that the key question is whether the whole of the respondent's nominal gross wages can be said to be "income" as that term is defined for the purposes of s 8 of the Act . Expressed alternatively, could the amount of the withheld shortfall be said to be earned, derived or received by her for her own use or benefit? 3. The phrase "for the person's own use or benefit" entails the notion of a person being able to use property or income as the person wishes or sees fit, as opposed to being obliged to apply the property or income in a particular way. The respondent was never able, at the time of earning, derivation or (constructive) receipt to use the whole of her nominal gross wage as she wished or saw fit. Rather, to the extent of any shortfall, her employer was contractually entitled to withhold the amount of that shortfall from that gross wage and the respondent was obliged to accept that such an amount could be so withheld. 4. The words "without any reduction" which appear in s 1072 of the Act qualify only "income" as defined, namely the income earned, derived or received for the person's own use or benefit . 5. Reference by the applicant to the sum of $1,300 later received by the respondent by way of refund from her employer is a distraction as the appeal is unconcerned with that sum, although it will be relevant in any recalculation by the applicant of the amount, if any, of any overpayment of benefit. In any event, the AAT correctly regarded that sum as "ordinary income" for the purposes of the Act . Are the questions "questions of law"? A party to a proceeding before the AAT may appeal to the Court from any decision of the AAT in that proceeding, but only on questions of law: s 44(1) Administrative Appeals Tribunal Act 1975 (Cth). 16 In my view questions 1, 5 and 6 as pleaded in the applicant's notice of appeal are not questions of law which can form the basis of an appeal from the AAT, and upon which the Court can rule. While construction of any legislation undoubtedly raises legal issues, advancing as propositions for the court "the proper construction and operation" of a either a section of an Act (question of law 1 in the notice of appeal) or a phrase (questions of law 5 and 6 in the notice of appeal) do not, without more, present questions which the Court can properly consider. This is not a case where a question of law has been inelegantly drafted but nonetheless is a question the purport of which is tolerably clear ( Ergon Energy Corporation Limited v The Commissioner of Taxation [2006] FCAFC 125 at [51] ) - questions 1, 5 and 6 simply do not raise questions . 17 However, questions 2, 3 and 4 do raise questions, which can be characterised as questions of law. Indeed, for reasons I outline later, in my view questions 3 and 4 can be considered together. 18 I propose to look at the relevant legislation, and then consider each of these questions in turn. Step 4 If the person's ordinary income does not exceed the person's ordinary income free area, the person's ordinary income excess is nil. Step 5 If the person's ordinary income exceeds the person's ordinary income free area, the person's ordinary income excess is the person's ordinary income less the person's ordinary income free area. Step 6 Use the person's ordinary income excess to work out the person's reduction for ordinary income using points 1068A-E19 and 1068A-E20 below. Note 1: For ordinary income see subsection 8 (1). Note 2: For other provisions affecting the amount of a person's ordinary income see sections 1074 and 1075 (business income), sections 1076 to 1084 (deemed income from financial assets) and sections 1095 to 1099 (income from income streams). However, in my view it is equally clear that in considering the meaning of "ordinary income" in s 8(1) , regard must first be had to the definition of "income" in s 8(1). The derivation of income and its impact upon social security payments is a key concept in the Act . 2. The Act contemplates different types of income - for example, ordinary income, business income (ss 1074 and 1075 ), deemed income from financial asserts (ss 1076 to 1085), employment income (s 8(1A) and (1B)) and income from personal exertion (s 8(1)) and maintenance income (s 10). Each is clearly a species of income. I agree with comments of the learned authors of Social Security in Australia (T Carney & P Hanks, Oxford University Press, Melbourne 1994 at 120) that "income under the Social Security Act is a multi-layered concept. At the core is 'income in relation to a person'...". 3. "Ordinary income" is defined as a species of income, namely income that is not maintenance income or an exempt lump sum. 26 It therefore follows that in order for facts to give rise to "ordinary income" within the meaning of s 1072 and Mod 5 1068A, it is necessary that they first demonstrate "income" as defined by s 8(1). 27 The applicant submitted that the AAT had erred in ignoring the words "gross" and "from all sources", and had (in error) focused in isolation on the s 8(1) definition of "income". However no error was demonstrated by the AAT's approach. As I have held, the threshold issue in relation to identifying ordinary income is determining whether it is actually " income " within the meaning of the Act . Once income is identified, ordinary income can be calculated in accordance with s 1072 by reference to the gross income from all sources for the relevant period without reduction other than reduction under Div 1A of the Act . Expressed another way, the adjective "gross" applies to income once it is identified as income. An example of the application of this principle is in Watson v Secretary, Department of Family and Community Services [2003] FCA 415 where Finn J considered whether payments received by the applicant in that case under an income protection policy bore the character of ordinary income of the applicant's business so as to allow the reduction for losses and outgoings permitted by Div 1A. In that case his Honour, correctly in my opinion, accepted the submissions of the parties that the relevant moneys in that case were "income" within the meaning of the Act . Similarly in this case, the first question is whether the moneys received in this case, in particular the moneys repaid by the respondent to the applicant, actually constitute "income" within the meaning of s 8(1). Question: on the facts as found by the AAT, does the respondent's ordinary income include the sums subsequently repaid by her to the Hotel in respect of TAB till shortfalls within the meaning of s 8(1) and s 1072 of the Act ? Indeed in considering whether the respondent's ordinary income included these sums, the question may be recharacterised as whether the sums subsequently repaid by the respondent to the Hotel in respect of TAB till shortfalls constituted income amounts earned, derived or received by the respondent for her own use or benefit. In this respect, as I indicated earlier in this judgment, this question subsumes question of law 4 posed by the applicant, and I will consider both questions of law 3 and 4 together. 30 First, the Act is remedial legislation in that it gives benefits to persons and thereby remedies Parliament's perceptions of social injustice (Social Services Consolidation Bill (Cth), Second reading speech, 15 May 1947, Minister for Health and Social Services, the Hon Senator McKenna). Accordingly, it calls for no narrow or pedantic construction: Lockhart, Gummow and Einfeld JJ in Rose v Secretary, Department of Social Security (1990) 21 FCR 241 at 244, Secretary, Department of Social Security v "SRA" (1993) 43 FCR 299 per Black CJ at 303 (for similar observations, I also note Director-General of Social Services v Hales (1983) 47 ALR 281 per Sheppard J at 321 and Secretary, Department of Family and Community Services v Geeves [2004] FCAFC 166 at para 53). 31 Second, however, the settled rules of construction apply to the Act , and ordinary words used in the Act should receive their ordinary and natural meaning unless, in accordance with accepted rules of statutory construction, there is good reason to prefer some other meaning (Black CJ in SRA 43 FCR at 303, Rose 21 FCR at 244). 32 Third, the concept of "income" under the Act is broad. The definition is couched in the widest terms, presumably to ensure that public expenditure is directed to those who stand in actual need of the periodic support which income-related pensions provide. However, like Foster J in Secretary to the Department of Social Security v Cuneen [1997] 1033 FCA, I do not read the other judgments in Read [1988] HCA 26 ; 167 CLR 57 as differing from Brennan J's construction of the meaning of "income"). 33 Fourth, it is important to note that the concept of "income" under the Act is not to be equated with "income" under income tax legislation: Haldane-Stevenson v Director-General of Social Services (1985) 9 FCR 73 per McGregor and Pincus JJ at 75 and Davies J at 80. It is an act which provides for income maintenance : Davies J in Haldane-Stevenson 9 FCR at 80; Morling, Hartigan and Lee JJ in Secretary, Department of Social Security v Garvey (1989) 22 FCR 132 at 136; cf comments of O'Loughlin J in Barry v Repatriation Commission (1993) 41 FCR 529 at 532. 35 In this case, although Deputy President Hack expressed doubt as to whether the relevant income in these proceedings had been "earned, derived or received" (at [22] of the AAT's Reasons for Decision), it does not appear in dispute before me that the respondent has derived, or "constructively" received, the gross amount from the Hotel including the TAB till shortfalls withheld (TS p 11 ll 32-45, p 12 ll 32-37). Accordingly, it is not necessary for me to consider this issue further. 36 It is in contention, however, that the respondent earned, derived or received the sums representing the TAB till shortfalls for her "own use or benefit" within the meaning of s 8(1). Were the sums representing the TAB till shortfalls income earned, derived or received by the respondent for her "own use or benefit"? 38 After considering submissions of Counsel, I consider that the sums representing the TAB till shortfalls did not represent income earned, derived or received by the respondent in these proceedings for her own use or benefit. Accordingly, no error of law was made by the AAT in so finding. 39 I take this view for the following reasons. 40 First, the repayment by the respondent of the TAB till shortfalls in appropriate circumstances appeared to be a fundamental term of her contract of employment. I agree with Deputy President Hack that the income of the respondent was determined by reference to three factors, namely the number of hours worked in a week, an hourly rate and any till shortfalls. Contrary to the submission of the applicant, this case is not analogous to circumstances where an employee becomes subject to damages payable to the employer arising from a separate cause of action unrelated to contractual provisions determining income. 41 Second, although the definition of "income" in the Act is construed broadly, the phrase "own use and benefit" necessarily implies rights of ownership of the relevant income amounts by the person receiving them. The breadth of the definition is demonstrated, for example, by the fact that it is not necessary that the relevant person does not have legal capacity to deal with the income amounts for the income amounts to be for the person's "own use and benefit". Income is for the "own use and benefit" of the person once it becomes their property which they can dispose of at will: cf Flannery v Secretary Department of Social Security (1987) 78 ALR 431 at 436 and Latham CJ in Mutual Acceptance Co Ltd v Federal Commissioner of Taxation [1944] HCA 34 ; (1944) 69 CLR 389 at 398. 42 Third, in my view the phrase does not contemplate moneys which, although received, are repayable to the employer under the employment contract against income earned. Such moneys are clearly not for the "own use and benefit" of the employee within the plain meaning of this phrase. The employee has no ownership of them in any meaningful sense until the employer has undertaken a reconciliation of the till. 43 Fourth, although not raised in argument before me, I note that it would not be sufficient to suggest that such moneys are for the employee's own use and benefit because, for example, they are in some fashion the price the employee must pay for having the employment and the entitlement to such remaining income as he or she may keep. Such a concept would represent a significant stretch of the ordinary meaning of the term "own use and benefit". 44 Fifth, in interpreting the phrase "own use or benefit" it is clear that the obligation of the respondent in this case can be contrasted, for example, with payments made by a person as a result of arrangements otherwise within his or her control, such as outgoings on residential properties of the person which constitute an expense in generating rental income on those properties. (See Read v Commonwealth [1988] HCA 26 ; (1988) 167 CLR 57 per Brennan J (at p 69). The facts before me however may be distinguished from those in Marsh 12 FCR 100 where the manner in which the relevant employee spent his training allowance was a matter of choice for him. 47 It is for the same reason that I find distinguishable from these facts the decision in Kear [1998] 1087 FCA where Heerey J held that the relevant money received by the applicant in that case was "his own money to deal with as he saw fit" notwithstanding that the applicant had other commitments or arrangements for which that money was earmarked. 48 Finally, in my view a construction of the phrase which would characterise moneys required to be repaid to the employer as being for the employee's "own use and benefit" is at odds with the purpose of the Act to maintain a basic level of income for those who are unable to receive sufficient income to provide for themselves ( Garvey 22 FCR at 136, Secretary, Department of Social Security v McLaughlin (1998) 81 FCR 35 at 42). Such an arrangement means that the money paid by the employee to the employer is not actually usable by the employee as income, and cannot be taken into consideration in any realistic way in maintaining a basic level of income for the employee. Contrary to the submissions of the applicant, I do not find the reporting by the Hotel for superannuation purposes helpful in this context. In that case the respondents, who had carried on business as milk vendors for a number of years, received $121,950 from the Western Australian Dairy Industry Authority under an industry deregulation scheme, in consideration for an undertaking of the respondents to have no involvement in the milk distribution or milk vending businesses in Western Australia for three years. The AAT found on the facts that the arrangement was for the Authority to pay the principal sum to the respondents without any intention that the respondents repay the money, but subject to a contractual term in the event of a breach of covenant giving the Authority the discretion to recover a similar amount. French J held that the amounts received by the respondents were "income" within the Act, notwithstanding that they had been not been received in exchange for anything; further his Honour accepted that the amounts had been received for the respondents' own use or benefit (at 44). Other than the provision with respect to possible breach of contract, there appeared to be no limitation on the entitlement of the respondents to deal with the moneys paid by the Authority as they chose. 51 Accordingly, contrary to the submissions of the applicant I do not find the decision in McLaughlin 81 FCR 35 helpful in identifying whether moneys received by respondent in the case before me were for her "own use and benefit". However in my view it is clear that if moneys representing TAB till shortfalls are paid by the employee to the employer, but subsequently refunded to the employee - as occurred in relation to the $1,300 the subject of the fraud perpetrated on the Hotel - it is at the point they are refunded to the employee that they become income amounts for the own use and benefit of the employee. In those circumstances where the employee is in receipt of Centrelink benefits the employee at that point is required to advise Centrelink of the receipt of that income, because it is only at that point that the money becomes income for the employee's "own use and benefit" within the meaning of the Act. I find no error in the reasoning of Deputy President Hack in relation to this issue. I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier.

social security appeal from the administrative appeals tribunal (aat) respondent required to repay tab till shortfalls from wages pursuant to employment contract whether money repaid constitutes income which should be declared to centrelink for the purposes of calculating parenting payment definition of income within the meaning of section 8(1) social security act 1991 (cth) definition of "ordinary income" within the meaning of section 1072 social security act whether definition of income within the meaning of section 8(1) relevant to definition of "ordinary income" in section 1072 whether money subsequently repaid by the respondent to her employer pursuant to her employment contract not money earned, derived or received by her for her own use and benefit "income" "earned, derived or received" "own use or benefit" administrative law words and phrases

On the same date, 8 July 2005, he appeared before the Court of Petty Sessions and was then granted bail pending the outcome of the extradition proceedings. The extradition hearing, pursuant to s 19 of that Act, was heard on Monday, 18 August 2008 in the Perth Magistrates Court before Magistrate Lane. Her Honour reserved her decision to 10 am today, when she made an order, pursuant to s 19(9) of the Act, that the applicant was eligible for surrender to the Republic of Hungary. 2 Since her Honour made her order this morning, an application has been lodged for Mr Zentai seeking an order to abridge the time by which this application is to be served, an order to quash the order made by her Honour today (by which her Honour found that the applicant was eligible for surrender for extradition to the Republic of Hungary) and an order to order the release of the applicant on bail, pursuant to the provisions of s 21(6)(f)(iv) of the Act. That section provides that where a magistrate of a State or Territory makes an order pursuant s 19(9) in relation to a person whose surrender is sought by an extradition country, the person may, within 15 days after the day on which the magistrate makes the order, apply to the Federal Court of Australia or to the Supreme Court of the State or Territory for a review of the order. 3 By the specific subparagraph relied upon today, if there are 'special circumstances' justifying such a course, the Court may order the release, on bail, of the person on such terms and conditions as the Court thinks fit, until the review has been conducted or the appeal has been heard. The applicant has acted promptly. As such there is no formal record of her Honour's decision available at this stage. However, in essence, the applicant says that, by virtue of the modified operation of the Act effected by Art 2(5) of the Extradition (Republic of Hungary) Regulations 1997 (Treaty), her Honour was precluded from proceeding to make an order that the applicant was eligible for extradition. This was because the warrant did not disclose that, at the time of the alleged offence there existed a law in the Republic of Hungary making the offence unlawful. It is argued that on a proper construction of the Act and Treaty, the decree did not have retrospective effect, and her Honour should have made an order dismissing the application for surrender for extradition. 4 It is not possible to evaluate in any detail the merits of that ground of review because there is no record of the decision available at present. Counsel for the Republic of Hungary, Mr Renton, has informed me that the Republic does not oppose bail being granted if I am satisfied that there are special circumstances in existence, and further that it would not, at this stage, take a position opposing the foreshadowed basis of the grounds of review. 5 In relation to 'special circumstances', under the Act, the High Court of Australia has dealt with this topic extensively in United Mexican States v Cabal [2001] HCA 61 ; (2001) 209 CLR 165. First, the circumstances of the individual case are special in the sense that they are different from the circumstances that persons facing extradition would ordinarily endure when regard is had to the nature and extent of the extradition charges. This means that the circumstances relied on must be different in kind from the disadvantages that all extradition defendants have to endure. To constitute "special circumstances", the matters relied on "need to be extraordinary and not factors applicable to all defendants facing extradition" (Matter of Extradition of Morales (1995) 906 F Supp 1368 at 1373 (SD Cal). Secondly, there must be no real risk of flight. Absence of a real risk of flight is ordinarily a necessary but not a sufficient condition of bail. 6 In this application the special circumstances relied upon by the applicant are the fact that the applicant is 86 years old, in poor health and in need of medical attention, has been on bail since July 2005 and has always attended court dates to extend his bail. I would add to the special circumstances that the applicant has lived in Western Australia for many years, indeed, since 1951. The applicant lives in Willetton, which is near most of his family, friends and support network. He has no close relatives or friends living outside of Australia and, significantly, his health, due to his age and his health condition generally, prevents him from leaving Perth as he is required to attend various medical appointments to monitor his health. 7 In that regard, I have been supplied with a report by Dr Ian Guy dated 19 August 2008 in which Dr Guy gives a brief account of the medical history for the applicant. Dr Guy has been his general practitioner since the mid-1970s. 8 During that time, Dr Guy says that the applicant has had a variety of significant medical problems but nevertheless, has been able to function fairly well. However, in the last few years, his general medical condition has 'deteriorated significantly' and he is becoming significantly more frail. Specifically, the applicant suffers from ischaemic heart disease, which first manifested itself in 1972 as a myocardial infarction heart attack and has since troubled him with angina and episodes of intermittent serious disturbance of heart rhythm, atrial fibrillation. He attended hospital with angina as recently as 10 August 2008 and although the heart rhythm abnormality is more frequent, he last attended hospital due to atrial fibrillation on 29 January 2008. He has also suffered from fairly frequent episodes of disturbance of brain function, thought to represent transient ischaemic attacks (mini strokes) over several years. Dr Guy continues to outline in his report the applicant's serious medical condition. 9 That condition and his age are significant factors to take into account in the 'special circumstances' issue for the purposes of the Act. The applicant is due to attend one of the regular appointments with the Stroke Registrar of the Fremantle Hospital, the next appointment being imminent on 9 September 2008. 10 Given all those matters, I am satisfied that there are special circumstances for the purpose of the Act. 11 As a separate and second consideration, but again, taking into account those factors, I consider that they also support a conclusion that there is no real risk of flight. 12 That being so, in my view, this is an appropriate circumstance in which bail should be granted under the provisions of the Act. I have been provided with a minute of the orders which are sought in relation to the grant of bail. In relation to that minute, there are specific conditions and terms which I am also informed by both counsel are the same conditions and terms which have applied in respect of the applicant's bail since he was originally arrested. Specifically, the terms and conditions are that the applicant provide a $50,000 personal undertaking, $75,000 surety; that he surrender all passports and not apply for any passports; that he is not to approach within one hundred metres of any point of domestic or international departure; is not to leave Australia; and is to continue to reside at the address at Willetton which is specified in the terms of the order. 13 Accordingly, I will make the orders as proposed in the minute as amended and there will be orders in terms of the abridgment of time, liberty to apply and costs of the motion being reserved. As to the formulation of the orders, I have adapted the minute provided by Mr Fiocco for the applicant which accords with the format identified by the High Court in United Mexican States v Cabal [2001] HCA 61 ; 209 CLR 165. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.

bail application urgent hearing special circumstances appropriate test extradition

For most of that time, that business has included the design, manufacture and supply of chairs moulded from plastic materials. Sebel's products are also sold overseas. It exports to over 70 countries worldwide. 2 Sebel's product range is extensive and varied. It produces seating and furniture for restaurants, cafes, stadia, auditoriums, conference venues, schools, colleges, universities, hospitals, aged care facilities and government departments. 3 Sebel is the largest distributor of furniture to educational institutions in Australia. It has developed a specific range of products designed to meet the needs of schools, TAFE colleges and universities. It supplies both government schools and private schools. It has supply contracts with several State governments in Australia. 4 One of the key products supplied by Sebel in its range of furniture specifically designed for the education sector is a sidechair known as the Postura chair. Sebel has supplied Postura chairs since 1996. 5 The respondent trades under the business name " Reed Furniture " ( Reed Furniture ). It also has other businesses. It acquired the business of Reed Furniture in early January 2006. Reed Furniture has also been in business in Australia for many years. It has traditionally supplied tubular steel chairs and other tubular steel furniture. It has supplied these items to schools, universities, local councils, government departments and churches. Tubular steel chairs are very different in construction, shape and appearance from one piece moulded polypropylene chairs of which the Postura chair is a well-known example. 6 Reed Furniture has recently commenced to import into Australia and to supply and distribute here a moulded plastic chair known as the Titan chair. The Titan chair is intended to be supplied to the same educational market which, for many years, has been supplied with Sebel's Postura chairs. 7 Thus, Reed Furniture intends to compete directly with Sebel in the market for the supply of chairs and other furniture to the education sector in Australia. 8 Sebel is the Registered Owner of Trade Mark No 1054076 in respect of a shape ( Sebel's trade mark ). Sebel's trade mark is registered in Class 20 in respect of sidechairs moulded from plastics materials. Sidechairs are chairs without arms. 9 The trade mark was registered with effect from 6 May 2005. Sebel also alleges that the respondent has engaged in passing off and in conduct which constitutes a contravention of s 52 of the Trade Practices Act 1974 (Cth) (As amended) (the Trade Practices Act ) by promoting, offering to supply and supplying the Titan chair. (b) The Titan chair is the only on[e]-piece polypropylene chair that has attained EN1729 Part 1 and Part 2 Certification. (c) The Titan chair is the only chair on offer in Australia which passes EN1729 Part 1 and Part 2 Certification. (d) EN1729 Part 1 supersedes all other standards in Australia for chairs used in classrooms. 12 Sebel contends that each of those representations was false at the time that it was made and that each of those representations will be false if they continue to be made. An order that, until further order, the respondent whether by itself, its servants or agents, be restrained from supplying or offering to supply, and from promoting by any means the supply of, the Titan chair. 2. (b) The Titan chair is the only one-piece polypropylene chair that has attained EN1729 Part 1 and Part 2 Certification. (c) EN1729 Part 1 supersedes all other standards in Australia for chairs used in classrooms. (d) The Titan chair is the first one-piece chair that conforms to EN1729 Parts 1 and 2 in the United Kingdom. No similar amendment has yet been made to the Statement of Claim. Nothing turns on this at the moment. 15 At the hearing of Sebel's application for interlocutory relief, the respondent informed me that it was prepared to offer an undertaking in respect of the subject matter of sub pars (a) to (c) of par 2 of the orders sought by Sebel. The respondent had also communicated that offer to Sebel shortly before the commencement of the interlocutory hearing. 17 The precise text of the undertaking which I have set out above varies slightly from the form of undertaking actually offered to the Court by the respondent after the conclusion of the interlocutory hearing. However, in my view, the substance of what was offered and what is recorded in [16] above is the same. In order to ensure that there is no misunderstanding as to the precise terms of the respondent's undertaking, I intend to seek an undertaking to the Court from the respondent in the terms recorded above when these Reasons for Judgment are delivered. 18 In light of the fact that the respondent has offered an undertaking to the Court in respect of the alleged misrepresentations referred to in sub-pars (a), (b) and (c) of par 2 of Sebel's claim for interlocutory relief, the only orders which Sebel continues to seek are those claimed in par 1 and in par 2(d) of that claim. The respondent resists the making of either of these orders. Their Honours who comprised the majority made clear that the final relief sought need not be injunctive in nature. See [8] to [21] (pp 216---220) (per Gleeson CJ); [59] to [61] (pp 231---232) (per Gaudron J); and [86] to [92] (pp 239---242); [98] to [100] (pp 244---246); and [105] (p 248) (per Gummow and Hayne JJ). At [10] (p 216), Gleeson CJ also specifically cited with approval Spry, The Principles of Equitable Remedies , 5th edn, 1997 (pp 446---456). 21 These remarks of Mason ACJ which were approved by Gleeson CJ echo the observations made by the High Court in Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1 ; (1968) 118 CLR 618 at 622---623. That this was the sense in which the Court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument [(1968) [1968] HCA 1 ; 118 CLR 618 at 620]. There is then no objection to the use of the phrase "serious question" if it is understood as conveying the notion that the seriousness of the question, like the strength of the probability referred to in Beecham , depends upon the considerations emphasised in Beecham . 71 However, a difference between this Court in Beecham and the House of Lords in American Cyanamid lies in the apparent statement by Lord Diplock that, provided the court is satisfied that the plaintiff's claim is not frivolous or vexatious, then there will be a serious question to be tried and this will be sufficient. The critical statement by his Lordship is "[t]he court no doubt must be satisfied that the claim is not frivolous or vexatious; in other words, that there is a serious question to be tried" [1975] UKHL 1 ; [[1975] AC 396 at 407]. (Emphasis added. They obscure the governing consideration that the requisite strength of the probability of ultimate success depends upon the nature of the rights asserted and the practical consequences likely to flow from the interlocutory order sought. 72 The second of these matters, the reference to practical consequences, is illustrated by the particular considerations which arise where the grant or refusal of an interlocutory injunction in effect would dispose of the action finally in favour of whichever party succeeded on that application [See the judgment of McLelland J in Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 at 535-536 and the article by Sofronoff, " Interlocutory Injunctions Having Final Effect ", Australian Law Journal, vol 61 (1987) 341.95]. The first consideration mentioned in Beecham , the nature of the rights asserted by the plaintiff, redirects attention to the present appeal. At [13] I have set out the claim for interlocutory relief with which these Reasons deal. Sebel's application for interlocutory relief is in aid of the private rights to which I have referred in [10] to [12] above. 26 The first of these matters involves an assessment by the Court as to whether the claimant would, in all material respects, be in as good a position if he were confined to his damages remedy, as he would be in if an injunction were granted (see the discussion of this aspect in Spry, The Principles of Equitable Remedies , 7th edn, 2007 at pp 383---389; at pp 397---399; and at pp 457---462). 27 The second of these matters requires the Court to exercise a discretion. 28 In exercising that discretion, the Court is required to assess and compare the prejudice and hardship likely to be suffered by the defendant, third persons and the public generally if an injunction is granted, with that which is likely to be suffered by the claimant if no injunction is granted. In determining this question, the Court must make an assessment of the likelihood that the final relief (if granted) will adequately compensate the claimant for the continuing breaches which will have occurred between the date of the interlocutory hearing and the date when final relief might be expected to be granted. 29 In order to address the irreparable injury question, the balance of convenience and the balance of justice in the present case, it is necessary to consider the nature and strength of Sebel's case and the circumstances in which the respondent decided to compete with Sebel by importing the Titan chair into Australia and by promoting and selling that chair in this country. 30 It is also necessary to consider and evaluate the impact that the grant or refusal of an injunction will have or is likely to have on third persons and the public generally. It was the product of extensive research carried out by Sebel in this period. These notes are themselves directed, one by one, to various parts of the chair. Some of these features arguably may not be dictated by the functional requirements of the chair (for example, the splayed legs; the aperture in the back of the chair; the moulded top of the back of the chair suggesting a more traditional two-piece construction of the back of the chair; the waterfall front edge; the shape that lends itself to safe, secure stacking and the one-piece design). Other features may simply be the result of the functions which the chair is required to perform. These are matters to which I shall return later in these Reasons for Judgment. The result, a range of furniture which is designed to promote good posture and improved learning --- that's the Sebel difference. 36 The Postura chair figures quite prominently in Sebel's advertising and promotional literature for educational furniture. 37 The Postura chair was formerly the subject of an Australian Registered Design (Registration No AU 115585 S). That design was first registered on 10 November 1992. It expired on 13 March 2008. 38 As I have already mentioned at [9] above, Sebel's trade mark was registered with effect from 6 May 2005 before its Registered Design expired. 39 There are nine different models in Sebel's range of Postura chairs. Each model embodies the same basic design and shape. All models are moulded chairs made from polypropylene. The only difference between models is the width and height of the seat in the chair. Different seat widths and heights are included within the range in order to meet the needs of persons of different heights and sizes. Across the range there are presently eight different colours available. Not all sizes are available in all colours. Half of the colour range comprises bright colours (red, yellow, blue and green). 40 The name Sebel is embossed on the back of each Postura chair, just below the aperture, in raised letters approximately 10 mm in height. This embossing is quite prominent. The Postura 265 sidechair is the smallest chair in the Postura chair range. The Data Sheet which I have attached accurately depicts the Postura chair. That Sheet also provides certain pertinent data concerning that particular model of Postura chair. A similar Data Sheet has been produced by Sebel in respect of each model in the range. 43 The evidence shows that Sebel's Postura chairs are mostly sold to the education sector for use in classrooms, lecture rooms and libraries. Essentially, they are intended to be used as desk chairs by students of all ages, shapes and sizes. They can also be used with tables (such as those larger tables found in some school, university and Municipal libraries). 44 The likely purchasers of this type of chair are officers of government agencies or persons who are given the responsibility for organising the purchase of such chairs on behalf of individual schools (both government and private), universities, colleges, local councils and other institutions and who do so either on a one-off basis or under the umbrella of a general State-wide procurement contract. By and large, those who make such purchasing decisions will have knowledge of Sebel and its Postura range of sidechairs and of any special position which Sebel might enjoy as a preferred or nominated contractor under any relevant government procurement contract. Such persons would generally be expected to be able to recognise Sebel's Postura chair and to be able to differentiate that chair from other similar products. They would not generally select the desired chair from the floor of a retail store or warehouse. Nor would they make their selection based solely on the chair's appearance. They would generally know the identity of the supplier of the chair and probably the manufacturer of the chair. They would generally have quite a lot of technical information about the chair --- information such as that which appears on Sebel's Product Data Sheet for the Postura range of chairs. 45 There is no evidence to suggest that members of the public are able to purchase Postura chairs individually or even in small numbers from retailers. 46 The price at which Sebel sells Postura chairs ranges from $17.00 to $39.00. The price at which a particular Postura model is sold depends principally on the size of the chair. The smaller chairs cost less. Price also depends to some extent on the customer's location and on the quantity of product ordered. 47 Postura chairs were first sold in Australia during the Financial Year ended 30 June 1996. Sebel has manufactured, promoted, marketed, advertised and sold Postura chairs continuously since that time. The evidence shows that the promotion, marketing and advertising of the Postura chair has been extensive and continuous since 1996. 48 Postura chairs are supplied by Sebel directly to end users as well as to resellers and distributors for on-sale to end users. 49 There was tendered before me as a Confidential Exhibit ( Exhibit C ) a spreadsheet which summarised the gross sales value in dollars and the quantities of Postura chairs sold in all relevant markets for the Financial Years ended 30 June 1999 to 30 June 2008 and also for some part of the 2008---2009 Financial Year. The financial information set out in that spreadsheet is confidential to Sebel. That spreadsheet demonstrates that the sale of the Postura chairs has generated significant revenue for Sebel over many years. The spreadsheet also establishes that sales of the Postura chairs are effected across many markets both in Australia and overseas. It is not necessary for present purposes to set out further details of the amounts or the quantities involved. 50 Sebel has been the nominated contractor under two successive supply contracts with the NSW Government covering the period from 1999 to 30 June 2009. The first of these contracts was exclusive to Sebel. The second has been shared with another supplier, Corporate Express Australia Limited. 51 The current contract (No 048/1250) is due to expire on 30 June 2009 and is to be succeeded by Department of Commerce --- NSW Contract No 1006 Workplace Supplies ( Contract No 1006 ). Sebel has submitted a tender for Contract No 1006. Tenders for that contract have now closed. That contract is due to commence on 1 July 2009 and is presumably for a term of some years. The successful tenderer is likely to be selected in January or February 2009, with the identity of that tenderer announced publicly soon thereafter. 52 One of the products included in Sebel's tender for Contract No 1006 is the Postura chair. It was included in response to the student chair required by the Department of Education and Training in the Request for Tender for Contract No 1006. There are six models across the range of Titan chairs. There are six colours used in the range. Not all colours are used on all models. The colours used include certain bright colours --- red, yellow, blue and green. Those colours are similar to but not the same as the corresponding bright colours used by Sebel on its Postura chairs. 54 The seat heights of the six models of Titan chair differ from most of the corresponding models of the Postura chair. Only two models of the Titan chair have the same seat height as one of the models in the Postura range of chairs. The differences in seat heights as between the equivalent other models are, however, relatively small. The word Titan is approximately 45 mm in height and the logo is slightly larger. These are not prominent stampings and are not easily noticed. This is because the degree to which the letters rise above the surface of the back of the chair is small. To the naked eye, it appears to be less than the embossing of the name of Sebel on the Postura chair. 57 I have attached as Annexure B to these Reasons for Judgment page 2 of Reed Furniture's current Titan chair brochure which accurately depicts the Titan chair. 58 Samples of the Titan chair were tendered in evidence (Exhibit F and Exhibit 3). 59 The Titan chair is manufactured for a United Kingdom corporation called Titan Furniture (UK) Limited ( Titan ). The product appears to be made in China. It was first supplied in about July 2007. That supply took place in the United Kingdom. Titan chairs have also been supplied in Europe, although no details of the period during which such supplies have been made or the quantities involved were in evidence. Over 100,000 Titan chairs have been supplied in the United Kingdom and Europe over the 18 month period commencing about July 2007. 60 The Titan chair is the subject of a design registration under the Copyright, Designs and Patents Act 1988 (UK). That registration took effect on 30 March 2007. 61 In a Test Report dated 30 May 2007, SGS-CST Co Ltd certified that the Titan chair met certain requirements of the standards known as EN 1729-1:2006 and EN 1729-2:2006. The tests which led to these certifications were carried out in China. The evidence did not address the status or acceptability of these certifications in any of the United Kingdom, Europe or Australia. 62 Subsequently, by two certificates dated 27 March 2008 and 15 April 2008 respectively, a different testing organisation, FIRA International Limited, certified that the Titan chair satisfied the same standards. The tests which supported these certifications were apparently carried out in England. 63 The respondent has very recently entered into a distributorship arrangement with Titan. In early August 2008, the respondent imported 12 Titan chairs for display at an education sector trade show to be held at Caulfield Race Course, Victoria, on 8 and 9 August 2008. Importation of Titan chairs for sale began in earnest in October 2008. 64 The evidence before me as to the number and value of orders already obtained by the respondent in Australia is scant. As at the date of the interlocutory hearing before me, it would appear that a relatively small number of Titan chairs had been ordered by the respondent from Titan, that approximately three-quarters of those had been sold on some basis or another (although not yet supplied) and that some hundreds were due for delivery in December 2008 and January 2009. 65 The respondent submitted a tender for Contract No 1006 for a broad range or products including Titan chairs. That tender was not in evidence before me. 68 Mr Standen said that he then immediately telephoned Mr Holmes, who is the General Manager of Reed Furniture, and asked Mr Holmes whether Reed Furniture did intend to supply such a chair. Mr Holmes confirmed that Reed Furniture did, in fact, intend to supply such a chair. Mr Standen told Mr Holmes that Sebel had subsisting intellectual property rights in the Postura chair and would take legal action to protect those rights should Reed Furniture attempt to sell a similar chair in Australia. Mr Holmes retorted that the respondent had taken legal advice and had been told that it could sell the Titan chair in Australia without infringing Sebel's intellectual property rights. 69 There are competing versions of this telephone conversation given by Mr Standen, on the one hand, and Mr Holmes, on the other. However, the substance of the conversation as recounted by each of the witnesses was essentially the same. For present purposes, I cannot and need not resolve which version of this conversation is to be preferred. 70 Mr Standen did not see a sample of the Titan chair at this time. He had not seen a sample of that chair at any time before October 2008. 71 Mr Standen also testified that, after the conversation which he had with Mr Holmes in late October 2008, he regularly checked Reed Furniture's website but did not find any indication on that website that Reed Furniture was in fact selling a chair similar to Sebel's Postura chair until 24 November 2008. On that day, prompted by a call from one of Sebel's Melbourne sales representatives, Mr Standen again checked the website and found that there was a brochure available on that website featuring the Titan chair. 72 On 25 November 2008, Mr Standen reported these events to Mr Welsh. On the same day, Mr Standen received an email from Ms Pope, who is a Sebel Account Manager. She was quite upset and asked "Why are Reeds Furniture selling our Posturas for $17.00 when she had been quoted $25.00 from our specials" It took me some time to explain to her that we don't sell to Reeds at all, and I was sure there was no collaboration with them to sell our products. She was reluctant to believe me saying the chair is exactly the same and she believes it is the Postura chair. I again explained it was not our chair and we don't sell the Postura to anyone who could in turn could sell it for $17.00. I also said it could only be the inferior product out of China and that Sebel has already stopped it being sold through places such as Office Max. I told her that the quality of that product is not a patch on our Postura and it has not been through the testing that our product has. In the end Wendy did believe me but her parting comment was "I guess I will have to deal with it:" I then rang Shayne to find out if a deal has been done with Reeds and he told me no, not to his knowledge, so I reported the above to Alan. I have had a look at the web site and the chair is similar however it has a grip hold in the top of the back and the poly seems thinner form [sic] the image and they don't stack as well. That suggestion is based upon a rather ambiguous statement in the first affidavit sworn by Mr Holmes. I am not persuaded that the brochure was, in fact, available to those who accessed the website from August 2008 onwards. However, for present purposes, it is sufficient to note that there is an issue about this matter with the evidence on the topic tending to favour Sebel's version. 74 Hard copies of the Titan chair brochure began to be distributed in October 2008. Seven thousand five hundred copies have been produced. Approximately 1,500 have been distributed to potential purchasers of the Titan chair and during the course of promotional activities carried out by the respondent. There was no evidence proving the costs incurred by the respondent in having these brochures printed. The only evidence concerning the cost of producing the electronic version of the brochure tended to suggest that the cost of having that version displayed on the Reed Furniture website was fairly minimal since it was an adaptation of the electronic version of the Titan brochure used in the United Kingdom. 76 Sebel called evidence from Ms Pope, who set up Sebel's stand at that trade show, and Mr Sargentson, who was the only Sebel employee who attended that trade show. Each testified that he/she did not see the Titan chair at all at that trade show. The respondent will challenge this evidence at the final hearing of these proceedings. 77 The other evidence concerning Sebel's knowledge came from Mr Rowley, who ordinarily resides in the United Kingdom. In an affidavit sworn by him on 17 December 2008, Mr Rowley testified that, at the end of February 2008, two representatives of Sebel based in the United Kingdom (Messrs McCluskey and Gallagher) inspected samples of the Titan chair which were displayed at the Education Show at NEC Birmingham in Mr Rowley's presence. This evidence was not contested by Sebel. However, there was no evidence which tended to establish that the knowledge of these two persons should be attributed to Sebel (the present applicant) or that either of these two persons had communicated any particular fact or matter concerning the Titan chair to Sebel. 78 Furthermore, this knowledge on the part of Messrs McCluskey and Gallagher did not provide any basis for anyone to think that Titan chairs would be imported into and supplied in Australia. Sebel called this new range of sidechairs the Postura Plus chair. 80 Sebel's Postura Plus chairs have been sold since about March 2008. They have been sold primarily in the United Kingdom although some have also been sold in Australia. This new range of Postura chairs was specifically designed in order to enable Sebel to have products available which complied with the new European furniture design standard relating to furniture used in educational institutions in Europe (BS EN1729) which was introduced in November 2006. 81 On 20 March 2008 and on 28 March 2008, FIRA International Limited certified that Sebel's Postura Plus chair range size marks 3, 4, 5, 6, and 7 met the dimensional requirements of BS EN1729-1 (2006) and the requirements of BS EN1729-2 (2006) respectively. In its letter, those solicitors raised by way of complaint the substance of all of the matters which are now the subject of complaint in the proceedings. 83 No substantive response to that letter was received prior to the commencement of the proceedings. The proceedings were commenced on 4 December 2008. During submissions I was told that the respondent intends to apply to have Sebel's trade mark cancelled. Initially, only s 87 of the Trade Marks Act 1995 (Cth) (As amended) ( the Trade Marks Act ) was the suggested basis for that application. Subsequently, but still during the interlocutory hearing, the respondent notified an intention to rely upon both s 87 and s 88 of the Trade Marks Act in support of the foreshadowed application to have Sebel's trade mark cancelled. However, no application has yet been made. 85 The respondent called evidence from Mr Holmes, Mr Tankard and Mr Rowley going to the balance of convenience. 87 Mr Holmes also gave some general and somewhat vague evidence that the grant of an injunction would seriously damage investments undertaken by the respondent and by Titan, that it would damage the goodwill in the Reed Furniture name which the respondent presently enjoys and that an injunction would probably affect Reed Furniture's capacity to sell additional items of furniture which are usually sold in association with chairs, such as tables and desks. 89 The expression busiest trading period was a reference to the months of December 2008 and January 2009. 90 Evidence to similar effect was given by Mr Tankard. He also focused on the impact that an injunction might have on his company's prospects in respect of Contract No 1006. In addition, he suggested that an injunction would be very disruptive to Reed Furniture's existing customers, although, as was the case with the evidence of Mr Holmes, this material did not rise much above bald assertion. 91 Mr Rowley gave evidence which, I gather, was intended to put the position of Titan before the Court, in effect, as a third party. The evidence was to the effect that the injunction would prevent Titan exploiting Australia as a potential market for its Titan chairs and would perhaps adversely affect Titan's reputation both in Australia and elsewhere. He put that the Postura chair was an embodiment of a chair to which Sebel's trade mark had been applied and that the appearance of Sebel's Postura chair was quite unique. Senior Counsel relied upon s 120(1) of the Trade Marks Act . 93 It was also submitted on behalf of Sebel that the shape of its Postura chairs had been identified in the minds of prospective purchasers as the shape of a chair that is put out by Sebel. 94 Senior Counsel concentrated his submissions on the concept of "deceptive similarity". He disavowed any reliance upon the concept embodied in the expression substantially identical which is found in s 120(1) of the Trade Marks Act . In opening, he did not put detailed submissions directed to the question of whether or not the respondent was using Sebel's trade mark as a trade mark but rather chose to address that matter in more detail in final submissions. In essence, he submitted that the shape found in Sebel's trade mark transcends the functional requirements of a chair. 95 He submitted that, in the present case, the comparison is not a side by side comparison but one based upon imperfect recollection ( Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 at 415). He further submitted that size and colour were irrelevant to the question of trade mark infringement. 96 Counsel for the respondent submitted that Sebel had failed to show that it had a prima facie case or serious question to be tried. 97 Counsel also submitted that the respondent does not use the shape or appearance of the Titan chair as a trade mark. He submitted that the respondent merely sells the Titan chair in that shape and depicts the shape of the chair in its brochure for the purpose of describing or identifying the product which it sells. He submitted that the shape of the Titan chair does not contain features which are additional to the inherent form of the chair. He relied upon the decision of the Full Court of this Court in Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd [2000] FCA 876 ; (2000) 100 FCR 90 as supporting the above propositions. 100 Counsel for the respondent stressed the fact that the Titan chairs were materially different in appearance from the Postura chairs and that the Titan chair clearly bore Titan logos and labelling which made it unlikely that any consumer in the class of those likely to be looking to purchase the chairs would ever be misled. 103 Counsel for the respondent contended that no such representation was being made. 104 It was common ground that, if such a representation was being made, then it was false, because Sebel's Postura Plus chairs had met standards EN 1729 Parts 1 and 2 (2006) from no later than 28 March 2008. I will not set out these arguments in detail. 106 I shall refer to them as necessary when I come to my consideration of the competing contentions of the parties in the next section of these Reasons for Judgment. 108 The respondent has foreshadowed (but not yet brought) an application for an order that the Register of Trade Marks kept under s 207 of the Trade Marks Act be rectified by cancelling the registration of Sebel's trade mark. No basis or grounds said to justify the cancellation of Sebel's trade mark have been articulated by the respondent either to the Court or to Sebel. The respondent has indicated that it proposes to rely upon the provisions of s 87 of the Trade Marks Act as well as those contained in s 88 of that Act. 109 In short, no case was actually advanced before me in support of the foreshadowed application to have Sebel's trade mark cancelled. 110 Therefore, for present purposes, in my view, the respondent's stated intention to seek to have Sebel's trade mark cancelled is of no significance or weight. These drawings or perspectives are set out in [9] above. 112 As I mentioned at [8] above, the Certificate of Registration of Sebel's trade mark bears an endorsement which refers to s 41(5) of the Trade Marks Act . That endorsement tells a reader of that Certificate that, when the Registrar of Trade Marks came to examine Sebel's trade mark for the purpose of determining whether or not it should be registered, the Registrar found that Sebel's trade mark was to some extent inherently adapted to distinguish Sebel's plastic moulded sidechairs from sidechairs supplied by other persons but was unable to decide, on that basis alone, that Sebel's trade mark was so capable of distinguishing Sebel's plastic moulded sidechairs. For that reason, the Registrar was required to consider and be satisfied of certain other matters before he could register Sebel's trade mark. 113 Because Sebel's trade mark was registered and because the Certificate of Registration bears the endorsement referred to, it follows that the Registrar must have considered and been satisfied of the matters set out in [112] above. 114 Therefore, I can assume that the Registrar formed the view that Sebel's trade mark did or would distinguish Sebel's plastic moulded sidechairs from sidechairs of other persons and I can accord some weight to that opinion of the Registrar. That opinion is, of course, not binding upon the Court. 115 I do not have the benefit of the Registrar's reasons for his or her decision to register Sebel's trade mark. ... (A) chair can take a variety of shapes and configurations and in that sense that's where the trade mark transcends the functional aspect of what is required of a chair. The shape of the trade mark is ... a unique shape which Sebel has promoted and ... promoted as being the Postura chair. He added that the particular shape of the Postura chair is a Sebel signature. The shape of the Postura chair signifies Sebel, so it was submitted, and thus is functioning as a trade mark. 122 Whilst the question of whether Sebel, as at the relevant date for registration purposes, had used or intended to use as a trade mark the shape comprising its trade mark is not directly in issue in the present application, in my judgment, I do need to understand why Sebel's trade mark is said to transcend the functional requirements of a chair and I also need to understand the reasoning which is said to justify Sebel's contention that, by embodying the shape comprising Sebel's trade mark in the Postura chair, Sebel has used its trade mark as a trade mark. 123 An understanding of both of these matters is both relevant and necessary to any sensible consideration of whether Sebel's trade mark has been used as a trade mark (emphasis added) upon or in relation to the Titan chair as alleged by Sebel. 125 At the moment, I do not see any other particular attributes or features of the shape which comprises Sebel's trade mark as features which, either alone or in combination, could conceivably be seen as permitting Sebel's trade mark to distinguish its plastic moulded sidechairs from other persons' sidechairs. 126 I do not mean to suggest by what I have said so far that I accept that the features set out in [124] above do, in fact, distinguish Sebel's Postura chairs from sidechairs of other persons and thus constitute reasons why the shape of that chair operates as a badge of origin which identifies Sebel as the source of the chair. All of these contentions put on behalf of Sebel are to be considered further in these Reasons for Judgment. 127 The case which Sebel puts as constituting infringement of its trade mark by the respondent is founded upon the provisions of s 120(1) of the Trade Marks Act . Note 2: For deceptively similar see section 10. Note 3: In addition, the regulations may provide for the effect of a protected international trade mark: see Part 17A. 130 The respondent contends that Sebel has failed to prove the above elements to the level of proof or satisfaction required in order for it to succeed with that part of its interlocutory application founded upon infringement of Sebel's trade mark. 132 For the purposes of that Act, a shape is a sign. use of a trade mark in relation to goods has the meaning given by subsection 7(4). Section 7(2) and s 7(3) are not presently relevant. A trade mark is a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person. Note: For sign see section 6. 136 There is a substantial contest in the present case as to whether or not the promotion, supply and sale of the Titan chairs is the use of a shape as a trade mark and, if so, what that shape actually is. Should the first of these questions be decided in favour of Sebel, the second question must be decided in order to enable the issue of deceptive similarity to be determined. 137 The first question to which I will now turn is: Has the respondent used a shape as a trade mark in its promotion and sale of the Titan chair? However the shape must have a feature that is "extra" and distinct from the inherent form of the particular goods: Mayne at [67], Remington at [16] and Kenman Kandy at [137]. (b) Non-descriptive features of a shape point towards a finding that such features are used for a trade mark purpose. Where features are striking, trade mark use will more readily be found. For example, features that make goods more arresting of appearance and more attractive may distinguish the goods from those of others: All-Fect at [25]. (c) Descriptive features, like descriptive words, make it more difficult to establish that those features distinguish the product. For example, the word COLA or an ordinary straight walled bottle are descriptive features that would have limited trade mark significance: All-Fect at [25] and Mayne at [61]---[62]. (d) Where the trade mark comprises a shape which involves a substantial functional element in the goods, references to the shape are almost certainly to the nature of the goods themselves rather than use of the shape as a trade mark: Mayne at [63]. For example, evidence that a shape was previously patented will weigh against a finding that the shape serves as a badge of origin: Remington at [12] and Mayne at [69]. (e) If a shape or a feature of a shape is either concocted compared to the inherent form of the shaped goods or incidental to the subject matter of a patent, it is unlikely to be a shape having any functional element. This may point towards the shape being used as a trade mark: Kenman Kandy at [162] and Mayne at [69]. (f) Whether a person has used a shape or a feature of a shape as a trade mark is a matter for the court, and cannot be governed by the absence of evidence on the point: All-Fect at [35]. (g) Context "is all important" and will typically characterise the mark's use as either trade mark use or not: Remington at [19] and Mayne at [60]---[62]. At one end of the spectrum are shapes or features thereof that are purely functional. The features may have derived substantially from a patented product, such as the S-shaped fence dropper, or go to the usefulness of the product: Remington at [3] and [12]. Cases such as Mayne and Remington show that such features point away from trade mark use. 63 At the other end of the spectrum are those features of a mark that are non-descriptive and non-functional. They ordinarily make the shape more arresting of appearance and more attractive, thus providing a means of distinguishing the goods from those of others. All-Fect and Remington show that non-functional features add something extra to the inherent form of the shape. A concocted feature will typically be considered non-functional: Kenman Kandy . 64 Finally, there will be cases, such as the present, that fall between the ends of the spectrum. These cases are not black and white. They involve consideration of whether one set of features supersedes, submerges or overwhelms the other. I will apply those principles in dealing with the application presently before me. 140 Similar observations were made by Greenwood J in Mayne Industries Pty Limited v Advanced Engineering Group Pty Limited (2008) 166 FCR 312 at [60] to [70] (pp 337---340). 141 In Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd [2000] FCA 876 ; 100 FCR 90 , a Full Court of this Court had to consider whether the promotion and sale by Remington of Remington's triple headed electric shaver infringed Philips' registered trade marks which comprised two-dimensional depictions of three shaving heads in the shape of an equilateral triangle. One of the issues in that case was whether Remington's activities involved the use of a trade mark as a trade mark in relation to goods. In the circumstances of that case, the Court held that Remington's promotion and sale of its triple headed electric shaver did not constitute trade mark use. When that definition -- which accords with the basal doctrine of trade mark law: see the passage from the United States Supreme Court decision Estate of P D Beckwith, Inc v Commissioner of Patents (1920) 252 US 538 at 543 which is cited in Johnson & Johnson at 342 -- is required to be applied, regard should be had to a so-called inclusive definition of the word "sign" which is to be found in s 6: the word "includes the following or any combination of the following, namely, any letter, word, name, signature, numeral, device, brand, heading, label, ticket, aspect of packaging, shape, colour, sound or scent". In any case, and somewhat inconsistently, Parliament did decide to specify the nature of the use involved when it came to deal with the subject of infringement. " (Emphasis added in subs (1) and in the opening part of subs (2). "Use" and "use", in those contexts, convey the idea of employing the mark, (first) as something that can be "upon" or serve in a "relation" to the goods, (and secondly) so as to fulfil a purpose, being the purpose of conveying information about their commercial origin. The mark is added, as something distinct from the goods. It may be closely bound up with the goods, as when it is written upon them, or stamped into them, or moulded onto them (see Coca-Cola Co v All-Fect Distributors Ltd [1999] FCA 1721 ; (1999) 96 FCR 107 , or, in the case of a liquid, it may be sold in a container so formed as to constitute at once both container and mark. But in none of these cases is the mark devoid of a separate identity from that of the goods. The alternative ways of using a trade mark in relation to goods do not include simply using the goods themselves as the trade mark. The reason is plain: it is to be assumed that goods in the market are useful, and if they are useful, other traders may legitimately wish to produce similar goods (unless, of course, there are, for the time being, subsisting patent, design or other rights to prevent them from doing so), and it follows that a mark consisting of nothing more than the goods themselves could not distinguish their commercial origin, which is the function of a mark: Johnson & Johnson at 342 and 348-349. If the picture is simply of an artefact which traders might legitimately wish to manufacture then to my mind it is just like the common word for it and, like the word for it, incapable of distinguishing. This definition assumes, it seems to me, that the mark is something distinct from the goods in relation to which it is used or to be used. It assumes that the goods can be conceived as something apart from the mark and that the mark is not of the essence of the goods. The goods are assumed to have an existence independently of the mark. As SargantLJ put it, in stating the difference between a design and a trade mark, 'A trade mark is something which is extra, which is added to the goods for the purpose of denoting the origin of the goods': Charles Goodall & Son Ltd v John Waddington Ltd (1924) 41 RPC 658 at p 668. And Lord Lindley, then Lindley LJ, said in In re James's Trade-Mark (1886) 33 Ch D 392 at 395, 'We must be careful to avoid confusion of ideas. A mark must be something distinct from the thing marked. A thing cannot be a mark of itself ...'. This does not mean that today a trade mark must be a mark to be physically applied to the goods. It may now be a mark to be used in other ways in relation to goods. A thing can always be described and distinguished in appearance by any visible characteristic which it has, its shape, colour or any mark which it bears. But the test is not -- Can the goods be described or depicted without reference to their markings? As I see it, a mark for the purposes of the Act must be capable of being described and depicted as something apart from the goods to which it is to be applied, or in relation to which it is to be used. This view is supported by the provisions of s 107 of the Act. It accords too with the various things included in the definition of 'mark'. That list is not expressed as exhaustive but it is certainly illustrative. I do not think that a mere description of goods simply by shape, size or colour can be a trade mark in respect of those goods. A rival manufacturer must be free to sell any container or article of similar shape provided the container or article is labelled or packaged in a manner which avoids confusion as to the origin of the goods in the container or the origin of the article ... The word 'mark' both in its normal meaning and in its statutory definition is apt only to describe something which distinguishes goods rather than the goods themselves. 15 The trial judge discussed (at 558-560) the question whether the 1995 Act has changed all that. It is unnecessary to repeat the various conflicting indications of legislative intention detailed in that discussion. I think it is important to note, as his Honour does (at 560), that the legislative background leaves a clear impression the inclusion of the word "shape" in the definition of "sign" was not understood to involve the effecting of a radical change in trade mark law. It seems to me that this is the reason there is so little assistance to be gained from ministerial statements or explanations. The amendment was simply not seen as important. Nor was the deletion of the provision made by s 39 of the repealed Trade Marks Act 1994 (Cth). No change being contemplated to the nature of trade mark use, it followed that neither a shape "possessed, because of their nature, by the goods" nor a shape "that the goods must have if a particular technical result is to be obtained" (the categories of shape identified in s 39) could distinguish the goods of one trade source from the similar goods of another; and therefore such a shape could not function as a trade mark. Indeed, it is hard to imagine how such a shape of the goods themselves could be used, or be intended to be used, for the purpose set out in s 17 -- its use would inevitably be nothing other than part of the use of the commodity itself. Section 39 was omitted from the Trade Marks Act 1995 because it was unnecessary. 16 It does not follow that a shape can never be registered as a trade mark if it is the shape of the whole or a part of the relevant goods, so long as the goods remain distinct from the mark. Some special shape of a container for a liquid may, subject to the matters already discussed, be used as a trade mark, just as the shape of a medallion attached to goods might be so used. A shape may be applied, as has been said, in relation to goods, perhaps by moulding or impressing, so that it becomes a feature of their shape, though it may be irrelevant to their function. Just as a special word may be coined, a special shape may be created as a badge of origin. But that is not to say that the 1995 Act has invalidated what Windeyer J said in Smith Kline . The special cases where a shape of the goods may be a mark are cases falling within, not without, the principle he expounded. For they are cases where the shape that is a mark is "extra", added to the inherent form of the particular goods as something distinct which can denote origin. The goods can still be seen as having, in Windeyer J's words, "an existence independently of the mark" which is imposed upon them. 17 The conclusion of this discussion is not that the addition of the word "shape" to the statutory definition calls for some new principle, or that a "shape" mark is somehow different in nature from other marks, but that a mark remains something "extra" added to distinguish the products of one trader from those of another, a function which plainly cannot be performed by a mark consisting of either a word or a shape other traders may legitimately wish to use. That proposition has commonly been stated in connection with marks that seek to appropriate the actual name of the product or an apt description of it; but the principle equally applies in the case of a shape or picture representing the very form and appearance in which another trader might legitimately wish to make the product. In Unilever Ltd's (Striped Toothpaste No 2) Trade Marks [1987] RPC 13, Hoffmann J (as Lord Hoffmann then was) dismissed an appeal against a refusal of registration of device marks containing representations of red and white striped toothpaste. The fact that members of the public now associate that feature with his product tells one nothing about what they would think if a product with a similar feature came upon the market. It seems to me that if Colgate or any other manufacturer produced a new brand of red and white striped toothpaste in a get-up which was not otherwise confusing, the public would have little difficulty in distinguishing the new brand from SIGNAL. There may be a few children who want SIGNAL, ask for 'the red and white striped toothpaste', are given the new brand without realising that it exists and do not discover the mistake till they have taken it home. But these are likely to be very few and I think represent the kind of confusion which is bound to occur whenever an existing monopoly is broken. I do not think that it is a possibility which would deter an honest trader from marketing red and white toothpaste if he thought it would be attractive to his customers. In my judgment, red and white stripes are a feature of toothpaste which other traders may legitimately desire to use ... It follows that the marks in suit are not in my view 'adapted to distinguish' the goods of Unilever within the meaning of s 9 [of the Trade Marks Act 1938 (UK) ] and they do not qualify for registration in part A. The nature of the marks is such that I see no prospect of there being a time when it would not be legitimate for other traders to wish to use them and I therefore do not regard them as 'capable of distinguishing' the goods for the purposes of section 10. Accordingly they do not qualify for registration in part B either. It may also explain the purpose of the disclaimer, although the effectiveness of that is another matter. Compare the remarks of Aldous LJ in UK Philips Electronics NV v Remington Consumer Products Ltd [1999] RPC 809 at 817-818. In order to function as a trade mark, the shape must be something which is extra or which is added to the inherent form of the particular goods as something distinct which can denote origin. A shape cannot function as a trade mark if it is something that other traders may legitimately wish to use either because it is inherent to the particular goods (ie it is of their nature ) or because it provides some technical or functional benefit to the goods. 145 As I understand Sebel's case, there are features of the shape of the Titan chair which are said by Sebel to constitute the use of that shape as a trade mark in relation to goods (namely, sidechairs moulded from plastic materials). Just exactly what those features are and how that use is said to arise were matters which were not made clear by Sebel at the hearing and are not at all clear to me now. In the present case, the respondent is, at most, using or intending to use the Titan chair itself as the trade mark. 147 For these reasons, I am inclined to think that Sebel has failed to prove, even to a prima facie level, that the respondent has used a shape as a trade mark in relation to goods of the relevant class by reason of its promotion and sale of the Titan chair. 148 However, I am very conscious that I am presently dealing with an interlocutory application. For this reason, I am prepared to assume for the time being (without deciding) that Sebel has proven these matters to the requisite level. 149 What, then, is the shape that has been used in this fashion? 151 In light of those general observations, I now turn to consider the question of deceptive similarity. 152 What must be compared is the allegedly infringing mark and the registered trade mark. 153 In the present case, given the way in which the trade marks are said to have been used, it is sensible to conduct that comparison by comparing the embodiment of Sebel's trade mark, the Postura chair, with the embodiment of the respondent's allegedly infringing trade mark, the Titan chair. I stress that I am taking this approach in order to conduct a comparison of the two shape trade marks and not to compare the two types of chair. " The reference to "restrained" reflects the fact that unlike this case the Australian Woollen Mills Ltd case was an appeal in an infringement action. The judgment of the likelihood of deception or confusion is a very practical one and what has long been accepted as the proper approach to making that judgment was set out in Australian Woollen Mills Ltd . It requires assessment of the effect of the challenged mark upon the minds of potential customers. Impression or recollection taken away from the point at which the challenged mark is observed will be the basis of any belief about a connection between the new and the old marks. The effect of spoken description must be considered. What confusion or deception may be expected is to be based upon the behaviour of ordinary people. As potential buyers of goods they are not to be credited with high perception or habitual caution. Exceptional carelessness or stupidity may be disregarded. The essential elements of those propositions continue to apply to the issue of deceptive similarity under the 1995 Act. A mere possibility is not sufficient. (ii) A trade mark is likely to cause confusion if the result of its use will be that a number of persons are caused to wonder whether it might not be the case that the two products or closely related products and services come from the same source. It is enough if the ordinary person entertains a reasonable doubt. It may be interpolated that this is another way of expressing the proposition that the trade mark is likely to cause confusion if there is a real likelihood that some people will wonder or be left in doubt about whether the two sets of products or the products and services in question come from the same source. (iii) In considering whether there is a likelihood of deception or confusion all surrounding circumstances have to be taken into consideration. These include the circumstances in which the marks will be used, the circumstances in which the goods or services will be bought and sold and the character of the probable acquirers of the goods and services. (iv) The rights of the parties are to be determined as at the date of the application. (v) The question of deceptive similarity must be considered in respect of all goods or services coming within the specification in the application and in respect of which registration is desired, not only in respect of those goods or services on which it is proposed to immediately use the mark. The question is not limited to whether a particular use will give rise to deception or confusion. It must be based upon what the applicant can do if registration is obtained. The issue is whether that use would give rise to a real danger of confusion. While a mere possibility of confusion is not enough--for there must be a real, tangible danger of its occurring (Reckitt & Colman (Australia) Ltd. v. Boden [3], at pp. 94, 95; Sym Choon & Co. Ltd. v. Gordon Choons Nuts Ltd. [4], at p. 79)--it is sufficient if the result of the user of the mark will be that a number of persons will be caused to wonder whether it might not be the case that the two products come from the same source. It is enough if the ordinary person entertains a reasonable doubt. (iii) In considering the probability of deception, all the surrounding circumstances have to be taken into consideration. (This includes the circumstances in which the marks will be used, the circumstances in which the goods will be bought and sold, and the character of the probable purchasers of the goods: Jafferjee v. Scarlett [5], at p. 120). 156 In the present case, the comparison is not a side-by-side comparison but one based upon imperfect recollection ( Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd 109 CLR 407 at 415; see also Australian Woollen Mills Ltd v FS Walton & Co Ltd [1937] HCA 51 ; (1937) 58 CLR 641 at 658). 157 The impression produced in the mind of potential customers which is carried away must be that the challenged trade mark is the same as the registered trade mark. 158 Mr Holmes, on behalf of the respondent, undertook a comparison between the Postura chair and the Titan chair based upon observations which he made. He then produced a catalogue of observable differences between the two chairs in order to negate any question of deceptive similarity between Sebel's trade mark and Reed Furniture's so-called trade mark. Some of these differences are, in my view, barely noticeable. In any event, as Sebel submitted, the approach reflected in Mr Holmes' comparison is not the correct approach to the issue of deceptive similarity. This impression is no doubt partly due to the location of the aperture in the back of each chair. It is also probably contributed to by the curved bottom edge of the top portion of the back of the Postura chair which stands in contradistinction to the straighter less interrupted lines of the top portion of the back of the Titan chair. (c) The apertures in the back of each chair are quite different in size, shape and location. These apertures are a prominent feature of both chairs to which the eye is inevitably drawn. Because of the differences between them, the whole of the back of the chair presents quite differently in each case. 160 In my judgment, having regard to the above factors, and on the assumption that the Postura chair is the embodiment of Sebel's trade mark, as the evidence stands at the moment, Sebel has failed to make out a prima facie case that the shape of the Titan chair as embodied in the Titan chair is deceptively similar to Sebel's trade mark. That conclusion is reinforced when regard is had to other matters such as the circumstances in which the chairs will be purchased and sold and the character of the likely purchasers (as to which see especially [43] to [45] above. The chairs are likely to be purchased in bulk by reasonably well-informed purchasing officers. The market which the respondent will be targeting with the Titan chair is the same education sector to which Sebel sells its Postura chair. Potential purchasers are very likely to be well-informed about the two competing products and the differences between them. In my judgment, there is no real likelihood of confusion in the minds of potential purchasers. 161 In expressing these views for the purposes of the present application, I have not ignored Ms Pope's email of 25 November 2008. However, a one-off example of what may have been actual confusion on the part of a potential purchaser does not, of itself, establish deceptive similarity. In any event, the basis for Ms Rasmussen's comments was not apparent from the email nor was it otherwise established in the evidence. 162 In my judgment, the respondent has probably not used a shape as a trade mark in relation to goods of the relevant class by promoting, advertising, distributing and selling the Titan chair. Further, I am of the opinion that, even if the respondent's activities do constitute the use of a shape as a trade mark in relation to goods, Sebel has failed to establish that it has a prima facie case or a serious question to be tried that the shape so used is deceptively similar to Sebel's trade mark. 165 The tort of passing off is notoriously difficult to define. A Full Court of this Court in Conagra Inc v McCain Foods (Aust) Pty Ltd [1992] FCA 159 ; (1992) 33 FCR 302 explained the history, meaning and current relevance of the tort. Now, Nourse LJ (in Consorzio del Prosciutto di Parma v Marks and Spencer plc [1991] RPC 351 at 368-369) has said that the formulations by Lord Diplock and Lord Fraser had not in his experience given the same degree of assistance in analysis and decision as "the classical trinity" of (1) reputation (2) misrepresentation and (3) damage. Nourse LJ regards what was said in the Borden case (supra) as signalling a "welcome return to the classical approach". It is neither necessary nor appropriate for us to comment upon these vicissitudes of the recent English case law. But it is to be observed that the law of passing off contains sufficient nooks and crannies to make it difficult to formulate any satisfactory definition in short form. However, "the classical trinity" does serve to emphasise three core concepts in this area of the law. This appeal is concerned with all of them, namely, the geographical requirements for a sufficient reputation, the nature of the interests damaged, and the significance of fraud in the making of the misrepresentation. An applicant must prove that there are, within the relevant jurisdiction, a substantial number of persons who were aware of the applicant's name or product and are possible consumers. It is necessary to show in a practical and business sense a sufficient reputation in the forum and this requires an evaluation of the size and distribution of the population of prospective consumers likely to be affected: see ConAgra Inc v McCain Foods (Aust) Pty Ltd [1992] FCA 159 ; (1992) 33 FCR 302 at 342, 343, 346 (per Lockhart J), and 380 (per French J). 35 The tort of passing off is designed to protect the property and goodwill of a business. It is only available where an applicant can show goodwill or reputation in relation to the name or get-up of his or her goods or services because they have become distinctive of his goods or services in a particular market. An applicant will succeed where he or she can show that a potential customer is likely to be misled into believing that the respondents' goods are goods of the applicant or are somehow associated with the applicant: see Cadbury-Schweppes Pty Limited v Pub Squash Co Pty Limited (1980) 32 ALR 387 at 393. 36 In Conagra 33 FCR at 381, in relation to a claim under the TPA, French J referred to the expression "a not insignificant number" of persons who would be potential customers as being an appropriate criterion. His Honour went on to observe that if the similarity complained of is "commercially irrelevant", having regard to the number of people who know of that similarity, then the name or get-up is not misleading or deceptive. 37 In considering the question of reputation, although s 52 of the TPA makes no reference to "reputation", decisions under that provision have referred to the need to prove a "significant" or "substantial" proportion of persons within the relevant market who would be likely to be misled: see 10th Cantanae Pty Ltd v Shoshana Pty Limited (1987) 79 ALR 299 at 301; National Exchange Pty Ltd v Australian Securities & Investments Commission (2004) 61 IPR 420 at 440; cf .au Domain Administration Ltd v Domain Names Australia Pty Limited [2004] FCA 424 ; (2004) 207 ALR 521 at 529-530. 168 However, I am not satisfied that Sebel has made out a prima facie case that, by promoting, offering to supply and supplying the Titan chair, the respondent has represented or led or is likely to lead a substantial number of persons in Australia to believe that the Titan chair has the alleged association with either the Postura chair or with Sebel itself or that the respondent has the alleged association with Sebel. 169 I have already held that Sebel has failed to establish a prima facie case of deceptive similarity for the purposes of its trade mark infringement case. 170 Sebel accepts that a similar comparison to that undertaken in respect of the question of deceptive similarity for the purposes of s 120(1) of the Trade Marks Act is required to be undertaken in order to come to a view about deception in the context of the tort of passing off. Sebel quite rightly submitted that the comparison to be undertaken for passing off is a comparison between the two objects with which I am presently concerned, namely, the Postura chair and the Titan chair. 171 I refer to and rely upon what I have already said about deceptive similarity in [151] to [161] above. 172 In addition, I note that the embossing on the Titan chair makes reasonably clear that it is a product of Titan (a UK corporation). The embossing on the Postura chair makes clear that it is a Sebel product. 173 There is no suggestion that Sebel and Titan are associated in any relevant way. 174 The Titan furniture brochure, it is true, deploys bright colours similar to those found on some of the chairs in the Postura range of chairs. However, that brochure is only found in electronic form on the Reed Furniture website. It is also distributed in paper form but only by Reed Furniture representatives. I am not persuaded that any member of the class of potential customers is likely to be led to believe by the form or method of distribution of the Titan furniture brochure that either the respondent (or Reed Furniture) or the Titan chair has the alleged associations with Sebel. 175 In my judgment, when one weighs up the appearance and shape of the Titan chair with that of the Postura chair; the distinguishing markings which appear on each product; the level of knowledge on the part of potential purchasers about the two products and of the identity and experience of each of Sebel and Reed Furniture; and the market into which the products are to be sold, it is not likely that any deception along the lines of that pleaded by Sebel has occurred or will occur in the future by reason of the respondent's introduction of the Titan chair into the Australian market. 176 The mere fact that one trader may have copied the product of another is not sufficient for passing off. There are hundreds of ordinary articles of consumption which, although made by different manufacturers and of different quality, closely resemble one another. In some cases this is because the design of a particular article has traditionally, or over a considerable period of time, been accepted as the most suitable for the purpose which the article serves. In some cases indeed no other design would be practicable. In other cases, although the article in question is the product of the invention of a person who is currently trading, the suitability of the design or appearance of the article is such that a market has become established which other manufacturers endeavour to satisfy, as they are entitled to do if no property exists in the design or appearance of the article. In all of these cases, the normal and reasonable way to distinguish one product from another is by marks, brands or labels. If an article is properly labelled so as to show the name of the manufacturer or the source of the article its close resemblance to another article will not mislead an ordinary reasonable member of the public. 178 Mason J (at 210---211) and Brennan J (at 224---226) expressed similar views. 179 The same reasoning would apply to passing off. 180 These passages were cited and followed in Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd [2000] FCA 876 ; 100 FCR 90 (at [37] to [47] (pp 114---116), especially at [40] (pp 114---115). 181 For these reasons, I am of the view that Sebel has failed to establish a prima facie case of passing off. 183 The first relies upon the allegations and contentions which Sebel makes in respect of passing off (see par 19 of the Statement of Claim). Sebel contends that those allegations and contentions lead to the conclusion that the respondent has been guilty of misleading and deceptive conduct or conduct that is likely to mislead and deceive in contravention of s 52 of the Trade Practices Act . 184 In my judgment, that case has the same difficulties as beset Sebel's case based upon the tort of passing off. It must suffer the same fate. 185 The second group of Trade Practices Act claims comprises Sebel's case based upon misrepresentations said to have been made in the Reed Furniture version of the Titan brochure in both its electronic and paper form. The conduct complained of is said to be continuing. 186 As I have already mentioned at [15] to [18] above, the respondent has offered an undertaking in respect of most of the matters about which Sebel complains in this part of its case. One aspect remains. This is the matter adverted to in [101] to [104] above. The fact that the chair was the first to meet the standards referred to is of little or no significance if, at the time the hypothetical purchasing decision is to be made, other chairs also meet that standard. Safety, good ergonomic design, and strength of the chairs are all factors which will influence the purchasers. 188 In my judgment, Sebel's case on this point has reached the level of a prima facie case. Subject to my consideration of the remaining questions (balance of convenience and balance of justice), I think that it is entitled to an injunction restraining the respondent from making statements which suggest that the Titan chair is the only chair available in Australia which conforms to the UK standard EN 1729 Parts 1 and 2 (2006). However, it is desirable that I briefly express my views on these matters. 190 Sebel submitted that the respondent's conduct involves the infringement of a monopoly property right which was undertaken by the respondent with its "eyes wide open". That is to say, the respondent was aware of Sebel's trade mark, took advice as to whether or not the supply of the Titan chair in Australia would infringe that trade mark or any other of Sebel's intellectual property rights and decided to go ahead with its plans to import and sell the Titan chair and run the gauntlet. It did so in the face of warnings from Sebel. Sebel also submitted that Sebel was the established supplier of this type of chair in the relevant market or markets in Australia whilst the respondent was embarking upon "new trade". 191 In my view, all of these matters are to be considered in light of the strength of Sebel's claim for relief directed at stopping the sale of the Titan chair in Australia. 192 Even if I am wrong about the first part of the present enquiry (the question of whether or not Sebel has made out a prima facie case), I am of the opinion that the case which it seeks to put in support of that claim for relief is weak --- sufficiently weak to neutralise the submissions on balance of convenience made by Sebel to which I have referred in [190] above. 193 In my judgment, the most significant matter to be weighed in the balance in this part of the case is the parties' respective ambitions in respect of Contract No 1006. 194 The other matters relied upon by the parties rise no higher than general assertions of harm which do not advance either position much in the present case. Furthermore, I do not place much weight upon the evidence led in this context directed to the impact which the granting of an injunction would have on the UK Titan company. Similarly, I am not persuaded that Sebel has been guilty of laches or delay which should deprive it of any remedy to which it might otherwise be entitled. 195 Sebel seeks an injunction in order to shut out the respondent from Contract No 1006. An interlocutory injunction in the terms of par 1 of Sebel's claim for interlocutory relief, if granted at the present time, would almost certainly deprive the respondent of any chance of being selected to supply a Titan-type chair to the NSW Government and would probably do so for many years to come. 196 On the other hand, if no injunction is granted, the advantages and disadvantages of the two brands of chair can be explained and fought over in the marketplace. It is highly unlikely that those employees of NSW Department of Commerce who have the responsibility of purchasing this type of chair on behalf of the NSW Government for its departments, institutions and authorities will not already know that the Titan chair has been introduced to compete with the Postura chair and that each brand of chair comes from a different source. 197 In my view, if I had found that Sebel had a prima facie case for an injunction in the terms of par 1 of its claim for interlocutory relief, the balance of convenience and the balance of justice favour the refusal of such an injunction. 198 An injunction restraining the supply of the Titan chair would probably also affect the respondent's prospects of supplying as well as its capacity to supply other furniture under Contract No 1006. 199 The granting of an injunction in those terms would also be likely to affect the respondent's prospects of supplying other furniture under arrangements which it has or hopes to have with other potential purchasers. 200 Sebel's claim for relief in relation to the specific misrepresentation about which it complains is in a different category. 201 In my judgment, the balance of convenience and the balance of justice favour the grant of an injunction restraining the making of any statement by the respondent which suggests that the Titan chair is the only plastic sidechair available in Australia which currently conforms to UK standards EN 1729 Parts 1 and 2 (2006). 202 A statement to that effect is a false statement because Sebel's Postura Plus sidechair meets the requirements of those standards and has done so since late March 2008. 203 The only issue that seems to me to be involved here is whether the granting of an injunction would cause the respondent significant financial hardship --- so significant that it should tip the balance against the grant of an injunction when weighed against the likely benefits to Sebel if an injunction is granted. 204 The cost to the respondent of altering the Titan chair brochure is not likely to be great. The likely harm to Sebel if no injunction is granted may be significant. 205 In those circumstances, I propose to grant an interlocutory injunction dealing with this aspect of Sebel's case. (b) For that reason, its claim for an interlocutory injunction restraining the respondent from engaging in such activities in respect of the Titan chair is refused. (c) If I am wrong in conclusions (a) and (b), I am of the view that the balance of convenience and the balance of justice in any event favour the refusal of an interlocutory injunction restraining the respondent from promoting, offering to supply or supplying the Titan chair in Australia. However, it has failed to obtain the injunction to which most of the evidence was directed and to which the parties devoted most of their time and attention at the hearing and in preparation for the hearing. 207 In those circumstances, I think that Sebel should pay the respondent's costs of and incidental to the interlocutory hearing which took place before me on 23 December last and I so order. I direct that the parties confer with a view to preparing a set of directions which the Court can make by consent, such directions being designed to have the proceedings ready for final hearing by no later than the second week of March 2009. 209 I further direct that the proceedings be listed before me for directions on Thursday, 5 February 2009 at 9.30 am at which time I intend to fix the proceedings for final hearing and to make all necessary directions to ensure that the proceedings are ready for final hearing within the time frame outlined above. I certify that the preceding two hundred and nine (209) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.

whether the promotion and supply of a one piece moulded plastic chair by a rival trader is likely to deceive potential purchasers into believing the rival trader's product was put out by or associated with the applicant or that the rival trader is itself associated with the applicant the competing products were sufficiently differentiated no prima facie case for interlocutory injunction to restrain promotion and supply of the new product balance of convenience and balance of justice against grant of an interlocutory injunction to that effect in any event interlocutory injunction refused. alleged infringement of shape trade mark in a plastic chair by rival trader whether rival trader used the shape of the registered trade mark as a trade mark meaning of use as a trade mark whether goods themselves can constitute a trade mark whether the trade mark must have a separate identity from that of the goods whether the features of the shape travel beyond the functional and technical requirements inherent in the goods whether the rival trader's chair is deceptively similar to the applicant's chair no prima facie case of trade mark infringement balance of convenience and justice against the grant of an injunction interlocutory injunction refused. misleading and deceptive conduct s 52 of the trade practices act whether the promotion and supply of a one piece moulded plastic chair by a rival trader is likely to deceive potential purchasers into believing the rival trader's product was put out by or associated with the applicant or that the rival trader is itself associated with the applicant the competing products were sufficiently differentiated no prima facie case for interlocutory injunction to restrain promotion and supply of the new product balance of convenience and balance of justice against grant of interlocutory injunction in any event interlocutory injunction refused. misleading and deceptive conduct s 52 of the trade practices act whether statement that the respondent's one piece moulded plastic chair is the first chair to conform to a uk standard carries with it or implies that it is the only chair which conforms to that standard statement held to be misleading interlocutory injunction granted. respondent mostly successful in resisting interlocutory relief applicant to pay respondent's costs of interlocutory hearing. passing off trade marks trade practices trade practices costs

2 By notices of motion filed on 13 February 2008, the respondents sought to have the applications dismissed pursuant to s 31A of the Federal Court Act. Mr Priestley challenges the constitutionality of s 31A of the Federal Court Act and O 20 r 5 of the Federal Court Rules made in furtherance of that section ('the constitutional challenge'). It is the constitutional challenge that is the matter presently for determination. 3 As set out in Priestley v Godwin [2008] FCA 1179 , Mr Priestley made a number of applications for me to disqualify myself from determining the constitutional challenge. I refused to disqualify myself on three of the grounds advanced by Mr Priestley. I reserved my decision in respect of a fourth ground based on the contention that, by s 79 of the Judiciary Act 1903 (Cth) ('the Judiciary Act '), the Human Rights Act 2004 (ACT) ('the Human Rights Act ') applies to these proceedings, being heard in the Australian Capital Territory ('the ACT') ('the fourth ground'). The section is addressed to courts exercising federal jurisdiction and is limited to cases to which the State or Territory laws in question are applicable ( Solomons at [23]). 6 It is, as McHugh J observed in Solomons at [37], a long recognised rule of statutory construction that a reference to courts, matters, things and persons in the legislation of a State (or Territory) is a reference to courts, matters, things and persons in that State (or Territory). Statutory provisions can be "picked up" by s 79 even though they are expressed in terms applying specifically to State or Territory courts ( Australian Securities and Investments Commission v Edensor Nominees Pty Ltd [2001] HCA 1 ; (2001) 204 CLR 559 at [72] per Gleeson CJ, Gaudron and Gummow JJ citing Kruger v The Commonwealth [1997] HCA 27 ; (1997) 190 CLR 1 at 140 per Gaudron J; Solomons at [58] per McHugh J). There may also be statutory provisions couched in terms which make it impossible for them to be "picked up" ( Edensor at [72]-[74] per Gleeson CJ, Gaudron and Gummow JJ; Solomons at [24] per Gleeson CJ, Gaudron, Gummow, Hayne and Callinan JJ). 7 A court exercising federal jurisdiction has no jurisdiction to apply an Act which, upon its proper construction, applies only to State matters ( Solomons at [33] per McHugh J). Justice McHugh commented in Edensor at [141] and affirmed in Solomons at [59] that it is not the literal interpretation of a State Act that determines whether it is applied in Federal Courts but the substance of the Act. The nature of some State and Territory statutes may make them inapplicable to proceedings in the federal jurisdiction. 8 Mr Priestley submits that s 21(1) of the Human Rights Act creates judicially enforceable rights regarding the independence and impartiality of courts which must be recognised by a court exercising jurisdiction in the ACT. • Whether there has been a breach of the rights recognised in s 21(1) of the Human Rights Act . DOES S 21(1) OF THE HUMAN RIGHTS ACT APPLY TO THESE PROCEEDINGS? 10 Mr Priestley recognises that s 21(1) of the Human Rights Act cannot apply of its own force in these proceedings. He relies on s 79 of the Judiciary Act . Mr Priestley submits that, as there is no provision in a Commonwealth Act for the subject matter of s 21(1) of the Human Rights Act , that section is binding. Mr Priestley contends that the Federal Court Act leaves room for the functions and requirements conferred by s 21(1) of the Human Rights Act . That is, he says, a Commonwealth law does not "otherwise provide" for the subject matter of s 21(1). 11 The respondents accept that s 79 of the Judiciary Act may operate to "pick up" at least parts of the Human Rights Act in relation to matters before the Federal Court sitting in the ACT. They submit, however, that even if s 21(1) of the Human Rights Act is capable of being picked up by s 79 of the Judiciary Act , it can have no operation in relation to these proceedings because these proceedings do not require the Court to interpret or apply a law of the ACT. 12 Section 21(1) of the Human Rights Act is in Part 3 of that Act. Part 3 sets out the civil and political rights which are defined, for the purpose of the Human Rights Act , in s 5 as "human rights". These human rights are given effect by Part 4 of the Human Rights Act . 13 There is nothing in Part 4 of the Human Rights Act that purports to give the human rights any operation in relation to the matters in issue in these proceedings. That is not, however, conclusive of whether or not the Human Rights Act applies. 17 In neither the constitutional challenge nor the substantive proceedings is the Court called upon to interpret or apply a Territory law, but laws of the Commonwealth. Section 79 of the Judiciary Act does not change the meaning of the State or Territory Act that is "picked up", nor does it operate to give a State or Territory law a new or extended meaning when it is made applicable in federal jurisdiction ( Edensor at [134] per McHugh J; Solomons at [60] per McHugh J). For these reasons, s 79 of the Judiciary Act does not operate to make s 21(1) of the Human Rights Act applicable to the present proceedings, which involve the application and interpretation of Commonwealth, not Territory, laws. 18 It follows that the Human Rights Act has no application to the constitutional challenge. In doing so, I applied the common law test as described in Ebner v Official Trustee in Bankruptcy [2000] HCA 63 ; (2000) 205 CLR 337 ( Priestley at [24]). In Forge v Australian Securities and Investments Commission [2006] HCA 44 ; (2006) 228 CLR 45 at [66] , Gummow, Hayne and Crennan JJ described the requirements as discussed by the High Court in Ebner in terms that included the requirement that a court or tribunal must be "independent" and "impartial". Those are the same terms as used in s 21(1) of the Human Rights Act . Section 21(1) does not relevantly change or add to the test as laid out in Ebner and Forge . It is the same test that I applied in Priestley . 20 Mr Priestley also submits that ' as a matter of law and policy ', s 5 of the Federal Court Act ' leaves room for the operation of section 21(1) by virtue of the Commonwealth's obligations under Article 14.1 of the ICCPR [the International Covenant on Civil and Political Rights]'. Article 14.1 relevantly provides for an entitlement to ' a fair and public hearing by a competent, independent and impartial tribunal established by law '. This does not relevantly add to Mr Priestley's submissions on the application of s 21(1) of the Human Rights Act . 21 Mr Priestley has not advanced any arguments as to my competence or independence, or the appearance of independence, or of impartiality, that were not advanced in his previous applications. His submission remains based on his contention that neither I nor any judge of the Federal Court can hear and determine the constitutional challenge. That has been dealt with in Priestley . The result is the same under the common law and, if it applied, under s 21(1) of the Human Rights Act . In his submission that the requirements in Article 14.1 of the ICCPR must be considered separately by reason of s 21(1) of the Human Rights Act , Mr Priestley has not added to the substance of the grounds for disqualification or recusal that he made previously. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett.

whether s 79 of the judiciary act 1903 (cth) operates to make s 21(1) of the human rights act 2004 (act) applicable to proceedings in the federal court heard in the act concerning the federal court of australia act 1976 (cth) and the federal court rules the human rights act applies to the interpretation of territory laws s 21(1) of the human rights act is not applicable to these proceedings the requirements of independence and impartiality in s 21(1) of the human rights act do not relevantly add to the test in ebner v official trustee in bankruptcy statutes

The Tribunal affirmed a decision of the Social Security Appeals Tribunal (SSAT). On 28 March 2006, the SSAT had affirmed a decision made by an authorised review officer within the Department of the respondent (the Secretary) on 3 November 2005, that a "preclusion period" from 30 April 2005 to 15 February 2008 applied to Mr Clark. The significance of this decision is explained below. 2 Section 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) provides that a party to a proceeding before the AAT may appeal to this Court "on a question of law" from any decision of the AAT in that proceeding. By his amended notice of appeal filed in Court on the hearing, Mr Clark purports to raise three questions of law. (Original emphasis. The second of the s 1184K questions is whether the AAT "failed to provide sufficient reasons for not including relevant considerations in its determination". 4 These two questions relating to s 1184K will not call for consideration if I should sustain the construction of the substantive provisions contended for by Mr Clark, and I will say nothing further in relation to them at this stage. 5 In my view, and contrary to the Secretary's submission, the first question (relating to the construction of s 1170(1)) raised by Mr Clark is one of law: that question of law is whether the notion of receipt of two payments in a particular statutory provision signifies, as the Secretary submits, simply the historical event of their being received, or, as Mr Clark submits, something like "receipt and retention of them" or "being in receipt of them" or "continuing enjoyment of them". The respondent cites Comcare v Etheridge [2006] FCAFC 27 ; (2006) 149 FCR 522 at [26] ; Collector of Customs v Agfa-Gavaert Limited [1996] HCA 36 ; (1996) 186 CLR 389 ( Agfa-Gavaert ) at 395-396; and Hope v Bathurst City Council [1980] HCA 16 ; (1980) 144 CLR 1 at 7 in support of the proposition that the question set out at [2] above is not a question of law because the words "receives both" in s 1170(1) are used according to their ordinary meaning. Therefore, the respondent argues, the question of whether the facts as found by the AAT fall within the meaning of those words is a question of fact. However, the meaning of a non-technical English word can give rise to associated questions of law, such as whether the word is used in its (presumably one and only) ordinary non-technical sense, and, most importantly, whether, and if so how, the meaning of the word in a particular case is affected by the statutory context in which it occurs: see the discussion in Agfa-Gavaert [1996] HCA 36 ; 186 CLR 389 at 395ff, and An v Minister for Immigration and Citizenship [2007] FCAFC 97. He was due to become entitled to "an age pension" upon reaching the retirement age of 65 years on 29 April 2004. 7 On 31 October 2000, Mr Clark ceased working as a haulage driver for Pasminco Limited (Pasminco) and Mountain Bulk Haulage Pty Ltd (Mountain Bulk) due to his suffering compensable lead and chemical poisoning arising out of his work. 8 In respect of the period 1 December 2000 to 2 November 2001 Mr Clark received "a social security benefit", called a "Newstart" allowance. The amounts he was paid totalled $4,415.67. 9 From 2 November 2001, Mr Clark began to receive periodic compensation payments under the Workers Compensation Act 1987 (NSW) (the WC Act). For the purposes of the appeal, the parties agree that these payments were in respect of the period from 31 October 2000, the date of the injury. The workers' compensation insurer that made the payments was Allianz Australia Workers' Compensation (NSW) Ltd (Allianz). Allianz paid workers compensation totalling $88,082.18 to Mr Clark in respect of the period to 31 October 2000 to 29 April 2005. As to $4,415.67 of this sum, however, Allianz paid it to Mr Clark by refunding it on his behalf to Centrelink on 14 November 2001. Mr Clark was not entitled to receive both workers' compensation and the social security benefit in respect of the same days: see s 1173 of the Act. Mr Clark's receipt and later repayment of the social security benefit of $4,415.67 is therefore only of historical interest: it was "replaced" by the workers' compensation totalling $88,082.18 paid to Mr Clark in respect of the period from 31 October 2000 to 29 April 2005. 10 Section 52 of the WC Act provided that if a person received an injury before reaching the retiring age, being the age at which the person would be eligible to receive an age pension under the SS Act, a weekly payment of compensation under the WC Act was not to be made in respect of any resulting period of incapacity for work occurring after the first anniversary of the date on which the person reached the retiring age. Since Mr Clark received his injury before reaching his retiring age of 65 years on 29 April 2004, a weekly payment of compensation was not to be made to him in respect of any period of incapacity for work occurring after 29 April 2005. 11 Mr Clark sued Pasminco and Mountain Bulk for damages at common law in the District Court of New South Wales. Allianz was the insurer providing indemnity to the defendants in respect of the claim. The action was settled "by consent and without admission of liability" on 10 March 2005 for $280,000. 12 Mr Clark's common law claim included a claim for loss of earning capacity, and Allianz deducted and retained for itself the sum of $88,082.18, leaving Mr Clark with $191,917.82. In substance, the compensation that Mr Clark received for loss of earnings and loss of earning capacity thus came to reside in the lump sum payment of $280,000 alone. The Plaintiff was a director of that company. The Plaintiff carried out truck driving services. The Plaintiff's average weekly earnings at the time of the injury were $600.00 gross per week. He has not engaged in gainful employment since October 2000. Since that time he has been unemployable on the open labour market. The Plaintiff ceased work in October 2000 and has been incapacitated for work since then. The Plaintiff makes a claim for past loss of income at the rate of $600.00 gross per week from October 2000 to age 65 and loss of superannuation at the rate of $54.00 per week for the same period. Further or in the alternative the Plaintiff makes a claim for diminution in earning capacity on the open labour market available to him for both the past and the future. The Plaintiff makes a claim for loss of superannuation for both the past and future. The Plaintiff makes a claim pursuant to Fox v Wood [(1981) [1981] HCA 41 ; 148 CLR 438]. 14 Against the above facts, the relevant legislative provisions and their application to Mr Clark's circumstances may now be considered. 15 Section 17 comprised definitions, the significance of which will now be noted. 16 Section 17(1) of the SS Act defined the expression "compensation affected payment" to mean any one of numerous forms of pensions, payments and allowances that are identified in the definition, including, relevantly, "a social security benefit" and "an age pension". While the expression "lump sum compensation payment" generally in the Act refers to the whole $280,000, for the particular purposes of s 17(3) the expression refers to only $191,917.82. 21 When this last figure of $191,917.82 is fed into s 17(3)(a), we find that the "compensation part" of the lump sum compensation payment is 50 percent of that amount, that is to say, $95,958.91. As noted at [17] above, the expression "compensation part" is defined in s 17(1) in relation to a lump sum compensation payment as having the meaning given by subss (3) and (4). 22 It is now necessary to turn to Pt 3.14 of the SS Act, which is headed "Compensation recovery". Section 1160, the first section in Pt 3.14, states that the Part operates in certain specified circumstances, relevantly, to "render a person's compensation affected payment", such as the age pension, not payable because of the receipt of compensation. 23 The primary question of law raised by the appeal turns on the construction of ss 1169 and 1170 of the SS Act. It is the refusal of an age pension that has given rise to this proceeding. 25 In terms of s 1169(1)(b), Mr Clark received a lump sum compensation payment of $280,000. Accordingly, a preclusion period applied to any entitlement he might otherwise have had to an age pension as from 29 April 2004. The question is how, and in particular from what date, the preclusion period is to be calculated. 26 Before turning to this question, I will discuss the length of the preclusion period. This preclusion period is expressed as a number of weeks worked out under subss (4) and (5) of s 1170. The "Compensation part of lump sum" which is the numerator in the fraction set out in s 1170(4) is the "compensation part of a lump sum compensation payment" referred to in s 17(3) of the SS Act (set out at [19] above), in Mr Clark's case, $95,958.91. The "Income cut-out amount", which is the denominator in that fraction, is defined in subss 17(1) and (8) of the SS Act, and it is agreed that in Mr Clark's case that amount is $656.63. Accordingly, the formula in s 1170(4) gives 146 weeks. It is common ground that this is the length of the preclusion period in Mr Clark's case. 27 I turn now to the critical subss (1) and (3) of s 1170. 28 The Secretary submits that the circumstances fall within subs (1) because, as a matter of historical fact, Mr Clark received both periodic compensation payments totalling $88,082.18 in respect of the period from 31 October 2000 to 29 April 2005, and (on 10 March 2005) a lump sum compensation payment of $280,000. 29 On this basis, s 1170(1) provides that the preclusion period of 146 weeks began on the day following the last day of the periodic payments period, that is to say, the day following 29 April 2005, that is to say, 30 April 2005. It is not disputed that a period of 146 weeks commencing on that date expires on 15 February 2008. 30 Mr Clark, on the other hand, submits that upon its proper construction, subs (1) of s 1170 applies only where a person receives and retains the benefit of both the periodic compensation payments and a lump sum compensation payment. Mr Clark submits he does not satisfy this description because the periodic compensation payments totalling $88,082.18 were repaid to Allianz out of the sum of $280,000, leaving him with only $191,917.82. Accordingly, Mr Clark submits, subs (1) does not apply and the applicable provision within s 1170 is subs (3). (It was not suggested by either party that subs (2) applies. ) According to subs (3), the lump sum preclusion period began on the day on which Mr Clark's loss of earnings or loss of earning capacity began, namely 31 October 2000. On this basis, the preclusion period of 146 weeks expired well before Mr Clark's 65 th birthday on 29 April 2004, and any entitlement he has to an age pension is unaffected. Section 1173 of the SS Act had the effect that because Mr Clark received periodic compensation payments in respect of the period from 31 October 2000 to 29 April 2005, he was not also entitled to a social security benefit in respect of any part of that period. 33 Although s 1170 uses the present tense, it is clearly referring to events that have already happened. If the words of s 1170 are taken in their ordinary meaning, it is clear that Mr Clark is a person who has received both periodic compensation payments ($88,082.18) and a lump sum compensation payment ($280,000). Counsel for Mr Clark submits that despite the ordinary meaning of the words, it could not have been Parliament's intention that Mr Clark would be subject to a double preclusion period. I noted earlier (at [30]) the construction which he suggests. He concedes, however, that this would involve a "somewhat strange interpretation of this language [of the statute]". 34 I do not think that the construction suggested by Mr Clark is correct, or that it is supported by the legislative policy that underlies the provision. 35 Because the plain meaning of the statutory language is the basis of the Secretary's construction, which I accept, in the following discussion I must deal with the fundamental argument put on Mr Clark's behalf that this construction produces such unjust results that it could not have been intended. Inevitably, in doing so, I will touch upon matters relevant to the s 1184K questions to be discussed later. 36 The fact that the periodic compensation payments have been repaid is already allowed for in the formulae stated in s 1170. The provisions of Div 3 are intended to apply in all cases where an LSP is received, whether or not it includes an RPCP. If it does not include an RPCP, the "compensation part" of the LSP is 50 percent of the total LSP unreduced, but if it does include an RPCP, the compensation part is 50 percent of only the balance remaining after the deduction of the RPCP. As a result, where the LSP does not include an RPCP, the lump sum preclusion period will be longer, but will start on the day on which the loss of earnings or loss of capacity to earn began. Where the LSP does include an RPCP, the preclusion period will be shorter, but will begin on the day following the last day of the periodic payments period. 37 This means that in Mr Clark's case the numerator "Compensation part of lump sum" is 50 percent of $191,917.82, not 50 percent of $280,000. If it were the latter ($140,000), the lump sum preclusion period would be 213 weeks, rather than only 146 weeks. As it happens, even this result would be preferable from Mr Clark's viewpoint to a preclusion period of 146 weeks commencing on 30 April 2005, as a period of 213 weeks commencing on 31 October 2000 would have expired around the end of November 2004. But it must be accepted that the legislature intended the statutory formula to apply to individuals placed as Mr Clark was. 38 It is inappropriate to regard Mr Clark as not having received and retained the sum of $88,082.18. He received that sum initially by way of the periodic compensation payments and later he received some unidentified amount in respect of his loss of earnings from 31 October 2001 apparently to 29 April 2004 (Mr Clark's 65 th birthday) as part of the lump sum compensation payment of $280,000. We simply do not know how the sum of $280,000 was arrived at. We know only how Mr Clark particularised his claim (see [13] above). There are, according to my calculation, approximately 181 weeks from 31 October 2000 to 29 April 2004. According to his particulars, Mr Clark claims to have suffered loss of earnings of $108,600 (181 x $600), or $118,374 (181 x $654) if lost superannuation is included, in respect of that period. Mr Clark was required by the WC Act to repay the periodic compensation payments totalling $88,082.18, leaving him with some $20,000 or $30,000 as the case may be, on account of "past loss of earnings" down to age 65 (29 April 2004). In addition, however, Mr Clark "further or in the alternative" claimed for diminution in earning capacity on the open labour market available to him for both the past and the future, which could have included a claim for diminution in capacity to earn beyond the age of 65. 39 What I have just said concerning Mr Clark's claims is speculative but serves to emphasise the difficulty of knowing for certain how much out of an undissected settlement sum is for loss of earnings and loss of earning capacity. 40 If it were to be assumed that Mr Clark received as part of the LSP of $280,000 nothing more in respect of either loss of earnings or loss of earning capacity than the sum of $88,082.18, the construction supported by the Secretary produces a result that is unfair to Mr Clark. If, on the other hand, the sum of $280,000 included something more than that amount for either loss of earnings or loss of earning capacity, it would not necessarily do so. 41 It is useful to look at the policy considerations that informed the inclusion of the 50 percent rule in the SS Act. Provisions that were substantially the same as ss 17(3)(a) were introduced by the Social Security Amendment Act 1988 (Cth) (Act No 58 of 1988) . Where a person receives personal injury compensation that makes up for lost income the Social Security Act provides that pension or benefit may be reduced or recovered. This is one way in which social security expenditures are directed to those most in need. Settlements of lump sum compensation particularly in the workers compensation jurisdiction are being manipulated to obscure the economic loss component and to avoid recovery of social security payments. To prevent this abuse, the Minister announced on 8 February 1988 that, for future personal injury settlements made by agreement or by consent order, 50 per cent of lump sum compensation will be deemed to be in respect of economic loss. This Bill gives effect to that proposal. In deciding Mr Clark's case, the AAT had regard to this policy, citing the discussion of the amendments and the background to them by von Doussa J in Secretary, Department of Social Security v Banks (1990) 20 ALD 19. 42 The construction supported by Mr Clark would itself result in an anomaly in relation to a young person whose loss of earning capacity accounted for a large part of his or her lump sum compensation payment. Assume a settlement for an LSP of $2,000,000, that there was an RPCP of $200,000, and that, although not specified, the sum of $2,000,000 included $1,400,000 for loss of earning capacity. According to the s 17(3) and s 17(4) formulae, the compensation part of the LSP would be only $900,000. On what basis in fairness would the injured young person have a claim to have the preclusion period (calculated by reference to that amount) begin back on the date of the injury, rather than the day after the end of the period covered by the periodical compensation payments of $200,000? The arbitrary figure of $900,000 would already be an understatement of the amount received for loss of earnings and of earning capacity, and to adopt the date of the injury as the start of the preclusion period would only increase the "over generous" treatment of the injured young person. In a perfect world, the preclusion period would run from the date of injury until the sum of $1,400,000 was exhausted, and in Mr Clark's case from 31 October 2000 until whatever amount was included in the sum of $280,000 for loss of earnings and of earning capacity was exhausted. But in an imperfect world in which settlement figures were being manipulated so as to understate the component for loss of earnings and of earning capacity, the legislature has solved the problem by the rough and ready 50 percent rule. 43 The provisions reflect a policy decision to treat that which remains after any repayment of any periodic compensation payments as relating, as to 50 percent, to loss of earnings or of earning capacity, in respect of the period after the expiry of the period covered by those payments. The provisions reflect an acceptance by the legislature that it is not practicable to achieve complete justice attuned to the circumstances of each individual case. 44 It may well be that in Mr Clark's case, because of his age, the sum of $280,000 included no component, or only a very small component, for loss of his capacity to earn beyond age 65 (29 April 2004) and the statutory formula produces a result that is unfair to him, but if so, that result flows from a deliberate policy decision of the legislature favouring simplicity and efficiency of administration and reduction in administrative costs over attaining a fair result in each case considered on its individual merits. 45 For the above reasons I accept the construction advanced by the Secretary, and not that contended for by Mr Clark. The reference in the section to "the special circumstances of the case" is a reference to circumstances of the case which make it unusual or out of the ordinary run. The notion is referable to some understanding of the usual or ordinary circumstances to which the provision in question was intended to apply. 47 Section 1184K , if enlivened, empowers the Secretary to treat the whole or part of "a compensation payment" as not having been made or not liable to be made. The power is a wide one, and refers to a "compensation payment", that is to say, either a periodical compensation payment or a lump sum compensation payment. whether there was any unfairness resulting from the Appellant's inability to claim economic loss compensation beyond his 65 th birthday when coupled with the requirement that "period compensation payments" be "repaid" with respect to that period. Whether in the exercise of its discretion under s 1184K of the Social Security Act 1991 to find that special circumstances exist, the Tribunal failed to provide sufficient reasons for not including relevant considerations in its determination. whether the object of the legislation to prevent "double dipping" may have been achieved in this particular case on an inequitable basis. (2B) Where the Tribunal gives in writing the reasons for its decision, those reasons shall include its findings on material questions of fact and a reference to the evidence or other material on which those findings were based. 53 Mr Clark's submissions go to the merits of the Tribunal's reasons. In Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30 ; (2001) 206 CLR 323 ( Yusuf ) at [67]---[69], McHugh, Gummow and Hayne JJ made clear that statutory obligations of the present kind require a statement of the administrative tribunal's actual reasons and findings and references to the evidence or other material on which the findings were actually based ( Yusuf [2001] HCA 30 ; 206 CLR 323 was concerned with s 430 of the Migration Act 1958 (Cth)). 54 It is not shown that the statement of "reasons for decision" provided by the Tribunal did not contain its actual reasons for its decision, did not include its actual findings on material questions of fact, and did not contain a reference to the evidence or other material on which those findings were actually based. 55 I turn now to the first question relating to s 1184K. the unfairness occasioned by the limitation placed on the Appellant's claim for economic loss compensation after the age of 65 coupled with the requirement that "periodic compensation payments" calculated up to the age of 66 were deducted from the appellant's "lump sum compensation". 57 Mr Clark complains that the AAT failed to address the true nature of the "special circumstances" on which he relied, namely, that the very provision in s 1170 for a preclusion period worked unjustly in his case. Much of what I have said above in dealing with the first question is relevant to this complaint. 58 At the outset, it is not amiss to note that Centrelink sent Mr Clark a letter on 12 November 2001 advising him that if he received any payment of weekly compensation or a lump sum compensation payment, some or all of the Centrelink payments made to him since the date of his injury may have to be refunded to Centrelink, and that any compensation he received might also stop him from receiving Centrelink payments in the future . 59 As well, apparently on 10 March 2005, Mr Clark's solicitors sent by fax to Centrelink a request for an estimate of the preclusion period for an estimated lump sum compensation payment of $280,000. The expected settlement date they gave to Centrelink was 15 March 2005. On 15 March 2005, Centrelink wrote to Mr Clark's solicitors advising that on certain bases, the preclusion period was likely to be from 16 March 2005 to 14 April 2009. It will be noted that in fact the settlement took place on 10 March 2005, the date of the solicitors' faxed inquiry. 60 It is not the case that the AAT omitted to consider the alleged unfairness. ... He [Mr Hanrahan, counsel for Mr Clark] pointed to counsel, Mr R Ingram's affidavit of 22 February 2006 (T27) in which Mr Ingram had deposed in relation to Mr Clark that the claim for future economic loss was to date from October 2000 only to age 65, and that was thus an inherent unfairness to the Applicant. 32. Mr Hanrahan also submitted that the preclusion period should have been calculated to begin on the day on which Mr Clark's loss of earnings began, that is 31 October 2000, (rather than 29 April 2005), and that this would have been the case if he had claimed a compensation affected payment such as Newstart instead of having received periodic payments of workers compensation before the settlement at the District Court. Mr Hanrahan cited Coppard v Department of Family and Community Services [2003] AATA 640 (7 July 2003) in this regard, although I noted that the only issue in that case was whether the discretion to allow for a reduction in the preclusion period due to "special circumstances" should be exercised. It was in fact refused. I was mindful that in Aiken and Secretary Department of Employment and Workplace Relations [2006] AATA 195 (6 March 2006), the preclusion period commenced immediately after the injury Mrs Aiken received because she had been receiving age pension at that time which was refunded when the compensation payment was made and the preclusion period imposed. The plaintiff makes a claim for future loss of income to age 65 years at the rate of a comparable employee. Further or in the alternative, the plaintiff makes a claim for diminution in earning capacity on the open labour market available to him for both the past and future. The claim for a diminution in earning capacity is a claim for economic loss in the alternative by way of a "cushion" or lump sum should the loss not be able to be calculated by way of a weekly amount. This was intended to be limited, and in my experience in practice is confined, to the limit of 65 years as pleaded in this matter unless otherwise specified. 6. On 31 January 2005, an Amended Statement of Particulars was served on the defendants. The economic loss claim was the same as initially pleaded. He stated that it was his practice to calculate the damages to which a plaintiff might be entitled by assessing each head of damage. He said he recalled calculating economic loss to age 65 and advising Mr Clark that he would not obtain any economic loss past that age if the matter went to a hearing. Mr Ingram said he recalled those matters because he remembered Mr Clark asking whether he "could continue with the aged pension after settlement". 64 Although it was Mr Ingram's usual practice to record his estimates in a handwritten schedule of damages which he would place in the brief and return to his instructing solicitor, in the present case his instructing solicitor informed him that the returned brief did not contain such a document, leaving him to conclude that he must have disposed of it instead. 65 I make three observations about Mr Ingram's evidence. First, the particulars of economic loss expressed in the Amended Statement of Particulars filed on 31 January 2005 and set out at [13] above, were in a different form from those set out in Mr Ingram's affidavit. However, they also referred to a claim for loss of income and loss of superannuation down to "age 65", although, further or in the alternative, to a claim for diminution in any capacity on the open labour market. 66 The second observation is that Mr Ingram's affidavit does not, of course, go to the state of mind of the representatives of the defendants in the District Court proceeding. We simply do not have an amount which it can be said was the agreed amount included in the sum of $280,000 as representing loss of earning or loss of earning capacity. 67 Third, evidence of the present kind represents an inquiry of the very kind against which the Parliament set its face in adopting the 50 percent rule (see [41] above). 68 In Secretary, Department of Family and Community Services v Chamberlain [2002] FCA 67 ; (2002) 116 FCR 348 ( Chamberlain ), Kiefel J addressed at some length the question of the circumstances that might be "special" within s 1184K. In particular, her Honour reviewed earlier cases and noted (at [32]) that two of them, Kertland v Secretary, Department of Family and Community Services [1999] FCA 1596 ; (1999) 95 FCR 64 and Secretary, Department of Social Security v Smith (1991) 30 FCR 56, were "unusual" in that in them "it could be seen, objectively, that there could not have been a double payment", so that "it might be concluded that the statutory assumption operated unjustly". Her Honour thought that that situation would not often arise and set those cases apart from the usual. 69 In Chamberlain [2002] FCA 67 ; 116 FCR 348 itself, the effect of the statutory formula was that the applicant would have to pay back more than twice the amount that had been allocated to loss of earnings and of earning capacity in her lump sum settlement. Nonetheless, her Honour thought that such a factor would be present in many cases and was simply an aspect of the outworking of the formula. Her Honour considered that it could not, by itself, amount to "special circumstances". 70 Like Mr Clark, Mrs Chamberlain was elderly. She was aged 60 years when, on 13 January 1999, she suffered personal injury in a motor vehicle accident. At the time she was in receipt of an age pension and she had previously received a disability support pension. She claimed to have been able and entitled to earn up to $50 per week from teaching music, without her pension entitlement being affected. Her claim was settled for $35,000 plus $4,000 for costs. The parties to the settlement allocated $31,500 to pain and suffering and medical expenses, and $3,500 to loss of earnings and of earning capacity. 71 Mrs Chamberlain had continued to receive the age pension from the time of the accident. At that time, it was ss 1165 and 1166 of the SS Act that provided for the lump sum preclusion period and refund in Mrs Chamberlain's case, and s 1184 of the SS Act that provided for a discretion in the Secretary to treat the whole or part of a compensation payment as not having been made or not liable to be made if the Secretary should think it appropriate to do so "in the special circumstances of the case". Under s 17(3)(a) , the compensation part of the LSP was $17,500. The preclusion period was arrived at by dividing that sum by $422.90, giving a period of 41 weeks. The period ran from the date of the injury, 13 January 1999, to 26 October 1999. The statutory formula produced the result that in respect of that period, Mrs Chamberlain was liable to pay to the Commonwealth $7,643.36 --- more than twice the sum of $3,500 mentioned above. It was far less than the statute assumed to be the case in applying the formulae. Again, however, this will be so in many, if not most, cases to which the Act applies. Further, the extent of the difference from the basis upon which the parties acted could not provide the necessary "special circumstance". The statute has selected a figure which may operate in an arbitrary way. [35] The statutory objectives in utilising the formulae, referred to above, must also be borne in mind. It is not intended that a decision-maker be required to consider contentions about what part of the compensation reflected the economic loss component. That is so whether one has regard to the application of the formulae or the discretion under s 1184. The latter does not alter the objective and must be read in light of it. 74 If Chamberlain [2002] FCA 67 ; 116 FCR 348 is to be followed, the present application must be dismissed. 75 I respectfully agree with the approach that was taken by Kiefel J. The expression "special circumstances" in s 1184K does not embrace the circumstance that the 50 percent rule will yield a preclusion period beginning on a certain date that will or may be excessive, even grossly excessive, having regard to the component included in a lump sum settlement for loss of earnings or of earning capacity, to the age of the injured person, and perhaps to other circumstances. 76 Once one embarks on an inquiry of the kind that would be required in such a case, one is defeating the legislative intention. The Parliament must be taken to have contemplated as "usual" or "ordinary" the circumstances of people placed as Mr Clark is. In effect, by adopting the rough and ready 50 percent rule, the legislature has faced such people with a choice: not sue at all and to rely, instead, on such other entitlements as may be available; litigate to trial so that the Court will identify a figure for loss of earnings and of earning capacity; or settle subject to the operation of the 50 percent rule. 77 In the present case, Mr Clark must be taken to have decided against the former two courses. I do not know why he did so. In one sense, it seems unfair that Mr Clark should suffer a preclusion period until 15 February 2008, but I do not think that this constitutes "special circumstances" in the light of the legislative intention. 78 If the position were otherwise, the régime that was introduced in 1988 would be defeated because it would be again open to parties to a settlement to attribute an artificially low figure to loss of earnings and earning capacity, and to the injured person, through s 1184K of the SS Act, to initiate the very kind of investigation that it was the intention of the 1988 amending Act to eliminate. 79 For the above reasons, I do not think that the AAT erred in law in failing to exercise the discretion given by s 1184K of the SS Act. I certify that the preceding eighty (80) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren.

time when "lump sum preclusion period" under s 1170 of the social security act 1991 (cth) begins whether the section requires that individual retain and have benefit of both periodic compensation payments and lump sum compensation payment whether lump sum preclusion period begins on the day following the last day of periodic payments period even where periodic compensation payments have been fully refunded out of lump sum compensation payment whether secretary's discretion under s 1184k of act had miscarried. held : section 1170 does not require that the individual retain and have the benefit of both periodic compensation payments and lump sum payment, and the lump sum preclusion period does begin on the day following the last day of the periodic payments period even in the circumstances mentioned. social security

In its application ASIC relies upon a presumption of insolvency flowing from the appointment of receivers and managers of Forestview under a floating charge and the receiver and manager's subsequent possession and control of Forestview's property for the purpose of enforcing that charge. For the reasons that follow I am satisfied that the presumption of insolvency is not displaced and that a winding up order should be made. So that these reasons may be self contained, it is convenient to reproduce the bulk of the factual and procedural background set out in the earlier judgment. 3 Forestview was incorporated in February 1994. Its current directors are Norman Phillip Carey, who has been a director since its incorporation, and his sister, Karen Sandra Carey-Hazell, who has been a director since 19 January 1996. The company is trustee of the Matheson Unit Trust. On 8 December 1998 the company granted a fixed and floating charge to Sandhurst Trustees Ltd (Sandhurst). The charge was assigned to Perpetual Nominees Ltd (Perpetual) as custodian of the ING Mortgage Pool for ING Funds Management Ltd as the responsible entity of The ING Mortgage Pool (ING) (ING Charge) on 28 June 2000. 4 Clause 2 of the ING Charge recited that Sandhurst, the mortgagee, had agreed to provide or continue providing credit or financial accommodation from time to time to, or at the request of, Forestview upon the condition that Forestview entered into the mortgage. Clause 24.7 provided, inter alia, that where the mortgagee's consent is required under the mortgage it was not valid unless expressly given in writing by the mortgagee. 6 The powers of the mortgagee under the Charge were extensive. They were set out in cl 16. They included powers to "enter, seize, take possession of, manage and use the Mortgaged Property" (cl 16.2.1) and to "deal in any way with the Mortgaged Property, any estate or interest in it, any right attaching to it or any encumbrance affecting it" (cl 16.2.12). 7 On 23 January 2006 Forestview granted an equitable mortgage in favour of Bowesco Pty Ltd (Bowesco). This grant was made without the consent of ING. It was treated as an Event of Default under the Charge. A notice of breach was sent to Forestview on 7 March 2006 by Corrs Chambers Westgarth (Corrs) acting for ING. Mr Carey wrote to Corrs on 9 March 2006 stating that the security had been lodged so that Bowesco could "assist Forestview in its funding requirements for the expansion of the Forresfield Shopping Centre, Stage 2" having regard to a recent commitment for expansion by Kmart. He said that Bowesco had not lent any money to Forestview and that the security therefore had no impact on ING's interest under its security. He further stated that funding would be required for predevelopment costs and that it was in Forestview's interests and ING's to move forward with the Kmart proposal given the significant increase in value this would bring to the shopping centre property. He took no steps to remove the mortgage. 8 On 30 March 2006 Oren Zohar, Mark Anthony Korda and David John Winterbottom, all partners of KordaMentha, were jointly and severally appointed receivers and managers of Forestview for the purpose of enforcing the charge. They entered into possession of and assumed control of Forestview's property on the date of their appointment. The appointment was effected by a deed between them and Perpetual as custodian of The ING Mortgage Pool for ING Funds Management Ltd as the responsible entity of the ING Mortgage Pool. 9 On 28 June 2006 ASIC filed an application in this Court, seeking leave to apply and applying for the winding up of Forestview on the ground of its insolvency. The application relied upon the presumption of insolvency, flowing from s 459C(2)(c) of Corporations Act 2001 (Cth) (the Act) by virtue of the appointment of the receivers and managers. 10 On 11 August 2006 orders were made requiring Forestview to file and serve any affidavit in opposition to the grant of leave to ASIC to bring the application by 18 August 2006. ASIC was to file and serve any affidavit in reply by 25 August 2006. His affidavit essentially went to the solvency of Forestview. He stated in it his belief that the appointment of the receivers was not indicative of any inability of Forestview to pay its debts when they became due and payable. 11 On 31 August 2006 orders were made declaring that Mr Carey, as a director, was entitled to defend the application in the name of Forestview. The company was given liberty to apply on the question whether any of its assets might be used to meet the costs of defending the application. Other orders relating to discovery of documents were made and the application listed for further directions on 29 September 2006. Further orders were made on that day for the filing of affidavits and amendment of the originating process. The application was listed for hearing on 23 October 2006. 12 On 23 October 2006 the company applied to adjourn the application. The hearing and the adjournment application were adjourned to 25 October 2006. At that time the company sought directions allowing for the programming of an application for funding, presumably pursuant to the liberty granted in the earlier orders. On 25 October 2006 the application was further adjourned to 30 October 2006. On that date, after hearing argument in related matters concerning Lanepoint Enterprises Pty Ltd (Receivers and Managers Appointed) and Bowesco Pty Ltd (Receivers and Managers Appointed) and by counsel for Forestview, judgment on the question whether funding for legal representation should be made available by the receivers and managers out of the assets of the company was reserved. As the Forestview receivers and managers had not been represented at the hearing on 30 October 2006, Forestview was directed to file a minute of its proposed orders for the release of funds for legal representation and to serve on them a copy of that minute together with its supporting affidavits, the written submissions and the transcript of the proceedings on that day. The receivers and managers filed, in response, affidavits sworn by Mr Zohar on 8 November 2006 and by another KordaMentha director, Mr Norman, on 14 November 2006. They also filed submissions opposing the Forestview application. 13 On 15 November 2006 the appeal against the decision of the receivers and managers to make funds available to Forestview for the purpose of defending these proceedings was dismissed. 14 The winding up application came on for hearing on 20 November 2006 along with the application in WAD 180 of 2006 in which ASIC sought winding up orders in relation to Eastlands Pty Ltd (Eastlands). Section 459A provides that, on an application under s 459P , the Court may order that "... an insolvent company be wound up in insolvency". These include ASIC (s 459P(1)(f)). By s 459P(2) an application by ASIC may only be made with the leave of the Court. A condition of such leave is that the Court be "... satisfied that there is a prima facie case that the company is insolvent,..." (s 459P(3)). That leave may be given subject to conditions (s 459P(4)). 19 Section 459R requires an application for a company to be wound up in insolvency to be determined within six months after it is made, albeit the Court may by order extend the period within which an application must be determined but only if it is satisfied that special circumstances justify that extension and the order is made within the relevant six month period, or the last extension thereof (s 459R(2)). The time limited by this section expires on 28 December 2006. 20 Division 5 of the Court's Corporations Law Rules govern winding up proceedings including applications under Pt 5.4 of the Act. Rule 5.6 requires notice of the application for the winding up order to be published. 23 The affidavits established what is set out in the factual and procedural outline earlier in these reasons, in particular, the creation of the charge, the appointment of the receivers and their entry into possession and control of Forestview's property. These matters and the character of the charge as fixed and floating are either not disputed or not able to be disputed and establish the factual foundation for the presumption of insolvency required by s 459C(2). Formalities including the service of the originating process and advertisement of the application were established by the affidavit evidence of Katrina McHarg and Kim Demarte. 24 The last signed set of financial accounts for Forestview covered the period ended 30 June 2003. Those accounts showed net assets of $2, representing contributed capital. 25 Mr Kevin Chin gave evidence of the results of a review of the Triumph accounting database used by the Westpoint Group. The use of that accounting system throughout the Group was explained by Wendy Chan who was employed as an assistant accountant by Westpoint Corporation from 1 December 2003 to 23 September 2005. She described the records maintained with the use of the Triumph system as "in effect the ledgers for each entity". 26 According to Mr Chin's affidavit of 29 September 2006 he reviewed the Triumph database and found that there were no financial records for Forestview. On reviewing other documents produced to ASIC he did not locate any financial records for the company distinct from the Matheson Unit Trust. Financial records for that Trust appeared in the Triumph database. Mr Chin pointed out that Westpoint Corporation is in receivership and has been wound up in insolvency. The Bridgeview Family Trust does not have any income or sufficient current assets to meet a claim for repayment of the loan. 27 Forestview executed guarantees and indemnities in favour of a number of Mezzanine finance companies associated with Mr Carey and Westpoint Corporation. These guarantees secured borrowings from the Mezzanine finance companies by other companies within the Westpoint Group. The Mezzanine finance companies have all been wound up. The debtor companies are under external administration in the form of receivers or liquidators. Cinema City Development Pty Ltd was wound up yesterday by order of this Court. According to the Triumph database accounting information the debts of the debtor companies owed to the Mezzanine finance companies are due and owing. The liquidators of the Mezzanine finance companies have issued notices under the loan agreements on the debtor companies accordingly. They have also issued demands to Forestview and other guarantors under the guarantees of those debts. Forestview has not paid the demands against it which exceed $207,731,000. 28 On 7 April 2006 Forestview wrote a letter to the liquidator indicating that no payments would be made by it under the guarantees. This was on the asserted basis that the guarantees were uncommercial transactions and insolvent transactions and were voidable under s 588FE of the Act. It was also contended that they did not provide the requisite commercial benefit and were limited to the amount of the loan agreements. ASIC submits that Forestview's debts to the Mezzanine finance companies are due and payable and, alternatively, will become due and that the company is unable to pay those debts. He also gave oral evidence. 30 The first aspect of the oral evidence concerned the conduct of ING in appointing receivers to Forestview. Mr Carey said he did not take any action to rectify the default under the Charge following his letter of 9 March 2006 to ING's solicitors Corrs because normally there is a "spirit of cooperation" with banks and financiers. He assumed that, because Corrs did not get back to him, ING was not concerned about what had been done as no money had been advanced under the Bowesco mortgage. On a different tack relevant to this point, he also said that, in June 2005 he had a conversation with a Mr Accabucci, the manager of Treasury Finance Group, which was responsible for arranging the original property loan. At the time of the conversation the loan was being refinanced and extended. According to Mr Carey, Mr Accabucci was acting as the lender's authorised agent and manager of the loan facility. He told Mr Accabucci about the proposed expansion of the Forrestfield Shopping Centre. He told him that he intended to get funding from Bowesco and that would be done on a secured basis. He did not want to seek any external funding until all relevant documentation, including leases, had been signed with Kmart and the property expansion was ready to proceed. According to Mr Carey, Mr Accabucci was very keen about the uplift in value that would occur because of the Kmart expansion and "... gave permission to put that mortgage on Forestview's 25% interest at that time". Mr Carey said this was done orally. He acknowledged that the permission allegedly given by Mr Accabucci predated the execution of the Charge which was signed in December 2005 or January 2006. It was never suggested that any written consent was sought or was forthcoming from ING in relation to the Bowesco security. 31 I regard it as inherently improbable that the manager of Treasury Finance would have given an oral permission of the kind suggested by Mr Carey. It is also inherently improbable that ING would have given an agent (assuming Mr Accabucci were such) authority to grant an oral dispensation in respect of a proposed, but unseen, security. The improbability of this suggestion is enhanced by the timing of the alleged permission. Nor is there any factual basis disclosed upon which it could be said that Mr Accabucci had apparent authority to give such a consent which would somehow overcome the requirement for express written consent contained in the Charge. If the alleged permission had been given and influenced the decision to grant an equitable mortgage to Bowesco then almost certainly some reference to it would have appeared in Mr Carey's letter of 9 March 2006. I do not accept that Mr Carey received the permission he claims to have received nor that he has shown any grounds for impugning the appointment of the receivers which followed the notice of default. 32 In his affidavit of 18 August 2006, Mr Carey pointed out that Forestview is the owner of a 25% share in properties situated on two titles at Forrestfield. A convenience shopping centre has been developed on the property and incorporates tenants such as Coles and Woolworths supermarkets. Development approval has been obtained from the local authority and the Western Australian Planning Commission to expand the shopping centre to incorporate a discount department store and further specialty stores. Kmart has given a commitment to lease the proposed discount department store. 33 Mr Carey asserted that the development approval and the Kmart lease commitments significantly increased the value of the property. He said that the funds advanced by Perpetual were advanced against a property with a market value of about $30 million. That figure seems to have been a reference to the value of the shopping centre prior to the development approval and the Kmart lease commitments. His view of the property's value was based on discussions that he had held with several property valuers concerning it and the feasibility of the shopping centre and the project funding. Mr Carey referred to the amount of the secured debt at present as $15.62 million. 34 Forestview's sole activity is as owner of its interest in the shopping centre. Its only liabilities arise out of that interest. Its share of the shopping centre and the property's liabilities are paid out of rent, rates and taxes and outgoings payable by the tenants from funds collected by the managing agent, Westpoint Realty, and then paid into the property owners' joint account. According to Mr Carey, the monthly rental income collected from the shopping centre tenants is sufficient to cover the interest payments due under the facility with ING. The monthly payments due are remitted automatically by debt from a joint bank account in the name of the property owners. Mr Carey said that he believed, based on a bank statement dated 14 July 2006, that the property owners' joint bank account had a balance of $218,718.09 at that date. 35 Based on the financial information to which he referred and his knowledge of how the rental and outgoings were collected and how the payments due under the ING facility were made, Mr Carey believed that at all times Forestview performed its obligations under the facility in a timely manner. He asserted that Forestview has not been in default with respect to its repayment obligations. He also stated in the affidavit his belief that the company is solvent and is able to pay its debts when they fall due. He said that the appointment of the receivers is not indicative of any inability of Forestview to pay its debts when they become due and payable. During the period from 26 May 2006 to 13 October 2006 the closing balance of the account fluctuated between a maximum of $459,691.48 and a minimum of $59,631.48. The balance at 13 October 2006 was $79,731.73. The affidavit also set out copies of cashflow forecasts for the Forrestfield Marketplace and the Forrestfield Forum which are both part of the shopping centre. They showed a surplus from which interest payments on the loan can be deducted. The total interest payable is in the order of $1.2 million per annum leaving a free cashflow of approximately $1.1 million to which Forestview has a 25% entitlement. 38 In a further affidavit sworn on 29 October 2006, Mr Carey referred to the recent sale of the Warnbro Fair Shopping Centre for approximately $55 million as reported in the West Australian Newspaper on 11 October 2006. He described the Centre as a "convenience level shopping centre". Major tenants are Coles and Woolworths and approximately 30 specialty shops. The Centre has a current commitment for expansion from "Big W". He saw the Forrestfield Shopping Centre as analogous. It had the same major tenants and approximately 35 specialty shops together with a commitment for expansion from Kmart. The net income of the Warnbro Centre was said to be very similar to that of the Forrestfield Centre. Mr Carey went on to state his belief that the Forrestfield Centre's current value would be in the order of $45 million. This was based on information he had about the Warnbro Fair Shopping Centre and his knowledge of the current market for these types of shopping centres. The net tangible asset value of the property is $29.38 million. Forestview's 25% interest is therefore $7.345 million, plus the value of the adjoining development land which it owns fully. On the preceding basis the total value of Forestview's interest in the property is in order of $12.345 million. 40 In his oral evidence Mr Carey cited his own qualifications and experience in relation to shopping centre developments as providing a foundation for his opinion about the value of the Forrestfield Shopping Centre. He referred in this context to the recent sale of the Warnbro Fair Shopping Centre which has similar characteristics to the Forrestfield Shopping Centre. It was his opinion that the sale price secured for the Warnbro Fair Shopping Centre was an indicator of the value of the Forrestfield Centre. He made the point that there was no default on the part of Forestview or its joint venture partner in relation to interest payments due on the secured debt. At present a nominal rather than the default interest rate is being charged by ING. Mr Carey contended that, on that basis, the debt of $15.62 million secured by the Charge could not be said to be presently due and payable. 41 Mr Carey also pointed to what he called a "genuine dispute" about the Mezzanine finance guarantees given by Forestview. He cited a letter dated 7 July 2006 from Forestview's solicitors to the solicitors acting for the liquidators of Ann Street Mezzanine Pty Ltd (In Liquidation), Bayshore Mezzanine Pty Ltd (In Liquidation), Bayshore Heritage Mezzanine Pty Ltd (In Liquidation), Market Street Mezzanine Ltd (In Liquidation), Mount Street Mezzanine Pty Ltd (In Liquidation) and York Street Mezzanine Pty Ltd (In Liquidation). 42 In advising that Forestview and other guarantors of debts owed to the Mezzanine companies disputed the validity and enforceability of the guarantee and indemnity agreements, the solicitors made a number of points. The Mezzanine companies had, without the written agreement of the guarantors, provided financial accommodation substantially in excess of the amount stated in the guarantee and indemnity agreements. On that basis the guarantor companies were in a position to elect to terminate the guarantee and indemnity payments. The letter gave notice that they so elected. 2. In the alternative, Forestview and the other companies' liability under the guarantee and indemnity agreements was limited to the amounts specified in the definition of "Advance" in each guarantee and indemnity agreement. The guarantees, it was said, were to be reduced or extinguished by the first payment received by the Mezzanine companies in repayment of the principal loan. There is an element of artificiality about the complaint raised by Forestview's solicitors. 43 In respect of guarantee and indemnity agreements relating to a loan between North City Development Pty Ltd and Mount Street Mezzanine Pty Ltd, Forestview and the other companies took the position that cl 14.3 of the loan agreement expressly limited the guarantors' liability to the properties mortgaged under the loan agreement and any related document. Given that no such properties were mortgaged, the liability of Forestview and the other guarantor companies was nil. These of course were simply assertions made by the solicitors for Forestview and other guarantor companies. They are not evidence of anything beyond the fact that the assertion was made. 44 Mr Carey, in his oral evidence, also claimed that the guarantees into which Forestview entered were only provided on the strength of written legal advice from Freehills, the solicitors who he said, designed and developed the promissory note product. According to Mr Carey their advice was that the promissory notes would not be treated as an interest in a managed investment scheme. However, late in 2004, the Supreme Court of Western Australia ruled that they were such an interest. Because of the advice, it was said, Forestview entered into the guarantees. It would not have done so but for that advice. If there were any action to enforce the guarantees, Forestview and the other guarantors would seek indemnity from their former solicitors. Again this evidence goes no higher than asserting that a claim under the guarantees would precipitate a cross-claim for indemnity against a third party, namely Forestview's former solicitors. 45 The third matter on which Mr Carey gave evidence was the existence of commercial negotiations with the liquidator of the Mezzanine finance companies directed to reaching a commercial settlement in relation to the guarantees. He accepted that the negotiations in that respect had not been finalised. 46 In cross-examination Mr Carey acknowledged that he had not had regard to sales evidence in forming his opinion about the value of the Forrestfield Shopping Centre other than that relating to the Warnbro Fair Shopping Centre. He accepted that there are other shopping centres within 8 to 12 kilometres of Forrestfield. 47 There was also cross-examination of Mr Carey about his awareness of the level of "loans" from the Mezzanine companies to other Westpoint companies covered by guarantees including those provided by Forestview. Evidence on this question took the matter no further than the proposition that there was an assertion of a dispute about liability under the guarantees. Forestview has operating against it in this case the presumption of insolvency which the Court is required to apply and which flows from the appointment of the receivers under a floating charge and their entry into possession and control of Forestview's property. Over and above the presumption, the evidence adduced by ASIC points to very substantial liabilities under guarantees entered into by Forestview with respect to the Mezzanine company loans and in respect of which demands for payment have been made by the liquidators. Forestview's solicitors have disputed the companies' liability under the guarantees but the evidence goes no further than to show the existence of the contentions raised by those solicitors. 50 Mr Carey made the point that Forestview is not in default in respect of the secured debt. The fact is that the company was in default under the Charge and the receivers were appointed as a result. The circumstances of the default arose from the grant of a security over the property of the company in favour of another company in the Westpoint Group, namely Bowesco. It is not in the least surprising that ING would act swiftly to protect its position. As noted already, the suggestion by Mr Carey that there was some kind of advance oral permission for the granting of the security, unseen, to Bowesco and in advance of the execution of the Charge, is untenable. 51 In my opinion the evidence relevant to solvency advanced by Mr Carey does not rise above the level of argument and contention. I do not consider that I can rely upon his opinion about the value of the Forrestfield Shopping Centre or Forestview's interest in it. His opinion as to value is based upon an extrapolation from the sale of the Warnbro Fair Shopping Centre and the similarities between that Centre and Forrestfield. It does not involve a considered analysis of other sales evidence. It is the self-serving opinion of an interested party. It is also worthy of note that Forestview's interest in the Forrestfield Shopping Centre is a 25% interest under a joint venture arrangement with another company. 52 In my opinion the evidence does not displace the presumption of insolvency. That is to say, the contrary has not been proven. It therefore meets the condition for the grant of leave to bring the application required by s 459P(3). It is appropriate that ASIC have leave to make the application having regard to its general investigative involvement in relation to the collapse of the Westpoint Group. 54 The ground of insolvency having been made out, I propose to order the winding up of the company. I will also order the appointment of receivers to the assets of the Matheson Unit Trust as proposed by ASIC and will allow the amendment of the originating process set out in its motion of 5 October 2006. I will also allow liberty to the receivers and the beneficiaries to apply in relation to the exercise of the receivers' powers. I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French.

winding up insolvency presumption of insolvency flowing from appointment of receivers under floating charge presumption of insolvency not displaced winding up order made liquidators also appointed as receivers of unit trust of which company is trustee corporations

At that time, the SECV employed him as a meter reader/collector in Hamilton. Mr Urquhart remained a meter reader for many years although the identity of his employer changed. At all material times, Mr Urquhart was a member of the Australian Municipal, Administrative, Clerical and Services Union ("ASU"), an organisation registered under the Workplace Relations Act 1996 (Cth) ("the Workplace Relations Act "). 2 The respondent, Automated Meter Reading Services (Aust) Pty Ltd ("AMRS"), is a company that specialises in providing meter reading services to the utilities industries in Australia. AMRS is not an electricity distributor. 3 The central questions in this proceeding are whether, for the purposes of ss 170MB(2) and 149 (1)(d) of the Workplace Relations Act , AMRS is the transmittee of the business or part of the business of Powercor Australia Ltd ("Powercor"). If so, there is a further question whether AMRS breached an award and certified agreements to which Powercor was a party. For the reasons stated below, I would answer the first question in the negative and dismiss this application. Mr Urquhart relied on the Workplace Relations Act as in force during the period of the alleged breaches --- between 28 March 2002 and 8 November 2004. Mr Urquhart did not rely on the provision for transmission, succession and assignment in the 1998 Award: see clause 3.1 of the 1998 Award. 6 As at 1989, the SECV undertook all functions of the electricity industry in Victoria, including the three functions of generation, transmission, and distribution (including retail). At that time, the SECV divided its workforce into divisions. 7 On 2 August 1990, the Australian Industrial Relations Commission ("the Commission") made the [SECV] Electrical Electronic and Engineering Employees Award 1989 ("the 1989 Award"). The 1989 Award superseded the Municipal Officers' Association of Australia (State Electricity Commission, Victoria) Award 1988. The 1989 Award provided for pay rates in 5 bands with 5 levels in each band. The career streams did not provide for specific jobs, although there were some allowances made for specific employees. 8 Also around this time, in the early 1990s, there was a large-scale restructuring of the Victorian electricity industry. In 1992, the SECV separated generation, transmission and distribution in order that a different entity might perform each one. An entity called Electricity Services Victoria assumed the function of distribution (including retail). 9 In 1994, prior to privatisation in 1995, Electricity Services Victoria was itself split into five separate businesses, each of which covered a different area of Victoria. Powercor assumed responsibility for one of these businesses. Powercor was licensed to distribute electricity to western Victoria and western metropolitan Melbourne. 10 Also in 1994, Mr Urquhart commenced employment with Powercor as a meter reader. Between January 1997 and November 1997, he mostly carried out what were termed "special meter reading" duties but sometimes performed standard (or "general", "cycle" or "field") meter reading duties. In the interests of clarity, I use the word "standard" in these reasons to describe "general", "cycle" or "field" meter reading, acknowledging that in the industry it is commonly described simply as "meter reading". Employees performing "standard" meter reading are referred to in these reasons as "standard meter readers", although usually described in the industry as simply "meter readers". 11 In November 1997, Powercor entered into a contract with Victoria Meter Management Pty Ltd ("VMM"), a company that was in the business of reading meters for utility companies providing electricity, gas or water, to perform standard meter reading ("the VMM contract"). The result was that, from 24 November 1997, Powercor no longer undertook standard meter reading. VMM performed this task instead. According to Mr Minster, from Powercor, (and I accept) when Powercor decided to outsource meter reading in late 1997, Powercor had about 50-60 meter readers out of a workforce of about 1,000 to 1,100 employees. At this time, the meter readers fell into three groups: (1) meter readers who accepted Powercor's redundancy package and took up employment with VMM; (2) meter readers who accepted the package but did not take up employment with VMM; and (3) meter readers (like Mr Urquhart) who stayed with Powercor and did work other than standard meter reading. 12 Mr Lang, also from Powercor, gave evidence (and I accept) that, during the VMM contract, Powercor ceased standard meter reading and undertook only special meter reading. His uncontested evidence was that Powercor periodically issued VMM with a reading cycle through a Portable Data Entry device ("PDE device") that VMM meter readers operated. VMM's meter readers would read the meters, record the information in the PDE device and download the information onto Powercor's technology system. Mr Lang's evidence was that Powercor provided VMM with logo and badges to gain access to premises. Powercor also owned the tongs that were used to seal the meters. VMM provided uniforms, vehicles and employed workers. Mr Minster gave evidence to like effect. 13 From 1994 until October 1999, Mr Urquhart remained an employee of Powercor. Save for two weeks around 13 April 1999 when he performed some standard meter reading, from November 1997, he carried out only special meter reading as an employee of Powercor. 14 In the electricity industry, a special meter reader has a different role from that of a standard meter reader. I accept that, as Mr Minster said, the position of special meter reader was separate from that of standard meter reader. There was little real dispute between the parties as to the duties of standard and special meter readers. Mr Urquhart's evidence was (and I accept) that special reading involved "reading meters for new connections and for disconnections resulting from non payment of accounts" and "matters concerned with tariff application such as re-checking meters following customer complaints about high readings and undertaking basic energy audits". Mr Urquhart described standard meter reading as involving monthly and quarterly reading, as well as investigating possible meter interference and reporting safety issues. He also said that the standard meter reader performed some additional tasks, including investigating tampering with meters, identifying safety problems with lines, poles, or service connections, and reprogramming meters to ensure the correct data was collected. The principal role of a standard meter reader was to attend a customer's premises and read the meter to identify how much electricity had been consumed. Mr Gallagher, AMRS's managing director, gave evidence to similar effect as to the duties of special meter readers and standard meter readers. 15 There were various certified agreements applicable to the SECV and/or Powercor in the 1990s. On 1 October 1992, the Commission certified the SECV Conditions of Employment Agreement 1992 ("the 1992 Agreement"), to which the ASU, amongst others, was a party. The Commission certified the Electricity Services Victoria Enterprise Agreement 1993 ("the 1993 Agreement") in 1993. On 24 November 1995, the Commission certified the Powercor Australia Ltd Enterprise Agreement 1995 ("the 1995 Agreement"). The 1995 Agreement made provision for a 5 level broad-banded structure as in 1989 Award, but changed the title of each level from a numerical band number to an alphabetical description. 16 A different pay structure was introduced when the Commission certified the Powercor Australia Ltd Partnership Enterprise Agreement 1997 ("the 1997 Agreement") on 1 August 1997. Clause 16.3.1 provided for a 30 point salary structure, upon the basis that "[t]ranslation will be at the equivalent position to that which the employee occupies on the current 5 band structure". Clauses 16.3.2-4 stipulated the system for working out the translation from the 5 band structure to the 30 point structure. 17 Some months later, on 23 February 1998, the Commission certified the VMM Powercor Contract Enterprise Agreement 1997 ("the VMM 1997 Agreement"). The VMM 1997 Agreement came into force on 23 February 1998 and applied in respect of VMM employees engaged to fulfil VMM's contract with Powercor, expressly binding VMM "[o]nly in respect of employees of [VMM] who [were engaged] to fulfil Powercor Contract duties". The VMM 1997 Agreement included provisions for meter reader salary rates and casual employees. 18 On 30 June 1998, the Commission made the 1998 Award, which is relied on by Mr Urquhart as the source of his entitlement to relief. The 1998 Award replaced the 1989 Award. The 1998 Award was binding on Powercor and ASU and did "not affect the existing custom and practice relating to coverage of classification" (clause 3.4). Clause 5.6 defined "employee" as a person employed under the 1998 Award. Clause 8.1 provided for employment "by the fortnight" (clause 8.1.1) and permanent part-time employment (clause 8.3). Clause 8.2 also made specific provision for casual employment. Clause 8.2.2, on which Mr Urquhart particularly relied, provided that: "[a] casual employee for working ordinary time shall be paid per hour one thirty-seventh and a half of the weekly rate prescribed in this award for the classification of work performed plus a loading of 25%". Clause 9.2 provided for 5 broad-banded levels, in each of which were a number of career streams including for administrative officers. The 1998 Award continued allowance entitlements in the 1989 Award in relation to employees engaged on meter reading duties on a full-time permanent basis (clauses 12.2.5.5 and 26.2.7). 19 In April 1999, Powercor terminated its meter reading contract with VMM. Mr Lang, who was Powercor's responsible officer at this time, deposed that he made an interim arrangement with Marshmans Personnel Geelong Pty Ltd ("Marshmans"), with the result that Powercor entered into a contract with Marshmans ("the Marshmans contract") to provide the labour, from 19 April 1999, to perform the meter reading function. Mr Lang's uncontested evidence was that, although Marshmans was a labour hire company rather than a meter reading company, Marshmans ran the meter reading functions "in almost exactly the same way as ...VMM", save that the amount paid to Marshmans was calculated on an hourly rate. They supervised, managed and were in charge of the personnel. The work required was set by Powercor and the data was managed when received from [Marshmans] employees. 20 Powercor did not re-employ any meter readers after the termination of its contract with VMM. As already noted, however, whilst still with Powercor, Mr Urquhart performed standard meter reading duties for two weeks around 13 April 1999. 21 On 19 August 1999, the Commission certified the 1999 Agreement under Div 2 of Pt VIB of the Workplace Relations Act . The 1999 Agreement continued the 30 pay point structure introduced by the 1997 Agreement. 22 On 18 October 1999, Powercor offered a redundancy package to Mr Urquhart, with effect from 27 October 1999. Mr Urquhart accepted the package. On 1 November 1999, he commenced employment with Marshmans as a standard meter reader. Mr Urquhart said, and I accept, that, while working at Marshmans, he was given "a Powercor vehicle, Powercor portable data machine, wore Powercor corporate clothing and carried a Powercor identity card". He also said that Powercor provided him with a PDE and "the itineraries and specific instructions on tasks and how they were to be performed". 23 On 8 March 2002, on the termination of the Marshmans contract, Powercor contracted out its meter reading function to AMRS. Under this contract with Powercor ("the 2002 contract"), AMRS was engaged "to supply labour with skills and expertise" in "cyclic meter reading activities" (clause 9, item 4 of Annexure, and Schedule 1). Also under the contract, AMRS was to provide "an accurate and timely Meter Reading, inspection and reporting service" (Schedule 1). 24 After the termination of its contract with Marshmans, Powercor did not re-employ any meter readers or perform any standard meter reading function for itself. On 25 March 2002, Mr Urquhart commenced employment with AMRS as a standard meter reader. His employment with AMRS was on a casual basis. 25 On 17 April 2002, the Commission certified the 2002 Agreement under Div 2 of Pt VIB of the Workplace Relations Act . The 2002 Agreement continued the 30 pay point structure introduced by the 1997 Agreement and continued by the 1999 Agreement. 26 On 22 May 2003, Powercor and AMRS entered into a contract ("the 2003 contract") for the provision of special meter reading services by AMRS (clause 7, item 5 of Annexure, and Schedule 1). Mr Lang's evidence was (and I accept) that the subsequent arrangement with AMRS to provide meter reading services "was essentially the same as that between Powercor and VMM". 27 On 7 June 2004, the Commission made the award known as the ASU/AMRS Powercor Award 2003. 28 On 1 October 2004, Powercor and AMRS entered into a contract ("the 2004 contract") for the provision by AMRS of standard meter reading and special meter reading, as well as inspection and reporting services (clause 3.1, Schedule 1). At no stage between its contract with AMRS in 2002 and October 2004 did Powercor re-employ any meter readers or perform any standard meter reading function for itself. 29 On 8 November 2004, Mr Urquhart ceased employment with AMRS. He undertook some special meter reading duties for AMRS in the last month (or possible months) of his employment. 30 I accept that, as counsel for AMRS submitted, Mr Urquhart was unable to give admissible evidence as to his correct classification under relevant industrial instruments. For present purposes, it suffices to note that payslips exhibited to his affidavit of 2 April 2007 showed that the SECV and/or Powercor paid him on the basis he was classified: (1) as at 11 April 1991 --- at band 1.5; (2) as at 4 November 1993 --- at band 2.3; (3) as at 15 December 1994 --- at band 2.4; (4) as at 18 May 1995 --- at band 2.5; and (5) as at 16 September 1997 --- at pay point 12. The reference to "band" was a reference to the pay structure under the 1998 Award, whilst the reference to "pay point" was a reference to the pay structure under the 1997 Agreement. Mr Urquhart's "role statement" dated April 1997 referred to his job title as "special reader/meter reader" and his band as 1/2, that is, band 1 or 2. Mr Rizzo, from the ASU, also gave evidence that meter readers employed by the SECV and Powercor were classified within the 5 band structure of the 1998 Award at level 1/2. 31 In addition, Mr Rizzo said that, following the introduction of the 30 point classification structure under the 1997 Agreement, he attended meetings with Powercor, at which Powercor gave him information as to the translation of employees to the new pay points. His evidence, in cross-examination, was that, around 24 March 1998, Powercor had given him a document entitled "Employees --- by Job and Paypoint", which reflected the translation process for around half of Powercor's employees. This document showed that Mr Urquhart was, like most meter reader/special readers, identified as at pay point 12. Mr Rizzo's evidence was that this was the final placement for Mr Urquhart. 32 Mr Minster, from Powercor, substantially agreed with Mr Rizzo's account of the implementation of the various industrial agreements. He deposed (and I accept) that, after the 1997 Agreement, there was a process of reclassifying employees for the purposes of that Agreement. He said that, "[f]rom the time of the 1997 Agreement beginning to operate until the meter reading function of Powercor was tendered out in late 1997 to VMM, Powercor still employed meter readers". Hence, meters readers were included in the reclassification process after the 1997 Agreement, as the Powercor documents produced by Mr Rizzo indicated. Mr Minster agreed with Mr Rizzo that job evaluations of Award positions were carried out during 1998. Mr Minster's evidence was, however, (and I accept) that, by January 1998, Powercor no longer employed standard meter readers, although it still employed some special meter readers, such as Mr Urquhart. This remained the position until Powercor made the 2004 contract with AMRS. Mr Minster deposed (and I accept) that "[n]ew job structures based on competencies were introduced during that 1999 [Agreement] and they did not include Meter Readers". 33 In cross-examination, Mr Minster agreed that, since 1998, the shift allowance for which clause 16.5 of the 1998 Award provided and other allowances were calculated as a percentage of the then current certified agreement. Furthermore, he said that long service leave, sick leave and the like had been paid on the relevant enterprise bargaining rate. According to Mr Minster "everything [was] paid in accordance with the enterprise agreement". Also in cross-examination, Mr Minster agreed that, under the awards, meter readers were allocated to the administrative stream. This evidence was received subject to AMRS's objection as to relevance. 34 I interpolate at this point that some other evidence was received subject to similar relevance objections by AMRS. For the reasons that appear below, it is unnecessary to say anything further about them. At the relevant time, Pt VIB of the Workplace Relations Act dealt with certified agreements. (Emphasis added. 36 Section 149 , in Div 6 of Pt VI , dealt with persons bound by awards. (Emphasis added. It is unnecessary to set these provisions out here. He argued that Powercor took back this part of its business when the VMM contract terminated and, again, when the Marshmans contract ended. Counsel contended that the Electricity Industry Act 2000 (Vic) ("the Electricity Industry Act "), the Electricity Distribution Licence, and the numerous regulatory Codes illustrated "both the essential part metering play[ed] in the distribution of electricity as well as the ongoing obligations of the distributor, regardless of whether or not the task [had] been outsourced". Counsel argued that, "[b]y reason of the ... obligations imposed on distributors and conditions of licence meter reading and the related activities undertaken by meter readers [meter reading] was more than an ancillary part of the business of a distributor and [was] in fact a necessary part of the business". He submitted that whether or not Powercor performed meter reading between the contracts was irrelevant. For the duration of the contract between Powercor and AMRS, AMRS had "what ... Powercor has within its power to give". Counsel for Mr Urquhart relied on PP Consultants Pty Ltd v Finance Sector Union of Australia [2000] HCA 59 ; (2000) 201 CLR 648 (" PP Consultants "), Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd [2005] HCA 9 ; (2005) 222 CLR 194 (" Gribbles ") and Stellar Call Centres Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal Plumbing and Allied Services Union [2001] FCA 106 ; (2001) 106 FCR 302 (" Stellar Call Centres "). He also relied on Construction Forestry Mining & Energy Union v Henry Walker Eltin Contracting Pty Ltd (2001) 108 IR 409 (" CFMEU v Henry Walker Eltin "), Minister of State for Employment, Workplace Relations and Small Business v Community and Public Sector Union [2001] FCA 316 ; (2001) 109 FCR 303 and North Western Health Care Network v Health Services Union of Australia [1999] FCA 897 ; (1999) 92 FCR 477 (" North Western Health Care "). (b) In these circumstances, by operation of ss 149(1)(d) and 170MB(2) of the Workplace Relations Act , the 1998 Award, the 1999 Agreement and the 2002 Agreement were binding on AMRS. Counsel for Mr Urquhart referred to the 1965 Award, 1969 Variations, the National Wage Cases , the 1998 Award, the 1999 Agreement and the 2002 Agreement in support of his submission that, whilst employed by AMRS, Mr Urquhart was entitled to be paid wages and superannuation at the rate for which the 1999 Agreement and the 2002 Agreement provided, and not at the rate he was in fact paid by AMRS, but with the loading prescribed by the 1998 Award. He referred to the principles for interpreting awards in various cases, including in City of Wanneroo v Australian Municipal, Administrative, Clerical and Services Union (2006) 153 IR 426. He contended that, properly construed, the underpayment that Mr Urquhart claimed in his relief (see [4]) included the loading for which the 1998 Award provided calculated by reference to the 1999 and 2002 certified agreement rates (as well as the difference between the amounts for which these certified agreements provided and that which he was actually paid). Rather, meter reading was an ancillary function that supported the core business of Powercor, which was to distribute electricity. AMRS also relied on PP Consultants , Gribbles and Stellar Call Centres . AMRS submitted that meter reading was not an essential, or even significant, part of the business of distributing electricity. Nor was it part of the development or maintenance of the assets used to generate electricity, the use of which enabled a fee to be charged to the retailers. AMRS contended that there was a material difference between the metering of electricity use and the reading of meters. This distinction was apparent in each of the outsourcing contracts and in Powercor's distribution licence. Powercor had not, since that time, "contracted in" the meter reading function. Hence, at the time of contracting out meter reading to AMRS, Powercor had no meter reading business left to transmit. Alternatively, there was no transmission because, under Powercor's distribution licence and the relevant Codes, Powercor retained the obligations with respect to meters and meter-reading. Further, there was no transfer of assets from Powercor to AMRS. Therefore, Mr Urquhart was not entitled to be paid in accordance with those instruments. AMRS argued that, even if a generous approach was adopted to the interpretation of the 1998 Award, there was nothing in the 1998 Award that imposed a legal obligation on Powercor to classify, or pay, meter readers under the 1998 Award. Moreover, the history did not disclose that that there was any previous agreement or award relevant to the 1998 Award showing that meter readers were to be covered by the award. Rather, by reference to Appendix C in the case of the 1999 Agreement and Appendix D in the case of the 2002 Agreement, each instrument sets out rates of pay within the structure of a 30-point pay scale. In the absence of express provision, AMRS contended that it was proper to consider the industrial and statutory context surrounding the Agreements. This required attention to the objective facts. AMRS argued that the translation exercise undertaken within Powercor after the 1997 Agreement was not relevant to the construction question. Even if this exercise could be taken into account in construing the 1999 Agreement, at the time of certification of the 1999 Agreement (and the 2002 Agreement), Powercor did not employ any standard meter readers. AMRS submitted that, in the circumstances, it could not be said that, viewed objectively, the pay point classification scheme in the two agreements was intended to cover standard meter readers. AMRS further argued that its approach was supported by the statutory context surrounding the certification of enterprise agreements. AMRS submitted that clause 8.2.2 of the 1998 Award made it clear that the loading of 25% attached to the rates of pay prescribed in the Award and not the rates in the 1999 or 2002 Agreements. (2) If meter reading was a part of Powercor's business, was it transmitted to AMRS in 2002 (and/or 2004)? If the first of these questions is answered in the negative, then Mr Urquhart's claim must fail. For the reasons stated below, this is the answer I would give. I would, as indicated below, also answer the second question against Mr Urquhart. 41 In these circumstances, there is no occasion to consider the question whether the industrial instruments on which Mr Urquhart relies (the 1998 Award, the 1999 Agreement and the 2002 Agreement) applied to him whilst in the employ of AMRS; and, if so, whether they gave rise to an obligation on AMRS's part in respect of Mr Urquhart's employment that has been breached. These questions lack any basis in fact to justify their further consideration. Was meter reading a part of Powercor's business? Whether there has been transmission (or a succession or assignment), for these purposes, is a mixed question of fact and law. PP Consultants indicates how this question should be considered. 43 According to PP Consultants , as a general rule, in a case such as the present, it is necessary, first, to identify or characterise the business or the relevant part of the business of the first employer; secondly, to identify the character of the transferred business activities in the hands of the new employer; and, thirdly, to compare the two business: see PP Consultants at 655 per Gleeson CJ, Gaudron, McHugh and Gummow JJ. If, in substance, the business of the first employer has the same character as the transferred business activities in the hands of the new employer, then it may be possible to say the business, or a part of the business of the first employer had been transmitted to the new employer. If the business of the first employer does not have the same character as the transferred business activities of the new employer, then there can be no transmission (or succession or assignment). 44 The joint judgment in PP Consultants illustrates this approach. The analysis began with the proposition that St George Bank Ltd was in the business of banking and the activities in which it engaged at its branch at Byron Bay were part of its banking business (at 655). The pharmacist that the Bank appointed to carry on a branch agency after it closed this branch did not engage in the business of banking, although it engaged in banking activities (at 656). The pharmacist was, so their Honours held, carrying on the business of a banking agent. Thus, no part of the Bank's business has been acquired by the [pharmacist], whether as successor, assignee or transmittee. On this approach, the fact that the activities carried on by the old and new employers were the same as far as the employees were concerned was immaterial. 45 Gribbles also concerned s 149(1)(d) of the Workplace Relations Act , although the focus in this case was on the meaning of the word "successor" in this provision. A company called Region Dell Pty Ltd conducted medical clinics, including one at Moorabbin. The company licensed the use of part of the Moorabbin clinic's premises for a radiology practice. The company also supplied the equipment. The radiology practice supplied the radiographers, consumables and the like. The company had granted three such licences --- the first, to Southern Radiology; the second until 31 August 1999, to MDIG; and the third, from 1 September 1999, to Gribbles. In 2000, Gribbles terminated the employment of the radiographers at Moorabbin. If Gribbles were bound by the Award that had bound MDIG, then Gribbles was bound to pay severance pay to the radiographers. This turned on whether Gribbles was a successor, for the purposes of s 149(1)(d) , to or to any part of the business of MDIG. In a joint judgment, Gleeson CJ, Hayne, Callinan and Heydon JJ held that it was not. 46 In the course of this judgment, their Honours touched on the meaning of the word "business" in this context. As their Honours said, to be a "successor" (or assignee or transmittee), it is not enough that the new employer pursues the same kind of business as the old: Gribbles at 211. What was meant by the word "business" in this context depends on s 149(1)(d) , which "focuses upon succession, assignment and transmission to or of a business which is identified as the business of an employer", which "necessarily directs attention to what it is that the former employer had which is to be described as the 'business' of that employer": Gribbles at 211. In the case of a commercial enterprise, identifying the employer's 'business' will usually require identification both of the particular activity that is pursued and of the tangible and intangible assets that are used in that pursuit. The 'business' of an employer will be identified as the assets that the employer uses in the pursuit of the particular activity. It is the assets used in that way that can be assigned or transmitted and it is to the assets used in that way that an employer can be a successor. The new employer may be a successor, assignee or transmittee to or of the business, or part of the business, of an employer who was a party to the relevant industrial dispute if the new employer, having the beneficial use of assets which the former employer used in the relevant pursuit, uses those assets in the same or a similar pursuit. ... Whether the new employer is a successor, assignee or transmittee, will require examination of whether what the new employer has can be described as a part of the former employer's business. In s 149(1)(d) of the Workplace Relations Act , "the business or part of the business" of the former employer --- which in the present case is Powercor --- is thus to be characterised by reference to the particular activity that it pursued and the assets that it used in that pursuit. As Stellar Call Centres shows, whether a new employer "becomes the ... transmittee ... of the whole or a part of the business concerned", for the purposes of subs 170MB(2) depends on much the same inquiry. 47 Stellar Call Centres applied the reasoning in PP Consultants to an inquiry under ss 149(1)(d) and 170MB(1) (which, for present purposes, is in relevantly the same terms as s 170MB(2)). In the Full Court of this Court, Stellar Call Centres challenged the decision of the judge at first instance that, pursuant to ss 149(1)(d) and 170MB(1) of the Workplace Relations Act , it was bound by awards and certified agreements binding on Telstra Corporation Ltd ("Telstra"). The question was whether a part of Telstra's business that involved the taking and responding to telephone calls from Telstra's customers had been transmitted to Stellar Call Centres. The Full Court held that there was no such transmission, chiefly because the receiving of the calls from customers were "activities in support of Telstra's businesses in the telecommunication industry" but were "not themselves ... the business or part of the business of Telstra": see Stellar Call Centres at 311. In the course of conducting that business, Telstra is called upon to respond to enquiries, requests for services and complaints from its customers, including those made by telephone. However, the making of those responses is not a distinct 'part' of Telstra's business within the meaning of s 149(1) , as explained by the High Court, any more than, for example, cleaning undertaken as a necessary aspect of the conduct of a restaurant is a 'part' of the business of the restauranteur. The business of Stellar Call Centres was the provision of telephone answering services. The answering of calls was not, however, a part of Telstra's business; and, accordingly, there was no transmission of that part of Telstra's business. 48 Having regard to the considerations set out below, I find that, as at 2002 and 2004, Powercor was in the business of using significant assets to distribute electricity to western Victoria and western metropolitan Melbourne. This is what Powercor was licensed under the Electricity Industry Act to do. It had two lesser businesses that are not presently material. Meter-reading was not the business or part of the business of Powercor as at 2002 and 2004, or in the preceding years. AMRS was, however, engaged in meter reading activities. Its managing director, Mr Gallagher, said (and I accept) that the company had over 600 employees, reading 25 million meters a year and entering over 100,000 premises every day to do so. In these circumstances, there could be no transmission of the business or part of the business of Powercor for the purposes of ss 149(1)(d) and 170MB(2) of the Workplace Relations Act . 49 The character of AMRS's business metering activities was not in dispute. Indeed, they were evident from the activities it contracted with Powercor to perform. Under the 2002 contract, AMRS provided a standard meter reading service, which included meter readers, who reported the data retained in the meters. Under the 2004 contract, AMRS provided a standard and special meter reading service. In substance, a standard meter reading service was also what Marshmans and VMM had earlier provided to Powercor under their contracts. Under each of these arrangements, Powercor itself provided the PDE devices, the information system onto which the data was downloaded, the ancillary equipment to read the meters, the information about the meters that were to be read and the time frames in which this was to be done: see clause 6 of the VMM contract; Schedule 2 of the Marshmans contract, Schedules 2 and 3 of the 2002 contract and Schedules 1 and 2 of the 2004 contract. 50 Powercor's business can be identified from what the company was licensed to do under the Electricity Industry Act , the evidence of Mr Minster (Powercor's Manager of Industrial Relations and Human Resources Systems) and Mr Lang (currently Powercor's Manager of Asset Maintenance and, as at 1997, the company's Manager --- Connection Services) as well as from the regulatory framework that governed its activities as a licensee under the Electricity Industry Act . 51 The purpose of the Electricity Industry Act is and was to regulate the electricity supply industry in Victoria: see s 1. The generation, transmission and distribution of electricity is and was at the relevant times subject to a licensing regime: see s 16. Provision was made for the application for and grant of licences: see ss 18 and 19 . Licences are and were subject to conditions determined by the Essential Services Commission (formerly the Office of the Regulator-General): see ss 20 - 21 . These conditions include conditions relating to customer-related standards, procedures, policies and practices: s 26. By virtue of s 40A(5) , a distribution company (as defined in s 3) and a retail customer (as also defined in s 3) are and were deemed to have entered into a contract on approved terms and conditions, of which notice had been given in conformity with subs 40A(4). Section 44 made provision for the regulation of metrology procedures. 52 At the relevant time, Powercor distributed electricity pursuant to an Electricity Distribution Licence issued under the Electricity Industry Act ("the licence"). The licensee's obligations included the provision of connection services on a customer's or retailer's request: see clauses 5-8 & 10-11. The licensee was required to issue national metering identifies: see clause 14. The licence also obliged Powercor to comply with various Codes, including the Electricity Distribution Code ("the Distribution Code") and the Electricity Customer Metering Code ("the Metering Code"): see, e.g., clause 21. 53 In summary, under the licence, Powercor distributed electricity for supply, to customers in the distribution area of western Victoria and western metropolitan Melbourne, using certain fixed assets. The licence imposed no obligation with respect to meter reading. The licence proved no support for the proposition that Powercor's business was or included meter reading. 54 The evidence of Mr Minster established that Powercor's principal business pursuit was the distribution of electricity over what was called a Network and involved transporting electricity from the various transmission terminal stations to zone substations and then to the end customers. The Network was a collection of assets such as poles, wires and substations, which Powercor owned and used to distribute the electricity. Mr Minster's evidence established that Powercor sold its retail arm in 2001. His evidence also established that, as at 4 October 2007, Powercor owned 69 zone substations, 520,000 poles and over 82,500 kilometres of line length. The Network Business employed managers, engineers, system controllers and technical experts. Powercor Services employed managers, engineers, project managers, line workers, substation fitters and electricians, technical officers and designers. Powercor generated most of its revenue by charging the retailers of electricity a fee for the use of the Network. 56 As a licensed electricity distributor, as indicated at [52] above, Powercor had obligations to comply with the various Codes governing the electricity industry in Victoria, including the Distribution Code and the Metering Code. These latter Codes dealt with Powercor's obligations as a distributor, particularly with regard to the supply and maintenance of assets. None of these Codes expressly required Powercor to make standard meter readings, although the Metering Code imposed obligations with respect to meters and the collection of data and, in certain circumstances, special meter readings. 57 The Distribution Code as at January 2002 required that the distributor "provide, install and maintain standard metering and necessary associated equipment, at a suitable location to be provided by the customer": see clause 2.1.1. Other obligations in the Distribution Code related to the management of the distribution assets (clause 3), the quality and reliability of the supply (clauses 4 and 5), and guaranteed service levels (clause 6). Save for clause 14, which required a distributor and a customer to comply with the Metering Code, metering was not otherwise dealt with in the Distribution Code. 58 The distributor's obligations in relation to metering customers' electricity usage were set out in the Metering Code: see, e.g., clauses 1.1, 5.1, 7.1, 9.1, 12.1, 13, 14.1 and 15.1. The Metering Code applied to a range of persons, not simply distributors. The Metering Code dealt with such matters as the location, installation and repair of metering equipment (clauses 2.3, 7.1, 12.1 & 6.1), the sealing of metering equipment (clause 4), the provision of a national metering identifier (clause 8), testing of metering equipment and accuracy assurance (clauses 9 & 10), and access to data (clause 14). Clause 13 concerned special readings. It provided that, "[o]n request by a retailer , a distributor or a responsible person (as the case may be) must use best endeavours to carry out a special meter read or an estimated read to enable the transfer of a customer to that retailer within a reasonable time of the request" (italics original). Clause 15.1 provided for an obligation to collect data, stating that "[i]n relation to the supply of electricity to a first tier customer , a distributor must collect data stored in metering equipment as frequently as is required to enable the retailer to discharge its minimum obligations under the Electricity Retail Code " (italics original). (Amongst other things, the Electricity Retail Code obliged the retailer to connect a customer who wanted the service and to render a bill based on a reading of the customer's meter: see clauses 2 & 5.1. ) Also under the Metering Code, there were further obligations in relation to the estimation of energy data, the validation and substitution of energy data, and the storage of energy data (clauses 16-17 and 19). In addition, the Metering Code made provision for the relationship between the distributor and bodies engaged to provide a metering function for the distributor: see clause 1.4. 59 Nothing in the Codes as discussed above would support the proposition that Powercor's business was or included meter reading. Nothing in them detracts from the proposition that, at the relevant time, Powercor's tangible assets were overwhelmingly deployed in operating and maintaining the Network to distribute electricity. Furthermore, as counsel for AMRS noted, the licence was also an asset for the business of using the Network to distribute electricity. Powercor was not in the business of meter reading or in a business that included the business of meter reading. 60 This conclusion is borne out by Mr Minster's evidence concerning the supply of meters and the role of meter readers. His evidence established that premises supplied with electricity by Powercor were equipped with a meter that recorded how much electricity was used at the premises over a period of time. It was the primary task of the standard meter reader to read the meter and record the data onto a PDE device. The data on the PDE device was subsequently downloaded onto a computer and transported to a central information system accessed by Powercor. Powercor conveyed the information to retailers in order that they might bill their customers. The information gathered from reading the meters also enabled Powercor to establish how much to charge retailers for the use of the Network. Powercor did not derive revenue from meter reading directly. 61 I reject the submission for Mr Urquhart that meter reading was a part of Powercor's business for the purposes of ss 149(1)(d) and/or 170MB(2) of the Workplace Relations Act . Meter reading was not a central part of Powercor's licence obligations, as counsel for Mr Urquhart argued. It was an aspect of data collection. As noted already, under the Metering Code, Powercor was obliged to measure the use of electricity by a customer, in order that the retailer might bill the customer correctly and Powercor might charge the retailer appropriately for the use of the Network. The meter reading function was not, however, the same as the measurement of electricity usage. The meter reading function involved recording data measured by the meter in a PDE device and downloading this data from the PDE device onto Powercor's information system. This function of meter reading was ancillary to its obligation to measure the use of electricity, which was itself ancillary to the business of Powercor, which was the use of its assets to distribute electricity. Counsel for Mr Urquhart also drew attention to the broader role of meter readers in reporting faults and other safety issues but this emphasises the ancillary nature of the meter reading function. 62 Counsel for Mr Urquhart relied on CFMEU v Henry Walker Eltin in support of his submission that meter reading was a part of the business of Powercor. CFMEU v Henry Walker Eltin should, however, be distinguished from the present case. In CFMEU v Henry Walker Eltin , the union sought a declaration that, pursuant to 170MB(2), the company ("HWE") was bound by a certified agreement in relation to operations of the coal handling preparation plant previously operated by Ebenezer Mining Company Pty Ltd ("Ebenezer"). Branson J upheld the union's claim. Her Honour found that, on the evidence before her, "the overall business of Ebenezer is, broadly speaking, that of causing coal to be extracted from the Mine and rendered fit for sale, and selling that coal either for export or domestic consumption" and that "the overall business of HWE is that of contractor to the mining and construction industries": see CFMEU v Henry Walker Eltin at 416-17. Her Honour further found that the operation of the coal handling preparation plant was "itself carrying on" of the second aspect of Ebenezer's business --- the rendering of coal fit for sale. Thus, Branson J held (at 417) that the operation of the plant was a distinct part of the business of Ebenezer's business "in the sense of a project or undertaking forming part of its overall business or a distinct operational unit within its overall business". The operation of the plant was not, therefore, merely ancillary to Ebenezer's business. 63 For the reasons stated above, apart from lesser businesses in the engineering and construction sector which are not presently material, the business of Powercor was the use of the Network for the distribution of electricity to the area under licence. Meter reading was not a distinct part of this business, as Mr Urquhart would have it. Meter reading was not a distinct project or undertaking in the sense of the operation of the plant by HWE, as discussed by Branson J in CFMEU v Henry Walker Eltin. Accordingly, CFMEU v Henry Walker Eltin does not assist Mr Urquhart's case. If meter reading was a part of Powercor's business in 2002, was there a transmission to AMRS? 65 In final submissions, AMRS submitted that there was no transmission because, under the licence, the Distribution Code and the Metering Code, Powercor retained the obligations to install and maintain meters and collect the data from them. AMRS itself has little or no discretion as to how the meters were read, and no control over, or interest in, Powercor's business. Rather, so AMRS said, it simply employed staff to provide meter-reading services. In addition, AMRS noted a number of other facts said to show lack of transmission, including that: (1) no goodwill or other assets changed hands; (2) the 2002 contract and the 2004 contract were terminable in a variety of circumstances; and (3) under these contracts, Powercor retained the right to read meters itself at any time (i.e., the contracts conveyed no exclusive right or licence to AMRS with respect to the reading of Powercor's meters). 66 In response, counsel for Mr Urquhart argued that "transmission" was a non-legal concept and did not depend upon privity or any formal legal transfer of rights between the parties. Moreover, he submitted that the Court should not give weight to the consideration as to whether or not Powercor technically retained rights or obligations with respect to meter reading, because to give weight to this consideration would not reflect commercial reality. He referred to North Western Health Care and Australian Rail Tram and Bus Industry Union v Torrens Transit Services Pty Ltd [2000] FCA 1683 ; (2000) 105 FCR 88 , which applied North Western Health Care . Both cases concerned, amongst other things, a transmission of the business of State government or department and, in any event, for the reasons appearing below, since PP Consultants and Gribbles , North Western Health Care can no longer be said reliably to state the law in this area. 67 For the reasons that follow, I accept the submissions of AMRS and reject those of Mr Urquhart. All that has happened is that the Bank has changed the method by which it carried on its banking business in Byron Bay. Thus, no part of the Bank's business has been acquired by the [pharmacy], whether as successor, assignee or transmittee. In effect, the joint judgment in PP Consultants set out two tests for succession, assignment and transmission --- a characterisation test (discussed above) and a disposal test. Both tests must be satisfied in order for the operation of the award (under s 149(1)(d)) or the certified agreement (under s 170MB(2)) to be attracted to the new employer. 69 As it happened, in his separate judgment, Callinan J (agreeing with the joint judgment in the result) considered the issue of disposal at greater length than in the joint judgment. After noting considerations that were not dissimilar to those relied on by AMRS, his Honour identified the question that he considered should be asked: see PP Consultants at 664. Adapted to this case, this question is, what 'business', which Powercor is said to have transmitted to AMRS, could AMRS sell or otherwise pass on to someone else? If this is a correct question to ask in connection with transmission, for the reasons stated below, the answer, as in PP Consultants , would be "no business". Callinan J's conclusion (at 665) that "[t]he business of the bank had not 'passed'"; rather "[a] new form of business was created (by agreement) and was to be carried on by a new operator as an agent" might also summarise the effect of the 2002 contract. Under the 2002 contract, the business of Powercor did not pass (and was not transmitted). Rather, under the contract, AMRS was to carry on a new business of meter reading for Powercor. 70 The foregoing notwithstanding, I might still be in some doubt as to the correct analysis to be followed had PP Consultants not been succeeded in the High Court by Gribbles . The combined effect of these two decisions is, so it seems to me, to make the relevant state of the law reasonably clear with respect to provisions like ss 149(1)(d) and 170MB(2) of the Workplace Relations Act . In Gribbles , the High Court confirmed that the characterisation test (identifying the business or part of a business) and the disposal test (determining whether the business or part of a business so characterised was disposed of) are separate and distinct questions. First, it is necessary to identify exactly what is meant in the context of the particular case, by 'the business or part of the business' of the former employer. Secondly, it is necessary to identify what part of that 'business' the former employer once had which is now enjoyed by the person allegedly bound by the award. 71 Before discussing Gribbles further, I would acknowledge that, as counsel for Mr Urquhart observed, Gribbles is distinguishable in at least one respect from this case because Gribbles , in contrast to this case, involved no direct transaction between the former employer and the new employer. That is, Gribbles involved the question whether there had been a "succession" by the new employer to the old employer's business, and did not involve a question of "transmission": see Gribbles at 203-204 and 208. This distinction does not, however, affect the critical reasoning in Gribbles , as the majority judgment shows. Where there has been some transaction between them, it will be possible to see whether the former employer transferred the whole, or part, of its business to the new employer. But in other cases there may be no transaction between the former employer and the employer alleged to be its successor ... Thus, the existence of some transaction between the two employers is not essential in order to show that one is the successor to the business of the other. Further, whether or not there was some transaction between the new employer and the former employer, there may be a real question about whether what the new employer enjoys is the whole or a part of the 'business' of the former employer. 73 In this case, unlike Gribbles , there was a direct transaction between the former and the new employers, as expressed in the 2002 contract (and, subsequently, transactions expressed in the 2003 contract and the 2004 contract). Accordingly, this (like PP Consultants ) is one of the "many cases" where the answer is to be found by considering the transaction between the former and the new employers. 74 It is worth noting that, in Gribbles , the characterisation test was on the facts of the case easily satisfied in contrast to PP Consultants where it was not satisfied at all: see Gribbles at 214. The majority in Gribbles (at 214-15) thus focussed on the disposal test or, from the new employer's perspective, the enjoyment test, whilst this aspect called for very much less attention in PP Consultants . Considered in this way, PP Consultants and Gribbles are complementary aspects of the overarching question --- whether there has been a transmission, succession or assignment. 75 Assuming (contrary to the finding above) that the characterisation test is satisfied since meter reading constituted a part of the business of Powercor, the critical question is that presented in Gribbles --- whether it can be properly said that Powercor disposed of a meter reading business, which is now enjoyed by AMRS. 76 In the present case, there is a degree of artificiality about this inquiry since it fails to take account of the fact that the former employer (Powercor) had entered into similar contracts with VMM and Marshmans immediately before entering into the 2002 contract with AMRS. In this context, if there was a transmission to AMRS, it must be assumed that either similar transmissions to VMM and Marshmans were limited to the duration of their respective contracts or, for some unapparent reason, the transactions between Powercor and VMM and Marshmans were relevantly different, with the consequence that there was no previous transmission. I do not stop to investigate these possibilities further because, in my view, there was no transmission between Powercor and AMRS. The critical question in Gribbles --- whether it can be said that Powercor disposed of a meter reading business that is now enjoyed by AMRS --- on the facts as disclosed in the evidence must be answered "no". 77 The majority judgment in Gribbles shows that some aspects of the transaction between Powercor and AMRS are more relevant than others to the disposal/enjoyment test. In particular, it must be asked whether the new employer has acquired any of the tangible or intangible assets of the old employer: compare Gribbles at 212. In Gribbles , the majority found that, by the relevant transaction, the new employer did not come to enjoy either the tangible assets of the former employer (i.e., the former employer's equipment) or the intangible assets of the former employer (i.e., the former employer's goodwill): see Gribbles 214. Further, citing Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014 , the majority also recognised that, while both former and new employers employed the same employees, "no employee is an asset in the employer's balance sheet to be bought or sold": Gribbles at 214. Accordingly, the majority concluded that the former employer had not disposed of any part of its business and the new employer was not, therefore, a successor to or of any part of the business of the former employer because "[a]t no time did [the new employer] enjoy any asset of the [former employer], tangible or intangible, which [the former employer] had used in the pursuit of its business activities": see Gribbles at 204. This test is substantially identical to that proposed by Callinan J in PP Consultants (at 664) in that his Honour there asked whether there was anything for the new employer "to sell or otherwise pass on to someone else". 78 The uncontroverted evidence was that Powercor had and retained ownership of the relevant tangible assets. Under the 2002 contract, the meters and certain equipment (such as the PDE devices, sealing tongs and seals, and magnetic logos) were and remained Powercor's property, although AMRS's employees used this equipment in reading Powercor's meters. Thus, the employees of AMRS had the use of the PDE devices to receive information from and convey data to Powercor. AMRS was responsible for providing its employees with other items, which were not derived from Powercor. Furthermore, under the 2002 contract, AMRS undertook meter reading services for Powercor but not on the basis that AMRS had an exclusive right to provide these services. The contract was terminable in the circumstances set out (including where Powercor reasonably considered that the services of AMRS were no longer required having regard (amongst other things) to business needs --- on one month's notice or payment in lieu). Powercor was not prevented from undertaking a meter reading function during the currency of the contract if it so chose. (Different provisions were made under the 2003 and 2004 contracts for some of these matters, as for example termination, but none relevantly altered the relationship between Powercor and AMRS. ) The licence to distribute was and continued to be held by Powercor. AMRS did not argue that it had acquired any intangible asset, such as goodwill; and, in any event, the evidence was clearly to the contrary. 79 The contractual regime that Powercor adopted with AMRS was consistent with the regulatory regime governing it as a licensed electricity distributor. The obligations that the licence and, thus, the Distribution Code and Metering Code imposed on Powercor, including with respect to meters and data collection (see [57]-[58]), stayed with Powercor. Powercor was subject to significant penalties (in the nature of fines and the revocation of the licence) in the event of non-compliance. See, in this regard, the Essential Services Commission Act 2001 (Vic), s 53 ; and Electricity Industry Act , ss 29(3) , 16 and clause 3.4 of the licence. 80 It might be said that the High Court's analysis of the operation of s 149(1)(d) and like provisions allows employers, in effect, to "contract out" of their obligations under awards and certified agreements with comparative ease. The legislation, it may be inferred requires a common identity of a business or part thereof, into whosoever hands it falls, on the assumption that a successor will have the same and continuing capacity to meet the obligations arising under an award as the former operator of the business. No such assumption may safely be made about a different business. 81 This was a different approach to that of the Full Court of this Court in North Western Health Care in which R D Nicholson J stated that "[t]he policy objective of this provision is to make the power to settle industrial disputes effective by extending the instrument of settlement to 'the ever changing body of persons within the area of such disturbances'": North Western Health Care at 485; also 502 per Madgwick J. 82 These fundamental differences in perspective and approach have been the subject of scholarly discussions, which have proposed alternative analyses: see, for example, Trent D Sebbens, "'Wake, O Wake' --- Transmission of Business Provisions in Outsourcing and Privatisation" (2003) 16 Australian Journal of Labour Law 133. This Court is, however, bound to follow PP Consultants and Gribbles , which provide a clear answer in this case. 83 In summary, by the transactions in question, Powercor did not convey ownership of any tangible or intangible assets to AMRS. It cannot be said that Powercor disposed of, or that AMRS enjoyed, any part of Powercor's business, however characterised. AMRS is, therefore, not a transmittee of Powercor's business or part thereof such as to attract the operation of the 1998 Award, the 1999 Agreement and the 2002 Agreement (see [4]) to the employment of Mr Urquhart by AMRS. 84 For the reasons stated, I would dismiss the application. I certify that the preceding eighty-four (84) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny.

award and certified agreements binding on licensed electricity distributor (powercor) powercor contracted out meter reading functions to other entities before contracting with the respondent whether respondent bound by award and certified agreements by operation of transmission of business provisions under the workplace relations act 1996 (cth) meter reading not a part of powercor's business no business from powercor passed to the respondent either application dismissed industrial law

MEGA-LITIGATION AND ITS DISCONTENTS [1] 1.1 Introduction [1] 1.2 The Hearing [6] 1.3 Extent of the Documentation [11] 1.4 Costs [17] 1.5 Challenges [19] 1.6 Attempts to Refine the Issues [29] 1.7 Chronologies [42] 1.8 Preparing a Judgment [46] 1.9 Scope of the Judgment [51] 1.9.1 Unresolved Issues [51] 1.9.2 Length of the Judgment [57] 1.10 A Risk [63] 1.11 A Cautionary Tale [67] 2 . OVERVIEW [75] 2.1 Introduction [75] 2.2 Seven's Principal Claims [79] 2.2.1 Anti-Competitive Conduct Causing Harm to C7 [79] 2.2.2 Causes of Action Based on Anti-Competitive Conduct Causing Harm to C7 [88] 2.2.2.1 Master Agreement: The Effects Case [88] 2.2.2.2 Master Agreement: The Purpose Case [93] 2.2.2.3 Taking Advantage of Market Power [95] 2.2.2.4 Denial of Access to the Telstra Cable [97] 2.2.2.5 Relief Sought by Seven [99] 2.2.3 Anti-Competitive Conduct: The Foxtel-Optus CSA [103] 2.3 Seven's Claims Arising out of the NRL Bidding Process [110] 2.4 Optus-Specific Causes of Action [115] 2.4.1 Seven's Claims against the Optus Respondents [115] 2.4.2 Optus' Cross-Claim [121] 2.5 Settled Claims [124] 2.6 Structure of the Judgment [127] 2.7 Summary of Conclusions [151] 2.7.1 General Observations [151] 2.7.2 Specific Conclusions [164] 2.8 Proposed Orders [177] 3 . THE PARTIES AND THE FOOTBALL COMPETITIONS [180] 3.1 Applicants [180] 3.1.1 Seven Network [180] 3.1.2 C7 and the Content Supply Agreements [185] 3.1.3 Seven's Officers [192] 3.2 Respondents [194] 3.2.1 News Parties [194] 3.2.1.1 News (and TNCL) [194] 3.2.1.2 News Pay TV [198] 3.2.1.3 NRLI [199] 3.2.1.4 Mr Philip [201] 3.2.1.5 News' Officers [203] 3.2.2 Telstra Parties [205] 3.2.2.1 Telstra [205] 3.2.2.2 Telstra Media [207] 3.2.2.3 Telstra Multimedia [208] 3.2.2.4 Telstra's Officers [211] 3.2.3 PBL Parties [213] 3.2.3.1 PBL [213] 3.2.3.2 Nine [216] 3.2.3.3 PBL Pay TV [218] 3.2.3.4 PBL's Officers [220] 3.2.4 Sky Cable [221] 3.2.5 Foxtel Parties [224] 3.2.5.1 Foxtel Partnership [224] 3.2.5.2 Foxtel Management [229] 3.2.5.3 Foxtel Cable [234] 3.2.5.4 Ownership Table [237] 3.2.5.5 Foxtel's Officers [240] 3.2.6 Fox Sports [242] 3.2.6.1 Ownership of Fox Sports [242] 3.2.6.2 Ownership Tables [249] 3.2.6.3 Fox Sports' Officers [251] 3.2.7 ARL and NRL Parties [252] 3.2.7.1 NRL Partnership [252] 3.2.7.2 NRL Ltd [256] 3.2.7.3 NRL Corporate Structure Table [259] 3.2.8 Optus Parties [260] 3.2.8.1 Optus Vision [260] 3.2.8.2 SingTel Optus [268] 3.2.8.3 Optus' Officers [271] 3.3 Interlocking Directorships and Key Relationships [272] 3.4 Inactive Parties: Austar [274] 3.5 Former Parties [279] 3.5.1 Ten [279] 3.5.2 AFL [282] 3.6 Football Competitions [284] 3.6.1 AFL Competition [284] 3.6.2 Rugby League Competitions [290] 4 . FRAMEWORK FOR TELEVISION BROADCASTING IN AUSTRALIA [301] 4.1 Introduction [301] 4.2 Licensing Regime under the Broadcasting Services Act [303] 4.2.1 Broadcasting Licences [303] 4.2.2 Commercial Television Broadcasting Licences [312] 4.2.3 Subscription Television Licences [315] 4.3 Anti-Siphoning and Anti-Hoarding [317] 4.3.1 Anti-Siphoning Regime [317] 4.3.2 Anti-Hoarding Regime [327] 4.4 Program Standards, Codes of Practice and Regulation of Advertising [328] 4.4.1 Free-To-Air Television [328] 4.4.2 Pay Television [334] 4.5 Telecommunications Access Regime [338] 4.6 Brief Overview of Free-to-Air Broadcasting [345] 4.6.1 Networks [345] 4.6.2 Technologies [347] 4.6.3 Ratings [354] 4.7 Pay Television in Australia [355] 4.7.1 Subscribers [356] 4.7.2 Basic and Tiers [357] 4.7.3 Bundling [361] 4.7.4 A Matter of Terminology [365] 5 . CREDIBILITY OF LAY WITNESSES [366] 5.1 General Observations [367] 5.2 Seven's Witnesses [385] 5.2.1 Mr Stokes [385] 5.2.2 Mr Gammell [399] 5.2.3 Mr Wise [408] 5.3 News' Witnesses [413] 5.3.1 Mr Macourt [413] 5.3.2 Mr Philip [420] 5.4 Foxtel's Witnesses [432] 5.4.1 Mr Mockridge [432] 5.5 Telstra's Witnesses [438] 5.5.1 Dr Switkowski [438] 5.5.2 Mr Akhurst [449] 5.6 Optus' Witnesses [458] 5.6.1 Mr Lee [458] 5.6.2 Mr Anderson [460] 5.7 Rule in Jones v Dunkel [465] 5.8 Document Deletion Policies [482] 6 . BACKGROUND TO PAY TELEVISION IN AUSTRALIA: 1993−1999 [491] 6.1 1993 [492] 6.2 1994 [494] 6.2.1 Origins of Austar [494] 6.2.2 Origins of Fox Sports [495] 6.2.3 Origins of the Foxtel Partnership [497] 6.2.4 Origins of Optus Vision [498] 6.3 1995 [499] 6.3.1 Alliance: TNCL and Telstra [499] 6.3.2 Australis and the Foxtel Partnership [501] 6.3.3 Seven and Optus Vision [503] 6.3.3.1 SportsVision [507] 6.3.3.2 Tallglen Agreement [508] 6.3.4 Seven Extends the AFL Broadcasting Rights [509] 6.3.5 SportsVision Distributes Programs [512] 6.3.6 Austar Commences [514] 6.3.7 The Foxtel Partnership Agreements [515] 6.3.8 Australis Has Liquidity Problems [517] 6.3.9 News Joins Fox Sports [518] 6.4 1996 [519] 6.4.1 PBL and Australis [519] 6.4.2 Seven versus PBL [520] 6.5 1997 [522] 6.5.1 Seven and Nine Leave Optus Vision [522] 6.5.2 Umbrella Agreement [523] 6.5.3 SportsVision versus Seven [527] 6.5.4 Telstra, News and PBL Agree [529] 6.5.5 The ACCC Intervenes [531] 6.5.6 AFL First and Last Deed [533] 6.5.7 News Acquires Half of Fox Sports [536] 6.5.8 The Content Agreements [537] 6.6 1998 [540] 6.6.1 Foxtel and Austar Agree [540] 6.6.2 Australis Collapses [541] 6.6.2.1 News Acquires All of Fox Sports [542] 6.6.2.2 Premium Movie Partnership and Foxtel [543] 6.6.3 Fox Sports-Austar Interim Licence [544] 6.6.4 Austar Sub-Licenses Fox Sports to Foxtel [546] 6.6.5 Merger Agreement [548] 6.6.6 AFL Website [549] 6.6.7 C7-Optus CSA [550] 6.6.8 C7 Commences Service [551] 6.6.9 PBL Exercises Its Option over the Foxtel Partnership [553] 6.6.10 PBL's Option over Fox Sports [556] 6.7 1999 [557] 6.7.1 C7-Austar CSA [557] 6.7.2 ACCC Declaration [558] 6.7.3 PBL Exercises Its Fox Sports Option [560] 6.7.4 Pay Television Providers [561] 7 . FOXTEL, C7 AND THE DISPUTE BETWEEN NEWS AND TELSTRA [563] 7.1 Introduction [563] 7.2 Fox Sports Licenses Austar [565] 7.3 Seven's Projections: May 1998 [572] 7.4 News' Dilemma [574] 7.5 Proposed Supply of Fox Sports to Optus [576] 7.6 The Supply of Fox Sports to Foxtel: Early Negotiations [583] 7.7 News' Financial Models: Mid-1998 [594] 7.8 C7's First Proposal to Foxtel: 7 June 1998 [598] 7.9 C7's Business Plans: July---August 1998 [603] 7.10 The Issues Crystallise between News and Telstra [606] 7.10.1 News Tries to Persuade Telstra [606] 7.10.2 Telstra Responds [610] 7.10.3 Further Meetings: August-September 1998 [612] 7.11 Telstra's Responses to the Fox Sports-Austar Licence and Further Negotiations with News: October-November 1998 [619] 7.12 Seven's Second Proposal to Foxtel: 5 November 1998 [627] 7.12.1 The Proposal [627] 7.12.2 ACCC Becomes Involved [629] 7.12.3 Foxtel Responds to Seven's Offer [635] 7.12.4 ACCC Takes No Action [637] 7.13 Supply of C7 to Austar [638] 7.13.1 Negotiations between Optus and Austar [639] 7.13.2 Negotiations between Seven and Austar [644] 7.13.3 C7-Austar CSA: March 1999 [651] 7.14 Negotiations between News and Telstra [654] 7.14.1 Mr Blount and Mr Murdoch Meet Again [654] 7.14.2 Each Side States Its Position [657] 7.15 Dr Switkowski Changes the Tone [662] 7.16 Foxtel Considers C7: Early 1999 [666] 7.17 Foxtel Management's Board Meeting of 23 March 1999 [678] 7.18 Seven Network's Board Meeting of 26 March 1999 [683] 7.19 Mr Rupert Murdoch Visits Foxtel [687] 7.20 Seven's Third Proposal: April 1999 [689] 7.20.1 The Proposal [689] 7.20.2 Discussions Concerning the Proposal [692] 7.20.3 Seven Clarifies Some Matters [698] 7.20.4 Branding of C7 [702] 7.21 Fox Sports Budget for 1999---2000 [704] 7.22 Mr Freudenstein's Term Sheet: May 1999 [706] 7.23 Seven Network's Board Meeting of 28 May 1999 [711] 7.24 Seven's Draft Heads of Agreement: 9 June 1999 [715] 7.25 Seven Network's Board Meeting of 25 July 1999 [721] 7.26 Foxtel's AFL Strategy Paper [723] 7.26.1 Final Paper [723] 7.26.2 Drafts of the Strategy Paper [730] 7.26.3 Mr Mockridge's Evidence [733] 7.26.4 Telstra's Assessment of the AFL Strategy Paper [736] 7.26.5 Foxtel Management's Board Meeting of 8 July 1999 [737] 7.27 Fox Sports Pricing Dispute [743] 7.27.1 Ms Lowes Builds a Case [743] 7.27.2 Mr Macourt Replies to Mr Moriarty [747] 7.27.3 Internal Telstra Memoranda: August/September 1999 [749] 7.28 Foxtel Management's Board Meeting of 21 September 1999 [753] 7.29 Telstra's Response to Seven's Tactics [759] 7.30 News, PBL and Telstra Meet: 22 October 1999 [763] 7.31 Foxtel Management's Board Meeting of 26 October 1999 [768] 7.31.1 Mr Mockridge's AFL Strategy Paper [768] 7.31.2 The Board Meeting [773] 7.32 Optus Seeks Fox Sports [774] 7.33 Seven's Letter of 17 November 1999 [776] 7.33.1 The Letter [776] 7.33.2 Mr Stokes' Understanding [780] 7.33.3 Foxtel's Response to Seven's Offer [784] 7.33.4 Telstra's Assessment [787] 7.33.5 Seven's Reply to Foxtel [789] 7.34 Mr Mockridge Sees Opportunities [792] 7.35 Mr Blomfield and Mr Stokes Correspond [797] 7.36 Communications within Telstra: May 2000 [801] 7.37 Foxtel Agrees to Take the Olympic Channels [806] 7.38 Telstra and News Consider Changes in the Foxtel Partnership: May-July 2000 [807] 7.39 Optus Tries Again to Obtain Fox Sports [819] 7.40 Further Discussions between News and Telstra: August 2000-January 2001 [821] 8 . AWARD OF THE AFL PAY TELEVISION RIGHTS [824] 8.1 Seven's Entitlements to the AFL Broadcasting Rights [826] 8.1.1 AFL-Seven Licence Extension [826] 8.1.2 AFL First and Last Deed [833] 8.2 Early Interest in the AFL Broadcasting Rights: Foxtel, Nine and Telstra [838] 8.3 Mr Mounter's Strategy at Seven [845] 8.4 Foxtel Prepares a Strategy [849] 8.5 Seven's Presentation to the AFL: 21 June 1999 [852] 8.6 Foxtel's AFL Strategy Paper [859] 8.7 Mr Mounter Leaves Seven [860] 8.8 Foxtel Management's Board Meeting of 26 October 1999 [863] 8.9 AFL Commission Meeting of 5 November 1999 [864] 8.10 Seven's Initial Offer: December 1999 [866] 8.10.1 Mr Stokes' Warning [866] 8.10.2 The Offer [869] 8.11 Project Chess [871] 8.12 Mr Mockridge and Ms Lowes Depart: February 2000 [876] 8.13 Seven's Offer of 17 March 2000 [879] 8.13.1 The Offer [879] 8.13.2 AFL Meeting of 20 March 2000 [884] 8.13.3 AFL's Response to Seven's Offer [885] 8.14 Project Chess: March-May 2000 [886] 8.15 Foxtel's Presentations to the AFL: May-June 2000 [893] 8.16 Telstra Withdraws from the AFL Bidding: June 2000 [894] 8.16.1 Mr Stokes and Dr Switkowski Meet [894] 8.16.2 Telstra Decides to Bid Only for New Media Rights [900] 8.16.3 Mr Akhurst Advises Mr Stokes of the Decision [901] 8.16.4 Mr Akhurst's Understanding [903] 8.16.5 Telstra Informs the AFL [908] 8.17 Foxtel Presents to the AFL [909] 8.18 Telstra and the AFL: June-August 2000 [913] 8.19 Fox Sports Decides Not to Bid: July 2000 [917] 8.20 The AFL's Four Column Chart [919] 8.20.1 The Chart [919] 8.20.2 Foxtel Meets the AFL [923] 8.21 Mr Wylie's Projections: July 2000 [926] 8.22 Seven and the AFL: July-August 2000 [928] 8.22.1 Seven's Interpretation of the First and Last Deed [928] 8.22.2 Meetings With the AFL [929] 8.23 News Considers Acquiring the AFL Broadcasting Rights: July-August 2000 [934] 8.24 AFL Commission Meeting of 27 August 2000 [942] 8.25 News' Bid Develops [946] 8.25.1 Mr Frykberg Negotiates for a Consortium [946] 8.25.2 News, Telstra and the Internet Rights [949] 8.25.3 Nine's Response [953] 8.26 Seven's Draft Offer of 5 October 2000 [956] 8.27 Foxtel's Board Paper of 25 October 2000 [963] 8.28 Flip-Flop Emerges [971] 8.29 Mr Frykberg Meets the AFL: 30 October 2000 [977] 8.30 Telstra Rejects Mr Blomfield's Proposal [978] 8.30.1 Mr Brenton Willis Discusses Modelling [978] 8.30.2 Telstra Declines [981] 8.30.3 Foxtel Responds [990] 8.30.4 Telstra Further Considers Its Position [994] 8.31 'Killing C7' Conversations [1004] 8.31.1 Mr Falloon and Mr Gammell [1004] 8.31.2 Telstra's Answers to Interrogatories [1006] 8.32 Nine Is Asked to Contribute More [1007] 8.33 Foxtel Management's Board Meeting of 9 November 2000 [1008] 8.33.1 Preliminaries [1008] 8.33.2 The Board Decision [1015] 8.34 ACCC Foreshadows Non-Intervention [1017] 8.35 Seven Network's Board Meeting of 17 November 2000 [1018] 8.36 Mr Frykberg's Discussions: Mid-November 2000 [1020] 8.37 Seven Complains to the ACCC: 22 November 2000 [1024] 8.38 Telstra: Early November --- 6 December 2000 [1026] 8.39 Mr Stokes Contemplates Withdrawing from the Bidding [1033] 8.40 AFL's First Offer: 28 November 2000 [1036] 8.40.1 The Offer [1036] 8.40.2 Seven's Response to the AFL's First Offer [1037] 8.41 Mr Gammell and Mr Macourt Meet: 4 December 2000 [1039] 8.41.1 Mr Philip's Fallback Scenarios [1039] 8.41.2 The Meeting [1042] 8.41.3 Significance of the Conversation [1048] 8.42 Foxtel Develops Its Bid for the AFL Pay Television Rights [1059] 8.43 Seven Again Considers Withdrawing [1067] 8.44 Foxtel's Board Paper of 6 December 2000 [1071] 8.45 Telstra Rejects the $30 Million Proposal [1075] 8.46 Mr Philip's Fax of 9 December 2000 [1080] 8.47 Seven Again Approaches the ACCC: 12 December 2000 [1082] 8.48 Teleconference of 13 December 2000 [1084] 8.49 Seven Presents to the AFL: 14 December 2000 [1085] 8.49.1 The Bid [1085] 8.49.2 Seven's Evidence on the Quantum of the Bid [1091] 8.50 Execution of the Puts [1098] 8.51 Consortium Presents Its Bid [1101] 8.52 AFL Accepts News' Bid [1105] 8.53 Mr Mansfield Congratulates Dr Switkowski [1112] 8.54 Documents Are Signed [1114] 8.55 Seven Declines the Last Offer [1118] 8.56 Execution of the Licences [1125] 8.57 Seven Again Requests the ACCC's Intervention: 24 January 2001 [1126] 8.58 Seven's Understanding of the First and Last Deed [1128] 8.59 Postscript: Award of the AFL Rights for 2007 to 2011 [1132] 8.59.1 Preliminaries [1133] 8.59.2 Offers [1136] 8.59.3 Last Offer [1150] 9 . AWARD OF THE NRL PAY TELEVISION RIGHTS [1157] 9.1 Background: NRL Agreements [1159] 9.2 Fox Sports Considers Bidding [1169] 9.3 Seven Considers the NRL Pay Television Rights [1175] 9.4 Fox Sports' First Offer [1179] 9.5 Telstra Consents to Fox Sports' Bid [1182] 9.5.1 Consent [1182] 9.5.2 Fox Sports Seeks to Supply NRL to Optus [1187] 9.6 C7 Expresses Interest in the NRL Pay Television Rights [1194] 9.7 Fox Sports Makes a Second Offer [1197] 9.8 C7 Discusses Making an Offer [1207] 9.9 Events Leading to C7's First Offer [1217] 9.9.1 Seven's Draft Note [1217] 9.9.2 Quay Apartments Meeting [1222] 9.9.3 Mr Stokes Speaks with Mr Moffett [1223] 9.10 C7's First Offer for the NRL Pay Television Rights [1225] 9.10.1 The Offer [1225] 9.10.2 Seven Network's Board Meeting of 17 November 2000 [1227] 9.10.3 Confidentiality Agreements [1230] 9.10.4 Newspaper Reports [1231] 9.11 Fox Sports and the NRL Partnership Assess Their Positions [1233] 9.12 C7 Prepares a Second Offer for the NRL Pay Television Rights [1238] 9.12.1 Towards $70 Million Cash [1238] 9.12.2 An ACCC Interlude [1246] 9.12.3 Back to $60 Million Cash [1248] 9.12.4 C7 Makes Its Second Offer [1255] 9.13 C7's Second Offer Is Considered [1261] 9.14 Terms of the Offer Are Disclosed [1273] 9.15 Further Discussions [1284] 9.16 C7's Third Offer for the NRL Pay Television Rights [1288] 9.16.1 The Offer [1288] 9.16.2 Legal Advice [1295] 9.16.3 Seven Clarifies [1297] 9.16.4 The Offer Is Revealed [1299] 9.17 Fox Sports' Meeting of 5 December 2000 [1300] 9.18 Mr Philip Attempts to Persuade Telstra [1303] 9.18.1 First Attempt [1303] 9.18.2 Fax of 9 December 2000 [1316] 9.18.3 Telstra Analyses Mr Philip's Proposal [1322] 9.18.4 Mr Philip's Second Fax: 12 December 2000 [1326] 9.19 A Meeting Between Mr Stokes and Mr James Packer? [1329] 9.20 Ms Ireland's Letter of 13 December 2000 [1340] 9.21 C7 Finalises Its Offer [1345] 9.22 Analysis of the Bids [1348] 9.23 Teleconference of 13 December 2000 [1353] 9.23.1 Lead-up [1353] 9.23.2 The Teleconference Takes Place [1361] 9.23.3 Dr Switkowski's Evidence Concerning the Teleconference [1364] 9.23.4 Mr Macourt's Evidence Concerning the Teleconference [1365] 9.23.5 Mr Philip's Evidence Concerning the Teleconference [1367] 9.23.6 Mr Akhurst's Evidence Relating to the Teleconference [1370] 9.24 NRL-Fox Sports Licence [1374] 9.24.1 Formalisation of Fox Sports' Offer [1374] 9.24.2 The Offer Is Accepted by the NRL PEC [1384] 9.24.3 Aftermath [1392] 9.25 Optus-NRL Licence [1398] 10 . RETAIL ACCESS DISPUTE [1417] 10.1 TARBS Request [1419] 10.2 ACCC's Inquiry and the Draft Decision [1421] 10.3 Mr North's Strategy [1428] 10.3.1 Mr North's Long-Term Engagement [1428] 10.3.2 Mr North's Strategic Objectives [1432] 10.4 Seven Formally Seeks Access to the Telstra Cable [1435] 10.5 A Declaration Is Made [1439] 10.6 Telstra's Response to Seven's Strategy [1441] 10.7 Foxtel and Telstra Respond to the Access Request [1447] 10.8 TARBS Arbitration [1456] 10.9 Responses to the Judgments [1459] 10.10 Further Discussions within Telstra [1469] 10.11 Full Court Decisions on the Access Appeals [1470] 10.11.1 The Decisions [1470] 10.11.2 Consequences of the Decisions [1471] 10.11.3 Notification of the Access Arbitration [1476] 10.12 Access Arbitration [1477] 10.13 Foxtel's Offer of Carriage to C7 [1478] 10.14 Seven's Response to the Interim Determination [1485] 10.15 Seven Considers Withdrawing Its Access Claim [1495] 10.16 End of the Access Arbitration [1498] 11 . EVENTS RELATING TO THE TERMINATION OF THE C7-OPTUS CSA AND ENTRY INTO THE FOXTEL-OPTUS CSA [1499] 11.1 Background: Licensing of C7 to Optus Vision [1501] 11.1.1 C7 Negotiates with Optus [1501] 11.1.2 C7-Optus CSA [1505] 11.1.3 CWO Deed Poll [1506] 11.2 Background: Optus and Pay Television [1507] 11.2.1 CMM's Woes [1507] 11.2.2 Optus Complains to the ACCC [1515] 11.2.3 The SingTel Implementation Agreement [1518] 11.2.4 Optus' Marketing Campaign [1520] 11.2.5 Responses [1525] 11.2.6 Optus' Position in 2001 [1528] 11.3 Optus Attempts to Ascertain the Termination Date [1529] 11.3.1 Optus Obtains Legal Advice [1529] 11.3.2 Optus and C7 Correspond [1533] 11.3.3 Optus Obtains Further Advice [1537] 11.3.4 Mr Fletcher's Pay TV End Game Memorandum [1540] 11.4 Seven Contemplates a Post-AFL Broadcasting Rights World [1544] 11.5 Optus Considers its Strategy [1550] 11.5.1 Options Are Canvassed [1550] 11.5.2 Optus Revives the Fox Sports Issue [1553] 11.5.3 Fox Sports Provides Optus with an Indicative Term Sheet: August 2001 [1558] 11.6 Optus Engages McKinsey to Review CMM [1562] 11.7 Negotiations between C7 and Optus: July−September 2001 [1567] 11.7.1 A Three Year Supply Contract? [1567] 11.7.2 Optus Requests a Copy of the AFL-Seven Licence [1572] 11.7.3 C7 Sends a Term Sheet [1576] 11.7.4 Optus Draws Back [1579] 11.8 McKinsey Review Proceeds: Restructure CMM [1582] 11.9 First Variation Agreement [1585] 11.9.1 Optus Decides to Consider Project Alchemy and Project Emu [1585] 11.9.2 Optus Seeks a Short-Term Extension [1592] 11.9.3 Execution of the First Variation Agreement: 28 September 2001 [1598] 11.9.4 Mr Wise's Advice [1604] 11.10 Discussions among Foxtel Partners: July−October 2001 [1606] 11.11 Optus Agitates for an Offer from Foxtel [1611] 11.12 Dinner at Tetsuya's and Movement towards Content Sharing: October 2001 [1617] 11.13 Seven's Deliberations: October−November 2001 [1623] 11.14 Resolution of Foxtel Partnership Differences [1626] 11.14.1 PBL Puts a Proposal [1626] 11.14.2 Meeting of 22 November 2001 [1629] 11.14.3 Agreements of 3 December 2001 [1632] 11.15 December 2001 Meetings [1634] 11.15.1 News, PBL, Telstra and Optus Meet [1634] 11.15.2 Dr Switkowski and Mr Anderson Meet [1640] 11.15.3 Mr Blomfield is Removed [1642] 11.16 Mr Dalgleish Recommends the C7 Agreement [1643] 11.17 Second Variation Agreement [1648] 11.17.1 An Extension is Agreed [1648] 11.17.2 Execution of the Second Variation Agreement [1652] 11.18 'NRL on Optus' Is Extended [1655] 11.19 Further Content Supply Discussions: January−February 2002 [1658] 11.19.1 Telstra and Optus Negotiate [1658] 11.19.2 Optus and Fox Sports [1662] 11.19.3 Foxtel and Optus Negotiate Concerning Fox Footy [1668] 11.19.4 Foxtel Supplies Fox Footy Channel to Austar [1673] 11.19.5 Foxtel-Optus Fox Footy Agreement [1675] 11.20 Optus Considers Project Emu January 2002 [1678] 11.21 Foxtel Optus Term Sheet and Termination of the C7-Optus CSA [1681] 11.21.1 Mr Wise Recommends an Interim Deal with Optus: 7 February 2002 [1681] 11.21.2 Optus Chooses Content Sharing [1683] 11.21.3 Foxtel-Optus Term Sheet Is Signed [1688] 11.21.4 Optus Terminates the C7-Optus CSA [1691] 11.22 The Resolution of Other Disputes [1692] 11.22.1 Telstra Becomes a Foxtel Reseller [1693] 11.22.2 Fox Sports-Foxtel Supply Agreement Is Signed [1695] 11.23 Foxtel Offers Carriage to C7 [1696] 11.23.1 Foxtel's Offer [1696] 11.23.2 Seven's Response [1698] 11.23.3 Impasse [1701] 11.24 A Decision on Project Alchemy [1702] 11.24.1 Mr Anderson Identifies the Options [1702] 11.24.2 SingTel's Board Meeting of 21 February 2002 [1707] 11.24.3 SingTel's Board Resolves in Favour of Project Alchemy [1719] 11.24.4 Motives: Mr Lee and Mr Anderson [1720] 11.24.5 The End of Project Emu [1735] 11.25 Seven and Optus Negotiate a Short-Term Arrangement [1736] 11.25.1 Negotiations [1736] 11.25.2 Signing of the March Variation Agreement [1738] 11.26 Execution of the Foxtel-Optus CSA [1740] 11.27 Ending the C7-Optus Relationship [1743] 11.28 C7 Closes Down [1747] 11.29 ACCC Approves the Foxtel-Optus CSA [1749] 11.29.1 Approval Is Sought [1749] 11.29.2 Enforceable Undertakings Are Given [1750] 11.29.3 ACCC Approval Is Given [1752] 11.29.4 Optus' Non-Foxtel Channels [1755] 11.29.5 The Position after the Foxtel-Optus CSA [1756] 12 . MARKETS [1757] 12.1 Introduction: Expert Evidence [1757] 12.2 Identification of Markets: Principles [1763] 12.2.1 Market Definition Is a Tool [1763] 12.2.2 Substitutability [1766] 12.2.3 In the Long Run [1771] 12.2.4 Close Competition [1773] 12.3 Common Ground [1776] 12.4 Application of the SSNIP Test [1784] 12.5 Evidence of Market Behaviour [1795] 12.6 Purpose [1801] 12.7 AFL and NRL Pay Rights Markets [1804] 12.7.1 Seven's Submissions [1806] 12.7.2 News' Submissions [1814] 12.7.3 PBL's Submissions [1822] 12.7.4 Reasoning [1823] 12.7.4.1 Seven's Experts [1824] 12.7.4.2 Does Pay Television Receive the Worst Matches? [1834] 12.7.4.3 Professor Hay's Analysis [1845] 12.7.4.4 Seven's Additional Arguments [1849] 12.7.4.5 Conclusion [1856] 12.8 Wholesale Sports Channel Market [1857] 12.8.1 The Issues [1857] 12.8.2 Seven's Submissions [1861] 12.8.3 News' Submissions [1868] 12.8.4 PBL's Submissions [1869] 12.8.5 Correct Question [1870] 12.8.6 Seven's Dilemma [1875] 12.8.6.1 Pleadings: Marquee Sports [1875] 12.8.6.2 Which Alternative? [1878] 12.8.6.3 AFL and NRL as Marquee Sports [1882] 12.8.7 A Premium Sports Channel Market? [1898] 12.8.8 Seven's Experts [1902] 12.8.9 Cumulative Appeal of AFL and NRL [1916] 12.8.9.1 Evidence [1916] 12.8.9.2 A Question of Overlap [1927] 12.8.10 General Sports Channel [1931] 12.8.11 Conduct as Evidence of the Market [1939] 12.8.11.1 Supply of Fox Sports to Foxtel [1941] 12.8.11.2 Supply of Fox Sports to Austar [1952] 12.8.11.3 Supply of Fox Sports to Optus [1957] 12.8.12 Views of Market Participants [1962] 12.8.13 No Wholesale Sports Channel Market as Pleaded [1966] 12.9 Wholesale Sports Channel Market: A Separate Functional Market? [1967] 12.9.1 The Respondents' Contention [1967] 12.9.2 The Contention Should Be Accepted [1972] 12.9.3 A Real World Foundation? [1975] 12.9.4 Additional Obstacles? [1977] 12.9.5 Seven's Role in 2000 and 2005-2006 [1988] 12.9.5.1 Seven's Offer in 2000 [1989] 12.9.5.2 Seven's Success in 2005 [1995] 12.9.6 Conclusion [2002] 12.10 Retail Pay Television Market [2004] 12.10.1 Pleadings [2004] 12.10.2 Seven's Submissions [2006] 12.10.3 News' Submissions [2014] 12.10.4 Reasoning [2019] 12.10.4.1 The Issue [2019] 12.10.4.2 Competing for the Same Viewers [2022] 12.10.4.3 Product Differentiation [2034] 12.10.4.4 The Critical Point: Choice [2038] 12.10.4.5 Churn [2045] 12.10.4.6 Foxtel's Pricing : Satellite Versus Cable [2052] 12.10.4.7 Foxtel's Profitability [2057] 12.10.4.8 Foxtel's Perceptions [2069] 12.11 Conclusion [2077] 13 . SEVEN'S EFFECTS CASE UNDER SECTION 45(2) OF THE TRADE PRACTICES ACT [2078] 13.1 Legislation [2078] 13.2 Structure of Seven's Case: A Guide for the Perplexed [2089] 13.2.1 Seven's Primary Effects Case [2092] 13.2.2 Alternative Markets [2096] 13.2.3 Other Provisions [2098] 13.2.4 What Happens if the Case against the Consortium Respondents Succeeds? [2099] 13.2.5 What Happens if the Case against the Consortium Respondents Does Not Succeed? [2103] 13.2.6 Purpose Case: What Does It Add? [2104] 13.3 Seven's Pleaded Effects Case [2107] 13.3.1 AFL and NRL Proposals [2109] 13.3.2 Master Agreement and Master Agreement Provision [2112] 13.3.3 Giving Effect to the Master Agreement Provision [2115] 13.3.4 Rights Sub-Licence Agreement [2116] 13.3.5 Markets [2117] 13.3.6 Consequences of Acquiring the AFL Pay Television Rights [2119] 13.3.7 Effect on the Retail Pay Television Market [2122] 13.3.8 Effect on the Wholesale Sports Channel Market [2126] 13.3.9 Effect of the Master Agreement Provision [2129] 13.3.10 Effect of the Acquisition Agreements [2132] 13.3.10.1 News-Foxtel Licence [2135] 13.3.10.2 Nine Put [2136] 13.3.10.3 News-Nine Licence [2137] 13.3.10.4 NRL Bidding Agreement [2138] 13.3.10.5 Fox Sports-NRL Pay Rights Agreement [2139] 13.4 Seven's Submissions [2140] 13.4.1 Markets [2141] 13.4.2 Existence of the Agreements [2142] 13.4.2.1 Master Agreement [2142] 13.4.2.2 Rights Sub-Licence Agreement [2150] 13.4.3 Effect of The Master Agreement Provision [2153] 13.4.4 'Competition on the Merits' [2165] 13.4.5 Logic of Seven's Case [2172] 13.4.6 Anti-Competitive Means [2174] 13.4.7 Effect on the Wholesale Sports Channel Market [2177] 13.4.8 Effect on the AFL and NRL Pay Rights Markets [2178] 13.4.9 Effect on the Retail Pay Television Market [2179] 13.4.10 Seven's Submissions on Particular Provisions [2184] 13.4.10.1 News-Foxtel Licence Provision [2185] 13.4.10.2 Rights Sub-Licence Provision [2186] 13.4.10.3 Nine Put Provision [2187] 13.4.10.4 NRL Bidding Agreement [2188] 13.5 Consortium Respondents' Submissions [2189] 13.5.1 No Markets [2190] 13.5.2 No Agreements [2191] 13.5.3 Competition on the Merits [2193] 13.5.4 Agreements Did Not Cause Seven's Demise [2195] 13.5.5 Master Agreement Provision Did Not Have the Alleged Effect on Competition [2196] 13.5.6 Substantial Lessening of Competition [2199] 13.6 Construction of s 45(2) of the TP Act [2204] 13.6.1 'Provision' [2204] 13.6.2 Prospective or Retrospective? [2205] 13.6.2.1 Structure of s 45(2)(a)(ii) and (b)(ii) [2205] 13.6.2.2 Common Ground [2209] 13.6.2.3 Preferred Construction of s 45(2)(b)(ii) [2213] 13.6.2.4 Authorities on s 45(2)(b)(ii) [2224] 13.6.3 Effect: Direct and Immediate? [2228] 13.6.4 'Likely' [2231] 13.6.5 'Substantially Lessening Competition' [2234] 13.6.6 Assessing whether Competition Has Substantially Lessened [2238] 13.6.7 Severance [2240] 13.7 Existence of the Master Agreement [2243] 13.7.1 Principles [2243] 13.7.2 Arrangement or Understanding [2246] 13.7.2.1 An Ambiguity [2247] 13.7.2.2 Was There an Arrangement or Understanding? [2258] 13.8 Existence of the Rights Sub-Licence Agreement [2265] 13.9 Effect of the Master Agreement Provision on the Retail Pay Television Market [2269] 13.9.1 Application of s 45(2)(a)(ii): Was It Likely That News Would Acquire the AFL Broadcasting Rights? [2271] 13.9.1.1 Two Assumptions [2272] 13.9.1.2 Seven Fails to Put Its Best Bid Forward [2273] 13.9.1.3 Was It Likely that News' Bid Would succeed? [2277] 13.9.2 Application of s 45(2): Was the Master Agreement Provision Likely to Substantially Lessen Competition in the Retail Pay Television Market ? [2284] 13.9.2.1 The Question [2284] 13.9.2.2 Competition with and without the Master Agreement Provision [2289] 13.10 Conclusions [2312] 14 . SEVEN'S PURPOSE CASE UNDER SECTION 45(2) OF THE TRADE PRACTICES ACT [2317] 14.1 Scope of Chapter [2317] 14.2 Relevance of 'Purpose' [2323] 14.2.1 Purpose of Substantially Lessening Competition [2324] 14.2.2 Foxtel's Taking Advantage of Market Power for an Anti-Competitive Purpose [2326] 14.2.3 Seven's Claim under s 45D [2328] 14.3 Seven's Pleaded Purpose Case under s 45(2) [2329] 14.3.1 Master Agreement Provision [2331] 14.3.1.1 Purpose and the Retail Pay Television Market [2331] 14.3.1.2 Purpose and the Wholesale Sports Channel Market [2337] 14.3.1.3 Purpose and the Pay Rights Markets [2338] 14.3.2 News-Foxtel Licence Provision [2339] 14.3.3 Rights Sub-Licence Provision [2340] 14.3.4 Nine Put Provision [2341] 14.3.5 News-Nine Licence Provision [2342] 14.3.6 NRL Bidding Agreement Provisions [2343] 14.4 Seven's Submissions on Purpose: General [2344] 14.4.1 News, PBL and Foxtel [2345] 14.4.2 Telstra [2357] 14.4.2.1 Seven's Closing Submissions [2357] 14.4.2.2 Seven's Reply submissions [2364] 14.5 Seven's Submissions as to the Purpose of the Provisions [2367] 14.5.1 Master Agreement Provision [2367] 14.5.2 Purpose in Relation to Markets [2369] 14.5.2.1 Wholesale Sports Channel Market [2370] 14.5.2.2 AFL Pay Rights Market [2375] 14.5.2.3 NRL Pay Rights Market [2377] 14.5.2.4 Retail Pay Television Market [2378] 14.5.3 News-Foxtel Licence Provision [2379] 14.5.4 Rights Sub-Licence Provision [2380] 14.5.5 Nine Put Provision [2382] 14.5.6 News-Nine Licence Provision [2384] 14.5.7 NRL Bidding Agreement Provisions [2385] 14.6 Construction of s 45(2): Purpose [2388] 14.6.1 Common Ground [2388] 14.6.2 Is a Shared Purpose Required? [2390] 14.6.2.1 The Issue [2390] 14.6.2.2 Authorities [2393] 14.6.2.3 Preferred Construction [2402] 14.6.3 An Impossible Purpose? [2414] 14.6.3.1 Seven's Contention [2414] 14.6.3.2 Universal Music v ACCC [2416] 14.6.3.3 Preferred Construction [2423] 14.6.3.4 Ascertaining Whether the Purpose is to Substantially Lessen Competition [2428] 14.7 Did the Consortium Respondents Have the Purpose of Substantially Lessening Competition? [2432] 14.8 Shared Purpose? Provisions Other Than the Master Agreement Provision [2439] 14.8.1 Nine Put Provision [2441] 14.8.2 News-Nine Licence Provision [2446] 14.8.3 Rights Sub-Licence Provision [2447] 14.8.4 NRL Bidding Agreement Provisions [2450] 14.9 Shared Purpose? Master Agreement Provision [2452] 14.9.1 Was Telstra Responsible for Including the Master Agreement Provision? [2452] 14.9.2 Did Telstra Have the Proscribed Purpose? [2456] 14.9.2.1 Telstra's Decision-Makers [2459] 14.9.2.2 Factual Findings [2466] 14.9.2.3 Seven's Key Points [2471] 14.10 News-Foxtel Licence Provision [2480] 15 . SEVEN'S PURPOSE CASE AGAINST NEWS, FOXTEL AND PBL [2483] 15.1 Purpose of Destroying a Competitor [2485] 15.1.1 Competition and Competitors [2487] 15.1.2 Statutory Prohibitions [2491] 15.2 News' Evidence on Purpose [2495] 15.3 Seven's Principal Contentions [2500] 15.4 A Strategy in 1998? [2503] 15.4.1 Context [2504] 15.4.2 Mr Macourt and the Financial Models [2505] 15.4.3 Four Further Matters [2518] 15.4.4 Findings [2527] 15.5 'Kill C7' [2529] 15.5.1 Mr Blomfield's Comments [2529] 15.5.2 Usage of 'Kill C7' [2531] 15.5.3 Significance of the Comments [2536] 15.6 Overbidding for the AFL Pay Television Rights? [2545] 15.6.1 Seven's Contention [2545] 15.6.2 Five Difficulties with Seven's Contention [2550] 15.6.3 Models [2560] 15.6.3.1 Flip-Flop [2563] 15.6.3.2 Penetration Rates and NPV [2567] 15.7 Assessment [2580] 15.8 Inferior Option? [2588] 15.9 Direct Acquisition of the AFL Pay Television Rights [2595] 15.9.1 Was the Acquisition Inexplicable? [2595] 15.9.2 A Gate-keeper Role [2600] 15.9.3 Quality of C7 [2607] 15.10 Conclusion [2610] 16 . SEVEN'S CASE BASED ON SECTION 46 OF THE TRADE PRACTICES ACT [2615] 16.1 Legislation [2616] 16.2 Seven's Pleaded Case [2619] 16.2.1 Case against Foxtel [2619] 16.2.2 Ancillary Claims against News, Telstra and PBL [2630] 16.3 Construction of s 46(1) [2632] 16.3.1 Common Ground [2632] 16.3.2 Application of s 46 to a Partnership [2645] 16.3.3 Disputed Issue of Construction [2647] 16.4 Seven's Submissions [2653] 16.4.1 Overview [2653] 16.4.2 Refusals to Accept C7's Proposals [2661] 16.4.2.1 16 April 1999 Letter [2661] 16.4.2.2 13 May 1999 Letter [2664] 16.4.2.3 9 June 1999 Letter [2665] 16.4.3 Refusal to Deal [2666] 16.4.4 Statements to the AFL and the NRL Partnership [2672] 16.4.5 Overbidding [2676] 16.4.6 Taking Advantage of Market Power [2677] 16.5 Telstra's Submissions [2683] 16.6 Reasoning [2687] 16.6.1 Rejection of C7's 'Offers' [2688] 16.6.1.1 16 April 1999 Letter [2688] 16.6.1.2 13 May 1999 Letter [2696] 16.6.1.3 9 June 1999 Letter [2698] 16.6.2 Refusal to Deal [2711] 16.6.2.1 Some Refinements [2711] 16.6.2.2 Factual Findings [2715] 16.6.2.3 Threshold Pleading Issue [2716] 16.6.2.4 What Did Foxtel Forego? [2727] 16.6.3 Statements to the AFL [2746] 16.6.3.1 Factual Issue [2746] 16.6.3.2 Relief [2758] 16.6.4 Statements to the NRL Partnership [2764] 16.6.5 Aggregation of Conduct [2770] 17 . SEVEN'S CASE BASED ON DENIAL OF ACCESS TO THE TELSTRA CABLE [2772] 17.1 Clause 5.2 of the BCA [2773] 17.2 Seven's Pleaded Case [2781] 17.3 Respondents' Admissions [2790] 17.4 Seven's Submissions [2792] 17.5 An Important Finding [2795] 17.6 Did Giving Effect to cl 5.2 of the BCA Have the Effect of Substantially Lessening Competition? [2805] 17.7 Conclusion [2812] 18 . SEVEN'S CAUSES OF ACTION BASED ON THE FOXTEL-OPTUS CSA [2813] 18.1 Introduction [2813] 18.2 Legislation [2816] 18.3 Seven's Pleadings [2818] 18.3.1 Section 45(2) Effects Case [2820] 18.3.2 Section 45(2) Purpose Case [2823] 18.3.3 Section 4D Case [2826] 18.4 Seven's Submissions [2829] 18.4.1 Section 45(2) Effects Case [2829] 18.4.2 Section 45(2) Purpose Case [2837] 18.4.3 Section 4D Case [2838] 18.5 Reasoning: s 45(2) Effects Case [2840] 18.5.1 Objective Circumstances [2841] 18.5.2 CMM Would Have Closed Down [2851] 18.5.3 Answers to Seven's Contentions [2852] 18.5.4 Findings [2858] 18.5.5 Effect of the Foxtel-Optus CSA on Competition [2860] 18.6 Reasoning: s 45(2) Purpose Case [2867] 18.7 Reasoning: s 4D Case [2886] 18.7.1 In Competition with Each Other [2887] 18.7.2 Particular Class of Persons [2892] 18.8 Conclusion [2900] 19 . SEVEN'S CAUSES OF ACTION BASED ON ITS FAILURE TO ACQUIRE THE NRL PAY TELEVISION RIGHTS [2901] 19.1 Causes of Action [2901] 19.2 Legislation [2903] 19.3 Was C7's Bid for the NRL Pay Television Rights Genuine? [2907] 19.4 Breach of Confidence Claim [2910] 19.4.1 Seven's Pleaded Case [2910] 19.4.2 Seven's Submissions [2914] 19.4.2.1 Confidentiality [2914] 19.4.2.2 Disclosure of Confidential Information [2918] 19.4.2.3 Relief Claimed [2921] 19.4.3 News' Submissions [2924] 19.4.3.1 Confidentiality [2925] 19.4.3.2 Alleged Misuse of the Information [2927] 19.4.3.3 Consequences of the Alleged Disclosure [2930] 19.4.4 PBL's Submissions [2931] 19.4.4.1 Confidentiality [2931] 19.4.4.2 Consequences of the Alleged Disclosure [2936] 19.4.5 ARL's Submissions [2937] 19.4.5.1 Confidentiality [2938] 19.4.5.2 Mr Philip not a Representative of the NRL Partnership [2941] 19.4.5.3 Consequences of the Alleged Disclosure [2944] 19.4.6 NRL's Submissions [2947] 19.4.7 Confidential Information: Principles [2948] 19.4.8 Was the Information Confidential? [2956] 19.4.8.1 Findings of Fact [2956] 19.4.8.2 Conclusions on Confidentiality [2974] 19.4.9 Disclosure of Information Relating to C7's bid [2983] 19.5 Press Release Claim [2995] 19.5.1 Seven's Pleaded Case [2995] 19.5.2 Seven's Submissions [2998] 19.5.3 NRL Ltd's Submissions [3003] 19.5.4 Reasoning [3007] 19.6 Fair Process Claim [3017] 19.6.1 Seven's Pleaded Case [3017] 19.6.2 Seven's Submissions [3022] 19.6.2.1 Making of the Representation [3022] 19.6.2.2 Lack of Reasonable Grounds [3024] 19.6.2.3 Departure from the Fair Process Representation [3025] 19.6.2.4 Reliance [3027] 19.6.2.5 Relief [3028] 19.6.3 News' Submissions [3032] 19.6.3.1 Making of the Representation [3032] 19.6.3.2 Departure from the Fair Process Representation [3034] 19.6.3.3 Reliance [3038] 19.6.3.4 Relief [3039] 19.6.4 ARL's Submissions [3041] 19.6.5 Reasoning [3046] 19.6.5.1 Representation as a Construct [3046] 19.6.5.2 Were the Alleged Statements Made? [3049] 19.6.5.3 Representations Allegedly Made to Mr Stokes [3052] 19.6.6 Four Additional Alleged Representations [3059] 19.6.7 Authority [3066] 19.6.8 Reliance [3079] 19.7 Fair Process Contract Claim [3084] 20 . SEVEN-OPTUS CAUSES OF ACTION [3085] 20.1 Pleadings [3085] 20.1.1 Seven's Pleaded Causes of Action [3085] 20.1.2 Optus' Cross-Claim [3087] 20.2 Optus' Misleading Conduct Case against Seven [3089] 20.2.1 Optus' Case and Seven's Response [3090] 20.2.2 Letter of 1 May 2001 [3098] 20.2.3 Significance of a Representation as to a Matter of Law [3099] 20.2.4 What Representations Were Conveyed? [3101] 20.2.5 Representation with Respect to a Future Matter? [3112] 20.2.6 Were the Representations Misleading or Deceptive? [3116] 20.2.6.1 FIRST REPRESENTATION [3116] 20.2.6.2 SECOND REPRESENTATION [3125] 20.2.7 Relief [3136] 20.2.7.1 Optus' Claims [3136] 20.2.7.2 Sections 82 and 87 of the TP Act [3140] 20.2.7.3 Reliance [3148] 20.2.7.4 Counter-factual World [3154] 20.2.7.5 Application of s 87(1A) of the TP Act [3169] 20.2.7.6 Damages Claim [3175] 20.3 Seven's Misleading Conduct Claims against Optus [3176] 20.3.1 Seven's Case [3176] 20.3.2 Representation of 28 September 2001 [3179] 20.3.2.1 Interpreting Seven's Submissions [3179] 20.3.2.2 Making of the Representation [3187] 20.3.2.3 Was the Representation False? [3193] 20.3.3 Failure to Disclose: 18 December 2001 [3199] 20.3.3.1 Was the Failure to Disclose Misleading conduct? [3199] 20.3.3.2 Reliance [3207] 20.3.4 Representation of 25 January 2002 [3208] 20.3.4.1 Reliance [3215] 20.3.5 Conclusion [3216] 20.4 Seven's Claims in Contract [3217] 20.4.1 Did Optus Breach the Exclusivity Clause? [3218] 20.4.1.1 Seven's Submissions [3218] 20.4.1.2 Optus' Submissions [3219] 20.4.1.3 Reasoning [3222] 20.4.2 CWO Deed Poll [3233] 20.4.3 Was Seven Entitled to Accept Optus' Repudiation of the C7-Optus CSA? [3234] 20.4.4 Did SingTel Optus Induce a Breach of Contract by Optus Vision? [3242] 20.4.4.1 Seven's Submissions [3242] 20.4.4.2 Reasoning [3244] 20.4.5 Is Seven Entitled to Exemplary or Aggravated Damages? [3247] 20.4.5.1 Seven's submissions [3247] 20.4.5.2 Reasoning [3249] 20.5 Deceit Claim [3255] 20.6 Optus' Defences [3257] 20.6.1 Did Seven Breach the C7-Optus CSA by Failing to Supply the AFL-Seven Licence on Request? [3258] 20.6.1.1 Optus' Submissions [3258] 20.6.1.2 Reasoning [3260] 20.6.2 Is the Exclusivity Clause Void for Uncertainty? [3266] 20.6.2.1 Optus' Submissions [3266] 20.6.2.2 Reasoning [3268] 20.6.3 Is the Exclusivity Clause Unenforceable as a Common Law Restraint of Trade? [3272] 20.6.3.1 Optus' Submissions [3273] 20.6.3.2 Principles [3276] 20.6.3.3 Pre-Existing Freedom [3278] 20.6.3.4 Legitimate Interest to Protect? [3279] 20.6.3.5 Was the Exclusivity Clause Reasonable? [3290] 20.6.4 Is the Exclusivity Clause Unenforceable by Reason of the TP Act? [3295] 20.6.4.1 Optus' Submissions [3295] 20.6.4.2 Exclusive Dealing [3302] 20.6.4.3 Exclusionary Provision [3305] 20.6.5 Did Seven Breach cl 3A.2? [3306] 20.6.6 Waiver, Estoppel and the Like [3308] 21 . FURTHER CAUSES OF ACTION [3310] 21.1 Breach of the Anti-Siphoning Regime [3312] 21.1.1 Relief Claimed [3312] 21.1.2 Seven's Pleadings [3319] 21.1.3 Reasoning [3325] 21.1.3.1 Seven's Case [3325] 21.1.3.2 An Understanding as Alleged? [3332] 21.1.3.3 A Disproportionate Penalty? [3337] 21.1.3.4 Additional Comments [3343] 21.2 Seven's Case under s 45D of the TP Act [3346] 21.2.1 Legislation [3346] 21.2.2 Seven's Pleading [3349] 21.2.3 Seven's Submissions [3354] 21.2.4 Reasoning [3355] 21.2.4.1 Any Practical Significance? [3355] 21.2.4.2 Hindering or Preventing [3358] 21.2.5 Conclusion [3366] 21.3 Optus-NRL Licence [3367] 21.3.1 The Issue [3367] 21.3.2 Seven's Pleading [3368] 21.3.3 Seven's Submissions [3371] 21.3.4 Reasoning [3378] 21.3.4.1 Damages [3378] 21.3.4.2 Claim for Declaratory Relief [3388] 21.3.5 Conclusion [3399] 22 . By that expression, I mean civil litigation, usually involving multiple and separately represented parties, that consumes many months of court time and generates vast quantities of documentation in paper or electronic form. An invariable characteristic of mega-litigation is that it imposes a very large burden, not only on the parties, but on the court system and, through that system, the community. 2 Mega-litigation, if it proceeds to finality, often generates very long judgments. Regrettably, this is a prime example. The judgment is divided into 21 substantive Chapters, of which the first two are introductory. Chapter 1 addresses features of the present case which exemplify the challenges posed to the courts and to the parties involved in mega-litigation. Chapter 2 provides an overview of the principal issues in the litigation and a summary of the outcome. 3 The object of this Chapter is not to offer comprehensive solutions to the challenges presented by mega-litigation, nor is it to put forward the management or conduct of the present case as a model to be followed in other cases. On the contrary, it is generally only when mega-litigation nears its conclusion that the mistakes and lost opportunities in the conduct of the proceedings become apparent. By then it is too late. Nonetheless, I think it important to record the dimensions of this case and to identify some of the challenges it and similar cases present for the judicial system. Mega-litigation is an increasing phenomenon and the courts, if not Parliaments, must devise ways to deal with it more effectively. 4 For the purposes of this Chapter, it is enough to observe that the heart of the dispute is the complaint by Seven (as I shall describe the applicants collectively or individually, unless it is necessary to distinguish between them) that in May 2002 it was forced to shut down the business of the second applicant, C7 Pty Ltd (' C7 '), a producer and distributor of sports channels for Australian pay television platforms. Seven says that the closure of C7's business was forced on it because some of the Respondents, notably the News, PBL and Telstra parties and associated corporations, engaged in anti-competitive conduct during the period 1999 to 2001. (Chapter 3 identifies the various parties and explains the relationships between them. However, the principal questions revolve around allegations that certain of the Respondents made or gave effect to arrangements that substantially lessened competition in various markets, or misused their market power, in contravention of ss 45 and 46 of the Trade Practices Act 1974 (Cth) (' TP Act '). (I refer collectively to the respondents to these proceedings, other than those against whom the proceedings were discontinued, as the ' Respondents '. In addition to Seven, six groups of Respondents were separately represented throughout the trial, although other parties were also represented at various times. Seven's legal team for the trial, apart from additional legal representatives engaged in ancillary proceedings determined by other Judges of the Court, comprised three senior counsel and six junior counsel (although only three or four counsel were usually in court at any given time). Counsel were, of course, assisted by a significant number of solicitors and support staff. The six groups of Respondents actively participating throughout the trial were represented by a total of seven senior counsel and nine junior counsel. While not all of these counsel were present on all hearing days, they, too, were assisted by their respective teams of solicitors and support staff. 7 The burden on the Court was not limited to the 120 hearing days. Before Seven commenced the current proceedings, it successfully applied for an order for preliminary discovery under Federal Court Rules (' FCR '), O 15A, against a number of the parties it ultimately joined as Respondents. The preliminary discovery proceedings involved, in all, at least seven hearing days and required four judgments, of which two were reserved: C7 Pty Ltd v Foxtel Management Pty Ltd [2001] FCA 1864 (Gyles J, 21 December 2001); C7 Pty Ltd v Foxtel Management Pty Ltd [2002] FCA 1189 (Gyles J, 25 September 2002). In addition, during the trial, other Judges of the Court resolved a number of separate privilege claims that I could not determine because the parties thought it would be inappropriate for me to see the allegedly privileged documents in advance of the claims being determined. 8 The length of a hearing is not the only indicator of the dimensions of litigation. Indeed, other cases have taken considerably longer than 120 hearing days. For example, a Federal Court case decided in 1985, also involving allegations of anti-competitive conduct, occupied 173 days of evidence and 32 days of oral addresses: Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1, at 7, per Franki J. Other, more recent, cases have consumed even more court time. Thus, the hearing in Bell Group Ltd v Westpac Banking Corporation (Supreme Court of Western Australia, Owen J), concluded on 22 September 2006 after 404 hearing days spread over 38 months. In Australian Securities and Investments Commission v Rich (Supreme Court of New South Wales, Austin J), the evidence concluded on 21 September 2006 after 220 hearing days, 16,226 pages of transcript and 67 published judgments. I refer later to Duke Group Ltd (in liq) v Pilmer (1998) 27 ACSR 1, in which the hearing in the Supreme Court of South Australia lasted no less than 471 days ([67]). 9 The hearing in the present case was considerably shorter than it might have been. The parties' estimates prior to the commencement of the trial varied, but in August 2004 Mr Hutley SC (who represented the News parties) suggested that the case was likely to take ' a good deal longer than six months '. Similar estimates were made in February 2005. In fact, the trial took just over twelve months from beginning (12 September 2005) to end (5 October 2006), although that period included a break from mid-December 2005 until early February 2006, and an adjournment of some three months after the conclusion of evidence on 20 June 2006 to enable the parties to prepare their written submissions and closing oral arguments. The oral argument commenced on 18 September 2006 and concluded on 5 October 2006. 10 The length of the trial would have been substantially greater but for several factors that curtailed the scope of the evidence, limited the need for more extensive oral submissions and facilitated the handling of vast numbers of documents tendered by the parties. For example, the PBL parties called no lay witnesses, despite filing eight witness statements. Excluding statements from parties against whom the proceedings were discontinued, the parties filed 19 lay witness statements which they did not tender and which therefore do not form part of the evidence. Obviously, if all the statements of lay witnesses had been tendered and their makers cross-examined, the trial would have been very much longer. As events transpired, the statements made by 33 lay witnesses were admitted into evidence. Of these witnesses, 28 were cross-examined, while the makers of the remaining five statements were not required for cross-examination. • I rejected two ' expert ' reports tendered on behalf of Seven, amounting in all to 529 pages: Seven Network Ltd v News Ltd (No 14) [2006] FCA 500 (rejecting the tender of a report by Mr Salter valuing Seven's lost opportunity to become an ' integrated media company' ); Seven Network Ltd v News Ltd (No 15) [2006] FCA 515 (rejecting the tender of a report by Mr Kinsella discussing ' subscription drivers ' for pay television). These rulings relieved the Respondents from the need to call the authors of reports, comprising some 111 pages, replying to Mr Salter and Mr Kinsella. In addition, the Respondents chose not to tender a further three expert reports that had been filed. Consequently their authors did not give evidence. By reason of these matters, a good deal of hearing time was saved. • Interlocutory disputes were kept within reasonable bounds for a case of this size and complexity, in part because mediation apparently assisted the parties to reach agreement on a discovery regime. This is not to deny that the litigation generated many contests on pleading, procedural and evidentiary issues. I delivered sixteen reserved judgments on such issues and made countless ex tempore rulings in the course of the trial. In addition, Graham J delivered seven reserved judgments on questions of privilege and related matters, while Tamberlin J and Rares J also gave judgments on privilege claims. Nonetheless, the extent of disputation on interlocutory matters during the trial was perhaps somewhat less than might have been expected in hard-fought, complex multi-party litigation. Discussion between the parties and the bench frequently resolved issues before they developed into contests requiring full argument and (potentially) the preparation of reserved judgments. • While there were a very large number of objections to the admissibility of portions of written statements and reports, the parties cooperated in identifying representative issues on which rulings were required. This reduced substantially the number of rulings that I had to make. The regime required the parties to agree on the application of particular rulings to material that had not specifically been the subject of argument. For the most part, the regime worked very well, saving the Court and the parties a good deal of hearing time. • Cross-examination of lay and expert witnesses, although usually very thorough, did not involve significant duplication. The Respondents accepted and abided by my ruling that the main burden of cross-examining each of Seven's witnesses ordinarily would be carried by one of the Respondents and that counsel for any of the others could cross-examine only if there was an issue, peculiar to its case, requiring additional questions to be put to the witness. It cannot be said that these arrangements produced cross-examination that was always notable for its brevity. For example, Mr Kerry Stokes, the Executive Chairman of the first applicant, Seven Network Ltd (' Seven Network '), was cross-examined over thirteen hearing days. Even so, there was little duplication in the cross-examination of Mr Stokes or, for that matter, the cross-examination of the other witnesses called by Seven. (As there was only one group of applicants, no question arose of duplication in the cross-examination of the Respondents' witnesses. Virtually all documents produced on discovery or subpoena were scanned or transferred onto an electronic database. When counsel referred to a document in court, it would be identified by a distinctive ' Doc ID ' number and brought up on screens located in the courtroom. The screens could be viewed by me, the legal practitioners and (except in the case of confidential documents) by members of the public. (Even so, the cross-examiner almost always provided a ' bundle ' of hard copy documents to the witness in order to facilitate the cross-examination. The 'bundle' for Mr Stokes, for example, comprised no fewer than 12 large folders. ) All pleadings, statements, expert reports and submissions were also placed on the electronic database. In addition, skilled operators provided a ' real-time ' transcript that could also be viewed on computer screens. Much hearing time was saved by avoiding the need for counsel and the Court to locate and retrieve hard copy documents either to put to witnesses or to refer to in submissions. It would have been virtually impossible to conduct the trial without the use of modern technology. • As is the way with modern commercial litigation, the parties prepared extremely detailed opening and closing written submissions. Subject to what is said in section 1.3, these submissions greatly reduced the time that otherwise would have been required for oral argument. The opening statements occupied six hearing days, while the closing oral argument required 12 hearing days. In this case, the volume of closing written submissions filed by the parties was truly astonishing. Seven produced 1,556 pages of written Closing Submissions in chief and 812 pages of Reply Submissions (not counting confidential portions of certain chapters and one electronic attachment containing spreadsheets which apparently runs for 8,900 or so pages). The Respondents managed to generate some 2,594 pages of written Closing Submissions between them. The parties' Closing Submissions were supplemented by yet further outlines, notes and summaries (some of which, to be fair, were required by me, as I shall explain later ([39]-[40]). 12 The written submissions are only a minor component of the ' paper ' burden in a case like this. A characteristic of mega-litigation is that the warring parties (and often third parties) devote massive resources to locating and producing vast quantities of documentation that might (or might not) be relevant to the issues in the case. The wider the issues raised by the pleadings, the greater the number of documents that must be located and produced on discovery or on subpoena. 13 The parties must devote equally massive resources to inspecting the documents that have been produced. They must also collate and analyse documents that are helpful (and, indeed, those that are unhelpful) to their respective contentions. In the electronic age, when deleted emails or other documents stored in digital form can generally be retrieved, albeit sometimes with great difficulty, the process of production and inspection of documents becomes an industry in itself. 14 Consider the statistics in the present case. Seven says that it produced 18,335 documents on discovery, either in electronic or hard copy form. These consist of 13,702 ' unattached' documents and 4,633 ' document groups' . (An ' unattached document ' is one that has been discovered as a single entry, such as a report or a letter with no enclosures. A ' document group ' consists of two or more documents which have been attached to each other, such as a letter with enclosures or a bundle of board papers behind a cover page. ) The comparable figures for the Telstra parties are said to be 4,519 documents, of which 3,251 are unattached and 1,268 are document groups. The two Optus respondents provided 3,686 documents (3,002 unattached and 684 document groups). (I use the expression ' Optus ' to refer to either or both of Optus Vision Pty Ltd (' Optus Vision '), the sixteenth respondent, and SingTel Optus Pty Ltd (' SingTel Optus '), the twenty-second respondent. (' Documents ' for this purpose refers to the total of ' unattached documents ' and of separate documents within ' document groups '. ) The parties' tender lists, excluding witness statements and expert reports, show that 12,849 documents, comprising 115,586 pages, were ultimately admitted into evidence. The list of exhibits would have been very much longer had I not rejected the tender of substantial categories of documents. 16 There is much more to consider beyond the documentary exhibits. The pleadings amount to 1,028 pages. The statements of lay witnesses that were admitted into evidence run to 1,613 pages. The expert reports in evidence total 2,041 pages of text, plus many hundred pages of appendices, calculations and the like. As I have noted, the parties' final written submissions comprise no fewer than 4,962 pages. The transcript of the trial is 9,530 pages in length. What is surprising is the sheer amount of money that has been devoted to a single case. The evidence does not quantify the costs incurred thus far by the parties to the proceedings. However, in his oral submissions, Mr Meagher SC (for the PBL parties) suggested that Seven has spent in the order of $100 million on this litigation up to date. This estimate accords more or less with my own. If the other parties together have incurred similar expense, which I think is likely, the litigation has cost the parties collectively a staggering sum, amounting to nearly $200 million. Part of this sum may be deductible for income tax purposes by the parties incurring the expense. Thus, in effect, some of the legal costs will ultimately be borne by the general body of taxpayers. 18 When the case was opened, Mr Sheahan SC, on behalf of Seven, suggested that it would be claiming more than $1.1 billion in damages (including interest). By the time final submissions were made, Seven's damages claim, at best, had been reduced to an amount between $194.8 million and $212.3 million. This amount was to be ' grossed up' by a factor of 1.429 to account for income tax. Pre-judgment interest was also to be added. But bearing in mind that Seven, if successful, must pay tax on any damages award (as the parties agree), the maximum amount at stake in this litigation is not likely to be very much more than the total legal costs incurred to date. It is difficult to understand how the costs incurred by the parties can be said to be proportionate to what is truly at stake (measured in financial terms). In my view, the expenditure of $200 million (and counting) on a single piece of litigation is not only extraordinarily wasteful but borders on the scandalous. The presiding judge can make efforts --- perhaps strenuous efforts --- to confine the scope of the litigation and thereby limit its cost, both to the parties and to the community. For example, the parties can be encouraged or even directed to undertake mediation or other forms of dispute resolution with a view to resolving their differences or at least narrowing the areas of dispute. They can also be directed to take measures designed to identify and record matters not genuinely in dispute. But there is a limit to what the judge can do without compromising his or her role as an independent and impartial judicial officer. 20 In the present case, I repeatedly encouraged the parties to enter mediation, if not to settle the proceedings, then at least to narrow the issues. In fact the parties did undertake mediation on more than one occasion, but apparently with only limited (but by no means negligible) success. Later in the proceedings, I directed the parties to prepare an agreed chronology and encouraged them to agree on a template for written submissions. However, the responses illustrate that parties to mega-litigation are often able effectively to ignore (albeit politely) directions made by the court, if they consider that their forensic interests will be advanced by doing so. 21 Much of the cost of conducting mega-litigation is generated by the discovery process. The process can impose a crippling burden on the parties, requiring them to locate and produce thousands of documents created over many years. The court may attempt to limit this burden, for example by making orders restricting the scope of discovery to specified categories of documents. Sometimes it may be appropriate to direct that separate questions be determined in advance of other issues in the proceedings. Such an approach can reduce the discovery burden and, depending on the answers to the separate questions, relieve the parties from the need to adduce evidence and argument on all the issues raised by the pleadings. 22 The compilation and presentation of expert evidence also can generate very great expense. The present case generated a vast quantity of expert evidence on a variety of topics from a variety of witnesses. Despite the eminence of a number of the experts in their respective fields, a substantial proportion of the costs incurred by the parties in producing this material was wasted. Some reports were inadmissible; some were largely repetitive of other reports (particularly on the competition issues); at least one (that of Professor Williams) I did not find particularly helpful; some expressed opinions on the basis of elaborate factual assumptions that have not been borne out by the evidence; and some, given the conclusions I have reached, have turned out to be unnecessary (unless an appellate Court takes a different view of the outcome). 23 In an age where mega-litigation is characterised by heavy, often unthinking reliance on expert evidence, the court may deem it appropriate to limit the number of reports or to restrict the volume of expert evidence. Procedures such as pre-hearing conferences between experts and the giving of concurrent evidence by experts may reduce the areas of disagreement and limit the hearing time required for exploring the remaining differences between the experts. If the parties insist on tendering expert reports that fail to comply with the rules of evidence or are simply unhelpful, they may find that the tender is rejected. 24 Limits may also be imposed on the extent of permissible cross-examination of lay witnesses. As I have noted, I directed that there should be no duplication of cross-examination of Seven's witnesses by the various Respondents. Similarly, in order to avoid prolonged legal argument and interruptions to the flow of evidence, I ordinarily permitted only one of the separately represented Respondents to object to particular questions asked by Seven's counsel in cross-examination. While (perhaps wrongly) I did not impose rigid time limits on cross-examination, I attempted to insist, to the maximum extent practicable, on adherence to the cross-examiner's estimate of the time required to complete the questioning of each witness. 25 The fundamental difficulty facing a court hearing mega-litigation, however, is that the parties may decide, for whatever reason, to engage in a full-blown forensic battle in which almost every barely arguable issue is examined in depth. In these circumstances, the best efforts of the court to limit the scope of the dispute may amount to very little. In the present case, for example, mediation, although apparently helpful in relation to discovery issues, did not allow the parties to resolve the major disputes. Similarly, I made a tentative suggestion, which Seven took up, that some of the experts might give concurrent evidence as a means of saving hearing time and encouraging a narrowing of the issues. However, the proposal was strenuously resisted by the Respondents and ultimately was not implemented. The parties' resolute determination to put their respective cases at great length is reflected in the volume of their written submissions. That determination has also been reflected in the unwillingness of some parties to make concessions unless a point is self-evidently hopeless or there is a perceived forensic advantage to making the concession. 26 A further problem in managing mega-litigation is that the presiding judge often has insufficient advance knowledge of the facts and issues in the case, to impose effective constraints on the parties, even if he or she diligently reads the available material. Knowledge that might have enabled the judge to limit the scope of the litigation often comes too late. For example, with the benefit of hindsight, it may have been better in this case for issues of liability to have been determined separately from and before any questions of damages and other relief. One reason for expressing this view is that, as events have turned out, Seven has been unsuccessful in the proceedings. Accordingly, if this conclusion is upheld on appeal, questions of relief simply will not arise. 27 In any event, separate trials on liability and relief at the very least would have deferred the need to obtain (extremely expensive) experts' reports, and would have provided the experts, when they did prepare reports, with a firmer factual foundation for their opinions and calculations. (I raised the question of separate trials at a directions hearing, but was told that it was an impossible idea in the circumstances of this case. ) Similarly, substantial costs may have been saved if the largely discrete disputes between Seven and the Optus parties and between Seven and the NRL parties had been heard separately. But I was not asked to take those steps. 28 No doubt courts must endeavour to control mega-litigation more efficiently. Despite my efforts, I cannot claim success in keeping the costs of this litigation commensurate with the value of the claims made by Seven. Ultimately, the only effective constraint may be for the parties and their legal advisers to recognise that large-scale litigation is generally a very blunt and disproportionately expensive means of resolving major commercial disputes. This may mean that the boards and shareholders of public companies embroiled in litigation of this kind need to take a more critical and sustained interest in the proceedings. Those who are most closely involved in the events which are the subject of the litigation may be the least equipped to make the decisions which determine the course of the litigation. If there is one lesson to emerge from this case, it is that even the largest and best-resourced corporations owe it to their shareholders, if not to the general public, to think very carefully before committing themselves irrevocably to mega-litigation. Very detailed submissions, despite their length, can of course be most helpful in clarifying the issues in dispute and in analysing the complex factual and legal questions requiring resolution. But this is not necessarily so. 30 The parties in the present case filed their written submissions (other than Seven's Reply Submissions) by 15 August 2006. They plainly reflect a great deal of painstaking work by many people and the material contained in them has proved to be indispensable in the preparation of this judgment. Even so, it quickly became apparent that, subject to limited exceptions, the parties had not structured their Closing Submissions by reference to an agreed list of topics that had been handed up in court towards the conclusion of the evidence. Seven's Closing Submissions include an Appendix which rather forlornly identifies chapters in which topics on the agreed list have been addressed or referred to in some way. But the submissions do not follow the agreed list of topics. The Closing Submissions of the News parties (all 1,006 pages of them) refer to topics on the agreed list, but also do not adopt the structure suggested by the agreed list. 31 For these reasons, I wrote to the legal representatives of the parties on 22 August 2006 inviting them to advise me whether the agreed list of topics continued to serve any purpose. The letter also addressed the question of chronologies. It acknowledged that the parties, in response to a direction requiring them to prepare an agreed chronology, had produced two ' Proposed Non-Contentious Chronologies ' comprising 176 pages. The letter noted, however, that the preparation of this document had not deterred the parties from producing their own competing chronologies, comprising many hundreds of pages. More importantly, the relationship, if any, between the various chronologies had been left unclear. The letter inquired how I was to determine which of the many events and transactions referred to in the various chronologies were genuinely in dispute. 32 The written responses of the parties to my enquiries made it clear that, by and large, they had decided to ignore the ' agreed ' list of topics. They had taken this course notwithstanding my understanding, derived from discussions in court, that the list would provide a template for the written submissions and, in all probability, for the judgment. In consequence, it appeared to me that the agreed list of topics no longer served any useful purpose. 33 It became equally clear that the direction to the parties to prepare an agreed chronology had served little purpose. I was unable to determine which facts were in dispute, at least without working my way through many hundreds of pages of material, most of which was not cross-referenced to the competing chronologies. Nor could I ascertain readily which factual issues were thought by the parties to be critical to the resolution of the many claims made by Seven. The responses to my letter suggest that this state of affairs has come about because the parties, generally speaking, have decided to follow their own paths rather than accommodate the approach suggested (and in certain respects directed) by the Court. That approach was designed to expose as clearly as possible the legal and factual issues in dispute and thus make the resolution of them more manageable. One consequence of imposing an unrealistic burden on the Judge is that completion of the judgment will be delayed to a point which is unsatisfactory both for the Court and for the parties. Another is that the conduct of any appeal will be rendered even more complex, time consuming and logistically difficult than can be expected in a case of these dimensions. At the risk of stating the obvious, part of the art of advocacy is to make it easy for the decision-maker to understand what issues need to be resolved and to explain clearly, cogently and concisely how and why the crucial issues should be resolved in favour of a particular party. To leave the Judge, if not completely at large, then without a reliable working compass in a vast sea of factual material, is not a technique calculated to advance a party's case. This, I hasten to say, is not because any Judge would consciously penalise a party by reason of the bulk of its submissions or the manner in which its arguments are presented. It is because the cogency and persuasiveness of submissions depends on the ability of the Judge to follow them and to isolate the critical legal and factual issues upon which a case is likely to turn'. The summary should contain cross-references to the written submissions, identifying where the proposed findings of fact are recorded in those submissions'. This recorded my dissatisfaction with certain aspects of the Closing Submissions, although I acknowledged that, at that stage I had not had time to read all of them. This difficulty arises notwithstanding indeed perhaps because of --- the length of the written submissions (over 1,500 pages). The submissions appear to demonstrate a marked reluctance to refine the issues being presented to the Court for determination. They put forward what seems to me at the moment to be a bewildering range of alternatives and provide little guidance as to how the possible combinations and permutations should be addressed in a judgment. Indeed, the applicants seem to be reluctant to identify their primary contentions from an extraordinary number of alternative arguments'. (The s 45(2) claim is but one of many causes of action pleaded by Seven in these proceedings. If not (as one would expect), what is the applicants' principal contention? ... How do the applicants suggest that I approach the plethora of alternatives, or am I to be left at large? Which causes of action can be ignored? Surely not all are seriously pressed'. At that hearing, on 4 September 2006, Mr Sheahan provided a draft ' Case Summary ' on behalf of Seven that addressed some of the concerns I had raised in the correspondence. The Respondents indicated that they, too, were willing to prepare Case Summaries to assist me to understand the issues in the proceeding. Not surprisingly, most of the parties suggested that the Case Summaries would need to be somewhat longer than the very short documents I had envisaged. 39 In due course, all the parties filed or handed up Case Summaries. Seven's Case Summary, comprising 54 pages, for the first time identifies its primary case under s 45(2) of the TP Act and attempts to explain the relationship between at least some of the many causes of action upon which it relies. The Case Summary concedes, again for the first time, that Seven does not intend to press certain arguments, usually because they add nothing of substance to Seven's primary submissions. The Case Summary also identifies certain arguments that need not be addressed, depending upon the conclusions I reach on other contentions advanced by Seven. 40 Seven's Case Summary by no means clarifies all of the questions left unanswered by its Closing Submissions. Indeed, as became clear in the closing oral submissions, Seven's Case Summary still leaves intact a very large, if not bewildering, range of alternatives for me to address. Nevertheless, the Case Summary at least represents an advance on the amorphous Closing Submissions filed by Seven. Even so, it must be said that filing of the Case Summary did not deter Mr Sumption QC, in particular, introducing fresh arguments in the course of his final oral submissions. Indeed, Mr Sumption did not shrink from introducing new or reformulated arguments in his oral submissions in reply. Naturally, the introduction of fresh arguments at this stage prompted the Respondents to reply in their own oral submissions and to hand up yet further written submissions. 41 It is difficult to avoid the impression that the changes in Seven's position and its frequent claims that the Respondents had misunderstood its arguments were not entirely unrelated to the fact that Seven's most senior counsel was present for only about 30 of the 120 days of the trial. No matter how experienced and skilled counsel may be --- and in this case the parties, including Seven, were represented by very experienced and very skilled counsel --- continuity of presentation in a lengthy and complex case is hard to achieve without continuity of representation. The difficulties created by the lack of such a document have been ameliorated to some extent by the individual chronologies. In particular, News has provided an extremely detailed chronology, albeit (as one would expect) an account that is, to a degree, selective and incomplete on some issues. Nonetheless, when read with Seven's chronologies and supplemented by other material, it has provided an extremely useful resource for the preparation of the chronologies incorporated into this judgment. 43 I do not wish to underestimate the difficulties facing the parties in managing and presenting a case such as this. Nor do I wish to discount the very considerable assistance I have received from all parties, including Seven. Nonetheless, it is appropriate to record that Seven's chronologies have been of less assistance than I might have expected. They are comparatively sketchy and do not incorporate, even by cross-referencing, much material that (as the written submissions make plain) is important to Seven's case. 44 In order to incorporate material of this kind into the factual account (Chapters 6 to 11), it has been necessary to scour Seven's written submissions to locate references to events, transactions and communications that Seven regards as important to its case. Since the material is not presented in chronological order, the task of compiling and presenting the facts has been rendered more difficult and time-consuming than it should have been. 45 News' chronology does not address the events leading to and consequential upon what have been described as the First and Second Variation Agreements, entered into between C7 and Optus in late 2001. This is because those events have given rise only to claims between Seven and Optus, and do not involve News. Neither Seven nor Optus has prepared a comprehensive chronology of the events relevant to these claims. Instead they have preferred to incorporate references to transactions, documents and conversations within the interstices of their extensive written submissions. I have therefore had to prepare my own chronology by identifying the apparently significant events (which sometimes turn out to be insignificant) from the submissions and placing them in some kind of order. The advantages to the parties, let alone to the Court, of imposing this additional burden are not apparent. In part, this is due to the sheer volume of material that must be read, absorbed and analysed. The onerous nature of the task increases in proportion to the complexity of the legal and factual issues requiring resolution. In my view, only those who have undertaken a task of this character and magnitude can appreciate how relentless and indeed stressful it can be. 47 The volume of material is, however, only part of the story. Even though the judge has heard the entirety of the evidence and had the benefit of written and oral submissions, it is only by working through the mass of material in painstaking detail that the full picture (or at least as full a picture as the judge can reasonably discern) emerges. Sometimes this requires the analysis of apparently discrete issues to be re-evaluated as additional material, perhaps referred to in another context, comes to light. 48 For these reasons, mega-litigation requires the judge to be given every assistance that modern information technology can provide. The writing of this judgment would not have been possible without the electronic databases prepared for the trial and the search functions they incorporate. I have found particularly useful the electronic versions of the parties' written submissions which, at my request, incorporated hyperlinks to the main documents (pleadings, statements, exhibits and transcript) to which the submissions refer. Similarly, the electronic version of the transcript, with hyperlinks to documents recorded in the transcript by Doc ID number, has been an invaluable resource. 49 Even so, there have been many problems associated with the use of the databases that, with the benefit of hindsight, could have been avoided. An example is interruptions to access apparently created by the interface between the database established for the hearing and the Court's security system. Another is the inconsistencies in the formatting of material, including submissions, provided by the parties. It is not necessary to record all the problems here. The important point is that, in future, the setting up and co-ordination of electronic databases in mega-litigation must be carried out under the direct supervision of the Court, not the parties. Moreover, the process must be directed from the outset to meeting the judgment writing needs of the judge. 50 In saying this, I do not attribute any responsibility to the parties for the information technology problems I have encountered. I wish to make it clear that the legal representatives have unfailingly responded helpfully to my requests for information and for modifications to be made to the databases. The responsibility is that of the Court. There is nothing unusual about a case that presents multiple issues and in which the parties rely on alternative arguments. In such a case, in order to accommodate the possibility of an appeal, a trial judge will often consider it appropriate to make findings on issues that do not strictly arise in view of his or her decision. This approach may allow the appellate court, if it takes a different view on a question of law or on a particular finding of fact, to make orders finally resolving the proceedings without further fact finding. The inconvenience of remitting the matter to enable further findings of fact to be made is thereby avoided. In particular, where an applicant fails on liability it is often a sensible course for the trial judge to assess damages or determine other questions of relief in the event that an appeal on the issue of liability is upheld. 52 An example of the approach I have described is Australian Competition and Consumer Commission v Visy Paper Pty Ltd (2000) 186 ALR 731. In that case, I dismissed the claim by the Australian Competition and Consumer Commission (' ACCC ') for pecuniary penalties, because I construed s 45(6) of the TP Act in a manner that removed the alleged conduct from the prohibition on exclusive dealing contained in s 45(2)(a)(i). Since I recognised that the matter was likely to go on appeal, I made the factual findings that would be required if a different construction of s 45(6) were to be adopted. In the event, both the Full Court and the High Court did take a different view of s 45(6). As I had made the necessary findings, there was no occasion to remit the proceedings (except to determine the appropriate penalties): Australian Competition and Consumer Commission v Visy Paper Pty Ltd [2001] FCA 1075 ; (2001) 112 FCR 37; Visy Paper Pty Ltd v Australian Competition and Consumer Commission [2003] HCA 59 ; (2003) 216 CLR 1. I attempted to take a similar approach in Jango v Northern Territory [2006] FCA 318 ; (2006) 152 FCR 150. 53 Subject to my observations at the conclusion of this Chapter, an appeal in the present case, given the damages claimed (and the costs of the proceedings), is inevitable. However, it is simply not possible to make findings on every factual issue that might require resolution if an appellate court takes a different view of the many questions of law or, indeed, of fact that are determined in this judgment. I have been able to identify and address certain issues upon which I consider that I should express a view, even though they do not arise on the findings I have made. But it is clearly not feasible to canvass all the questions that might arise in the event of a successful appeal. 54 The conclusion I have reached is that Seven has not succeeded in any of the many causes of action in which it has relied. I have not addressed in this judgment the question of any relief to which Seven might be entitled, should I be wrong in rejecting its case. My principal reason for not assessing damages, or dealing with any other claims for relief, is that I simply do not know on what provisional basis the question should be addressed. Judging from the way the case has been conducted thus far, Seven is likely to appeal on a very large number of grounds. The relief to which Seven will be entitled, should it succeed on appeal, will depend upon which grounds are upheld. To attempt to cover all possibilities would take an utterly disproportionate amount of further time and effort. 55 I have explained on several occasions to the parties that in the event of a successful appeal they run the risk of the proceedings having to be remitted in order to enable further necessary findings of fact to be made or to deal with other unresolved issues. I gave these explanations in order to bring home to the parties the virtues of compromise in the litigation and to emphasise the fact that this round of litigation (even allowing for an appeal) may well not be the last. They have chosen to press ahead in full knowledge of the possible consequences, including the fact that I may not be available to hear any remitted proceedings. 56 Despite the warnings I have given to the parties, I propose to give them the opportunity to make brief submissions as to whether, in order to minimise the inconvenience that might otherwise flow from a successful appeal, I should assess damages on the basis of a particular hypothesis. As at present advised, I am not prepared to canvass all the alternatives advanced by Seven at the trial. However, if there is one particular hypothesis that can be identified on the basis of which findings by me in relation to relief are likely to prove helpful, I would consider preparing a supplementary judgment. If I were to deal with every argument in detail, not only would the judgment be even longer than it is now, but it would involve completely unacceptable delays in finalising the judgment. Faced with a similar problem in TPC v TNT Management, Franki J observed (6 FCR, at 8) that it was necessary to deal with the evidence and submissions ' in a practical way '. This meant, among other things, not referring to evidence if it was of minor significance and not recounting unimportant submissions. Written submissions on the appeal also run into thousands of pages. ... In complex appeals involving enormous quantities of material it is impracticable, in reasons for judgment, to explore at length every one of the complaints made by each appellant. We propose therefore to ... confine our reasons to the issues raised that are both significant and consequential'. Nonetheless, their observations and those of Franki J in TPC v TNT Management are pertinent to the present case. In making findings of fact, I have endeavoured to take into account the material identified in the written and oral submissions that is relevant to the findings. Similarly, I have endeavoured to address the principal arguments advanced by the parties (bearing in mind that it is not practicable to resolve all the alternative contentions that do not arise on the conclusions I have reached). Nonetheless, it is neither possible nor desirable to canvass explicitly all the arguments referred to in the submissions or the entirety of the evidence that may have influenced my findings. 60 I am conscious that this is a very long judgment indeed. The longer a judgment is and the more issues with which it deals the greater the likelihood that: (i) the losing party, the Court of Appeal and any future readers of the judgment will not be able to identify the crucial matters which swayed the judge; (ii) the judgment will contain something with which the unsuccessful party can legitimately take issue and attempt to launch an appeal; (iii) citation of the judgment in future cases will lengthen the hearing of those future cases because time will be taken sorting out the precise status of the judicial observation in question; and (iv) reading the judgment will occupy a considerable amount of the time of legal advisers to other parties in future cases who again will have to sort out the status of the judicial observation in question. All this adds to the cost of obtaining legal advice'. Judgments of trial judges would soon become longer than they already are if a judge's failure to mention such facts and arguments would be evidence that he or she had not properly considered the losing party's case'. There are just as many notes, Majesty, as are required. Neither more nor less'. I plead in mitigation that the concept of proportionality applies as much to the time required to write a judgment as it does to other aspects of litigation. The completion of the trial and the timely preparation of a judgment are contingent upon the trial judge surviving in reasonable health for the entirety of the proceedings. 64 If, as the trial judge, I had been unable to continue for any reason after the hearing had commenced, the parties would have faced the horrendous prospect of having to restart the trial afresh. It is true that in the event of the death or serious illness or injury of a trial judge (for example, in consequence of falling off a ladder), the parties may be able to agree that a new judge should deal with the case on the papers, perhaps supplemented by limited oral argument. But the feasibility of that solution may depend upon the point at which the trial has to be aborted. Moreover, it may not be easy to proceed on the papers when so much turns on the credit of key witnesses and when the documentary evidence is so vast. Furthermore, continuing in this manner presupposes a willingness by the parties to co-operate in the conduct of any re-trial. 65 I asked at a pre-trial directions hearing whether the parties in the present case had considered insuring against the risk of judicial death or infirmity. Perhaps out of a sense of delicacy, I received no clear answer and do not know whether the parties gave consideration to obtaining insurance. Indeed, I do not know whether insurance of this kind is available, at least without the judge being required to submit to a medical examination, or, if it is, whether the cost of the insurance is prohibitive. Be that as it may, if the trial had been aborted for any reason the parties not only would have lost a substantial portion of the costs incurred by them, but would have experienced additional very long delays in finalising the litigation. 66 Sooner or later, if it has not happened already, mega-litigation will be disrupted by a judge falling ill or otherwise being unable to continue presiding over the proceedings. In the future, both the courts and the parties to mega-litigation may need to give careful consideration to this possibility. One solution to the problem, although it would come at a significant cost to the court, could be for a reserve judge to participate in the trial and to have the authority of the parties to prepare a judgment should the primary trial judge be unable to do so. This solution may not be very attractive, especially for the reserve judge, but it may be preferable to the alternative. Another possibility is for the trial to be conducted by a panel of two judges, with the opinion of the more senior prevailing in the event of disagreement. This would have the advantage of permitting a division of labour and an opportunity for discussion between peers on the complex issues thrown up by mega-litigation. So far as I am aware, the longest civil trial in recent Australian history took place in the Supreme Court of South Australia. The litigation involved a claim for damages against a number of defendants in respect of losses incurred by a company when acquiring shares in another company in the course of an attempted takeover in late 1987. The defendants were a firm of accountants who prepared a report relating to the value of the shares, and five directors of the plaintiff's company. As I have previously noted, the trial ran for 471 days, from 15 June 1994 to 29 September 1997. Remarkably enough, the trial judge, Mullighan J, delivered a judgment of nearly 500 printed pages within a mere four months of the conclusion of the hearing: Duke Group Ltd (in liq) v Pilmer (1998) 27 ACSR 1. His Honour awarded damages of some $93 million in favour of the plaintiff and made certain orders for contribution among the defendants. 68 That, however, in Churchill's phrase, was merely the end of the beginning. Appeals and cross-appeals were heard by the Full Court of the Supreme Court of South Australia over 15 days in November 1998. In a judgment of some 239 printed pages delivered on 20 May 1999, the Full Court allowed the appeals and cross-appeals in part and increased the award of damages by about $23 million: Duke Group Ltd (in liq) v Pilmer (1999) 73 SASR 64. The Full Court delivered a second judgment on the question of contribution between the tortfeasors on 8 December 2000: Duke Group Ltd (in liq) v Pilmer (No 2) (2000) 78 SASR 216. 69 In the meantime, an application for special leave to appeal to the High Court, on certain issues only, was granted on 30 November 1999. The High Court heard the appeal on 7 April and 23 November 2000 and delivered judgment on 31 May 2001: Pilmer v Duke Group Ltd (in liq) [2001] HCA 31 ; (2001) 207 CLR 165. The majority held that the damages awarded against the accountants should be substantially reduced. The matter was remitted to the Full Court of the Supreme Court of South Australia for an assessment of damages consistent with the reasons of the High Court. 70 After a hearing on 16 November 2001, the Full Court made orders in the proceedings on 20 December 2001: Duke Group Ltd (in liq) v Pilmer (No 4) [2001] SASC 451. The Full Court entered judgment against the accountants in a sum of approximately $31.7 million, inclusive of interest, and against other defendants in a sum of approximately $188 million. The Full Court dealt with the question of costs, but acknowledged that it was not in a position to resolve all issues in the absence of agreement between the parties. 71 Still this was not the end. On 15 October 2003, the Full Court heard an application to reopen the appeal on the question of the orders for contribution. On 18 November 2003, the Court granted the application, but ultimately dismissed the appeal from the trial Judge's orders on this question: Duke Group Ltd (in liq) v Pilmer (No 5) (2003) 87 SASR 325. On 27 May 2004 the Full Court delivered a further judgment explaining orders that it had made in the proceedings: Duke Group Ltd (in liq) v Pilmer (No 6) [2004] SASC 147. 72 On 19 November 2004, the High Court refused a further application for special leave to appeal in the proceedings. Ten and a half years had elapsed since the commencement of the trial and over 12 years since the commencement of the proceedings. Nearly seven years had passed since the trial judge had given judgment. 73 Even now, it is not too late for the parties to bring these protracted and excessively expensive proceedings to a conclusion by mutual agreement. In the light of my findings of fact and conclusions of law, the parties should be able to assess realistically their prospects on appeal. They should also take into account that the transactions which gave rise to this litigation are long past and have been overtaken, not only by later events, but a changed commercial environment in the industries in which they operate. 74 The alternative to a negotiated resolution may be a reprise of the Duke litigation. In the application and statement of claim filed on that date, Seven sought damages, declarations, injunctions and other relief against 19 respondents. 76 As is to be expected in such a complex case, the pleadings have been extensively amended. The final version of the pleadings comprises the Fifth Further Amended Application filed on 22 June 2006 (' Application ') and the Fifth Further Amended Statement of Claim, also filed on 22 June 2006 (' Statement of Claim '). Despite the amendments to the pleadings, including the addition of three respondents and the removal of another two following settlement of the proceedings against them, the core of Seven's case has not fundamentally changed since the proceedings were instituted. 77 As I have noted in Chapter 1, the case revolves around the fate of C7, a wholly owned subsidiary of Seven Network. C7 commenced a business in mid-1998 as a producer and distributor of sporting channels to retail subscription (pay) television services. It is common ground that C7 ceased operations as a producer and distributor of sporting channels on 7 May 2002. 78 Before summarising the issues, I should record that a limited amount of the evidence in these proceedings was commercially sensitive and is protected from publication by confidentiality orders. In preparing this judgment, I have attempted to avoid explicit reference to any such evidence. So far as I am aware, no portion of the judgment need be regarded as confidential. Nine operates free-to-air television channels, while Fox Sports compiles and supplies sporting channels to pay television operators (including Foxtel). Until C7 ceased to operate its business, Fox Sports and C7 were competitors, although the parties disagree as to the market in which they competed. 82 Seven's causes of action against the News, PBL and Telstra respondents, insofar as they are based on anti-competitive conduct causing harm to C7, arise out of events, or series of events, occurring between mid-1999 and early 2001. According to Seven, there were three major instances of anti-competitive conduct which caused or contributed to the demise of C7. 83 First , during the period from mid-1999 until December 2000, when the Australian Football League Ltd (' AFL ') awarded the AFL pay television rights for 2002 to 2006 to News, Foxtel refused to negotiate with C7 for the carriage of its channels on the Foxtel platform. The refusal occurred (so Seven argues) even though the C7 channels contained attractive programming, including AFL matches (which were not otherwise available to Foxtel subscribers), and even though Telstra, effectively one of the ' Foxtel partners ', considered that C7's proposals, if accepted, would have been highly beneficial to Foxtel. Seven says that the conduct of Foxtel was designed to harm C7 and to favour the interests of Fox Sports, C7's competitor in the market for the supply of sports channels to retail pay television operators. Indeed, Seven says that News and PBL had the explicit purpose of ' killing C7 ' and that Telstra, ultimately at least, acquiesced in that purpose. 84 Secondly , at a teleconference held on 13 December 2000, a ' consortium ', including representatives of News, Foxtel, PBL and Telstra, made an arrangement (referred to in the case as the ' Master Agreement '). The Master Agreement was intended to facilitate Foxtel's acquisition of the AFL pay television rights for the 2002 to 2006 seasons. The Master Agreement provided for News to bid for and acquire the AFL broadcasting rights and then to sub-license the AFL pay television rights to Foxtel and the AFL free-to-air rights to Nine and Network Ten Pty Ltd (' Ten '), another free-to-air channel, on previously agreed terms. These terms required Foxtel to pay $30 million per annum, plus adjustments, for the AFL pay television rights, in circumstances where the Foxtel partners were aware that Foxtel was overpaying for the rights and that the acquisition would result in a loss to it over the five year term of the sub-licensing agreement. The Master Agreement also contemplated that Fox Sports would acquire the pay television rights to National Rugby League (' NRL ') matches for the 2001 to 2006 seasons from the ' NRL Partnership ', which (as will appear from Chapter 3) makes all decisions relating to NRL broadcasting rights. 85 Pursuant to the Master Agreement, News and Fox Sports successfully bid for the AFL broadcasting rights and the NRL pay television rights, respectively, and subsequently entered into the various licensing and other transactions contemplated by the arrangement. Seven says that the objective and effect of the Master Agreement were to deprive C7 of the rights to the two ' marquee sports ' which were essential to C7's continued existence as a sports channel. That objective was achieved. In consequence, the two pay television platforms with which C7 had contracts (Optus and Austar) terminated or failed to renew their contracts once C7 had lost the AFL pay television rights. (I use the expression ' Austar ' to refer to either or both of Austar United Communications Ltd (' Austar United '), the seventeenth respondent, and Austar Entertainment Pty Ltd (' Austar Entertainment '), the eighteenth respondent. ) Bereft of both the AFL pay television rights and the NRL pay television rights, C7 could not continue as a viable sports channel. It was effectively doomed. 86 Thirdly , Seven says that during the period from August 1999 until August 2000, Foxtel and Telstra Multimedia repeatedly denied C7's request for access to Telstra Multimedia's hybrid fibre coaxial cable (the ' Telstra Cable '). C7 made its requests pursuant to the access arbitration regime contained in Pt XIC of the TP Act . Foxtel and Telstra Multimedia declined the requests on the ground, among others, that Foxtel had a ' protected contractual right ' in relation to the Telstra Cable under the applicable contractual arrangements. The refusal of access prevented C7 from offering its channels directly to retail pay television subscribers and prejudiced Seven's chances of successfully bidding for the AFL broadcasting rights, including the pay television rights. 87 The claim based on denial of access to the Telstra Cable loomed larger in Seven's pleaded case and in opening than it did in the closing submissions. In the end, it played a relatively minor part in the proceedings. One required or contemplated that News would acquire the AFL broadcasting rights, while the other required or contemplated that Fox Sports would acquire the NRL pay television rights. The acquisition of each set of rights was to occur with the support of the other parties to the Master Agreement. In particular, Foxtel had agreed with News to take defined AFL pay television rights for $30 million per annum (plus adjustments), should News' bid for the AFL broadcasting rights succeed, while Nine and Ten had agreed to take the AFL free-to-air television rights for a combined fee of $46 million per annum (plus adjustments). Together these arrangements constituted what Seven describes as the ' Master Agreement Provision '. Seven contends that the demise of C7 substantially lessened competition in that market, since C7 was the closest constraint on Fox Sports and there were substantial barriers to entry into the market. 91 The parties to the Master Agreement are said to be News, PBL, Telstra and Foxtel (that is, Sky Cable and Telstra Media, the partners in Foxtel) (the ' Consortium Respondents '). Seven argues that the Consortium Respondents made a contract or arrangement containing a provision which ' would have or be likely to have the effect ... of substantially lessening competition ', and thus each of them contravened s 45(2)(a)(ii) of the TP Act . 92 According to Seven, the Consortium Respondents also gave effect to the Master Agreement Provision by entering into the various agreements contemplated by the Master Agreement, including the ' Foxtel Put ' by which Foxtel agreed to take the AFL pay television rights from News at a fee of $30 million per annum. They each therefore gave effect to a provision of a contract or arrangement which had, or was likely to have, the effect of substantially lessening competition, and thereby contravened s 45(2)(b)(ii) of the TP Act. They also each contravened s 45(2)(b)(ii) of the TP Act , by giving effect to a provision that had the purpose of substantially lessening competition. Seven also contends that Foxtel took advantage of its substantial market power for the purpose of preventing or deterring Optus from engaging in competitive conduct in the retail pay television market. Accordingly, Foxtel took advantage of its market power for one of the purposes proscribed by s 46(1) of the TP Act and thus contravened that subsection. The provision had the effect or likely effect of substantially lessening competition in the retail pay television market, since giving effect to Foxtel's right of exclusive access deprived C7 of the opportunity to supply its channels directly to retail pay television subscribers. For this reason Foxtel and Telstra Media contravened s 45(2)(a)(ii) of the TP Act. The loss of the opportunity to enter the retail market adversely affected Seven's chances of acquiring the AFL pay television rights. 98 Although this claim was given some prominence during the hearing, Seven acknowledges in its Case Summary that the claim need only be addressed if all other claims against the Telstra parties fail. Seven's primary claim is based on the value of C7's lost opportunity to produce and exploit pay television sports channels. Seven advances three ' mutually exclusive scenarios ' for assessing damages, supported by elaborate expert evidence. Seven's claim for damages arising out of the contraventions already outlined relies on ' Scenario 1 '. Scenario 1 assumes that in the absence of the unlawful anti-competitive conduct (that is, in the ' counter-factual world '), C7 would have retained the AFL pay television rights for the 2002 to 2006 seasons, but would not have acquired the NRL pay television rights for 2001 to 2007. 100 On this basis, Seven claims that the net present value (' NPV ') of its lost opportunity as at February 2002, taking account of other relatively modest compensable losses (such as C7's close-down costs), is between $194.8 million and $212.3 million. These figures are, however, calculated on the assumption that C7 would have been able to acquire the AFL pay television rights for the 2002 to 2006 seasons for $22 million per annum (plus adjustments). If it be assumed that C7 would have had to pay $30 million per annum (plus adjustments) for the AFL pay television rights (the amount Foxtel in fact paid), the damages recoverable under Scenario 1, on Seven's calculations, are reduced to between $167.4 million and $182.5 million. 101 It is common ground that any damages award should be ' grossed up ' for the effect of income tax, by using a multiplier of 1.429. In addition, Seven seeks pre-judgment interest calculated from the valuation date. 102 Seven also seeks declaratory and injunctive relief against the News, PBL and Telstra parties, although Seven no longer presses some forms of relief claimed in the Application. The ' structural relief' sought by Seven includes orders requiring News and PBL to divest themselves of their direct or indirect interests in Sky Cable and Foxtel. In final oral submissions, Mr Sheahan SC agreed on behalf of Seven that the sensible course was to defer the final resolution of Seven's claim to non-pecuniary relief until I make the necessary factual findings and reach conclusions as to the nature of the contravening conduct, if any. This case rests primarily on the purpose and effect of the Foxtel-Optus Content Supply Agreement ( 'Foxtel-Optus CSA '), entered into on 5 March 2002 between the ' Foxtel Partnership ' (Sky Cable and Telstra Media in partnership), the sixteenth respondent, Optus Vision, and other Optus entities. 104 The fourth respondent, Foxtel Management Pty Ltd (' Foxtel Management ') was also a party to the Foxtel-Optus CSA. Foxtel Management is owned equally by Sky Cable and Telstra Media. It carries on the business of Foxtel as its agent. Optus Vision at all material times has been a retail pay television provider. Prior to the Foxtel-Optus CSA, Optus Vision was a competitor of Foxtel, although the parties disagree both as to the relevant market and the extent to which Optus Vision acted as a constraint on Foxtel in the market. Optus Vision forms part of the Optus Group, which provides a range of telecommunications services and thus at all material times has been a competitor of Telstra, at least in relation to certain services. 105 The Foxtel-Optus CSA provides that Optus Vision has the right to receive and broadcast all of Foxtel's channels and that Optus Vision must make all the channels it produces and most of its other content available to Foxtel for broadcast on the Foxtel Service. The Foxtel-Optus CSA also contains pricing arrangements which Seven says limit Optus Vision's ability to compete with Foxtel on the price charged to retail subscribers. 106 Seven's principal case is that the effect or likely effect of the relevant provisions of the Foxtel-Optus CSA was to substantially lessen competition in the retail pay television market, in contravention of s 45(2) of the TP Act . Seven recognises that before the Foxtel-Optus CSA was executed, Optus' pay television business was experiencing difficulties. It also acknowledges (although this was in dispute until the final submissions) that had the Foxtel-Optus CSA not been executed, Optus would have adopted a ' Manage for Cash ' strategy that involved it winding down its retail pay television business. 107 However, Seven says that, but for the Foxtel-Optus CSA, Optus would have continued as a pay television operator and would have sought actively to retain subscribers and to acquire attractive programming. Optus would therefore have continued to compete with Foxtel. According to Seven, the effect of the Foxtel-Optus CSA provisions was that Optus ceased to impose competitive constraints on Foxtel. In particular, there was little or no product differentiation between the two services and a significant reduction in the price competition that otherwise would have taken place. 108 Seven further says that the Foxtel-Optus CSA contains ' exclusionary provisions ' within the meaning of s 4D of the TP Act . 109 Seven seeks damages for the loss of a valuable opportunity to enter into a three year agreement for the supply of the C7 channels to Optus on terms that had been discussed with Optus in September 2001. One possible issue to which this claim gives rise is how it can be reconciled with Seven's contention that C7 was doomed to extinction by the Master Agreement Provision. The partners in the NRL Partnership are the twelfth respondent, the Australian Rugby Football League Ltd (' ARL ') and the thirteenth respondent, National Rugby League Investments Pty Ltd (' NRLI '). NRLI is a subsidiary of News. 111 Seven's principal claim is that the nineteenth respondent, Mr Ian Huntly Philip (' Mr Philip '), disclosed confidential information relating to the terms of an offer for the NRL pay television rights which Seven made to the NRL Partnership on 5 December 2000. Mr Philip at the time, among other positions held by him, was Chief General Counsel of News, a director of Sky Cable and a member of the NRL Partnership Executive Committee (' NRL PEC '). The NRL PEC made decisions on behalf of the NRL Partnership. Seven claims that Mr Philip disclosed the confidential information to Foxtel, News, PBL, Telstra and Fox Sports in circumstances which, as they were aware, breached confidentiality. Seven says that these parties misused the confidential information to Seven's disadvantage. According to Seven, the unauthorised use of the confidential information enabled Fox Sports to make a successful bid for the NRL pay television rights. 112 Seven also claims that the NRL Partnership and NRLI represented to Seven that C7's bid for the NRL pay television rights would be treated in a fair and impartial manner (' the fair process representation '). The representation is said to have been misleading and deceptive because there were no reasonable grounds for making it and in fact (so Seven says) the NRL Partnership ultimately accepted an inferior bid for the NRL pay television rights than that put forward by C7. 113 Seven seeks equitable compensation for the losses sustained by C7 by reason of Mr Philip's disclosure of confidential information. Alternatively, Seven seeks an account of the profits derived by News, PBL, Telstra and Fox Sports in consequence of their misuse of the confidential information. It also seeks damages for losses sustained by reason of the making of the fair process representation. 114 The claim for equitable compensation is based on ' Scenario 3 ', which assumes that, but for the breach of confidence, C7 would have acquired the NRL pay television rights for 2001 to 2006, but would not have acquired the AFL pay television rights for 2002 or any later years. On this basis, Seven seeks equitable compensation for C7's loss of opportunity to exploit the rights (plus certain other losses such as the close-down costs), which is calculated to have a net present value of between $85.9 million and $104.5 million calculated as at February 2002. These amounts must be grossed up for tax and (according to Seven) also require the addition of pre-judgment interest calculated from the valuation date. Optus Vision and C7 were in dispute, however, as to the date on which the right to terminate could be exercised. As a result of negotiations, the parties entered into what was described as the ' First Variation Agreement' in September 2001. The First Variation Agreement amended the C7-Optus CSA, inter alia, by inserting the so-called ' Exclusivity Clause ' (which became cl 8A of the C7-Optus CSA) and by clarifying the date on which Optus Vision could exercise its right of termination. The First Variation Agreement was for a term of three months, but the ' Second Variation Agreement ' formally executed on about 25 January 2002, effectively extended the arrangement until 28 February 2002. The Exclusivity Clause, which was drafted in broad terms, prevented Optus Vision negotiating or entering into agreements with channel suppliers other than C7 for the duration of the C7-Optus CSA (as amended by the Variation Agreements). 116 Seven claims that Optus Vision breached the Exclusivity Clause by negotiating with Foxtel for the Foxtel-Optus CSA, which was ultimately entered into on 5 March 2002. Seven also says that Optus Vision breached the Exclusivity Clause by negotiating with Foxtel and Fox Sports for the ' Foxtel-Optus Term Sheet ' of 20 February 2002 , by which Fox Sports agreed to supply sports content to Optus Vision pending the finalisation of the Foxtel-Optus CSA. According to Seven, as a result of Optus Vision's breach, C7 lost the opportunity to enter into a valuable three year agreement to supply Optus Vision with general sports programming channels. Seven seeks damages for that lost opportunity. Optus is said to have misrepresented its intentions concerning compliance with the Exclusivity Clause. But for Optus' misleading and deceptive conduct, so Seven says, Seven would have insisted that Optus Vision enter into a three year agreement with C7. 119 Finally, Seven seeks damages against Optus Vision for repudiating the C7-Optus CSA. Optus Vision purported to exercise its contractual right of termination (available because Seven had lost the AFL pay television rights) but, according to Seven, Optus Vision was not entitled to do so because at the time it was in breach of the Exclusivity Clause. 120 Seven's damages claim against Optus is based on ' Scenario 2 '. This values C7's lost opportunity to produce sports channels on the assumption that C7 acquired neither the AFL pay television rights for 2002 to 2006 nor the NRL pay television rights for 2001 to 2006, yet succeeded in acquiring the AFL pay television rights in respect of 2007 and later years. Seven relies on the expert evidence of Professor McFadden who suggested that the NPV of C7's lost opportunity on Scenario 2 was between $26 million and $65 million. Accordingly, Optus says, Seven is precluded from relying on the Exclusivity Clause. 122 Optus also advances a large number of other contentions that enable it (so it argues) to avoid liability under the Exclusivity Clause. Despite being sued by Seven, Ten joined forces with Seven in 2005 to bid for the AFL broadcasting rights for the 2007 to 2011 seasons. Seven and Ten were ultimately successful in acquiring those rights. On 6 February 2006, shortly after their success was announced, Seven discontinued the proceedings against Ten. It is one of the many somewhat bizarre features of this case that Seven apparently maintained its suit against Ten during the whole of the period of their joint bid for the AFL broadcasting rights. 125 The AFL was originally the eleventh respondent in the proceedings. However, by orders made on 5 December 2005, Seven discontinued the proceedings against the AFL. It is another strange feature of this case that Seven was suing the AFL at the same time as it was negotiating with the AFL to acquire the AFL broadcasting rights for the 2007 to 2011 seasons. 126 The consent orders reserved the question of costs and preserved the AFL's entitlement to make submissions in any claims for relief insofar as they affect it. In fact, the AFL filed brief written submissions opposing the grant of certain relief in the event that Seven pressed its claim for that relief. In this Chapter 2 , I provide an overview of the claims made in the litigation and the conclusions I have reached on the principal issues. 128 Chapter 3 identifies the parties to the proceedings and outlines the relationships between associated entities. Chapter 3 refers briefly to the principal transactions relating to the allocation of the AFL broadcasting rights and the NRL pay television rights (although most of these are referred to in more detail elsewhere in the judgment). In addition, Chapter 3 provides summary information concerning the officers who played (or are said to have played) a significant part in the transactions which are central to Seven's case. It also provides some background on the AFL and NRL Competitions, each of which generates valuable broadcasting rights. 129 Chapter 4 explains the regulatory framework governing television broadcasting in Australia, including the so-called anti-siphoning regime established by the Broadcasting Services Act 1992 (Cth) (' BS Act ') that has played such a large part in the case. The Chapter also provides some information on free-to-air and pay television in Australia. 130 Chapter 5 explains the approach I have taken to assessing the evidence of witnesses whose credit has been impugned. I assess the credibility of the key witnesses who gave evidence in the proceedings. I also consider the significance of the fact that some potential witnesses have not been called to give evidence, notwithstanding that they can be regarded as being in the camp of one or other of the parties. 131 Chapters 6 to 11 recount, at considerable length, the facts relevant to Seven's claims and to Optus' Cross-Claim. The account includes some important findings of fact on contested issues. I have rejected a simple chronological approach in favour of ordering the material by reference to topics. Each of the six Chapters deals with a particular aspect of the case. The account within each Chapter is more or less in chronological order, although events are grouped under sub-headings by subject matter. 132 This thematic approach has the advantage of recording events in a form that allows them most readily to be related to the various claims made by Seven. It has the disadvantage that the events cannot, in truth, be neatly compartmentalised according to subject matter. For example, certain discussions, such as those occurring at the teleconference of 13 December 2000, related to both the AFL broadcasting rights and the NRL pay television rights. Indeed, Seven's case depends, to some extent, on the existence of an arrangement among the Consortium Respondents relating to both sets of rights. 133 It is therefore important to appreciate that the thematic presentation of the facts is not intended to suggest that the various discussions and transactions were not inter-connected. Nor does it imply any pre-judgment of Seven's case, insofar as it depends on the relationship between events referred to in different Chapters. The facts recounted in one Chapter may be directly relevant to a number of causes of action and may influence the interpretation of conversations or events recounted in another. The analysis of Seven's contentions in this judgment is intended to take into account the relevant events, regardless of where they are referred to in the judgment. 134 Chapter 6 provides background information on pay television in Australia during the period 1993 to 1999, including the foundation agreements that provided the framework for many of the events central to this case. 135 Chapter 7 addresses C7's efforts to license its sporting channels to Foxtel during 1999 and 2000 and the related dispute between the Foxtel partners, particularly News and Telstra (whose interests were held through Sky Cable and Telstra Media), concerning Foxtel's operations. The dispute primarily concerned the terms on which the Fox Sports channels were licensed to Foxtel and Telstra's efforts to reduce the price paid by Foxtel (in which it had an interest) to Fox Sports (in which it had no interest). 136 Chapter 8 analyses the events leading to the award to News in December 2000 of the AFL broadcasting rights for 2002 to 2006 and the acquisition by Foxtel of the AFL pay television rights in respect of the same period. 137 Chapter 9 deals with the events leading to the award to Fox Sports in December 2000 of the NRL pay television rights for 2001 to 2006. 138 Chapter 10 recounts C7's attempts to gain access to the Telstra Cable pursuant to the regime in Pt XIC of the TP Act . These events relate to Seven's claim that the conduct of Foxtel and Telstra Multimedia contravened s 45(2) of the TP Act by giving effect to a term of the BCA that was likely to have the effect of substantially lessening competition. 139 Chapter 11 covers the events post-dating the award of the AFL broadcasting rights, including those leading to the execution by Foxtel and Optus of the Foxtel-Optus CSA in March 2002, by which the parties agreed to share content to be broadcast on their respective pay television platforms. Chapter 11 also deals with events relevant to the claims between Seven and Optus. 140 The balance of the judgment contains my reasoning on Seven's contentions and in relation to Optus' Cross-Claim. The sequence of Chapters has been influenced to some extent by the structure of the parties' written submissions, although the parties themselves have not adopted a uniform approach. Where I have found it convenient to depart from the structure suggested by the written submissions, I have done so. 141 Chapter 12 addresses the questions of market definition posed by Seven's submissions. I make findings in relation to the existence or otherwise of the four markets relied on by Seven − the AFL pay rights market; the NRL pay rights market; the wholesale sports channel market; and the retail pay television market. 142 Chapter 13 deals with Seven's case under s 45(2)(a)(ii) and (b)(ii) of the TP Act against the Consortium Respondents, insofar as it is based on the effects or likely effects of the Master Agreement Provision. The Chapter also deals with certain other provisions which Seven claims had the effect or likely effect of substantially lessening competition in the four markets on which it relies. I consider whether, in the light of the findings as to markets made in Chapter 12 and the questions of construction that arise, any of the provisions identified by Seven had the effect or likely effect of substantially lessening competition in any of the pleaded markets. 143 Chapter 14 considers Seven's alternative case that the Master Agreement Provision and the other provisions identified by Seven had the purpose of substantially lessening competition and that each of the Consortium Respondents therefore contravened s 45(2)(a)(ii) and (b)(ii) of the TP Act . Because of the construction I give to the legislation, it is necessary to determine whether all the parties responsible for including the provision in the contract, arrangement or understanding shared the proscribed purpose. As in Chapter 13, it is necessary, when making this judgment, to take into account the findings I make on questions of market definition. 144 Chapter 15 makes findings as to whether News, Foxtel or PBL had the purpose Seven alleges against them, namely ' killing C7 '. 145 Chapter 16 considers whether Seven has established that Foxtel took advantage of its power in the retail pay television market for a proscribed purpose, in contravention of s 46(1) of the TP Act. 147 Chapter 18 considers whether provisions in the Foxtel-Optus CSA, by which Foxtel and Optus agreed to share content on their respective pay television platforms, had the purpose or effect of substantially lessening competition in the retail pay television market. 148 Chapter 19 deals with four causes of action propounded by Seven, arising out of its failure to acquire the NRL pay television rights in December 2000. 149 Chapter 20 addresses Seven's claims against Optus and Optus' Cross-Claim against Seven. 150 Chapter 21 deals with Seven's causes of action based on the alleged contravention by Foxtel Cable Television Pty Ltd (' Foxtel Cable '), the fifteenth respondent, of the anti-siphoning regime created by the BS Act ; alleged contraventions by News, PBL, Telstra, Nine and Fox Sports of s 45D of the TP Act arising out of the Master Agreement Provision; and alleged contraventions of s 45(2) of the TP Act flowing from the Optus-NRL Licence of 25 January 2001, pursuant to which Fox Sports, with Foxtel's consent, supplied the ' NRL on Optus ' channel to Optus during the 2001 NRL season. These comments are designed to assist in placing this very lengthy and complex case in context. 152 First , it was part of Seven's strategy for a long period of time to claim that a bid by Foxtel for the AFL pay television rights would constitute unlawful anti-competitive conduct. Moreover, Seven was seriously contemplating litigation against the Consortium Respondents (or some of them) in respect of the loss or possible loss of the AFL pay television rights well before the AFL actually awarded the rights for 2002 to 2006 in December 2000. For example, on 22 November 1999 Mr Stokes conveyed to the AFL a threat that any bid by Foxtel for the AFL pay television rights would be a breach of the TP Act . In May 2000, Mr Stokes told Dr Switkowski that he was considering wide-ranging legal options to protect Seven's interests in the AFL pay television rights. Prior to the AFL's award of the broadcasting rights, Seven unsuccessfully sought the intervention of the ACCC in the bidding process. At Seven's annual general meeting on 18 November 2000, Mr Stokes warned of a damages claim against Foxtel if Seven lost the AFL pay television rights. Mr Stokes conceded in evidence that, by that time, he was giving serious consideration to suing the parties bidding for the AFL broadcasting rights. 153 If a party embarks on a strategy of the kind adopted by Seven in this case, yet continues to deal with those whom it accuses of anti-competitive conduct, its own conduct may well be influenced and its perceptions coloured by the very strategy it is following. The risk of that happening is increased if the strategy includes litigation, because there must be a strong temptation to act in a manner that is calculated to improve the chances of success in the forensic battle to come. 154 The impending litigation itself may shape the recollections of those who ultimately give evidence, particularly if the litigation is seen as critical to the fortunes of the prospective litigant. Of course, the reconstruction of events through a prism of self-interest is a common feature of litigation in which the facts are strongly disputed. But if a party implements a litigious strategy while the relevant events are still unfolding, the pressures to reconstruct or interpret events in a manner that reflects the party's objectives may be very intense. 155 In my view, Seven's case has been affected by these factors. As my findings indicate, certain of Seven's witnesses frequently reconstructed events in a manner that not merely reflected Seven's interests, but could not withstand critical examination. In particular, the accounts of those witnesses could not be reconciled, in important respects, with the contemporaneous documentation. 156 Secondly , the gist of Seven's complaint against the Consortium Respondents is that they engaged in anti-competitive conduct in relation to the acquisition of the AFL pay television rights and the NRL pay television rights. Seven also complains that Foxtel took advantage of its market power to refuse C7's offer to supply channels for broadcast on the Foxtel platform. Seven relies on the provisions of the TP Act that aim to promote competition and, to that end, prohibit certain forms of anti-competitive conduct. 157 It is not essential that a party which invokes the TP Act to attack allegedly anti-competitive practices of its rivals should itself be a paragon of competitive virtue. Yet it is striking that Seven's strategy in 1999 and 2000 for obtaining the AFL broadcasting rights for 2002 to 2006 hinged on avoiding a competitive bidding process for the rights. Seven had certain advantages in the bidding process, including its status as the existing holder of the broadcasting rights, its role as a free-to-air television broadcaster and its entitlement to a last right of refusal in relation to the AFL free-to-air television rights for 2002 to 2006. Seven sought to exploit these advantages by insisting to the AFL that it would bid only for the AFL broadcasting rights as a whole and not separately for the pay and free-to-air television rights. Seven also used a variety of techniques, including seeking the intervention of the competition regulator, to discourage Foxtel from bidding (whether through News or otherwise) for the AFL pay television rights. Seven's intention was to position itself as the only potential buyer of the AFL broadcasting rights. 158 Mr Sumption, in his oral closing submissions on behalf of Seven, accepted that the logic of Seven's position in the case is that once News realised that Fox Sports (of which it was the part owner) had a real chance of acquiring the NRL pay television rights, News could not lawfully bid for the AFL pay television rights as a component of the AFL broadcasting rights. As I discuss in Chapter 13 ([2172], [2220]), Mr Sumption did not concede that, from a policy perspective, there was anything odd about this result. He pointed to steps that the AFL might have taken to generate competitive bids for its broadcasting rights. Even so, it seems curious that competition law should have the effect, in the particular circumstances of this case, of conferring upon one potential buyer the opportunity to acquire valuable rights without any opposition from an otherwise willing competitive bidder for the same rights. That was the very basis on which the ACCC declined to intervene in the competitive bidding process for the AFL broadcasting rights. 159 Thirdly , Seven has consistently maintained that securing the AFL pay television rights was essential to C7's commercial survival after 2001. Yet the evidence clearly establishes that Seven failed to make its best offer for the rights when they became available. The reasons for Seven's quite remarkable failure are also explained in Chapter 13 ([2273]-[2276]). In essence, Seven was the author of its own misfortune. 160 I do not suggest that this finding is determinative of Seven's case on liability (although it may be significant on the question of damages, should that arise). But the finding demonstrates that Seven was far from a helpless victim in the face of the allegedly anti-competitive conduct of which it complains. 161 Fourthly , an important element in Seven's case is that the Consortium Respondents endorsed a bid for the AFL pay television rights by Foxtel, believing that the price offered was substantially more than the rights were worth and that the acquisition would prove to be loss-producing for Foxtel. It is yet another extraordinary feature of this case that Mr Stokes conceded in cross-examination that he regarded the price paid by the Foxtel Partnership for the AFL pay television rights as a ' good ' deal for a purchaser. As I explain in Chapters 8 and 15 , this concession makes it very difficult for Seven to establish the factual foundation for its ' overbidding ' contention. 162 Fifthly , there is more than a hint of hypocrisy in certain of Seven's contentions. I particularly have in mind Seven's claim that Mr Philip divulged confidential information in relation to Seven's bid for the NRL pay television rights and that certain Respondents received the information knowing that it had been obtained in circumstances which breached confidentiality. I find in Chapter 19 that Seven ' leaked ' to the media details of its bid, thus destroying any confidentiality in the information. This finding makes it surprising, to say the least, that the claim was brought in the first place. Another example is Seven's complaint that C7 suffered losses by being denied retail access via the Telstra Cable when (as I find) it never had any serious intention that C7 should be a retailer of pay television services. 163 By pointing to these matters, I do not intend to imply that the behaviour of all the Respondents was exemplary. Mr Philip, for example, on his own account dishonestly attempted to mislead Telstra into contributing additional support to Fox Sports' bid for the NRL pay television rights. News also was content to withhold important information from Telstra, in effect its partner in Foxtel, and did so over a considerable period of time. But in the end it is Seven which must make out its pleaded case against the Respondents. In Chapter 12 , I find that Seven has failed to establish the existence of that market. I also find that Seven has not established the existence of either the AFL pay rights market or the NRL pay rights market on which it relies. However, I conclude that Seven has made out that there was, at the relevant times, a retail pay television market in the terms pleaded by it. 165 It follows from the findings made in Chapter 12, that Seven can only succeed in its anti-competitive effects case under s 45(2) of the TP Act if the provisions on which it relies had the effect or likely effect of substantially lessening competition in the retail pay television market. In Chapter 13 , I find that the Master Agreement Provision and the other provisions relied on by Seven did not have the effect or likely effect at the relevant times of substantially lessening competition in that market. By December 2000 (when the Master Agreement was entered into) and January 2001 (when the parties gave effect to the Master Agreement Provision), Optus' pay television operations had been experiencing very substantial losses over a period of several years. The strong likelihood in December 2000 and January 2001 was that, if the Master Agreement had not been entered into or implemented, Optus would have negotiated a content sharing agreement with Foxtel along the lines of the Foxtel-Optus CSA (which was in fact executed on 5 March 2002). Thus, even in the absence of the Master Agreement Provision, Optus would not have been a significant constraint on Foxtel in the retail pay television market. 166 In Chapter 14 , I conclude that Seven's case based on the anti-competitive purpose of the various provisions, including the Master Agreement Provision, cannot succeed. The reason is that even if each of the Consortium Respondents had the objective attributed to it by Seven − that of killing C7 − achieving that objective could not have substantially lessened competition in the retail pay television market. By reason of Optus' parlous state, any lessening of competition in that market would have occurred quite independently of the fate of C7. 167 Although strictly not necessary to do so, I consider in Chapter 14 further construction questions relating to s 45(2)(a)(ii) and (b)(ii) of the TP Act . I construe these provisions as requiring all parties responsible for the inclusion of the impugned provision in the contract, arrangement or understanding to have the subjective purpose of substantially lessening competition, if a contravention of s 45(2) is to be established. I find that Telstra was responsible, together with the other Consortium Respondents, for including the Master Agreement Provision in the Master Agreement (that is, the provision requiring or contemplating that bids would be made for both the AFL and NRL pay television rights). But I also find that Telstra did not have the purpose proscribed by s 45(2), even if it is assumed that the other Consortium Respondents did have such a purpose. Thus Seven's purpose case under s 45(2) in relation to the Master Agreement Provision fails. 168 Seven's case in relation to the other provisions on which it relies (with one exception) similarly fails because Seven cannot show that all parties responsible for including the provision in the contract, arrangement or understanding shared the purpose proscribed by s 45(2) of the TP Act . The exception is the so-called News-Foxtel Licence, which is not affected by this particular analysis, although I reject Seven's claim based on the News-Foxtel Licence for other reasons. 169 In view of the conclusions reached in Chapter 14, it is not necessary, in order to deal with Seven's purpose case under s 45(2) of the TP Act , to make factual findings about the purpose of News, Foxtel and PBL. However, such findings may be important if my construction of s 45(2) is incorrect. Moreover, the purpose of News, Foxtel and PBL may be relevant to Seven's case that Foxtel took advantage of its market power for a proscribed purpose in contravention of s 46(1) of the TP Act . It also has some significance for the market definition issues. Accordingly, I deal with the factual issues relating to the purpose of News, Foxtel and PBL in Chapter 15. Seven has not demonstrated that any of those parties crossed the boundary that distinguishes legitimate, albeit aggressive and even ruthless competitive conduct from anti-competitive behaviour of the kind proscribed by ss 45(2) and 46(1) of the TP Act . 171 In Chapter 16 , I conclude that Foxtel did not take advantage of its power in the retail pay television market in any of the ways alleged by Seven. I find that the requests made by C7 for retail access were intended to place pressure on Foxtel in relation to other issues. Seven never intended that C7 should take advantage of retail access via the Telstra Cable, should it ever have become available. I conclude that, although Foxtel and Telstra Multimedia gave effect to a provision in the BCA that conferred on Foxtel exclusive access to the Telstra Cable, that provision did not have the effect or likely effect of substantially lessening competition in the retail pay television market. 173 In Chapter 18 , I find that the provisions of the Foxtel-Optus CSA (by which Foxtel and Optus agreed to share content) did not have the effect or likely effect of substantially lessening competition in the retail pay television market. I reach this conclusion because, in the absence of the Foxtel-Optus CSA, Optus would have adopted the ' Manage for Cash ' strategy which would have led to the closure of Optus' pay television operations within three to four years. In the meantime, in the so-called ' counter-factual world ', Optus would not have been a significant competitive constraint on Foxtel. 174 In Chapter 19 , I conclude that Seven's cause of action founded on breach of confidentiality fails. I find that, although Mr Philip (contrary to his evidence) deliberately disclosed certain information relating to Seven's bid for the NRL pay television rights, the information lacked the quality of confidentiality because Seven had already publicly disclosed it. I also reject Seven's contentions on the other causes of action upon which it relies in relation to the award of the NRL pay television rights. 175 In Chapter 20 , I reject Seven's claims that Optus engaged in misleading or deceptive conduct in contravention of s 52 of the TP Act. However, I find that Seven engaged in misleading or deceptive conduct in the lead-up to Optus executing the First and Second Variation Agreements. I conclude that the appropriate relief to which Optus is entitled is an order pursuant to s 87(2)(ba) of the TP Act refusing to permit Seven to enforce the Exclusivity Clause inserted into the C7-Optus CSA by the First and Second Variation Agreements. In consequence, Seven's claim based on breach of contract fails. I conclude that Optus is not entitled to any further relief. 176 In Chapter 21 , I conclude that Seven has not made out the various additional causes of action based on alleged contraventions of the anti-siphoning regime in the BS Act , s 45D of the TP Act and s 45(2) of the TP Act . Optus will be directed to bring in Short Minutes of any order it says should be made on its Cross-Claim. 178 I intend to defer making final orders until the parties have the opportunity to make submissions on costs. Although I intend to dismiss Seven's Application, as indicated in Chapter 1, I nonetheless propose to give the parties an opportunity to make brief submissions on what issues relating to relief, if any, I should address before entering final orders. The only reason for contemplating this course as a possibility is to facilitate the appellate process. I emphasise that in giving the parties this opportunity I do not necessarily intend to accede to any request that they make, even assuming they are in agreement. 179 The orders I propose to make now are set out in Chapter 22 . 3 THE PARTIES AND THE FOOTBALL COMPETITIONS [180] 3.1 Applicants [180] 3.1.1 Seven Network [180] 3.1.2 C7 and the Content Supply Agreements [185] 3.1.3 Seven's Officers [192] 3.2 Respondents [194] 3.2.1 News Parties [194] 3.2.1.1 News (and TNCL) [194] 3.2.1.2 News Pay TV [198] 3.2.1.3 NRLI [199] 3.2.1.4 Mr Philip [201] 3.2.1.5 News' Officers [203] 3.2.2 Telstra Parties [205] 3.2.2.1 Telstra [205] 3.2.2.2 Telstra Media [207] 3.2.2.3 Telstra Multimedia [208] 3.2.2.4 Telstra's Officers [211] 3.2.3 PBL Parties [213] 3.2.3.1 PBL [213] 3.2.3.2 Nine [216] 3.2.3.3 PBL Pay TV [218] 3.2.3.4 PBL's Officers [220] 3.2.4 Sky Cable [221] 3.2.5 Foxtel Parties [224] 3.2.5.1 Foxtel Partnership [224] 3.2.5.2 Foxtel Management [229] 3.2.5.3 Foxtel Cable [234] 3.2.5.4 Ownership Table [237] 3.2.5.5 Foxtel's Officers [240] 3.2.6 Fox Sports [242] 3.2.6.1 Ownership of Fox Sports [242] 3.2.6.2 Ownership Tables [249] 3.2.6.3 Fox Sports' Officers [251] 3.2.7 ARL and NRL Parties [252] 3.2.7.1 NRL Partnership [252] 3.2.7.2 NRL Ltd [256] 3.2.7.3 NRL Corporate Structure Table [259] 3.2.8 Optus Parties [260] 3.2.8.1 Optus Vision [260] 3.2.8.2 SingTel Optus [268] 3.2.8.3 Optus' Officers [271] 3.3 Interlocking Directorships and Key Relationships [272] 3.4 Inactive Parties: Austar [274] 3.5 Former Parties [279] 3.5.1 Ten [279] 3.5.2 AFL [282] 3.6 Football Competitions [284] 3.6.1 AFL Competition [284] 3.6.2 Rugby League Competitions [290] 3. It carries on business principally as a broadcaster operating a commercial free-to-air television network. It does so through five wholly owned subsidiaries, each of which holds a commercial broadcasting licence issued under the Broadcasting Services Act 1992 (Cth) (' BS Act '). The free-to-air network known as the Seven Network (' 7 Network ') broadcasts in Sydney, Brisbane, Melbourne, Adelaide, Perth and regional Queensland. 181 7 Network is affiliated with Prime Television, a regional network. Prime Television has stations broadcasting in Canberra and regional New South Wales, Victoria and Western Australia. 7 Network is also affiliated with Southern Cross Broadcasting, which has stations in Adelaide and regional areas of New South Wales, Victoria, Queensland, Tasmania and the Northern Territory, as well as in Hobart and Darwin. 182 Until the end of the 2001 AFL season, Seven Network or its subsidiaries held the AFL broadcasting rights (both free-to-air and pay). The AFL granted the broadcasting rights for the 1993 to 1998 AFL seasons to Seven Network's subsidiaries by an agreement dated 8 November 1993 (' AFL-Seven Original Licence '). By the ' AFL-Seven Licence Extension ' dated 15 November 1996, the AFL extended the grant of the broadcasting rights until the end of the 2001 season. 183 AFL games were in fact broadcast on 7 Network's free-to-air service until the end of the 2001 season. From 1996 to 1998, some AFL games were broadcast on pay television through SportsVision channels (shown on the Optus pay television platform), while from 1999 to 2001 AFL games were broadcast on C7 (shown on the Optus and Austar pay television platforms). 184 Seven Network has never held the free-to-air or pay television rights for the NRL although, as I shall explain, NRL matches were incorporated into a C7 channel supplied to Optus Vision. As has already been noted, in late 2000 C7 bid unsuccessfully for the NRL pay television rights for the 2001 to 2006 seasons. It is a wholly owned subsidiary of Seven Network. In the second half of 1998, C7 (then called ' Seven Cable Television ') commenced operating what Seven has described in these proceedings as a ' wholesale channel supply business ' in Australia. The business involved the production and supply of sporting channels to the retail providers of pay television services. The C7 channels consisted primarily of sports programming and included exclusive live coverage of the AFL matches, to which C7 had acquired the exclusive pay television rights under a sub-licence from Seven Network. 186 By the C7-Optus CSA (that is, the Channel Production and Supply Agreement of 30 June 1998), Seven Network agreed to supply sports channels, including AFL matches, to Optus Vision on a non-exclusive basis. From August 1998, C7 commenced supplying television channels to the Optus platform. For the first six months or so, these channels were called ' Sports Australia ' and ' Sports Australia 2 '. The former was the primary, full-time channel, while the latter was an ' overflow channel ', broadcast mostly on weekends. From March until December 1999, the primary channel was known as ' C7 (Sport) AFL '. Thereafter the primary channel was known as ' C7 Gold ' (January 2000 until October 2001) and as ' C7 Sport ' (November 2001 until March 2002, when the channel ceased to operate). The second channel was branded ' C7 Sport (NRL) ' from March until December 1999 and ' C7 Blue ' from January 2000 until 1 November 2001, when it ceased to operate. 187 By an arrangement made with News on 14 May 1998, Optus Vision acquired the non-exclusive NRL pay television rights for the 1998, 1999 and 2000 seasons. Optus incorporated its coverage of the NRL matches on C7's overflow channel, C7 Blue. C7 also used this channel to show live sports that could not be fitted into the schedule of its primary channel, C7 Gold. 188 On 5 March 1999, C7 and the eighteenth respondent, Austar Entertainment, entered into the Austar Channel Supply Agreement (' C7-Austar CSA '), under which C7 agreed to supply the Austar pay platform with a single full-time sports channel on a non-exclusive basis. The C7-Austar CSA was expressed to operate from 1 April 1999 to 28 February 2002 and provided for the sports channel to include live AFL matches. In fact, the C7 channel supplied to Austar contained the same programming as the primary C7 channel broadcast on Optus. For satellite and cable subscribers to Austar, the C7 channel was included in Austar's General Entertainment tier known as ' Austar Deluxe '. This tier on Austar incorporated other sports and entertainment channels. 189 Although the C7-Austar CSA was expressed to expire on 28 February 2002, it was extended until 31 March 2002. By that time, C7 no longer had the AFL pay television rights. Accordingly, Austar Entertainment elected not to take the C7 channel after 31 March 2002. 190 In addition to the supply agreements with Optus and Austar, in April 1999 C7 entered into a supply agreement with Neighbourhood Cable, a regional pay television service provider in Victoria. That supply agreement continued in force until December 1999, when it was apparently terminated. A fresh agreement was entered into in March 2001 and continued until January 2002. 191 On 28 March 2002, Optus ceased broadcasting the C7 channel (Optus Vision and C7 having agreed to an extension of their arrangement for 28 days beyond 28 February 2002). On about 6 May 2002, C7 ceased supply the signal which would have enabled Optus to take the C7 channel. From this time, C7 did not have access to any retail pay television platforms and no longer generated any revenue. As has already been noted, C7 ceased operations on 7 May 2002. From June 1995 until July 1999, Mr Stokes was Seven Network's Non-Executive Chairman and from August 1999 to October 2000 he was the Chief Executive Officer (' CEO '). Mr Stokes and his private companies have a substantial shareholding in Seven Network. Mr Stokes said in evidence that he controlled something over 40 per cent of the shareholding in Seven Network. • Mr Peter Gammell was appointed an alternate director of Seven Network in June 1995 and became a director in November 1997. Mr Gammell later became Chairman of i7 Ltd (' i7 '), which conducted Seven Network's online consumer content business and was directly responsible for C7. Mr Gammell described himself as a nominee of Australian Capital Equity Pty Ltd (' ACE ') on the Seven Network board. ACE was described by Mr Stokes as his ' private company '. • Mr Julian Mounter was appointed a director of Seven Network on 10 September 1998. He took up his position as CEO and Managing Director on 1 January 1999. Mr Mounter's Executive Service Agreement provided that his term of appointment was three years from 1 January 1999. However, he left his position on 30 July 1999 because of what a press release issued by Seven Network described as ' irreconcilable differences ... over a restructuring of the company '. • Mr Harold Anderson was Director of Sports and Olympics for Seven Network from March 1999 to May 2003. Mr Anderson reported directly to Seven Network's CEO. He was a member of Seven Network's Executive Management Committee which subsequently became known as the Strategy Group and, later, as the Broadcast Strategy Group. • Mr Steven Wise became Managing Director of Seven Resources, a division of Seven Network, in July 1999. In April 2000, he became CEO of i7 which, at that stage, was responsible for the operations of C7. In December 2001, Seven Network created a new division called New Media and Investments, which assumed responsibility for pay television strategy, including C7. Mr Wise became CEO of this division. • Mr Shane Wood was General Manager of Pay Television at Seven Network from July 1998 to July 1999. In July 1999 his title changed to Chief Operating Officer, but his responsibilities remained essentially the same until May 2002. Mr Wood's responsibilities included day-to-day management of C7's operations. Between July 1998 and August 2000, Mr Wood reported to Seven Network's CEO and thereafter he reported to Mr Wise as CEO of i7. • Ms Maureen Plavsic was an Executive Director of Seven Network from May 1997 to September 2003. She was the Chief Executive and Managing Director, Broadcast Television, between November 2000 and April 2003. In that position, she had executive responsibility for all aspects of the Seven Network's free-to-air business. Before that appointment, Ms Plavsic had held the position of Director of Sales and Corporate Marketing between October 1999 and October 2000. Mr Mounter, whose association with Seven ended in 1999, did not give evidence. Ms Plavsic provided a witness statement, but the statement was not tendered by Seven. TNCL is a global media company, with newspaper, film studio, free-to-air and subscription television businesses in many countries. Its Australian media interests have included, at all relevant times, newspapers, subscription television and content production. Until recently, TNCL was listed in Australia, but it is now listed in the United States, although of course its shares are still traded on Australian stock exchanges. 195 Although News is a respondent to the proceedings, TNCL is not. Nonetheless, it is convenient to refer to TNCL's Australian interests. News has also acquired, from time to time, both free-to-air and pay television sports rights, which it sub-licenses to third parties. In particular, under an agreement known as the ' Australian Pay Television Rights --- NRL to News ' of 14 May 1998 (' NRL-News Pay Rights Agreement '), News acquired from the NRL Partnership the exclusive NRL pay television rights for a three year period from 1 January 1998. News was permitted to sub-license the rights on a non-exclusive basis. Under the NRL-News Pay Rights Agreement, News was also granted the exclusive first right of negotiation and last right of refusal in respect of the broadcast rights (including free-to-air and pay television) to the NRL Competition, any Rugby League matches conducted under the auspices of the NRL Partnership and any representative matches conducted by the ARL. The first and last rights cover the period 1 January 1998 to 1 January 2023. News in fact sub-licensed the NRL pay television rights to Optus Vision and Foxtel, with each platform receiving the same games. News also sub-licensed the NRL pay television rights to Austar. 197 On 19 December 2000, News formally acquired the AFL pay television rights for 2002 to 2006 for a fee of $30 million per annum (plus CPI adjustments and GST). The agreement by which this came about has been referred to in these proceedings as the ' AFL-News Licence '. On 19 December 2000, News also acquired the AFL free-to-air television rights for the same five year period, subject to Seven Network's rights under a so-called ' First and Last Deed ', between it and the AFL, executed on 3 September 1997. On 25 January 2001, News acquired the AFL free-to-air television rights after Seven Network chose not to exercise its last rights. Until February 2005, News Pay TV held a 50 per cent interest in Pay TV Management Pty Ltd (' Pay TV Management '), which in turn owned all the shares in Sky Cable. (The remaining 50 per cent interest in Pay TV Management was held by a wholly owned subsidiary of PBL. ) Sky Cable owned 50 per cent of Foxtel Management so that, in effect, TNCL held a 25 per cent interest in Foxtel Management. Sky Cable also owned 20 per cent of the shares in Foxtel Cable, giving TNCL, in effect, a 10 per cent interest in Foxtel Cable. NRLI is incorporated in New South Wales. 200 NRLI and the twelfth respondent, ARL, are partners in the NRL Partnership. The NRL Partnership owns the unified competition known as the ' National Rugby League Competition ' (' NRL Competition '). The NRL Competition commenced in 1998 as a result of an agreement between News and ARL to merge rival Rugby League competitions. One of the two rival competitions prior to that time was conducted by ARL and the other (' Super League ') was controlled by News. Mr Philip is a respondent because Seven seeks relief against him by reason of his alleged breach of confidentiality in relation to Seven's bid in 2000 for the NRL pay television rights. 202 Mr Philip played a number of roles in the events leading to this litigation. He was a director of Sky Cable, Foxtel Cable, News Pay TV and Pay TV Management. In addition, he has been a director of Fox Sports since 1999 and of NRLI since its incorporation. At the relevant times, Mr Philip was a member of the NRL PEC as a representative of NRLI (which, as I have noted, is a subsidiary of News). Like Mr Philip, some held positions in companies which were not controlled by News alone. At all material times, he was the Chairman and CEO of TNCL and was a resident of the United States. • Mr LK (Lachlan) Murdoch was a director and the Executive Chairman of News from 1995 until (apparently) mid-2005. Mr Murdoch was also a director of Foxtel Management and Foxtel Cable (from 1995 until December 2004), Sky Cable (from 1999 until (presumably) 2005), News Pay TV (from November 1998 until (presumably) 2005) and Pay TV Management. Mr Murdoch occupied the position of CEO of News until October 2000, when he seems to have left Australia for New York. However, he continued as Executive Chairman of News for approximately another five years. Mr Lachlan Murdoch was living in Australia at the time the hearing took place. • Mr Peter Macourt became a director of News in 1994. From 1994 to September 1998, he was News' Chief Financial Officer; thereafter, until 3 July 2001, he was the Deputy Chief Executive; and from the latter date he became News' Chief Operating Officer. Mr Macourt has also been a director of Sky Cable and Foxtel Cable since 1995; of Foxtel Management and Pay TV Management since 1998; and of Fox Sports since June 1999. Mr Macourt was a director of NRLI from 25 February 1998 to 26 May 2000 and a member of the NRL PEC in the period leading up to the award of the NRL pay television rights to Fox Sports in late 2000. • Mr John Hartigan was the CEO of News from October 2000 and a director from 17 November 2000. Prior to his appointment as CEO, Mr Hartigan was the Editorial Director of News. • Mr Ian Frykberg was employed by News between December 1996 and June 1998 as Executive Director of Sport ' on a contract basis '. After that time, he continued to act as a consultant for News on different terms and conditions and also acted as a consultant to Foxtel Management. Mr Frykberg was a director of National Rugby League Ltd (' NRL Ltd '), the fourteenth respondent, between March 1998 and January 2000 and a director of Fox Sports between September 1998 and February 2000. Mr Frykberg was the acting CEO of Fox Sports from September 1999 to December 1999, following the termination of the employment of the previous CEO, Mr Dodds. • Mr Thomas Mockridge was a director of News from 6 February 1996 until 29 October 2002. He was a director of Foxtel Management and Foxtel Cable from 1995 until 31 March 2000 and the CEO of Foxtel Management from January 1997 until about February 2000. Prior to his appointment as CEO of Foxtel Management, Mr Mockridge had been employed by News in various roles. He negotiated with Telstra in 1994 on behalf of News in relation to the Foxtel pay television business. Messrs Philip, Macourt, Frykberg and Mockridge gave evidence and were cross-examined. It is a very large, publicly listed Australian telecommunications and information services company. Until 1997, the Commonwealth of Australia was the sole shareholder in Telstra. At all relevant times since that date, the Commonwealth has been Telstra's majority shareholder. (After the hearing in this case concluded, the Commonwealth sold part of its majority stake in Telstra. In November 1994, Telstra and the News Group entered into a Heads of Agreement to establish a joint venture under the name of ' Foxtel '. The joint venture was to deliver pay television services in Australia using Telstra's hybrid fibre coaxial cable (that is, the Telstra Cable). Telstra's interests in pay television have been held through two wholly owned subsidiaries: the third respondent, Telstra Media, and the sixth respondent, Telstra Multimedia. Telstra Media is one of the two partners in the Foxtel Partnership. It holds a 50 per cent interest in Foxtel, while Sky Cable holds the other 50 per cent interest. Telstra Media and Sky Cable also each hold 50 per cent of the shares in Foxtel Management. I shall refer briefly to the relevant terms of the arrangements governing the Foxtel Partnership when dealing with the position of the Foxtel parties. It owns the Telstra Cable, which is one of the two main hybrid fibre coaxial cable networks in Australia, the other being owned by Optus Vision. 209 The roll-out of the Telstra Cable commenced in 1994. From 1995, the Telstra Cable was configured so that it had the capacity to carry 64 analogue pay television channels. Since March 2004, the Telstra Cable has also carried pay television services in digital format and it presently has the capacity to carry up to 560 digital channels. From 1994 until the hearing, Telstra had invested over $3.7 billion in the construction and operation of the Telstra Cable, which services areas of Sydney, Melbourne, Brisbane, the Gold Coast, Adelaide and Perth. By mid-2001, the Telstra Cable passed about 2.5 million homes, a figure that had largely remained unchanged since late 1997. This figure represented about one third of Australian households. From October 1995 until early December 2002, Foxtel was the only pay television service carried on the Telstra Cable. 210 From December 2002, Telstra, through Telstra Pay TV Pty Ltd, has also provided pay television services to subscribers by means of the Telstra Cable. The pay television service, which is normally ' bundled ' with telephony services, provides the same channels or suites of channels offered by Foxtel. On 1 March 1999, Dr Switkowski was appointed CEO and Managing Director of Telstra and continued to hold those positions until 1 July 2005. While CEO of Telstra, he was a Telstra-nominated director of Foxtel Management and Foxtel Cable, initially between 1 March and 23 March 1999 and then from 31 July 2001 until 1 July 2005. Prior to his employment with Telstra, Dr Switkowski was CEO of the entity then called Optus Communications Pty Ltd and was Chairman of Optus Vision from 1996 to 1997. • Mr Bruce Akhurst first joined Telstra in December 1996 as General Counsel. In 1999 he was appointed Group Managing Director, Legal and Regulatory and in December 2002 he assumed the role of Group Managing Director, Telstra Wholesale, Telstra Broadband and Media and Group General Counsel. Before joining Telstra, Mr Akhurst was a partner in the law firm of Mallesons Stephen Jaques, specialising in competition law. Mr Akhurst became a Telstra-appointed director of both Foxtel Management and Foxtel Cable on 29 March 2000. He became Chairman of the Board of Foxtel Management on 30 March 2005. • Mr Robert Mansfield was a director of Telstra between 12 November 1999 and 14 April 2004. For some time during this period, not precisely identified in the evidence, Mr Mansfield was Chairman of the board of Telstra. • Mr Gerald Moriarty was a director of both Telstra Media and Telstra Multimedia between 22 June 1995 and 15 December 2000. Together with Mr Akhurst, Mr Moriarty had executive responsibility for the dispute with Seven relating to C7's access to the Telstra Cable. Mr Moriarty was a director of Foxtel Management and Foxtel Cable from 27 June 1995 to 31 July 2001. • Mr Gerald Sutton joined Telstra in December 1999, and worked in the Convergent Business Division before taking up the position of Managing Director of Telstra Media in March 2001. Mr Sutton was a Telstra-nominated alternate director of both Foxtel Management and Foxtel Cable from 21 August 2001 until his appointment as a director on 30 March 2005. Notwithstanding his title of Managing Director, the company's filings suggest that Mr Sutton did not become a director of Telstra Media and Telstra Multimedia until 4 April 2003. • Mr Greg Willis was a director of Telstra Media from 10 April 2000 to 4 April 2003. He was a director of Telstra Multimedia from 2 June 2000 to 4 April 2003. Mr Willis was also a Telstra-nominated director of Foxtel Management and Foxtel Cable from 11 April 2000 to 31 July 2001. During 2000, Mr Willis was effectively the Chief Operating Officer preparing Telstra for the Olympic Games. It appears that he reported to Mr Pretty, the Group Managing Director of ' Convergent Business ', a unit responsible for internet and media-based businesses. However, at this time, Mr Willis was also responsible for the day-to-day management of Telstra's relationship with Foxtel and, in this respect, reported to Mr Akhurst. • Mr Sam Chisholm was a director of Telstra from 17 November 2000 until 28 October 2004. Mr Chisholm was appointed a director of Foxtel Management on 31 July 2001 and soon after became Chairman of the Foxtel Management board. He was also a director of Foxtel Cable from 23 May 1995 to 16 January 1998 and was reappointed from 31 July 2001. He remained a director of Foxtel Management and Foxtel Cable at least until April 2005. • Mr Paul Rizzo was appointed as a Telstra nominee on the boards of Foxtel Management and Foxtel Cable in March 1999 and retained these positions until 31 July 2001. Mr Rizzo was Chairman of the board of Foxtel Management between 19 March 1999 and 21 August 2001. At the time of this appointment he was Chief Financial Officer of Telstra, a position he held until January 2001. • Ms Danita Lowes was in charge of the Telstra Media Division from early 1998 until February 2000. During the same period she was a Telstra-nominated director of Foxtel Management. During her employment with Telstra, she sent a number of lively emails, some of which were extremely critical of Telstra's partners in the Foxtel Partnership, especially News. After leaving Telstra, Ms Lowes was employed by an entity associated with Seven Network and acted as a consultant to Seven Network. The precise dates of her engagement with Seven Network were not established by the evidence, but she certainly was working on its behalf by June 2001. • Mr Brenton Willis was a Project Manager, Pay Television, with Telstra's Media Division, reporting to the relevant Group Managing Director. Dr Switkowski described him as a Telstra executive with active involvement in relation to the Foxtel business. Mr Boyd's statement said that Mr Brenton Willis was a financial analyst and I think that this is an accurate description of his role. It owns, operates and manages a range of media, gaming, entertainment and e-commerce businesses and investments. PBL also publishes many of Australia's best-selling magazines. At that time, PBL Pay TV exercised an option to acquire a 50 per cent interest in Fox Sports. The option had been granted by the Fox Sports Option Deed, dated 3 December 1998, between TNCL and PBL. At the time the deed was executed, News held all the shares in Fox Sports. Nine carries on business principally as a national broadcaster operating a commercial free-to-air television network known as the ' Nine Network '. The Nine Network broadcasts predominantly in capital cities. Wholly owned subsidiaries of Nine hold commercial broadcasting licences and operate free-to-air commercial television stations in Sydney, Melbourne, Brisbane and Darwin. Nine has affiliates which broadcast in Perth (controlled by Sunraysia Television), Adelaide (controlled by Southern Cross Broadcasting), Canberra and regional areas of Australia. Nine has in place supply arrangements for the broadcast of its programs on affiliated stations. 217 On the commencement of the NRL Competition in 1998, Nine acquired the exclusive NRL free-to-air television rights until the end of the 2007 season. In January 2001, Nine acquired from News the AFL free-to-air television rights for the 2002 to 2006 seasons. Ten also acquired free-to-air television rights from News for AFL matches for this period. PBL Pay TV is the vehicle through which PBL holds its 50 per cent interest in Fox Sports and (more indirectly) its 50 per cent interest in Sky Cable. It is through Sky Cable that PBL holds its interest in Foxtel, which it acquired in December 1998. 219 PBL Pay TV and News Pay TV are partners in the Pay TV Partnership, which was constituted when PBL exercised its option to acquire an interest in Foxtel. PBL Pay TV and News Pay TV each owns 50 per cent of the shares in Pay TV Management, which is the agent of the Pay TV Partnership. Until February 2005, Pay TV Management owned all the shares in Sky Cable. Since that date, Pay TV Management has owned about 29.4 per cent of the shares in Fox Sports, which in turn owns all the shares in Sky Cable. On a date not identified in the evidence, he became Executive Chairman of PBL and occupied that position at least during the period 1998 until December 2000. Mr Packer was a director of Foxtel Cable and Foxtel Management between 3 December 1998 and 30 March 2005. He was a director of Pay TV Management and Sky Cable at all material times from December 1998. • Mr Nicholas Falloon was a director of PBL from 1990 until 27 March 2001 and its CEO from May 1998 until his departure from the company in March 2001. He was PBL's nominated director of SportsVision from August 1995 until its liquidation in June 1998 and a director of Optus Vision between August 1995 and January 1997. From 1992 to 1998, Mr Falloon was a director of Nine. Between December 1998 and March 2001, Mr Falloon held directorships in a number of other companies including Sky Cable, Foxtel Cable, Foxtel Management and Fox Sports (from October 1999). At some time after his departure from PBL, Mr Falloon became Executive Chairman of Ten. At the material times, Mr Falloon, assisted by Mr James McLachlan, was primarily responsible for monitoring and developing PBL's interests in Foxtel and Fox Sports. • Mr Geoffrey Kleemann was Chief Financial Officer of PBL at all material times after October 1998. Mr Kleemann was not a director of PBL, but was a director of Nine (from October 1998) and of Fox Sports (from October 1999). • Mr James McLachlan was a director of Sky Cable, PBL Pay TV, Pay TV Management and Nine between late 1998 and November 2004. He was also a director of Fox Sports between October 1999 and November 2004. According to PBL's Closing Submissions, Mr McLachlan was CEO of PBL's investment arm, although there does not appear to be evidence directly to that effect. • Mr David Leckie was a director of PBL from August 1990 until 8 January 2002. He was also a director of Nine between June 1994 and January 2002 and participated in the negotiations leading to News' bid for the AFL broadcasting rights in 2000. In keeping with the revolving door phenomenon which appears to be a characteristic of the Australian television industry, Mr Leckie became the Managing Director of Seven Network after leaving PBL. However, none of the statements was tendered and PBL called no lay witnesses. However, in October 1998 the seventh respondent, PBL, exercised an option granted to it by TNCL in June 1997 to acquire a 50 per cent interest in Sky Cable. 222 As a result of these arrangements, Pay TV Management, in which News Pay TV and PBL Pay TV each had a 50 per cent share, owned all the shares in Sky Cable. In this way, Sky Cable was ultimately owned equally by TNCL and PBL. Since January 2005, however, Fox Sports has owned all the shares in Sky Cable. 223 Sky Cable and Telstra Media are partners in the Foxtel Partnership, which conducts the Foxtel pay television business. It follows that, as I have noted, TNCL and PBL each ultimately has a 25 per cent interest in the Foxtel Partnership. Each of the Foxtel partners, namely Sky Cable and Telstra Media, is, however, joined as a respondent, as is the fourth respondent, Foxtel Management. 225 The relationship between the Foxtel partners is governed by a number of agreements. One is the Foxtel Television Partnership Agreement, made on 14 April 1997 and amended on 3 December 1998 (' Foxtel Partnership Agreement '), between Sky Cable, Telstra Media and Foxtel Management. The Foxtel Partnership Agreement provides that Foxtel Management is to be the exclusive agent to manage the business of the Foxtel Partnership. The amendments to the Foxtel Partnership Agreement made in December 1998 were introduced in consequence of PBL becoming a shareholder of Sky Cable. 226 The Foxtel Partnership conducts the business of supplying pay television services by cable and satellite under the brand name ' Foxtel '. The Foxtel business had its genesis in the Umbrella Agreement of 9 March 1995 (amended and restated on 14 April 1997) between TNCL and Telstra (' Umbrella Agreement '). The Foxtel pay television platform commenced operations in October 1995, in the form of a twenty channel cable pay television service, using the Telstra Cable to deliver the service. Since March 1999, the Foxtel Partnership has also delivered a digital service by satellite. It originally acquired transponder capacity on the Optus B3 satellite, but in late 2003 switched to the Optus C1 satellite. 227 In March 2004, the Foxtel Partnership commenced supplying a digital pay television service on the Telstra Cable and an enhanced digital service by satellite. Foxtel's analogue service is currently being phased out. 228 The Foxtel Partnership, like other pay television platforms, acquires channels from channel suppliers such as Fox Sports and ESPN, but has also produced its own channels. Following the Foxtel Partnership's acquisition of the AFL pay television rights from News in 2001, it compiled the ' Fox Footy Channel '. This channel, which commenced in early 2002, showed AFL content exclusively, even in the off-season. In February 2002, the Foxtel Partnership appointed Optus Vision as a non-exclusive selling agent for its Fox Footy Channel and in March 2002, the Foxtel Partnership sub-licensed the Fox Footy Channel to Austar. However, the Fox Footy Channel apparently ceased operations after the 2006 AFL season, by which time Seven had acquired the AFL broadcasting rights for the 2007 to 2011 seasons. Sky Cable and Telstra Media each has a 50 per cent shareholding in Foxtel Management. 230 Under the Foxtel Partnership Agreement, as amended, the board of Foxtel Management comprises eight voting directors, four of whom are appointed by Telstra Media and four by Sky Cable (cl 11.1). Of Sky Cable's nominees, two must be appointed as representatives of News and two as representatives of PBL. The ninth director is the CEO, but he or she is not entitled to vote. Decisions made by the board must be by majority vote and require the support of at least one director appointed by each of Telstra Media, News and PBL. It follows that, in practice, the board cannot make an affirmative decision without the support of each of Telstra Media, News and PBL; in other words, each has a right of veto. This fact has considerable significance for the present case. 231 Under the Foxtel Partnership Agreement, at least as it has worked in practice, Telstra Media appoints the Chairman of the board of Foxtel Management; News appoints the CEO after consultation with Telstra Media; and PBL appoints the Chief Financial Officer (cl 11.4). 232 The Foxtel Partnership Agreement provides that a ' Business Plan ' may not be amended without the approval of Sky Cable and Telstra Media (cl 10.1). It also provides that a number of matters require the unanimous consent of the members of the Foxtel Partnership for the time being. These matters include entering into any contractual obligation or commitment under which the business conducted by the Foxtel Partnership will incur a liability exceeding $2.5 million, other than as provided in the Business Plan (cl 10.2(i)). 233 The Foxtel Partnership Agreement originally provided that the directors, in exercising or performing their powers or duties as directors, could act solely in the interests of the party appointing them (cl 11.3(a)). This provision was, however, deleted by cl 4 of the ' BSD Side Agreement ' dated 25 July 1997, between Telstra, Telstra Multimedia, TNCL and Foxtel Management. Subject to limited exceptions, the BSD Side Agreement obliges each party to require its representatives on the board to act in the best interests of Foxtel Management. By virtue of other agreements, the details of which are presently irrelevant, this requirement became binding on PBL as well as the other parties. It holds subscription television broadcasting licences under the BS Act. Foxtel Cable is the entity that supplies the Foxtel Partnership's packages of pay television channels to residential and commercial subscribers and owns the supply business. It does so pursuant to the Foxtel Partnership Agreement. 235 Sky Cable and Telstra Media are the two shareholders in Foxtel Cable. Sky Cable owns 20 per cent of the shares and Telstra Media 80 per cent. 236 By the Management Agreement, Foxtel Cable delegated authority to the Foxtel Partnership to manage Foxtel Cable's business. The Foxtel partners, in turn, delegated authority under the Foxtel Partnership Agreement to Foxtel Management. For the most part, this usage causes no particular difficulty, since the context makes the sense clear. I have frequently followed the same practice, but in some parts of the judgment I have found it convenient to distinguish between the different concepts denoted by the expression. • Mr James Blomfield was employed by News between 1995 and 18 December 2001. He became the CEO of Foxtel Management after Mr Mockridge's resignation and remained in that role until 18 December 2001. Mr Blomfield was a director of Foxtel Management and Foxtel Cable from 31 March 2000 until 20 December 2001. • Mr Kimberley Williams succeeded Mr Blomfield as CEO of Foxtel Management in December 2001. From that date, Mr Williams was a director of both Foxtel Management and Foxtel Cable. • Mr Peter Campbell commenced employment at Foxtel Management in September 1999, as Manager of External Channel Relations. He continued in this role until June 2004, when he became General Manager of External Channel Relations and the Executive in Charge of the AFL. Prior to his appointment at Foxtel Management, Mr Campbell had been employed by a subsidiary of Seven Network. In his capacity as General Manager of External Channel Relations, Mr Campbell was responsible, among other things, for negotiating the supply of content for the Foxtel platform and for ensuring contractual compliance by Foxtel in relation to the AFL broadcasting rights. • Mr Angus Boyd was employed by Foxtel Management in December 1998 as a Strategic Planning Analyst. In September 2002, he became Senior Analyst, Strategic Planning and Special Projects. Mr Boyd prepared financial models in connection with the Foxtel Partnership's participation in the bidding for the AFL pay television rights in 2000. Messrs Williams, Campbell and Boyd also gave evidence. Mr Blomfield, however, did not. The shares in Fox Sports are held, through subsidiaries, by TNCL and PBL equally. The subsidiaries are, respectively, News and PBL Pay TV. 243 News first acquired an interest in what became Fox Sports in 1995, when it obtained a 25 per cent interest. In 1997, it increased its interest to 50 per cent and on 12 June 1998 it acquired the remaining 50 per cent share. At that point, Fox Sports was known as Liberty Sports Australia Pty Ltd, but it changed its name to Sports Investments Australia Pty Ltd on 21 August 1998. The most recent name change occurred, as noted above, in November 2003. 244 PBL acquired its 50 per cent interest in Fox Sports in November 1999, through PBL Pay TV. PBL exercised an option that had been granted to it on 3 December 1998, by the ' Fox Sports Option Deed ' between TNCL and PBL. At the time the option was granted, TNCL held all the shares in Fox Sports. 245 Since 1998, Fox Sports has compiled channels consisting primarily, but not exclusively, of sports programming. Its channels have included ' Fox Sports 1 ', ' Fox Sports 2 ', ' NRL on Optus ', ' Fuel ' (action sports and ' extreme lifestyle activities ') and the ' How to Channel ' (home renovations and lifestyle issues). At various points between 1998 and 2002, Fox Sports supplied sports channels to the major retail pay television platforms: Foxtel, Optus and Austar. 246 From 13 May 1998 to 20 February 2002, the Fox Sports channels were supplied to Foxtel on an interim month-to-month basis by way of a ' pass-through ' sub-licence from Austar. It is common ground that one reason for Foxtel's refusal to take C7 on its pay television platform between 1999 and 2001 was News' and PBL's desire (not shared by Telstra) to finalise a long-term supply arrangement between Fox Sports and Foxtel. The finalisation of such an arrangement was frustrated (so far as News and PBL were concerned) by Telstra's unwillingness to confirm arrangements it thought were too generous to Fox Sports and, consequently, were detrimental to Foxtel. In the event, Fox Sports and Foxtel entered an agreement on 20 February 2002 for the supply of Fox Sports to Foxtel ( ' Fox Sports-Foxtel Supply Agreement ' ) . The Agreement was for an indefinite term and allowed Foxtel to license the Fox Sports channels to Optus. By that time, of course, Fox Sports had acquired the NRL pay television rights. 247 On 3 September 1998, Fox Sports and Austar United, the seventeenth respondent, entered into the Austar Channel Supply Agreement (' Fox Sports-Austar CSA '). Under the Fox Sports-Austar CSA, Fox Sports agreed to supply Austar with channels until 30 June 2006. The Fox Sports-Austar CSA replaced an earlier agreement dated 13 May 1998. 248 In 2001, Fox Sports produced the ' NRL on Optus ' channel which it supplied to Optus. On 20 February 2002, Foxtel sub-licensed two Fox Sports channels to Optus on condition that they were rebranded ' Optus Sports 1 ' and ' Optus Sports 2 '. This sub-licence was an interim arrangement pending the coming into force of the Foxtel-Optus CSA (that is, the Foxtel-Optus Content Supply Agreement of 5 March 2002). The Foxtel-Optus CSA in fact came into operation in November 2002, once the conditions precedent were satisfied, and the interim Fox Sports licence was terminated with effect from 30 November 2002. Prior to joining Fox Sports, he was CEO of Multichannel Network Pty Ltd (' MCN '), the organisation through which pay television sells advertising. Among other responsibilities Mr Malone headed Fox Sports' ' Acquisition Team ' which formulated tactics for the acquisition of the NRL pay television rights in 2000. • Mr Jon Marquard commenced employment at Fox Sports in 1998 as Corporate Counsel, having at one time practised as a solicitor. In February 1999, Mr Marquard held the position of Director of Business and Corporate Affairs, and in January 2003 he became Fox Sports' Chief Operating Officer. Mr Marquard reported to Mr Malone (following the latter's appointment) and was a member of the Acquisition Team in 2000. Mr Marquard attended Fox Sports board meetings from 1999 and prepared the minutes. • Mr Adam Oakes became Director of Marketing at Fox Sports in April 2000 and in March 2003 he became Director of Marketing, Commercial and On-Air Promotions. It is a partner in the NRL Partnership with NRLI (which is, as has been seen, a subsidiary of News). The NRL Partnership owns the unified NRL Competition which resulted from the merger of the pre-existing ARL and Super League competitions. The NRL Partnership disposes of the television broadcast rights and other rights relating to the NRL Competition. 253 The NRL Partnership is governed by the ' Partnership Agreement - NRL Partnership ' (' NRL Partnership Agreement '), which was entered into on 14 May 1998, in consequence of the settlement of the Super League dispute. The terms of the NRL Partnership Agreement are referred to in Chapter 19 ([3071]-[3072]). 254 At the relevant times, the NRL Partnership was managed by the NRL PEC. NRLI was entitled to nominate three of the six members of the NRL PEC, while ARL was entitled to nominate the remaining three. The three NRLI nominees in late 2000 were Mr Philip, Mr Peter Macourt and Mr Stephen Loosley. The three ARL representatives were Mr Colin Love (the Chairman of ARL), Mr Nicholas Politis and Mr John McDonald. As I have noted, Mr Philip and Mr Macourt gave evidence in the proceedings; the other four members of the NRL PEC did not. 255 Under the terms of the ' Merger Agreement ', which resolved the Super League dispute, the NRL PEC awarded News the NRL pay television rights for a three year period from 1 January 1998. In December 2000, the NRL PEC awarded the NRL pay television rights to Fox Sports for the 2001 to 2006 seasons. The NRL Competition, although owned by the NRL Partnership, is operated and managed by NRL Ltd pursuant to the ' NRL Services Agreement ' of 14 May 1998. Each club receives a grant from NRL Ltd in consideration for its participation in the competition, but the clubs are not members or shareholders of NRL Ltd. The clubs cannot direct NRL Ltd or the NRL Partnership. 258 The board of directors of NRL Ltd deals primarily with matters related to the conduct of the NRL Competition, as distinct from major revenue matters such as the disposition of the NRL pay television rights. NRL Ltd has a CEO and numerous staff. At the relevant times, the CEO of NRL Ltd was Mr David Moffett and Mr David Gallop was the Director of Legal and Business Affairs. Neither gave evidence in the proceedings. The statement that the NRL PEC is the ' effective decision making organ ' should be understood as a reference to major revenue matters. In effect, it was intended to be an incorporated joint venture between SingTel Optus, then known as Optus Communications Pty Ltd; a United States corporation (Continental Cablevision Inc); Pay TV Holdings Pty Ltd; and Tallglen Pty Ltd (' Tallglen '), a subsidiary of Seven Network. SingTel Optus originally held 46.5 per cent of the shares in Optus Vision, but it acquired the remaining shares in Optus Vision in 1997. 261 At all material times the Optus Group, of which Optus Vision forms part, has provided a broad range of communications services. These include mobile services, local and international telephony, business network services, internet and satellite services, and pay television. 262 Optus Vision has provided pay television services since September 1995. For this purpose it has used the hybrid fibre coaxial cable network (' Optus Cable ') owned by a related company. The Optus Cable services parts of Sydney, Melbourne and Brisbane, but is unavailable to multi-dwelling units. By mid-2001, the Optus Cable passed and was capable of servicing about 1.4 million homes, representing about 20 per cent of Australian households at the time. 263 The Optus Cable is used not only to provide pay television services, but telephone and internet services. From 1998, Optus Vision ' packaged ' pay television with local telephony services and in 1999 it extended the concept of ' bundling ' to include internet services. In 2000, Optus Vision marketed a product called ' Optus Choices ' which enabled customers to bundle pay television, local and long-distance telephony and internet services. 264 As at January 2002, although Optus had an interest in the Optus B3 Satellite, it supplied pay television services by satellite only to a small number of customers. The satellite was, however, used both by Foxtel and Austar to deliver their pay television services. 265 Both Telstra and Optus continue to add to the reach of their respective cable networks. There is considerable overlap, in the sense that many households can be serviced by both networks. The Telstra network is approximately 70 per cent ' overbuilt ' by the Optus Cable, while the Optus network is about 80 per cent overbuilt by the Telstra Cable. (The different figures are explained by the greater reach of the Telstra Cable. As has been noted, on 30 June 1998, Optus Vision, Seven Network and C7 entered into the C7-Optus CSA, under which C7 agreed to provide sports programming to the Optus platform on a non-exclusive basis, including coverage of AFL matches, until 31 December 2008. Optus Vision independently acquired non-exclusive NRL pay television rights for the 1998 to 2000 seasons. It appears that these rights were granted to Optus Vision by News as part of the settlement bringing about the merger of the ARL and Super League competitions. 267 The C7-Optus CSA provided for C7 to receive a minimum subscriber guarantee (' MSG ') of approximately $30 million per annum, plus CPI adjustments. As I have noted, Optus Vision had a right to terminate the C7-Optus CSA if C7 did not have or lost the AFL pay television rights. Each of these provisions has played an important part in this case. 269 SingTel Optus is and has been at all material times the holding company of Optus Vision. In that capacity it guaranteed by deed poll (' CWO Deed Poll ') the performance of Optus Vision's obligations under the C7-Optus CSA. The parent company of SingTel Optus is now Singapore Telecommunications Ltd (' SingTel '), a Singapore corporation. SingTel acquired all shares in SingTel Optus in August 2001. At that time, the acquisition was SingTel's largest single offshore investment. 270 SingTel Optus' pay television business has been managed as part of its Consumer and Multimedia Division (' CMM '). The business is conducted through Optus Vision. Mr Lee was directly involved in SingTel's acquisition of SingTel Optus (previously Cable & Wireless Optus Ltd). He chaired the weekly SingTel Management Committee meeting. • Mr Christopher Anderson was the CEO of SingTel Optus from August 1997 to August 2004 and a director of SingTel Optus and Optus Vision throughout virtually all of that period. Mr Anderson was a member of the Executive and Management Committees of SingTel after SingTel's acquisition of SingTel Optus in 2001. Prior to joining SingTel Optus, Mr Anderson was Group Chief Executive of Television New Zealand. • Mr Michael Ebeid joined the Optus Group in 1995. In 1999, he joined CMM and in April 2000 he became involved in the pay television activities of CMM. At the time Mr Ebeid gave his evidence, he held the position of Director, Commercial Operations, of CMM. • Mr Paul Fletcher was the Director of Corporate and Regulatory Affairs at SingTel Optus from December 2001. He commenced his employment with Optus Vision on 23 March 2000 and became a director on 5 June 2002. In his capacity as Director of Corporate and Regulatory Affairs, Mr Fletcher was responsible, inter alia , for Optus' internal legal functions, regulatory issues and the ' commercial interconnect relationship ' with Telstra. Mr Keely's responsibilities included providing advice to the senior management on all issues relating to Optus' pay television operations. Table 3.5 reproduces that chart, which is an accurate, although not entirely comprehensive summary. Until 2002, NRL matches were the only winter ' marquee ' sporting events shown on Fox Sports' channels. • Since 1998, TNCL and PBL have each indirectly held a 50 per cent interest in Fox Sports. • Telstra has always indirectly held a 50 per cent interest in the Foxtel Partnership. Since late 1998, TNCL and PBL, through Sky Cable, have each held a 25 per cent interest in the Foxtel Partnership. • Under the terms of the Foxtel Partnership Agreement, no affirmative decision can be made by the board of Foxtel Management (which manages the business of the Foxtel Partnership) without the support of each of Telstra Media, News and PBL. It adopted that stance on the not unreasonable ground that no relief is sought against either Austar United or Austar Entertainment. 275 Austar commenced its retail pay television service in August 1995, via satellite. The Austar pay television service has been provided to regional areas of New South Wales, Victoria, Queensland and South Australia, as well as to Tasmania and most of the Northern Territory. Parts of Darwin are serviced by Austar's own cable network. By the end of June 2001, some 2.1 million householders in these areas could access Austar's service. As the result of Austar's migration from the Optus B3 Satellite to the Optus C1 Satellite, this had increased to about 2.3 million homes by the end of 2003. 276 Austar has not competed directly with either Foxtel or Optus for retail subscribers, since Austar services different geographic areas than those serviced by Foxtel and Optus. The one exception is on the Gold Coast, where Austar competes with the Foxtel Service. In conformity with its agreements with channel suppliers, including Foxtel, Austar does not offer its channels in the major Australian metropolitan areas (other than the Gold Coast). 277 As already noted, on 5 March 1999, C7 and Austar entered into the C7-Austar CSA which continued in force until 31 March 2002. By the Fox Sports-Austar CSA, made on 3 September 1998, Fox Sports granted Austar the rights to distribute the Fox Sports 1 and Fox Sports 2 channels in certain territories until 30 June 2006. On the same date, Fox Sports granted Austar the non-exclusive rights to telecast NRL matches for the 1998 to 2000 seasons in the same territories. 278 In 2002 Austar introduced bundling of mobile telephony and internet services (under the names ' Austarmobile ' and ' Austarnet ' respectively) with its pay television product. In September 2003, Telstra Pay TV obtained approval from the ACCC to bundle Austar's pay television service with Telstra's telecommunications services in areas serviced by Austar. 280 Ten operates the free-to-air television network known as ' Ten Network ' in Sydney, Melbourne, Brisbane, Adelaide and Perth. Ten makes programming available to affiliate stations which broadcast in Canberra, Hobart, regional Queensland, regional New South Wales, regional Tasmania and regional and remote Victoria. 281 As the result of an agreement with Nine and others, Ten acquired AFL free-to-air television rights from News for the 2002 to 2006 years. Seven and Ten joined forces in 2005 to bid for the AFL broadcasting rights for the 2007 to 2011 years. They were ultimately successful in acquiring the rights, through the exercise of Seven's last right of refusal. Shortly after their success was announced, minutes of order resolving the dispute between Seven and Ten were handed up in court. The AFL is a company limited by guarantee. Its members consist of life members and appointees of each club competing in the Australian Rules Football Competition conducted by the AFL. Since 1996, the AFL Competition has involved sixteen teams in five states competing over 22 weekly rounds, followed by the finals series. The season proper commences in March and concludes with the Grand Final in Melbourne at the end of September. 283 At the relevant times, Mr Wayne Jackson was the CEO and a director of the AFL. Mr Ron Evans was the Chairman and a director of the AFL, while Mr Graeme Samuel was a director and a Commissioner of the AFL. Mr Samuel resigned his position with the AFL shortly before he was appointed in 2003 to the position of Chairman of the ACCC. Of course, Mr Samuel was not Chairman of the ACCC at the times it was concerned with the various events recounted in this judgment. The participating clubs were all Victorian. This pattern continued for 85 years, until 1982, when the South Melbourne Football Club relocated to Sydney and became known as the ' Sydney Swans '. In 1987, one team from Perth (the ' West Coast Eagles ') and one team from Brisbane (then known as the ' Brisbane Bears ') joined the VFL. 285 In 1990, the name of the competition was changed to the AFL Premiership Competition. During the 1990s, three further teams joined the AFL: one from Adelaide in 1991 (' Adelaide Crows '); a second from Perth in 1995 (' Fremantle Dockers '); and a second team from Adelaide in 1997 (' Port Adelaide '). Following the 1996 season, one of the VFL's foundation clubs, the ' Fitzroy Lions ', merged with the Brisbane Bears and the merged entity became known as the ' Brisbane Lions '. In recent years, therefore, the AFL Competition has comprised 16 teams: nine from Melbourne; one from Geelong; one from Sydney; one from Brisbane; two from Adelaide; and two from Perth. 286 The AFL Competition season ordinarily starts in March and finishes on the last Saturday in September, when the Grand Final is played at the Melbourne Cricket Ground. During the regular season, there are 22 rounds, with eight matches played every round. Accordingly, the 16 clubs play a total of 176 matches prior to the finals. The matches are primarily played on Friday nights, Saturday afternoons and nights and Sundays afternoons. At the end of the regular season, the top eight teams participate in a final series comprising nine games played over four weeks, including the Grand Final. 287 Prior to the regular AFL Competition, a pre-season competition is conducted. This has taken different forms at different times, including round-robin and knock-out competitions. The rules in the pre-season competition games are slightly different from the rules applied in the regular competition. 288 State of Origin matches contested by State representative teams were staged by the AFL (and previously the VFL) between 1977 and 1999, but not since. (Presumably it is for this reason that State of Origin matches have been removed from the anti-siphoning list, which gives free-to-air television operators certain rights in respect of popular sporting events. ) Since 1984, the AFL and the Gaelic Athletic Association of Ireland have organised from time to time an International Rules Football Series (a hybrid version of Australian and Gaelic Football) between Australian and Irish representative teams. This has not always been an annual event, but International Rules games were held each year between 1998 and 2005. 289 The most significant source of revenue for the AFL has come from the sale of the AFL broadcasting rights. It is an agreed fact that the rights account for approximately 45 per cent of the AFL's revenue. Other sources of revenue for the AFL include gate receipts from the pre-season competition and finals series. The case arose out of attempts by News to establish Super League as a rival competition to that conducted under the auspices of ARL. 291 Rugby League in Australia grew out of moves in England in the 1890s to allow rugby players to receive payments. This led to what is now known as Rugby League emerging as a code, separate from Rugby Union, with its own rules. 292 The first premiership Rugby League competition in Australia began in 1908 under the auspices of the New South Wales Rugby Football League (' NSWRL '). The competition comprised nine teams, eight from Sydney and one from Newcastle. A separate competition began in Queensland in 1909. 293 Over time, some teams left and others joined the NSWRL. The first televised game took place in 1961 and the NSWRL secured its first sponsorship in 1962. By 1982, there were twelve teams in the competition, all from Sydney. Between 1982 and 1988, one team left the competition and five teams joined. All five were based outside Sydney and three were from outside New South Wales. 294 ARL was incorporated in 1986 as a company limited by guarantee. Thereafter the NSWRL conducted the competition on behalf of ARL. ARL controlled national initiatives and international contests. 295 In 1995, the number of ARL teams increased from fifteen to twenty, with the addition of four interstate teams and one from New Zealand. 296 In 1995, News set in place measures designed to start its own Rugby League competition. Following News' success in the Super League Case , the Super League competition got under way in 1997. The competition comprised ten teams, eight of which were formerly ARL teams. The ARL competition continued with twelve teams. 297 In 1998, ARL and News agreed to merge their competitions. NRL Ltd was formed in March 1998 to organise and conduct the unified NRL Competition on a national basis with fewer clubs than the aggregate of the pre-existing competitions. The structure of the competition and the role of the various entities has already been explained. 298 In 1998, the NRL Competition involved twenty teams. As the result of mergers and the exclusion of South Sydney, the number of teams was reduced to fourteen in 2000 (South Sydney challenged its exclusion under ss 45(2) and 4D of the TP Act , but ultimately failed: News Ltd v South Sydney District Rugby League Football Club Ltd [2003] HCA 45 ; (2003) 215 CLR 563). However, South Sydney was reinstated in 2002. Since the reinstatement, fifteen clubs have competed in the NRL Competition which, from 2003, has been known as the ' Telstra NRL Premiership '. Of the fifteen participating clubs, nine are from Sydney and one is based in each of Canberra, Melbourne, Newcastle, Brisbane, North Queensland and New Zealand. 299 Since 1998, the NRL Competition season has commenced in March each year and has concluded with the playing of the Grand Final in late September or early October. The number of rounds each season has varied from 24 to 26. As the NRL Competition involves fifteen participating clubs, there have been seven matches each round, with one team receiving a bye. Special arrangements are made during the rounds scheduled around the State of Origin fixture between representatives of New South Wales and Queensland. The eight top teams compete in the finals series, which comprises nine matches culminating in the Grand Final. 300 In addition to the NRL Competition and State of Origin matches, other Rugby League games are played under the auspices of the NRL Ltd. These include a New South Wales City versus New South Wales Country fixture and Rugby League Internationals involving the Australian representative team. The regulation of the television industry goes far beyond the matters to which I refer and, at the time of the hearing, was in a state of flux. I have confined the account to regimes that were in force at the relevant times and that were referred to, otherwise than in passing, in evidence or submissions. 302 In addition, I provide a brief, in no way complete, overview of free-to-air broadcasting in Australia, the form of which has been shaped by the regulatory regime. I also provide certain information on pay television broadcasting in Australia. However, other aspects of the history and structure of pay television in Australia are dealt with elsewhere in the judgment. In particular, the BS Act sets up a licensing regime for broadcasting services, regulates the content of such services and imposes restrictions on the ownership and control of broadcasting service providers. The ACMA Act transferred the functions of the ABA to the Australian Communications and Media Authority. However, since the ABA was the regulator at the times material to this litigation, I shall refer to its role under the BS Act , prior to the amendments made by the ACMA Act . 305 In performing its functions under the BS Act , the ABA is to promote the objects of the Act, including ' the economic and efficient use of the radiofrequency spectrum ' (s 23). Its functions include planning the availability segments of the ' broadcasting services bands ' (s 158(b)). This expression is defined by s 6 to mean that part of the radiofrequency spectrum that has been designated under s 31 of the Radiocommunications Act 1992 (Cth) as being primarily for broadcasting purposes and that has been referred by the Minister to the ABA for planning. 306 Where the Minister has referred a part of the radiofrequency spectrum to the ABA for planning, it must prepare ' a frequency allotment plan ' (s 25(1)). The plan determines the number of channels that are to be available in particular areas of Australia for the purpose of providing broadcasting services using that part of the radiofrequency spectrum. The ABA is also to prepare ' licence area plans ' (s 26(1)). These plans determine the number and characteristics, including technical specifications, of broadcasting services that are to be available in particular areas of Australia through the use of the broadcasting services bands. The licence area plans must be consistent with the relevant frequency allotment plan. 307 In order to provide a free-to-air or subscription (pay) television service, a person must have the appropriate licence issued under the BS Act . Penalties are imposed for contraventions (Pt 10, Div 1) and action may be taken by the ABA to stop any unauthorised service (Pt 10, Div 2). 308 A commercial free-to-air television operator must hold an individual ' commercial television broadcasting licence ' (ss 6, 12(1), 131). 311 All licences granted under the BS Act are subject to the standard conditions specified in Sch 2, Pts 1 and 2. The standard conditions relate to such matters as political broadcasts and the proper keeping of records. Commercial television broadcasting licensees are subject to the conditions imposed by Sch 2, Pt 3 (s 42(1)). Subscription television broadcasting licensees are subject to the conditions in Sch 2, Pt 6 (s 99(1)), while subscription television narrowcasting licensees are subject to the conditions specified in Sch 2, Pt 7 (s 118(3)). The conditions applicable to a subscription television broadcasting licence and a subscription narrowcasting licence include a requirement that ' subscription fees will continue to be the predominant source of revenue for the service ' (Sch 2, Pt 6, cl 10(2)(b); Pt 7, cl 11(2)). At the relevant times, there were in fact 27 licence areas for television in Australia. 313 Prior to 25 June 1998, the ABA was prohibited from allocating more than three television licences for the same area. From that date until 31 December 2006, the ABA has been prohibited from allocating any commercial television broadcasting licences, except in an area where fewer than two such licences have been allocated: ss 28, 28A. In consequence of these arrangements, each of the six largest capital cities in Australia has three commercial television services, as do several regional areas in the eastern states. Hobart and some regional areas have two commercial services. There are four ' solus ' regional markets, each of which has only one commercial service. At the time of the hearing, there were 53 commercial television broadcasting licences on issue. 314 The holder of a commercial television broadcasting licence is not permitted to hold or be in a position to exercise control of another commercial television broadcasting licence in the same licence area: s 53(2). A licensee is also prohibited, subject to certain exceptions, from providing commercial television broadcasting services under the licence outside the relevant licence area: Sch 2, Pt 3, cl 7(2A). The holder of a commercial television broadcasting licence cannot hold or be in a position to control commercial television broadcasting licences such that its combined licence area population exceeds 75 per cent of the Australian population: s 53(1). Sections 93 and 96 of the BS Act , inserted by the Broadcasting Services (Subscription Television Broadcasting) Amendment Act 1992 (Cth), provided for the allocation of subscription television broadcasting licences (s 93 was subsequently repealed). 316 The ABA must allocate one licence per service: s 96(2). Before allocating a subscription television broadcasting licence, the ABA must request the ACCC to provide a report: s 97(1). The report must advise whether the allocation of the licence would constitute a contravention of s 50 of the TP Act if the allocation of the licence were the acquisition of an asset by a corporation: s 97(2). The term ' service ' is not defined by the BS Act . However, there are dicta suggesting that the expression ' one licence per service ', which is used in s 96(2), suggests that each service is provided by a particular channel: Amalgamated Television Services Pty Ltd v Foxtel Digital Cable Television Pty Ltd (1996) 136 ALR 319, at 322, per curiam . The regime is central to the competing arguments relating to the identification of relevant markets. An understanding of the regime is also necessary to follow the nature and form of the transactions that have given rise to this litigation. If nothing was done, and market forces were allowed to prevail, there was a chance that a subscription service would acquire the exclusive right to televise such an event, and thereby deny everyone but its subscribers the opportunity to view it on television. Parliament thought this possibility unacceptable. Accordingly, it included in the Act some provisions that are generally called "the anti-siphoning provisions". These provisions do not force the free-to-air transmission of a declared event. Provisions having that effect would have cut across the underlying philosophy of the Act, namely, that it is generally for the national broadcasters (the Australian Broadcasting Corporation and Special Broadcasting Service) and commercial television broadcasting licensees to determine what programs to televise on the services provided by them. The anti-siphoning provisions operate indirectly. They encourage the free-to-air transmission of declared events by removing any incentive for a subscription service to "lock away" the exclusive rights. If it does so, it loses its own right to televise the event'. 319 As the Full Court pointed out in Foxtel Cable v Nine Network 73 FCR, at 431, the anti-siphoning provisions consist of two elements. First, s 115(1) empowers the Minister, by notice published in the Gazette, to specify an event or events of a kind, the televising of which should, in the opinion of the Minister, be available free to the general public. The Minister has power to amend a notice, for example by specifying an additional event to be included in the list: s 115(1A). An event specified in a notice is taken to be removed 168 hours after the end of the event unless a declaration to the contrary is made in the meantime: s 115(1B). Contravention of a condition of a subscription television broadcasting licence constitutes an offence: s 139(2). 321 The parties agree that the expression ' right to televise ... an event ' means that a free-to-air operator must have the right to televise the event as it happens or as soon thereafter as is technically feasible. It follows that a right in a pay television provider to broadcast the highlights of an event, or to broadcast the event several days after it takes place, does not involve a breach of cl 10(1)(e) set out above. The parties' agreement on this issue reflects the holding of the Full Court in Foxtel Cable v Nine Network 73 FCR, at 435. They will not necessarily be sporting events; the provisions could be used to cover an historical event like a special commemoration or visit. But all the events listed in the notice of 6 July 1994 were sporting events and this may be the future pattern. Either way, events are selected because the Minister is of the opinion that many people will wish to feel part of them, by seeing them as they occur, not by later seeing a television record of them. In the present context, we do not think it can be said that a national broadcaster or television broadcasting licensee has the "right to televise the event" unless that broadcaster or licensee can televise it as it happens, or as soon thereafter as is technically feasible'. The original list was expressed to continue for a period of ten years, until the end of 2005 (subject to amendment from time to time). A new list has been put in place for the period 1 January 2006 to 31 December 2010. Thus far, only sporting events have been placed on the anti-siphoning list. 323 An event can be removed from the anti-siphoning list in any one of three ways. First, as noted above, an event is automatically removed from the list seven days after it concludes, unless the Minister makes a declaration otherwise. 324 Secondly, by virtue of amendments to the BS Act which took effect on 20 July 2001, an event was automatically delisted six weeks before its scheduled commencement, unless the Minister published a declaration that the event continues to be specified in the notice: s 115(1AA), inserted by the Broadcasting Legislation Amendment Act (No 2) 2001 (Cth), Sch 1, cl 5. The period of six weeks was changed to 12 weeks as from 1 April 2005: Broadcasting Services Amendment (Anti-Siphoning) Act 2005 (Cth), Sch 1, cl 1. The Minister may publish a declaration under s 115(1AA) only if satisfied that at least one free-to-air broadcaster has not had a reasonable opportunity to acquire the right to televise the event concerned: s 115(1AB). It follows (as the parties agree) that a sporting event will now be automatically delisted 12 weeks before its scheduled commencement if the free-to-air broadcasters have had a reasonable opportunity to acquire the rights to televise the event, but have elected not to do so. 325 Thirdly, the Minister has a general power to remove an event from the list, although the amending notice is a disallowable instrument: s 115(2), (3). Accordingly, anyone may apply to the Minister to remove a particular sporting event or events from the anti-siphoning list. In practice, it appears that the Minister has not been prepared to remove an event unless satisfied that the free-to-air broadcasters have had a reasonable opportunity to televise the event. 326 At all material times, each match in the AFL Competition (including finals) and each match in the NRL Competition (including finals) was on the anti-siphoning list. Annexure A to this judgment sets out the events specified on the anti-siphoning list during the period November 1998 to December 2010. Annexure A omits events that have been removed from the list from time to time. In similar vein, if the ABC or SBS have acquired rights to an event and do not intend to use them, they must offer their unused live rights to each other. In recognition of the fact that it is common practice in the commercial broadcasting industry for rights to sporting events to be acquired by companies other than the licensee, the anti-hoarding rules also apply to persons who supply programs to commercial television broadcasting licensees'. It is a condition of each commercial television broadcaster's licence that it not contravene the anti-hoarding rule: BS Act , Sch 2, Pt 3, cl 7(1)(ha). Since the introduction of the anti-hoarding provisions in 1998, only two events have been designated by the Minister on the anti-hoarding list. The events were the soccer World Cups of 2002 and 2006. The section concerns only standards for children's programs and for the Australian content of programs. A licensee must comply with any applicable program standard as a condition of its licence ( BS Act , Sch 2, Pt 3, cl 7(1)(b)). 329 The ABA has determined a number of standards. Codes of practice are developed in conjunction with the ABA and are registered with the ABA if they conform to certain criteria (ss 123(1), (4), 124). If the ABA considers that a registered code of practice does not provide ' appropriate community safeguards ' in relation to certain matters, it must determine its own standard (s 125). 331 The relevant industry group for free-to-air broadcasters is Free TV Australia (formerly known as the Federation of Australian Commercial Television Stations (' FACTS ')) and, later, as Commercial Television Australia (' CTVA '). The relevant code of practice developed by Free TV Australia and registered with the ABA is the Commercial Television Industry Code of Practice July 2004 (' Free TV Australia Code '). 332 The conditions of commercial broadcasting licences impose other restrictions on the content of broadcasts. For example, licensees must not broadcast a program that has been refused classification or has been classified ' X ' by the Classification Board of the Office of Film and Literature Classification ( BS Act , Sch 2, Pt 3, cl 7(1)(g)). 333 The Free TV Australia Code imposes limits on the volume of free-to-air advertising by the licensee. For example, on any one day a licensee may schedule an average of no more than 13 minutes per hour of ' non-program matter ' between 6 pm and midnight, and an average of no more than 15 minutes per hour at other times. (' Non-program matter ' includes most paid advertising and certain program promotions. ) A channel may schedule up to 15 minutes of non-program matter in any hour between 6 pm and midnight, with different hourly limits applying at other times. The parties agree that these restrictions equate to a daily average of 348 minutes of non-program material; a weekly average of 2,436 minutes; and a monthly average of about 10,556 minutes. ASTRA has developed two codes of practice which are registered with the ABA: the Subscription Broadcast Television Code (' ASTRA Broadcasting Code '); and the Subscription Narrowcasting Television Code (' ASTRA Narrowcasting Code '). 335 The ASTRA Broadcasting Code applies to subscription broadcasting services within the meaning of the BS Act , while the ASTRA Narrowcasting Code applies to open and subscription narrowcasting services as defined in the BS Act . Licensees who provide both broadcasting and narrowcasting programming are subject to both ASTRA Codes. 336 Subscription television broadcasting licensees are subject to conditions that restrict content. For example, like a free-to-air broadcaster, a subscription television broadcasting licensee must not broadcast a program that has been refused classification or has been classified ' X ' by the Classification Board ( BS Act , Sch 2, Pt 6, cl 10(1)(f)) and there are extremely stringent restrictions on the broadcast of ' R ' classified programs (cl 10(1)(g)). There are, however, no regulatory restrictions on the ability of a pay television licensee, which operates a subscription television narrowcasting service under a class licence, to broadcast ' R ' classified programs. The ASTRA Narrowcasting Code requires that access to ' R ' classified programs be restricted by disabling devices. 337 Advertisements and sponsorship announcements were not permitted on pay television services until 1 July 1997. Broadcasting of advertisements and sponsorship announcements has been permitted since that date, subject to a subscription television licence condition that subscription fees remain the predominant source of revenue for the service (cl 10(2)(b)). Subscription television licensees are not otherwise subject to regulations restricting the volume of advertising. The statutory regime is relevant to Seven's case that Foxtel and Telstra Multimedia gave effect to a provision in the BCA, which conferred upon Foxtel exclusive rights of access to the Telstra Cable. Seven says that by this conduct, Foxtel and Telstra Multimedia contravened s 45(2)(b)(ii) of the TP Act. The account of the key provisions in this section is based in part on that of Beaumont J in Foxtel Management Pty Ltd v Seven Cable Television Pty Ltd [2000] FCA 1159 ; (2000) 102 FCR 464, at 468-469 [5]-[7]. 341 Section 152AB of the TP Act sets out the objects of Pt XIC. 342 The power to declare a service is conferred by s 152AL(3) of the TP Act. Before exercising the power, the ACCC must hold a public inquiry and prepare a written report. The declaration can only be made if the ACCC is satisfied that it will promote the long-term interests of end-users of carriage services or of services provided by means of carriage services. 343 The ' standard access obligations ' are set out in s 152AR of the TP Act. (Emphasis added. In addition, these areas are serviced by the two public national broadcasters, namely the Australian Broadcasting Corporation (' ABC ') and the Special Broadcasting Service (' SBS ') (together the ' National Broadcasters '). 346 The three commercial networks broadcast predominantly in the major capital cities. Other commercial broadcasters, mainly affiliated regional broadcasters, service regional areas and the smaller capital cities. (I refer to the three commercial networks and their regional affiliates as the ' Commercial Broadcasters '. In Australia, however, the free-to-air broadcasters have provided channels via terrestrial broadcasts. These transmissions have been in analogue format: that is, the transmission uses an analogue modulation technique. Each analogue free-to-air service provides a single channel for viewers that can transmit one continuous stream of programming and some limited data embedded in the main carrier signal, such as teletext. 348 Digital transmission of television broadcasts enables multiple programs to be transmitted simultaneously, using the same amount of radiofrequency spectrum as is used for analogue television. This form of transmission is known as ' multi-channelling '. The Commercial Broadcasters have not been permitted to transmit programs via multi-channelling, subject to a minor exception where a licensee is broadcasting live sports coverage of a sporting event which is delayed for reasons outside the licensee's control and, in consequence, the sporting event broadcast overlaps with a regularly scheduled news program. The National Broadcasters are permitted to transmit certain programs via multi-channelling, if the programs are not provided as part of a subscription service. 349 The regulatory scheme governing the introduction of digital free-to-air television was set up by the Television Broadcasting Services ( Digital Conversion) Act 1998 (Cth), which inserted Sch 4, headed ' Digital television broadcasting ', into the BS Act . The scheme requires a commercial television broadcasting licensee to comply with the Commercial Television Conversion Scheme (' CTC Scheme ') as a condition of its licence. The CTC Scheme, which was formulated by the ABA, specifies arrangements for the progressive conversion of commercial free-to-air television transmissions from analogue mode to digital mode. The ABA has also formulated a counterpart digital conversion scheme for the National Broadcasters. 350 Under the CTC Scheme, the ABA has prepared ' digital channel plans ' which allot additional channels to free-to-air broadcasters. This enables the broadcasters to transmit programs in Standard Definition Television (' SDTV ') and High Definition Television (' HDTV ') digital mode, as well as in analogue mode, during a 'simulcast period'. SDTV is the base format for digital television broadcasting and provides a wider picture and larger viewing area, in addition to CD-quality sound. HDTV is a high quality form of digital television broadcasting, providing cinema quality pictures and sound. 351 The simulcast period is to run for at least eight years from 1 January 2001. During the simulcast period, a licensee must achieve certain HDTV digital transmission quotas. At the end of the simulcast period, analogue transmissions are to cease. Schedule 4 to the BS Act provides, however, for a review of the arrangements for the simulcast period to be conducted by 1 January 2006. It appears that no such review had been conducted by the stipulated date. 352 Digital free-to-air television was introduced in Sydney, Melbourne, Brisbane, Perth and Adelaide in 2001 and extended thereafter to regional areas. In compliance with their obligations, each of the Commercial Broadcasters and the National Broadcasters has delivered both SDTV and HDTV digital signals, at the same time as transmitting in analogue format. 353 Although commercial broadcasting licensees are not permitted to ' multi-channel ' during a simulcast period, they are permitted to provide digital enhancements to their primary simulcast program, provided the enhancements are directly linked to, and contemporaneous with, that program. Digital enhancements enable a viewer to watch one or more streams of content simultaneously. For example, a viewer may be able to watch a cricket match and simultaneously display program enhancements, such as player statistics or highlights using ' picture-in-picture ' display technology. Digital enhancements may take the form of text, data, speech, music, sounds or visual images, or any combination of these. Table 4.1 records the television ratings for the Commercial Broadcasters and the National Broadcasters during that period, based on ratings in the five major metropolitan markets from 6 pm until midnight. Figures in brackets exclude the Olympics (weeks 38 to 41). I point out there that Austar did not compete directly with Foxtel or Optus, as it serviced different geographic areas (except on the Gold Coast). Austar went into liquidation in May 1998. The figures for Foxtel, for the period December 2002 to June 2004, include subscribers to Foxtel through Telstra Pay TV. 3. Both Foxtel and Austar launched their full digital services in March 2004. These terms were not defined in the Agreed Assumptions. However, the evidence indicates that ' basic ' refers to the basic package which all subscribers to a particular platform must take. The content of the basic package may vary considerably between platforms and over time. 358 A ' tier ' comprises a channel or a package of channels that subscribers to a platform can take in addition to the basic package. Where the tier comprises a single channel, it is often described as an ' a la carte ' offering or a ' stand alone ' channel. Ordinarily, a subscriber pays an additional monthly fee for the tier. Typically, content offered on a tier appeals to a particular segment of subscribers who are willing to pay extra for access to that material. 359 By way of illustration, the Foxtel basic cable package in December 2000 incorporated 29 channels, including Fox Sports 1 and Fox Sports 2 , Fox 8 , Sky Racing , Lifestyle , CNN and Sky News . The cost of the basic package was $37.95 per subscriber per month (' pspm '). A subscriber wishing to take movie channels on a tier or tiers paid an additional $10.00 or $20.00 pspm depending on the selection. Various add-on channels were available a la carte at an additional cost, ranging from $6.95 pspm to $14.95 pspm (for ' Adults Only '). 360 The arrangement between the pay television platform and the channel supplier whose products are on a tier can differ, depending on the content and its value as a subscription driver. The distributor may pay a licence fee for the channel on a tier by reference to the number of subscribers to the basic package, even though the subscribers to the tier will always be fewer than the subscribers to the basic package. This is usually known as payment ' as if on basic '. An alternative is for the licensing arrangement to be based on the number of subscribers to the tier. The simplest example, although there are various forms, is a licence fee calculated as an amount per subscriber (to the tier) per month. This occurs where a provider of pay television (not necessarily the compiler of channels) offers a package which combines pay television services with other products, such as telephony services. 362 Bundling appears to have commenced in Australia in 1996, when Optus provided free installation for pay television subscribers (worth $29.95 at the time) if they acquired local telephony from an Optus affiliate. In 1998, Optus packaged its pay television services with local telephony services. In 1999, Optus extended its bundling to Optus Internet and in 2000 to long-distance telephony services. In 2000, Optus reported that new pay television subscribers taking more than one bundled product had increased to 65 per cent. By the end of June 2000, more than 95 per cent of new Optus pay television subscribers were also taking local telephony services. 363 In July 2002, Telstra notified the ACCC that it proposed to offer the Foxtel Service bundled with telecommunications services. The ACCC approved this offering in November 2002. Prior to this, Telstra had been unable to offer a bundled product as News was not prepared to agree to Telstra reselling the Foxtel Service for this purpose. By May 2003, Telstra had signed up 100,000 customers to its so-called ' Rewards ' package, although not all customers taking the package would necessarily have been subscribers to Foxtel. 364 In 2002, Austar introduced bundling of mobile telephony and internet services with its pay television service. In September 2003, Telstra Pay TV obtained approval from the ACCC to bundle Austar's pay television service with Telstra's telecommunications services in areas that Austar then supplied (rural and regional Australia, Hobart and Darwin). Within the industry, the expression ' exclusively live ' connotes an entitlement in the holder of the rights to be the only broadcaster permitted to show the particular event live. However, other broadcasters may be entitled to broadcast the event on a delayed basis. The expression ' live and exclusive ' connotes an entitlement to show the event not only live, but to the exclusion of any other broadcaster, even on a delayed basis. 5 CREDIBILITY OF LAY WITNESSES [366] 5.1 General Observations [367] 5.2 Seven's Witnesses [385] 5.2.1 Mr Stokes [385] 5.2.2 Mr Gammell [399] 5.2.3 Mr Wise [408] 5.3 News' Witnesses [413] 5.3.1 Mr Macourt [413] 5.3.2 Mr Philip [420] 5.4 Foxtel's Witnesses [432] 5.4.1 Mr Mockridge [432] 5.5 Telstra's Witnesses [438] 5.5.1 Dr Switkowski [438] 5.5.2 Mr Akhurst [449] 5.6 Optus' Witnesses [458] 5.6.1 Mr Lee [458] 5.6.2 Mr Anderson [460] 5.7 Rule in Jones v Dunkel [465] 5.8 Document Deletion Policies [482] 5. Mr Hutley SC, for example, repeatedly accused Mr Stokes and Mr Gammell of deliberately telling untruths in the course of their evidence. Mr Philip admitted in his written statements that he lied to Mr Akhurst in December 2000 as part of an attempt to persuade Telstra to support a revised bid by Fox Sports for the NRL pay television rights. Mr Philip's admission that he had lied in his dealings with Telstra did not render him immune from accusations by Mr Sumption QC that he was not telling the truth in the witness box about his dealings with Telstra or his motives for certain conduct. Seven also submits that Mr Akhurst's evidence, in certain respects, was ' so lacking in credibility that it should be rejected ' and that he was ' generally evasive ' in the witness box. 368 Quite apart from challenges to credit, the parties disputed the reliability of at least some evidence given by most of their opponents' lay witnesses. For example, in his closing oral submissions, Mr Sumption seemed to abandon a rather half-hearted attempt in Seven's written submissions to challenge Dr Switkowski's credit in relation to certain aspects of his evidence. Instead, Mr Sumption submitted that Dr Switkowski had simply forgotten a great deal of material that he had known in 2000. In particular, Mr Sumption invited me to reject on that ground Dr Switkowski's evidence that, even if News' purpose in acquiring the AFL broadcasting rights included bringing about C7's demise, he did not appreciate that fact at the time he gave Telstra's support to News' bid. 369 In Australia, appellate courts recognise that there are ' natural limitations ' that affect the scope of an appeal on findings of fact in cases where the appellate court is confined to the record of the proceedings at first instance: Fox v Percy [2003] HCA 22 ; (2003) 214 CLR 118 at 125-126 [23] , per Gleeson CJ, Gummow and Kirby JJ; CSR Ltd v Della Maddalena [2006] HCA 1 ; (2006) 224 ALR 1 at 7 [17] , per Kirby J (with whom Gleeson CJ agreed). Furthermore, the appellate court does not typically get taken to, or read, all of the evidence taken at the trial. Commonly, the trial judge therefore has advantages that derive from the obligation at trial to receive and consider the entirety of the evidence and the opportunity, normally over a longer interval, to reflect upon that evidence and to draw conclusions from it, viewed as a whole ' . (Citations omitted. Nonetheless appellate courts have expressed caution about paying excessive deference to findings on credit based on an assessment of the demeanour or appearance of a witness. The ' subtle influence of demeanour ' seems now to be given less weight by appellate courts than was once the case: CSR v Della Maddalena 224 ALR, at 9 [23], per Kirby J (with whom Gleeson CJ agreed). Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility; but it tends to reduce the occasions where those principles are seen as critical ' . (Emphasis added. See also Expectation Pty Ltd v PRD Realty Pty Ltd [2004] FCAFC 189 ; (2004) 140 FCR 17, at 32 [67], per curiam . 372 A recent paper by the Chief Judge at Common Law of the Supreme Court of New South Wales has canvassed some of the literature casting doubt on the assumption that careful observation of a witness giving evidence will reveal whether he or she is lying: P McLellan, 'Who Is Telling the Truth? Psychology, Common Sense and the Law' (2006) 80 ALJ 655. In particular, there is a danger that a confident presentation by a witness may wrongly be taken as a guarantee of reliability and a hesitant presentation may wrongly be taken as proof that the witnesses is not telling the truth. Chief Judge McLellan also refers (at 664) to the psychological literature emphasising the fallibility of memory, especially its susceptibility to suggestion. What is remembered about an event is shaped by how that event was experienced, by conditions prevailing during attempts to remember, and by events occurring between the experience and the attempt at remembering. Memories can be altered, deleted and created by events that occur during and after the time of encoding, during the period of storage, and during any attempts at retrieval'. 373 The present judgment follows a trial at which a great deal of evidence was given by many witnesses. It is not an appellate judgment. Nonetheless, the observations in Fox v Percy are pertinent to the fact-finding process a trial judge is required to undertake. It is not inconsistent with those observations to observe that the importance of ' demeanour ' as an indicator of the reliability of a witness may vary according to the circumstances. It may be quite inappropriate, to take an example not relevant to this case, to regard an indigenous person's apparent unwillingness to make eye contact and hesitancy in answering questions as demonstrating untruthfulness. But if a confident and articulate witness becomes hesitant and defensive when confronted with documentary evidence apparently at odds with his or her own account of events, the witness' hesitancy might well suggest a lack of candour: see McLellan, at 662. 374 In this case, most of the lay witnesses gave evidence about events occurring some years before they signed their witness statements and an even longer period before they gave oral evidence in the proceedings. The crucial events occurred, for the most part, in 1999 and 2000. Accordingly, witnesses giving oral evidence in 2005 and 2006 were being asked to recall meetings, conversations and transactions that had taken place between five and seven years earlier. Similarly, when witnesses were asked about their motivation for particular actions, or their intentions at certain times, they were being asked to cast their mind back perhaps six or seven years, to the time when they took the actions or formed their intentions. It is expecting a great deal of any witness to remember clearly what was said at a meeting or what he or she was thinking at a given time from a distance of half a decade or more. It is even more difficult when the recollection necessarily involves reconstruction in the context of litigation. As Mr Sumption observed in his final oral submissions, it is difficult even for the most honest witness to recall when he or she first learned of something or what his or her opinion was at a particular time without the recollection being shaped by subsequent events or the heat of battle. Mr Sumption might have added that it is particularly difficult when the litigation is the outcome of a strategy formed well before the proceedings commenced. 375 As I have noted, an enormous volume of documentation (including electronically stored material) contemporaneous with the relevant events was produced or identified by the parties on discovery and in response to notices to produce (although, for reasons that I shall explain, the News parties produced relatively little). Much of this material comprises internal emails. These communications tend to be more revealing than more formal correspondence between parties, which is often expressed more circumspectly. (Of course, the experience in this case and others like it may curtail the frank exchange of views by email within large organisations or, alternatively, may encourage the early culling of electronic records, a practice enthusiastically implemented by News. Nonetheless, as I have explained in Chapter 1, there was a very large volume of documentation in evidence. In consequence, contemporaneous records often shed light on many of the disputed factual issues. Of course, contemporaneous records are not invariably reliable and a judgment may have to be made about their accuracy. But if there is no reason to doubt them, the records may be very helpful in determining where the probabilities lie. The minutes of a meeting or an email summarising a recent conversation, particularly where the documents are prepared by someone with no obvious axe to grind, often will provide the ' ounce of intrinsic merit or demerit ' that is worth pounds of fallible evidence derived from memories prone to distortion and reconstruction. 377 Mr Stokes and, to a lesser extent, Mr Gammell, for example, not infrequently gave evidence about the content of meetings or discussion that was at odds with contemporaneous records such as minutes or emails sent shortly after the discussion. In these circumstances, the records have assisted me to conclude that their accounts, insofar as they conflict with the contemporaneous records, are more likely to be the product of a coloured reconstruction of events than an accurate reflection of what actually occurred. Similarly, where a witness' account drawn from memory is difficult to reconcile with (in the language used in Fox v Percy ) the ' objectively established facts ', I tend to regard the account with some scepticism. 378 This is not to say that I have been relieved from the need to assess the credibility of key witnesses, at least in relation to certain aspects of their evidence. Sometimes there are conflicts between their accounts of events that must be resolved. Sometimes I have been required to determine whether a witness' account of his intentions or motivation is likely to be correct (none of the lay witnesses was female). Sometimes I have been required to determine what would have happened in a ' counter-factual world ', an assessment that may depend, in part, upon what the witnesses concerned say they would have done in a hypothetical set of circumstances. 379 In assessing both credit and reliability it is necessary to remember the kind of men who gave lay evidence. Virtually all were executives of large media companies or companies with large media interests. Some were very senior executives: Mr Stokes (Seven); Mr Macourt (News); Dr Switkowski (Telstra); and Mr Anderson and Mr Lee (Optus). Others were less senior, but usually held very responsible positions. As might be expected, the witnesses were, generally speaking, both intelligent and knowledgeable about their respective industries or fields of work. All were involved in what they saw as intense competition with rivals, albeit in the context of heavily regulated industries in which allegiances can shift from time to time. It is fair to say that none of the witnesses had any obvious difficulty in expressing himself or (except in certain instances of illness or understandable weariness) in following the questions put to him, although not all were equally articulate. 380 The witnesses had undertaken varying degrees of preparation for giving their evidence and had different perceptions of the litigation and their role in it. Some, plainly enough, felt aggrieved that they had been embroiled in the litigation. For example, in a moment of frustration, when his veracity was under challenge, Mr Mockridge said that he regarded the case as ' bizarre ' and the fact that he was in the witness box as also ' bizarre '. Mr Philip, not surprisingly in view of his admissions, manifested clear signs of discomfort at various points in his cross-examination. 381 Mr Stokes was clearly one of the driving forces behind the proceedings instituted by Seven. Perhaps surprisingly, he was prepared to undergo what he must have known would be a long and searching cross-examination in which his credibility would come under sustained attack. While Mr Stokes may not have foreseen quite how long and searching the cross-examination would be, he appeared on the surface, with a few exceptions, to be relatively unruffled by the experience. 382 In my opinion, Mr Stokes' generally calm demeanour in the witness box illustrates the caution that is necessary before relying on a witness' appearance or behaviour as a clear indication of the reliability or otherwise of his or her evidence. As Seven points out and I accept, Mr Stokes was subject to a vigorous, sometimes aggressive cross-examination conducted in the full glare of publicity (although I do not regard the cross-examination as having exceeded the bounds of propriety). During his 14 days of cross-examination, Mr Stokes remained unfailingly calm and polite even in the face of repeated claims that his evidence was fabricated. For the most part, Mr Stokes' answers were laconic. 383 Mr Stokes showed considerable self-control and great determination throughout his period in the witness box. These characteristics were particularly striking, since Mr Stokes is clearly accustomed to being in control of his business environment. Occasionally this became apparent as when, in response to a question, he commented somewhat sharply that he was ' not used to being instructed by one of our managers in what to do '. 384 The question, however, is what inferences, if any, should be drawn from Mr Stokes' controlled demeanour. Seven submits that on the basis of his demeanour that I should infer that Mr Stokes is a man of ' sincere and strongly held convictions ' and that his evidence was given ' honestly and with care '. There is little doubt that Mr Stokes is a man of sincere and strongly held convictions, although I would have reached this conclusion independently of his demeanour when giving evidence. Mr Stokes' demeanour demonstrated clearly enough that he was well able to suppress outward manifestations of the emotions that must have been stirred by the nature of the cross-examination and by his inability to control the course of the proceedings. However, I do not think that Mr Stokes' generally calm and controlled demeanour in the witness box, of itself, provides a great deal of assistance in assessing Mr Stokes' reliability on contested issues. This, however, is not to suggest that Mr Stokes' demeanour when responding to particular questions was not of assistance in making findings on factual questions. There were clearly occasions, despite his self-control, when he exhibited signs of discomfort when giving evidence that appeared to be implausible. It is quite another for him to have been willing to give evidence. 386 In retrospect, it may have been possible for Seven to conduct this litigation without Mr Stokes going into the witness box. In his final oral submissions, Mr Sumption was at pains to contend that issues of credit, so far as Seven's witnesses are concerned, go primarily to causation and damages, rather than liability. No doubt this submission recognises the difficulties in the path of accepting some of the evidence given by Seven's witnesses. But it also reflects the fact that Seven perhaps might have run its case without Mr Stokes subjecting himself to cross-examination. In the absence of Mr Stokes, Seven might have been foreclosed from persisting with its more extravagant claims for relief, but for the most part these have been effectively abandoned in any event. 387 Mr Stokes' willingness to give evidence is somewhat perplexing. Not only must he have known that he would face a gruelling cross-examination, but it must have been apparent to him well before he stepped into the witness box, that his account of events was likely to prove vulnerable at many points. As became clear in the course of cross-examination, his evidence was repeatedly at odds with the contents of the contemporaneous documentation. Time after time, Mr Stokes asserted that important discussions had taken place at board meetings or elsewhere, when the relevant minutes or other contemporaneous records contained no reference to them. He also maintained that he had been unaware of matters that, according to the records, had been discussed in his presence. This judgment is replete with examples. 388 Mr Stokes is plainly a highly intelligent, shrewd and determined person. These attributes, and others, have undoubtedly contributed to his very considerable business success. It would be surprising if a person of Mr Stokes' intelligence and shrewdness did not appreciate the difficulties in the path of accepting much of his evidence, insofar as it was a matter of dispute. It would be particularly surprising, given that Seven had access to and availed itself of legal advice at every stage of the litigation (and indeed on many occasions beforehand). This is not a dispute (or series of disputes) in which expense has been spared. Mr Stokes' legal advisers would have had every opportunity to draw his attention, in an appropriate way, to the apparent disparities between his version of events and the contemporaneous documentation. 389 In assessing Mr Stokes' evidence I have taken into account a number of factors in his favour. An example of what I regard as an important concession was his agreement that the successful offer Foxtel made for the AFL pay television rights (through the Foxtel Put) was ' a good price ' (for Foxtel). 391 Even taking these matters into account, however, there were simply too many occasions on which Mr Stokes' evidence was implausible for me to regard him as a reliable witness on disputed issues. Sometimes it is extremely difficult or impossible to reconcile his version of events with the contemporaneous records, the reliability of which there is no good reason to doubt. Sometimes Mr Stokes' evidence flies in the face of incontrovertible facts. Sometimes, he changed his evidence when confronted with material that made it virtually impossible to maintain the position he had previously adopted. Sometimes Mr Stokes' evidence conflicted with that of other witnesses (including, on occasions, witnesses called by Seven) whose accounts are, in my view, reliable. 392 So far as contemporaneous records are concerned, there may be, as Mr Sumption submits, a difference between an apparently reliable record that omits reference to a discussion or event that a witness says took place, and a similar record that includes reference to a discussion or event that the witness denies occurred. However, Seven adduced no evidence to counter the inference that the minutes of board and committee meetings within Seven were intended to be reasonably reliable records of the meetings prepared by competent people. In any event, it is often difficult to think of a plausible reason why the contemporaneous records would have omitted reference to a particular discussion or event that Mr Stokes said took place, if indeed it did. Further, Mr Stokes on a number of occasions denied knowledge of important information, such as the state of C7's negotiations with Austar, that the contemporaneous documentation overwhelmingly suggests was drawn to his attention. 393 A trial judge in civil proceedings should exercise caution before pronouncing that a witness has given deliberately false evidence. Often it is necessary only to determine whether the witness' evidence, insofar as it is relevant to the issues, should be accepted in whole, in part or not at all. It may not matter very much, for the purposes of deciding the litigation, whether a witness found to be unreliable has told deliberate untruths or has given unsatisfactory evidence for other reasons. 394 However, in this case a sustained and vigorous attack was mounted against Mr Stokes' credit, including his honesty as a witness. I think it appropriate to observe that, although some of the particular attacks on Mr Stokes' credit lacked cogency, there were occasions on which, in my opinion, he gave evidence that he knew was not true. One example was a particularly unconvincing denial that he did not share the objective of others within Seven of ' ramping ' the price that News (through Fox Sports) would ultimately have to pay for the NRL pay television rights by outbidding Seven. Mr Stokes participated in a conference at which the objective was discussed and, on his own admission, said nothing to dissociate himself from the views expressed there. Mr Gammell gave evidence that everyone at the meeting agreed with the ramping objective. Internal Seven documentation makes it clear that ramping was, at the very least, a critical (if not the only) objective underlying the bidding by Seven for the NRL pay television rights. Mr Stokes' evidence on this issue was not only implausible but, I must conclude, deliberately false. 395 Similarly, I must conclude that Mr Stokes' professed ignorance about the state of negotiations between Seven and Austar could not have been a mere failure of memory. This evidence went to the damages sought by Seven and Mr Stokes understood its importance. Mr Stokes repeatedly denied that matters came to his attention over a substantial period of time, notwithstanding much documentary evidence to the contrary. The inaccuracy of Mr Stokes' evidence on this point, in my view, was not the product of inadvertence. 396 Having said that, it is also appropriate to record my view that the unreliability of Mr Stokes' evidence was, in part, a product of his reconstruction of events through the prism of self-interest, layered with more than a little wishful thinking. Mr Stokes' evidence demonstrates that he was extremely resolute and persistent in pursuit of his and Seven's business objectives, sometimes to the point of obstinacy. His relentless attempts to enlist the ACCC as an ally in Seven's battles with its opponents are examples of both persistence and, to a marked degree, apparent over-optimism. 397 Mr Stokes demonstrated a tendency both in his actions and evidence to see the commercial world, particularly the propriety of his competitors' conduct, in rather black and white terms. (This trait has not proved an insuperable obstacle to Seven itself switching allegiances, as shown by its alliance with Ten in bidding for the AFL broadcasting rights in 2005. ) A rather Manichaean view of the commercial world may or may not explain Mr Stokes' propensity to engage in litigation (a propensity of which the Respondents sought to make much, although it hardly seems to be unique in the television industry). But it may help to explain how he could believe that particular discussions or events occurred, or that certain beliefs were expressed or opinions held, when the objective evidence strongly suggests otherwise. A firm grasp of the facts, in the lawyer's sense, is evidently not a prerequisite to business success. 398 In summary, I cannot accept Mr Stokes as a reliable witness on matters that are in dispute, especially where there is contemporaneous documentation or cogent oral evidence that conflicts with his account. He came to Australia in 1981 and worked for a company controlled by Mr Stokes. Mr Gammell returned to Scotland in 1984, but after five years came back to Australia to take up a position as General Manager of ACE, Mr Stokes' private company. Later Mr Gammell assumed the title of Group Managing Director of ACE and has continued in that position ever since. 400 Mr Gammell became an alternate to Mr Stokes as a director of Seven Network in 1995 and a non-executive director in 1998. There has clearly been a very close working relationship over the years between Mr Stokes and Mr Gammell. This relationship continued throughout the period relevant to this case, except for three months from early July 1998, when Mr Gammell was overseas. 401 Like Mr Stokes, Mr Gammell generally appeared unruffled in the witness box, notwithstanding that his credibility was repeatedly challenged. He, too, displayed considerable self-control during his evidence. 402 Mr Gammell made a number of concessions readily enough. For example, Mr Gammell acknowledged that he had told Ms Lowes of Telstra that Seven's attempts to secure retail access for C7 via the Telstra Cable was a pressure tactic to get C7 onto the Foxtel platform, although he gave contradictory evidence as to whether he had admitted to Ms Lowes that C7 was not in truth looking for retail access via the Telstra Cable. He agreed that his conversation with Mr Falloon on 4 November 1999, in which Mr Falloon said ' hell will freeze over ' before C7 got onto Foxtel, had taken place in the context of a discussion about C7's application for a right of access to the Telstra Cable, rather than in relation to C7's attempts to gain wholesale access to the Foxtel Service. Mr Gammell also accepted that he had framed a particular bid for the NRL pay television rights with the express purpose of creating division within the NRL PEC and that Seven's bid for the NRL pay television rights was designed in part to ' ramp ' the price that News or Fox Sports would have to pay for the rights. 403 Despite these concessions, I formed the view that Mr Gammell's evidence was sometimes unreliable. Difficulties with his account became apparent when he claimed that over a period of four months from November 1998 he did nothing to follow up the state of negotiations for the supply of C7 to Austar and Foxtel. I have taken into account that Mr Gammell was out of Australia on several occasions between November 1998 and March 1999 and that there were other matters to occupy his time. Even so, I find his evidence that he did nothing to ascertain the position in relation to Austar and Foxtel implausible. Among other things, Mr Gammell met with Mr Mounter at least twice during this period (once in London). Mr Gammell had every opportunity to make inquiries on issues in which he evidently had a close interest. 404 Similarly, I found implausible Mr Gammell's evidence that he had remonstrated with Mr Mounter before the board meetings of 26 March 1999 and 28 May 1999, about the latter's approach to the negotiations with Austar and Foxtel. Mr Gammell agreed that he did not raise the issue at either board meeting. His apparent reticence is very hard to accept, given that he regarded Mr Mounter's conduct as threatening the very viability of C7 and that, by the time of the second board meeting, Mr Gammell thought that Mr Mounter's continued tenure as CEO was untenable. 405 My reservations about the reliability of Mr Gammell's evidence are reinforced by his claim that he had understood a reference in Mr Mounter's CEO's report of 16 June 1999 to ' $4-$5 a sub ' as meaning that Mr Mounter was negotiating with Foxtel to pay C7 a fee of $4.00 to $5.00 pspm on basic or as if on basic. Mr Gammell had earlier conceded that he knew that Mr Mounter was ' sticking to his guns ' --- that is, negotiating with Foxtel for the supply of C7 on a tier, not on basic. My reservations are compounded by the fact that the documentation relating to Mr Mounter's departure from Seven in July 1999 makes no reference to his stance on the negotiations for the sale of C7 to Austar and Foxtel. Mr Gammell's explanation for yet another apparently significant omission I found to be unconvincing. 406 Other aspects of Mr Gammell's evidence were equally unsatisfactory. For example, he claimed to have instructed Mr Wise in July 2000 to correct a draft budget to remove a revenue figure based on $2.00 pspm for C7 on a tier on Foxtel. Yet no correction was ever made to replace that figure with the figure that Mr Gammell said he regarded as appropriate, namely $4.00 to $5.00 pspm on basic (which would have increased revenue by perhaps $30 million per annum). Mr Gammell had a motive for dissociating himself from the negotiations with Foxtel for the placement of C7 on a tier, namely to bolster Seven's damages claim. In my opinion, that motive coloured his evidence. 407 My overall impression is that Mr Gammell's evidence is something of a mixture of frankness and unreliability. I think that parts of his account have been strongly influenced, unconsciously or otherwise, by his perception of the case Seven seeks to advance. It is therefore necessary to approach his evidence on contested issues with caution, especially where it is unsupported by or inconsistent with contemporaneous documentation or other reliable evidence. Early in his evidence, in particular, Mr Wise presented as a careful and generally quite precise witness. While his memory of some events was imperfect, the gaps in his recollection during that portion of his evidence were no more than might be expected of a witness asked to remember conversations or dealings that took place years earlier. 409 As Mr Wise's cross-examination continued, however, his evidence became less convincing in a number of respects. For example, after being pressed for some time, Mr Wise conceded that letters he sent to the AFL on 20 and 22 November 2000 had been carefully crafted following discussions with Mr Stokes and Mr Gammell, in terms that were misleading. He then disputed the proposition that the AFL had in fact been misled, giving reasons that I found difficult to understand and, in any event, unpersuasive. 410 Shortly after this evidence, Mr Wise gave an equally unpersuasive explanation as to what he had meant by suggesting that Mr Stokes tell the AFL that Seven had received no credit for having ' suffocated ' soccer by not showing it on free-to-air television. Mr Wise's explanation of what he intended to convey in his ' dummy bid ' email of 24 November 2000 to Mr Gammell was also somewhat confused and, at least insofar as Mr Wise denied any knowledge that Seven intended to ' ramp ' News in relation to the NRL rights, was not at all persuasive. 411 There were other occasions on which Mr Wise was reluctant to admit the obvious or on which his evidence was simply self-contradictory. An example of the former was his reluctance to acknowledge that he appreciated that Seven's public campaign against SingTel would be likely to damage SingTel's reputation. An example of the latter was Mr Wise's apparently unequivocal evidence that, at the end of 2000, his understanding was that negotiations between Seven and Foxtel for the carriage of C7 had ceased with Seven's offer of 17 November 1999. Mr Wise later claimed that he had performed certain calculations in December 2000 by reference to negotiations for the carriage of C7 on Foxtel. Those negotiations had taken place in November 2000 between Mr Stokes and Mr Blomfield. His attempt to reconcile the two pieces of evidence did not succeed. In addition, Mr Wise, like Mr Stokes, was forced from time to time to disavow the accuracy of contemporaneous records in order to support his version of what had taken place. 412 In my view, some of Mr Wise's evidence was coloured by his perception of where Seven's interests lay in the proceedings. I have therefore found it necessary to approach carefully Mr Wise's evidence on certain contested issues. Care is especially warranted when Mr Wise's evidence is difficult to reconcile with contemporaneous documentation and lacks internal consistency. Seven's Closing Submissions argue that I should ' treat Mr Macourt's evidence with reserve in some respects '. The particular criticisms made by Seven are that he had a tendency to engage in advocacy and that some of the explanations he gave for particular conduct did not withstand scrutiny. For example, Seven says that Mr Macourt's evidence as to his reasons for refusing to allow the C7 channels to be taken by Foxtel fell away in cross-examination. 414 Mr Macourt's credit is important, since he was a decision-maker on behalf of News and played a significant role in Foxtel's affairs. Mr Philip reported to him. As Mr Sumption acknowledged in his oral closing submissions, in order for Seven to make out its case that News and Foxtel's objective was to destroy C7, it is necessary to reject Mr Macourt's evidence to the contrary. 415 For the most part, Mr Macourt answered questions in a straightforward manner. He quite often gave his evidence in an emphatic and convincing fashion, particularly when disagreeing with propositions put to him by Mr Sumption. I think it is significant that Mr Macourt gave what seemed to me frank answers to questions that were clearly intended to elicit material unfavourable to the Respondents' interests. For example, he readily accepted that between 1998 and 2002 he would have preferred C7 to go out of business. He agreed that in 1998 he had every intention of preventing C7 being taken by Foxtel (although he did not accept the motives suggested to him by Mr Sumption). 416 Mr Macourt also candidly admitted to some matters that do not necessarily do him credit. He said, for example, that he would not have informed Telstra in December 2000 that C7's offer for the NRL pay television rights was likely to ' disappear ', even though that was his view at the time. Similarly, Mr Macourt acknowledged that he would not necessarily have contradicted Mr Philip in a face to face meeting with Telstra, even if Mr Philip was putting propositions that Mr Macourt did not consider to be correct. Mr Macourt also acknowledged that he had authorised supply arrangements involving Fox Sports without informing Telstra in advance, because he did not want Telstra to prevent the arrangements being implemented. Mr Macourt certainly had a very good grasp of the legal issues in the case and was astute to discern the direction his cross-examination was taking. Perhaps for this reason there were a few occasions when I thought that he was rather too quick to claim that he had no recollection of particular events. In making that observation, I take into account that Mr Macourt's recall of events that occurred years before was plainly not as precise as, for example, that of Mr Mockridge. 418 There were also occasions when Mr Macourt was forced to acknowledge that he had overstated the position in his written statements. It is fair to say that some of the reasons Mr Macourt gave in his written statements for refusing to allow Foxtel to take C7 he found difficult to sustain in the witness box. In my view, however, his evidence that he was unwilling to allow Foxtel to take the C7 channels until the dispute with Telstra concerning the pricing of Fox Sports had been resolved, withstood cross-examination. 419 My overall general impression is that Mr Macourt's evidence was given truthfully and with reasonable care, even though he saw himself as an advocate for News. Nonetheless, there are some aspects of his evidence that warrant close scrutiny in the light of the contemporaneous documentation and the objective circumstances. For example, I think that Mr Macourt adverted to the possible impact on C7 of Foxtel's acquisition of the AFL pay television rights to a greater extent than he was prepared to concede. But I accept the broad thrust of his evidence as to his state of mind and the matters he took into account in his decision-making. He had previously been a partner in a large law firm, then known as Allen Allen and Hemsley, specialising in commercial and corporate work. Mr Philip's clients included News and Foxtel. He said that he did not conduct litigation while at the firm, but had been ' [p]eripherally involved in litigation ' from time to time. In the course of his work, Mr Philip acquired familiarity with the competition provisions of the TP Act. At the material times, Mr Philip also occupied the positions that have been identified in Chapter 3 ([202]). He played an important part in the events that gave rise to this case. 422 Mr Philip gave the impression of a man who quite willingly subordinated his sense of ethics and propriety to a single-minded determination to advance the commercial interests of his employer. Mr Philip admitted to dishonestly attempting to persuade Telstra to contribute an extra $13 to $14 million to Fox Sports' bid for the NRL pay television rights. Mr Philip also admitted that he had destroyed the fax by which he made his request to Telstra and that he had asked the recipients to do likewise because he feared that Seven might use the document to sue him for breach of confidentiality in relation to C7's bid for the NRL pay television rights. The fax only came to light because at least one recipient did not comply with the request. 423 Mr Philip was not the architect of News' policy of deleting the central record of emails after three days, but he was an enthusiastic proponent of deleting all emails from his own computer after 14 days. I did not find convincing Mr Philip's attempts to explain why he had taken that course. 424 When confronted in cross-examination with his own admissions as to his dishonest conduct (which Mr Philip had disclosed in a statement filed in the course of the trial), Mr Philip's responses conveyed the impression that up to that point he had not fully grasped the magnitude of what he had done. Be that as it may, the evidence shows that at the time Mr Philip went into the witness box, News had taken no action either to terminate his employment or to discipline him. A possible, although unlikely, explanation for this lack of action is that News had not had sufficient time to act on Mr Philip's admitted dishonesty. If it remains the case that News has taken no disciplinary action against Mr Philip, it would reflect very seriously indeed on News' standards of commercial morality. 425 In any event, for a solicitor still holding a practising certificate to engage in deliberately dishonest conduct calls out for further inquiry by the authority responsible for professional discipline. I propose to request the Registrar of the Court to forward a copy of this judgment to the Law Society of New South Wales for its consideration and, if necessary, referral to the appropriate bodies. 426 As I observe in Chapter 19, Mr Philip's admissions of dishonesty do not necessarily mean that his evidence was untruthful in all or, indeed, in any respects. However, there are some parts of his evidence that I do not accept. For example, as I explain in Chapter 19 ([2984]ff), I reject Mr Philip's evidence that he did not deliberately disclose information to Mr Akhurst of Telstra concerning C7's bid for the NRL pay television rights. His evidence on that issue was confused, implausible and singularly unsatisfactory. 427 I found other parts of Mr Philip's evidence difficult to accept. For example, he denied contemplating that C7 had a real chance of acquiring the NRL pay television rights because he intended to urge the NRL PEC to accept the Fox Sports offer regardless of the merits of C7's offer and he expected the other members of the NRL PEC to follow suit. Yet on 13 December 2000, during a period of frenetic action in relation to the AFL and NRL pay television rights, Mr Philip found time to create a draft call option to be exercised by Foxtel Management against C7 if the latter secured the NRL pay television rights. Mr Philip professed not to remember why he created the document at such a late stage, a disclaimer that did not ring true, particularly as he told the teleconference of 13 December 2000 that there was a serious risk that C7 might acquire the NRL pay television rights. The document created by Mr Philip does not necessarily mean that his evidence about his voting intentions was untrue. But I do not think he was being frank with the Court in professing not to remember why he had created it. 428 Mr Philip was willing to go to considerable lengths to present a picture that bore little relationship to reality. As Seven submits, his efforts to maintain the fiction that there was no consortium bidding for the AFL pay television rights reflected the extremely wishful thinking of a lawyer seeking to present an artificial (and false) picture of the facts, rather than the true position. Mr Philip also seemed to me to downplay the extent to which he was involved in commercial decision-making by News or by the entities of which he was a director. 429 In assessing Mr Philip's evidence, it is appropriate to take into account that, apart from hard copy documents retained in his own files or copies of electronic or paper communications retained by others, he deleted the records of his emails. He did so, in part, because he appreciated that communications of this kind might be useful in litigation. Seven has been denied the opportunity to cross-examine Mr Philip by reference to the deleted material. 430 For these reasons, I do not regard Mr Philip as a reliable witness. His evidence therefore needs to be scrutinised carefully, including his claims as to his thought processes in relation to particular decisions, negotiations or communications. 431 This caution does not lead me to conclude that I should reject all of Mr Philip's evidence. Sometimes it is supported by the contemporaneous documentation or by other witnesses whose evidence I consider to be reliable. For example, I think it likely that Mr Philip deferred to Mr Macourt in the manner he described. I also think it likely that Mr Philip was told and accepted that News' position, for sound commercial reasons, was that C7 should not be taken on Foxtel until the long-term contractual arrangements between Fox Sports and Foxtel had been secured. Similarly, I think it likely that Mr Philip believed that a decision by Foxtel not to take C7 pending the award of the AFL pay television rights would enhance Foxtel's chances of successfully bidding for the rights. Unlike some witnesses, Mr Mockridge had taken considerable trouble to re-familiarise himself with the contemporary documentation bearing on his evidence. He thus seemed to be well-prepared for his time in the witness box. 433 Seven accepts that Mr Mockridge's ' evidence as to factual matters is generally reliable ', but submits his evidence should nonetheless be treated with some reserve. Seven argues that Mr Mockridge had a tendency to exaggerate or frame his evidence in a way that assisted News. 434 Mr Mockridge was not a reticent witness. He did not hesitate to request clarification of the cross-examiner's questions, nor to correct what he regarded as erroneous assumptions underlying questions. --- To answer that question in the negative, I'll have to accept your statement that it was an excuse, and it wasn't an excuse. But the essence of the question is no'. I also gained the impression, as Seven suggests, that he saw himself as something as an advocate for Foxtel in these proceedings. This stance was consistent with his frank acknowledgement that he had seen his role as CEO of Foxtel as in part that of an advocate, for example to allay the ACCC's concerns about merger proposals. --- I think if --- I would state it more strongly. If the reality of pay TV and free TV being in the same market is accepted , there is no grounds for the ACCC intervention. --- I understood it [to be] in Foxtel's interest for the reality of the marketplace to be accepted by the regulator, yes'. (Emphasis added. At another point he underplayed the conflict in the Telstra-News relationship in the first half of 1999. He acknowledged that there had been ' differences of view ' but insisted, not very persuasively, that ' broadly this was a successful relationship '. 437 It is necessary to bear these matters in mind when assessing Mr Mockridge's evidence. Nonetheless, I consider him to be generally a reliable witness, whose account of events was mostly consistent with the contemporaneous documentation and who showed a good recall of significant events. Generally speaking, he was prepared to make concessions where appropriate. There were several occasions when I found Mr Mockridge's version of events to be not entirely convincing, but overall I thought that his evidence was given truthfully and with some care. Mr Sheahan certainly challenged Dr Switkowski's credibility in cross-examination. Specifically, as Mr Sheahan explained in dealing with objections to certain questions, he sought to contradict Dr Switkowski's denial that he (Dr Switkowski) had known in 2000 that the purpose of News and PBL was to ' kill C7 '. Mr Sheahan also sought to contradict Dr Switkowski's evidence that he was not conscious that the transactions to which he committed Telstra on 13 December 2000 would have the effect of destroying C7 as a viable business. 439 To that end, Mr Sheahan suggested to Dr Switkowski in cross-examination that Telstra had a powerful motive to forego any scruples about the fate of C7 when it came to securing the cooperation of the other Foxtel partners in expanding the scope of Foxtel's business. Dr Switkowski agreed that he supported the idea of an expansion of Foxtel's activities in certain respects. The thrust of the questioning was that such an expansion, which required the support of both News and PBL, would ' unlock ' value in Foxtel, to the advantage of Telstra as a 50 per cent partner in the business. The assumption underlying the questioning appeared to be that Dr Switkowski was prepared to sacrifice Foxtel's immediate commercial interests (by paying too much for the AFL pay television rights), in order to gain rewards from a more valuable Foxtel business further down the track. In addition, Mr Sheahan asked a number of questions that went only to Dr Switkowski's credit, although the answers did not cause me to doubt the reliability of Dr Switkowski's evidence. 440 In addition to these matters, Mr Sheahan put directly to Dr Switkowski that he had formed the view in about September 1999 that the goal of News and PBL, in refusing to allow C7 access to the Foxtel platform, was ' to run C7 out of business '. Dr Switkowski denied that he had formed such a view. Mr Sheahan also questioned Dr Switkowski about a conversation he had with Mr Stokes at a dinner meeting which took place on 31 May 2000. Dr Switkowski accepted that Mr Stokes may have said (as he claimed) that both Seven and C7 would be brought down if they lost the AFL pay television rights. However, Dr Switkowski said in evidence that he interpreted Mr Stokes as dramatising the importance of Seven acquiring the AFL broadcasting rights and as warning Telstra off Seven's ' territory '. 441 Despite the challenges to Dr Switkowski's credit in cross-examination, Seven's written submissions, as I have noted, make only limited criticisms of his evidence. Indeed, the submissions concede that Dr Switkowski's denials that he had been told by his executives that News and PBL wished to kill C7 ' probably have the ring of truth '. 443 As I have noted, Mr Sumption confirmed in his closing oral submissions that Seven makes no challenge to Dr Switkowski's credit and that it does not suggest that he was deliberately untruthful in his evidence. Instead, Mr Sumption submitted that Dr Switkowski ' had forgotten a great deal of the material that he once knew in 2000 '. According to Mr Sumption, Dr Switkowski had come into the transaction involving the AFL broadcasting and NRL pay television rights at a late stage (' from a great height ') and it would therefore not be surprising if he had forgotten his state of mind at the time. 444 Clearly enough, Dr Switkowski's recollection of the events about which he gave evidence was far from perfect. He readily accepted in cross-examination that he did not remember certain matters about which he was asked. It is also true, as Dr Switkowski himself pointed out, that he was primarily concerned about strategic issues arising in his management of an extremely large telecommunications company worth, in 2000, some $70-$80 billion. Questions concerning Telstra's role in pay television, for the most part, were not at the forefront of his mind, despite his membership of the pay television sub-committee of the board. Nonetheless, in my view, Dr Switkowski generally demonstrated a surprisingly good recall of the events in which he was involved and of the issues requiring decisions to be made at the time. On more than one occasion, his recollection, unaided by reference to documents, turned out to be supported by the contemporaneous materials. 445 It is also significant that Dr Switkowski's attention was drawn to the AFL broadcasting rights well before the critical teleconference of 13 December 2000. For example, earlier in 2000, Dr Switkowski attended meetings and made decisions about ' Project Chess ', a plan that contemplated that Telstra itself would bid for and acquire the AFL broadcasting rights for 2002 to 2006. Dr Switkowski met with Mr Stokes on 31 May 2000 and had been briefed in preparation for that meeting. In late October and early November 2000, he had discussions with Mr Chisholm and others about Foxtel's possible acquisition of the AFL pay television rights. He was well aware of the strategic issues arising from the relationship between Telstra and the other Foxtel partners. 446 Once Seven accepts that Dr Switkowski's credit is not in issue, I have little hesitation in accepting his evidence that he was not aware that the likely consequence of the acquisition of the AFL broadcasting rights by News and the sub-licensing of the AFL pay television rights to Foxtel would be the demise of C7 or its demise as an entity capable of seriously challenging Fox Sports. Given Dr Switkowski's good recall of other matters and the significance of the transaction to which he was committing Telstra (even though it was relatively modest by Telstra's standards), I do not accept Seven's submission that in the witness box he simply forgot his state of mind at the time. 447 For completeness, I should add that I accept that Dr Switkowski held the views he expressed in his evidence about Mr Stokes' litigious propensities, notwithstanding his willingness to do business with Mr Stokes or Seven on a number of occasions. I see no inconsistency between Dr Switkowski's evidence and his actions, given the need for Telstra and Optus (on the one hand) and Seven (on the other) to cooperate on certain matters, such as advertising. 448 The fact that several passages in the statements of Dr Switkowski and Mr Akhurst are identical possibly may reflect on Telstra's legal advisers, but I do not think that, of itself, it affects the reliability of the evidence in those statements. Finally, the relatively minor differences in the recollection of Dr Switkowski and Mr Stokes as to the content of their discussions on 31 May 2000 are no more than might be expected from participants to a conversation that took place many years earlier. His involvement in the issues concerning Telstra and Foxtel became greater from about July or August 1999, although the process was gradual. 450 Mr Akhurst did not seem to have examined the extensive contemporary documentation in depth before giving his evidence. Leaving aside matters in which his involvement was peripheral, this meant that his recollection of some events and communications was vague and, in certain respects, inaccurate. As I have already remarked, this of itself is no more than is to be expected when a witness is asked about matters occurring at least five years earlier, particularly when, in this case, Mr Akhurst had no particular reason to pay close attention to some of the documents to which he was taken in cross-examination. 451 Nonetheless, I formed the view that there were occasions when Mr Akhurst was inclined to take refuge in being unable to remember matters that he preferred not to address directly. For example, Mr Akhurst said that he could not recall that, after receiving a June 2000 memorandum from Telstra's Legal & Regulatory Department, he appreciated that Seven's public position was that C7's business would be in jeopardy if it did not secure the AFL pay television rights. I think Mr Akhurst must have appreciated at the time that this was Seven's position and that the probability is that he realised that in the witness box. 452 Another example is Mr Akhurst's inability to recall being told by Mr Fogarty (on 31 October 2000) that Foxtel had indicated that acquiring the AFL pay television rights ' will negate C7 '. Even when shown the email, he maintained that he may have skimmed over it and thus could not remember it. I think it is likely that Mr Akhurst appreciated at about this time that if Seven failed to acquire the AFL pay television rights, the consequences for C7 might be very serious. By this time, Mr Akhurst appreciated (as he accepted in evidence) that if Seven lost the AFL pay television rights Optus and Austar would be entitled to terminate their content supply agreements with C7. 453 Because of my concerns about aspects of Mr Akhurst's testimony, I have scrutinised carefully his evidence on the central issues, especially his reasons for Telstra giving support to the bids by News and Fox Sports for the AFL broadcasting and NRL pay television rights. Nonetheless, I think that the substance of his evidence on these issues should be accepted. I reach this conclusion in part because Mr Akhurst's account was consistent with contemporaneous documentation. For example, Mr Akhurst's evidence that he was influenced by Mr Chisholm's view that Foxtel should acquire the AFL pay television rights from the AFL, is supported by contemporaneous documentation showing that Mr Chisholm indeed expressed that view. An email of 20 November 2000 from Mr Akhurst to Dr Switkowski supports Mr Akhurst's evidence that he did not think that Telstra's support for Foxtel acquiring the AFL pay television rights involved anti-competitive conduct. Mr Akhurst was told by Mr Philip in written communications that there was a sound commercial justification for each of the bids to be made by News (supported by Foxtel) and by Fox Sports. I have also taken into account that Mr Akhurst's evidence was consistent with that of Dr Switkowski, whose evidence I accept as reliable. 454 Mr Akhurst was cross-examined on his explanation for deciding to lend Telstra's in-principle support to the Foxtel Put (at a fee of $17.5 million per annum) at Foxtel's board meeting of 9 November 2000. The cross-examination demonstrated that Mr Akhurst might well have made further inquiries to verify what he had been told about the merits of the proposal and to probe further Mr Fogarty's assessment of the possible consequences of concentrating the AFL and NRL sports rights in the hands of News and Fox Sports. I also think it probable that Mr Akhurst, although he was reluctant to acknowledge it, appreciated that there was a real risk that if C7 lost the AFL pay television rights it might not be able to survive as a supplier of sports channels. 455 I do not think, however, that the cross-examination established that Mr Akhurst formed the view that the objective of News, PBL or Telstra in seeking the AFL pay television rights was to kill C7 or otherwise severely harm it as a supplier of sports channels. Appreciating that there was a risk that the loss of the AFL pay television rights might threaten C7's survival is very different from understanding that this was a substantial objective sought by News or PBL in bidding for the AFL pay television rights. The risk was an incident, as Mr Akhurst saw matters, of the ordinary processes of competition for the AFL pay television rights. 456 Much less do I think that the cross-examination established that Mr Akhurst thought that Telstra should support any such objective. Mr Akhurst considered that there were valid commercial reasons for Telstra to agree to the Foxtel Put and for Foxtel to acquire the AFL pay television rights. In particular, he considered that the rights would drive Foxtel's subscriber growth and benefit the business generally. In reaching this conclusion, I have not overlooked that Mr Willis had expressed the view in early November 2000 that C7 stood between a sports monopoly and some competition. Mr Akhurst said, and I accept, that he was sceptical of the proposition that Fox Sports would be able to extract monopoly profits. 457 Nor did the cross-examination establish that Mr Akhurst's state of mind in relation to these matters changed materially between 9 November 2000 and 13 December 2000, when the teleconference took place. The course of events at the teleconference and Dr Switkowski's evidence support Mr Akhurst's denial that he allied himself with any objective of News, PBL or Foxtel to kill C7. That challenge to his credit failed, as Seven recognises. Seven makes no submission that Mr Lee should not be regarded as a witness of truth, although it contends that his reconstruction of the ' counter-factual ' (what Optus would have done had the Foxtel-Optus CSA not been executed) should not be accepted. 459 In my view, Mr Lee was an impressive witness. I agree with Optus' submission that his responses were not only articulate, but well-informed and careful. He demonstrated a good recall of the events in which he was involved and his evidence was consistent with the relevant contemporaneous documentation. I regard his evidence as reliable. He was also a director of SingTel Optus and of Optus Vision for most of that period. Following the acquisition of SingTel Optus by SingTel in 2001, Mr Anderson became a member of the Executive and Management Committees of that company. In June 2004, Mr Anderson became a non-executive director of PBL and some of its affiliated companies. Thus, at the time he gave evidence, he was an officer of one of the respondents, but not of SingTel Optus or its associated companies. 461 Mr Anderson was a somewhat unusual witness. He presented as a competent executive who had been instrumental in turning around the fortunes of Optus during his tenure. He seemed, however, very concerned to persuade Mr Karkar, the cross-examiner, that he (Mr Anderson) was providing a truthful and, so far as he could recall, a complete account of events. Perhaps for this reason, he tended to be somewhat voluble in his responses. His answers were also peppered with comments that in some circumstances might be taken as indicative of a less than candid witness. For example, he frequently prefaced answers with ' I am not trying to be unhelpful ' or ' frankly '. 462 Mr Anderson gave evidence over three days, but only for less than an hour on the third day. On the first two days he was clearly handicapped by a cold or influenza, a handicap which may have affected his concentration at some points. On the third morning, when he was cross-examined about whether SingTel Optus' CMM would have been closed down if the CSA with Foxtel had not been entered into on 5 March 2002, he seemed to be less affected by illness. Be that as it may, he was particularly firm and clear in rejecting repeated suggestions that, in that hypothetical situation, SingTel Optus would have elected to keep CMM going notwithstanding the losses it had incurred. 463 Mr Anderson, unlike some other witnesses, had clearly not made a detailed study of contemporaneous documentation in preparation for giving evidence. On the whole, however, while there were some gaps in his memory, his recollection of the course of events was reasonably sound. 464 In general, despite the odd features of his evidence, I consider Mr Anderson to be a reliable witness. I think that there were occasions on which he protested a little too much and became somewhat defensive. He was also concerned to work out where the cross-examiner was heading. But I reject the attacks on his credit. It seems to me that his evidence on the principal issues was largely unshaken in cross-examination. There was no dispute as to the principles to apply, although there were strong disagreements as to the significance of the principles in the circumstances of this case. These inferences, to be sure, cannot fairly be made except upon certain conditions; and they are also open always to explanation by circumstances which made some other hypothesis a more natural one than the party's fear of exposure. But the propriety of such an inference in general is not doubted'. This proposition extends to a potential witness in the party's camp. A potential witness is normally regarded as within the camp of a particular party if it would be natural for that party to call the witness, or if the party could reasonably be expected to call the witness: RPS v The Queen [2000] HCA 3 ; (2000) 199 CLR 620, at 632 [26], per Gaudron ACJ, Gummow, Kirby and Hayne JJ; O'Donnell v Reichard [1975] VR 916, at 929, per Newton and Norris JJ. 469 The rule in Jones v Dunkel only applies where a party is required to explain or contradict something: Schellenberg v Tunnel Holdings Pty Ltd [2000] HCA 18 ; (1999) 200 CLR 121, at 142-143 [51], per Gleeson CJ and McHugh J, approving J D Heydon, Cross on Evidence (6 th Aust ed, Butterworths, 2000), at [1215]. No inference can be drawn unless evidence is given of facts "requiring an answer"'. (Footnotes omitted. Moreover, although the trier of fact may draw that inference, it is not appropriate to infer that the absent witness' evidence would have exposed facts unfavourable to the case of the party failing to call the witness: Brandi v Mingot (1976) 12 ALR 551, at 559, per Gibbs ACJ, Stephen, Mason and Aickin JJ. 471 The joint judgment of the High Court in Brandi v Mingot approved the analysis in O'Donnell v Reichard , a decision of the Full Court of the Supreme Court of Victoria. Moreover, if a party chooses without explanation not to give evidence, the rule in Jones v Dunkel does not require the court to refrain from drawing any inferences in that party's favour. That may follow from the proposition that it can be assumed that the evidence of the witness who fails to give evidence would not support the witness' case. But except in a case where the inferences are equally open, each case will involve the Court weighing up all the relevant evidence to determine whether an inference should be drawn. Put another way, I do not think that Jones v Dunkel will ever lead to the conclusion that where there are competing inferences one inference will, in all cases, of necessity have to be accepted by the Court where the inference to be drawn does not depend upon evidence which the non-participating witness might give, or even where it might, if other evidence justifies the drawing of the inference'. Cross on Evidence (7th Aust ed), at [1215], n 251, gives the example of a meeting attended by five people. No Jones v Dunkel inference will ordinarily arise in relation to evidence concerning the meeting if some of the participants are called. Similarly, if the senior officers responsible for making a decision give evidence of the decision and their reasons for making it, the rule in Jones v Dunkel does not apply merely because more junior officers have not been called, even if they contributed to the decision-making process: Apand Pty Ltd v The Kettle Chip Company Pty Ltd (1994) 52 FCR 474, at 490, per curiam. In that chapter, Seven submits that inferences adverse to one or more Respondents can be drawn from the failure to call no less than 25 potential witnesses. The potential witnesses identified by Seven include very senior executives, such as Mr Lachlan Murdoch, the CEO of News at relevant times; Mr Blomfield, the CEO of Foxtel Management until December 2001; Mr James Packer, Chairman of PBL; and Mr Mansfield, the Chairman of Telstra. The list also includes less senior personnel, or those who were more peripheral to the relevant events. Potential witnesses within these categories include Mr Greg Willis, a director of Telstra Media and Foxtel Management; Mr Brenton Willis, a Project Manager with Telstra Media; Mr Dalgliesh, Director, Marketing of Optus' CMM division; and various officers of NRL Ltd and ARL. Had all the potential witnesses identified by Seven been called, the case would have run for at least another 30 or so hearing days. 475 I am not entirely sure of the purpose of Seven's submissions on this topic. Seven appears to submit that, as a general proposition, inferences adverse to the various Respondents should be drawn from the failure to call witnesses within their respective camps. The attempts made by Mr Macourt, and to a lesser extent Mr Philip, to distance Mr Murdoch from these events should not be accepted'. The submissions do not, however, at least at this point, identify the factual questions in respect of which inferences adverse to News should be drawn by reason of its failure to call Mr Murdoch. 476 Similarly, Seven submits that Mr James Packer was ' actively involved in all relevant facets of the case pleaded by [Seven] '. Seven points out, for example, that Mr Packer participated in the teleconference of 13 December 2000 and held a meeting with Mr Lachlan Murdoch, Mr Chisholm of Telstra and Mr Chris Anderson of Optus and which opened the way to the Foxtel-Optus CSA. Seven invites me to find that Mr Packer was as involved as Mr Murdoch in the relevant events. However, its submissions do not explain precisely which inferences adverse to PBL should be drawn from Mr Packer's unexplained absence from the witness box. 477 If the point of these submissions is simply to establish that Mr Murdoch and Mr Packer should be regarded as within News' and PBL's camps respectively, for the purposes of the rule in Jones v Dunkel, I have no difficulty with that proposition. It seems to me clear that each should be so regarded. The critical question is then whether News' failure to call Mr Murdoch, or PBL's failure to call Mr Packer, justifies drawing an inference against those parties and in favour of Seven on particular factual issues. As the authorities show, whether such inferences should be drawn will depend on the nature of the factual issues raised by the pleadings, the totality of the evidence relating to those issues and the extent to which the evidence of Mr Murdoch or Mr Packer might reasonably be thought to elucidate the matters in dispute. The significance of the unexplained absence of any potential witness from the witness box cannot be determined in the abstract. 478 This is not to deny that it may be necessary, when considering the inferences that should be drawn in relation to specific factual questions, to take into account that one or other of the Respondents has not called a potential witness from their camp who could have been expected to explain or contradict something. An example is Mr Stokes' account of a meeting with Mr James Packer, said to have taken place on the weekend of 9 and 10 December 2000. Clearly, Mr Packer could have been expected to give evidence contradicting Mr Stokes' account if that account was inaccurate. Mr Packer did not do so. 479 A second example is Foxtel's failure to call Mr Blomfield to give evidence about his conversations with Mr Fogarty of Telstra in late October or early November 2000 in which he said words to the effect that the acquisition of the AFL pay television rights was ' about killing C7 '. Contrary to News' submissions, I find that Mr Blomfield was in News' camp at the time the hearing took place notwithstanding the circumstances in which his employment was terminated. Clearly he could have given evidence explaining his comments. Mr Blomfield's unexplained absence from the witness box is therefore a factor (but only one factor) to be taken into account in determining the significance of his comments. 480 Contrary, however, to the tenor of some of Seven's submissions, the unexplained failure to call Mr Packer or Mr Blomfield does not require me to accept the evidence of Mr Stokes or to infer from Mr Blomfield's comments that Foxtel (or some of the Foxtel partners) had the objective of killing C7. These factual issues must be determined in the light of the totality of the evidence. In the result, I do not accept the substance of Mr Stokes' account of his conversation with Mr Packer, despite PBL's failure to call Mr Packer. Similarly, although I give some weight to Mr Blomfield's comments, I do not regard them as decisive or compelling on the question of whether I should infer that Foxtel had the purpose of killing C7 that Seven attributes to it. 481 It must also be borne in mind that although Mr Murdoch and Mr Packer (and other potential witnesses identified by Seven) may have participated in significant conversations, this does not mean that there is any real dispute as to what occurred. For example, Ms Lowes of Telstra prepared a detailed file note of a conversation between Mr Murdoch and Mr Blount (CEO of Telstra) on 17 December 1998, the accuracy of which there is no reason to doubt. Similarly, there is no real dispute as to the substance of what was said at the teleconference of 13 December 2000, at which the Master Agreement was made. In any event, four witnesses who had attended the teleconference gave evidence: Mr Macourt, Mr Philip, Dr Switkowski and Mr Akhurst. In these circumstances, there is no room for the application of Jones v Dunkel in relation to the contents of the discussion. According to Mr Philip, email traffic within News is stored on the local computer and ' synchronised ' to a central disk storage. Between 1998 and 2002, the practice was to delete the material stored centrally after a period of three days, by overwriting the back-up disks. 483 The effect of this policy is to delete any record of email traffic, both incoming and outgoing, after three days, except to the extent that the creator or recipient of an email chooses to retain it. The individual may retain a copy of the email, either by retaining it on his or her hard drive, or by printing out the email and storing it in a paper file. It appears that News discovered fewer than 50 emails in electronic form, although doubtless more would have been discovered as part of paper files. 484 Mr Philip claimed that he printed out important emails and retained them in his files. However, his practice was to delete emails permanently from the hard drive of his computer after about two weeks. His explanation for this practice was that he thought it ' sensible to be precise about what you retain and don't retain '. In these circumstances, I think the appropriate course is to take an approach analogous to the rule in Jones v Dunkel . That is, if the evidence as a whole is consistent with a particular inference relating to Mr Philip's conduct or intentions, that inference may be easier to draw by reason of the absence of contemporaneous internal News documentation that might have shed light on the true position. 486 There is no direct evidence that other officers of News were prepared to destroy documents in the same way as Mr Philip. However, the paucity of News' discovery of emails suggests that internal emails damaging to News' interests would not come to light unless someone chose to retain a hard copy. An approach analogous to the rule in Jones v Dunkel might therefore be appropriate if the evidence on a particular point is unclear and it is likely that internal News emails would shed light on the true position. 487 There is no evidence as to PBL's policy relating to the retention or deletion of electronic communications. (PBL called no lay witnesses. ) However, it appears that PBL and Nine discovered between them only 30 emails for the period 1998 to 2001. Of course, this surprisingly low number might have been the consequence of practices quite different from those adopted by News. There is certainly no evidence of the deliberate destruction of unhelpful documents. 488 News' document deletion practice raises real issues for the conduct of litigation of this kind. Although there has been no suggestion that News' general policy is unlawful, Seven has been deprived, to some extent, of the opportunity to cross-examine News' officers by reference to contemporaneous emails. I was not told how many emails were discovered in paper form or were preserved by recipients outside News, so the precise extent of any disadvantage is hard to assess. Even so, care must be taken to ensure that cynical business practices are not rewarded by forensic advantages. 489 Having said that, I think the impact of News' document deletion policy on the conduct of this case was not as serious as it might have been. Both Mr Macourt and Mr Philip had roles outside News. Neither Foxtel Management nor Sky Cable appears to have implemented a policy similar to News. In any event, the documentary evidence includes many contemporaneous communications by Mr Macourt and Mr Philip, including internal Foxtel communications or communications between the Foxtel partners. Discussions in which Mr Macourt or Mr Philip (or both) participated were often recorded by others, such as Ms Lowes of Telstra. The same is true of meetings attended by Mr Lachlan Murdoch. 490 In the end, each disputed factual issue must be resolved by reference to the evidence as a whole. This includes News' document deletion policy, but the policy is only one factor to take into account in evaluating the totality of the evidence. The outline is substantially in chronological order, but is not intended to cover all relevant events and transactions during this period. More details are provided, particularly in relation to developments towards the end of the period, elsewhere in the judgment. In April 1995, it became the first broadcaster to commence providing retail pay television services, using the name ' Galaxy '. Optus Vision commenced supplying pay television services by cable in September 1995, while the Foxtel cable service commenced in October 1995. 493 In November 1993, the AFL granted companies related to Seven Network the exclusive free-to-air and pay television rights for the 1993 to 1998 AFL seasons (' AFL-Seven Original Licence '). Although pay television was not scheduled to commence until 1995, the AFL agreed to permit live, unrestricted pay television coverage of six Saturday night games per season in each of the 1995 to 1998 seasons and at least twelve Sunday matches played in Melbourne in each season. The purpose of the joint venture was to establish a sports channel to be known as ' Premier Sports ' (which became ' Fox Sports ' in early 1996). Premier Sports commenced broadcasting in January 1995, and was operated by Premier Sports Australia Pty Ltd (' Premier Sports Australia ') on behalf of the joint venture. 496 Australis commenced broadcasting pay television services, including Premier Sports, via satellite and Multipoint Distribution Service (' MDS ') in April 1995. At this time neither News nor PBL had yet acquired any interest in the Fox Sports business. The interest of News was held through Sky Cable. Foxtel was to deliver pay television services on the Telstra Cable from October 1995. This arrangement was formalised in March 1995 ([226]). The parties agreed to the terms on which Seven would be invited to participate in the joint venture. At this time Seven held the AFL broadcasting rights. The Alliance was defined as the overall relationship between TNCL and its subsidiaries (such as News), on the one hand, and Telstra and its subsidiaries on the other. The Umbrella Agreement, which established the basis for the Foxtel Partnership, was amended and restated on 14 April 1997. It is more fully described below ([523]ff). 500 By the end of June 1995, Foxtel Cable had been formed and Telstra had apparently transferred certain pay television broadcasting licences to it. Telstra Media (wholly owned by Telstra) and Sky Cable (then wholly owned by News) together had commenced carrying on the business of the Foxtel Partnership. Eight Galaxy channels were to be made available to Foxtel over a 25 year period, with Foxtel to make payments on a per subscriber basis, subject to an MSG (minimum subscriber guarantee). The Galaxy package included Premier Sports (later known as Fox Sports). Telstra and News each took a significant equity stake in Australis. In April 1995, the Trade Practices Commission (the predecessor to the ACCC) announced that it would not take any action in relation to the TNC Heads of Agreement. By April 1995, the Galaxy package included Premier Sports, Showtime/Encore, TV1, Arena, Max, Discovery, Red and CNBC Asia. 502 In March 1995, the Premier Sports channel was licensed to Australis and Australis granted a sub-licence to Foxtel. 504 Interests associated with Mr Stokes commenced acquiring a shareholding in Seven Network in about April 1995. At that time, News and Telstra each held interests in Seven Network (approximately 15 per cent and 10 per cent, respectively). Mr Stokes became a director and Non-Executive Chairman of Seven Network in June 1995. Mr Stokes' view at the time was that Seven should not have licensed the AFL pay television rights exclusively for the benefit of Optus Vision, but should have made the rights available to all pay television platforms. Nonetheless the arrangements proceeded. 505 On 28 April 1995, Seven announced that it had accepted an offer to join Optus Vision as an equity partner and program supplier. Under the agreement, Seven was to acquire a two per cent equity in Optus Vision and an option to increase that stake to 15 per cent before July 1997. Pay TV Holdings acquired a five per cent equity with an option to increase its share to 20 per cent. Seven was also to acquire a 30 per cent interest in Optus' sports channels and an eight per cent interest in Optus' movie channels. As previously noted ([260]), Optus Vision was duly incorporated, in effect as an incorporated joint venture. Seven held its interest through Tallglen, a subsidiary. The agreement announced in April 1995 was implemented by the ' Optus Vision Joint Venture: Optus Vision Shareholders Agreement ' executed on 19 May 1995 (' Optus Vision Shareholders Agreement ' ). 506 Optus Vision commenced operating its pay television service in September 1995 via the Optus Cable and progressively added channels to its service from time to time. The service was provided through Optus Vision Media Pty Ltd (' Optus Vision Media '), under licence from Optus Vision. The main shareholders in SportsVision were Tallglen (30 per cent), ESPN (25 per cent), PBL (20 per cent) and Optus Vision (25 per cent). Each shareholder was to contribute sports rights to the SportsVision venture, for sub-licensing to Optus Vision. Seven was to contribute AFL broadcasting rights; PBL (through Nine) was to contribute ARL broadcasting rights; and ESPN was to contribute international sports rights. The key terms of the Tallglen Agreement are outlined in the judgment of Bryson J of the Supreme Court of New South Wales in SportsVision Australia Pty Ltd v Tallglen Ltd (1998) 44 NSWLR 103, at 106-109, and only a brief reference to them is needed here. Tallglen granted to SportsVision the right to broadcast a number of sporting events, including AFL matches. SportsVision was granted live and exclusive rights to broadcast throughout Australia six Saturday night AFL games and twelve Sunday afternoon AFL games per season. SportsVision also received rights in relation to certain other AFL matches to be broadcast in Sydney and Brisbane and the replay rights to all AFL matches. SportsVision in turn granted Optus Vision certain pay television rights, including AFL matches, pursuant to ' Sports Programming Affiliation Agreements ' entered into in April and May 1995. In response to that concern, Seven put funding proposals to Optus Vision and negotiated with the AFL for an extension of Seven's licence from the AFL (which was due to expire in 1998). The negotiations continued in May and early June 1995, during which time the AFL received offers for the AFL broadcasting rights from other parties, including Nine. 510 On 1 June 1995, Seven Network made an offer to the AFL for the broadcasting rights (both free-to-air and pay) for the 1999, 2000 and 2001 seasons. An amended offer was made on 7 June 1995. The amended offer, subject to some revision, was accepted by the AFL. This agreement ultimately resulted in the execution of the AFL-Seven Licence Extension on 15 November 1996. The details of the AFL Licence Extension and the consolidated licence agreement between the AFL and Seven are dealt with later ([826]ff). The PDJV Agreement was intended to establish SportsVision as the vehicle for a joint venture for the purpose of distributing sports programs which the parties would make available to SportsVision. The programs were to include AFL matches, ARL matches and international sports. Under the PDJV Agreement, Seven licensed SportsVision to broadcast AFL matches and Nine licensed SportsVision to broadcast ARL matches. 513 From 1995 to 1998, SportsVision produced and supplied to Optus Vision two pay television channels called ' Sports Australia 1 ' and ' Sports Australia 2 '. SportsVision also supplied the ESPN channel to Optus Vision for broadcasting to subscribers. From 1996 to 1998, SportsVision compiled AFL matches into a pay television channel called ' Sports AFL ' which was broadcast on Optus. Sports AFL was a dedicated cable subscription channel which transmitted only AFL programs. The Austar pay television service became available in many regional areas in Australia (other than Western Australia). The migration of Austar's satellite signal to a new satellite (the C1 satellite) in June 2003 increased its satellite coverage area and allowed a further 200,000 homes to access the signal. As I have already noted, the Foxtel Partnership Agreement provided for Foxtel Management to manage the business of the Foxtel Partnership as its exclusive agent. • The Foxtel Television Partnership Agreement between Sky Cable, Telstra Media and Foxtel Cable, whereby the Foxtel Partnership, through Foxtel Management, was to establish and manage Foxtel Cable's business. Foxtel Cable was to supply the pay television services to subscribers and pass on the revenue received from them to the Foxtel Partnership. • The Management Agreement between Sky Cable, Telstra Media, Foxtel Cable and Foxtel Management, pursuant to which Foxtel Cable appointed the Foxtel Partnership to manage the business of providing subscription television services and the Foxtel Partnership appointed Foxtel Management as its agent to manage Foxtel Cable's business. • The BCA , the parties to which were Telstra Multimedia and Foxtel Management on behalf of the Foxtel Partnership. The BCA set out the terms on which broadband facilities were to be provided to the Foxtel Partnership. As I have noted ([97]), the BCA granted the Foxtel Partnership the exclusive right to provide pay television services via the Telstra Cable. The BCA also set out revenue sharing arrangements between Telstra and the Foxtel Partnership. By an ' Implementation Deed ' dated 21 November 2002, the Foxtel Partnership's exclusive right to use the Telstra Cable was removed. Foxtel progressively added channels to this service from time to time. In October 1995, it announced an agreement with TNCL and Telstra, subject to ACCC approval, to merge Foxtel's cable and Australis' satellite and microwave operations. Optus Vision lodged submissions with the ACCC urging it not to approve the proposed merger. In February 1996, the ACCC refused approval. TNCL's interest in the joint venture was 50 per cent. The joint venture acquired all the shares in Premier Sports Australia, the operator of Premier Sports, and all the shares in Liberty Sports, the joint venturer with Australis' subsidiary in the business. The effect of these arrangements was that TNCL acquired a 25 per cent interest in the joint venture conducting the Premier Sports business. TNCL agreed to license the ' Fox Sports ' trademark to the joint venture and the Premier Sports channel was subsequently re-branded ' Fox Sports '. Because of the allegations made in the proceedings and the relief sought by Tallglen and Seven Network, Optus Vision effectively became paralysed. 521 The proceedings were ultimately settled on terms recorded in a ' Deed of Settlement and Release ' dated 28 March 1997, to which Seven Network, PBL and Optus Communications (among others) were parties. Under the Deed, Seven Network, Nine and Continental Cablevision agreed to transfer their respective shareholdings (whether held directly or through subsidiaries) in Optus Vision to Optus Communications. The parties did not, however, agree to dispose of their interests in SportsVision. The first was the Umbrella Agreement, entered into initially on 9 March 1995, but amended and restated on 14 April 1997. The Umbrella Agreement recited that Telstra and News desired to participate in business opportunities presented by the convergence of technologies and that they had agreed to establish an ' Alliance ' (in essence the Foxtel Partnership). The Umbrella Agreement was intended to set out the terms of the Alliance (cl 2.1). Except as otherwise provided, the parties agreed that they would have equality of interest in all businesses established within the scope of the Alliance (cl 2.4). The Alliance embraced all businesses within the broadband video home entertainment sector relating to ' Services ', including pay television (cll 3.1, 3.2). 524 Clause 7 is of particular relevance to the dispute which arose between Telstra and News concerning the terms on which Fox Sports would provide its channels to the Foxtel Partnership. Clause 2 of the Program Rights Agreement mirrored the language of cl 7 of the Umbrella Agreement, but imposed the obligations on News for the benefit of Foxtel Management. 526 In addition, on 14 April 1997, Telstra and News and associated parties executed the Foxtel Partnership and Management Agreements and the BCA ([515]). Relations deteriorated further during the 1997 AFL season. In early June 1997, Seven proposed to nominate SportsVision's AFL matches on a week to week basis. SportsVision rejected this proposal. Seven also refused to give SportsVision an undertaking that Seven's licensees would not broadcast matches that Seven had nominated as live and exclusive matches pursuant to the Tallglen Agreement. 528 On 13 June 1997, SportsVision commenced proceedings against Seven in the Supreme Court of New South Wales for allegedly breaching the Tallglen Agreement in relation to the transmission of AFL matches and the nomination of matches by Seven. The proceedings were ultimately resolved in favour of SportsVision on 22 May 1998. Bryson J made declarations to the effect that Tallglen would breach the Tallglen Agreement if Seven broadcast on free-to-air television any AFL match that had been nominated as a SportsVision live match and that Tallglen was obliged to nominate SportsVision exclusive matches on certain nominated days: SportsVision v Tallglen , 44 NSWLR 103, at 120. Although SportsVision succeeded in the proceedings, by the date Bryson J gave judgment the company was doomed, since (as Mr Stokes agreed in his evidence) Seven and others had decided to withdraw their investments. 530 In June 1997, following its departure from Optus Vision, PBL entered into a series of agreements with News (or TNCL) and Telstra. The effect of the Deeming Statement, if valid, would have been to create access rights to the Telstra Cable in third parties pursuant to Pt XIC of the TP Act . The 1997 Deeming Statement was ultimately held to be invalid for reasons that are not presently material: Telstra Corporation Ltd v Seven Cable Television Pty Ltd [2000] FCA 1160 ; (2000) 102 FCR 517, reversing in part Foxtel Management Pty Ltd v Australian Competition and Consumer Commission (2000) 173 ALR 362, at 399 [141]-[142], per Wilcox J. The Deeming Statement and Seven's attempts to obtain retail access via the Telstra Cable are dealt with further in Chapter 10. 532 In July 1997, Australis and the Foxtel Partnership agreed to merge. The merger attracted the opposition of the ACCC and the agreement was ultimately terminated in November 1997. The proposed fee for the first and last rights was $25 million on the signing of a First and Last Deed. PBL's proposal included put options in favour of the AFL in respect of both free-to-air and pay television rights. PBL's offer was not accepted. 534 On 24 July 1997, Mr Stokes for Seven and Mr Lachlan Murdoch for News agreed to the ' Docklands Stadium Consortium Proposal '. 535 On 3 September 1997, the AFL and companies related to Seven Network entered into the ' First and Last Deed' , by which the AFL granted Seven a first and last right of refusal over certain free-to-air television rights for the period 2002 to 2011. The details of the First and Last Deed are dealt with later ([833]ff). At this point, News (through Liberty Sports) and Australis each held a 50 per cent interest in the Fox Sports business. The proposal envisaged the creation of a single content company to be formed before the end of November 1997 ' through a merger between Foxtel and Australis '. The content company was to provide programming to all other Australian distributors. 538 On 29 October 1997, TNCL and Optus Communications entered into a long form agreement similar in effect to the short form agreement signed in September. Each of News and Optus acknowledge that the pay television industry in Australia at present is not viable because the subscriber uptake of pay television services is too low and the cost of acquisition of the programming comprised in those services is too high. Accordingly, Optus and News have been discussing ways in which the programming comprised in the pay television services supplied in Australia can be made more attractive to potential subscribers so as to increase penetration, lower the rates of churn and achieve sustainable long term competition. That condition precedent was never met. 539 On 20 February 1998, TNCL and Optus Communications entered into a second agreement based on the parties' belief (as set out in the recitals) that ' the Australian pay television industry is ... unsustainable and all retail pay television suppliers have incurred substantial losses '. The agreement was conditional on Telstra's consent. According to Mr Macourt's evidence, the creation of C7 led Optus to disengage from discussions concerning implementation of the content agreements. It recited that Australis was in financial difficulty and that both Austar and the Foxtel Partnership required access, among other things, to ' Sports Programming ' including the Fox Sports channels, to ensure the continuity and viability of their business. The term sheet set out the terms on which Austar and the Foxtel Partnership would sub-license Sports Programming to each other if their agreements with Australis were terminated. The Foxtel Partnership agreed to sub-license Sports Programming to Austar in ' AUSTAR Areas ' while Austar agreed to sub-license Sports Programming to the Foxtel Partnership in the ' Non-AUSTAR Areas '. On 18 May 1998, it was made the subject of a winding up order. Shortly thereafter, Fox Sports terminated its supply agreement with Australis because of Australis' failure to pay licence fees when due. Australis ceased supplying the channels to Foxtel. On 29 June 1998, SportsVision's shareholders applied to wind up the company by reason of its inability to raise sufficient equity to meet funding requirements. This was implemented by an agreement dated 12 June 1998 between (among others) Australis (in liquidation), Liberty Sports and Premier Sports Australia. Liberty Sports purchased the interest of Australis in the ' Fox Sports Assets '. In consequence News acquired 100 per cent ownership of the Fox Sports business through Liberty Sports. In August 1998, Liberty Sports changed its name to Sports Investments Australia Pty Ltd. Later still, in November 2003, Sports Investments Australia Pty Ltd changed its name to Premier Media Group Pty Ltd. This is the ninth respondent, Fox Sports. That agreement had enabled Australis to supply the Showtime and Encore channels to Foxtel, as part of the eight Galaxy channels made available under the TNC Heads of Agreement entered into in March 1995. An agreement between Foxtel and the Premium Movie Partnership for direct supply of the Showtime and Encore movie channels to Foxtel then became effective. Austar was to pay US$5.25 pspm for each residential subscriber, subject to an MSG of US$787,500. Austar was not permitted to sub-license to Optus Vision. The Fox Sports-Austar Interim Licence covered the regions that had been franchised by Australis. 545 On the same day, Austar and Fox Sports entered into a similar agreement in relation to the regions which had not been the subject of franchising by Australis. Austar was permitted to sub-license the channels (excluding NRL), but not to Optus Vision. The agreements were terminable upon two months notice. As will be seen, a long-term arrangement was entered into on 3 September 1998 ([568]). The sub-licence was terminable at any time by Foxtel and was terminable by Austar if Foxtel acquired certain sports rights from another person. 547 From 13 May 1998 until 20 February 2002, the Fox Sports channels were supplied to Foxtel by way of a sub-licence from Austar. Foxtel paid Austar US$5.25 pspm with an MSG of US$787,500 per month. The pspm fee was of course the same as that payable by Austar to Fox Sports. It is of some importance to this case that the licence fee was constant and contained no provision for adjustments for inflation. Mr Macourt's evidence, which I accept, was that the absence of any price adjustment created concerns for Fox Sports as inflation began to take effect. The Merger Agreement annexed further agreements (' NRL Agreements ') by which News acquired the NRL pay television rights for the years 1998 to 2001 and sub-licensed them on a non-exclusive basis to Optus Vision. The NRL Partnership also granted News the first right of negotiation and last right of refusal over the NRL free-to-air and pay television rights and internet rights for the 25 year period between 1998 and 2023. Details of the Merger Agreement and related agreements are given in Chapter 9 ([1160]ff). Seven and News jointly held the rights to operate the site for a three year period, with an option to renew for a further four year term. In fact, SportsVision ceased to provide sports programming to Optus on about 31 August 1998. The term of the C7-Optus CSA was until 31 December 2008. Details of the C7-Optus CSA are given later ([1505]). 552 In about August 1998, C7 (then called Seven Cable Television) commenced providing sports programming to Optus on an interim basis. C7 commenced a full service to Optus on about 1 November 1998. The designation of C7's channels has previously been explained ([186]). This had the effect that PBL and News each had a 25 per cent interest in the Foxtel Partnership, effective from 3 December 1998. The acquisition price which was to be paid by PBL on completion, was $158.127 million (equal to the invested cost of the other partners). Following completion, Telstra had the right to put part of its stake in the Foxtel Partnership to PBL and News, such that Telstra, News and PBL would each have a one third share. Telstra, however, chose not to exercise that right. 554 Immediately following PBL's announcement that it had exercised its option, representatives of Seven met with the ACCC to express concern about PBL's newly acquired interest in the Foxtel Partnership. 555 As recorded in a ' Deed of Accession ' dated 3 December 1998 between PBL, Telstra and TNCL, upon completion of PBL's exercise of its option, the Pay TV Partnership was formed between News Pay TV and PBL Pay TV. The Pay TV Partnership acquired all the shares in Sky Cable, which was described in the Deed of Accession as a partner in each of the Foxtel Partnership and the Foxtel Television Partnership. Under the ' Terms of Accession ' set out in the Deed, ' non compete ' obligations were imposed on PBL, TNCL and Telstra until 2008. These obligations, which mirrored those in the Umbrella Agreement, prohibited a party (subject to certain exceptions) from supplying programs to a television via an STU (set top unit), otherwise than as a participant in the Foxtel Partnership. On 3 December 1998, coinciding with the completion of PBL's acquisition of its interest in the Foxtel Partnership, TNCL and PBL entered into the Fox Sports Option Deed. This provided that TNCL was to grant PBL an option to acquire 50 per cent of all interests of TNCL and its affiliates in the Fox Sports entities (being Premier Sports Australia and Sports Investments Australia Pty Ltd, later Premier Media Group Pty Ltd (that is, Fox Sports)). The arrangements of December 1998 included a ' Program Rights Deed ' under which PBL undertook to give the Foxtel Partnership the exclusive first right to refuse and the exclusive last right to match any proposed grant of licences of programming to third parties (cl 2). The declaration, which came into force on 8 September 1999, was held to be valid by the Federal Court on 8 May 2000 (see Foxtel Management v ACCC 173 ALR, at 418 [219], per Wilcox J), a decision affirmed on 18 August 2000 by the Full Court: Telstra v Seven Cable Television 102 FCR, at 553 [141]-[142], per curiam . These matters are referred to again in Chapter 10. (A further $10.5 million was paid in June 2000. ) From this time, TNCL and PBL, through their respective subsidiaries, had a 50 per cent interest in Fox Sports. TARBS provided programming via satellite and achieved Australia-wide coverage. 562 In 1999, the retail pay television service providers were Foxtel, Optus, Austar and TARBS. In addition, a service known as Neighbourhood Cable operated a cable network in three towns in regional Victoria. By 1999, as I have explained in Chapter 4, Optus was packaging its pay television service with local telephony services in a ' bundled ' offer, which had been expanded to include internet services. The first concerns the dealings between Foxtel and C7 leading to the decision of the Foxtel Management board not to take C7 until it was known to whom the AFL would award the AFL broadcasting rights for 2002 to 2006. The second is the dispute between News and Telstra as two of the partners (through Sky Cable and Telstra Media) in the Foxtel Partnership. Not all the dealings between Foxtel and C7 were affected by the partnership dispute and the dispute between News and Telstra was by no means confined to the conduct of negotiations between Foxtel and C7. On the contrary, the dispute between News and Telstra centred on the proposals for the long-term supply of Fox Sports to Foxtel. However, the question of whether Foxtel would take C7 and, if so, on what terms was closely related, at least from Telstra's perspective, to the principal bone of contention between the parties. It is for this reason that it is convenient to consider both matters together. 564 The Chapter recounts the course of the News-Telstra disputes until early January 2001, immediately after the AFL and the NRL Partnership had awarded their respective pay television rights. The dealings between the Foxtel partners, leading to resolution of the disputes and the execution of the Foxtel-Optus CSA on 5 March 2002 are addressed in Chapter 11. After Fox Sports and Austar had entered into the Fox Sports-Austar Interim Licence of 13 May 1998 ([544]), they negotiated for more permanent arrangements. 567 In the meantime, on 8 July 1998, Mr Macourt sent a fax to Mr Fries outlining alternative proposals for Austar to take both Fox Sports channels for a five year term. One proposal involved flat fee pricing, while the other provided for a fee on a pspm basis. The latter proposal contemplated a base price of US$5.25 pspm (inflation adjusted), with volume discounts reducing the fee to US$3.00 pspm for more than 350,000 subscribers in the first year. NRL was included from 2001, but the NRL pay television rights were to attract a fee of $130,000 per season week for 1999 and 2000. On 30 July 1998, Mr Macourt made a revised offer, reducing certain of the proposed fees. 568 After further negotiations, the Fox Sports-Austar CSA was executed on 3 September 1998. Fox Sports granted Austar the right to retail distribution of the Fox Sports channels (including, from 1 January 2001, the NRL) in specified territories. The licence was to expire on 30 June 2006, but Austar could terminate the agreement if, during the NRL seasons for 2001 to 2006, Fox Sports did not have the NRL pay television rights. Austar was not permitted to sub-license except to Austar entities. 569 The Fox Sports-Austar CSA made provision for a ' Base Price ' of US$4.75 pspm and a ' Band A Price ' of US$3.25 pspm. The Base Price was payable for the first 250,000 subscribers and the Band A Price for subscribers in excess of 250,000. The price was payable ' as if on basic ': that is, by reference to all subscribers and not merely to the subscribers to the tier on which Fox Sports was placed. The Fox Sports-Austar Interim Licence was terminated, except to the extent necessary to enable Austar to perform its obligations to Foxtel. The result was that Foxtel continued to receive Fox Sports programming through Austar, with payments remitted to Fox Sports. 570 On 3 September 1998, News also sub-licensed the NRL pay television rights to Fox Sports for the territories in which Austar provided services. Fox Sports granted Austar the non-exclusive rights to telecast NRL matches in the territories covered by the Fox Sports-Austar CSA for the period 13 March 1998 to 31 October 2000. The sub-licence provided that the feed of NRL matches would be compiled on Fox Sports 2 and that Austar could exercise its right by taking a feed of the coverage on that channel. However, Fox Sports retained a right of approval ' over any alternative channel into which the coverage of [NRL] Matches may be compiled if it is not Fox Sports Two '. 571 The arrangements between Fox Sports and Austar were concluded without Telstra's knowledge or consent. Mr Macourt acknowledged in evidence that Telstra had not been told because he thought Telstra might try to stop the deal. Even Telstra acknowledges that keeping Austar as a customer is crucial to both FOXTEL and Fox Sports. News is of the view that it was free to do the deal with Austar but had no confidence that Telstra would have permitted FOXTEL to conclude a deal with Austar in time on the back of exclusive supply from Fox Sports to FOXTEL (it was our expectation that Telstra would have happily used Austar's threats to go to Optus Vision and Channel Seven to put pressure on Fox Sports to reduce the price of Fox Sports to both FOXTEL and Austar)'. These included a series of business plans prepared by Mr Hyde under the supervision of Mr Bateman and Mr Gammell. Mr Stokes also had some involvement in the process. 573 A business plan, apparently prepared on about 31 May 1998, projected a subscriber base of 1.06 million in 1999 for a Seven pay television sports channel. Total costs for the channel, including the cost of pay television rights and production, were estimated at $24.6 million for that year. A later business plan, apparently prepared on about 5 June 1998, made more modest predictions as to the number of subscribers. However, total costs were estimated at $40 million for the first full year, comprising $24.6 million in rights fees and $15.4 million in ' additional production costs '. The model contemplated, among other things, that the sports channel would be placed on a tier on Foxtel. The price proposed was US$5.25 pspm, calculated on the basis of the total number of subscribers to Optus and to its sub-licensees' packages, with provision for annual increments. Optus was to be responsible for obtaining and paying for NRL pay television rights. The proposal contained a provision preventing Optus from transmitting sports programming not provided by Fox Sports, except with the latter's consent. Mr Philip, who was responsible for inserting the provision, explained in evidence that its purpose was ' to obtain exclusivity of supply of sports programming in favour of Fox Sports '. He agreed that its purpose and effect was to prevent Optus from transmitting sports programming provided by Seven ' and anyone else who came along '. 577 On 15 and 16 June 1998, Mr Spain (from Optus' solicitors) and Mr Philip exchanged faxes. It appears that Optus had set a deadline of 15 June 1998 by which to reach an agreement, but Mr Philip persisted with proposed draft terms ' in case discussions recommenced '. In the event, further discussions did take place between News and Optus. 578 On 19 June 1998, Mr Philip sent Optus a revised term sheet. Clause 11(b) of the revised term sheet required Optus, if it acquired AFL programming, to procure non-exclusive AFL pay television rights for Fox Sports on the same terms as applied to Optus (without any MSGs and at a maximum price of $3.00 pspm). 579 On 26 June 1998, Telstra's solicitors wrote to News and Foxtel Management expressing the view that News was not free to hold discussions with Optus unless and until the exclusive first right of refusal provisions of the Umbrella Agreement (cl 7) had been complied with. The point was reiterated in strong terms in a letter of 1 July 1998, which asserted that any discussions that had taken place between News and Optus in relation to the acquisition of programming by Optus had breached News' contractual obligations to Telstra and Foxtel and its fiduciary obligations to Telstra. In the meantime, on 30 June 1998, Seven and Optus entered into the C7-Optus CSA. 580 Mr Philip responded to the letters on 2 July 1998. He denied the assertions made by Telstra, on the basis that News had procured an offer of the supply of exclusive rights from Fox Sports to Foxtel which the latter had not thus far accepted. He stated that if Foxtel did not accept the offer, there was nothing to prevent Fox Sports offering the channels on a non-exclusive basis to Optus. 581 News' understanding of the reasons why Fox Sports ultimately failed to reach agreement with Optus was recorded in a later briefing note (21 October 1998) to Mr Rupert Murdoch on the state of News' relationship with Telstra. The document recorded that ' [a]t partnership level there is a level of mistrust '. Telstra had been happy to accept the substantial benefits of the rationalisation of pay television (including agreements with Optus and PBL), but had made no contribution to the process. Discussions were held with Optus --- at all times subject to Telstra approval --- concerning the supply of unbranded sports product. Telstra sought to prevent such discussion through delay and subsequent legal threats (letters from Mallesons on June 26 and July 1). This was successful in that Optus has signed a sports deal with Seven, an arrangement that will inevitably lead to higher sports rights fees'. The reference to an increase in the cost of sports programming related to possible increases in the cost of sports rights, arising from competition between C7 and Fox Sports. On 4 June 1998, Mr Philip of News, ' in anticipation of News obtaining control of Fox Sports in the near future ', sent to Mr Mockridge of Foxtel Management two alternative proposals for the long-term supply of the Fox Sports channels to Foxtel. (News in fact exercised its right to acquire Australis' share in Fox Sports on 12 June 1998. The suggested price was US$6.25 pspm, with an annual increase of five per cent from 1998 to 2000 and six per cent from 2000 onwards, subject to specified MSGs. In addition, Foxtel was to make an initial payment of $8 million, to be set off against subscriber fees for the last two months of the term. The second proposal was for non-exclusive rights at US$5.25 pspm, with an initial payment of US$4 million, reduced MSGs and a volume discount for 500,000 subscribers or more. In each case, the proposed term was six years, expiring on 30 June 2004. 585 Each of the two proposals contained a clause, equivalent to that included in Fox Sport's proposal to Optus, which would have prevented Foxtel transmitting any sports programming not provided by Fox Sports unless the latter agreed. There were exceptions for ESPN (on a tier) and for AFL programming (provided that Foxtel licensed Fox Sports to supply the programming to Foxtel. ) As Mr Macourt confirmed, the intent, so far as AFL programming was concerned, was to allow Foxtel to take a feed of AFL matches via Fox Sports, but to prevent it from taking a different channel containing AFL programming, such as C7. He acknowledged that, having regard to the exceptions in the offer, the only party caught by the provision at the time would have been Seven. Mr Macourt also said that he expected the clauses to be negotiated out. 586 On 5 June 1998, Ms Lowes reported to Mr Blount that she had discussed with Mr Macourt the fact that Fox Sports was requesting Foxtel to pay higher fees for sports than under current arrangements. She had told Mr Macourt that the request was unacceptable to Telstra as it could not be argued that higher prices were in Foxtel's interests. 587 On 12 June 1998, Mr Freudenstein, on behalf of Foxtel Management, sent Ms Lowes and Ms Dodd of Telstra a fax, of which a copy was sent to Mr Philip and Mr Macourt. The fax attached a marked up copy of the arrangement for the exclusive supply of Fox Sports to Foxtel that had been proposed by Mr Philip. In substance, Foxtel was ' prepared to do a deal on broadly the same economic terms as the existing Australis Fox Sports deal '. Thus it was prepared to pay a base subscriber fee of US$5.25 pspm and adjusted MSGs. 588 On 16 June 1998, Mr Philip forwarded to Mr Freudenstein and Ms Dodd a document specifying a set of issues that had arisen in relation to the Fox Sports-Foxtel proposal. He suggested a meeting, which apparently took place on 18 June 1998. A summary of the meeting prepared by Mr Philip recorded that Telstra had argued that a fee of US$6.25 pspm, or even of US$5.25 pspm, was too high and that, in any event, the fee should be set in Australian dollars. Telstra also objected to other features of the proposal, including the ' $8 million bond ' and the percentage increases in the licence fees over time. 589 On 19 June 1998, Mr Philip sent to Mr Mockridge and Mr Freudenstein of Foxtel Management redrafted exclusive and non-exclusive terms sheets ' indicative of counter offers from you that Fox Sports is likely to find acceptable '. The non-exclusive term sheet contemplated that Foxtel would be permitted to carry other sports channels (including but not limited to AFL programming), provided that they were carried on a tier above that carrying the Fox Sports channels. Mr Macourt agreed in evidence that the general object of this clause was to prevent other sports suppliers from competing with Fox Sports. He also said that it was part of an attempt to make Fox Sports the ' gate-keeper of sports programming for Foxtel '. Mr Macourt further agreed that, in view of the exceptions for ESPN and Sky Racing , the only channel that he anticipated would be affected was C7. 590 Ms Lowes of Telstra put her views to Mr Macourt in a fax of 22 June 1998. She said that she was at a loss to understand the commercial justification for the then current proposal which was ' more expensive and on worse terms than Australis' original deal with Fox Sports '. Ms Lowes asserted that the terms were neither reasonable nor commercial. She recognised, however, the desirability of Foxtel securing long-term sports programming and suggested as a basis for discussion certain ' price parameters '. Her suggestion was a base price of US$5.25 pspm, subject to volume discounts above 500,000 subscribers. She rejected the proposal that Foxtel should pay an $8 million bond. 591 On 28 June 1998, Mr Mockridge sent a memorandum to Ms Lowes attaching financial models relating to the proposal for the long-term supply of Fox Sports to Foxtel. The proposal at this stage contemplated a price of US$5.25 pspm for the Fox Sports channels until October 1998, increasing five per cent annually until 2000 and thereafter by six per cent per annum. Foxtel would receive a reduced price of US$4.00 pspm above a specified subscriber level and there would be no MSG. 592 On 1 July 1998, Mr Mockridge sent a term sheet prepared by Mr Freudenstein to Mr Macourt and Ms Lowes which was said to reflect earlier discussions. It is therefore consistent with my initial view that a deal around the old Australis position was "fair" to both shareholders given the significant benefits to both shareholders delivered via the termination of the TNC Heads'. One such model, prepared by Mr Parker in about late May 1998, showed that carriage of Fox Sports on all three pay platforms over a 10 year period, on the basis of the assumptions recorded in the model, produced a net present value (' NPV ') of $1.038 billion. Carriage on both Foxtel (but no satellite coverage) and on Austar produced an NPV of $88.9 million, while carriage on the Foxtel platform alone (no satellite coverage) produced an NPV of -$171.2 million. Mr Macourt accepted in his evidence that the models suggested to him at the time that there was a very considerable financial difference between the situation where the Fox Sports channels were carried on Foxtel alone and where they were carried on Foxtel, Optus and Austar. 595 Other modelling performed by Mr Parker at Mr Macourt's request at about this time was prepared on alternative assumptions as to the inflation rate applied to rights expenses and outside production costs depending on the ' competitive environment '. The inflation rate was assumed to be five per cent when there was no ' alternative sports programmer ' and eight per cent when there was such a programmer. (The rate of general inflation was assumed to be 3.5 per cent. ) According to Fox Sports 2000 Budget Operating Plan, rights fees and delivery represented 66 per cent of total expenses, while production costs amounted to 24 per cent of total expenses. 596 On about 17 June 1998, a further 10 year model was prepared within News under Mr Parker's supervision in order to take account of amendments provided by Mr Macourt and Mr Lachlan Murdoch during a business plan meeting. The model preserved the distinction between rights inflation of eight per cent for exclusive supply of Fox Sports to Foxtel and Austar only (that is, where there was an alternative sports programmer) and rights inflation of five per cent for non-exclusive supply to all three platforms (that is, where there was no alternative sports programmer). The assumptions recorded in the model indicate that News was contemplating that AFL might be shown on a tier. The model estimated that exclusive supply produced an NPV of -$23.4 million, compared with an NPV of $100.9 million for non-exclusive supply. The major reasons for the different outcomes were, as Mr Macourt explained, extra revenue from Optus subscribers and reduced rights fees payable on the non-exclusive model. 597 Mr Macourt agreed in evidence that the reason for differentiating between the situation where there was and was not competition in the sports channel business was that if Fox Sports was the only sports channel supplier, ' it would be able to drive a harder bargain with sports bodies who sell rights '. Mr Macourt also agreed that it was important to News, Fox Sports and Foxtel to hold down the cost of sports rights and that the most likely source of competition to Fox Sports ' in the sports channel business ', following the demise or likely demise of SportsVision, was C7. The participants were Messrs Macourt, Mockridge, Stokes and Gammell. He said that he was also concerned that the offer had no guarantee of quality, although he acknowledged that the sports channel had not yet commenced broadcasting and it was open to Foxtel to negotiate guarantees as to quality. I considered either result as inimical to the interests both of Fox Sports and FOXTEL'. However, he maintained that if the channel had been cheap enough he would have accepted it on Foxtel. 600 Mr Mockridge was more emphatic in his evidence. He said that he regarded Seven's proposed price as ' excessive and not ... a genuine commercial offer '. Indeed, in his cross-examination Mr Mockridge asserted that the term sheet was ' so crazy and lacked such detail ' that it conveyed that Seven was not prepared to deal. Mr Mockridge said that because he did not regard the proposition as serious, he did not carry the negotiations further. This was despite holding the view (as he acknowledged) that it was desirable, in principle, for Foxtel to carry AFL content. Mr Gammell confirmed Mr Mockridge's evidence to the extent that he recalled Mr Mockridge making it clear at the meeting of 7 June 1998 that the proposed price for C7 was unacceptable. 601 Mr Gammell's evidence was that he regarded Seven's offer as reasonable. However, he formed that view largely because he believed that Foxtel was paying Fox Sports in the range of $12.00 pspm. Although Mr Gammell ultimately learned the true position (that is, that Foxtel was paying US$5.25 pspm), he apparently continued to believe that Foxtel paid $12.00 pspm, at least until April 1999. 602 At the time C7 made its proposal to Foxtel, Seven had not secured any supply agreement with Optus and C7 had not commenced business. As already noted, the C7-Optus CSA was entered into on 30 June 1998. During this period, Mr Wood took charge of C7, initially under direction of Mr Bateman. At the Seven Network board meeting of 31 July 1998, Mr Wood presented a preliminary business plan. The plan assumed that C7's channels would be supplied to Foxtel and Austar, as well as to Optus, and that it would be supplied on a tier at $4.00 pspm (inflation adjusted). The business plan estimated costs in the first year at $30.97 million, increasing to $55.71 million in 2008/2009. This reduction in estimated costs for the first year (from $40 million in earlier plans) reflected Mr Gammell's view in consultation with Mr Bateman that costs should be reduced. 604 The board approved the business plan in principle. However, Mr Wood was requested to prepare a revised business plan and a budget ' which included a profit '. Mr Stokes accepted in evidence that the move from a cost base of $40 million to $31 million in the first year meant that the channel would have a ' different character '. 605 Mr Wood presented a revised budget for C7 at the Seven Network board meeting of 28 August 1998. This showed EBIT (earnings before interest and tax) of $2.2 million on net revenue of $30.5 million and costs of $30.5 million, allowing $2.2 million for ' FTA rights recovery '. The projection assumed modest revenue in the first year from Foxtel, on the basis that C7 would be on a tier at $4.00 pspm. This model assumes licensing to Austar but not Optus. As you are aware News Limited has been very aggressive in obtaining rights for Foxtel including Rugby League, Rugby Union Super 12 and more recently international cricket and Premier League Soccer. I believe there will be the opportunity for Foxtel to dominate sports broadcasting over the next several years. However, this will require News to continue to aggressively pursue sports rights. We are prepared to do this and take further losses over the next several years, not shown in the model provided, if we can secure a sensible financial arrangement with Foxtel'. This involves buying rights which involve a significant financial commitment for Fox Sports. There are obvious benefits for FOXTEL in knowing that Fox Sports can develop its business in this way. This will hurt both FOXTEL and Fox Sports'. This provision would have required Optus, if it acquired AFL pay television rights, to procure non-exclusive pay distribution rights to AFL programming for Fox Sports on the same terms as applied to Optus itself. He characterised the use of the phrase ' as you know ' by Ms Lowes as ' not only fallacious but ... also malicious '. Mr Murdoch could see no point to a meeting when ' our people ... go out of their way to insult one another '. That meeting was held on 28 August 1998. News seems to believe that Telstra has gotten exactly what it wanted from Foxtel -- telephony defence and that they have been unable to get what they want -- a dominant position in programming supply and PayTV with returns to match. Apparently, they are very angry about the failure of SuperLeague. They believe that they lost a lot of money, all in the interests of Foxtel. Except for the Australis winding up litigation, they believe that we have not taken the actions we should have to support Foxtel. Telstra, at best, has ambiguous views of the success of PayTV. It is tired of being "nickel and dimed" about payments into Foxtel/News and can point to numerous instances where it has not been consulted by News on key issues. (For example, News put an offer for FoxSports [sic] to Optus in breach of its legal obligations to Telstra and without our knowledge. We found out from Optus directly. ) Telstra is also of the view that News does not act like a partner -- deals are always crafted to be in their best interests, they are sometimes abusive in their dealings with Telstra and will never give a point in Telstra's interests unless they can see a quid pro quo'. We need closure here. ... In addition, all parties seem to believe that AFL rights for PayTV will be sold in the next few months. Obviously, we would like these rights to be secured for Foxtel '. (Emphasis added. A Telstra paper identified two related issues concerning Fox Sports that had emerged from the meeting, namely ' equity ' and the programming agreement with Foxtel. AFL) with acquisitions via special purpose [joint ventures] '. One such fear was that PBL and News might ' gang up ' on Telstra. You noted your desire to have certainty, transparency and fairness regarding sports programming costs. I was, and remain, surprised by Telstra's proposed pricing for the service. As I said yesterday, in my view Telstra's proposal simply does not reflect the commercial or competitive environment for sports rights. Once the opportunity to take Fox Sports non-exclusive a couple of months ago was lost, reducing the price for the service is uneconomic'. At a meeting between Mr Macourt and Ms Lowes on 16 September 1998, Ms Lowes put the proposition that a ' fair price ' for a sports service, excluding certain premium events such as the Olympics, was US$2.73 pspm. This prompted a letter from Mr Macourt on 17 September 1998 expressing his ' deep concern and disappointment about the conduct of our partnership relationship '. Mr Macourt considered that Telstra's approach reflected ' deeply on the ability and integrity of News ' and that the negotiations would have to wait until the return of Mr Blount and Mr Lachlan Murdoch from overseas. 618 On 23 September 1998, a meeting took place between Mr Philip, Mr Frykberg, Ms Lowes and Ms Dodd to discuss the Fox Sports issue. On 30 September 1998, Ms Lowes sent a fax to Mr Philip describing the meeting as ' constructive '. As had been foreshadowed at that meeting, she provided News with a list of ' Special Programming ' events that Telstra considered to be ' unique in nature ... and likely to be expensive '. According to Ms Lowes, Telstra believed that any deal between Fox Sports and Foxtel should not include these events. It would be better if they were purchased separately through special purpose joint ventures. The events nominated by Telstra included the AFL, the Rugby World Cup, the Olympics, the Soccer World Cup, the Cricket World Cup and the Ashes cricket series. Ms Lowes reported that News had '" done the dirty" to us on Fox Sports '. She thought that the price charged to Austar was around US$5.00 pspm, but considered the agreement a clear breach of News' obligations to Foxtel. Use the breach as grounds to terminate the partnership. Assuming it gets to this, News has 120 days to remedy. If they do not, we can buy them out at cost. Try to negotiate a deal with Seven for [Fox] Sports and use that as a chip to force them down. Get Rupert [Murdoch] or someone to get them to start acting like partners. (Remember they still owe us an offer on Super League. The note recounted conflicts between News and Telstra and complained that the Austar deal had caused Foxtel ' real commercial harm '. Oddly enough, Ms Lowes considered that the harm resulted from the fact that the price charged to Austar (which she still thought to be around US$5.00 pspm) was too high . She thought that this was an ' overvalue ' imposed on Austar by ' some collateral pressure '. If they cannot, or will not, I personally believe that we should seek to get rid of them'. On balance, we think they will be prepared to assist FOXTEL on price despite their future option to have synthetic equity in FoxSports [sic], as we know they have doubts about being with News through a synthetic interest with no control'. It canvassed the possibility that Telstra and News should go their separate ways. Even Telstra acknowledges that keeping Austar as a customer is crucial to both FOXTEL and Fox Sports. News is of the view that it was free to do the deal with Austar but had no confidence that Telstra would have permitted FOXTEL to conclude a deal with Austar in time on the back of exclusive supply from Fox Sports to FOXTEL (it was our expectation that Telstra would have happily used Austar's threats to go to Optus Vision and Channel Seven to put pressure on Fox Sports to reduce the price of Fox Sports to both FOXTEL and Austar)'. In any event, another meeting was scheduled for 2 November 1998 between Mr Blount and Mr Lachlan Murdoch to discuss the Fox Sports issues. The briefing note for Mr Blount recommended that Telstra move no further than US$3.70 pspm as an average price (that is, for the long-term supply of Fox Sports to Foxtel). This was said to be what Optus paid for Seven Sports and was described as ' very generous '. Clear goal to be the industry programming landlord for sports'. Mr Mockridge recorded that at about the time Fox Sports had terminated its arrangement with Australis, he had supported a deal for Fox Sports on broadly the same economic terms as Fox Sports previously had in place with Australis. He noted that Ms Lowes had the opportunity at that time to reserve Telstra's position in relation to this deal but she had chosen not to do so. Mr Mockridge thought that in these circumstances it was fair that any new deal be structured around the old Australis arrangements. However, Mr Mockridge noted that he had also told News that its initial attempts to raise the price of Fox Sports were unreasonable. 625 A further meeting between Mr Blount and Mr Lachlan Murdoch took place over dinner on 17 November 1998. It appears that at that meeting or earlier, Mr Murdoch provided Mr Blount with material that disclosed the price paid by Austar to Fox Sports. Ms Lowes thought that the revelation had occurred by accident. In any event, it propelled Ms Lowes to new heights of indignation. (This is, somewhat coincidentally, the amount you told Lachlan we would accept as a ceiling. ) The deal they are offering Foxtel has an average price of approximately US$5.30!!! And Foxtel has more subscribers than Austar!!! We have been trying to negotiate this thing with them since May. We have acted in good faith at every opportunity and, I am pleased to say, have been proved correct in every position we have taken. We do not understand how News could leave FOXTEL paying the highest prices in the industry while subsidising others. This is a major partnership issue with grave implications. They must give FOXTEL a deal or bear the consequences'. The letter referred to earlier discussions between Mr Mockridge and Mr Gammell regarding the supply of ' Seven's Sports Pay Service ' to Foxtel and noted that all figures discussed had been quoted in Australian dollars. The letter also noted that Seven's Sports Pay Service had started on 1 September 1998 and was predominantly based around Australian domestic sport. Mr Bateman expressed the belief that the Seven Service ' would complement your current sports channels '. This would create a level playing field for your subscribers, Seven and Foxsport [sic] and would not distort the competitive environment. However, in consideration of the current penetration by Foxtel, we would consider negotiating an appropriate discount'. Mr Stokes also accepted that, although the letter referred to the ' same fees and conditions as those we understand are applying to [Fox Sports] ', Seven had no clear idea what those fees and conditions were. Further, the letter, which appears to have been drafted with the assistance of Seven's solicitors, did not include any term sheet. The solicitors' letter noted that Seven had no objection to the ACCC writing to Foxtel and to News concerning Seven's proposal. 630 With surprising alacrity, the AGS forwarded to Seven's solicitors on the same day a draft letter to Foxtel for their urgent comment. Later that day, the ACCC sent the letter to Foxtel Management's Director of Legal and Business Affairs. The only substantial difference between the final version and the earlier draft sent to Seven's solicitors was the addition of a concluding paragraph. 631 The AGS's letter to Foxtel noted that the ACCC was making enquiries in relation to the competition implications of the ' equalisation ' of the interests of News and PBL in the Foxtel Partnership. It has been suggested to the [ACCC] that Foxtel has declined the offer because Foxtel proposes or expects to obtain the rights to sport comprised in Seven's programming, particularly rights to the AFL, direct from the sporting organisations concerned or indirectly through one of its associated companies (such as News ... or Fox Sports) with a view to using the pay TV rights for inclusion in the Fox Sports channels and the free to air rights being used for Network Nine programming. I would be grateful if you would let me know whether Foxtel has declined Seven's offer of pay TV sports programming and, if so, Foxtel's reasons for declining the offer. Further, would you please comment on the suggestions referred to above which have been put to the [ACCC] as to Foxtel's strategy. 632 Mr Mockridge's evidence was that he had been surprised to receive the letter from the ACCC, since Foxtel had not yet responded to Seven's proposal set out in its letter of 5 November 1998. 633 Foxtel replied to the ACCC's letter on 10 November 1998. The reply expressed concern that Foxtel should have received a general letter from Seven offering to consider the supply of a sports channel to Foxtel and then, on the very next day, a letter from the ACCC alleging that Seven's offer had already been declined. Also, whilst FOXTEL would like to acquire rights to AFL programming if they become available, we have no present expectation of being able to do so'. Presumably, these draft affidavits were intended to support Seven's contention that the ACCC should intervene to prevent PBL from acquiring a stake in the Foxtel Partnership. Mr Mockridge suggested that the best way to progress the matter was for Seven to provide a detailed analysis of Seven's Sports Pay Service schedule and for a meeting then to take place at which Seven could describe the programming line-up in more detail. In particular, I would be especially hesitant to add anything to basic and I would also be reluctant to consider a service which is branded the same as one of our free-to-air competitors (be that Seven, Nine or Ten)'. 636 Mr Mockridge's report to Foxtel Management's board meeting of 1 December 1998 noted that Foxtel had received approaches from ESPN and Seven for carriage of their respective sports services. Seven has sought placement on basic for its prospective sports channel at "some discount" to FOX Sports. Unfortunately, Seven's proposal arrived one day before FOXTEL received a letter from the ACCC asking why we had rejected a Seven offer, indicating to us there was possible cooperation between Seven and the ACCC. I have indicated to ESPN that I do not see an early opportunity to carry its service, and to Seven that further details are required to enable proper consideration of their proposal, but that carriage on basic is an unrealistic expectation'. On the same day, News and PBL entered into the Fox Sports Option Deed, by which News granted PBL an option to acquire 50 per cent of News' interest in Fox Sports. Telstra repeatedly invoked the terms of the agreement reached between C7 and Austar to justify its opposition to the terms sought by News for a long-term deal for the supply of Fox Sports to Foxtel. It is therefore convenient to deal here with the negotiations for the supply of C7 to Austar. Negotiations commenced in July 1998. In a letter of 7 July 1998, Optus proposed a licence fee of $6.00 pspm for the first 200,000 subscribers, with reductions as the number of subscribers increased. The channel to be provided was not to include NRL coverage. 640 Austar responded on 27 July 1998, pointing out that C7 could not meet Austar's total sports requirements because it needed ESPN for its ' international requirements ' and ' NRL rights represent[ed] an additional cost as well '. Austar proposed a fee for basic carriage of $4.50 pspm for the first 200,000 subscribers, decreasing thereafter to $3.00 pspm for subscribers over 300,000. Austar proposed carriage on a tier at $5.00 per unit. 641 After further deliberations, including a meeting with Mr Stokes, Mr Mann of Austar wrote to Mr Weston of Optus on 25 August 1998. The letter stated that Mr Mann and Mr Fries had met recently with Mr Stokes and were ' suitably impressed ' with his vision for pay television. Austar's decision as to sports channels was being made difficult by ' financial and channel capacity limitations which effectively make us choose between C7 Sports/ESPN and FOX Sports '. The letter indicated Austar's preference for taking C7 on a tier. 642 Mr Mann's letter identified two major obstacles to Austar granting C7 basic carriage. Simply put, with 2/3 of our customer base and market potential north of Wagga Wagga, our inability to deliver this important sporting code is an unacceptable risk . What can SEVEN do to ensure that we get NRL rights, if anything? ' (Emphasis added. Austar offered C7 a price of $3.00 pspm for the first 200,000 subscribers, reducing thereafter to $2.00 pspm for subscribers over 300,000. (Ultimately Austar took both C7 and Fox Sports, the latter on basic, the former on a tier. In a subsequent memorandum, Mr Bateman confirmed that further negotiations had occurred and that, as discussed with Mr Stokes, Seven's objective was to get C7 on basic at a price range from $4.50 to $6.50 pspm, although Austar favoured placing the service on a tier. In his evidence, Mr Stokes had no recollection of the conversation, but he agreed that he would have been content for C7 to be on a tier with Austar at $6.50 pspm. I find that he also would have been content with $4.50 pspm on basic. 645 Mr Bateman and Mr Wood met with Mr Mounter on 28 October 1998 (Mr Mounter having come to Sydney in anticipation of taking up his appointment as CEO of Seven in January 1999). Mr Mounter supported their objectives, but thought that the risk of being on a tier was reduced with a small basic service. On the same day, Mr Stokes lunched with Austar executives. Mr Stokes said that he could not recall the discussions, but it is very likely that he negotiated with the Austar representatives for the supply of C7. At this time, Mr Gammell was also aware of the state of negotiations with Austar. 646 On 12 November 1998, Mr Mann sent a fax to Mr Bateman asserting that because Austar had distributed Fox Sports on basic for over three years and for other reasons ' for AUSTAR to even consider basic carriage C7's pricing would have to be very low '. Mr Bateman subsequently reported to Mr Stokes that Austar's position was that C7 was not directly comparable with Fox Sports and that any reasonable comparison required C7 and ESPN in effect to be bundled. 647 Mr Bateman and Mr Wood met with Mr Mann on 24 November 1998. The discussion at that meeting centred on whether C7 would be sold on a stand alone basis (the sole product on a tier) or as a component of a tier that included ESPN and entertainment channels. Either Mr Bateman or Mr Wood suggested at this meeting that C7 was worth about $4.00 pspm on a tier. 648 On 26 November 1998, Mr Mann proposed a three year arrangement whereby Seven would be paid $1.75 pspm if C7 was included in a five channel entertainment tier, or $3.50 pspm if C7 was on a stand alone tier. The evidence is inconclusive as to whether Seven made a counter offer at the time. However, in about November 1998 Mr Wood prepared a five year business plan which assumed that C7 would be provided on a tier at $2.50 pspm (inflation adjusted), with an initial penetration rate of 33 per cent increasing to 50 per cent in the second year. (The business plan also assumed that C7 would be supplied to Foxtel on a tier at $4.00 pspm, with an initial penetration rate of 16 per cent, increasing to 20 per cent in the second year. The fee was to be $2.00 per general entertainment tier subscriber and $3.50 per stand alone subscriber (or 50 per cent of revenue, whichever was greater). The stand alone offer related to particular licences held by Austar, predominantly in Tasmania. The offer related to a single C7 channel, as Austar already took NRL matches and therefore had no interest in C7's overflow channel. 650 Mr Wood assumed day to day control of the finalisation of the C7-Austar arrangement in early February 1999. Further negotiations took place in February 1999. One issue was the length of the proposed arrangement. If Seven does not have the AFL rights after 2001 it probably will not continue to produce the Seven Service'. C7 licensed its channel (which had been renamed ' C7 Sport ') to Austar on a non-exclusive basis for a three year term, commencing on 1 April 1999 and expiring on 28 February 2002. The C7 channel was to include minimum AFL content in terms that mirrored the C7-Optus CSA. The fees remained unchanged from the term sheet of 16 December 1998. C7 was to be carried on the general entertainment tier with at least four high quality channels, including ESPN . 652 The price was to be $2.00 pspm for subscribers to the tier. The price for MDS subscribers was $3.50 pspm, reflecting the fact that C7 was supplied to those subscribers on a stand alone tier. (In fact from May 1999 to February 2002 C7 was available to satellite and cable subscribers as part of the Austar Deluxe package (a tier subscription), which included Fox 8 , ESPN , Hallmark , UKTV and FX , all general entertainment channels. I accept that evidence. Mr Stokes acknowledged that he had been kept apprised of the precise status of the negotiations between C7 and Austar until he went overseas in mid-December 1998. Mr Gammell claimed that he knew nothing of the negotiations between 23 November 1998 and 5 March 1999. I do not accept that evidence, which flies in the face of the objective circumstances and, for that matter, Mr Wood's evidence. Mr Stokes and Mr Gammell were kept up to date with the negotiations with Austar in a timely fashion and were aware of the terms being proposed. The proposal was for Foxtel to pay a fee of US$5.25 pspm (inflation adjusted), reduced to US$4.00 pspm for more than 600,000 subscribers. The memorandum complained that News had obtained inadequate returns from Fox Sports and that Telstra was asking News ' to subsidise the Foxtel programming '. Mr Lowes prepared a file note of the meeting, the accuracy of which there is no reason to doubt. Frank asked how Telstra could accept US$5.25 when Austar pricing was US$3.70. He said that they are good negotiators and they got that price. Frank then asked why we had to find out about such a deal via indirect methods and why we never heard about it from News. Lachlan responded by saying that "Well we were at a total impasse with Telstra on FoxSports [sic] and we needed to complete the deal. " He went on to explain they needed the higher price from Foxtel to make a reasonable return and provide quality programming to Foxtel. Lachlan explained that it was essential for FoxSports to have both Austar and Foxtel to make a return and provide quality programming. He said that Foxtel benefited from this. Peter [Macourt] replied that Foxtel would be hurt by not having FoxSports as it could not compete against Optus. Frank asked if Foxtel could do a deal with Seven. I said that Ian Philip had told me that "there was no way in hell News would agree to that. " [Note: He also said that they would veto it at the Foxtel Board. ] Peter Macourt muttered that a deal between Foxtel and Seven was not a possibility and that PBL would not agree to it either'. Mr Macourt also accepted that, although he could not rule out the possibility that Telstra might agree to a long-term deal between Fox Sports and Foxtel, he had said in apparently unequivocal terms at the meeting that there was no possibility of a deal between Foxtel and Seven. However, he also said in evidence that he understood that Telstra's major concern was to achieve a lower price for the supply of Fox Sports than to ensure that Foxtel took C7. In response, Mr Philip proposed a meeting in the New Year. 658 On 8 January 1999, Mr Akhurst sent a letter to Mr Philip drafted by Telstra's lawyers. The letter asserted that the long-term deal between Fox Sports and Austar was done ' behind Telstra's back '. It also rejected News' contention that the Austar deal was permissible because Fox Sports, prior to reaching agreement with Austar, had made a ' Complying Offer ' to the Foxtel Partnership as required by the Umbrella Agreement. Telstra maintained that the letter of 4 June 1998 from News to Foxtel, containing alternative proposals, did not amount to a Complying Offer. Thus News was in breach of the Umbrella Agreement. 659 On 11 January 1999, Telstra's then chairman (Mr Hoare) and CEO (Mr Blount) met with Messrs Rupert and Lachlan Murdoch. No detailed record of that meeting was in evidence, but in the course of the meeting the Murdochs proposed that the interests of Telstra, PBL and News in the Foxtel Partnership should be equalised at one third each. 660 The dispute with News was considered by a sub-committee of the Telstra board on 21 January 1999. In a subsequent conversation with Danita Lowes, Peter Macourt echoed this view, saying that Fox Sports could not afford to --- and would not --- give FOXTEL an equivalent deal. He had no explanation as to why Telstra had not been told of the Austar deal, other than that we would have objected to it if we had known. They say the cost of sports programming is rising, that sports is a key subscription driver (despite the anti-siphoning rules), and that the price they seek is essential to enable Fox Sports to compete with C7 in acquiring a stronger programming lineup. ... Neither PBL nor News will accept FOXTEL using C7 programming. Accordingly, they argue that FOXTEL cannot, in effect, expect the benefit of pricing that might be determined in a competitive market. Meantime, they are extracting and seeking permanently to extract the highest sports prices in the industry from FOXTEL, knowing that Telstra is funding 50% of this, and News only 25%'. The former wrote on 26 January 1999, rejecting any consideration of the equalisation proposal until ' the existing fundamental partnership issues are resolved'. They complained that Foxtel was bearing higher programming costs than either Optus or Austar. The Murdochs replied on 5 February 1999. They asserted that Fox Sports was a significantly better service than C7 and pointed out that the licence to Austar was non-exclusive and subject to certain restrictions. The two were therefore not comparable. The price payable by FOXTEL should be calculated by reference to the cost of providing the relevant programming plus a reasonable rate of return on the capital invested in Fox Sports. It is also very expensive to acquire and to produce. If the costs of doing so were borne by FOXTEL alone, they would be prohibitive. By licensing Fox Sports programming to Austar in the areas in which Austar operates, Fox Sports is able to reduce the costs of sports programming to FOXTEL. The terms Fox Sports agreed with Austar were the best terms it could reach in a context where Austar was threatening to acquire its sports programming from Seven. If that happened, sports programming to FOXTEL would be prohibitively expensive. Moreover, there would be a number of strategic disadvantages of Austar acquiring its programming from Seven, particularly in an anti-syphoning [sic] environment. We all know this is nonsense. It demonstrates a lack of understanding of what is necessary to create a high quality sports channel. It overlooks the fact that the costs of Fox Sports programming was largely determined at a time when News clearly did not have control of Fox Sports. We agree that in the normal course of events it would have been appropriate for that to happen. However, the agreement was reached in a context where Telstra was taking a completely unrealistic and uncooperative approach to the supply of sports programming by Fox Sports'. (Emphasis added, except for ' not '. Dr Switkowski had had no involvement in pay television since his departure from Optus in June 1997. He did so in a letter of 10 March 1999, which rejected the equalisation proposal. Dr Switkowski suggested that the way forward was for the management teams to negotiate as to the terms for the supply of Fox Sports to Foxtel. 664 Dr Switkowski's response was conciliatory in tone. This reflected his reluctance to pursue litigation except as a last resort. Mr Moriarty stated that the price of US$2.73 pspm put forward by Telstra as appropriate for the supply of Fox Sports to Foxtel, had been based on removing some sporting events from the Fox Sports programming line-up. Telstra was not insisting on US$2.73 pspm as the price and indeed there had been substantial movement in recent negotiations. These claims are not reconcilable. That Austar was unwilling to pay more than it did (Austar's average price would be approximately US$3.70 if FOXTEL's subscriber numbers were applied to it) for Fox Sports programming, and News accepted that price demonstrates that neither Austar nor News believed that superior quality of Fox Sports programming created a compelling reason for Austar not to take Seven's alternative offering. At this meeting, one of the Foxtel representatives expressed concern about C7 on Foxtel's line-up because its presence would promote the 7 Network. Mr Wood said that this would not be the case and Mr Mockridge then suggested that Mr Wood get together with Mr Freudenstein to sort out the terms on which C7 might be offered to Foxtel. A meeting between Mr Wood and Mr Freudenstein took place on 17 March 1999. 667 In early March 1999, Mr Mockridge of Foxtel Management became aware of the C7-Austar CSA. He also became aware that Austar had decided to include the C7 Sports Gold channel in its general entertainment tier, known as the ' Deluxe ' tier. 668 On 8 March 1999, Mr Freudenstein of Foxtel sent his fax to Mr Macourt, among others, advising that Foxtel had sub-licensed Fox 8 (an entertainment channel) and other channels to Austar, to be carried on a tier together with C7 , ESPN and Hallmark ([652]). Since the price paid by Austar for C7 was significantly less than the price that had previously been discussed between Seven and Foxtel, he thought that Foxtel might now be able to acquire C7 ' at a reasonable price '. Furthermore, since the C7-Austar CSA was to terminate in about December 2001, he considered that Foxtel might be able to negotiate an arrangement for a similar term, thus allowing it to bid for and obtain the AFL pay television rights when they became available. In addition, Mr Mockridge believed it was desirable for Foxtel to be able to include the AFL as part of its programming. 670 By contrast, Mr Macourt was not pleased with Foxtel's decision. This would appear to assist C7 and ESPN in acquiring subscribers where they have been previously unable to do so. Even so, Seven relies on the response as demonstrating that Mr Macourt completely identified News with Fox Sports and that he regarded C7 as a direct competitor of News. However, at this time Fox Sports was still a wholly owned subsidiary of News, so a complete identification between the two (if that is what Mr Macourt was conveying) was hardly surprising. Further, Mr Macourt regarded both C7 and ESPN as direct competitors of News, without distinguishing between them. It is not clear from the response why Mr Macourt regarded C7 and ESPN as direct competitors of News, but in evidence he said that he regarded both C7 and the free-to-air broadcasters as competitors of Fox Sports. This response of 10 March 1999 is consistent with that evidence. 672 Mr Freudenstein responded on 11 March 1999. While I agree that the FOX 8 brand is important to the channel, lets [sic] not over state it. Therefore FOX Sports will always have more subscribers than those channels and, in addition, any additional subscriber that those channels attract to the platform is additional revenue to FOX Sports on basic. Further, my understanding is that the price paid for both channels, on a tier is approximately A$3.50. At best this tier will penetrate 50%, which equates to a basic price for the two channels in total of A$1.75. Although I am not aware of the details of your deal, I understand that this is significantly cheaper than the FOX Sports basic price to Austar'. While I appreciate that at first consideration this might not appear an attractive idea might I suggest there are a number of reasons for raising it. In particular, Austar has done a particularly cheap deal with C7 to carry the service. Their deal has a pspm of no more than A$2.00, no MSG's and it is being carried in a tier (if the tier penetrates at 40% of basic, this equates to a rate of A$0.80 pspm on basic). In addition, Austar's deal terminates in December 2001 meaning it is linked with the expiry of Channel 7's pay television rights for AFL. However, whilst obviously a proportion of our subscribers would do that, relatively you would expect our existing subscriber base is light on AFL "nuts". (Emphasis added. This was because, in the absence of such a long-term agreement, Foxtel ' was unlikely to be prepared to enter into an agreement to obtain sports programming from an additional source '. In this connection, Mr Mockridge stated that he had hoped to be able to persuade Mr Lachlan Murdoch of the merits of obtaining C7. However, shortly after he sent the memorandum of 17 March 1999, he was told by either Mr Murdoch or Mr Macourt that News did not support Foxtel taking C7 while the issue between Fox Sports and Foxtel remained unresolved. 675 In cross-examination, Mr Mockridge was asked about his use of the expression ' fobbed off ' in the memorandum of 17 March 1999. He rejected a suggestion that he meant to convey that Foxtel had given insincere reasons for rejecting the advances of C7. Rather, he was intending to convey that, prior to that time, there had been no serious prospect of coming to a workable agreement with Seven because of Seven's negotiating position. However, from the time he sent his memorandum to Mr Murdoch, Mr Mockridge thought that the prospects for such an agreement might be better. Mr Mockridge denied that his understanding was that News would not support the carriage of C7 in any circumstances. I accept his denial and his explanation for the use of ' fobbed off ' (an expression which, according to the Macquarie Dictionary , does not necessarily imply deceit, but can mean simply ' put off '). 676 On the same day, 17 March 1999, Mr Mounter responded to a letter from Mr Mockridge seeking approval from Seven for Foxtel to retransmit Seven's free-to-air signal via Foxtel's cable network. Mr Mounter linked the retransmission issue with Foxtel's carriage of C7. Interestingly, Mr Mounter said that ' [we do] not feel that we are ... in competition with Foxtel (Pay is a very different business)'. Mr Wood advised that Seven was interested in doing a deal for the supply of C7 to Foxtel. Mr Freudenstein made it clear that Foxtel's interest, if any, was in C7's AFL content and that Foxtel would not be prepared to have C7 on basic. The discussion centred on two live AFL games per week and included the possibility of C7 being on a stand alone tier at a price in the range of $4.00 to 5.00 pspm, with no MSG. Mr Freudenstein said that Foxtel would want a lengthy lead time so as to market exclusively live games throughout the Foxtel network. This meant, as Mr Wood understood it, that the games would be exclusive as against free-to-air television. 679 The CEO's report prepared by Mr Mockridge for the Foxtel Management board meeting of 23 March 1999 recorded that Seven had indicated that it would shortly make a more detailed offer to Foxtel for the carriage of C7. (This was the second meeting to be attended by PBL representatives, Mr McLachlan having previously attended the board meeting of 2 March 1999. ) Mr Mockridge also reported that Foxtel was preparing a strategy to acquire the AFL pay television rights. He noted that, while Seven's AFL broadcasting rights contract would not expire until December 2001, it was due to be renegotiated later in the year. Mr Mockridge also reported verbally that management could not recommend a further significant sports commitment so long as the Fox Sports issue remained unresolved. 680 On 25 March 1999, Ms Lowes prepared a summary of the discussion at the Foxtel Management board meeting held two days earlier. She described the meeting as ' tense '. Tom then said that it was impossible for management to know what to do while [Fox Sports] was outstanding. Gerry [Moriarty] and I then asked about seeing the term sheet from 7. Tom said that it was management's practice to show shareholders things if they were worthy of merit. ... Nick Falloon said that the only thing 7 had was the AFL and that we should try to get that rather than 7. Before the discussion moved on, I again asked Tom, in my nicest voice, if we could [see] the offer from 7. Tom, in his nastiest voice, said, "Your request has been noted. " (Note: Gerry and I discussed this later. He will ask Julian Mounter (an old friend of his) to send it to us directly. ... [T]he parties agreed that Tom should lead the effort to acquire AFL rights on a non-exclusive basis. All thought that exclusive would be too much. There was some discussion about the other parties agreeing to stay away from the AFL. However, if we do, that obviously sends the AFL the message that we don't need the deal to get AFL, but rather we want to deal to improve our coverage of AFL (which is a good position to be in). (Emphasis added. First, the interim arrangement involved a fixed price of US$5.25 pspm and a permanent arrangement would certainly carry a volume discount. Secondly, the issue was increasingly recognised as a distraction for management. I accept that evidence. Seeing both C7 and Fox Sports, I have to say that the C7 team have done remarkably well with limited resources. I have given the approval for re-transmission of our broadcast signal on Foxtel, subject to successful outcome of the C7 talks. This forms part of an overall strategy to secure our Australian Football League franchise from 2002'. In his fourth statement, Mr Stokes said that he had read Mr Mounter's report at the time and recalled that Mr Mounter had told the board meeting that a deal had been negotiated with Austar at $2.00 pspm. Mr Stokes claimed that he told Mr Mounter outside the board meeting that Mr Mounter had no authority to conclude a deal with Austar on these terms, and that he (Mr Mounter) should have adhered to a figure of $4.00 pspm discussed with Mr Stokes in October 1998. 685 The minutes of the meeting noted a number of matters arising out of the CEO's report, but neither the Austar arrangements nor the Foxtel negotiations were mentioned. While Mr Stokes claimed that his complaint about Austar had been discussed outside the meeting, his evidence was that the Foxtel negotiations were discussed inside the meeting and that he had specifically stated at the meeting that C7 should not be on a tier with Foxtel (contrary to Mr Mounter's proposal). Yet the minutes contained no record of any such statement by Mr Stokes, nor of any discussion of the issue. Moreover, it is difficult to understand why Mr Stokes, who is plainly not a reticent man in business matters, was prepared to tackle Mr Mounter at the meeting on the Foxtel issue, yet apparently was not prepared to raise Austar at that forum. I cannot accept Mr Stokes' evidence as to what transpired at or shortly after the board meeting. 686 Mr Gammell claimed that he had discussed the Austar deal with Mr Mounter before the board meeting and that he had also told Mr Mounter that he was concerned that negotiations were taking place on the basis that C7 would be placed on a Foxtel tier. Despite receiving no satisfaction from Mr Mounter, Mr Gammell's evidence was that he raised neither issue at the board meeting. As I have recorded in Chapter 5, I do not accept Mr Gammell's account of what occurred before or at the board meeting. Nor do I accept his claim that he was previously unaware of the state of negotiations with Austar. The note dealt primarily with the question of equalisation of the interests of News, PBL and Telstra in the Foxtel Partnership. (Emphasis added. I accept Mr Mockridge's evidence that he thought that, as a result of this meeting, the Foxtel partners might resolve the outstanding issues dividing them and that there would then be no insuperable impediment to Foxtel acquiring AFL content through C7 in the short term. This would allow (as with the Austar agreement), us simply to go to AFL for their agreement once Foxtel say "yes". Accordingly, we have indicated prices for the inclusion of C7 on a first tier both as a stand alone channel and within a general entertainment tier. The price per subscriber in calendar 2002 and 2003 increases to reflect the increased number of live AFL matches in the service'. On 23 April 1999, Mr Rizzo expressed his ' initial view ... that the offer warrants further and detailed consideration '. Mr Mockridge responded on 28 April, indicating that Mr Freudenstein was meeting Mr Wood to obtain more details on Seven's proposal. I do not think Management should recommend a further significant sports commitment whilst the Fox Sports issue is not resolved. This issue also needs to be considered in the context of FOXTEL's wider aspirations in securing the AFL rights'. 693 Mr Wood and Mr Harold Anderson of Seven met with Mr Freudenstein on 27 April 1999. At the meeting, Mr Freudenstein noted that C7 showed only one live AFL game per week. He requested at least two live matches per week commencing in July 1999, together with three replays of Seven's free-to-air matches in the week following the matches. This prompted a discussion about the effect of the anti-siphoning legislation and of the blackout of Saturday afternoon matches on Melbourne free-to-air television. Although Seven had asked for a five year term, Mr Freudenstein said that Foxtel would not agree to a term beyond December 2001, when the AFL broadcasting rights agreement with Seven terminated. Mr Freudenstein also said that Seven would have to ensure that the terms it offered were at least as good as those afforded to Optus and Austar. We suggested that FOXTEL would want to be involved in the selection of matches. For example, Channel 7 will select the first 2 matches of any round, and we select the next 2 matches and then Channel 7 has the remaining matches. The selection has to be 6 weeks prior to the match'. He said in the note that: ' we won't negotiate until we are clear what we will be getting on the channel '. Mr Macourt annotated Mr Freudenstein's note of the meeting of 27 April 1999 and, in particular, recorded his agreement with Mr Freudenstein's suggestion as to the process for selecting matches. Mr Mockridge's annotations indicate that he was paying close attention to the proposal, notwithstanding the intimation he had received in March that News did not support Foxtel taking C7 while the pricing issue between Fox Sports and Foxtel remained unresolved. 697 At the Foxtel Management board meeting of 4 May 1999, Mr Moriarty of Telstra asked where discussions had reached on the question of the carriage of C7 on Foxtel. The CEO further advised that he intended to bring a full AFL strategy proposal to the next FOXTEL Board meeting [scheduled for 22 June 1999]'. 699 On about 6 May 1999, a budget was prepared under Mr Wood's supervision within C7. The budget assumed that C7 would be provided to Foxtel at a price of $2.00 pspm and would be placed on a tier. Mr Wood, in his evidence, said that he considered this figure to be appropriate for budgeting purposes as it was his ' assessment of a reasonably possible outcome, although erring on the side of conservatism '. He also said that the basis for the $2.00 pspm figure used in the budget was that this was the fee Seven had been receiving from Austar. 700 On 13 May 1999 Mr Wood wrote to Mr Freudenstein addressing a number of matters that had been raised on behalf of Foxtel. Naturally, the number of games will be reviewed again next season but will not decrease. In each time slot (eg. Saturday afternoon, Saturday evening, Sunday afternoon) C7 Sport will have second priority in game selection. As we are targeting July 1 for commencement of the service Seven would ask for a grace period of three months, which would be the end of the Football season, to implement this change. This of course, would be dependent on Foxtel agreeing to the MSG or equivalent underwriting. The channel does not currently and will not in the future, carry Seven FTA promos. I'm not sure how this clause would operate in practice as C7 is in basic on Optus, in the general entertainment tier on Austar and is proposed to be in a sport tier on Foxtel. Seven does not believe that being bundled with ESPN would create any more penetration than being on a stand alone basis and therefore our pricing would remain the same as quoted for a stand alone tier. That price is $4.00 per subscriber'. In relation to branding, he noted that: ' [t]his is important if we are to promote the channel '. He ticked the suggestion for a term of two and a half years. On the question of price, Mr Mockridge asked: ' What is Austar paying? This was necessary because the C7-Optus CSA included a term requiring Seven to brand the service as a ' Seven Network ' production. On 13 May 1999, Mr Wood advised Mr Lattin of Optus that Seven was considering changing the branding of C7, so that it would no longer be branded as required by the C7-Optus CSA. Mr Wood noted that Mr Lattin had previously indicated that the request did not constitute a problem from Optus' perspective, but Mr Wood nonetheless formally asked for Optus' consent to the change. 703 Despite Mr Wood's optimism, Optus promptly rejected Seven's request. Mr Wood duly advised Mr Mounter of the rejection, adding the comment ' [s]o much for partnerships '. As News observes, the rejection was a blow to Seven, given that it had agreed with Foxtel to rebrand its service. The business case assumed that 20 per cent of subscribers would take the tier at $6.95 pspm. The fees payable would be $4.00 pspm in the first two years for C7 and ESPN, increasing to $5.00 pspm. He said that he disagreed with the assumptions, which he thought were overly optimistic and that he did not accept the model. 709 Foxtel prepared a separate model for C7 on a stand alone tier over a 10 year term. This assessed the NPV at $30.5 million over the term, including a terminal value of $10.2 million. The model made no allowance for any MSG payable by Foxtel, but assumed a take up rate of only 10 per cent of Foxtel subscribers. 710 On 24 May 1999, Mr Freudenstein sent a draft term sheet to Mr Wood. The parameters we need are set out in the attached term sheet. You will see that we have not yet addressed pricing issues, but we will once the rest of the term sheet is substantially agreed'. Mr Mounter recorded that he was keen for the deal to go through before ' tough negotiations on AFL ' commenced. At the presentation of this to the AFL I intend, with your blessing, to declare that Seven will never share and that they should expect nothing more from Seven at the next renewal because we simply cannot afford it. On or immediately following that date, if they are still pushing split rights or have not agreed to our proposals, it is my view that we should announce that we wish to withdraw from the contract at the end of the period and will only be able to do the minimum required under the contract (which is considerably less than we do) from October 1 and after renewal if it is forced upon us. It is a high stakes strategy, but one we must play soon if we are not to end up in a no-win auction in two years time. Currently, we are negotiating around $3 to $5 per sub in first tier '. (Emphasis added. The minutes record that a number of issues arising out of the report were discussed, but none of these related to the negotiations with Foxtel. Mr Stokes' evidence as to what transpired at the meeting was again curious, bearing in mind the content of the minutes. He said that, although he knew that Seven had made an offer to Foxtel, he had not seen Mr Freudenstein's term sheet. Mr Stokes claimed that he became upset when he read Mr Mounter's report, because he realised that the proposed price of $3.00 to $5.00 pspm for the supply of C7 to Foxtel would undermine Seven's negotiating position with Foxtel. Mr Stokes said that he raised the issue at the meeting and dissented from Mr Mounter's report, as did others present at the meeting. 713 Mr Stokes acknowledged that he knew that Mr Mounter had been pursuing a strategy of getting C7 onto Foxtel since early 1999. He also knew that one reason for the strategy was the perception that if C7 was on Foxtel, Seven could avoid competing with Foxtel in relation to the renewal of the AFL pay television rights. Moreover, Mr Stokes had ample opportunity to ascertain the terms on which Mr Mounter was negotiating with Foxtel. Had Mr Stokes dissented from Mr Mounter's strategy at the May 1999 board meeting, it is hardly conceivable the minutes would not have recorded such an important matter. Indeed, Mr Gammell's evidence contradicted that of Mr Stokes, in that his recollection was that the matter had not been discussed at the board meeting. I therefore reject Mr Stokes' evidence on this point. I find that he was fully aware of Mr Mounter's strategy at and before the 28 May 1999 board meeting and expressed no disapproval of it at that meeting. 714 Mr Gammell's evidence was that he met with Mr Mounter the day before the board meeting. By that time, according to Mr Gammell, he was concerned about Mr Mounter's approach, having formed the view that it threatened C7's very viability. Mr Gammell claimed that he told Mr Mounter that Seven should not be negotiating with Foxtel to place C7 on a tier, but that Mr Mounter disagreed with Mr Gammell's view. Even so, Mr Gammell, on his account, said nothing at the board meeting about this important disagreement. Mr Gammell agreed in his evidence that he was duty bound, if he had these concerns, to raise them at the board meeting. I do not accept Mr Gammell's evidence that he raised concerns about the Foxtel strategy with Mr Mounter before the board meeting. Mr Wood made the point in a covering letter that it was not worthwhile to negotiate without including pricing. Mr Wood's letter noted that Seven currently had pay television rights for (among others) AFL ' until the end of the 2001 season '. In addition, the heads of agreement contained one particularly odd feature. Seven offered to provide two ' live ' home and away matches per week, not two ' exclusively live ' matches. Mr Mockridge said that he regarded this provision as of critical significance because exclusivity was essential to Foxtel. 718 Mr Wood was closely questioned by Mr Hutley as to why the word ' exclusively ' was omitted from the draft heads of agreement, particularly having regard to the fact that the expression ' exclusively live ' had been used in Mr Wood's letter of 13 May 1999. Mr Wood's evidence was that, on his understanding, Seven's offer was intended to mean exclusively live (as distinct from live and exclusive) and that, for some reason he was unable to identify, the word ' exclusively ' had been omitted from the document. 719 I do not accept Mr Wood's evidence. The importance of exclusivity to Foxtel had been repeatedly brought home to Seven, most recently in Mr Freudenstein's term sheet of 24 May 1999. The importance of exclusivity to Foxtel had also been acknowledged by Mr Mounter in his CEO's report for the Seven Network board meeting of 28 May 1999. Seven's letter of 13 May 1999 had used the expression ' exclusively live '. Its letter of 9 June, as well as the draft heads of agreement, had been carefully examined by Mr Wood before they were sent. His explanations for the omission of the word ' exclusively ' in that letter were unconvincing. The likelihood is that the omission was deliberate, reflecting Seven's view (acknowledged by Mr Stokes in his evidence) that it could not supply 44 exclusively live matches per season consistently with its agreement with the AFL. I accept Mr Wood's evidence on this point. I also accept Mr Wood's evidence that he attempted, without success, to call Mr Freudenstein between 9 and 24 June 1999 to ascertain Foxtel's response to the draft heads of agreement. In the event, Mr Freudenstein telephoned Mr Wood on 30 June 1999 and told him that the whole idea of C7 on Foxtel could only be considered by the Foxtel board in some weeks' time. Mr Freudenstein added that C7's price was too high, but declined Mr Woods' invitation to nominate a price. The meeting received and discussed Mr Mounter's CEO's report dated 16 June 1999. They continue to criticise C7's quality, while not recognising that to provide a 24 hour service at that cost is extremely limiting. We have offered a bargain basement deal (of $4-5 a sub), in order to try and win the position which, in my view, is crucial to our negotiations with the AFL for renewal'. 722 Mr Stokes' evidence was that when he read Mr Mounter's report he realised that Mr Mounter had offered a bargain basement deal to Foxtel and that this was in flagrant violation of a previous (unrecorded) determination of the board. Yet, on Mr Stokes' account, he did not mention Mr Mounter's conduct at the eight hour meeting because the board was concentrating on other issues. I do not regard this evidence as plausible. Nor do I accept Mr Gammell's evidence that he understood the reference in Mr Mounter's report to the price being sought from Foxtel on basic or as if on basic (as distinct from on a tier). Mr Gammell's evidence on this point was both inconsistent and unconvincing. An ' AFL Strategy ' paper was distributed to board members shortly before 22 June. The AFL Strategy paper proposed that the board should note management's intention to participate in discussions with the AFL Commission with the objective of securing the AFL pay television rights for 2002 and following years. March 1999 brand research data shows that among those either subscribing to pay-TV or interested in subscribing to pay−TV, FOXTEL is seen as having the best sports by 42% against 17% for C7. Similarly, FOXTEL is considered to have better sports coverage than free-to-air by 51% as against 38%. However, it is clear our one remaining gap is in AFL programming. If FOXTEL leaves Seven as the "gate-keeper" on AFL rights, it is unlikely that the network will ever co-operate by releasing sufficient exclusive live pay-TV games to permit AFL to become a true subscription driver for pay-TV. More fundamentally, in assessing its medium-term competitive threats, FOXTEL must assume that the free-to-air networks will seek to expand the use of the digital spectrum granted them by the Federal Government from so-called "enhanced" broadcasts to true multi-channelling. If Seven is left with monopoly control of the AFL product it would then be in an excellent position to attack our subscriber base. Management is not recommending a bid for the free-to-air rights, given the anti-siphoning laws as they currently stand'. The paper identified the quality of C7 as an issue, since its non-AFL pay television rights were ' weak ' and the AFL product was limited compared with Foxtel's deal with the NRL. The major rights it holds apart from AFL are weak. ... Certainly, Seven would present its non-exclusive supply to all pay-TV platforms as evidence to the AFL that it will be able [to] maximise AFL coverage nationally without doing a direct deal with the pay-TV operators. For this reason management does not believe FOXTEL should consider a deal with C7 until we are able to more clearly determine whether a direct deal with the AFL acceptable to FOXTEL is feasible'. Opposite the observations that Foxtel's one gap in programming was the AFL and that Foxtel should seek to acquire the AFL pay television rights directly, Mr Macourt noted: ' Not critical. May be cheaper to acquire [through] C7 '. He also highlighted the worst case scenario projections for direct acquisition of the rights. 729 Mr Macourt's evidence was that he could not recall having a concluded view that it was cheaper to acquire C7 than the AFL pay television rights. He pointed out, correctly, that he had merely written ' may be cheaper '. I do not think that there is a sound basis for finding that his view at the time was that the acquisition of the rights at $15 million per annum was necessarily too expensive for Foxtel. To cover this guarantee, FOXTEL would need a penetration rate of less than 9% of its basic subscribers in the first year, which is very achievable'. The base case produced an NPV of $27.48 million, while a more optimistic set of assumptions resulted in an NPV of $70.32 million. The second draft business case produced identical outcomes. Mr Mockridge's evidence was that his staff (including Mr Freudenstein) had prepared the earlier drafts of the AFL Strategy paper and that he had not participated in their preparation. Mr Mockridge said that his own views were reflected in the final version of the AFL Strategy paper, not the drafts. While he had been willing to negotiate with Seven about the possibility of Foxtel taking C7, by June he had formed the view that a decision on C7 should be deferred until Foxtel could assess the extent to which taking C7 would adversely affect a bid by Foxtel to secure the AFL pay television rights directly from the AFL. At that time (mid-1999), Mr Mockridge believed that the AFL would make a decision about the rights by the end of calendar year 1999 (a belief recorded in the AFL Strategy paper itself). Mr Mockridge's evidence on these issues is consistent with the contemporaneous documentation and I accept it. 734 I also accept Mr Mockridge's evidence that he had formed the view by early July that it was preferable for Foxtel to deal directly with the AFL than to take C7 even though Foxtel would bear the risk of sub-licensing Optus and Austar. It must be remembered that Mr Mockridge had had discussions with AFL representatives about pay television rights for some time prior to mid-1999. It follows that I do not accept the suggestion made by Seven that the AFL Strategy paper prepared for the board meeting was merely a stratagem or subterfuge designed to keep Telstra at bay on the Fox Sports issue. --- At this point I believed them to be, or at least I believed that C7 would not be --- taking C7 would not be helpful to us pitching to the AFL. But it was completely right for Foxtel to go directly to the AFL to get these rights instead of buying it through a competitor. --- The AFL was dealing with the Seven Network, not C7 as a separate entity. It is Seven Network, our competitor. So the people we were up against were the Seven Network. --- Yes. --- My concern was if we were in a competitive bid with the Seven Network for the AFL rights, that our strategic advantage was our distribution, and if we didn't play that advantage out then we wouldn't win this competitive bid. --- Again, can you repeat it so I can listen to it very carefully? I know it's a long question. So far as Foxtel getting the AFL rights was concerned, your concern about doing an interim deal with C7 was that the AFL might draw the inference that if it ultimately dealt with Seven instead of Foxtel for the pay rights, it would still see its games on Foxtel via C7; wasn't that your concern? --- Yes. --- No, not necessarily. I had to have a rationale for the AFL to deal with Foxtel. --- Correct. --- But if the AFL could go to Seven and get all the benefits that Foxtel could deliver it, why would they deal with Foxtel? As the rights for 2002 onwards have to be bid for later this year, FOXTEL would be assuming considerable subscriber base growth risk not only within FOXTEL but also within Optus and Austar. The feasibility of the deal also appears to assume additional penetration rate assumptions once the rights are secured. The assumed price charged to subscribers for the tier is not provided. Considering FOXTEL does not compete in Austar's area, Austar is likely to attempt to use the benefits its subscriber base brings to the proposed structure to leverage a "subsidised" deal as it has done in the past. The benefits the proposed structure has over the current C7 offer, in addition to the risky financial benefits, are branding and one or two extra exclusive games a week. The paper mentions the AFL is keen to maintain a strong relationship with an FTA (presumably Seven). Therefore securing more than the current two live exclusive matches is potentially difficult. Taking a C7 branded channel is raised as an issue in the context of Seven potentially multi-channelling and becoming a competitor. The term of the C7 offer is to February 2002 and multi-channelling by the FTA's [sic] is currently prohibited until after 2005. A reference is made suggesting that if FOXTEL were to take C7 now, it would increase the likelihood of the AFL renewing the pay TV rights with them. NSL and Socceroos Soccer, Super 12 Rugby, Sheffield Shield Cricket, Tennis and Golf are considered weak. Tennis and Golf because most events are shown on FTA (much like FOXTEL's World Cup Cricket coverage where Nine showed all the Australian games live). No explanation of why soccer and rugby are considered weak is provided. If C7 were to lose the AFL rights, it is questionable whether the channel would continue to operate. This would leave FOX Sports in a position of strength when it came to negotiating the pay TV rights for the "weak" sports C7 had other than pay TV. Directors ask for a detailed paper be [sic] circulated as soon as possible outlining the reasons why C7 should not be taken until 2002, evidence as to why C7 sports are weak as compared to other sports and all the assumptions behind the proposed structure for 2002 and beyond' . (Emphasis in original. Mr. Falloon advised that it was important to obtain a clear view from the AFL of the rights which were likely to be available and the arrangements under which FOXTEL might bid for those rights. He stated that this support would not be forthcoming at this time. Mr N. Falloon stated that this would weaken FOXTEL's position in bidding for the AFL rights and that the medium to long term supply of sports was more critical to FOXTEL than short term carriage of C7. News said that Foxtel could NOT say that it was with News in any discussions with the AFL. Peter [Macourt] argued that Foxtel could not justify the $25M plus that would be required to get AFL. Both News and PBL argued that getting C7 would actually hurt Foxtel, but the arguments did not make much sense. Gerry [Moriarty] strongly pointed out that there [sic] arguments did not make sense --- need AFL for Foxtel, too expensive from AFL directly and cannot get from C7. Nick [Falloon] got a bit exercised, but Gerry continued to push. Tom pushed both shareholders to try to address. Peter tried to put the blame on Telstra and admitted that he did not know how to negotiate as "We sent out our number one negotiator [meaning Rupert [Murdoch]] and you did not deal". In the end, it was "agreed" that Foxtel should not approach the AFL at this point in time and News/PBL said that Foxtel could not take C7. Paul [Rizzo] said to me that it is definitely time for Telstra to take legal action and Gerry agreed. It was absolutely clear that both News and PBL only cared about themselves in this one and were not acting in the best interest of Foxtel. I mentioned that we intended to send a letter to News on this one AND that we were working on a Board paper. Paul and Gerry both seemed very supportive of clear action'. However, as News points out, there appears to be an inconsistency between her note, insofar as it stated that the meeting had agreed that Foxtel should not approach the AFL, and the ' consensus ' recorded in the minutes. Mr Mockridge understood after the meeting that he was to continue informal discussions with the AFL and he did so. To the extent that there is any inconsistency, the minutes are more likely to have been more accurate on this point than Ms Lowes' note. 740 Mr Macourt did not dispute that he had argued that Foxtel could not justify the $25 million that would be required to get the AFL, nor that he had refused to authorise discussions between Foxtel and the AFL until the Fox Sports issue had been resolved. He said that he was also influenced by reluctance to commit News to editorial support for a bid that he thought was unlikely to succeed. He had in mind Seven's advantage in having the first and last right and the problems created by the anti-siphoning regime for a bidder seeking the pay television rights. 741 Despite Mr Macourt's reluctance to accept that he thought direct acquisition of the AFL pay rights was too expensive, it is clear that he both had and expressed a concern about the cost of the rights. I accept, however, that this was by no means a final view and that there were other factors that concerned him at the time about the bid. It is also clear enough that he was unwilling to contemplate taking C7 on Foxtel until the Fox Sports dispute had been resolved. 742 On 20 July 1999, Mr Wood wrote to Mr Freudenstein noting that Mr Freudenstein had not provided any response to the draft heads of agreement forwarded by Seven on 9 June 1999. Mr Wood asked for information on the outcome of Foxtel Management's board meeting. In response, Mr Freudenstein told Mr Wood that Mr Mounter and Mr Mockridge needed to speak to each other. Mr Mounter's days at Seven by then were numbered. An email of 15 July 1999 to Ms Lowes from Mr de Jong, an in-house lawyer at Telstra, set out the issues. The email was headed ' Fox Sports Reasonableness ', a reference (I infer) to News' obligation under the Umbrella Agreement to offer ' reasonable commercial terms for the supply of Fox Sports to Foxtel '. I spoke with someone from Henry's team [Henry Ergas, an economist] --- he is interested in finding costs for other sports programming to compare with Fox Sports costs. AT Kearney [a firm of management consultants] did some work here, but prices were for US markets, so limited usefulness. --- this is what really counts to the distributor). If the "pulling power" of C7 is no less than the "pulling power" of Fox Sports, but the price is significantly lower, it would assist our case. Of course, one might expect Fox Sports to be more expensive if it is exclusive in relation to FOXTEL's major competitor (C7 being non-exclusive). As to the first point, can we ask C7 to give Telstra a term sheet (including price) for (a) each C7 channel in basic , and (b) for both in basic ? As to the second point, should we ask AT Kearney to do the work on this (they have done part of the work already)? ' (Emphasis in original. I am in fairly regular contact with Seven/ACE so I suppose that I could ask. However, it is unlikely to be the best offer we could get as it would not come from serious negotiation. Is there anything in the accounts of Optus that might give us any clue for them? I will asked [sic] ACE if they would give it to us and hint that we want to pull the plug on FoxSports [sic]. I was a little disappointed in their work in FoxSports --- I did not think that it answered the real questions. However, I am happy to bring them back (or to find someone else) if we know what we need/want'. The purpose of the draft was said to be to secure approval for Telstra to acquire the remaining 50 per cent of Foxtel and to ' pursue certain legal remedies against News as part of its overall strategy '. Meantime, they are extracting and seeking permanently to extract the highest sports prices in the industry from Foxtel, knowing that Telstra is funding 50% of this, and News only 25%. At the most recent Foxtel Board meeting in July, News indicated that it would not support any attempts by Foxtel to secure AFL programming until Telstra completed the FoxSports [sic] deal with News on its terms'. However, they increasingly seem to side with News. Also, they have refused to allow Foxtel to take the C7 sports package, citing a view that it was better for Foxtel to allow C7 to fail. (1) Management is concerned that PBL will increasingly seek to promote interests outside of Foxtel rather than Foxtel itself. This appears to have been a consequence of Dr Switkowski's view that the amount of money at stake did not warrant the drastic step of litigation against News. Both parties have clearly decided that Telstra will not take strong action and hence are not responding to anything we raise'. The methodology was said to involve an analysis of free-to-air ratings ' of actual events or similar programs as a proxy for measuring general appeal of sport content '. The report included a chart comparing the pay television ratings for Fox Sports and C7. This showed Fox Sports as having very much higher ratings, although the disparity was in part due to the relatively smaller number of subscribers having access to C7. The lengthy letter sought to refute an assertion previously made by Mr Moriarty that News had not addressed the issues raised by him in his letter to Mr Lachlan Murdoch of 15 March 1999 ([665]). The thrust of the letter was that the terms for the supply of Fox Sports programming which News had offered to Telstra and Foxtel were reasonable and thus News had met its contractual obligations to Telstra. News absolutely rejects Telstra's assertion that FOXTEL is suffering a so-called material adverse cost impact as a result of the supply to FOXTEL of the Fox Sports channels. The terms of that arrangement are very reasonable. News is concerned that Telstra's ultimate desire is to strip FOXTEL of access to the Fox Sports channels, and for some inexplicable reason, move FOXTEL to a point where it takes the sports channels that FOXTEL's competitor has, and which are supplied by a free-to-air operator'. Mr Vicary, who seems to have reported to Ms Lowes, said that he had undertaken to provide Mr Samarcq, the Director of External Relations, with a short memorandum on ' the messages ... that we will be reeling out this week '. 750 Mr Vicary duly prepared a document entitled ' Pay TV Brief ACCC Declaration '. This is a proposition that Telstra is prepared to consider on proper commercial basis. Such a deal is extremely unlikely as News and PBL run FoxSports [sic] (the only competitor to C7) and their stated goal is "to run C7 out of business . " A deal on the Olympics is possible'. (Emphasis added. It is not clear who told Mr Vicary of the ' stated goal ' of News and PBL. The evidence is consistent with the information coming from somebody at Seven, or perhaps from someone within Telstra. In any event, I give little weight to the document on the question of the purpose of the Foxtel partners. 752 Dr Switkowski was cross-examined on Mr Vicary's paper. Dr Switkowski could not recall being told by his executives that the stated goal of News and PBL was to run C7 out of business. Nor had he formed that view himself. I accept Dr Switkowski's evidence. The CEO indicated that the application would be in the name of FOXTEL only as Telstra were unwilling to join the proceedings at this stage, although FOXTEL was receiving good co-operation from Telstra's legal team on the matter. The CEO reported he had continued to maintain informal contacts with the Commission, which had again indicated it would seek a presentation from FOXTEL shortly. The CEO undertook to circulate a draft of that presentation'. Tom [Mockridge] is of the strong view that FOXTEL can get the AFL so does not need Seven. He thinks that the AFL would go for a JV with Foxtel to supply PayTV content. There was some discussion if AFL would go with Foxtel or FoxSports [sic] --- we said FOXTEL. (Query --- they may be pushing Telstra to pay 50% of the high cost stuff, but ... better to start this way and back off in my view. ) All agreed that Tom should approach the AFL about a deal here. There was some discussion re Fox Sports but ... not much'. At the meeting, held at the instigation of the AFL, Mr Samuel indicated that the AFL was interested in a strategic alliance with Telstra that would cover pay television, broadband and narrowband internet rights. According to Mr Pretty, the AFL was clearly looking for a ' soul mate '. We will need to be very careful to ensure that we do not end up bidding against ourselves'. Ms Lowes attended these meetings, which were characterised in a Telstra memorandum as ' "fact finding" on the part of AFL '. 758 On 16 November 1999, Ms Lowes had a discussion with Mr Samuel in which he advised that the AFL was working on three terms sheets with a view to inviting alliances to come to the AFL. One of the term sheets was to deal with pay and internet rights. Mr Samuel said that Telstra was ' the elephant that everyone knew they had to work with '. Ms Lowes' view was that ' we might pull this one off, but probably with News '. She thought that this would be a good outcome. Telstra would LOVE to do this, but ... News and PBL (the owner and soon to be 1/2 owner of FoxSports [sic]) are actively blocking it at the Foxtel level. This has been conveyed to Seven. They are simply looking at some way to force their way in and I do not see how we can help'. He seemed very sceptical of our claims re exclusivity of contract with Foxtel, tho' subsequently I am told that his view is conveniently coloured and overlooks his own role in the drafting and timing of relevant legislation. Also, there is little to fear from adding C7 to Foxtel assuming matters of branding, and most especially pricing, could be resolved. But I am not sure that Telstra should explicitly align with News/PBL on this one'. The benefit on this is that it would place additional pressure on News and PBL and would probably assist in shifting public opinion that media greed is more to blame than any access issues. The downside is that it makes very public a long standing dispute ... and probably escalates our need to fix it'. Tom [Mockridge] agreed that FOXTEL should seek to get the Olympics and highlighted that Seven's terms to date were not acceptable. He also suggested that the deal was likely to get better the closer to the Olympics. I agreed with the general point but asked him to consider moving faster given the circumstances. Tom argued that Seven was a competitor to FOXTEL and that he thought he had a chance of getting the AFL directly and that he did not want to help Seven in any way. I pushed a bit, but ... I do not think that he (or News or PBL) will move here'. He agreed that Telstra executives had reported to him the results of the research summarised in the briefing paper. On that basis, he had concluded that it was in Foxtel's interests to carry C7 and ' possibly ' to carry C7 instead of Fox Sports. 767 The outcome of the meeting was inconclusive. The CEO's report to the Telstra board of 26 November 1999 stated that ' the issue will remain unresolved and the tension between the parties is likely to remain'. The Commission has appointed a sub-committee to deal with this issue headed by Graeme Samuel, who I met again last week. Samuel indicates that the Commission will seek to do a deal shortly, possibly as early as before the end of this year. It will proceed by supplying FOXTEL with a term sheet indicating what pay television rights the Commission believes it is able to offer. A difficulty in these discussions is that we understand that Seven enjoys a first and last right with the AFL for FTA rights and the AFL has a "put" option to Seven for pay rights. While naturally FOXTEL is unaware of where the boundary is drawn between free and pay rights, Samuel is confident that sufficient rights can be extracted to be attractive to us. It appears likely this will be in a form where, while most weekly games will be available on FTA in at least one city in Australia, those same games will be restricted to pay television availability in other cities. It is also possible the Commission will seek to offer us a simultaneous broadcast right with FTA games. As a consequence, even if FOXTEL were not to participate in a bid for the AFL, it is likely that the Commission will seek to find a party other than Seven to distribute the rights. More fundamentally, in assessing its medium-term competitive threats, FOXTEL must assume that the free-to-air networks will seek to expand the use of the digital spectrum granted them by the Federal Government from so-called "enhanced" broadcasts to true multi-channelling. Seven has already broken with FACTS on this issue. If Seven is left with monopoly control of the AFL product it would then be in an excellent position to attack our subscriber base. Management is not recommending that FOXTEL bid for anything other than pay television rights (ie FTA, internet rights and other applications are not within our business scope and therefore it is more straight forward for FOXTEL not to complicate a bid by seeking to involve them). Both have indicated their dissatisfaction with that service and we understand that they have a break point if C7 no longer has access to AFL rights, and therefore we believe both distributors would readily accept a sub-licence deal from the joint venture. (Emphasis added. 770 After Mr Murdoch had seen the draft, Mr Mockridge prepared a final version of the AFL Strategy paper for the board. The only major difference was that the final version removed the last bolded paragraph reproduced above. Mr Mockridge's evidence was that he had been prepared to recommend seeking an interim deal with C7, notwithstanding that the long-term Foxtel-Fox Sports arrangements had not been finalised. (This implied that between June and October Mr Mockridge had formed the view that an interim deal with Seven was compatible with Foxtel's AFL aspirations. ) Mr Mockridge said in evidence that he remained optimistic that a deal with C7 could be done, but that he had removed the paragraph following a conversation with Mr Lachlan Murdoch who ' reiterated his view that until Fox Sports was sorted out we shouldn't take C7 '. Mr Mockridge was content in these circumstances to delete the paragraphs in the interests of obtaining the board's support for the recommendation to deal directly with the AFL Commission. Mr Mockridge rejected a suggestion put to him that he had included the paragraph in the draft paper because he had formed the view that if C7 lost the AFL pay television rights it would be ' doomed commercially' anyway. I accept Mr Mockridge's evidence on those matters. 771 The final AFL Strategy paper had ' Base Case ' and ' Positive Scenario ' models attached. The first showed an NPV of $81.8 million for Foxtel over 10 years, while the more optimistic scenario produced an NPV of $143.1 million. Mr Mockridge accepted in his evidence that the estimate that Foxtel would achieve increased basic penetration with AFL of 1.9 per cent in the southern states and 0.9 per cent in the northern states was ' fair average rather than conservative '. He also agreed that he would have felt uncomfortable with forecasts that assumed greater increases in basic penetration than those assumed in the ' positive ' model, namely 2.9 per cent for the southern states and 1.8 per cent for the northern states. 772 Mr Macourt acknowledged that the estimate of an NPV between $81.8 million and $143.1 million was higher than the proposal put to the Foxtel Management board in July 1999. He said, however, that he thought at the time that the projected subscriber growth was, if anything, pessimistic because the penetration rate in Melbourne was six per cent less than Sydney. Since the model showed that only relatively small increases in subscribers were necessary to break even, he regarded the risk of acquiring the AFL pay television rights at the assumed price to be low. While there were some disparities in Mr Macourt's evidence at different points, they were minor. I consider his evidence of his reasoning process at the time of the board meeting to be broadly correct. A sub-committee was established, comprising Ms Lowes, Mr Falloon and Mr Macourt, to modify the AFL offer as negotiations progressed. Mr Anderson said that he wanted Optus out of direct involvement in pay television and raised the prospect of taking Fox Sports in a non-exclusive arrangement. Mr Rizzo told Mr Anderson that Telstra would consider the proposal. Mr Rizzo duly reported the meeting to other Telstra executives. 775 Ms Lowes, in a detailed response later that day, pointed out that the issue was not new, as Mr Anderson had been ' trying to get non-exclusive content for Pay TV for some time '. Ms Lowes explained why the proposal presented difficulties. In particular, Telstra had invested in Foxtel for telephony defence because Foxtel had better programming and marketing than Optus. Common programming between Foxtel and Optus would undercut Telstra's advantage. Furthermore, Ms Lowes did not think that the economics of any deal would ' stack up '. Mr Rizzo thought that these were ' compelling points '. He asked for a final evaluation so that a formal response could be made to Mr Anderson. However, the issue then seems to have faded away for some time. Mr Wood said that in view of recent discussions, Seven was prepared to make ' another attempt at a commercial solution '. The covering letter asked for a response from Foxtel by 30 November 1999. As mentioned above, you indicated those prices were too high but you would not indicate what price would be acceptable. Given your reluctance to discuss price with us, we have looked at our fees again and focused on offering a price to Foxtel which is a significant discount on the fees you are paying FoxSport [sic] for the FoxSport channels. As you will see we have offered a price for all the channels (including the Olympics) which is a discount on the price Foxtel has paid FoxSport for the FoxSport channels over the last 12 months together with a simple payment mechanism based on the total number of subscribers to the Foxtel service. The payment mechanism gives Foxtel the flexibility to place the Channels in whichever Foxtel tier it chooses in order for Foxtel to optimise its own channel line up. The fee structure means Foxtel would be paying Seven less than it pays FoxSport. Given the time that has elapsed since Seven first approached Foxtel about Seven supplying C7 to Foxtel and the urgency of providing for Olympics coverage, it is important that this matter be brought to a resolution. Foxtel has shown little interest in recent months in progressing the matter. Seven now needs to know where it stands'. (Emphasis added. Nonetheless, News contrasts the terms of this offer unfavourably with the earlier offer made by Seven on 13 May 1999. C7 retained complete discretion about the scheduling and selection of AFL matches. • The later offer made no promises about the branding of the sports channel and Mr Wood's cover letter made it clear that C7 would not in fact be rebranded. • Unlike the earlier offer, the 17 November 1999 term sheet did not contain a ' most favoured nations ' clause. • The earlier offer was for a two and a half year term, but Foxtel was asked to consider an option to extend for a further two and a half years at Seven's election, dependent upon the retention of the AFL pay television rights. The later term sheet provided for a 10 year term and required Foxtel to take C7 in the event that Seven retained the pay television rights to the AFL. • The earlier term sheet proposed $4.00 pspm for C7 on a tier. The fee structure in the later term sheet provided for substantially higher fees and required Foxtel, even if C7 were on a tier, to pay a fee as if it was on basic. • The earlier term sheet indicated that the Olympics could be dealt with separately, while the later term sheet rolled the C7 proposal and the Olympics proposal together. In particular, he said that he was not told in any detail of the income expected if the offer were to be accepted. Nor had he appreciated that the proposed offer had been described by Mr Wood as a final offer. 781 Mr Stokes was asked in his evidence to make an assessment of the revenue that would have been derived had Seven's 17 November 1999 term sheet been accepted. Mr Stokes also agreed that if Foxtel had accepted Seven's proposal, the fortunes of C7 would have turned around immediately from a slight loss to a situation of massive profitability. Mr Stokes further acknowledged that he realised at the time that the 17 November 1999 offer, if accepted, would have cost Foxtel many multiples of the price which had been the subject of earlier negotiations between Seven and Foxtel. Yet Mr Stokes asserted that he considered that Foxtel might have accepted the deal ' because [he] thought it was good value for Foxtel '. Mr Stokes later resiled from this last assertion and I do not regard it as credible. We estimate that the NPV cost of this to FOXTEL is in excess of $340 million assuming that the deal expires at the end of the ten year term (which understates the cost to FOXTEL relative to normal practice). This also assumes that there is no increase in subscribers to compensate. Were we to assume any increase in subscribers, it would be necessarily a very conservative assumption given that our market research shows that the appeal of the C7 channel to prospective subscribers is approximately one-third of that of Fox Sports. Clearly this is not commercially viable for FOXTEL. Furthermore, FOXTEL has consistently stressed to you we are not interested in taking any of your services on basic (or an obligation to pay on basic) and therefore I can only assume that your so-called "offer" was drafted with the express purpose of forming part of your legal strategy and was not intended to constitute a serious offer. This view is reiterated by your presenting it as a "final offer" requiring acceptance in all parts by November 30. I believe that if this offer was a serious commercial offer it would not have been phrased as Seven's final offer which FOXTEL is required to accept by 30 November 1999. If the Seven Network is interested in negotiating with FOXTEL for the provision of the Olympic channels on the terms I have outlined above, then I would be pleased to discuss this with the Seven Network more fully'. (Emphasis added. As I have said before, FOXTEL remains ready and willing to engage in serious commercial negotiations on the Olympic channels and you will find us flexible financially. Mr Mockridge sent Mr Macourt a copy of his response to Seven of 30 November 1999. Mr Macourt was content with that response because he thought that there was no realistic chance of the Fox Sports issue being resolved before the AFL pay television rights were awarded. Mr Macourt's position at the time was that he opposed C7 being taken on Foxtel until the conclusion of a long-term supply agreement with Fox Sports. On 19 November 1999, Mr de Jong was asked to analyse the term sheet. Mr de Jong provided his comments to Ms Lowes later that day. Seven says this is their "final offer". This implies they will not negotiate, which is a bizarre position given the many problems with the term sheet. Query what their tactic is here?? Clause 7 relating to tiering is clumsily worded. They seem to want to impose an obligation on FOXTEL to ensure that at least 50% of FOXTEL's total subscriber numbers subscribe for the channels --- How would FOXTEL ensure this? Clause 8 fees are interesting. The fees are pegged to the Fox Sports price (with relatively small discounts), CPI indexed and are payable on ALL basic subscribers. These fees payable would be higher than the fees previously offered. Clause 13 provides only general and vague quality commitments. In clause 15, the promise of 2 live AFL matches per week (except finals) does not say they are exclusive. The promise of 2 AFL qualifying final matches per week does not say whether they are live or exclusive. Seven's obligations are subject to third party agreements, which is a major risk for FOXTEL. The obligations and liabilities on FOXTEL seem to heavily outweigh the benefits to FOXTEL --- FOXTEL has some very firm financial and other obligations, while Seven has very vague obligations, often defined by reference to its own discretion'. She thought it was an ' odd term sheet '. She told Mr Gammell, after quickly skimming the letter herself, that it ' did not look compelling '. Ms Lowes told Messrs Rizzo and Mockridge on 29 November 1999, that the offer was not acceptable and did not represent discussions that either Foxtel or Telstra had had with Seven on the subject. Now that we know what FOXTEL is paying for FoxSport we understand your concerns with our price --- given the starting point of at least $7.50 . Had we known what FoxSport was charging FOXTEL for its channels, we would have come up with a more generous discount formula for our channels. It should not be lost on you that we were seeking to provide a lower priced service for FOXTEL than the incumbent FoxSport product. If our calculations as to the Fox Sport price are correct, we would be very interested in discussing with FOXTEL a greater discount than the one contained in our 17 November offer. Can you please let us know what an acceptable discount would be. The FOXTEL drafted C7 Sport term sheet you sent to me on 24 May of this year indicates that basic was certainly within FOXTEL's contemplation. Further, I don't see how our term sheet would interfere with FOXTEL's negotiations regarding AFL rights given that clause 22(b) of that term sheet allows FOXTEL to terminate, without penalty, if Seven ceases to hold the AFL rights. Could you please tell me exactly how obtaining C7 Sport interferes with your negotiations regarding AFL rights. Your motives in drawing out negotiations and then, at this late stage, saying you are not interested at all are questionable to say the least. We assumed that both our organisations had been negotiating in good faith. It is clear now that FOXTEL does not wish to take C7 Sport at any price, due to FOXTEL's own strategies to ensure FOXTEL and not Seven, obtains the AFL rights. Seven reserves all its rights in relation to these matters'. (Emphasis added. Mr Stokes expressed disappointment that Seven's offer had been seen as a legal strategy, as it was a ' serious ' and ' balanced ' offer. Mr Stokes said that he would be available to advance any discussions. 791 The bolded passage in Mr Wood's letter to Mr Mockridge was false. Mr Stokes admitted in evidence that he expected at the time that the fee payable to Fox Sports to be greater than $7.50 pspm. Mr Stokes saw Mr Wood's letter before it was sent. I think it likely that Mr Wood also was aware that the letter contained a false assertion, if for no other reason than there had been press reports as early as April 1999 that Foxtel was paying at least $10.00 pspm to Fox Sports. It is probable that the press reports based on ' market intelligence ' had been brought to Mr Wood's attention. This aspect of Mr Wood's letter of 6 December 1999 does neither him nor Mr Stokes any credit. In a memorandum of 28 January 2000 to Mr Lachlan Murdoch, Mr Mockridge saw this as an opportunity for a possible settlement of the Fox Sports pricing issue. 793 According to Ms Lowes' report, the Foxtel board meeting of 8 February 2000 (Ms Lowes' last) was told by Mr Mockridge of a ' good meeting ' with the AFL, apparently held on about 20 December 1999. Discussions were to be held with Foxtel's legal people to see ' what rights could be arranged '. Mr Akhurst, who was about to join the Foxtel board, expressed his agreement with the Media Division, but qualified his agreement by noting that he was ' still learning '. 796 On 23 March 2000, Mr Blomfield advised the directors of Foxtel that Telstra was now willing to support a proposal to commit advertising expenditure to News in return for editorial coverage. The fax did not explain why Telstra apparently had a change of mind. Mr Stokes sought to persuade Mr Blomfield to take C7 on Foxtel. Mr Blomfield's position was that Foxtel wished to acquire the Olympic channel but not C7. 798 Mr Blomfield wrote to Mr Stokes on 27 April 2000. The letter noted that the barriers to Foxtel and Seven reaching a commercial agreement on the Olympics channels were Seven's insistence on a minimum guarantee of $25 million for the exclusive pay television rights and on carriage of C7 on Foxtel as a precondition. Mr Blomfield suggested that the two issues be treated separately. Seven has previously proposed a price for these channels which is at a significant discount to the FoxSport [sic] fee --- starting at 80% of what Foxtel pays FoxSport per subscriber and reducing this fee as subscriber numbers increase. That proposal was for an all inclusive fee including both the Olympic channels and C7. That price still stands --- it is an extremely competitive price'. Mr Stokes also said that he could not see how Foxtel's acceptance of C7 could interfere with its ambition to bid separately for the AFL ' other than possibly by legal provisions such as the Trade Practices Act '. A copy of this letter was sent to Dr Switkowski. This will reduce Telstra's (and, if FOXTEL is found to be a carriage service provider, FOXTEL's) potential damages exposure, and eliminate (or at least reduce) further public criticism of FOXTEL and Telstra for 'blocking' Olympic coverage on FOXTEL. However, Seven appears to be committed to tying the Olympics to the C7 Sport channel (Stokes is still referring to Seven's November 1999 term sheet, which ties the channels). FOXTEL management appear to be totally opposed to carrying the C7 Sport channel. This opposition may be due to FOXTEL management's strategic considerations regarding AFL rights, and/or could be at the direction of News and/or PBL because of their Fox Sports interests, or PBL's FTA interests. Whatever the reason is, we appear to have an impasse'. This is very clear and well reasoned. Thank you. Maybe the answer is that Foxtel has an absolute right to decide whether it wants to deal with anyone, irrespective of commercial attractiveness of any particular deal or extraneous agenda. For example, if the access regime does not apply as we claim it does not, then Foxtel could refuse to deal because it didn't like Stokes or any reason it had. But if the regime does apply, then should we as directors of Foxtel be insisting that proper commercial criteria are used for working out the deal with Stokes? Wouldn't it be best for it to be right now so there was not left in place evidence of improper considerations (if that were in play and I'm not sure it is, although I note your comments ... ) and then a change in stance being required in the event the litigation is lost. Mr Akhurst's view was that News and PBL had partly been driven by their preference for the commercial interests of Fox Sports at the expense of Foxtel. He considered Mr de Jong's perceptions ' quite plausible '. However, he said that he was not expressing his own view as to a possible misuse of market power, but asking Mr de Jong for his advice. The documentation is consistent with that evidence and I accept it. 804 On 26 May 2000, Mr de Jong sent a further memorandum to Messrs Akhurst and Willis. He gave four ' legitimate ' reasons for rejecting Seven's November 1999 term sheet. The first three were the high price asked for the supply of C7; the absence of guarantees as to quality; and the excessive length of the term proposed. (Emphasis added. I don't think FOXTEL management is minded to do a deal because of [the adverse consequences for Foxtel's AFL rights bid] but if Seven drops the price low enough perhaps they will. However, there is a certain level of asymmetry in the way FOXTEL management deals with News entities (eg Fox Sports) versus the way they deal with Seven. For example, FOXTEL management was much tougher in negotiations with C7 than with Fox Sports. Also, FOXTEL management seem to have no problem putting "Fox" brands onto FOXTEL, but is vehemently opposed to Seven having its branding on the Olympic and C7 Sport channels (although C7 is arguably a competitor while Fox isn't). It strengthens Seven, which is bad for [Nine] and bad for Fox Sports. My cynical view is that Fox Sports would like to monopolise the pay TV sports rights market in Australia, and C7 is Fox Sports' only competitor (ESPN is also available in Australia, but I think it is basically a US sport channel resold in Australia). Mr de Jong replied that Mr Blomfield's letter of 27 April 2000 had made just such an offer, but that Mr Stokes had rejected it. He did so because, as he said in an internal memorandum, he recognised that Foxtel would never accept bundling of the two sets of rights. In consequence of Seven's change of position, C7 and Foxtel Management reached agreement as to carriage of the Olympic channels. On 7 July 2000, they signed a term sheet which recorded the terms of an arrangement for the carriage of two C7 Olympic Games channels on Foxtel. By April 2000, the board of Foxtel Management was considering the introduction of a digital service which would provide enhanced capabilities. By May 2000, Mr Akhurst was discussing with Mr Macourt a redefinition of the scope of Foxtel's activities. One of Telstra's concerns, as Mr Akhurst acknowledged, was that News had ' strong management control ' over Foxtel. Mr Akhurst agreed that his view at the time was that if the totality of issues between the Foxtel partners could be resolved, that would be a ' bigger sum ... than fixing the Fox Sports pricing issue '. --- Yes. --- Build some trust. --- Yes. --- Potentially. --- I don't know that I would have put it exactly like that. --- What I had in mind was that we would sit around the table and identify what issues were of importance to each of the relevant partners and discuss what their objectives were in relation to those issues, and then see which, if any, of those might be soluble. I didn't really know where it was all headed at that point. I wanted to get around the table and explore the territory with them'. A briefing note of 5 July 2000, prepared by Mr Greg Willis in anticipation of a meeting between Dr Switkowski and Mr Lachlan Murdoch, recorded that agreement ' in principle ' had been reached on some issues, although discussions continued ' and could stall ' on other matters. The parties had agreed in principle to expand the scope of Foxtel; to allow the Foxtel partners to bundle Foxtel with their own services (but not with products in competition with Telstra); and to provide for the Foxtel partners jointly to appoint senior officers of Foxtel. The topics on which discussions were continuing included whether Telstra would be the sole supplier of telephony services to Foxtel; whether the obligation of News and PBL to supply Foxtel with content on an exclusive basis should be removed; whether Foxtel should be floated on the sharemarket; and whether agreement could be reached for the long-term supply of Fox Sports to Foxtel. This is from the increased value of FOXTEL, revenue share and telephony defence. These included expansion of the scope of Foxtel's activities; removal of the non-compete obligations; and removal of News' and PBL's exclusive pay television content supply obligations. The paper noted that existing exclusive content requirements remained a key market differentiator between the Foxtel and Optus pay television platforms, but recorded that ' Telstra may be willing to consider exceptions on a case-by-case basis '. (Emphasis in original. The document recorded that the board of Telstra had ' drawn a number of lines in the sand '. These included a requirement that the content arrangements for pay television should remain in place. 817 An apparently lengthy meeting took place between Mr Macourt of News and Mr Akhurst of Telstra on 27 July 2000. Many items were discussed, including whether the obligations of News and PBL to provide exclusive content to Foxtel should remain. The notes of the meeting do not suggest that the issue was resolved. 818 On 18 August 2000, Mr Akhurst summarised for Mr Mansfield and Dr Switkowski the state of negotiations in relation to Foxtel. In the next 3 years News and PBL have suggested programming obligations which are weaker than their current obligations. This will result in less programming delivered to FOXTEL and at higher prices. The News and PBL agenda appears to include being able to supply Fox Sports to Optus, which will harm FOXTEL. It will also allow News and PBL to deliver their content to their own pay TV operation if they are released from the non-compete. News and PBL also want Telstra to assume programming obligations'. Mr Anderson asked what had become of the promise made six months earlier to sell Fox Sports to Optus. Mr Anderson pointed out that nothing had ever happened. Mr Rizzo responded that he ' wasn't sure its [sic] ours to sell '. Mr Anderson concluded the email reporting on the meeting on a sceptical note: ' (probably another six months ... ) '. 820 Mr Rizzo responded on 9 August 2000, apologising for the delay. He said that Telstra's consideration had ' been complicated by other factors affecting Foxtel ', presumably a reference to the discussions concerning the restructuring of Foxtel. It does not appear, however, that Mr Rizzo made any further written response to Mr Anderson. 822 A meeting took place between Mr Philip and Mr Akhurst on 1 November 2000. He said they did not really have any difficulty with this except that FOXTEL Management had told them exclusivity for Fox Sports was extremely valuable (and that this would therefore need to be reflected in the exclusive price/non-exclusive price differential), and that they had great difficulty agreeing to this when Optus was suing them on the cable roll out --- he said Optus had recently re-pleaded and re-invigorated this claim, and was seeking in the order of $900 million --- he referred to it as a very irritating try on --- he was clearly trying to tell me that we should get Optus to drop the claim as the price of getting Fox Sports'. He did so by reference to handwritten notes. As a postscript, I include a brief account of the award of the AFL broadcasting rights for 2007 to 2011, which occurred in 2005. The award to Seven and Ten of the AFL broadcasting rights for 2007 to 2011 through the exercise of Seven's last right of refusal, although not the subject of any complaint in the proceedings, is relevant to significant issues in the case, including market definition. 825 Of necessity, there is material in this Chapter that relates to topics dealt with elsewhere. Equally, material presented elsewhere, particularly in Chapters 7 and 9, relates to the factual matters outlined in this Chapter. Some cross-references are given, but it is important to remember that each Chapter in this judgment is not necessarily self-contained. The AFL-Seven Licence Extension took the form of the AFL-Seven Original Licence, but with additional clauses and some amendments. The AFL-Seven Licence Extension extended the AFL-Seven Original Licence to cover the 1999, 2000 and 2001 AFL seasons. Because the formal agreement executed by the parties on 15 November 1996 incorporated the AFL-Seven Original Licence, the consolidated agreement governed the 1993 to 2001 AFL seasons. I shall refer to the consolidated agreement as the ' AFL-Seven Licence '. For example, the fee of $33 million for the 2001 season was made up of $20 million for the free-to-air television rights and $13 million for the pay television rights (cl 4.10(i)). At a minimum, the AFL agrees that it will schedule 30 games in 1999, 33 games in 2000 and 36 games in 2001 so that they are available for live Australia wide pay television coverage. Scheduling of such games will be agreed between [Seven] and the AFL'. The AFL also agreed to provide at least six Saturday night games for broadcast on pay television throughout Australia without restriction and at least 12 Sunday matches played in Melbourne for exclusive pay television coverage without restriction (Sch 3). 832 On 15 November 1996, the same parties entered into the ' AFL Copyright Agreement '. Under the AFL Copyright Agreement, copyright in Australia in all transmissions and recordings of each ' AFL Spectacle ' vested in the Seven company that first transmitted or recorded it. The copyright was assigned until the end of the term of the AFL-Seven Licence Extension (cl 2.1). At the end of the term of the AFL-Seven Licence Extension, copyright reverted to the AFL (cl 2.2). Subject to the AFL-Seven Licence Extension, Seven was entitled to transmit on free-to-air or pay television within Australia the recordings of AFL Spectacles, on an exclusive basis during the term and on a non-exclusive basis in perpetuity (cl 4). Seven agreed to make irrevocable offers to the AFL in respect of free-to-air and pay television rights covering the whole of the period. Seven agreed to pay the AFL a total of $20 million as consideration for the rights and benefits under the Deed and also agreed to negotiate a sponsorship package with the AFL (cl 2). 834 The AFL undertook not to grant a licence of the AFL free-to-air television rights to any person except for a 10 year term (2002 to 2011), or for a five year term (2002 to 2006) followed by further licences for the balance of the term (cl 3). The AFL further agreed not to grant a third party a licence for any term unless it first made a written offer to grant the licence to Seven (' First Offer ') (cl 4(a)). Seven had 14 days in which to accept or reject the First Offer (cl 4(b)). If Seven rejected the First Offer, the AFL was free to negotiate with a third party for the grant of the free-to-air television rights. However, before granting any such licence, the AFL had to make a ' Last Offer ' to Seven on the same terms and conditions offered to the third party (cl 4(d)(i)). If Seven rejected the Last Offer, the AFL had 45 days in which to grant a licence to the third party on the terms and conditions of the Last Offer (cl 4(d)(iv)). 835 Clause 5 provided for the AFL to have a put option, in that Seven irrevocably offered the AFL the right to require Seven to accept a licence for the 10 year term, or the first five year term or further terms totalling five years, on specified terms and conditions. The licence fee if the AFL accepted the offer (that is, exercised its put option) was to be $36 million per annum, subject to CPI adjustments (cl 5(b)). This irrevocable offer must be accepted by the AFL within 30 days of a binding licence for the Term being concluded between Seven and the AFL pursuant to clause 4 or clause 5'. For each year of the term, Seven guaranteed the AFL a minimum return of $15 million (cl 6(d)). 837 The parties to the First and Last Deed agreed that News would provide promotional support to the value of $5 million per annum over a five year period commencing in 1998. Seven was to procure News to provide this promotional support (cl 8). In fact, Seven and News had previously agreed, as part of the ' Docklands Stadium Consortium Proposal ' (by which Seven proposed that News participate in a bid for the Docklands Stadium in Melbourne, at which AFL matches were played), that News would offer the AFL a promotional package worth at least $5 million per annum. Mr Mockridge's view was that exclusive AFL content was a subscription driver, particularly in Victoria, where Foxtel's subscriptions were lagging. 839 Mr Macourt, who in 1997 was News' Chief Financial Officer, held a similar view at the time. He was responsible for inserting a provision into the Docklands Stadium Consortium Proposal, to the effect that News had to be given all AFL pay television rights made available in connection with the Docklands bid. 840 An internal AFL document of 9 July 1998 recorded that Seven had told the AFL that it would not bid if the AFL broadcasting rights package was split between free-to-air and pay television rights. The same document recorded that Nine had expressed an interest in Friday night games, but had indicated that NRL content would be a priority in Sydney and Brisbane. 841 On 21 July 1998, Mr Moriarty (then the Telstra executive responsible for the Foxtel Partnership) and Mr Akhurst met representatives of the AFL, including Mr Jeff Browne and Mr Wayne Jackson. The meeting canvassed the options available to the AFL in relation to the broadcasting rights after 2001. Telstra expressed interest in acquiring the AFL pay television rights (for broadcast by Foxtel) and the online rights. The AFL representatives said at the meeting that the AFL might split the free-to-air and pay television rights. 842 The minutes of PBL's Executive Committee meeting of 6 August 1998 recorded that Messrs Falloon and Macourt had attended a meeting with Mr Jackson of the AFL to discuss the possible acquisition of the AFL pay television rights. The minutes did not identify which entity or entities might be interested in acquiring the rights. 843 Reference has already been made to meetings between Telstra and News representatives on 28 August 1998 and 9 September 1998 ([612]-[616]). At those meetings, the discussions included the possibility of acquiring of the AFL pay television rights for the benefit of Foxtel. 844 A draft presentation to the AFL was prepared within Foxtel in late September or early October 1998. One page included the statement that ' Foxtel is Australia's Leading Pay TV Company and Enjoys the Backing of Australia's Largest Companies '. However, he maintained that this was not in fact his view at the time and that he wished to convey the impression, in effect, for negotiating purposes. On about 1 February 1999, Mr Mounter received a draft report from the Pay/Cable/Satellite Television Committee of Seven. The draft report recommended joint venture arrangements with pay television carriers to ensure that Seven was in the strongest position to retain the AFL broadcasting rights. 846 On 9 February 1999, Mr Mounter sent an email to Mr Wood and others. Copies were sent to Messrs Stokes and Gammell and both (I find) read the email. There is little doubt that if we do not, Fox will make serious efforts to secure rights of their own at renewal time. I have also cleared the way for our broadcast channel to be carried on Foxtel and this opportunity will be used in any negotiations. At that meeting, Messrs Stokes and Gammell agreed with Mr Mounter's strategy to get C7 on Foxtel if possible. Mr Stokes acknowledged in evidence that he was aware from February 1999 that one reason for this strategy was to avoid competition for the AFL broadcasting rights when they came up for renewal. It is likely that at this meeting Mr Mounter updated Mr Stokes as to the state of negotiations with Austar. It is clear we cannot get into a price war for those rights, next time around'. Seven had been a ' fantastic provider ' of free-to-air coverage, but its expertise was not in pay television. Moreover, Seven had a vested interest in seeing maximum coverage on free-to-air and as little as possible on pay television because it was a ' competing medium '. • Foxtel would offer the AFL ' equity in its own channel '. The document remained a work in progress throughout 1999 and no version of it was ever given to the AFL. At the time Mr Boyd commenced work on the draft presentation, he also began preparing financial models setting out the consequences for Foxtel if it acquired the AFL pay television rights. 851 At the Foxtel Management board meeting of 23 March 1999, it was agreed that Mr Mockridge should take the lead in pursuing discussions with the AFL in order to secure the AFL pay television rights on a non-exclusive basis ([680]). Mr Stokes was, however, aware that the AFL was seeking to promote competitive tension in relation to the rights. It is clear we cannot get into a price war for those rights, next time around. We must find other ways, as the company did with Docklands, of strengthening our position'. Mr Stokes agreed that his attitude from this time on, in relation to the renewal of the AFL broadcasting rights, was that Seven should do ' whatever it could to avoid competition on price for those rights '. The approach Seven adopted was to propose a joint venture with the AFL for the exploitation of the pay television rights and to insist on a single bid for both the free-to-air and pay television rights. Mr Stokes, Mr Wise and others considered that this would maximise Seven's chances of avoiding competition for the rights, since they thought that there would be little interest in the free-to-air television rights. 855 On 21 June 1999, Seven made a presentation to the AFL Commission. The leading role was played by Mr Mounter, but Messrs Wise and Harold Anderson were also present. On 30 June 1999, Mr Anderson forwarded a copy of the written presentation to the AFL. The proposal put forward by Seven at the meeting, as an AFL Commission document recorded, was withdrawn after Mr Mounter's departure as CEO. 858 Mr Stokes was closely questioned about his knowledge of Mr Mounter's presentation. At first, he insisted that he had not learned of the presentation until some time in July 1999. Mr Stokes also said that Mr Mounter, at the board meeting of 25 June 1999, had merely advised the board in general terms that discussions had taken place, but had not mentioned the presentation to the AFL Commission a few days earlier. In fact, as appeared from documents that were not discovered by Seven until later in Mr Stokes' cross-examination, Mr Stokes wrote a long letter to Mr Mounter on the afternoon of 21 June (the day of the meeting with the AFL Commission). The letter raised many matters of concern to Mr Stokes about Mr Mounter's performance as CEO, including Mr Stokes' disappointment that he had not been asked to join in the presentation to the AFL and that Mr Mounter had not adequately informed the board on Seven's position in relation to the AFL. In his reply, made on the same day, Mr Mounter said that the presentation to the AFL was not ' definitive ' but merely ' opened the door [on] what will be a long discussion '. Faced with this correspondence, Mr Stokes accepted that his original evidence as to when he had learned of the presentation had been ' wrong '. Mr Mounter did not attend the meeting. After the meeting, Seven issued a press release announcing Mr Mounter's departure from Seven and attributing the departure to ' irreconcilable differences which have emerged over a restructuring of the company '. The minutes of the meeting record that Mr Stokes ' distributed a confidential paper on his discussions with Mr Julian Mounter regarding [six specified matters] '. None of the six matters identified in the minutes referred to Mr Mounter's dealings with Foxtel or Austar concerning the supply of C7. 861 When Mr Stokes was first asked about this meeting in cross-examination, the confidential paper identified in the minutes had not been produced. Mr Stokes agreed that the minutes made no reference to any differences between the board or himself and Mr Mounter in relation to his dealings with Foxtel or Austar concerning C7. However, Mr Stokes said that his recollection was that the confidential paper was ' far more developed than the items [in the minutes] '. A draft of the confidential paper referred to in the minutes of 30 July 1999 was subsequently produced by Seven and admitted into evidence. Mr Stokes was questioned about the document. The draft made no reference to any dissatisfaction with Mr Mounter on the issue of C7's dealings with Austar and Foxtel. The omission can hardly be a consequence of delicacy on Mr Stokes' part, since the draft document appears to have presented Mr Stokes' concerns fully and frankly on each subject addressed. The absence of any reference to Mr Mounter's dealings with Foxtel or Austar is an additional very strong reason for rejecting the evidence of Mr Stokes and Mr Gammell that they had complained to Mr Mounter about these matters in the period leading up to the termination of his employment. 862 There was a conflict between the evidence of Mr Stokes and Mr Gammell as to the precise strategy that was employed to engineer Mr Mounter's departure. It is not necessary to resolve the conflict. It is enough to say that neither version enhances the plausibility of their version of the conversations with Mr Mounter concerning his dealings with Austar and Foxtel. In any event, following Mr Mounter's departure, Mr Stokes took over the position of CEO of Seven and acted full-time in that capacity for the following 18 months. The board resolved that a sub-committee be formed to modify Foxtel's offer as negotiations progressed. The events leading up to the meeting and the resolutions of the board have been dealt with in Chapter 7 ([768]-[772]). It identified the critical question as whether or not ' migrating ... to subscription television is in line with [the AFL's] mass marketing philosophy '. The decision to split will be between free to air and subscription broadcasting'. That letter attached a second letter from Mr Stokes addressed to Mr Wise which Mr Stokes said Mr Wise could show to Mr Samuel but not leave with him. Indeed given the circumstances this would probably be unconscionable conduct. (Emphasis added. I cannot accept that denial. No doubt Mr Stokes' threat of legal proceedings encompassed News, Foxtel and PBL, but the letter did not confine the threat to these parties. Indeed, it is difficult to see how Mr Stokes (as a lay person, not a lawyer) could have thought that Seven could obtain the injunction referred to in the letter without involving the AFL in the litigation. I infer that Mr Stokes intended the letter to be perceived by the AFL as a threat that, if it split the AFL broadcasting rights, it would risk being embroiled in legal proceedings instituted by Seven. 870 An AFL ' Broadcasting Update ' of 31 January 2000 described Seven's proposal as essentially a joint venture on all rights other than the free-to-air television rights. The update reported that Seven had indicated that if the free-to-air television rights were split, it would not bid. Nine, by contrast, had said that it would not bid unless the rights were split. News and Foxtel were interested in the pay television rights, but did not necessarily want exclusivity. Telstra was very interested in establishing a relationship with the AFL, but Optus was selling its interest in Optus Vision and did not ' see broadcasting as core business '. The group was to consider and develop a proposal that Telstra acquire the AFL broadcasting, sponsorship and internet rights. Project Chess was managed by Mr Rolland, the head of the Online Division of the Convergent Business Group. 872 Telstra representatives, including Ms Lowes (until her departure), met with AFL representatives on a number of occasions between September 1999 and March 2000. Some of these meetings have been referred to in Chapter 7. On 14 December 1999, Telstra's interest in acquiring the AFL pay television and internet rights was the subject of an article in The Australian. The meeting was attended by Messrs Samuel and Jackson and others on behalf of the AFL. Ms Lowes and others represented Telstra. Mr Akhurst of Telstra also attended in place of Mr Moriarty, who was unable to participate. 874 Mr Samuel suggested at the meeting that Telstra consider making a bid for all the AFL broadcast, sponsorship and internet rights, with a view to onselling some of the rights. A number of other possibilities were also discussed. Mr Akhurst did not understand the AFL to be expressing a preference that every bidder should bid for the entirety of the rights. Rather, he took it that the comments were being addressed specifically to Telstra. The Telstra representatives were also informed at the meeting that Optus and Austar could terminate their respective CSAs with Seven if Seven lost the AFL pay television rights. The plot is for Telstra to get the interactive rights (eg, internet, interactive TV) for a revenue or profit share (ie, very little up-front cash) and to keep the AFL happy by linking this with a sponsorship deal (Foxtel would get the PayTV in this scenario. On 17 February 2000, shortly before his departure, Mr Mockridge prepared a memorandum recommending that the board authorise an agreement with News requiring News to support Foxtel's bid for the AFL pay television rights, in return for Foxtel committing additional advertising expenditure to News' publications. The memorandum noted that on 26 October 1999 the board had approved in principle a submission to the AFL to acquire the AFL pay television rights. 877 Within a short time of taking office, Mr Blomfield asked Mr Campbell, who happened to be an AFL enthusiast, to become involved in the preparation of a bid for the AFL pay television rights. Mr Campbell took as his starting point Mr Mockridge's memorandum of 17 February 2000. Among the tasks entrusted to him was the preparation of a financial presentation to the AFL. 878 At about the same time, Ms Lowes left Telstra and shortly thereafter commenced working for Seven Network and an associated entity. She was engaged by Seven on Mr Gammell's recommendation and acted, among other roles, as a director of i7 while Mr Gammell was Chairman of that company. Her departure meant that she had to be replaced on the sub-committee set up by the Foxtel Management board on 26 October 1999 to pursue the AFL pay television rights. Mention has already been made of the fact that Ms Lowes' departure from Telstra was seen as an opportunity by Mr Mockridge for a settlement of the Fox Sports pricing dispute with Telstra. Mr Wise believed at the time that Nine was not interested in the free-to-air television rights (although Mr Stokes said that he had a contrary belief) and Mr Wise had given no consideration at all to Ten as a potential bidder. Nor did he think that Telstra was a serious competitor for the free-to-air television rights. --- Yes. --- Again, at the prices that Seven was prepared to pay, yes. --- That's correct'. The letter contained a ' proposal ' in relation to the AFL broadcasting and related rights. The proposal was expressed to be without prejudice to Seven's rights under the First and Last Deed. It was ' merely a proposition capable of being acted upon given your agreement to move forward ' but was to ' lapse ' after 30 days. He also agreed that Seven was seeking a ' fairly radical revamping of the competition '. One reason for doing so, as he explained, was that such a revamp was needed to justify the offer of $75 million per annum. 883 Mr Wise agreed that the term entitling Seven to allocate rights between mediums was an important principle from Seven's perspective because Seven wanted to control the allocation, rather than leaving it to the AFL. Mr Wise said that the term gave Seven ' the ultimate discretion to manage the games between mediums to give us the best outcome '. That recommendation was accepted by the Commission. Among other things, the letter rejected the suggested 30 game season and accused Seven of a lack of good faith in seeking to impose a 30 day deadline having regard to the complex issues at stake. Shortly thereafter, the first of a series of ' Chess Deal Strategy ' documents was prepared within Telstra. The presentation stated that Telstra would bid for the free-to-air and pay television rights, as well as internet, interactive and datacasting rights. 889 A Project Chess document of 19 April 2000 recorded that Telstra had put forward what was described as an ' Original Bid ' of $380 million over five years. A Project Chess ' Overview ' of 12 May 2000 noted that Telstra could benefit from the broadcasting and other AFL rights and that it was in a position to ' deliver a compelling value proposition to the AFL '. The proposed bid was to be $420 million over five years, plus a share of ' upside ' with estimated value of $50 million. The proposal contemplated that Telstra would onsell the broadcasting rights by disposing of the free-to-air television rights to Seven and the pay television rights to Foxtel. 890 On 28 April 2000, Mr Rolland updated Dr Switkowski on Project Chess, following a meeting with the AFL that day. Mr Rolland recommended taking the project further, in part because if Seven succeeded in its bid Foxtel might be locked out of the AFL. Thus Telstra's bid was ' actually protecting Foxtel '. In response, Dr Switkowski queried whether Telstra had the resources and skill to implement the proposal. 891 On 9 May 2000, the AFL prepared a document comparing the initial offers of Telstra and Seven. A further discussion between Telstra and the AFL took place on that day (as did a meeting between Foxtel and the AFL). 892 On 19 May 2000, Mr Greg Willis provided Dr Switkowski with the summary to which I have referred in Chapter 7 ([808]). The summary referred to Telstra's proposed bid of $420 million. However, Mr Akhurst said in his evidence that, while he had not been involved in the proposed bid, as events turned out Telstra had not presented the proposed bid to the AFL. The presentation included examples of Foxtel's technical capabilities, and followed a prepared script. The script called for Mr Blomfield to refer to the proposal that a dedicated channel, Network AFL, should operate a joint venture between the AFL and Foxtel. C7 has been offered to FOXTEL and we have declined'. Mr Wise agreed that the ' principal protagonists within Seven who were pushing that line ' were Mr Stokes and Mr Gammell. 895 On 25 May 2000, Mr Greg Willis of Telstra met with Mr Gammell. The meeting principally related to issues concerning Seven's desire to obtain access to the Telstra Cable. However, Mr Gammell told Mr Willis that Seven wanted all AFL broadcasting rights and that, unless that happened, Seven would have very little content for its sports channel. Mr Gammell also said that Seven was aware that Telstra had bid for the entirety of the AFL broadcasting rights. He observed that this would cause Seven difficulty because it wanted a fully integrated product on all platforms. Mr Willis reported these matters to Dr Switkowski in an email of 29 May 2000. 896 In the meantime, Mr Stokes proposed on 25 May 2000 that he and Dr Switkowski should meet, suggesting a meeting that afternoon. The meeting in fact took place on 31 May 2000, at Mr Stokes' house in Sydney. 897 In response to a request from Dr Switkowski, Mr Willis prepared a briefing paper on 29 May 2000. The briefing identified, on the basis of Mr Willis' conversation with Mr Gammell, two items that were likely to be discussed at the meeting between Dr Switkowski and Mr Stokes, namely the access issue and the bidding for the AFL broadcasting rights. As to the latter, Mr Willis observed that Seven was aware that Telstra had bid for all the AFL broadcasting rights. Dr Switkowski understood from Mr Williams' briefing that if Foxtel obtained the AFL pay television rights, Seven would lose ' potentially vital ' rights. In particular, Dr Switkowski agreed that he understood from Mr Willis' briefing that if Foxtel obtained the AFL pay television rights, it might be difficult for C7 to remain a viable competitor of Fox Sports. Dr Switkowski said in evidence that he could not recall turning his attention to the question of break clauses in Seven's content supply agreements and I do not think at the time he did. 898 After his meeting with Mr Stokes, Dr Switkowski set out in an email his recollection of the substance of the discussion. He also noted the payTV rights cost $15m/year tho' he believed they should have been set between $5-10m. Suggested we contemplate acquiring 50% of C7 and then taking his content non exclusively across all platforms'. (Emphasis added. The report noted that Telstra now contemplated making an attractive new media offer to Seven ' to ensure an ongoing relationship with the broadcaster '. As the year unfolded, our conviction that we had the skill set or even that it was a smart business decision to be the lead bidder for all of the rights weakened. I certainly had the view by the middle of the year that Telstra didn't belong in that position, that we should focus on the areas that were right in the middle of our business interests, which was the new media rights, and be a party to some other coalition, if that made sense, for the larger rights process'. Presumably for this reason, Mr Akhurst telephoned Mr Stokes on 7 June 2000 to advise him that Telstra was not proposing to bid for the AFL broadcasting rights, but that Foxtel would probably bid for the AFL pay television rights. Mr Akhurst also informed Mr Stokes that Telstra was interested in the online rights, but thought that it could acquire them ' in a way which doesn't bother [Seven] '. In the conversation, Mr Stokes said that the exclusion of C7 from Foxtel was a contravention of the TP Act and that he wanted C7 to have a place in the pay television industry. Mr Stokes also said that there was a ' real problem ' if C7 could not get on Foxtel. 902 On 8 June 2000, Ms van Beelen, a lawyer within Telstra's Regulatory Department, prepared a chart based in part on Mr Akhurst's notes of his meeting and in part on publicly available information. He seemed to say that he did not address the question of whether Foxtel had market power in the context of Foxtel's apparent refusal to take C7 pending the award of the AFL pay television rights. Yet Mr Akhurst had had an exchange of emails with Mr de Jong on the question of whether Foxtel's refusal to take C7 could contravene s 46 of the TP Act. While Mr de Jong thought it was justifiable for Foxtel to reject Seven's 17 November 1999 term sheet, it would have been odd if Mr Akhurst, with his background in trade practices law, had not even adverted to the issue of Foxtel's market power. Particularly is this so when Mr Stokes suggested to Mr Akhurst in their conversation that Foxtel had contravened the TP Act. However, Ms van Beelen's chart must have brought home to Mr Akhurst, even if (as Mr Akhurst said) Mr Stokes did not mention the issue, that Seven was asserting the loss of the AFL pay television rights as a threat to C7's survival. Indeed, Mr Akhurst ultimately conceded as much. That is not to say that Mr Akhurst formed the view that such an outcome was inevitable or even likely. But he must have appreciated that Seven was suggesting that the AFL pay television rights were central to the survival of C7. 906 Nonetheless, I accept Mr Akhurst's evidence that he did not think that bidding against Seven for the AFL rights was anti-competitive behaviour. An email Mr Akhurst sent to Dr Switkowski in November 2000, to which I refer later, supports Mr Akhurst's evidence. Nor do I see any reason to doubt his evidence that he interpreted Mr Stokes' conversation with Dr Switkowski as intended to warn Telstra off Seven's territory. 907 Telstra's position on the AFL broadcasting rights was again communicated to Seven at a meeting held on 16 June 2000, between Mr Willis of Telstra and Messrs Gammell and Wise. Telstra (presumably through Mr Willis) advised the AFL that Telstra was now not interested in the AFL broadcasting rights and could not assist C7 or the AFL ' in getting C7 on Foxtel '. Telstra indicated its interest in the internet and iTV [interactive television] rights. As Mr Campbell said, he erred, if at all, on the optimistic side, although he endeavoured to utilise realistic figures. 910 Mr Campbell prepared a model on 1 June 2000, in contemplation of a meeting between Foxtel representatives and the AFL, to be held on 9 June 2000. It assumed that, if Foxtel had AFL content, there would be a take-up of the AFL tier of 14 per cent of all subscribers in 2002, rising to 17 per cent in 2012. The model further assumed that, if Foxtel had AFL content, subscribers in the southern States would increase by three per cent in 2002, rising to eight per cent in 2011, compared with the position if Foxtel had no AFL content. In the northern States the comparable figures were one per cent in 2002 and three per cent in 2011. 911 On 9 June 2000, Foxtel made its presentation to the AFL in Melbourne. The presentation was led by Mr Blomfield, although Mr Campbell discussed the proposed scheduling of AFL matches on Foxtel. In these discussions Mr Campbell stressed what he saw as the advantages of News' editorial support for the AFL. The update stated that the maximum Telstra was prepared to pay for the rights was $60 million over five years. The document recorded Telstra's need to ensure an ongoing relationship with Seven, said to be worth $14 million per annum. 914 On 24 July 2000, Dr Switkowski attended a meeting with AFL representatives, at the request of the AFL. At that meeting, the AFL representatives encouraged a bid from Telstra for all the AFL broadcasting and internet rights or, alternatively, a bid from a coalition between Telstra and a broadcaster. 915 On 4 August 2000, Mr Greg Willis alerted Mr Akhurst to the possibility that Fox Sports might be a bidder for the AFL pay television rights, with the attendant risk that ' it would tie up most sport content '. We need to ... confront News/PBL. They have to be kidding if they think we'd stand for this one! He said he felt strongly about the issue because, in his view, Telstra had been misled by its partners. Mr Akhurst's view was that Foxtel, not Fox Sports, should have the rights. I accept Mr Akhurst's evidence on these matters. One of the options, Option D, involved Fox Sports acquiring the AFL pay television rights. Mr Parker's assessment, on the assumptions adopted by him, was that acquisition of the AFL pay television rights created an NPV of $81.3 million for Fox Sports. Notwithstanding Mr Parker's modelling, Mr Marquard and Mr Malone's evidence was that from about July 2000, Fox Sports no longer considered the acquisition of the AFL pay television rights to be part of Fox Sports' strategic plan. They each said that the decision not to bid was prompted by the view that, although AFL content was attractive, Fox Sports should focus on acquiring the NRL pay television rights, especially as Austar was entitled to terminate the Fox Sports-Austar CSA if Fox Sports lost those rights. Mr Malone considered that it was not practicable, from a financial perspective, for Fox Sports to bid for both the NRL and AFL pay television rights. 918 There was no evidence of a written recommendation to the board of Fox Sports that it should not bid for the AFL pay television rights. Mr Malone said his ' sense ' was that the board had made a decision, but he could not recall a specific decision to that effect. Mr Malone denied a suggestion that the Fox Sports directors had told him that they preferred to let Foxtel or News bid for the AFL pay television rights. Whatever the basis for the decision, Fox Sports did not demonstrate any direct interest in the AFL pay television rights after about July 2000. This option leaves Seven very satisfied but is far from satisfactory from the viewpoint of Foxtel and its partners PBL, News and Telstra --- although the latter may be partly satisfied by New Media rights. It runs the risk of retaliation by News/PBL including longer term boycott or reduced promotion in favour of competing codes. While Seven would dearly love to have the assistance of AFL in putting the squeeze on Foxtel, I think their primary concern is to protect the 30M contract with Optus. But in the past, Foxtel have consistently maintained that they are happy with non-exclusive pay TV rights, believing they can "do in" C7 slowly by sheer market power and distribution . They will still run the gauntlet of the court case, but I do not believe they ever expected that the AFL would be party to an arrangement that would demolish C7 overnight'. (Emphasis added. But in the past, Foxtel has consistently maintained that it is happy with non-exclusive pay TV rights, believing it can "do in" C7 slowly by sheer market power and distribution. Foxtel and C7 are left in no better or worse position in relation to the current Court case although some of the heat may be taken out as a result of what we have proposed'. The chart, or a summary of it, was to be presented to Foxtel and Telstra at scheduled negotiating meetings and, subject to the outcome, to Seven at a later meeting. This was the outcome Seven itself was hoping for since it considered that this maximised its chances of obtaining all the AFL broadcasting rights, including the pay television rights, without competitive bidding. The advantages from the AFL's perspective of Seven taking the rights were said to include Seven's long relationship with the AFL, its commitment to the game and its willingness to protect the AFL brand. Discussion centred on the AFL's four column chart. Mr Campbell and Mr Nichles each said at the meeting that the AFL's proposal for non-exclusive rights was unacceptable to Foxtel. The meeting then terminated abruptly. The Foxtel representatives did not retain copies of the chart discussed at the meeting. 924 Mr Boyd made handwritten notes of the 19 July 2000 meeting with the AFL. One of the bullet points recorded by him was ' Don't want to kill C7 overnight '. Mr Boyd's evidence, which I accept, was that this referred to a statement by one of the AFL representatives and that after the statement was made someone said ' It won't happen overnight, but it will happen '. This evidence was not challenged, although News submits that Mr Boyd did not necessarily understand that the AFL did not expect C7 to survive if it lost the AFL pay television rights. 925 Mr Campbell and Mr Buckley of the AFL had a telephone conversation on 21 July 2000. Mr Campbell's internal correspondence following the meeting indicated that, despite what had been said at the meeting on 19 July 2000, Foxtel Management was still contemplating the acquisition of non-exclusive AFL pay television rights. In August, Mr Boyd modelled the AFL's proposal for the non-exclusive supply of AFL content. The budget projected a loss of $13.5 million for pay television for the 2000/2001 year. As Mr Gammell accepted, the budget assumed that C7 would gain access to Foxtel by January 2001 and that C7 would be supplied to Foxtel on a tier at a price of about $2.00 pspm. 927 Although Mr Gammell did not attend the board meeting, he read Mr Wylie's paper and understood the assumptions underling it. Mr Gammell's evidence was that he considered that the sale of C7 to Foxtel on a tier was not a reasonable assumption. Nonetheless, he agreed that he had not sought to amend or register his disapproval of the projections. Mr Gammell claimed that he foresaw a ' binary outcome ' --- that is, either C7 would derive no revenue from Foxtel or it would derive considerably more than the projection made by Mr Wylie. Mr Gammell conceded, however, that the budget was unsatisfactory and that he would have preferred that it contained no projection of revenue from Foxtel. Mr Wise gave evidence that Mr Gammell expressed concern to him about the figure of $2.00 pspm assumed by Mr Wylie, but I do not accept Mr Wise's evidence on this point. These reports prompted Mr Wise to write to Mr Jackson on 18 July 2000 asserting that, under the terms of the First and Last Deed, the AFL could not accept an offer for the AFL pay television rights until the AFL free-to-air television rights had been dealt with. The terms of the letter are set out later ([...]). This view of the operation of the First and Last Deed was referred to in these proceedings as the ' must means must ' interpretation. Seven's representatives were given a copy of the AFL's four column chart. Mr Wise noted at the time that the chart assumed that the AFL pay television rights would be allocated on a non-exclusive basis to both C7 and Foxtel. He and Mr Gammell told the AFL that a model in which C7 held non-exclusive rights and had access only to the Optus platform would not allow C7 to survive. Mr Samuel said that the AFL needed to get onto Foxtel. Mr Gammell told Mr Samuel that C7 would get on to Foxtel and that Foxtel could not afford to keep C7 off its pay platform. 930 Messrs Gammell and Wise gave evidence that Mr Samuel told them that Foxtel or News had said to the AFL that C7 would never get on Foxtel, presumably meaning that this would be the case even if Seven acquired the AFL pay television rights . The contemporaneous AFL documentation does not corroborate this evidence and I do not accept it. 931 A further meeting took place between Messrs Gammell, Wise and Samuel on 10 August 2000. At that meeting, which Mr Wise described in a report as ' lively ', Mr Samuel rejected the ' must means must ' interpretation of the First and Last Deed. Mr Wise told Mr Samuel that Seven would not accept either a division of the AFL free-to-air and pay television rights, or a grant of non-exclusive AFL pay television rights. Mr Samuel then identified three concerns with Seven's position on exclusivity: the amount to be paid for the rights; securing the cooperation of News in the absence of a Foxtel bid for the rights; and ' anti-ambush provisions ' (designed to prevent proprietors of venues such as the Melbourne Cricket Ground selling rights to events taking place at those venues). 932 At about the same time Mr Stokes had a ' positive ' meeting with Mr Evans of the AFL. One outcome of the meeting was that Mr Stokes and Mr Wise became confident that Seven would retain the AFL broadcasting rights. Mr Stokes' evidence was that he remained relatively confident until the Olympics concluded in late September 2000. 933 In his evidence, Mr Stokes acknowledged that the four column AFL proposal had advantages for Seven. It meant that Seven would have the exclusive free-to-air and non-exclusive pay television rights and that it could maintain the C7-Optus CSA. Mr Stokes' first explanation in evidence for Seven's rejection of the proposal was that it did not take account of what Foxtel wanted (that is, exclusivity) and that it would have left Seven exposed on Austar. However, he later accepted that another reason for rejecting the AFL's proposal was that Seven considered ' that Foxtel was to have nothing unless it got it through C7 '. Mr Stokes agreed that by declining to negotiate on the AFL's terms, Seven was running a risk of not getting the rights at all. According to Mr Philip, by mid-2000 he had formed the view that in order to negotiate such an acquisition it was necessary to address a number of issues created by the combined impact of the anti-siphoning regime and Seven's relationship with the AFL (as he understood it). Mr Philip's evidence was that, as a result of discussions with Mr Blomfield, he had lost confidence in the latter's ability to address these issues. 935 In July or August 2000, Mr Macourt and Mr Philip decided to investigate the possibility of News bidding for both the AFL free-to-air and pay television rights. This led them (so I infer) to investigate whether Nine and Ten might be interested in acquiring from News the free-to-air television rights, on the basis that Foxtel would acquire the pay television rights. They also had in mind that Telstra might acquire the internet rights. 936 Mr Macourt discussed with Mr Frykberg the possibility that he could assist News in its bid for the AFL broadcasting rights. Mr Macourt also spoke to Mr Falloon, who expressed an interest on Nine's behalf in acquiring the AFL free-to-air television rights. Shortly afterwards, Mr Philip spoke to Mr Greg Willis of Telstra to ascertain Telstra's interest in acquiring the online rights from News. Mr Willis conveyed Telstra's possible interest in the proposal. 937 On 21 August 2000, Mr Philip sought legal advice on the proposal to acquire the AFL broadcasting rights. The structure he had in mind contemplated that the free-to-air operators would ' enjoy a hold back against pay tv of 2 hours for say 4 games per week '. The free-to-air operators would take a feed of other games from the pay television operators and could ' exercise live rights in that feed on payment of an additional $500,000 per ' (that is, free-to-air operators could broadcast additional matches upon payment of a fee of $500,000 per match). 939 Mr Samuel of the AFL held a meeting with Mr Macourt on 25 August 2000. Mr Samuel sent the four column chart to Mr Macourt on 22 August, in advance of the meeting. According to Mr Macourt, Mr Samuel said that the object of the meeting was not to negotiate but to allow the AFL to explain its preferred outcome, as recorded in the four column chart. Mr Macourt said that he did not follow up the matter because the proposal required agreement between the AFL and Seven before it could be accepted by Foxtel. 940 On 29 August 2000, Mr Philip sent Mr Frykberg an ' AFL Bid Proposal '. If News wants to increase the prospects of pay tv rights being available to FOXTEL, News might consider bidding for pay tv and free tv rights. News could add further attractiveness to the bid by adding newspaper support to the AFL. The end result of this is that News could end up with the free-to-air rights only but this should be OK if News has got underwriting puts in place'. The letter proposed that Mr Frykberg should be paid a retainer and receive a very substantial success fee. I do not believe it is essential that the pay TV rights be exclusive'. The report identified a number of objectives including ' Optimis[ing] the Value of the Rights '. Although Option 4 involved the severing of the AFL's relationship with Seven, the Status Report noted that it contemplated that News would onsell the free-to-air television rights to Seven, Nine or Ten, or some combination of them, and would onsell the pay television rights to Foxtel, Optus and Austar. New media rights should still be pursued but more time be allowed to review all of the options available'. He also undertook negotiations with the AFL. Mr Frykberg, however, did not approach Seven in relation to the free-to-air television rights. His evidence was that any such approach was unnecessary since Nine and Ten had evinced interest in the AFL free-to-air rights. 947 In his first statement, Mr Frykberg was at some pains to insist that he had not conducted negotiations with Nine, Ten and Foxtel simultaneously. Rather, he said that he had moved between representatives of each of the organisations to facilitate the formulation of a bid by News. In his cross-examination, he said that he had been given a briefing by Mr Philip about possible problems with the ACCC. For that reason, he understood that there had to be separate negotiations with each of the parties. --- It was --- it had its difficulties because there needed to be --- the broadcasters needed to dovetail for the overall offer. But it was still possible to do that without divulging what the other parties were doing. However, you wouldn't need to be Einstein to work it out'. Mr Philip tried valiantly to discourage the use of the word ' consortium ' among those participating in the negotiations, but with conspicuous lack of success. His concern, so he explained, was that he did not ' want to create an understanding [for TP Act purposes] where there wasn't one '. The problem for Mr Philip at the time and in the witness box was that if discussions take place and arrangements are made among members of a group that is described as a consortium, looks like a consortium and acts like a consortium, it probably is a consortium. News hopes to secure a put of pay TV / enhanced pay TV / interactive (non-internet) TV rights to Foxtel'. This fax appears to be the first written notification to Telstra of a proposal involving put agreements. 950 On 11 October 2000, Mr Willis replied to Mr Philip setting out the basis upon which Telstra would be prepared to consider paying $21.5 million for the internet rights over a five year period. Mr Philip and Mr Frykberg discussed the terms specified in the fax and agreed it would be too difficult to conclude a deal with Telstra for the AFL internet rights. 951 On 13 October 2000, Mr Macourt wrote to Mr Buckley of the AFL confirming News' interest in acquiring free-to-air and pay television rights to the AFL for the five year period, 2002 to 2006. The letter attached indicative term sheets. The free-to-air term sheet proposed a licence fee of $36 million per annum (plus CPI adjustments) for four exclusive live matches per week. In addition, News was to pay $500,000 for every non-exclusive match televised earlier than 14 days after the date it was played (subject to certain exceptions for Perth and Adelaide) and was to bear the GST. The ' Other Rights Term Sheet ' proposed a licence fee of $20 million per annum (plus CPI adjustments) for the exclusive pay television and other non-internet pay rights. Again News was to bear the GST. This term sheet provided for the AFL to give News at least four live pay television matches per week during the 22 week season. 952 On 18 October 2000, Mr James Packer of PBL told Mr Mansfield, the Chairman of Telstra, that PBL had no problem with Telstra bidding for the online rights to the AFL, but that it was critical to keep the bid components together since to split them would play into the hands of the AFL and C7. Mr Mansfield passed on the information to Dr Switkowski. Following discussions with Telstra, Mr Akhurst expressed agreement with a recommendation that Telstra should press on with its separate bid for the AFL internet rights. Nine had told the AFL that it was only interested in a particular package of free-to-air games because of its commitment to NRL content. 954 Mr Frykberg's point of contact with Nine appears to have been Mr Falloon. Internal Nine memoranda show that Nine was interested in Friday night and Sunday afternoon AFL matches. Mr Yarwood of Nine held discussions with affiliates in Perth and Adelaide to secure their commitment to sharing the costs of obtaining the AFL content. 955 On 10 October 2000, Mr Leckie, then the Managing Director and CEO of Nine, confirmed in a letter to Mr Frykberg that Nine would be prepared to bid for specific home and away and finals AFL matches during the period 2002 to 2006 inclusive. Nine would be willing to pay a licence fee of $20 million per annum (plus CPI), exclusive of GST. Mr Wise advised Mr Jackson that Seven would offer $36 million per annum for the AFL free-to-air television rights, $20 million per annum for the AFL pay television rights, plus a profit share and $10 million in contra per annum. Mr Jackson thought that Seven's position looked ' more relevant '. 957 On 5 October 2000, Seven provided the AFL with a draft offer. The summary noted that there was now ' serious competition ' for all the AFL rights. Consistent with what was tabled at the Commission meeting in August News Limited have presented a formal proposal to acquire the rights to Free To Air Television, Pay Television and International Television Distribution. The Seven Network has also revised it's [sic] original and ongoing offers and presented a formal proposal to acquire the rights to Free To Air Television, Pay Television and New Media. Option One is an ongoing partnership with the Seven Network and Option Two, contained within the News Limited agreement, is a split rights arrangement from the Nine Network and Channel Ten . As a result of receiving the competing proposals the AFL is not restricted to dealing exclusively with the Seven Network under the terms of the "Put Option". The AFL still has the protection afforded by the "Put Option" however it can now negotiate additional benefits not contained within the framework of that agreement. Both parties have indicated they are able to distribute on all platforms ie: Foxtel, Austar, and Optus, which is consistent with the AFL's desire to offer the game on as broad an access point as possible. While the Foxtel group clearly can achieve this unencumbered there remains a question over C7's ability to achieve this as the recent court proceedings have granted C7 access to the Foxtel Cable but not the Set Top Box or the Marketing and Customer Service capabilities of the Foxtel group. (Emphasis in original. He said that Seven's strategy was to secure the AFL rights on acceptable terms and to ensure that ' we maintain the opportunity for C7 and its related access claims '. The offer would have a time limit for acceptance. If the AFL did not come ' to the table ' on the offer, Seven would withdraw from negotiations and rely on its first and last rights. • Seven would approach Telstra with an offer to compromise on the issues of access and the AFL. 962 In his evidence, Mr Wise accepted that when he put forward this strategy he contemplated that, if implemented, Seven would be unopposed in its bidding for the AFL pay television rights. He accepted that this strategy, if successful, meant that Seven would acquire the rights more cheaply than otherwise would have been the case. The models took account of the fact that two free-to-air channels would be providing AFL coverage instead of one, making it more likely that the four least favourable matches would be available to Foxtel. No change has been made in the North as it is not as popular in these states. Over 10 years the impact is $39.5 million (NPV now negative $42.8 [million])'. 965 Mr Blomfield attached a financial model which had been prepared by Mr Boyd. The model projected an NPV to Foxtel over the five year period of -$23.9 million, without any terminal value. In his evidence, Mr Boyd accepted that the financial model attached to Mr Blomfield's paper did not incorporate the changes Mr Boyd had suggested in his memorandum of 20 October 2000. Mr Boyd agreed that he would have prepared the model after discussing the matter with Mr Blomfield and on the basis of Mr Blomfield's instructions. 966 Mr Macourt's evidence was that he had disagreed at the time with the analysis that led to a NPV of -$23.9 million. He said his principal criticism was that the analysis lacked a terminal value, being the value to Foxtel of additional subscribers, at the end of the period under consideration, that was attributable to the inclusion of AFL content in Foxtel programming. Mr Macourt adhered to this view in cross-examination, notwithstanding that the term of the proposed licence was only five years. Mr Macourt said that the modelling had assumed that every subscriber attracted by the AFL would simply terminate his or her subscription on the day the last AFL game was played. He considered this to be an unrealistic assumption, not least because even if Foxtel lost the rights, the AFL might still be broadcast on the Foxtel platform. 967 Mr Macourt also said that he was unaware that Foxtel's management took the view that the proposal to acquire AFL pay television rights would assist in dealing with C7's access issues. He asserted that he could not recall holding this view himself. Mr Macourt stated that his view was that the strategic benefit of acquiring the AFL pay television rights was that it enabled Foxtel to obtain a quality AFL package. I accept Mr Macourt's evidence on these matters. 968 Mr Philip's evidence was that he regarded Mr Blomfield's proposal ' obviously beneficial ' to Foxtel. This would enable FOXTEL to have significant control over the presentation of the AFL and the branding of AFL broadcasts. I thought that this was likely to greatly assist FOXTEL to bring its penetration in the southern States into line with the penetration ... in the northern States and, given the popularity of AFL in the northern States, increase overall penetration ... I did not think it would be possible to achieve that by FOXTEL taking C7. Over time, I had formed the view that a pay television business which relied on a sports service that was controlled by a free to air operator would be at a significant disadvantage because of the likelihood that the free to air operator would program that sports service in a way that favoured its free to air service, rather than its pay television operations'. However, he claimed that his concern was pursuing the rights for Foxtel and that he could not remember ' having many cares about C7, to be honest '. I didn't give it much thought, is really what I meant'. Mr Philip denied that the ' obviously beneficial ' result he contemplated was that Fox Sports would be rid of its main competitor in the business of supplying sports channels. 970 I think the likelihood is that Mr Philip did advert at the time to the possibility that C7 would suffer significant harm if it both lost the AFL pay television rights and did not succeed in obtaining the NRL pay television rights. I also think it likely that he was not concerned if any such harm was in fact inflicted on C7. However, that does not amount to a finding that Mr Philip did not believe that there were sound commercial reasons for Foxtel to attempt to acquire the AFL pay television rights for itself. The effect of this is that different games would be run on Friday night, Saturday afternoon, Saturday night, Sunday afternoon in all the major cities. It has obvious impact on pay television. You will work out the minuses but one of the pluses is that pay television will probably get the higher picks in some cities than the 5, 6, 7, 8 currently envisaged'. 972 As Seven observes, it is common ground that the flip-flop turned out to be detrimental to the value of the AFL pay television rights obtained by Foxtel. The flip-flop was also detrimental to the fortunes of the Fox Footy channel , which utilised the rights. My understanding by this stage was, and continues to be, that the flip-flop provision effectively meant that FOXTEL was never able to broadcast matches played by a team based in Sydney, Brisbane, Adelaide or Perth until the match had first been played on either the Nine Network or Network Ten, even if the game was produced by FOXTEL. 973 Mr Frykberg said that he had assumed throughout his negotiations with the AFL that Nine and Ten would have the first choice of games in each round for free-to-air television. However, he believed that this would not necessarily have the result that Nine and Ten would have the most attractive games (in the sense of the games likely to appeal to the greatest television audiences). As the negotiations developed, the AFL extended this position to include Perth and Adelaide. Mr Frykberg always understood that the AFL saw the flip-flop as a compulsory arrangement in the four capital cities for which it was proposed. As his advice of 27 October 2000 indicated, Mr Frykberg regarded the flip-flop as having a potential negative impact on pay television, but not invariably so. If, for example, a Perth team was last on the ladder, he thought that that team's game might be less attractive, even in Perth, than a game between two top (non-Perth) teams. 975 In Mr Frykberg's cross-examination, he was taken to negotiations between Nine and News (through Mr Philip), whereby Nine sought the opportunity to show the local game in Adelaide and Perth immediately after the telecast of the national game (even though the local game would already have been under way or completed on pay television). He agreed that the free-to-air operators were generally keen about some form of flip-flop and that Mr Philip had made it quite clear that News and Foxtel would ' prefer to avoid a flip-flop if that were possible '. Indeed, during the negotiations Foxtel had rejected draft clauses giving effect to a flip-flop. Despite these matters, I accept Mr Frykberg's evidence as to his assessment at the time of the likely effect of the flip-flop. 976 Mr Boyd, who prepared all of Foxtel's financial models, could not recall any discussions about the flip-flop and did not take it into account in his modelling. Mr Philip said in evidence that his first response was that Mr Frykberg's suggestion might have involved a potential contravention of s 4D of the TP Act . However, he said that he subsequently formed the view that the suggestion did not involve any such contravention. Mr Boyd declined Mr Willis' request for a ' soft copy of the model ', on the ground that Foxtel was not providing any of the shareholders with a copy at that stage. Nonetheless, Mr Boyd ran through the model with Mr Willis. Will assist with dealing with C7 access issues'. The strategic reason, according to Seven, was that acquiring the AFL pay television rights would have an impact on C7 and remove the access issue. Seven argues that the only way of removing the access issue was to remove C7, or at least make it unviable for C7 to pursue its access claim. Seven says this is evidence that the acquisition of the AFL pay television rights was, from Foxtel's perspective, directed at harming C7. 980 In his evidence, Mr Boyd did not dispute that he was aware that if C7 no longer had the AFL pay television rights, Optus and Austar could terminate their contracts with C7. However, he could not recall anyone within Foxtel expressing the view to him that, in the event of C7 losing the AFL pay television rights and consequently its contract with Optus and Austar, its business would probably be brought to an end. It was not put to Mr Boyd in his cross examination that he was intending to convey in his conversation with Mr Willis that the effect of Foxtel acquiring the AFL pay television rights would be to destroy C7 and I make no such finding. Deal economics are significantly negative or value diluting for FOXTEL . The proposed deal is more than $20M negative (NPV) to FOXTEL versus the previous deal which was more that $80M positive for FOXTEL. There is no sound overriding strategic benefit for FOXTEL. Absence of Overriding Strategic Benefit . FOXTEL have indicated that acquiring the AFL rights will negate C7 and the issues surrounding the access dispute. This is an overly simplistic view as the AFL is only one part of C7's content lineup/aspirations. Additionally, FOXTEL has historically argued that the AFL is not a major business driver and this is reconfirmed in its financial modelling which shows an increase in subscribers of between 1% - 3% (20K additional subscribers on a forecast base of more than 1.1M)'. (Emphasis added. He did not recall any reference to C7 being negated. For him the major consideration was the negative NPV analysis. Mr Willis also asked for advice as to what discussion Foxtel had undertaken with C7 regarding the AFL pay television rights or AFL content. 984 Mr Akhurst accepted that he had read Mr Fogarty's briefing notes. He also agreed that the language used in the briefing notes suggested that the acquisition by Foxtel of the AFL pay television rights would bring about the end of C7's business. However, Mr Akhurst maintained that he could not recall appreciating that at the time. As I have already found in Chapter 6, I think it likely that Mr Akhurst appreciated at the time that the acquisition by Foxtel of the AFL pay television rights might have produced very serious consequences for C7, including possible cessation of its business. 985 Mr Akhurst was asked whether he had been given an explanation as to why it was not in Foxtel's interests at least to discuss with C7 the terms on which AFL coverage might be made available if C7 won the AFL pay television rights. Mr Akhurst appeared to misinterpret the question as directed to Foxtel's reasons for bidding directly for the AFL pay television rights, rather than trying to acquire them from C7. Mr Akhurst thought that any such negotiations could await the outcome of the bidding process. He also seemed to suggest that there were doubts, in any event, as to whether Foxtel could negotiate an arrangement with Seven relating to the long-term carriage of AFL content prior to the AFL awarding the pay television rights. 987 Later in the cross-examination, Mr Akhurst was asked what basis there was for thinking that Nine and Ten would treat Foxtel more kindly than Seven when it came to scheduling. I'm a member of the partnership, and the other partners, who are much more experienced and knowledgeable about getting sporting content, don't believe this is the best way to handle it. So it didn't really matter what I thought from that point of view'. I therefore accept it. 989 Mr Philip was asked about his response to Mr Willis' letter of 1 November 2000. Mr Philip said that he had been unaware of any recent discussions about Foxtel taking AFL programming from C7. Was that a matter of any importance to you? --- It was important to me that I thought there were significant advantages to taking the rights directly as opposed to taking them from C7 in relation to AFL. --- I don't know. I mean, it wasn't for me to conduct those negotiations'. As discussed and supported by the Board last year, the subscription penetration and performance of FOXTEL would improve overall and our performance in the southern states would be brought into line with the northern states if we were to offer AFL. Churn will be reduced particularly in the southern states and the marketing and sales messages will be greatly enhanced if FOXTEL could boast the provision of AFL. The News bid with the associated FTA party will provide for a cooperative relationship regarding scheduling of matches and earlier windows for the non live matches. The AFL service, as demonstrated by C7 this year, will not present a consumer proposition that would sustain interest or subscription levels'. This model assumed that Foxtel would acquire live rights to three matches, rather than four and that the AFL would be on a tier at a price of $9.95 pspm, rising to $10.95 pspm; that the AFL channel would be supplied to Optus and Austar; that Optus and Austar would each pay $6.00 pspm for the AFL channel (rising to $6.50) and, in addition, would each pay ' Sign On Bonuses ' of $4 million per annum (with specified increases); and that the rights fee payable by Foxtel would be reduced from $20 million to $17.5 million per annum (inflation adjusted). The sub-licensing revenue was projected to be $14.8 million in 2002, rising to $18.7 million in 2006. The increased penetration on basic by reason of the AFL was assumed to be two per cent in the southern States in 2002, rising to six per cent in 2006, but was projected to be only one per cent in the northern States. 992 It appears that the change from four exclusively live pay television games to three came about because of pressure from Nine. Originally, Nine and Ten had been offered two live free-to-air games each week, but Nine insisted on three matches for itself. 993 Mr Akhurst said in evidence that he appreciated at the time that Foxtel's model assumed a substantial increase in sub-licensing revenue, yet incorporated a substantial decrease in the quality of the product (in the sense that Foxtel was to receive only three live pay television matches per week, rather than four). Mr Akhurst maintained that he did not regard the model as simply an arithmetical exercise, as distinct from reflecting a considered judgment. He conceded that he did not know when he received the model what basis there was for assuming a substantial increase in licence fees from Optus and Austar. However, he said that he had later received reassurance on that score from Mr Blomfield. That particular evidence receives some support from the fact that most financial modelling incorporated sub-licences both to Optus and Austar, but one model, prepared for the Foxtel board meeting of 25 October 2000, assumed only a sub-licence to Austar. Mr Boyd could not explain why this had been done, but the re-inclusion of an (assumed) sub-licence to Optus would explain the reassurance Mr Akhurst said that he had received from Mr Blomfield. Whilst today this may not be of concern, in the near future it will mean that FOXSPORTS will have market power to effectively require sporting bodies to deal only with FOXSPORTS giving it the ability to negotiate content supply at lower rates. Being the premier provider of sporting content will enable FOXSPORTS to extract monopoly profits from pay TV operators for the supply of that content. Pay-TV operators such as FOXTEL, who do not own the content, become simple distributors and with their negotiating position considerably weakened by not owning the content. ' (Emphasis added. These included Telstra bidding for all rights; ' test[ing] the waters ' with Seven in relation to an arrangement with Foxtel; and a ' do nothing ' strategy, which allowed Telstra to drive a potentially better supply arrangement later. The underlying assumptions represent an optimistic view of the financial impact. We understand that such a sum requires Telstra main board approval'. However, Mr Akhurst said he was sceptical at the time because he knew that there was a range of sports and that it was implausible that one company would buy all the rights. Mr Akhurst also said that he concurred with Mr Fogarty's observation that News would always try to divert funds from Foxtel to Fox Sports. I accept Mr Akhurst's evidence as to his understanding at the time. I think it unlikely that Mr Akhurst would have formed the view that Mr Fogarty (a non-lawyer) was likely to be correct in his assessment, yet would have failed to take any steps to investigate or report on the issue. 997 On 3 November 2000, Mr Blomfield sent a revised AFL financial model to Mr Greg Willis at Telstra. This model assumed that Foxtel would acquire the right to broadcast four live AFL matches weekly; that Foxtel would pay a licence fee of $20 million per annum (increasing by $0.5 million annually); that Optus and Austar would each pay ' Sign On Bonuses ' of $5 million per annum (increasing by $0.1 million annually); and that Optus and Austar would each pay $6.00 pspm, rising to $6.50 pspm. The model also assumed a greater peak season tier penetration. The NPV to Foxtel over five years was said to be $5.7 million. 998 On the same day, Mr Brenton Willis forwarded briefing notes to Mr Akhurst. The notes stated that the deal remained ' value dilutive ' for Foxtel. The commercial, financial and strategic objectives do not support FOXTEL granting the proposed put option. FOXTEL have conceded in both their forecast subscriber numbers (additional subscribers grow by between 1% and 3%) and in their position vis-à-vis Optus that AFL is not critical to their line-up or overall performance'. 999 In the evening of 3 November 2000, Mr Fogarty left a telephone message for Mr Blomfield. The message suggested that the numbers in the latest proposal made no sense and the deal appeared to be in the interests of parties other than Foxtel. The proposals involve a total deal outlay in excess of $200M and the assumption of significant risk by FOXTEL for a nominal return. We would suggest however, that the rights fees would have to be significantly lower, the games covered by FOXTEL would have to include at least some of the "games of the round" and that take-or-pay contractual arrangements be in place with both Optus and Austar. Mr Akhurst said that he agreed with the contents of the fax. When questioned about his response to Mr Brenton Willis' briefing notes of 3 November 2000, Mr Akhurst said in evidence that Telstra had always regarded $10.00 pspm paid by Foxtel for Fox Sports as too expensive. He agreed that he thought the effective licence fee for Optus and Austar (taking account of the sign on fee) of $12.00 to $13.00 pspm was ' expensive ' and ' unlikely ' to be achieved. He also understood that the proposal involved the three least appealing games for Foxtel (in the sense of the least appealing to the viewers generally). When asked why he had not sought to test Seven's willingness to provide better terms than News, Mr Akhurst maintained that his attitude was that he was not running Foxtel and that other members of the Foxtel Partnership, more experienced and knowledgeable than he about sporting content, thought that direct dealing with the AFL was the way to proceed. 1002 Mr Akhurst gave evidence that he participated in a telephone conference held in the afternoon of 3 November 2000 with Dr Switkowski and Messrs Mansfield, Chisholm and Greg Willis. Mr Akhurst said in his evidence that Mr Chisholm enthusiastically supported the proposal that Foxtel acquire the AFL pay television rights and characterised the cost as ' bird seed '. In cross-examination, Mr Akhurst was uncertain as to the date of the conversation. It is clear from Dr Switkowski's evidence that Mr Chisholm was indeed enthusiastic about the proposal that Foxtel should acquire the AFL pay television rights and I accept that Mr Akhurst had a correct recollection of the substance of Mr Chisholm's comments. The likelihood is that Mr Chisholm expressed his views to senior Telstra officers both before and after Mr Greg Willis sent the fax of 3 November 2000. 1003 I think that Mr Akhurst's recollection that he agreed with Mr Blomfield's approach in the letter of 2 November 2000 (that the AFL pay television rights should be acquired directly from the AFL) is not correct, having regard to his agreement with Mr Greg Willis' response of 3 November 2000. But it is significant that Mr Willis' fax of 3 November was somewhat more receptive to the proposal for direct acquisition of the rights than Mr Willis' letter of 1 November 2000, in that the 3 November 2000 fax made specific suggestions as to how the proposal could be rendered more palatable. I am satisfied that Mr Akhurst's somewhat more receptive attitude towards the proposal that the rights be acquired directly was influenced by the strong opinions that had been expressed in the meantime by Mr Chisholm. ] Hell will freeze over before C7 gets onto Foxtel --- you're never going to get on to the system. As Mr Gammell readily accepted in evidence, the context for the exchange was a discussion concerning ongoing litigation in relation to C7's attempts to gain access to the Telstra Cable. Moreover, it was Mr Gammell who, on his own account, used the expression ' kill C7 '. Mr Gammell agreed that the expression had been used within Seven to describe the consequences of Seven losing the AFL pay television rights. Mr Wise confirmed that he had used the expression, as had Mr Aspinall and Mr Francis. Indeed Mr Wise said in an internal email of 8 November 1999 that the only value of a bid by Foxtel for the AFL rights was that it ' could be seen as killing C7 '. Mr Stokes himself told the ACCC that ' should Foxtel acquire the AFL rights that would kill C7 ' . The answers were admitted into evidence but only against Telstra. In relation to that proposal, Mr Blomfield stated to Mr Fogarty words to the effect, "Don't you understand that this is about killing C7?". To the best of [Telstra's] knowledge the conversation occurred by telephone conference call. [Telstra] is unable to identify all of the persons who participated in, or were present during, that telephone conversation but believes that they included a person who [Telstra] understands was then an employee of Foxtel Management and Greg Willis, Jack Simos, Brenton Willis, employees of the Fifth Respondent. All persons were in Sydney. In relation to that proposal, Mr Blomfield said words to the effect: "Look, this is about killing C7"'. On 7 November 2000, Mr Philip sent to Mr Leckie a draft put term sheet providing for a contribution of $21 million (plus CPI) per annum for Friday night and Sunday afternoon matches for free-to-air broadcast during the regular season. On 10 November 2000, Mr Leckie signified Nine's acceptance of the term sheet. Internal Nine working papers suggested that at this price the free-to-air television rights would yield a profitable outcome for Nine. 1009 On 8 November 2000, Mr Fogarty forwarded briefing notes to Mr Akhurst and the other Telstra directors of Foxtel in relation to the Foxtel Put proposal. The paper compared the ' deal metrics ' of three proposals: the 10 year joint venture proposal of February 2000; the proposal of 2 November 2000 (3 games at $17.5 million per annum); and the proposal of 4 November 2000 (4 games at $20 million per annum). The paper identified a number of key risks, including the unlikelihood of achieving the forecast wholesale tier price for the supply of Foxtel to Optus and Austar of $12.50 to $13.25 pspm. It pointed out that Foxtel would be offered AFL programming by the successful bidder, whoever that ultimately turned out to be, since the AFL had required coverage to be offered to both Austar and Foxtel. Directors may also wish to consider a reciprocal call option and that the contract be redrafted so as to be enforceable. However, by the time he received them he had an open mind as to whether the bid would be ' value dilutive ' for Foxtel, having been influenced by Mr Chisholm's views. Moreover, he did not accept that Foxtel could source the AFL from the eventual rights holder at a lower cost and risk profile than through a direct acquisition, since that was contrary to the advice the management of Foxtel was giving. Mr Akhurst was not directly challenged on this evidence and I accept it. 1011 Mr Philip prepared a response to the concerns raised by Mr Willis with ' significant input ' from Mr Macourt. Where FOXTEL is suitably equipped with the most popular winter football code, i.e. Sydney, FOXTEL has been most successful. It is the duty of the directors of FOXTEL to try and replicate this in other cities, particularly Melbourne. As I have explained to you, this is not an opportunity that has been available to pay tv from the current AFL rights holder, whose free to air interests conflict absolutely with any expectation that reasonable pay tv rights will be available to FOXTEL. Past conduct by that rights holder does not suggest that this will change in the future. I am not aware that FOXTEL has received any such offer. The only realistic opportunity available to FOXTEL is the proposal put forward by News Limited. To reject that proposal is to deny FOXTEL AFL rights altogether '. (Emphasis added. As such, FOXTEL can control pricing decisions and the marketing of the channel. This supports FOXTEL management's expectation of tier pricing at $9.95, and higher take up rates. While the current proposal includes 3 live games, all other games are available for replay. Put simply, I think the current proposal will equip FOXTEL to work harder to achieve increased take up rates at the suggested pricing. Your suggestion that the additional increase in subscribers because [of] the AFL is only 1-3% is wrong. The model presented to you as directors of FOXTEL moved from 2% to 6% over 5 years. I think that is an extremely conservative forecast. It is reasonable to expect that FOXTEL will be able to achieve subscriber number differentiation with Optus in Melbourne similar to that achieved in Sydney once it carries the winter football code. This alone would suggest an additional increase in subscribers because of the AFL of 4% to 6% per annum from Year 1. If you are going to make a comparison like this, you must compare apples with apples. If the same assumptions are made in relation to the current proposal (which is quite legitimate with the benefit of an exclusive right of negotiation to renew, which is available under the current proposal), the NPV of the current proposal is in fact $135.4 million. Our information is that Optus is paying approximately $35 million for the channel in which the AFL is the key programming. That gives a per subscriber cost to Optus of $14.60. The decision of Optus to take FOXTEL's offer of AFL programming will be a cost to its business. Optus will analyse it the same way I have analysed it above. The programming has commercial importance to Optus just as it has to FOXTEL. I expect Optus to take the programming for this reason, and because the programming will be better than what Optus currently gets (one live game). However, if Optus does not take the programming, you cannot simply back out that revenue stream from FOXTEL's model. If that were to happen, you must conclude that there would be a significant boost in the take up rates for FOXTEL, and a significant increase in the kick to total subscriber numbers to FOXTEL. To analyse this in isolation, as you have done, is not justified. It is consistent with our experience [of] dealing with rights of this nature ... We think the proposal will be enforceable. If you think there is anything loose about the terms of the agreement, I am sure we can build it into any final agreement that is entered into'. 1013 Before the board meeting, Mr Akhurst met with Mr Rizzo and Mr Greg Willis. Mr Akhurst, after consulting with them, decided to support the proposal that Foxtel enter a put option with News to facilitate a single bid for the AFL broadcasting rights, at a fee for Foxtel of $17.5 million per annum. But the questioning, in my opinion, did not satisfy me that Mr Akhurst's views were not sincerely held at the time. Mr Akhurst understood the approval to be ' in principle ' and to be subject to further modelling and the resolution of any drafting issues. 1016 At the board meeting, Mr Blomfield indicated that the reason that subscriber levels were higher in Sydney than in Melbourne was because Foxtel had live NRL content, but not live AFL pay television rights. Mr Blomfield said that he expected the differences to be evened out if Foxtel got the AFL pay television rights, but that the model presented to the board had not factored in this expectation. The discussion at the meeting was to the effect that the model should reflect the expectation. Mr Blomfield also said that Optus and Austar might well be prepared to pay more than had been assumed. (This account is based on Mr Akhurst's oral evidence, which was not challenged. Mr Allerton commented on the articles in an email to Mr Stokes on the same day. Mr Stokes then wrote a lengthy letter to the AFL. Mr Stokes observed, no doubt sagely, that long experience had taught him not to negotiate in the press. He also asserted that the decision of the Full Court on the access dispute would ' ensure that C7 will be available on the Foxtel system prior to the commencement of the new proposed contract '. As both Mr Stokes and Mr Gammell (who drafted the paragraph) knew, there was no foundation for this assertion. Mr Gammell admitted as much in his evidence. Mr Stokes was not prepared to concede that the statement was misleading, but it plainly was. It is relevant to note here that a paper prepared by Mr Francis was tabled at the board meeting. The paper dealt at some length with the latest press coverage concerning the bidding for the AFL broadcasting rights. At the meeting, the board noted that Seven's current offer for the AFL broadcasting rights was $56 million. The notations apparently recorded a discussion to the effect that News, Fox Sports and Foxtel would be ' ACCC fodder ' if they acquired both the AFL broadcasting rights and the NRL pay television rights. The notations also referred to the drawing up of a paper trail and the possibility of Seven ending up with the NRL pay television rights. It is not clear whether the discussion recorded by Ms Plavsic took place at the board meeting (Mr Stokes denied that it did) or elsewhere. Nonetheless, it is clear enough that at about that time, senior executives at Seven were looking to make out a case based on anti-competitive conduct against News, Foxtel and Fox Sports, should Seven fail to obtain either the AFL or NRL pay television rights. The model prepared by Mr Campbell incorporated some ' flip-flop arrangements ' in local markets serviced by Nine and Ten. Mr Campbell's evidence was that the model produced a positive NPV. 1021 During this period, there was discussion within Foxtel and between Mr Frykberg and the AFL in relation to the flip-flop . News and Foxtel asked Mr Frykberg to press the AFL on the issue. While he continued to request that the flip-flop be optional, Mr Frykberg said that he had always assumed that the AFL would insist on arrangements that, in effect, if not in form, were compulsory. Mr Frykberg proposed an amendment to make the terms of the flip-flop more favourable to Foxtel. He did so because he had been requested to press the issue by a combination of people, including Messrs Macourt, Philip and Blomfield. 1025 The following day, Mr Stokes sent a copy of the ACCC's 1998 press release (which recorded the ACCC's intention to monitor the conduct of the Foxtel partners) to Mr Evans, the Chairman of the AFL Commission. In his evidence, Mr Stokes agreed that his strategy was intended to discourage News, PBL, Foxtel and Telstra from bidding for the AFL broadcasting rights. He also agreed that he considered that one way of deterring the AFL from entertaining any such proposal was to elicit the interest of the ACCC in a bid by News or the consortium. On 9 November 2000, Mr Stokes told Mr Rolland of Telstra that he wanted to work with Telstra on the understanding that Telstra would bid separately for the internet rights. Mr Stokes proposed joining i7 and Telstra.com. Dr Switkowski received a copy of Mr Rolland's memorandum relating to the conversation and asked Mr Akhurst for his reading of the situation. I don't see much advantage to us in combining i7 and T.com by giving equity to 7 in T.com ... Separately, I note Kerry is threatening to sue us if Foxtel obtains the AFL Pay TV rights. Hard to see what we've done wrong other than support Foxtel as it competes for the rights and if successful, isn't he just a sore loser? ' (Emphasis added. The article reported Mr Stokes as ' admitt[ing] C7 would have a "very limited" future without the AFL rights '. 1028 Telstra points out, correctly, that the last sentence of Mr Akhurst's email corroborates Mr Akhurst's evidence that he did not think that Telstra's support for Foxtel involved anti-competitive conduct. Telstra also submits, perhaps with less force, that the reference in the article to C7's ' very limited future ' supported Mr Akhurst's evidence that he did not believe the loss of the AFL rights would ' kill C7 '. 1029 On 22 November 2000, Dr Switkowski initiated a telephone conversation with Mr Samuel and Mr Evans to ascertain the status of the bidding process for the AFL broadcasting rights. Actual date sounded fairly fluid. Was advised not to be led by newspaper reports. Will be for formal and final offers --- sudden death for pay TV; subject to last right of refusal by Seven for FTA. (Steve Wise for Seven). The Foxtel bid was described as being an "interesting package", but I did not sense we were off the mark re dollars. (Emphasis added. All the press speculation is guess work --- even the AFL doesn't know what News will bid, the various conditions and extra items. They think free rights are around the $40M and pay $20M level from some earlier exchanges --- but they really don't know and we are intending to keep it that way. The risk for us is that a competitor comes over the top with their sealed bid and that this leaves News out of the running. But Foxtel will still have a chance of getting the programming as it has the best pay subscriber numbers and the winner is almost sure to approach Foxtel. 7 has a last right to match on FTA only. I would imagine that it's likely we will be asked during this week to front up with some more money. Greg can model this for us. The trade practices issues need to be carefully managed as litigation is likely given the nature of the various parties, irrespective of the merits'. My sense is that these are the two alternatives in play'. Mr Akhurst also said that he referred to trade practices issues in his email to Dr Switkowski because he thought that litigation on trade practices grounds seemed to be ' the natural course ' for ' these particular parties '. He denied that he had formed the view that Foxtel was enhancing its market power. I accept Mr Akhurst's evidence as to his state of mind on this issue. 1032 Dr Switkowski said that he agreed with Mr Akhurst's assessment at the time and that he understood Mr Akhurst to be referring simply to the possibility of Seven litigating. --- Yes, I see that. --- I did. --- Enthusiasm of both of our shareholders, shareholding partners, News and PBL, for winning the AFL rights, yes. --- I mean, I think I would answer "yes" for all of us in evaluating the appeal of the AFL rights as going beyond a simple numerical calculation of near term economics. --- And by that I mean we shared the view that quality sports content had high value in a subscription television environment, that there were a range of ways in which we might work with the AFL that could not easily be quantified, and that the opportunity to win the rights came up at infrequent intervals five years apart. All of those considerations would then be added to a straight financial evaluation. --- Some form of AFL coverage, yes. --- That's correct. --- Correct. --- That was the outcome we were seeking, yes. --- That sounds plausible, yes. --- That was not exactly my consideration at all. --- It was certainly a line of reasoning down which I did not travel'. On 27 November 2000, Mr Stokes sent to Messrs Gammell, Wise and others a draft letter to Mr Evans of the AFL, stating that Seven proposed to withdraw from the bidding process. Mr Stokes' draft letter complained of Seven's competitors receiving a bidding advantage by reason of the AFL's willingness to split the price of the AFL free-to-air and pay television rights. Mr Gammell advised Mr Stokes that the time was not yet ripe to withdraw. Mr Stokes accepted that advice. 1034 On 28 November 2000, during an international flight, Mr Stokes dictated notes that (as he said in evidence) reflected his true thoughts at the time. Even though Ron Evans has said to me our 40 year relationship is important and highly valued, I think if we are going to achieve our objective, it may be time for a tactical retreat to the high ground. I confidently expect with the ten day timetable News will take some sort of legal action to prevent the NRL accepting our offer. That would be the icing on the cake, particularly if the AFL were aware of that and we then took the course of action I am suggesting'. (Errors corrected and emphasis added. However, he subsequently denied that he already had in mind suing Foxtel, News and PBL. I do not accept that denial. It flies in the face of the objective evidence. The offer provided for Seven to broadcast five free-to-air matches per round, plus finals and other matches, for a fee of $50 million per annum (inflation adjusted), plus $500,000 (also inflation adjusted) for each additional match broadcast. The offer was for a five year term. A copy of the offer was sent to Mr Stokes in Beijing. Mr Stokes said in evidence that it became apparent to him that the AFL was seeking to proceed on the basis that separate offers would be entertained for the free-to-air and pay television rights. Mr Stokes agreed in his evidence that the AFL's strategy remained unacceptable to him. The letter claimed that the offer did not comply with the requirements of cl 4(a) of the First and Last Deed. The letter also asserted that the financial terms included in the purported offer were ' so out of line with proper market realities and so uncommercial as to be lacking in bona fides '. 1038 The minutes of the AFL Commission's meeting of 11 December 2000 recorded that the AFL did not necessarily agree with Seven's comments, but was ' willing to try and satisfy Channel 7's requests '. The minutes also noted that Seven had not acknowledged that the First and Last Deed dealt only with the free-to-air television rights. Seven's position at the time was that the first and last rights related to pay television as well. He had prepared a similar document on 21 November 2000, because he was concerned that News might lose the support of Nine and Ten for the bid. 1040 The Fallback Scenarios document presented an alternative strategy, in case News' plan to obtain all the AFL rights failed. The strategy contemplated an agreement between News and Seven, whereby Seven would grant News a put option in respect of the AFL free-to-air television rights at $40 million per annum. Thus, as Mr Philip proposed in the document, if News won the free-to-air television rights it could ' offload them onto Seven, who were the ones who really wanted them '. In addition, Seven and Foxtel would each grant a call option to the other in respect of non-exclusive AFL pay television rights for $9 million per annum. Mr Philip's alternative strategy also contemplated that C7 would grant Foxtel a call option in respect of the non-exclusive NRL pay television rights for $11 million. Foxtel would give Fox Sports a call option in respect of the non-exclusive NRL pay television rights acquired from C7 for the same fee. In his evidence, Mr Philip agreed that the aim of the strategy, as outlined in the document, was to enable Foxtel to obtain the non-exclusive AFL pay television rights for $9 million. Mr Philip said his assumption was that the AFL would be unlikely to deal with Foxtel in respect of the pay television rights only and thus the only bidder for the rights would be Seven. 1041 In anticipation of a meeting to be held on 4 December 2000 between Mr Gammell and Mr Macourt, Mr Philip prepared a draft of a formal call option whereby C7, if requested by Foxtel, agreed to sell to Foxtel the non-exclusive AFL pay television rights. Mr Philip said that he prepared the document on his own initiative, with a view to giving it to Mr Macourt before the meeting. His recollection was that he did not in fact have a chance to do so. The only written record of the meeting is an unsigned typed note, the contents of which were dictated, not by Mr Macourt but by Mr Philip. According to both Mr Macourt and Mr Philip, Mr Macourt compiled rough handwritten notes after the meeting. Mr Philip then dictated the final note on the basis of Mr Macourt's rough notes and his answers to Mr Philip's questions. 1043 The typewritten note is in the form of a record of conversation, although it does not purport to be a complete verbatim account and, indeed, Mr Gammell agreed that certain things were said that were not recorded in the note. Mr Philip rather oddly said that he could not recall why he recommended preparation of the note in the first place, other than it seemed to be an important exchange of views. Mr Philip's concern to have a record is particularly odd given his propensity to encourage the deletion or destruction of records that might be relevant to potential legal proceedings. 1044 Mr Gammell's evidence was equally odd. He said nothing about this meeting in his first statement and dealt with it only in his third statement, after he had read the note prepared by Mr Philip. Mr Gammell himself had taken no notes of the meeting. Yet in his third statement he provided a detailed account of the conversation (which had occurred four years earlier), based on the note supplemented by Mr Gammell's own recollection. Mr Gammell's account contained additions to and deletions from the version that had been prepared by Mr Philip after his discussions with Mr Macourt. 1045 Certain conclusions can be drawn about this conversation with reasonable confidence. Mr Gammell told Mr Macourt that Seven needed the exclusive AFL or NRL pay television rights or otherwise C7 would have no business. Mr Macourt expressed disagreement with that claim and challenged the quality of C7's content. There was also discussion about C7 taking non-exclusive AFL pay television rights as part of an arrangement with Foxtel. --- Yes. --- That was his view. --- He expressed his view, yes . --- Yes . --- Well, he was not really looking out for C7's interests, I have to say. --- No, I recall him just saying that he was content to have non-exclusive for him. --- He held that view . --- Words to that effect'. (Emphasis added. We won't get any deal because Packer will not allow it to happen. ] That way we'd both get half of both the NRL and AFL. Yet Mr Gammell maintained that he had forgotten the conversation when he made his first statement. Mr Gammell denied that he was proposing to Mr Macourt that the bidding for all NRL and AFL rights be rigged. Later in his evidence, he said that he had recognised at the time that there was a risk that what he was proposing breached the TP Act and that advice would therefore be needed. (Prior to giving the later evidence, the Court was briefly adjourned to enable Mr Sheahan to give Mr Gammell any necessary advice as to the possible consequences for him of this evidence. ) Mr Gammell said that what he had in mind was a competitive process, followed by some kind of matching right in the unsuccessful bidder. He denied discussing the idea in advance with Mr Stokes. 1049 For the most part, I prefer Mr Macourt's account of the conversation to that of Mr Gammell, insofar as they are in conflict. I do not regard Mr Gammell as a reliable witness when it comes to recalling conversations or the substance of undocumented transactions. The circumstances in which Mr Gammell came to recollect the conversation with Mr Macourt do not inspire confidence in the accuracy of his version. 1050 There is one exception to my preference for Mr Macourt's account. I think it is likely that Mr Gammell was correct in substance when he recalled that the conversation concluded with his suggesting a sharing of rights between Foxtel and C7. This part of his evidence was potentially adverse to his interests, in that it exposed him to the possibility of criticism for floating a proposal that, if implemented, might have involved a contravention of the TP Act . Mr Gammell's recollection also dovetails, to some extent, with Mr Philip's contemplation of a cooperative arrangement through call options and (as I find) Mr Philip's discussion of that proposal with Mr Macourt in advance of the meeting. Furthermore, if Mr Gammell (or Mr Macourt, for that matter) had suggested a cooperative bidding arrangement during the conversation, this would explain Mr Philip's desire to prepare what was probably a sanitised version of the conversation. 1051 Mr Macourt said that he could not recall any discussion about the sharing of rights, as distinct from mention of Foxtel and C7 acquiring non-exclusive AFL pay television rights. The note of the conversation made no reference to the sharing of rights. However, Mr Macourt, upon being reminded of Mr Philip's Fallback Scenarios document agreed that it was likely that he had discussed the document with Mr Philip. Mr Macourt also agreed that the practical effect of Mr Philip's proposal, if implemented, would have been that neither party would have needed to offer the AFL more than $9 million for the rights because each would have been assured of getting the non-exclusive rights for that amount. Mr Macourt's evidence is thus not diametrically opposed to Mr Gammell's on this particular point. 1052 News contends that Mr Gammell's admission that he and Mr Macourt discussed Foxtel and C7 taking the AFL pay rights on a non-exclusive basis is inconsistent with Mr Macourt (or News) having the objective of destroying C7. News points out that Mr Sumption cross-examined Mr Macourt in relation to the AFL's four column chart on the basis that if C7 acquired the non-exclusive AFL pay television rights, neither Optus nor Austar would have been able to terminate its content supply agreement with C7. --- Yes. --- Sorry, those break clauses would not operate? --- Sorry, yes. --- Yes. --- Yes. --- No, it is not right'. All that Mr Macourt was discussing with Mr Gammell was a possibility that would arise only if News' plan to acquire the AFL pay television rights exclusively for Foxtel fell through. It follows, according to Seven, that Mr Macourt's proposal to Mr Gammell was not inconsistent with Mr Macourt having the objective of destroying C7 by means of News' and Foxtel's bid for the exclusive AFL pay television rights. 1054 The evidence to which I have referred shows (despite Mr Philip's refusal to concede the point) that Mr Macourt had seen Mr Philip's Fallback Scenarios document before he (Mr Macourt) met Mr Gammell on 4 December 2000. Even so, it is not entirely clear what Mr Macourt was proposing to Mr Gammell. If it was an arrangement intended to replace News' planned bid, the proposal would be inconsistent with Mr Macourt wanting C7 destroyed since the offer, if accepted, would have permitted C7 to retain the fruits of the C7-Optus CSA and the C7-Austar CSA. If, however, Mr Macourt was suggesting an arrangement to take effect only if News' bid failed, or if the bid did not go ahead (for example, because Nine and Ten pulled out), his proposal would not necessarily have been inconsistent with his having decided that News and Foxtel should bid for the AFL pay television rights in order to destroy C7's viability as a sports channel provider. 1055 Mr Macourt did not explain in his evidence precisely what he conveyed to Mr Gammell. In the absence of such an explanation, I think it likely that Mr Macourt was canvassing the idea of a cooperative approach in the event that the News' bid did not go ahead. Nonetheless, it is clear from Mr Gammell's evidence that Mr Macourt explicitly stated that he (Mr Macourt) was happy for C7 to have the non-exclusive rights so that C7 could continue its relationship with Optus. If Mr Macourt truly had the objective of destroying C7 (if necessary by making a predatory bid for the AFL pay television rights), the making of such a statement would have been duplicitous. If Mr Macourt had that objective, he certainly would not have been happy for C7 to continue its relationship with Optus, let alone survive as a viable sports channel. 1056 Mr Macourt was cross-examined after Mr Gammell had given evidence. Mr Macourt was questioned about the conversation of 4 December 2000 with Mr Gammell, but it was never put to him that he had acted duplicitously. Mr Sumption contends that Mr Macourt could have been in no doubt that his evidence was being challenged. He also says that he chose not to cross-examine Mr Macourt in detail about the events in the last six months of 2000 because the relevant acts were done by Mr Philip ' by way of delegation '. 1057 I think that this submission overstates the extent to which Mr Philip took over the process. Mr Macourt continued to play an important role, not least as a News decision-maker at the teleconference of 13 December 2000. Without insisting on a rigid interpretation of the so-called rule in Browne v Dunn (1893) 6 R 67, I would have thought that if I am to be invited in effect to find that Mr Macourt acted duplicitously in his dealings with Mr Gammell on 4 December 2000, it would have been helpful if the allegation had been made directly to Mr Macourt and he had been given an opportunity to respond. While there is no doubt that Mr Philip was perfectly prepared to act in a deliberately dishonest manner in his dealings with third parties (in particular, Telstra), and while Mr Macourt on his own evidence did not always behave with perfect propriety in his commercial dealings, I am not satisfied that Mr Macourt acted in a duplicitous manner in the course of his conversation with Mr Gammell. 1058 It follows, in my opinion, that the conversation of 4 December 2000 lends support to Mr Macourt's denial that he understood that News' bid for the AFL pay television rights was for the substantial purpose of destroying C7. He thought at the time that an earlier model prepared by him had done exactly that, but he later realised that in fact that was not so. 1060 In early December 2000, Mr Frykberg told Mr Philip that it might be necessary for News to pay up to $30 million for the AFL pay television rights. Following that conversation, Mr Philip told Mr Blomfield that $20 million might not get Foxtel the rights, and that $25 million or $30 million might be required. Mr Philip asked Mr Blomfield to prepare ' models which indicate what assumptions need to be made to support an acquisition at $25 million and $30 million '. For my own part, I did not place a great deal of reliance on the models ... I saw the acquisition of the AFL rights as a strategic acquisition and I did not necessarily expect it to be cash flow positive for FOXTEL'. 1061 Curiously enough, Mr Frykberg himself did not give evidence that he had told Mr Philip that up to $30 million might be required to obtain the AFL pay television rights. Mr Philip gave that evidence and for tactical or other reasons, was not challenged by Seven on it. Indeed, Seven specifically accepts that Mr Frykberg told Mr Philip that the then current bid of $17.5 million per annum for the AFL pay television rights would not be sufficient and that it might have to be $25 million or even as high as $30 million. 1062 The fact that Mr Frykberg gave Mr Philip this advice is, in my view, a matter of some significance. Although Mr Philip and Mr Frykberg worked closely together, Seven does not suggest that Mr Frykberg was party to, or knew of, any strategy to kill C7 by means of Foxtel paying more for the AFL pay television rights than their true value. Why, then, would Mr Frykberg advise Mr Philip as he did, unless he thought that up to $30 million was the price required to succeed in a competitive auction? 1063 On about 5 December 2000, Mr Philip told Mr Boyd that the bid needed to be $30 million. Following this conversation, Mr Boyd prepared a $30 million model and faxed a copy of that model and an earlier $25 million model to Mr Philip and to Mr Blomfield. 1064 At about this time, Mr Blomfield informed Mr Campbell that the fee for the AFL pay television rights was likely to be $30 million. Mr Blomfield also told Mr Campbell that Telstra had yet to be convinced of the value of the rights and thus Foxtel needed to show them that ' this is a good decision '. In his statement, Mr Campbell said that he understood that it was up to him (and others) ' to try and make the financial model work with a rights fee of $30 million '. --- To take that figure of $30 million that Jim Blomfield had told me to put in as the new rights fee, go back to the AFL, put that figure into the AFL model, look at the penetration rates, look at the business model very, very carefully and see, if we are going to be spending $30 million, what is it that the number comes out to, what is the NPV, what does the business case look like, taking that $30 million into account and all of the things that we would need to do to make the AFL successful. --- In and of itself, it wouldn't have. But I consulted with our general manager of commercial operations at that stage, basically our head of sales and marketing, and I explained to Nick Nichles at the time that the rights fee is going up significantly higher, "Nick, what does that do to alter what you would do as the head of sales and marketing to be able to achieve an outcome that makes this a sensible and a smart decision for Foxtel's business? " Nick's response to that was, "Well, we have a door-to-door sales force. We have 600 to 800 staff in Melbourne. I will have to redirect some of my marketing and expenditure and marketing activity and selling activity into selling the AFL and making sure that we obtain penetration rates and sales rates for basic that are going to be what you need to get". --- That's what I'm saying, yes. And, on the basis of that conversation, you, I take it, felt comfortable that you could include in a model penetration rates that were more or less consistent with the penetration rates you had assumed previously? --- No, they were more aggressive. --- That's correct'. The first model assumed an increased take-up of the Foxtel basic package (with the AFL) in the southern States of 10 per cent in 2002, increasing to 18, 25, 28 and 30 per cent in each subsequent year. The increased take-up of the basic package in the northern States was assumed to be a constant one per cent. The $30 million model was based on the same assumptions. 1066 On 1 December 2000, Mr Philip sent a memorandum to Mr Hartigan and Mr Macourt in advance of a proposed meeting with the AFL. Mr Philip was prompted to send his memorandum because of press speculation that the News proposal involved a ' consortium '. (Emphasis in original. The redraft accused the AFL of not acting in good faith. Mr Stokes later amended Mr Gammell's draft, but the letter was still not sent. 1068 In the meantime, on 1 December 2000, Seven's solicitors wrote to the ACCC. Mr Francis' covering email to Messrs Gammell and Wise (among others) noted that the current thinking was that the draft should be used ' as a thing to talk to --- rather than release '. The draft media release itself included a passage suggesting that as the AFL had split the free-to-air and pay television rights, Seven would participate in negotiations for the pay television rights. This and a similar statement in a ' Questions and Answers ' document prepared on the same day suggests that the management of Seven erroneously assumed that it would have an opportunity to bid for the AFL pay television rights after the AFL had disposed of the free-to-air television rights. Second, the FTA rights but only at the right price, no higher than our previous bid that was more than we should [have] submitted. We can pay more for the pay rights if we don't have the NRL. We could go as high as 25m for pay, without FTA. I do want to retain an action ... for abuse of market power ... providing that we have [a] reasonable case'. (Errors corrected. This figure was chosen because it was the maximum fee that produced a positive NPV, given the assumptions adopted by Mr Boyd. Mr Philip also asked for a model which allowed for a $30 million per annum fee, but also incorporated an accelerated take-up rate in the southern States. The NPV in the revised $30 million model came in at $2.3 million. In this model the take-up rates for the basic in the southern States were increased for each of the five years so that they became the following: 15, 20, 25 and 30 per cent (for each of the fourth and fifth years). 1072 Mr Philip agreed that he was perfectly content to ask for models which would show that the acquisition was cash flow positive notwithstanding that he did not necessarily expect that it would produce a positive cashflow for Foxtel. He accepted that he had the models prepared because he wished to persuade Telstra to support the proposal, although he qualified that response by stating that there was no point in producing a document for Telstra that ' didn't stack up '. Mr Philip never asked Mr Boyd or anyone else at Foxtel to identify the most reasonable assumptions about penetration rates that Foxtel could achieve with AFL content. 1073 Mr Blomfield circulated a Foxtel board paper on 6 December 2000. It assumes that after five years with the AFL, FOXTEL's take-up in southern states (where AFL following is strongest) will be equal to FOXTEL take-up in northern states. The changes noted included the introduction of the flip-flop. Mr Willis duly informed Mr Akhurst, who discussed the matter with Dr Switkowski. The notes covered both the AFL and NRL pay television rights (the NRL aspect is dealt with in Chapter 9 ([...]). (The NRL aspects of the meeting are also dealt with in Chapter 9 ([1311]-[1313]). Mr Fogarty circulated briefing notes recommending that the board of Telstra decline to approve the proposed variation to the AFL put option proposal by which the rights fee would increase from $17.5 million to $30 million per annum and other changes adverse to Telstra (including the flip-flop) would be made. The briefing notes suggested that the financial risk to Foxtel over five years would be $100 million, of which Telstra would be required to fund $50 million. Appendix A to the briefing notes analysed the subscriber take-up assumptions embodied in the Foxtel $30 million financial model. Appendix A estimated that every percentage point shortfall in the additional subscriber uptake reduced the NPV by about $3 million. 1078 Mr Akhurst's position at this stage was that, although he understood the basis of the Media Division's opposition to Foxtel's acquisition of the AFL pay television rights, he did not agree that the proposed increase in the bid for the rights should simply be rejected. Rather, he believed that Telstra should maintain the position that it was ' not comfortable ' with the proposed increase, in order to ensure that neither News or Foxtel proposed yet further increases in the price. 1079 Mr Greg Willis wrote to Mr Philip on 8 December 2000. He advised that, after discussions among Telstra's executives and board members, Telstra was not comfortable moving beyond the AFL proposal agreed at the November 2000 Foxtel board meeting, namely a fee of $17.5 million per annum for three games plus additional funding for advertising and editorials, producing a total of $20 million per annum for the AFL pay television rights. This language was similar to that used in previous communications between Telstra and News. The contents of the fax, which primarily concerned the NRL pay television rights, and the extensive evidence concerning it are dealt with in Chapter 9 ([1316]ff). 1081 Telstra gave consideration to the requests made by Mr Philip in his fax. It should be noted, however, that when Mr Akhurst told Mr Philip (on 11 or 12 December 2000) that Telstra would not take the naming or internet rights, he also told Mr Philip that he was agreeable to setting up a meeting of the Foxtel partners to finalise a decision on the bid for the AFL pay television rights. Seven's legal representative said that advice had been received that Seven had little prospect of success in any action against the Foxtel consortium in respect of the bidding for the AFL broadcasting rights. However, the advice had suggested that the ACCC could intervene under the TP Act to seek an injunction. Assuming the NRL bid was bona fide, it was potentially misleading for Mr Gammell to assert, without qualification, that C7 would fail if it did not obtain the AFL pay television rights. As Mr Stokes accepted in his evidence, if Seven acquired the NRL pay television rights, C7 would not have failed (at least not when it did). 1083 Seven's solicitor followed up the meeting of 12 December 2000 with a telephone call to the ACCC the following afternoon. The ACCC's representative told the solicitor that the ACCC was not keen to intervene in a competitive bidding process. The representative observed that the AFL was ' confident that there will be additional bidders when the rights next become available ' and that it would be difficult for the ACCC to intervene, given the AFL's view. The discussions that took place during that teleconference are dealt with in Chapter 9 ([1353]ff). By this time, Mr Stokes was aware that C7 had not obtained the NRL pay television rights. The presentation consisted of a written proposal, compiled over the previous two to three weeks, and an audio-visual presentation, part of which was scripted. Messrs Gammell, Wise, Francis and, to a lesser extent, Stokes participated in the preparation of the documentation. 1086 The written proposal incorporated a bid of $60 million per annum for all free-to-air and pay television rights for the period 2002 to 2006. In addition, Seven offered $4 million in contra and $8 million in sponsorships, club development and the promotion of a Seven-AFL online venture. The offer for all AFL broadcasting rights was made notwithstanding that, as Mr Wise acknowledged in his evidence, Seven appreciated that the AFL wanted separate bids for the AFL free-to-air and pay television rights. It incorrectly stated, for example, that Seven had reached in principle agreement with Telstra on a proposal for a sports site on the internet and that C7 had distribution rights such that it could reach all pay subscribers in Australia. In addition, the words ' up to ' were deliberately inserted in Seven's proposed commitment to indicate that this level of live and exclusive coverage on C7 was not guaranteed. As Mr Wise pointed out in evidence, Seven's contract with Optus required Seven to supply only 16 games per season. But I will make a separate offer for pay at $30 million per annum. --- Yes. --- I was anticipating a continuation of the existing rights that we had, Mr Hutley. --- Yes. --- Yes'. Mr Stokes' evidence was that the decision was made before Thursday, 14 December 2000 (the date of the presentation to the AFL), probably on the previous weekend. He said that this was the culmination of a series of discussions involving Ms Plavsic, Mr Gammell, Mr Wise and Mr Anderson. A consensus was reached that a single offer should be made for both free-to-air and pay television rights. Mr Stokes said that although Seven had been prepared to offer $30 million for the AFL pay television rights, no mention was made of this in the presentation to the AFL. According to Mr Stokes, the offer of $60 million per annum was the best Seven could make, having regard to likely costs and revenues and strategic considerations. 1092 Mr Gammell's recollection was that the decision was made at a meeting between himself, Mr Stokes and Mr Wise on the morning of 14 December 2000. Mr Stokes had said at the meeting that Seven was ' pushing the edge of the envelope ' and that $60 million per annum was the best price Seven could offer pay without overpaying. 1093 Mr Wise's evidence was that he had calculated the appropriate bid to make for the AFL broadcasting rights and that he had explained his reasoning process at a meeting held with Mr Stokes and Mr Gammell in the morning of 14 December 2000. He reached this conclusion in part because he thought that C7 could be expected to recover costs of about $12 million from Optus and Austar. He calculated that the benefits of carriage on Foxtel should be assessed at $3.00 pspm, a figure he said was derived from C7's offer to Foxtel of November 1999. Mr Wise's understanding at the time (so he said) was that Seven's earlier proposal was equivalent to 80 per cent of the fee paid by Foxtel to Fox Sports, being $7.50 pspm, so that C7 was to be paid $6.00 pspm. The figure of $3.00 pspm was simply 50 per cent of $6.00 pspm, reflecting an MSG of 50 per cent penetration for a tier carrying C7. Mr Wise said that the total cost to Foxtel of purchasing the C7 channel at $3.00 pspm would be less than the cost of purchasing the AFL pay television rights directly and that production costs and the value of non-AFL programming had been factored in. 1095 Mr Wise's evidence did not withstand cross-examination. He acknowledged that he had been wrong in claiming that his calculations had been based on the terms of C7's November 1999 offer. He then asserted that they were in fact based on discussions between Mr Stokes and Mr Blomfield in late 2000, discussions he had not previously mentioned. Mr Wise also admitted that by December 2000, he knew that Foxtel was paying Fox Sports approximately US$8.00 pspm, not $7.50. Perhaps more significantly, Mr Wise admitted that the figure of $12 million to be recouped from Optus and Austar, reflected Seven's internal accounting, not the amounts (exceeding $35 million) likely to be derived by C7 from those platforms. Finally, Mr Wise agreed that his calculations concerning the comparative costs of Foxtel acquiring the AFL pay television rights directly from the AFL or from C7 had been ' seriously flawed '. 1096 The likelihood is that the final decision to pitch the bid for the AFL broadcasting rights at $60 million was made at a meeting on the morning of 14 December 2000. This conclusion is supported by the fact that a draft presentation of 13 December 2000 recorded a proposed cash bid of $56 million for the AFL broadcasting rights. The final decision was probably made by Mr Stokes and Mr Gammell in consultation with Mr Wise. Mr Stokes' recollection on these matters was unreliable. 1097 I accept News' submission that regardless of what Mr Stokes may have said at the meeting, the offer made on 14 December 2000 by Seven was neither the most that Seven could have reasonably offered, given the potential benefits (had they been assessed correctly), nor what Seven believed the broadcasting rights to be worth once the true value of the AFL pay television rights was taken into account. The latter proposition is supported by Mr Stokes' offer of $30 million for the pay television rights alone, and his evidence concerning that offer, as well as the fact that Mr Stokes wrongly assumed that there would be a further opportunity for Seven to bid separately for the AFL pay television rights if its offer for the broadcasting rights was unsuccessful. Rights: exclusive right to broadcast the matches as defined in Clauses 5 and 6 ( Matches ) throughout the Territory in the Medium throughout the Term with right to sublicense and all other related rights, the subject of this agreement. Licensee must offer pay television rights to Austar for Austar's territory on terms no less favourable than these terms (this does not oblige FOXTEL to offer exclusivity). Licensee must also offer pay television rights to Optus on reasonable commercial terms. Licensee may broadcast the Matches in any channel as part of its basic or tier service or as part of an a la carte service. Territory: Australia. Term: 5 years commencing with the first Match played in 2002 and terminating with the last Match played in 2006. Licensee is granted a 3 month exclusive first right of negotiation to renew. Licence Fees: $30 million per annum (plus CPI on each of 2003-2006). All fees are exclusive of GST which must be paid by Licensee on Licensor's tax invoice. Matches: live (pay television matches only), replay and highlights rights to all regular season, finals series matches, State of Origin, Ansett Cup (or replacement) matches and other AFL organised or sanctioned matches. Licensor will require AFL to conduct at least 8 regular season matches per season week to give Licensee at least 3 live pay television matches per week. Free to air matches: 5 regular season matches per season week, plus finals series matches plus, two thirds of the Ansett Cup (or replacement) matches, plus State of Origin matches. (Emphasis added. Each of the Puts took the form of a letter (from Nine and Ten respectively) offering to acquire from News certain AFL free-to-air television rights for the purpose of any offer News elected to make for the AFL rights. The substance of each letter was very similar. Each offer made by News to acquire free television rights to the AFL must include an offer that is sufficient for News to sublicense to Nine free to air television rights on the basis of the term sheet in Schedule 1. News must, in relation to the relevant season, offer and deal solely and exclusively with Nine with respect to the free television rights contained in Schedule 1. Subject to News acquiring free television rights to AFL, News sub-licences to Nine free television rights on the basis of the term sheet set out in Schedule 1. Nine agrees to accept such licence on the basis of the term sheet set out in Schedule 1. Ten's term sheet defined ' Exclusive Ten matches ' to mean ' 2 regular season matches per season week, plus finals series matches ' as well as certain minor matches. All other matches were to be regarded as ' non-exclusive matches '. 1103 News' offer set out detailed provisions for the selection and scheduling of matches. The provisions included arrangements for the flip-flop, the effect of which was that free-to-air operators in Sydney, Brisbane, Adelaide and Perth could substitute each of the scheduled pay television matches for the regular free-to-air match if the substitute match involved a team based in the relevant city. 1104 Presentations were made to the AFL on behalf of Foxtel, Nine and Ten on 14 December 2000 in Melbourne. Foxtel's representatives were Messrs Lachlan Murdoch, Philip, Hartigan, Akhurst and Blomfield. According to Mr Akhurst, the presentations, doubtless in accordance with Mr Philip's wishes, were separate and each was ' closed ' to the other parties. The analysis was prepared under the supervision of the AFL Broadcasting Sub-Committee and recommended that News' bid be accepted, subject to legal sign off. The News Consortium bid is clearly a financially superior offer. ($100 million NPV for the five year period. The copyright position on AFL vision is stronger with the News Consortium which delivers significant upside Commercial Value. The additional support in Print and Press is more definitive and has measurable Commercial value. The AFL has less confidence in the Management of the AFL Brand under the existing Seven Network Structure than in previous years. The potential value of all three Networks and Subscription services bidding for the rights at the end of this five year period'. The Consortium group is an alliance of competitors and as such will present a challenge to manage and control. The 39 year agreement relationship with the Seven Network will be broken'. 1108 Before the AFL Commission met on Monday, 18 December 2000, the AFL requested amendments to the term sheets attached to News' bid. According to Mr Philip, over the weekend of 16 and 17 December 2000 and early on Monday 18 December 2000, he negotiated ' separately ' with the AFL, Nine, Ten and Foxtel about the amendments. He revised the bid documents and ' separately ' secured the agreement of Nine, Ten and Foxtel to the amendments. 1109 One of the amendments had the effect of making the flip-flop compulsory, rather than optional, for the free-to-air broadcaster. 1110 The AFL Commission's meeting on 18 December 2000 lasted from 8 am until 2 pm. The minutes recorded detailed discussion of the competing bids and noted that the financial analysis clearly demonstrated the superiority of the News bid. The Commission resolved that a sub-committee should review all the information and make a final decision. 1111 The Commission again met at 7.30 am on 19 December 2000 and considered a report responding to certain questions raised at the previous day's meeting. The rise in Foxtel's value that will come from this deal will more than make up for the extra programming costs". While Optus TV and Austar may survive, Foxtel's dominance means that it would control the market in programming. If we can get the revised [relationship] sorted out, this is a big one for us'. Dr Switkowski also agreed that his own perception was that if Foxtel won the AFL pay television rights it would increase its prospects of outcompeting Optus. That followed from Foxtel ' having in its inventory a wide range of content, including important sports '. The term sheet provided that the AFL was not to deal with the free-to-air television rights otherwise than in accordance with the term sheet (except that the licence fee of $46 million could be varied if the rights were sold, on or before 22 January 2001, to a person other than News). If the AFL had not sold the free-to-air television rights on or before 22 January 2001 in accordance with the term sheet, it would be taken to have sold them to News on the specified terms. Licensee must require that its sublicensee offers pay television rights to Austar and Optus on reasonable commercial terms. If there is a dispute between News and Optus or Austar as to the reasonableness of the terms on which the signal is offered, that dispute will be settled by reference to Arbitration under the NSW process ie. Sir Lawrence [sic] Street'. The licence fee was $30 million per annum, plus CPI for each of the 2003 to 2006 years, plus GST. The other terms were consistent with those put to the AFL on 14 December 2000. 1117 Mr Philip then informed Mr Blomfield that News had won the pay television rights and that, once the free-to-air television rights had been resolved (having regard to Seven's last rights), News would be able to offer Foxtel the pay television rights. He had similar conversations with Nine and Ten. News ultimately acquired the AFL free-to-air television rights, in accordance with the term sheet signed 19 December 2000, on the expiry of Seven's rights under the First and Last Deed on 25 January 2001. Mr Wise advised that Seven would probably not succeed in the bidding process and that it would now negotiate under the last right for the free-to-air television rights. No mention was made of Seven's failure to acquire the NRL pay television rights. 1119 On 9 January 2001, Mr Wise sent a note, simultaneously resigned and aggressive in tone, to Mr Stokes, observing that ' [c]ash is king '. It is critical we get them with a good old fashioned kick in the balls, satisfying and make them feel somewhat less comfortable ... While our objective will be to take them for conspiring to kill C7 other less spectacular outcomes are still important'. In substance, the offer took the form of the free-to-air term sheet attached to the News offer. On 18 January 2001, Mr Wise wrote a lengthy letter disputing that the offer complied with the AFL's obligations under the First and Last Deed. Mr Buckley of the AFL responded on 23 January 2001. He rejected Seven's contentions and confirmed that Seven had only until 26 January 2001 to accept the last offer. 1121 In the meantime, on 16 January 2001, Mr Wise prepared a draft strategy paper in relation to C7. Intervention will no longer create a monopoly bidder, as C7 would take at Foxtel price, ie the market has established a price for Pay. Positive response here would impact ongoing strategy'. 1122 Seven Network's board met on 23 January 2001. The board had before it a detailed paper prepared by Ms Plavsic which recommended against renewal of the AFL free-to-air television rights largely on grounds of cost. The minutes of the meeting recorded that a number of matters were discussed. These included the importance of AFL content to the Melbourne, Adelaide and Perth markets; the status of the AFL as a ' mature product ' with regard to revenue potential; the fact that, although the AFL was a very important product for Seven, the cost was difficult to justify; and the potential for Seven to develop ' new strong product to compensate for the loss of AFL '. The consensus of the meeting was that Seven should decline the last offer. Discussions were, however, deferred to the next day. 1123 The issue was further discussed at a two hour board meeting on 24 January 2001. A majority of directors agreed not to renew the AFL free-to-air television rights, subject to receiving advice on the effect of the decision on Australian content quota and other matters. 1124 The Seven board finally resolved at a meeting held on 25 January 2001 not to renew the AFL free-to-air television rights on the terms presented. Mr Wise wrote to Mr Buckley at the AFL on the same day giving written notice that Seven would not match the last offer. Seven reserved its rights. The AFL duly informed News of Seven's decision. Be that as it may, on or about 25 January 2001, the News-Nine Licence, the News-Ten Licence and the News-Foxtel Licence were signed by the respective parties. 1127 Mr Stokes was cross-examined on his approach to the ACCC. --- In cash terms, yes. --- No. You didn't think it was reasonable value, did you? --- No. --- Yes. --- No, Mr Hutley. --- There was a strategic benefit in having our business and the subscription television that outweighed short-term losses. So the value to you of the totality of these rights was equal to what the consortium was paying; correct? --- Yes. --- Yes. --- Yes. --- Yes. --- Yes. --- Yes. --- Yes. --- Certainly price was satisfactory, yes, Mr Hutley. --- I wouldn't use that term, Mr Hutley. --- Yes. --- No. --- A good price, yes. On 14 December 2000, had Seven wished to, it could have put a proposal to the AFL that there be three live and exclusive games to pay had it wanted to; correct? --- Yes. --- Yes. --- Our strategy --- no. You had lost the rights; correct? --- Yes. --- Yes. --- No. --- Made that decision, yes. --- Yes' . (Emphasis added. The letter was sent to the AFL on 18 July 2000. 1129 Mr Wise gave evidence that the draft letter reflected his understanding at the time as to the effect of the First and Last Deed, in combination with the anti-siphoning regime. Mr Wise explained that Mr Gammell and Mr Stokes urged that interpretation on him and that he had accepted it. Moreover, he had held that view until January 2001 and had made strategic decisions in relation to the AFL broadcasting rights on the assumption it was correct. 1130 Mr Stokes said that he had read the First and Last Deed and formed the view by 14 December 2000 on the basis of the anti-siphoning provisions, that the AFL could be compelled to undertake an auction for the AFL pay television rights after it had disposed of the free-to-air television rights. I infer that Mr Stokes changed his view in January 2001, in consequence of legal advice received by Seven. However, it was the view adopted by Mr Stokes, Mr Gammell and others within Seven until the receipt of the legal advice. There is little doubt, however, that the view held by Mr Stokes and Mr Gammell influenced the approach taken by Seven to its bidding for the AFL rights. In particular, it helps to explain why Seven did not structure its bid so as to offer $30 million cash per annum for the AFL pay television rights notwithstanding that Mr Stokes thought that that figure represented a ' good price ' for a purchaser. For the most part, there is no disagreement among the parties as to the significant events, which are set out in an agreed chronology. There is little point in reproducing the agreed chronology since it cannot form part of the published judgment. However, I outline briefly the key events, but in a manner that is designed to avoid the disclosure of confidential information. The Guidelines assumed that there would be eight home and away matches each week, with six matches available for free-to-air broadcast and two matches available for pay television. 1134 On 15 March 2005, Mr Leckie, by then the CEO of Seven, sought the AFL's consent to assign Seven's rights under cl 4 of the First and Last Deed to Seven and Ten in accordance with cl 12.7 of the First and Last Deed. On 17 May 2005, the AFL publicly announced its acceptance that Seven could partially assign to Ten the right to receive First and Last offers in relation to the new round of AFL broadcasting rights. 1135 In April and May 2005, discussions took place between Nine and Foxtel with a view to countering the alliance between Seven and Ten. Following a series of discussions, on 29 June 2005 Foxtel sent Nine a proposal regarding the manner in which Nine and Foxtel could share the AFL broadcasting rights for the forthcoming licence period. The proposal contemplated that Nine and Foxtel would each broadcast four live matches per week, in accordance with an agreed schedule. 1137 On 31 August 2005, Mr Falloon forwarded a proposal to the AFL under which Seven and Ten would obtain five live and exclusive free-to-air matches per round, thereby enabling the AFL to enter a separate agreement for the three remaining live and exclusive pay television matches per round. Under the proposal, Seven and Ten also had the right to broadcast all finals matches. Seven and Ten offered the AFL a put option for the balance of the rights (that is, in respect of the remaining three weekly matches) in the event that the AFL failed to reach agreement for the pay television rights with Foxtel. If the AFL exercised the put option, it was to use its best endeavours to schedule games so that a maximum return could be reached for all eight weekly games on free-to-air television. 1138 On 12 October 2005, the AFL sent to Seven and Ten a notice of its first offer for the AFL free-to-air broadcast rights pursuant to the First and Last Deed. The first offer set out the terms and conditions upon which the AFL would grant a licence to Seven and Ten for the AFL free-to-air television rights for 2007 to 2011. Following a letter from solicitors on behalf of Seven and Ten asserting that the first offer was not a valid notice in accordance with the First and Last Deed, the AFL delivered a fresh notice on 21 October 2005. In substance, the terms of the first offer did not change. 1139 On 2 November 2005, Mr Falloon wrote to the AFL challenging the validity of its revised first offer. Mr Falloon's letter included an offer on behalf of Seven and Ten for all eight weekly AFL matches plus the finals matches. The term was to be six years, from 2007 to 2012. 1140 On 9 November 2005, Seven and Ten submitted a revised offer to the AFL for the AFL broadcasting rights. The offer encompassed the rights for the 2007 to 2012 seasons. The AFL was to use its best commercial endeavours to sell pay television rights for up to three matches per week within specified parameters. If the AFL could not reach agreement with Foxtel to purchase the pay television rights, then Seven and Ten would be able to direct the AFL to sell those rights to third parties. 1141 A board meeting of Seven Network held on 11 November 2005 resolved that the company should proceed with negotiations for the AFL broadcasting rights on terms substantially as outlined in a paper tabled at the meeting. The tabled paper recommended that Seven proceed with negotiations on terms substantially as outlined in the offer of 9 November 2005. In addition, Ten and Seven have structured other aspects of their offer to appeal to Foxtel ...' (Emphasis added. The letter also confirmed that the AFL could negotiate with any third party for the sale of its television rights until 5 pm on 18 November 2005. 1143 On 11 November 2005, a meeting took place between the AFL and PBL. At this meeting, the AFL representatives indicated that the AFL would accept a bid for all free-to-air television rights (that is, encompassing eight free-to-air games), including sub-licensing rights to other free-to-air and pay television broadcasters. 1144 On 12 November 2005, PBL sent a fax to the AFL setting out the terms on which Nine would be prepared to negotiate for the AFL broadcasting rights for the 2007 to 2011 seasons. The terms included the acquisition by Nine of the sole and exclusive right to broadcast on a free-to-air television service all eight AFL matches in each round, as well as the finals matches. Nine would also acquire the sole and exclusive right to sub-license the broadcasting rights to free-to-air or pay television operators. 1145 On 28 November 2005, the AFL's solicitors requested that Seven and Ten provide written confirmation that they had rejected the AFL's revised first offer. I infer that Seven and Ten had in fact already rejected that offer. 1146 On 16 December 2005, Seven and Ten made a revised offer to acquire the AFL broadcasting rights for the period 2007 to 2011. The major changes to the offer previously made on 9 November 2005 concerned a decrease in the proposed term (five instead of six years) and an increase in the licence fees. 1147 On 20 December 2005, the AFL advised Mr Blackley of Ten that the AFL had rejected the offer of 16 December 2005. On the same day, Mr Blackley informed the AFL that Seven and Ten would leave their offer open until further notice. Mr Blackley provided the AFL with a letter which consolidated the financial terms set out in the letter of 16 December 2005 with the other provisions set out in the offer of 9 November 2005. 1148 In late November 2005, Mr Campbell of Foxtel had discussions with AFL representatives in relation to scheduling issues. Agreement was not reached as to a schedule that met Foxtel's requirements. Further discussions concerning scheduling issues took place between PBL and the AFL on 21 December 2005. 1149 On or shortly before 23 December 2005, PBL and Foxtel reached agreement on the terms of an offer to be made by PBL for the AFL broadcasting rights for 2007 to 2011. PBL and Foxtel agreed that in the event the PBL offer was successful, PBL would sub-license to Foxtel the right to broadcast AFL matches on pay television on specified terms. Nine was to acquire the sole and exclusive right to broadcast on free-to-air television all eight AFL matches in each round as well as AFL finals matches for the period 2007 to 2011. Nine would have the right to sub-license to other free-to-air or pay television broadcasters (for a maximum of four matches per round). The AFL was to agree to certain scheduling requirements specified in the offer. 1151 In the afternoon of 23 December 2005, the AFL's solicitors forwarded to PBL a formal acceptance by the AFL of PBL's offer. On the same day, the AFL forwarded to Seven and Ten a notice pursuant to cl 4(d)(i) of the First and Last Deed (as amended by the May 2005 Deed of Assignment). The notice constituted a last offer to Seven and Ten for the grant of a licence on the terms of the PBL offer. 1152 A paper relating to the AFL's last offer to Seven and Ten was submitted to Seven Network's board meeting of 2 January 2006. The authors of the paper included Mr Leckie and Seven's Chief Financial Officer. The paper suggested that if Seven and Ten could not do a deal with Foxtel, they would need to explore alternatives such as sub-licensing to other pay operators or new operators. The paper recorded management's view that Foxtel would have to acquire the pay sub-licence from Seven and Ten, thus allowing Seven and Ten to ' dictate the pay television offering '. The paper recommended that Seven should explore the opportunity with Ten to accept the last offer. 1153 Seven Network's board meeting of 2 January 2006 resolved that Mr Leckie ' subject to Board approval ' conduct negotiations with Ten concerning acceptance of the last offer and acquisition of the AFL television rights. 1154 On 4 January 2006, the board of Seven Network resolved that Seven and Ten should match PBL's last offer for the AFL broadcasting rights and that Seven should execute all necessary agreements to give effect to the arrangements. 1155 Seven and Ten reached agreement on revised ' Agreed Guidelines ' on 5 January 2006. The revised Agreed Guidelines provided that Seven and Ten would accept the AFL's last offer and, to that end, vary the earlier agreement between them in certain respects. 1156 On 5 January 2006, Seven and Ten notified the AFL in writing that they accepted the last offer. In consequence, Seven and Ten acquired the AFL broadcasting rights for the period 2007 to 2011 on the terms set out in the PBL offer of 23 December 2005. 9 AWARD OF THE NRL PAY TELEVISION RIGHTS [1157] 9.1 Background: NRL Agreements [1159] 9.2 Fox Sports Considers Bidding [1169] 9.3 Seven Considers the NRL Pay Television Rights [1175] 9.4 Fox Sports' First Offer [1179] 9.5 Telstra Consents to Fox Sports' Bid [1182] 9.5.1 Consent [1182] 9.5.2 Fox Sports Seeks to Supply NRL to Optus [1187] 9.6 C7 Expresses Interest in the NRL Pay Television Rights [1194] 9.7 Fox Sports Makes a Second Offer [1197] 9.8 C7 Discusses Making an Offer [1207] 9.9 Events Leading to C7's First Offer [1217] 9.9.1 Seven's Draft Note [1217] 9.9.2 Quay Apartments Meeting [1222] 9.9.3 Mr Stokes Speaks with Mr Moffett [1223] 9.10 C7's First Offer for the NRL Pay Television Rights [1225] 9.10.1 The Offer [1225] 9.10.2 Seven Network's Board Meeting of 17 November 2000 [1227] 9.10.3 Confidentiality Agreements [1230] 9.10.4 Newspaper Reports [1231] 9.11 Fox Sports and the NRL Partnership Assess Their Positions [1233] 9.12 C7 Prepares a Second Offer for the NRL Pay Television Rights [1238] 9.12.1 Towards $70 Million Cash [1238] 9.12.2 An ACCC Interlude [1246] 9.12.3 Back to $60 Million Cash [1248] 9.12.4 C7 Makes Its Second Offer [1255] 9.13 C7's Second Offer Is Considered [1261] 9.14 Terms of the Offer Are Disclosed [1273] 9.15 Further Discussions [1284] 9.16 C7's Third Offer for the NRL Pay Television Rights [1288] 9.16.1 The Offer [1288] 9.16.2 Legal Advice [1295] 9.16.3 Seven Clarifies [1297] 9.16.4 The Offer Is Revealed [1299] 9.17 Fox Sports' Meeting of 5 December 2000 [1300] 9.18 Mr Philip Attempts to Persuade Telstra [1303] 9.18.1 First Attempt [1303] 9.18.2 Fax of 9 December 2000 [1316] 9.18.3 Telstra Analyses Mr Philip's Proposal [1322] 9.18.4 Mr Philip's Second Fax: 12 December 2000 [1326] 9.19 A Meeting Between Mr Stokes and Mr James Packer? As I have already explained, the matters addressed in this Chapter cannot be regarded as separate from the events recounted elsewhere in the judgment. Nonetheless, the focus is on the circumstances surrounding the award of the NRL pay television rights for 2001 to 2006. 1158 I have explained in Chapter 3 the relationship between the parties involved in running the NRL Competition and in awarding the NRL pay television rights. Both in the contemporaneous documentation and at the hearing, the expression ' NRL ' was used in a variety of senses, often very loosely. In this Chapter, I sometimes use the expression without identifying precisely whether I mean the NRL Partnership, NRLI, NRL Ltd, the NRL Competition or the NRL pay television rights. Sometimes the context makes the identity of the relevant entity (or partnership) clear. Sometimes, the parties themselves, whether in the contemporaneous documentation or at the hearing, have left the precise meaning unclear, and I have not attempted to resolve the ambiguity. The free-to-air television rights to both competitions were held by Nine. 1160 The Super League dispute was resolved in 1998, when News and ARL agreed that the two rival competitions should merge. The terms of the agreement were recorded in the Merger Agreement of 14 May 1998, which annexed the NRL Agreements. 1161 Under one of the NRL Agreements known as the ' NRLP Australian Free-to-Air Television Rights Licence Agreement ' (' NRL Free-to-Air Licence '), Nine acquired the NRL free-to-air rights for a term of 10 years commencing on 1 January 1998. The ' base licence fee ' was $13 million per annum, increasing by the CPI from 2000 onwards. Nine also received a right of first negotiation and last refusal in respect of a further five year licence agreement. 1162 The NRL Free-to-Air Licence conferred on Nine the right to televise all NRL Competition matches (including finals). However, Nine was to select two matches in each round at least five weeks prior to the round, after consultation with the NRL Partnership. Subject to limited exceptions, if Nine broadcast any other match in each round earlier than 14 days after the match was played, Nine was obliged to pay the NRL Partnership $300,000 per match. Nine's two designated time slots were Friday night at 8.30 pm and Sunday at 4 pm, although these could be altered with the agreement of the NRL Partnership. 1163 Another of the NRL Agreements, the ' NRL-News Pay Rights Agreement ', granted News the NRL pay television rights for a period of three years from 1 January 1998. The licence fee payable by News was $16 million for 1998 and 1999 and $18 million for 2000. News was entitled to broadcast weekly NRL Competition matches, but could not broadcast either of Nine's matches earlier than one hour after Nine's Sydney telecast of the matches had concluded. News' time slots for the weekly pay matches were subject to change if Nine and the NRL Partnership agreed to alter the two free-to-air slots. The NRL-News Pay Rights Agreement also granted News the first right of negotiation and last right of refusal over the NRL free-to-air television, pay television and internet broadcast rights for the period 1 January 1998 to 1 January 2023. These rights were, however, subject to Nine's rights under the NRL Free-to-Air Licence. 1164 News sub-licensed the NRL pay television rights to Foxtel (by the ' Foxtel Pay TV Rights Programming Agreement ') and to Optus (by the ' Optus Pay TV Programming Agreement '). The licence fees payable by Foxtel to News were $8 million for each of 1998 and 1999, and $9 million for 2000. The same fees were payable by Optus. Thus Foxtel and Optus, in effect, reimbursed News in equal shares for the licence fees payable to the NRL Partnership. 1165 The Optus Pay TV Programming Agreement provided that if News obtained the NRL pay television rights for the years between 2001 and 2021, it had to offer to sub-license those rights to Optus on terms no less favourable than those offered by News to Foxtel. If the pay television rights were not sub-licensed to Foxtel, News had to offer the rights to Optus on the terms set out in the agreement. 1166 Foxtel and Optus each secured non-exclusive rights to broadcast the same NRL matches as were included in News' licence agreement with the NRL Partnership. Foxtel and Optus entered into an agreement pursuant to which production of the NRL programming was allocated between them. Each party agreed to provide the other with feeds of the coverage for which it was responsible for producing. In the event, Foxtel contracted with Fox Sports for the latter to produce, on Foxtel's behalf, the games allocated to it. Fox Sports was also licensed to incorporate coverage of all NRL matches into the Fox Sports channels, except for a weekly game that Foxtel broadcast as part of the Fox 8 channel. Optus contracted with a third party for the production of its matches. 1167 Optus Vision initially sub-licensed the non-exclusive NRL pay television rights to SportsVision. After SportsVision went into liquidation, Optus inserted NRL programming into C7's overflow channel (' C7 Sports (Blue) '). 1168 On 15 May 1998, Optus Vision and the NRL Partnership executed the ' Optus Partners Funding Deed ' , which recited that the NRL Partnership had requested Optus to provide ' Transitional Funding ' and that Optus, wishing to ensure access to NRL programming for pay television, had agreed to do so. Shortly thereafter, he instituted regular meetings to discuss rights acquisition. The co-called ' Acquisition Team ', which included Mr Marquard and Mr Dobbs, agreed in early 2000 that it was desirable for Fox Sports to acquire the NRL pay television rights on an exclusive basis. One consideration was that Austar could terminate the Fox Sports-Austar CSA if Fox Sports lost the NRL pay television rights and Fox Sports was dependent upon Foxtel for its NRL programming. Another was the desirability of Fox Sports using the exclusive NRL pay television rights to promote the Fox Sports brand. 1170 In early April 2000, Mr Marquard, in consultation with Mr Malone, prepared a paper for the Fox Sports board meeting of 14 April. Will FOXTEL continue this program supply agreement with FOX Sports if FOXTEL are awarded the next NRL contract? In particular, if FOX Sports does not have NRL rights for 2001-2006, Austar may terminate the long term Austar distribution agreement'. The recommendation was approved at the Fox Sports board meeting of 14 April. The board also authorised management to discuss with Optus the possible licensing of NRL pay television rights to Optus. 1172 Following the board meeting, Mr Marquard prepared draft ' NRL Deal Points ', providing for Fox Sports to acquire the exclusive NRL pay television rights for five years, with it having an option to extend the arrangement for a further two years. The document did not specify a proposed fee. Mr Malone and Mr Marquard then attended a meeting with Mr Moffett and Mr Gallop. Mr Moffett indicated in the course of the meeting that the NRL considered that a fee of about $21 million to $22 million per annum was likely to be acceptable for the NRL pay television rights. 1173 The Fox Sports board met again on 20 June 2000. Those attending the meeting included Mr Malone, Mr Marquard, Mr Parker, Mr Philip and Mr Falloon. A board paper reported that management had discussed with the NRL the possibility of Fox Sports acquiring the NRL pay television rights and ' distributing NRL across all subscription platforms '. The rights would be held for 5 years, with a 2 year option, bringing the rights into line with those licensed by the NRL for FTA television''. Management would revert to the NRL ' once we were in a position to make a meaningful bid ' . One option referred to in the plan involved Fox Sports acquiring both the NRL and AFL pay television rights. According to Mr Marquard, the draft strategic plan was ' an evolving document that was frequently amended over time '. The briefing paper, which had been prepared by Mr Wood and an in-house lawyer, noted that C7 ' needs NRL to balance the "southern states" bias of the AFL '. It also observed that C7 was of interest to the NRL, particularly the member clubs, because by dealing exclusively with Fox Sports the NRL was not reaching Optus subscribers and was ' putting all its eggs in one basket '. The proposal envisaged a term of five years. According to Mr Wood, this proposal later became part of ongoing discussions with Optus. Potential costs, share between Seven and Optus, impact on subscription ... 1177 Mr Stokes said that he read Mr Wood's briefing paper on 7 July 2000 and that led him for the first time to consider the possibility of making an offer for the NRL pay television rights for the 2001 to 2007 seasons. While (as he said) he was sceptical of whether C7 would be allowed to obtain the rights, given News' involvement in Rugby League, he instructed Mr Gammell to investigate the possibilities. 1178 Discussions took place periodically between Seven and Optus from late July 2000. In the course of those discussions, the Optus representatives indicated that Optus was willing to relax the terms of the C7-Optus CSA in relation to the AFL content required. The discussions also included a proposal for Optus to take over payment of the NRL pay television rights fee, with C7 to meet production costs. The amount to be offered was $21 million per annum initially, increasing to $24 million per annum by 2007. The board noted that the shareholders would need to speak to Telstra about the possibility of Fox Sports licensing the NRL pay television rights to Foxtel and Optus. The CEO (Mr Malone) was asked to follow up with Mr Lattin regarding Optus' interest. (The need for Fox Sports to speak with Telstra arose out of TCNL's obligations to Telstra under the Umbrella Agreement. TCNL was obliged to use all reasonable endeavours, where Fox Sports held exclusive rights to televise sports events, to procure that Fox Sports offered the rights to Foxtel exclusively. PBL was also obliged, under the Program Rights Deed of 3 December 1998 to ensure that it and its associated entities, including Fox Sports, provided Foxtel with the first right to refuse and last right to match proposed grants of licences to third parties. Mr Lattin advised Mr Malone that Optus was interested in the Fox Sports channels, not in a raw feed of NRL matches. 1181 At some time after Fox Sports' 22 August 2000 board meeting, not precisely identified in the evidence, Fox Sports made a formal offer to the NRL Partnership. The offer was for non-exclusive NRL pay television rights for 6 years for $21 million per annum (rising with inflation). The offer contemplated that the NRL would offer the same deal to Optus. Optus Vision has had rights to the NRL competition over the last 3 years on terms the same as FOXTEL. The proposal therefore represents a significant immediate saving to FOXTEL'. Mr Philip also observed that the issue of the long-term supply of the Fox Sports channels to Foxtel could be dealt with separately. At the time, Foxtel was paying $9 million per annum to receive non-exclusive NRL pay television rights, under a sub-licence from News. 1184 On 1 September 2000, Mr Greg Willis of Telstra, at Mr Akhurst's request, faxed a series of questions to Mr Philip. These related to ' the proposal to include NRL coverage in Fox Sports Two and the supply by Fox Sports of NRL coverage to Optus '. Mr Philip provided answers in a fax sent the same afternoon. 1185 On 4 September 2000, Mr Willis confirmed his earlier oral advice to Mr Philip that Telstra consented, on certain conditions, to the supply by Fox Sports of the proposed NRL coverage as previously outlined by Mr Philip. The specified conditions included a requirement that Fox Sports would not seek any payment from Foxtel in respect of the proposed NRL coverage. The consent related to the NRL coverage and did not extend to supplying the balance of the content of the Fox Sports 2 channel. 1186 Mr Akhurst had no objection to Fox Sports bidding for the NRL pay television rights, as distinct from the AFL pay television rights, because he understood that Fox Sports was already the supplier of NRL content. Mr Akhurst at the time did not realise that Fox Sports obtained its NRL pay television rights by way of a sub-licence from Foxtel. Mr Philip told Mr Falloon that he intended to send the correspondence to Fox Sports ' with a suggestion they cut a deal with Optus asap '. Mr Philip then sent Mr Malone of Fox Sports a copy of the correspondence with Telstra. 1188 At this stage Mr Malone was aware that Telstra had not consented to the supply of the complete Fox Sports package to Optus, but had consented only to the supply of NRL coverage. On 11 September 2000, Mr Malone sent to Mr Macourt and Mr Falloon a draft letter which he intended should be sent by Fox Sports to Optus in relation to the provision of NRL coverage to Optus. The draft letter proposed that Fox Sports would acquire the NRL pay television rights from ' the NRL '. Fox Sports would arrange for the production of all NRL pay television matches and would license NRL pay television rights and coverage to Optus on a non-exclusive basis. Fox Sports was to provide to Optus a ' dirty feed ' of all NRL matches: that is, a coverage branded as ' Fox Sports ' and featuring use of the Fox Sports logo. The draft letter included a restriction requiring Optus to incorporate NRL content in a channel ' currently wholly owned by Optus ' and to obtain Fox Sports' consent to the designated channel before incorporating or compiling ' NRL rights ', such consent not to be unreasonably withheld. 1189 The draft letter was prepared primarily by Mr Marquard, with the participation of Mr Malone. Mr Marquard said that he had included the restriction because he wanted to prevent Optus from incorporating Fox Sports' coverage of NRL matches into C7's channels. He considered that there was a benefit to Fox Sports in being the only sports channel to show NRL matches. He had taken the view that the incorporation of NRL matches into C7's channel on Optus, from 1998 to 2000, had given C7 a ' windfall benefit ' through a brand association with Rugby League programming, without C7 having invested heavily in the product. 1190 According to Mr Malone, his objective in approving the restriction was to secure an exclusive brand ownership of NRL content on Fox Sports. Mr Malone accepted that the proposed restriction would allow Optus to incorporate NRL content on its own channel, such as ' NRL on Optus '. However, he maintained that there was a big difference between permitting NRL content to be carried on an Optus channel and permitting it to be carried on a sports channel, such as ESPN or C7, which competed with Fox Sports. Mr Malone agreed that, as he saw it, the most likely outcome, in the absence of the draft clause, was that NRL content would be shown on C7. 1191 Mr Philip apparently received a copy of the draft letter prepared by Mr Marquard and Mr Malone. He returned a copy of the draft to Mr Marquard, with his editorial comments endorsed. 1192 An offer, including the channel restriction, was dispatched to Mr Lattin of Optus later on 12 September 2000. Mr Lattin replied on 14 September 2000, rejecting Fox Sports' offer. Mr Lattin restated Optus Vision's position that it was interested in taking ' the complete Fox Sports package ' rather than ' an NRL only Fox Sports package '. Of course, Optus had a right under cl 4.1 of the Optus Partners Funding Deed to receive an offer for the NRL pay television rights on the same terms as those offered to Foxtel. Optus also had a right under the Optus Pay TV Programming Agreement to a sub-licence of the NRL pay television rights from News (if it acquired the rights) on terms no less favourable than those offered to Foxtel. 1193 In October 2000, Mr Philip had a number of communications with Mr Greg Willis at Telstra. Mr Philip noted that Optus was unlikely to take an NRL-only package and he sought Telstra's consent to Fox Sports providing Optus with the balance of Fox Sports 2 . On 11 October 2000, Mr Willis conveyed Telstra's refusal to consent. Mr Willis said that Telstra did not agree that Fox Sports 1 or Fox Sports 2 , or any programming included in those channels, be supplied to Optus. Mr Moffett had indicated that the NRL would be ' working to wrap this up asap' . The email also recorded that ' Optus, as usual, are inactive '. Mr Wood of C7 said in his evidence that by this time Optus had ' decided to sit back and see what happened '. 1196 On 25 October 2000, Mr Wood provided Mr Lattin with Seven's comments on Optus' proposal to outsource to Seven the production of its channels. Mr Wood said that Optus would be required to exercise its right to match Fox Sports' bid for the NRL pay television rights, subject to Seven's approval of the fee, and would have to obtain the rights for both cable and satellite delivery. If Optus was successful, the parties would split the rights and production costs equally. Copies of the draft were provided to Messrs Philip and Macourt and to Messrs Kleeman and Mr Falloon of PBL. Mr Philip had previously discussed the contents of the draft with Mr Marquard. Mr Philip and Mr Marquard were aware of the NRL Partnership's obligations under the Optus Partners Funding Deed and News' obligations to Optus under the Optus Pay TV Programming Agreement. This right is non-exclusive because Optus or Optus Vision have the right to be offered non-exclusive rights. However, Optus may elect for reasons of its own, not to acquire the rights which are offered to it by the NRL'. In his evidence, Mr Philip acknowledged that he knew Optus did not want to produce its own programs and thus he knew that the proposed requirement would make it unattractive for Optus to match Fox Sports' bid. Nonetheless, he denied that the ' whole purpose ' of the exercise was to restrict Optus to its own branded channel, and to prevent Optus incorporating NRL content on C7. He maintained, unconvincingly, that the ' purpose was to secure for Fox Sports control over the production of all of the NRL Pay TV games '. However, he denied that he intended to achieve control over the quality of production of the NRL pay television games by eliminating C7. 1202 Mr Marquard acknowledged that the relevant provisions were designed to ensure that Optus could incorporate NRL coverage only on a wholly Optus owned and branded channel. One of his purposes was to ensure that Optus could not continue to incorporate NRL content on the C7 channel, even if Optus acquired the NRL pay television rights directly from the NRL. In his view, this made it much more likely that Optus would deal with Fox Sports. Mr Marquard appreciated that Optus would be hesitant about the burden of producing a single sport channel, since Mr Lattin had previously indicated that Optus wanted to take Fox Sports 2 . Mr Malone's position was similar. 1203 A board meeting of Fox Sports was held on 27 October 2000. The final version of the Options Paper was discussed at the meeting. Members of the board were informed that Optus had rejected Fox Sports' first offer; that Optus had a contractual right to take the NRL pay television rights directly from the NRL Partnership, independently of Fox Sports; and that Fox Sports had developed a strategy to circumvent Optus' contractual right. 1204 The Fox Sports board noted that the NRL Partnership was contractually obliged to offer to Optus the same rights as were offered to Fox Sports. The board authorised management to enter into an agreement with the NRL to acquire non-exclusive NRL Partnership pay television rights as set out in Option 1 in the Paper. This resolution was clearly intended to adopt the strategy outlined in the Options Paper and in fact the final offer made by Fox Sports on 13 December 2000 included provisions intended to implement the strategy. 1205 On 27 October 2000, Fox Sports offered the NRL Partnership $21 million per annum (increasing to $22 million per annum from 2003 and to $23 million per annum from 2005) for the NRL pay television rights for six years from 1 January 2001, with additional amounts payable for promotional spending (at least $17 million over the term) and production costs (in the order of $35 million over the term). The offer made no explicit reference to GST. Fox Sports proposed that if Optus took up an offer of the NRL pay television rights, the amount of $132 million payable over six years would be shared between Fox Sports and Optus. 1206 A meeting of the NRL PEC took place on 2 November 2000. Mr Philip and Mr Macourt formally disclosed that they were directors of Fox Sports. The meeting noted that Fox Sports had made ' an attractive offer which allowed for the [P]artnership to meet its contractual obligations to Optus' and that C7 had been asked to provide a proposal. It was agreed that ' unless C7 made a better offer the [P]artnership should proceed to accept the Fox Sports offer '. Mr Wood thought that Austar had a strong incentive to back Seven in its bid for NRL pay television rights ' as they have a very onerous $US contract with Fox Sports which falls over if Fox cannot deliver the NRL '. Mr Stokes, in his response to Mr Gammell, described the Austar development as ' intriguing '. 1209 On 6 November 2000, Mr Wood had a telephone conversation with Mr Moffett. You just need to give us your best offer as soon as possible'. You said that C7 could bid for any package of rights but also said that Channel 9 had an exclusive free to air window on two games for the next eights years and that News Limited had a first and last option over all Pay TV rights. You did however state that you had to act independently in the best interests of the NRL and the clubs when assessing offers for Pay TV rights. The information I've asked for will enable us to give proper consideration to the value of the rights and to offer the NRL a genuine and competitive price. That said, we are under no obligation to engage with you in any tender process in respect of those rights, to respond to any proposal, or to refrain from conducting our affairs as we see fit'. Mr Stokes acknowledged that he had read the letter and that he had accepted what Mr Moffett had said in it. 1212 On 10 November 2000, Mr Wood circulated an ' NRL Proposal ' to the Seven Network directors. Channel Nine also have an exclusive free-to-air window on two games for the next eight years as well as exclusive live rights to State of Origin and domestic test matches. Perhaps securing a package of NRL rights which could be delivered on all platforms and be a subscription driver in the Northern states. and another for a package of two to three games exclusively live in the order of $15-20 million p.a. 1213 On 13 November 2000, Mr Anderson signed two letters drafted within Seven, both of which were addressed to Mr Moffett. The letters were identical, except that one contained a paragraph stating that a formal offer was being made by C7 for the NRL pay television rights because there was some doubt whether Seven would retain the AFL broadcasting rights. As the NRL did not discover either version of either of these letters, the probabilities are that neither version was sent. However, the draft letters foreshadowed that C7's offer would have ' a cash value of between AU$40 to 50 million per annum '. 1214 Mr Stokes' evidence was that the foreshadowed offer of $40 million to $50 million was ' reasonably aggressive '. He acknowledged that no business case had been undertaken to support the proposal notwithstanding that the proposal, if pursued successfully, would have committed Seven to up to $400 million over eight years. Mr Anderson acknowledged that a recommendation to offer $40 million per annum for the NRL pay television rights was ' extremely aggressive '. 1215 Mr Anderson, Mr Wood and Mr Crawley (General Manager in charge of production for C7) met with Mr Moffett and Mr Gallop on 13 November 2000. The C7 representatives indicated that C7 intended to make a substantial bid for the NRL pay television rights, but it is not clear on the evidence what figures, if any, were mentioned (although Mr Anderson's recollection was that $40 million had been mentioned). According to Mr Anderson, he sought an assurance from the NRL representatives that the NRL had ' independent decision making authority [from News] '. I have ... responsibility to get the best possible deal for Rugby League. 1216 In the afternoon of 13 November 2000, Mr Anderson faxed a letter to the NRL. The letter referred to the ' substantial verbal offer ' made at the meeting earlier that day and sought an extension until 17 November 2000 for C7 to make the formal offer. Mr Moffett replied on the same day acceding to Seven's request ' on the same basis as stated in my letter of 8 November 2000 '. The draft note was dated 16 November 2000, but there was conflicting evidence as to when it was in fact prepared. The opportunity exists to acquire all rugby league games on an exclusive basis, which would provide C7 with a very competitive product. I think it is possible to negotiate with Optus, non-exclusive, to keep our $30 million contract in place. The latter bore the date 15 November 2000 and was addressed to Mr Stokes, with the author being recorded as ' Harold [Anderson] '. The second memorandum was in similar terms to the draft note and repeated the mistaken assertion that the NRL Competition was not on the anti-siphoning list. However, it corrected the erroneous suggestion in the draft note that C7 had an opportunity to acquire all Rugby League games exclusively, pointing out that the opportunity existed only for the NRL pay television rights. The second memorandum recommended a bid of $60 million for the NRL pay television rights (not $50 million). 1219 Mr Anderson duly signed a memorandum to Mr Stokes in the terms of the second unsigned memorandum. However, the memorandum signed by Mr Anderson was dated 14 November 2000. While there is some mystery about the sequence of events, nothing of substance turns on it. Contrary to News' submissions, the evidence does not support a finding of a deliberate backdating of documents with an intent to deceive. 1220 In his first statement, Mr Stokes claimed that he telephoned Mr Love (whom Mr Stokes thought was ' in charge of the NRL ') on 14 November 2000, shortly after reading Mr Anderson's memorandum of the same date. According to Mr Stokes, he was in his North Sydney office with Mr Anderson. Mr Stokes said that he asked whether Seven would receive a fair go, since there was no point in participating unless it would be treated properly. Mr Love answered affirmatively and said that the ' best bid will win [and we] are very keen for Seven to bid '. He also told Mr Stokes that if Seven could show that its bid had something for the clubs, that would be helpful. Mr Stokes' evidence on this conversation was hotly contested. 1221 Mr Anderson accepted in his evidence that, regardless of when the memorandum had been prepared, he had not undertaken any systematic assessment of the value of the NRL pay television rights. Mr Anderson said that he had recommended the figure of $60 million on the advice of Mr Wood but had not enquired what work, if any, Mr Wood had undertaken. There are conflicts of interest. Have you got legal advice as to the construct of the partnership and can the News people be excluded from making the decision? Can you really act for the NRL? We do not just want to be the stalking horse. Can you deliver the rights? We are not affiliated with News. We are going to make sure this is a proper process and fair deal. We want to ensure that there is fair play and the NRL gets the best deal. It is not our intention to get Seven involved as a stalking horse to get the price up. That doesn't achieve anything. We want you to genuinely win these rights'. A very serious offer to buy the rights. But we will only do so if we can be confident of being dealt with on equal commercial terms. Can you assure me that proper governance would be applicable, given the role that News plays in both the ownership and representation of rugby league? Confidentiality will be observed and the relevant bamboo walls will apply. According to News, we are currently being paid more than the code is worth. Mr Gammell's evidence was that he had not instructed Mr Wood to seek the NRL pay television rights directly until about October or November 2000, at approximately the same time as Mr Wood had informed him of the meeting with Austar concerning the NRL pay television rights. The likelihood, in my view, is that the conversation between Mr Stokes and Mr Moffett occurred shortly after this, in about early to mid-November 2000. This offer is confidential. If confidentiality is breached C7 Pty Limited reserves the right to withdraw the offer. It has the Chairman's recommendation. Confirmation of the offer will be conveyed to you by 5.00 pm tomorrow'. The offer noted that two NRL home and away matches would be selected each week by Nine. NRL will grant to Seven a right of first and last refusal to any and all pay television rights (as described in this letter) for a further period of five years. The board meeting convened at 9.20 am, adjourned at 10.30 am so that directors could attend the annual general meeting, and reconvened at 1.30 pm. The topic of the NRL pay television rights were discussed at the board meeting both before and after the adjournment. It was noted that there is an estimated loss of $20 million per annum, if the coverage was unable to access Foxtel, and it may prove difficult to sell the service to Austar and Optus. The Directors in approving the bid were of the view to be co-operatively involved with the NRL regarding their re-structuring plans for the future of the game and, if any additional games became available as a result, then they would be added to the Pay TV schedule. The Directors also consider that observer status for Seven on the NRL Board would be appropriate and would raise concerns that a conflict of interest exists where Seven's competitors were present at NRL Board meetings'. (Emphasis added. Both Mr Stokes and Mr Gammell gave oral evidence that, although the minutes had been confirmed at the board meeting of 26 January 2001, they were incorrect, in that Mr Stokes had not told the board that both free-to-air and pay television rights were available. This evidence was disputed by the Respondents and I do not accept it. The minutes were likely to be accurate on this point. 1229 The board meeting of 17 November 2000 concluded at 3.05 pm. At 3.43 pm Mr Anderson sent a fax addressed to Mr Moffett at ' NRL ' advising that the Seven Network board had approved the offer outlined in the letter of 16 November. The approach was said to come with additional elements to be added to the original offer. Some directors of the NRL will have a conflict of interest in respect of this offer. We expect that they will not participate in decision making related to the offer. The minutes of the board meeting, however, do not record any such resolution. Nonetheless, between 21 November and 4 December 2000, 22 directors and employees of Seven, including Mr Stokes and Mr Gammell, entered into confidentiality deeds. In each deed the ' Recipient ' of the ' Confidential Information ' (both of which were defined terms) acknowledged that any breach of the undertakings could result in irreparable harm to Seven. The Recipient agreed to maintain the confidence of the Confidential Information and to prevent its unauthorised use or dissemination. One of the articles, in the Daily Telegraph , reported that the Seven Network had launched ' a $250 million bid for control of rugby league pay TV rights ' over five seasons. The article stated that an offer of $250 million had been made for access to five live games per week on C7 over a period of five years. Mr Masters claimed that a confidentiality clause in the offer might ' void the deal, following publication of the details '. Mr Masters reported that the offer to the NRL had become public knowledge through a News publication. He said that NRL clubs had been made aware of the C7 offer ' to guard against the possibility of a fait accompli deal ' and that Mr Hill, chairman of the NRL board and president of the Newcastle Knights, had become involved in negotiations. The draft incorporated terms previously set out in the NRL Options Paper presented to the Fox Sports board on 27 October 2000. Notwithstanding anything contained in this agreement to the contrary, the Rights may be telecast on subscription television only on the basis that the pay television channel or channels that includes the Matches is completely branded with the primary brand of the Licensee or the Other Pay TV Licensee and no other brand [subject to a partial exception for one Match per week]'. Mr Marquard, Mr Parker and Mr Malone discussed the C7 bid on 20 November 2000. On that day, Mr Parker prepared a revised summary of Fox Sports' 10 year financial model. Austar was to remain a customer, but there would be no sale to Optus. When compared with Fox Sports' ' base case ' strategic plan, the ' value impact on Fox Sports ' was -$188.1 million. • Scenario B assumed the same rights and production costs, but with NRL content being supplied to Foxtel at an additional US$0.50 pspm. Austar would remain a customer and Optus would take the NRL product for $8 million to $9 million per annum. The ' value impact ' of Scenario B was -$58 million. • Scenario C assumed that the NRL pay television rights would not be acquired, that Foxtel would remain a customer of Fox Sports on current terms and that the Austar deal would be terminated. Fees from hotel subscribers would fall by 60 per cent, advertising revenues attached to the NRL would be lost and ' [o]ngoing advertising revenues [would] fall [pro rata] with reduced sub numbers '. This produced a ' value impact ' on Fox Sports of -$543.8 million. Mr Parker noted that the models showed that ' loss of Austar as a customer is, in all of these cases, [a] less attractive option than paying increased NRL fees '. • Scenario B: -$111.8 million at $30 million per annum; -$193.8 million at $40 million per annum; and -$275.8 million at $50 million per annum. • The ' value impact ' of Scenario C remained at -$543.8 million. We trust you will also treat this response and all other communications as confidential. He also observed that Mr Stokes ' is still serious about putting a serious number forward '. The draft, among other things, specified which NRL matches would be subject to the licence and provided for Nine to have the right of first selection of two weekly matches. The draft also showed the licensors to be NRLI and ARL trading in partnership as the NRL Partnership. Mr Gammell received a copy of the draft agreement the following day. Mr Gammell did not dispute in his evidence that Seven never communicated to the NRL Partnership whether it agreed or disagreed with the draft terms. 1241 On 23 November 2000, Mr Francis sent an email to Messrs Stokes, Gammell and others within Seven. (Emphasis added. Can you tell me who is on the NRL Partnership Committee which will allocate the rights? Can you tell me where they come from? There are six people on the Board. Two are nominees of News Limited. They are Macourt and Philip, Looseley [sic] is an independent appointed by News. Colin Love is from the ARL and John McDonald is from the QRL. And then there is Nick Polites [sic] from Easts. The draft offered a cash component of $60 million per annum (exclusive of GST), comprising $30 million payable to the NRL and $30 million directly to the clubs ' as club appearance fee and sponsorship to compensate for lost gate receipts '. At 7.05 pm that evening, Mr Gammell distributed a revised draft of the letter of offer. Mr Gammell said in the covering note that ' I think I have [Mr Stokes] on side with the structure '. 1244 The revised draft stated that the offer was $70 million for exclusive NRL pay television and internet rights. A copy of the draft was sent to Mr Stokes on 24 November 2000. The participants discussed Seven's approach to the ACCC at a meeting scheduled for later that day. Following the morning meeting, Mr Wise sent an email to Mr Gammell (with copies to the others) attaching a revised draft offer to the NRL. I know we can say it was a dummy bid , but that just encourages them to the same response on FTA. We may say they will anyway, but I am more focused on the regulators view, I am worried that we pull a response that this is just a big boys fight! I think a bid at $50m + contra (which should be inclusive of gst) gets us there but keeps us in the frame for our positioning on AFL. ' (Emphasis added. Mr Wood said C7 would go out of business. News has last option for 25 years and the most likely outcome would be that News would match its bid. He said the bid was to annoy News and that was about it . He observed that Foxsports [sic] had only bid $20m for the pay rights and half of that would be transferred back to News through its half ownership, and the rest would go to Nine'. (Emphasis added. Shane [Wood] said that Seven was looking at survival. However, News has the first and last rights for 25 years and so the chances Seven succeeding are remote. News will match whatever offer is made by Seven as of course they get 50% of it anyway through their ownership of NRL. He characterised Seven as being annoying but that's about all. AFL by far is Seven's best chance'. We were disappointed to see that News Ltd papers carried the story of C7's last bid within 12 hours of us confirming the offer. I trust that this will not happen again. While I consider the attached offer to be well above market rates C7 needs this property to ensure its survival'. However, it appears that this figure included contra of $10 million, since the cash offer was for a maximum of $70 million per annum inclusive of GST. 1249 Early on 25 November 2000, Mr Stokes forwarded a revised draft of C7's second offer for the NRL pay television rights to Messrs Gammell, Anderson and Wood. The covering email recorded that Mr Stokes had made minor changes and, after discussion with Mr Gammell, had taken off the last sum on the table. The effect of the changes was that the rights fee of $70 million for over one million subscribers had been removed and the maximum rights fee was shown as $60 million for 750,000 to one million subscribers. However, the first paragraph of the revised draft still referred to an offer of $80 million per annum. 1250 In his cross-examination, Mr Stokes could not remember why he had reduced the cash component of the offer from $70 million to $60 million. However, he later recalled thinking at the time that $60 million was the ' top priority we should pay ' for the rights. 1251 In his witness statement, Mr Stokes said that on 25 November 2000 he had held a meeting at his home with Mr Hill (a director of both ARL and NRL Ltd) and Mr Politis to discuss C7's bid for the NRL pay television rights. Mr Stokes stated that prior to the meeting he had been told by Mr Gammell that the NRL Partnership was controlled by a board which consisted of three News representatives and three people independent of News. Anyway it appears as though we don't have a right to the pay rights on AFL under the first and last, and so we need to have a driver on sports to survive. That is why we are making such a large offer for these rights. People step out of meetings or withdraw where there are conflicts. 1252 On Sunday, 26 November 2000, Mr Wood, Mr Lewis and Ms Jordan of Clayton Utz met with Messrs Gallop and Moffett. The meeting ' work[ed] through ' C7's draft second offer. Ms Jordan's notes of the meeting show that either Mr Gallop or Mr Moffett explained that the NRL PEC dealt with financial matters, while the board of NRL Ltd dealt with football matters. The draft discussed at the meeting indicated that the maximum cash offer was $70 million for more than one million subscribers. However, a handwritten notation states that the tiered offer would be ' revised in the morning '. 1253 On 27 November 2000, Mr Hill sent an email to Mr Wood regarding the meeting of Saturday 25 November 2000. This was in the form sent later on the same day to the NRL Partnership. We still believe confidentiality to be in the best interests of both parties. While I consider the attached offer to be well above market rates C7 needs this property to ensure its survival'. The offer was said to be ' $70 million per annum for exclusive Pay Television and Internet rights to the NRL '. 1257 In his evidence, Mr Gammell acknowledged that it may have been his idea to include the paragraph referring to ' compensation for loss of gate receipts '. He also acknowledged that he had made no inquiries and did not know whether any diminution in gate receipts could justify a payment of $28 million per annum to the clubs. He said that in retrospect it would have been better to say that the payments were ' in support of the clubs ' finances generally '. (Mr Gammell also maintained, however, that the object of the logo requirement was to promote C7 and that any promotion of Seven was a ' collateral benefit '. Mr Gammell acknowledged that the effect of the penalty was to transfer to the NRL Partnership the financial risk associated with an event over which it had no control and, for that reason, would be highly unattractive to the NRL PEC. (Mr Gammell also said that the reason for including the penalty provision was to protect C7, which would be paying a very high price for the rights --- more than $300,000 per game. Mr Gammell acknowledged that the effect of the offer was to create a conflict for the members of the NRL PEC who were interested in the clubs and that he intended to highlight that conflict. Mr Gammell also acknowledged that he wished to create dissension between News and ARL and that he realised the form in which the offer was structured would not be particularly appealing to News. However, he claimed that he had thought that the offer might have some appeal to News because of the amounts being retained in the game. All decisions, so far as he was concerned, were then in the hands of Mr Gammell and Mr Anderson. This set out a list of issues to be resolved in relation to C7's second offer for the NRL pay television rights. 1263 A document prepared by ' NRL Legal ' on 27 November 2000 compared in chart form aspects of the respective Fox Sports and C7 offers. In relation to ' Proposed Platform/Sub-licensing ', the chart recorded that Fox Sports would be on Foxtel and Austar. The column for C7 contained only a question mark under this heading. 1264 A meeting of the NRL PEC took place in the evening of 28 November 2000. Shortly before the meeting, Mr Philip prepared an analysis of C7's second offer. He estimated the ' Cash to NRL ' as $22.73 million exclusive of GST, on the basis that there were ' no guarantees fees will exceed minimums based on 500,000 subscribers '. Mr Philip assessed the offer as having a ' Potential Total Cash ' value of $15.93 million per annum, allowing for ' Foregone Internet Revenues ' ($2 million per annum) and ' Foregone Naming Rights Sponsorship Revenues ' ($2 million per annum), assuming Nine showed four games per season over and above its allotted two games per week. (The latter assumption would involve a net penalty to the NRL Partnership of $2.8 million --- that is, 4 x $1 million, minus 4 x $300,000. ) Mr Philip compared this with the Fox Sports offer which he recorded as being worth a guaranteed $22 million per annum, with internet and naming rights left unencumbered. Mr Philip gave evidence that he took the document to the NRL PEC meeting where he made some points based upon its contents. 1265 The minutes of the NRL PEC meeting recorded that C7's second offer was tabled. It was resolved to highlight this issue to C7'. The meeting was chaired by Mr Moffett and attended by Mr Gallop. At 10.10 am AEDST on that day Mr Crawley sent an email to Mr Gammell, who was in Perth. David Gallop has called to see if you are comfortable with offer being tabled? with restrictions mentioned yesterday regarding no paper leaving the room'. However, the reference to a conversation the previous day confirms that Mr Gammell had approved disclosure of C7's bid to the CEOs on a confidential basis. The current offer from C7 was distributed by D Gallop. D Gallop discussed the issues included in the offer and answered questions posed by the CEO's [sic]. The confidential nature of the offer was stressed to all participants'. Mr Gammell said in evidence that Mr Hill had arranged the meeting so that Mr Gammell could discuss C7's bid with ARL's representatives on the NRL PEC. Mr Gammell's notes of the meeting show that there was discussion about some of the ' major issues that have arisen '. 1269 In his evidence, Mr Gammell agreed that there had been talk at the meeting about GST. He acknowledged that it had been made clear by Messrs Moffett, Love and Politis that any bid should be exclusive of GST, yet C7 had deliberately framed the offer to be inclusive of GST. Mr Gammell could not remember why C7 had not acceded to the request, but pointed out that it was merely a mathematical exercise to convert the bid to one exclusive of GST. 1270 At 2.08 pm on 30 November 2000, Mr Moffett sent a fax to Mr Anderson responding to C7's second offer. Your offer for Pay Television rights includes various terms that make it impossible for NRLP to fulfil its obligation to ... Optus. We do not accept the proposal to oblige the NRLP to distribute the licence fees between NRL, the Clubs and a junior development program. Distributions are a matter for NRLP and we would need compelling reasons why NRLP's discretion to distribute revenue in the best interests of the game should be fettered in any way. We would be prepared to pay you $300,000 (or $150,000 to each of you and Optus in the event that Optus accepts non-exclusive rights), within 3 business days of receipt of that amount from Channel Nine. However, we would agree to hold weekly meetings with representatives of C7 at an operational level and invite representatives of C7 to meet with NRL Board members to discuss any concerns on a regular basis. Mr Moffet requested C7's response by Monday, 4 December 2000. A copy of his letter was forwarded to Mr Gammell. 1272 Despite the request for C7 to respond to the issues raised in the letter of 20 November 2000, C7 never did respond. Mr Stokes claimed that ' it may have been a defensive reply that we were making at the time '. In re-examination, Mr Stokes explained that a ' defensive reply ' was a response to a previous article or item in the media. 1274 At about 4.50 pm on 30 November 2000, Mr Ray Hadley appeared on Radio 2UE in Sydney with compere Mike Carlton. They've all signed up confidentiality agreements but someone couldn't keep their trap shut so I'll tell you what happened. It's an offer over seven years, $60 million a year. Now there's a couple of complex issues here. The decision will be made by a six member partnership board, three members of the board, Nick Politis from the Sydney City Club, the chairman of that club, Colin Love, chairman of the ARL, and John McDonald, chairman of the QRL. The other three members come from News, because News fund the NRL. So I think there's a fair bit of, you know, tit for tat in this, Channel Seven and C7 are obviously very upset at Fox and Channel Nine muscling in on their AFL'. The email reported that Mr Hadley had said that confidentiality agreements had been breached. The email was forwarded to Mr Gammell about an hour later. There is no evidence that any of the recipients expressed concern about the apparent disclosure of the terms of C7's bid. 1276 At about 6.13 pm, Mr Hadley repeated much the same material on 2UE as he had broadcast earlier. He referred to the problem that C7 have to ' make it viable somewhere between 500,000 and a million subscribers ', suggesting that he was aware that C7 had made a tiered bid. (Emphasis added. An article by Mr Roy Masters in the Sydney Morning Herald provided further details of the offer. National Rugby League clubs were excited last night following the tabling of the richest TV deal in Australian sport a half-billion-dollar bid for pay-TV rights from the Seven Network's subscription arm, C7 Sport. But chief executives fear Fox Sports, 50 per cent owned by Rupert Murdoch's News Ltd, will exercise a first-and-last-rights tender which would cut them out of any direct payment. A constant contra component of $10m and a payment of $1m for junior development applies, irrespective of the number of subscribers attracted. Both offers are for seven years and include additional advertising and other non-cash elements. It had all been covered in that, certainly in that article, yes. (Emphasis added. He also said that he thought that there may have been a leak from C7 to Mr Masters. It was also agreed that Fox Sports would have to be seen as having offered at least $39 million per annum for the NRL pay television rights. Mr Philip said that this figure was based on Mr Masters' report that C7's offer was for $25 million to be paid to the NRL and $14 million to the clubs if the number of subscribers did not exceed 500,000. 1285 Mr Philip gave evidence that, as from 1 December 2000, he did not consider the offers made by C7 before that date to be confidential. Nor did he consider that C7 was serious in claiming confidentiality. Rather he considered it a tactical device to prevent Mr Macourt and him from participating fully in the bidding process and to enable C7 to justify termination of any agreement resulting from the NRL PEC's acceptance of its offer. Mr Philip also claimed that, while he regarded himself as free to use the details of C7's bid, he did not wish to expose himself or Fox Sports to a spurious claim for disclosure of confidential information. He therefore thought it undesirable for him to disclose the details of C7's offers in his own dealings. 1286 Mr Philip said that from early December he began to formulate ways for Fox Sports to finance a revised bid for the NRL pay television rights. As part of that process, he decided that he would attempt to persuade Telstra to contribute to the bid through the NRL naming and internet rights and to approve Fox Sports' licensing of NRL coverage to Optus. At about this time, he also prepared the ' Fallback Scenarios ' document to which reference has already been made ([1039]). 1287 On 4 December 2000, Messrs Gammell and Anderson met with Messrs Moffett and Gallop. No notes were made of the meeting. Why do you want us to keep changing the bid? All you're doing is taking away pieces of value particularly for the clubs. We will construct an offer to you which we will be submitting which will take all of that out as you requested and we will build it on a per subscriber base. You should accept the best financial offer. But we are trying to make sure that the bid is capable of being accepted. We need to make sure that what you offer to provide will be equivalent as far as the rights to be sold are concerned. So you need to take out offers for internet rights, as they may impact on other rights. We don't mind if you accept elements of our bid, we'll make sure our bid can be accepted in part. You keep knocking us back on technicalities, so I'll make sure there are no problems on that front. But you should be putting the bid up for decision. Either someone will top it or you will have our bid. There is no downside for you. We really want you to accept our offer. To the extent you cannot accept parts of it, exclude those bits you cannot accept but accept the offer because we want to know that the best offer has been put up, and you haven't just been pushed into a corner and told to sign. We have constructed this bid so that there is a strong incentive for you to apply pressure through your clubs. We will give you a good minimum and we want you to participate alongside us and we want to encourage you to help us to get on to Foxtel, and when you do help us get onto Foxtel you get more money. You're only being told one side of the story by News. We have won the protected contractual rights litigation and, with the assistance of the ACCC, we are confident of winning access to the cable. You should get your own advice about this and not rely on what News tells you. We have never heard it put that way'. Neither Mr Moffett nor Mr Gallop gave evidence. The offer was addressed to Mr Moffett as CEO of ' National Rugby League '. The offer was not expressed to be confidential, a fact of which Mr Stokes said he was unaware at the time. Mr Gammell collaborated in the drafting of the offer. 1289 The letter stated in the opening paragraph that the offer was $66.5 million for the sole and exclusive NRL pay television rights, together with an option to acquire marketing and hospitality rights for $3.5 million. The offer was for seven years (2001 to 2007 inclusive) and included five home and away matches per week, but not the ' Free-to-air Matches ' as defined in the letter (that is, two home and away matches each week selected by Nine, as well as finals matches and State of Origin matches). C7 also sought rights to the Free-to-air Matches on a delayed basis. from $28m p.a. to $35m p.a. may be distributed to the NRLI and ARL. C7 requires any surplus to be applied in the best interests of the NRL competition. Once the existing distribution arrangements have expired, NRL will ensure that apart from any distribution of money to participating clubs all monies paid by C7 will be retained by the NRL for use in junior development and for the best interests of NRL Competition'. The figure of $66.5 million presumably represented the maximum total fee of $62.5 million plus contra of $4 million. C7 will keep accurate records in relation to the number of subscribers. NRL (including its external auditor) will be entitled, at its cost, to conduct an audit for the purpose of verifying subscriber information and will be given all necessary assistance and access to perform this task'. C7 was to have an observer on the ' NRL board' if it was discussing or deciding upon issues relating to scheduling or broadcasting. If C7 was successful in obtaining the exclusive NRL pay television rights, it would have the option of purchasing for $3.5 million (inclusive of GST) marketing and sponsorship entitlements, including ' on-sleeve logo recognition for every team '. 1293 Mr Stokes was questioned about his understanding of the statement in the offer that the fee payable was ' dependent upon the total number of homes subscribing to the Pay TV services that carry the NRL product '. Mr Stokes' evidence was that the fee would be determined by reference to the total number of subscribers to the platform that carried the NRL, regardless of the number of subscribers that actually took C7 and its NRL service (for example, if C7 was on a tier). --- The original price we had offered, your Honour, was 60 million. --- Part of the philosophy for the table was to give the rights holders, the NRL themselves, an incentive to help us get on to Foxtel. We were always confident that we were prepared to pay $60 million, and that didn't have any conditions on it. We felt that by having it by the homes passed, not by subscribers to our channel, that was a fair alternative. --- If we indeed were to be, yes, we would. --- No, it wouldn't be'. Mr Macourt said in his statement that by the time of the NRL PEC meeting on 13 December 2000 he was satisfied that payment was to be calculated by reference to the number of subscribers to tiers taking C7. He was not challenged on this evidence. Mr Philip said that at the time of the offer he did not think that it referred to the number of homes carrying the platform, as distinct from those actually taking the C7 channels. The purpose of the meeting was to discuss whether any action was available to Seven in relation to the bidding process for the AFL free-to-air and pay television rights. The effect of Mr Finch's advice was that the ACCC had a maximum 60 per cent chance of restraining Foxtel or Fox Sports from acquiring the AFL pay television rights, but that Seven would have fewer prospects of success in any action it might bring itself. 1296 Two days later, on 8 December 2000, Mr Finch gave further advice in conference on similar issues. He expressed the view that if C7 won the NRL pay television rights, this would be fatal both to an action for damages by Seven under the TP Act and to any proceedings brought by the ACCC seeking restraining orders against the bidders for the AFL broadcasting rights. The letter stated, however, that if the pay television offer was accepted, C7 ' would require a first and last option over the Marketing and Hospitality rights'. The letter, which was not expressed to be confidential, was drafted by Mr Gammell as a response to one of the complaints made by Mr Moffett about the terms of C7's 5 December offer. Mr Gallop duly sent a copy of the letter to Mr Philip. Once again the letter was not expressed to be confidential. This means the half-billion-dollar offer for the next seven years is for pay-TV rights only. A clause in the existing free-to-air deal between Packer and the NRL allows Nine to buy additional free-to-air games per week for $300,000 each. It was noted that the NRL had not done this to date. In the meantime, management continued to work on revised bid figures, noting that the press indicated that its initial bid was below that of C7's apparent bid. It was agreed that Management would continue to consult with the board regarding this issue, pending a revised bid to be made to the NRL in the near future'. Prior to the meeting, he circulated a report that set out the position that had been reached to that point in relation to Fox Sports' bid for the NRL pay television rights. At the meeting, Mr Malone outlined what the newspaper articles had revealed about C7's bid. He expressed the view that it was imperative for Fox Sports to increase its bid so as to ' win this deal '. 1302 Both Mr Philip and Mr Macourt attended this meeting. Both knew the contents of C7's bid. However, Mr Macourt's evidence was that neither he nor Mr Philip confirmed the accuracy of the newspaper reports. According to Mr Macourt, this was because they were acutely conscious of the conflict of interest they faced having regard to their membership of the NRL PEC. In the conversation, Mr Philip expressed the view that Optus would not take NRL programming unless it got Fox Sports 2 . Mr Willis noted in his email that Telstra had not allowed this to be done because it would break the program supply arrangements with Foxtel. Mr Philip suggested that if Optus would not take the NRL, Foxtel should pay an additional $8 million per annum for the NRL pay television rights. 1304 In the morning of 6 December 2000, Mr Philip faxed a draft term sheet to Mr Gallop. The term sheet set out a proposal by which Telstra could become the naming rights sponsor of the NRL Competition. The fee was to be $5 million per annum plus CPI increases. Mr Philip sent this fax after discussing with Mr Gallop the possibility that Fox Sports might be able to persuade Telstra to take up the naming rights as part of the bid for the NRL pay television rights. 1305 Later on 6 December 2000, Mr Philip sent a fax to Mr Greg Willis at Telstra Media headed ' NRL and AFL '. Mr Philip referred to separate documents in which Mr Blomfield of Foxtel Management had supported an earlier request by Mr Philip to Telstra to endorse Foxtel's bid of up to $30 million per annum for the AFL pay television rights. Mr Philip's fax attached two draft term sheets detailing proposals Mr Philip had previously put to Mr Willis. One term sheet provided for Telstra to acquire internet rights, including advertising and sponsorship rights to the transmissions, for an aggregate sum of $5 million per annum. The second term sheet related to naming rights. As I have previously noted, Telstra's consent to the supply of Fox Sports to a third party was required because of cl 7 of the Umbrella Agreement. This provided that where News or its ' Affiliates ' (including, for this purpose, Fox Sports) held exclusive rights to exhibit sporting events, News had to ensure that the rights would be made available exclusively to the ' Alliance ' (that is, Foxtel). 1307 Shortly after Mr Philip sent the fax to Mr Willis, Mr Gallop faxed a document to Mr Philip analysing C7's offer of 5 December 2000. Mr Gallop observed that the offer was still not for the NRL pay television rights only and that the option to take up marketing and hospitality rights for $3.5 million could not be offered to Optus. He pointed out that the fee would be reduced to $22.5 million (exclusive of GST) if Nine took extra matches. Mr Gallop also raised a number of issues relating to the bid, including the restrictions on future distribution of money and the fact that the offer effectively prevented the NRL Partnership from granting internet rights to any other party. 1308 On 7 December 2000, Mr Philip faxed Mr Akhurst some notes he had prepared ahead of a scheduled meeting between Mr Akhurst and Mr Willis. The notes covered aspects of both Foxtel's bid for the AFL pay television rights and Fox Sports' bid for the NRL pay television rights. If this occurs it is prudent to expect that FOXTEL will be expected to pay C7 in excess of current costs (particularly bearing [in] mind the reported prices being offered by C7) to recapture the NRL. (Emphasis in original. As Telstra points out, the final three paragraphs quoted above do not suggest that a purpose of the bid for the NRL pay television rights was to kill C7. --- I was, but on the same basis as the statements I make about the handwritten fax, that statement was not true. That was a statement I made to try and convince him that there was a jeopardy in not supporting the proposal that I was putting to him. So your evidence is that, in addition to lying to Mr Akhurst in the fax, the manuscript fax, you also lied to him in this document two days earlier? --- Yes, I think it's the same --- it's the same issue'. Things are moving very fast on this, and I need to know whether you can help? Prior to the meeting, Mr Fogarty of Telstra Media sent the participants briefing notes relating to the proposed News-Foxtel Put in respect of the AFL pay television rights and the Fox Sports proposal to acquire the NRL pay television rights. 1312 The NRL briefing paper recorded that News had requested Telstra's consent to the payment by Foxtel of $8 million for NRL coverage if Fox Sports was unable to on-sell its NRL coverage either to Optus Vision or C7. It also recorded that News had requested Telstra's support by taking sponsorship and internet rights. However, the paper noted that there was little support within Telstra for taking the rights. If Optus TV or C7 carry the NRL then FOXTEL should not make any payment to FOX Sports'. Strategically it was important that Optus not receive Fox Sports programming. FOXTEL should then be able to leverage off this "exclusive" carriage of NRL and acquire disaffected Optus subscribers, thereby benefiting FOXTEL and, also Telstra via its telephony winback. The value derived through telephony winback customers'. The former has been addressed in Chapter 8. As to the latter, Mr Willis rejected the sponsorship and internet rights proposals. He reconfirmed Telstra's prior agreement to Fox Sports offering NRL pay television rights to Optus, provided Fox Sports supplied NRL coverage to Foxtel at no extra cost for the period Fox Sports held the rights. The fax was headed ' Private and Confidential '. The C7 offer we need to beat is, p.a. That is the base offer. It has extra payments for subscribers over 5000,000, getting up to $60m p.a. for rights --- we think we counter this "blue sky" with the dependable subscribers that Fox Sports has in Austar and Foxtel. Before the C7 offer came along Fox Sports was prepared to bid p.a. However, that bid will not now win the rights. Foxtel currently pays $13m p.a. for NRL and Optus pays $13m p.a. These amounts include rights and production. These contracts ended this year. With Telstra covering half the $13m p.a., the proposal in 3. above would instead have cost Telstra nil . To better the C7 offer the Fox Sports bid needs to be p.a. I can get Fox Sports to pay p.a. if Fox Sports cannot sell NRL to Optus). My proposal is that Telstra helps by filling the gap of $9-10m for value --- that is NRL naming rights and internet rights. We can get these rights from NRL because C7's bid includes terms that prevent NRL ever getting any value for internet and naming rights. The proposal would be p.a. if a sale cannot be made to Optus). I am confident this bid can win. The bid works out (if the $8m p.a. Foxtel needs NRL. If Foxtel tried to win the bid, a winning bid would cost $45m p.a., which would cost Telstra $22.5m. My proposal costs Telstra only $14m, with News and PBL paying way above their $11.25m share (together paying $8.5m over their share p.a. Also , Telstra gets naming rights and internet rights for its share. Telstra is way head. The proposal is for a 6 year deal. For the $8m p.a. I am sure Foxtel can have the right to control whether NRL is offered to Optus and on what terms. Also, at a bid of $45m, I know Optus will not pick up NRL rights direct from NRL (even at half that bid). This means that Optus will be looking to get rights from Foxtel/Fox Sports. C7 has vocal supporters on the NRL. They are pushing for a decision on Tuesday. We need to move fast. If Foxtel loses NRL the impact will be tragic. At C7's bid price the price C7 will charge Foxtel will be extortionate, and we will be forced to put it in basic (or pay as if it is). To get AFL and build our southern state subscribers we need to bid $30m p.a. --- if we don't we will not win. Remember that winning means Foxtel becomes the supplier of AFL to Optus and Austar. The AFL will call for final bids any time after Tuesday when Seven's first expires. (Emphasis in original. It appears that the fax was sent to Mr Akhurst's Melbourne office and from there was sent on to Mr Akhurst in Sydney. Mr Philip also sent a copy of the fax to Mr Falloon. 1318 The evidence relating to this document was quite extraordinary. Mr Philip admitted that he destroyed his own copy of the document after he had faxed a copy to Mr Akhurst (and, presumably, a second copy to Mr Falloon). The reason he wrote the document, rather than have it typed, was to avoid creating an electronic record. Mr Philip said that he telephoned Mr Akhurst prior to sending the fax asking him to destroy it as soon as he had read it. 1319 Mr Akhurst denied that he had received such a request, and pointed out that he did not in fact destroy the copy sent to him. However, I prefer Mr Philip's admission against interest on this point, particularly as it appears to be common ground that Mr Akhurst and Mr Philip spoke by telephone on the Saturday, albeit briefly, shortly before the fax was sent. A discreditable explanation for Mr Akhurst's denial is that acknowledging that he was requested to destroy the fax might suggest that he was aware that Mr Philip was improperly communicating confidential information. However, I think it more likely that Mr Akhurst simply forgot that the request had been made, bearing in mind that he plainly did not comply with Mr Philip's suggestion. It is likely, given that PBL did not discover a copy of the fax, that Mr Philip made a similar request to Mr Falloon with which Mr Falloon complied. 1320 Mr Philip said that the reason he took these measures was because he believed that if someone at Seven came to see the fax it might have been alleged that he (Mr Philip) had disclosed confidential information concerning C7's bid for the NRL pay television rights, even though he did not consider any material relating to the bid to be confidential. Despite his admissions, Mr Philip claimed that the fax did not in fact reveal the terms of C7's bid. Rather, the figures contained in it reflected his assessment of what Fox Sports needed to do in order to make a bid that could be publicly perceived as at least equivalent to C7's bid. 1321 In his third statement, prepared on 5 December 2005, the 43rd day of the trial, Mr Philip explained at length that a number of the statements in the fax were, to his knowledge, untrue or misleading. I did not believe that that was true at the time I sent my fax. By that time ... I had already decided to vote against the C7 bid if it came to be considered by the NRL Partnership Executive Committee and I knew the C7 bid could not be accepted without a unanimous decision of the PEC. My real concern at the time I wrote the fax to Mr Akhurst was to reach a position where Fox Sports could put forward a bid that could be presented publicly, and also to the ARL's nominees on the PEC and to the NRL clubs, as worth $39 million. I wanted to avoid News Ltd being criticised for making the NRL accept a lower bid than the C7 bid. I was influenced in that desire by the criticism News Ltd had received in relation to the Superleague competition and the exclusion of Souths from the NRL Competition. I did not believe that that [the last sentence in par 3 of the fax] was true at the time I sent my fax. If Telstra did not agree to fill the gap of $10 million that I refer to in my fax, I was considering putting a similar request to Foxtel or seeking PBL's consent to increasing the cash amount of the Fox Sports bid. However, if all of those approaches failed, I thought News Ltd would fill the gap itself. Although I believed that the ARL nominees on the PEC were keen for a decision to be made [as stated in par 16], that was not the true reason I had for making the statement that "We need to move fast. " The true reason was that I was concerned that the AFL might award the AFL rights to Seven in the near future. I thought that, if that happened, C7 was likely to withdraw its NRL bid. If C7 withdrew its NRL bid, then I thought it would still be necessary to present the Fox Sports bid as worth at least $39 million in order to avoid News Ltd and the NRL PEC being criticised for not accepting the C7 bid while it was open. However, I was concerned that the PBL-appointed directors of Fox Sports would not support Fox Sports making a cash bid of $25 million, or higher, in the absence of a competing bid from C7. I thought it was likely that they would regard the fear of public criticism as News Ltd's problem, not PBL's, and would not approve Fox Sports paying any extra for the rights in order to avoid that criticism, even though I did think they would prefer to preserve Fox Sports' contract with Austar by gaining NRL rights for Fox Sports. ... As a result, I thought that, if the AFL rights were awarded to Seven, there was likely to be a bigger "gap" to fill in order to present an NRL bid worth $39 million and that News Ltd was likely to be forced to bear a greater cost in filling that gap, and possibly the entire cost. He recommended that Telstra's position remain unchanged. Both groups declined to take the rights. The Naming and Internet rights have zero value. The breakdown of costs/revenues understates the value to FOX Sports by ignoring the revenue that FOX Sports receives from Austar and any other revenue streams such as interactive of which are not aware'. They were said to show that the numbers provided by Mr Philip were ' overly simplistic ' and that all the ' potential and substantial upside ' rested with Fox Sports, not Telstra. (Emphasis added. 1324 Late in the afternoon of Monday, 11 December 2000 or early the next day, Mr Akhurst told Mr Philip that Telstra would not take the naming and internet rights as he had proposed, but that Telstra was agreeable to a meeting of principals as Mr Philip had proposed. 1325 At 11.14 am on Wednesday, 13 December 2000, Mr Brenton Willis sent Mr Fogarty a further email setting out information relating to Mr Philip's proposals. It is a condition of the granting of the NRL rights that it [sic] be offered to FOXTEL. In order for C7 to generate a return they will have to negotiate with FOXTEL. The risk of C7 demanding an extortionate price is a furphy. FOXTEL will simply reject the offer and C7 left with the NRL liability. As you are aware Telstra is supportive of FOXTEL showing C7's channels as it improves FOXTEL's offering but we have faced difficulties because News and PBL via FOX Sports are C7's direct competitor. Indeed, FOXTEL have stated that an objective of the present rights bidding frenzy is to "kill C7 ". He is an alternative FOXTEL director, a director of the NRL and involved in the NRL's assessment of the pay TV rights, is a director of News and acts on FOX Sports behalf, which is the entity bidding for the NRL rights. Ian has disclosed the confidential C7 offer for the NRL to FOX Sports and to Telstra. He has also seemingly manipulated figures to his advantage in presenting them to Telstra for approval yet we are unable to question him as to their authenticity or source'. (Emphasis added. He faxed a copy of the document to Mr Falloon at 7.46 am on 12 December 2000, although in evidence Mr Philip said that he could not remember sending the fax to Mr Falloon. Twenty minutes later, at 8.06 am, Mr Philip faxed the document to Mr Akhurst. The version faxed to Mr Akhurst added the bolded words in parentheses at the end of sub-paragraph 2(a) (set out below), indicating that it is probable that Mr Philip discussed the draft with Mr Falloon before sending it. If Telstra cannot take naming and internet rights to NRL then Foxtel can, as you suggest. Bruce, this is urgent. Please call me with your OK on the above, and a time for principals to finalise the AFL bid today'. (Emphasis added, except in par 4. Mr Philip said that he could not remember asking Mr Akhurst to destroy his copy of the document. Given that Mr Philip asked Mr Akhurst to destroy the first fax and that Mr Philip destroyed his own copy of the second document, it is plausible that he did ask Mr Akhurst and Mr Falloon to destroy the second document, even though it did not seem to reveal any information about C7's bid that could be regarded as confidential. However, the substance of Mr Philip's proposal in the second fax was freely discussed at the teleconference in which Mr Philip participated on 13 December 2000. Moreover, Mr Akhurst sent a copy of Mr Philip's second fax to Mr Fogarty. In the absence of an admission by Mr Philip, I am not satisfied (if it matters) that he asked either Mr Akhurst or Mr Falloon to destroy their copy of the second faxed document. In fact neither did. 1328 Mr Macourt did not see either of Mr Philip's handwritten faxes at the time they were sent. However, Mr Macourt knew that Mr Philip was attempting to persuade Telstra to participate in a revised offer. Mr Macourt also agreed that Mr Philip told him of the substance of the proposal in the second fax. 9.19 A Meeting Between Mr Stokes and Mr James Packer? We're all going to get together to take those rights. We don't really want to do it but News are making us. And I hear you're trying to do something with the NRL rights. We've gone and closed all the gates and got everything set and they go and leave a huge back door open. But it doesn't matter what you spend, I would not be against Rupert when it comes to getting the NRL rights. The first relates to the timing of the conversation. Mr Stokes was overseas from 26 November 2000 to 8 December 2000. He gave evidence that Mr Packer's secretary telephoned him (Mr Stokes) on his mobile telephone, saying that Mr Packer wanted to see him. No records were tendered supporting the making of such a call or the holding of a meeting on the weekend identified by Mr Stokes. Nor did Mr Stokes make any notes of the conversation with Mr Packer. It appears that his first account of the conversation to a third party was to Seven's solicitors in early 2003, well over two years after the event. 1331 Mr Stokes placed the date of the meeting with Mr Packer by a ' process of elimination '. After referring to his diaries (which did not record the meeting) and other documentation relating to his movements, he thought that this weekend was the only time the meeting could have happened. However, it is implausible that on the weekend of 9-10 December 2000 Mr Packer would have made the first statement attributed to him by Mr Stokes. By that time, Seven was actively promoting the intervention of the ACCC to prevent a combined bid by News, PBL and Foxtel for the AFL broadcasting rights. Newspaper articles had been published about the proposed bid. Mr Packer is hardly likely to have been bringing Mr Stokes news of something that had been common knowledge for a long time. Similarly it would be odd if Mr Packer had said during a meeting on that weekend that he had heard that Seven was trying to do something with the NRL pay television rights. By early December 2000, as PBL points out, C7's bids for the NRL pay television rights had attracted extensive publicity and indeed the details of its second bid had been published in the press. 1332 Seven, in its Reply Submissions, attempts to make a virtue out of necessity by citing an email from Mr Stokes' personal assistant to Mr Packer which was sent at 7.02 pm on Friday, 24 November 2000. The email gave Mr Packer Mr Stokes' mobile number and confirmed that it was in order for Mr Packer to call Mr Stokes the next day (Saturday), 25 November. Seven submits that the email supports Mr Stokes' account of the conversation, except that Seven says that I should find, contrary to Mr Stokes' evidence, that the meeting took place during the weekend of 25-26 November 2000. 1333 By 25 November 2000, although accurate details of C7's first bid had not appeared in the media, there had been speculation about the contents of the bid in newspaper articles appearing on 18 and 20 November 2000. It is quite possible, therefore, that Mr Packer, on 25 November 2000, might have said words to the effect of ' I hear you're trying to do something with the NRL rights'. However, Seven had expressed concern about the proposed joint bid for the AFL broadcasting rights well before 25 November. It is highly unlikely that Mr Packer would have said to Mr Stokes that he had come to tell Mr Stokes that a group was going to get together to take the rights off Seven. Mr Stokes accepted that around 9 and 10 November he had become aware of press articles reporting the fact of a bid for the AFL broadcasting rights by a consortium. Mr Stokes had made some public comments on the subject at or shortly after Seven's annual general meeting on 17 November 2000. On 22 November 2000, Seven's solicitors had written to the ACCC expressing Seven's concern about the potential for misuse of market power by ' the PBL/News/Telstra consortium ' in relation to the bidding for the AFL broadcasting rights. Even as early as 25 November 2000, Mr Packer (as he surely would have known) would not have been conveying new information to Mr Stokes about the joint bid for the AFL broadcasting rights. 1334 Secondly, the absence of any record of the conversation until more than two years had elapsed is significant. In his evidence, Mr Stokes vacillated about whether, by November 2000, Seven was contemplating legal action against Foxtel and others in respect of the consortium's bid for the AFL broadcasting rights. Mr Stokes ultimately conceded that by mid-November 2000 he was indeed giving serious consideration to instituting legal proceedings against the parties bidding for the AFL broadcasting rights. Mr Stokes had little choice in making that concession, since in an email he sent to Mr Gammell and Mr Wise on 18 November 2000, he referred to the strengthening of ' future actions that we would ... have against Foxtel, News and PBL '. By ' future actions ' Mr Stokes meant (as he accepted) possible future legal proceedings. 1335 I accept Seven's submission that Mr Stokes is not a person who is in the habit of making notes of conversations. It is nonetheless curious that if Mr Stokes thought that Mr Packer's comments important, he did not cause a record to be made or did not communicate by email the fact of the conversation much earlier than he did. It is clear, although Mr Stokes did not accept this unequivocally, that he had been told long before November 2000 that he should keep a record of anything which might provide evidence of collusion between News and PBL. In fact, Mr Stokes did not communicate his recollection of the conversation to his solicitors until more than a year after Gyles J had delivered an important judgment in the preliminary discovery proceedings. 1336 Thirdly, in my opinion, it is implausible that Mr Packer would have said to Mr Stokes that PBL did not want to take the AFL broadcasting rights off Seven and that News had ' made ' PBL participate in the bid. As Mr Stokes knew, Nine had sought to acquire the AFL free-to-air rights on separate occasions over a number of years. In these circumstances, it would have been extraordinary for Mr Packer to plead helplessness. 1337 A fourth difficulty is that, as I have explained elsewhere, Mr Stokes' evidence was characterised by strong tendency to reconstruct events as he wished them to have been rather than as they were. I approach his uncorroborated evidence of conversations, in so far as his account is favourable to Seven's interests, with considerable caution. For the reasons I have given, there are particular grounds to view his account of the conversation with Mr Packer in this way. 1338 I appreciate that it is necessary to pay due attention to the fact that Mr Packer was available to give evidence, but was not called by PBL. His unexplained absence from the witness box could justify an inference that his evidence would not have assisted PBL. Certainly, Mr Packer's absence from the witness box requires me to think carefully before rejecting Mr Stokes' evidence in whole or in part. Nonetheless, the fact that Mr Packer did not give evidence does not mean that I must accept Mr Stokes' account, having regard to the fact that his version was directly challenged in cross-examination. I must assess the evidence in its entirety, including any inference that may be available from Mr Packer's unexplained absence from the witness box. 1339 I think it probable that a meeting took place between Mr Stokes and Mr Packer in late November 2000, most likely in the course of the weekend before Mr Stokes' departure on 26 November for his overseas trip. Mr Stokes said in evidence that he and Mr Packer discussed in some depth free-to-air television. I think it likely that a conversation took place which included references to the competing bids for the AFL broadcasting rights, especially the free-to-air rights. In that context Mr Stokes may well have asked Mr Packer why PBL was prepared to pay so much for the free-to-air rights. I do not accept, however, that Mr Packer told Mr Stokes that PBL, News and Foxtel were all going to get together to take the AFL broadcasting rights away from Seven. Nor do I accept that Mr Packer said that Nine did not ' really want to do it ', but had been forced by News to participate in the bid. Similarly I am unable to accept that Mr Packer made observations in the conversation about News leaving ' the back door open ', at least in a context suggesting that News and PBL were joining forces to deprive Seven of both the AFL and NRL pay television rights. The letter stated that the NRL had received an offer from C7. Mr Gallop inquired about the latest position in the litigation concerning use of the Telstra Cable. Specifically, Mr Gallop asked for advice as to the ' possible scenarios which may arise over the next 12 months '. 1341 Ms Ireland replied on 13 December 2000, providing a detailed account of the then current litigation and access arbitration. Prior to sending the letter, she forwarded a draft to Mr Gallop asking him to confirm that he was happy with it. In the final version sent on 13 December 2000, Ms Ireland noted that there were still many issues to be determined before the ACCC could make a final determination about access. While the ACCC had power to make an interim determination, Foxtel's view was that this was inappropriate and Foxtel might challenge any such determination. The effect of this is that C7 will have to put its own STUs into the home which will mean there are 2 STUs if the C7 subscriber is also a FOXTEL subscriber. FOXTEL also cannot be obliged to market the C7 channels. The C7 service will be a separate service and C7 will be solely responsible for the marketing of this separate service to attract subscribers'. (Emphasis added. --- Yes. --- Yes. --- Yes'. The draft formed the basis of C7's reply, which was signed by Mr Anderson and sent later on that day. " As you know we have only requested that, in the event that Marketing rights are subsequently offered by the NRL, that C7 be provided with a fair opportunity to match any offer you may receive. Conflict of interest issues can then be dealt with and the competitive matching process can commence. A continuation of such prevarication over these minor issues prior to consideration by the Partnership Board cannot be demonstrated to be in the best interest of the game or the clubs. Mr Moffett asked for comment. The analysis identified two major variables built into C7's offer: first, the fees depended on subscriber levels and, secondly, there was uncertainty as to whether Nine would broadcast only two games per week, broadcast two games per week and another 12 matches over the season, or broadcast three games per week. 1350 Between Friday, 8 December 2000 and Wednesday, 13 December 2000, Mr Parker prepared financial models in connection with Fox Sports' proposed bid for the NRL pay television rights. On 8 December 2000, for example, Mr Parker prepared a model which he sent to Mr Marquard at Fox Sports, Mr Falloon at PBL and Mr Macourt at News. The model analysed the implications for Fox Sports if it acquired the NRL pay television rights for a total consideration of $26 million per annum, including production costs. In the model the ' Current Position ' and ' Scenario C --- Lose Austar ' were unchanged from previous models. 1351 Scenario A modelled a purchase of the NRL pay television rights, sale to Austar on the existing terms, receipt of $8 million per annum from Foxtel and no sale to Optus Vision. Scenario B was similar to Scenario A, except that it incorporated the expansion of Fox Sports to two full channels. Scenario A produced a ' 5 year cash to Fox Sports ' of -$88 million, while the comparable figure for Scenario B was -$107.4 million. 1352 On the afternoon of 13 December 2000, Mr Parker sent to Mr Macourt and Mr Kleeman a model assessing the impact on Fox Sports and Foxtel of Fox Sports acquiring the NRL pay television rights for $30 million per annum. Mr Marquard saw the model before Mr Parker sent it. The meeting was described in emails as ' AFL/NRL Meeting '. Mr Philip was invited to participate. Mr Philip arranged for representatives of PBL and for Messrs Macourt and Blomfield to participate in the teleconference. 1354 At 9.13 am on 13 December 2000 Mr Philip created a document headed ' Pay Television --- National Rugby League --- C7/Foxtel '. He agreed in cross-examination that the document was a draft call option in respect of the NRL pay television rights to be granted by C7 to Foxtel. Mr Philip said that he ' topped and tailed ' another document to create the draft call option. I accept that evidence, as the document is very similar to the Fox Sports-NRL Licence prepared by Mr Marquard and executed later on 13 December 2000. 1355 Mr Philip said that he could not remember why he created the draft call option, particularly at such a busy time. Mr Philip denied, however, that he created the document because he thought that there was a serious prospect that C7 would acquire the NRL pay television rights. Mr Philip stated that he had no intention of voting in favour of C7's bid, regardless of the comparative values of the two offers. He also did not expect the meeting of the NRL PEC to give serious consideration to the C7 offer which, in any event, he did not think was capable of acceptance. 1356 At 9.30 am on 13 December 2000, Mr Fogarty faxed Mr Akhurst a page from Foxtel's budget papers outlining the cost to Foxtel of the NRL pay television rights. In an email sent at 10.18 am, Mr Fogarty referred to a discussion the previous day concerning pricing of the NRL rights and confirmed that the cost was $10.1 million in 1999/2000 and was expected to be $9.8 million in the current financial year (2000/2001). The email also observed that Mr Philip had previously said in meetings that Optus paid $30 million or $36 million per annum for AFL content, but that the true figure was $25 million per annum. 1357 At 9.43 am on 13 December 2000, Mr Fogarty sent two briefing papers to Dr Switkowski, and Messrs Akhurst, Moriarty, Rizzo and Greg Willis. Telstra consented to allow FOX Sports to supply the NRL to Optus TV on condition that the NRL coverage was provided to FOXTEL at no cost. Additional price to FOXTEL was nil. Telstra subsequently consented to FOXTEL paying FOX Sports an additional $8M pa for metropolitan exclusivity. Additional price to FOXTEL was $8M. 12 December proposal is for FOXTEL to pay $28M per annum ($18M pa to FOX Sports for the NRL coverage and $10M pa for the naming and internet rights). Additional price to FOXTEL is $28M. FOX Sports outlays are reduced by this proposal. FOX Sports holds the rights for six years. They gain revenue from AUSTAR and additional sources (BSkyB, FOX Cable ... ). Any upside from the proposal accrues to FOX Sports. We consider that FOXTEL will find it very difficult to on-sell the naming and internet rights. The NRL and/or FOX Sports should be selling these rights. Telstra would then be party to any legal proceedings as a result. ($28M versus, $8M versus zero). Telstra should use the rejection to leverage a better proposal from News/Fox Sports and consider approaching C7 for a call option'. It is supported by News and PBL'. The briefing included a review of the contents of the papers prepared by Mr Fogarty. It started at 11.23 am and finished some time after 12.30 pm. It is a four page handwritten note prepared by Mr Fogarty, apparently during the meeting itself. Clearly enough, since the meeting ran for at least an hour and a quarter, the notes are not a verbatim account of what transpired. The position is further complicated by the fact that the note records that the Telstra representatives went ' off-line ' for a short time towards the end of the meeting. These were the NRL pay television rights for 2001 to 2006 and the AFL broadcasting rights for 2002 to 2006. • Mr Philip stated that Fox Sports was bidding against C7 for the NRL pay television rights. Fox Sports' bid was important if ' we want to keep [the NRL] and control ... it '. Mr Philip warned that if C7 won the bidding contest Fox Sports would lose subscribers and C7 would demand an extortionate price for its channels. • Mr Philip then said that the proposal he was putting forward for the NRL pay television rights was reasonable. He stated that a bid of $45 million per annum ' inclusive ', with $35 million in cash going to the NRL, would be needed to beat the C7 bid. • Mr Falloon asked whether naming rights to the NRL Competition could be on-sold. Mr Macourt said they could, except to a competitor of Nine. • Mr Philip then set out the structure of the proposal, in terms similar to those recorded in his second handwritten fax to Mr Akhurst. The proposal was for Fox Sports to bid $30 million per annum, plus $6 million per annum for production and $4 million per annum for contra. In addition, Foxtel would pay $5 per annum million for naming and internet rights and pay $23 million to Fox Sports for NRL programs. The end result would be that Telstra would bear $14 million of the total cost and PBL and News would each bear $15.5 million (the same figures as appears in Mr Philip's second handwritten fax). Part of Telstra's commitment involved its agreement to Foxtel making the exclusivity payment to Fox Sports if Optus did not wish to acquire any NRL rights. If Foxtel sub-licensed the rights to Optus, Foxtel would retain the benefit. • Discussion then took place concerning the proposal. Whatever you think will put Foxtel in the best position'. • After discussion, support was expressed for Mr Philip's ' weekend proposal ' --- that is, so it would seem, the proposal put in his second handwritten fax to Mr Akhurst. Those present agreed that the proposal should include a payment of $10 million for naming and internet rights and what is recorded in the note as an $8 million payment, presumably by Telstra in the event of Fox Sports not being able to license the NRL rights to Optus. Any ' upside ' from Optus was to go to Foxtel. Mr Philip was to detail what had been agreed. • Mr Falloon asked for clarification about the amounts to be paid. The response was recorded by Mr Fogarty as ' First 8 from Optus to Foxtel! Any upside from Optus goes to Foxtel '. As PBL points out, the need for clarification arose because the proposal was now somewhat different from that originally put by Mr Philip. Telstra was now to pay $5 million for naming and internet rights, rather than $10 million. Foxtel was to pay $18 million to Fox Sports, rather than $8 million, but was to receive the benefit of sub-licensing revenue from Optus and a reduction in fees should Optus exercise its matching rights. • Attention turned to the AFL pay television rights. Encouragement from AFL based on a good bid for both Pay TV and FTA'. $12 pspm. Technical people have considered brief and are concerned. Could offer a lesser product. If Stokes wins Pay & Free he will use his rights to continue to offer poor Pay. We could offer them a package to replace C7. Telstra has always said NO! to offering Fox Sports to Optus'. (Emphasis in original. We should not agree'. We are increasingly demanding of ourselves. We stand shoulder to shoulder to push this forward. A show of solidarity only at next meeting. Dr Switkowski's participation related primarily to the acquisition of the AFL broadcasting rights and Foxtel's grant of a put option in favour of News in respect of the AFL pay television rights. • Although Telstra's Retail Division was inclined to the view that the naming rights were not worth $4 million (the remaining $1 million was allocated to the internet rights), Dr Switkowski considered that Telstra should pay that amount to support the acquisition of the NRL pay television rights for the benefit of Foxtel. • Dr Switkowski knew that Telstra's nominees on the Foxtel Management board had already agreed that Foxtel should grant a put option to News for a fee of $17.5 million per annum, and should provide $2.5 million for advertising and editorial support. He understood that Telstra was being asked to support an increased bid for the AFL broadcasting rights. Dr Switkowski had previously discussed the assumptions underlying the models with Mr Akhurst. Based on these discussions and his experience, Dr Switkowski considered the assumptions to be aggressive but not unreasonable. He also considered that even if some assumptions proved not to be achievable, ' the downside risk ... was small relative to the size of the investment and possible benefits to Foxtel of acquiring the rights '. (Dr Switkowski was challenged on these matters, but the cross-examination showed that he had paid attention to the modelling and formed the view that the numbers were plausible and were based on defensible forecasts about take-up rates. He also said that it was not sensible to try to save a few million dollars and miss out on the rights. • Dr Switkowski at no time during the conference call considered what the effect would be for Seven or C7 of News succeeding in its bid for the AFL pay television rights. Accordingly, I never understood that agreement by Telstra or the other FOXTEL partners concerning any arrangement or bid for either set of rights was dependent or conditional upon there being any arrangement concerning the other set of rights'. Mr Macourt said that his main concern at the time about C7's offer for the NRL pay television rights was that it ' was going to vanish '. However, he did not think it appropriate in front of the other participants to contradict Mr Philip's statement that there was a serious risk of C7 winning the NRL pay television rights. Nor did Mr Macourt think it useful to tell Telstra and PBL about his concerns as they would not have been at all troubled and indeed might not have supported the package. He agreed that Mr Philip was conveying to the meeting that News needed Telstra's support to avoid C7 obtaining the NRL pay television rights. Mr Macourt said that he did not believe what Mr Philip was saying was correct, since he (Mr Macourt) knew that News had the last rights. Even so, he did not contradict Mr Philip's statements because he did not wish to disadvantage the NRL Partnership. Mr Philip admitted that, despite what he said at the meeting, he did not believe that there was a serious risk that C7 would succeed in obtaining the NRL pay television rights. Nor did he think that Mr Macourt believed that there was such a risk, since he knew that Mr Macourt would not be voting in favour of a C7 bid. Mr Philip was not worried about Mr Macourt correcting him at the meeting because Mr Macourt would have known that the untrue statements were simply being used as ' leverage ' on Telstra and PBL. We did have a telephone conversation after this meeting where Mr Macourt, Mr Falloon and I checked with each other as to effectively what the outcome of the meeting was, whether it accorded with our expectations and whether it fitted with what FoxSports proposed. So the meeting --- that conversation didn't happen during this meeting. It happened subsequent to that meeting'. He had a ' vague recollection ' that in the conversation with Mr Macourt and Mr Falloon they agreed that Mr Philip would tell Mr Marquard that Fox Sports could bid $30 million cash per annum and that he did tell Mr Marquard this. She advised Mr Akhurst that sponsorship rights would be valuable for Telstra and they were worth about $5 million. However, she did not have provision for such an amount in the relevant budget. Mr Akhurst then asked whether, if he arranged for the payment out of the budget for which he was responsible, the rights could be used. She replied in the affirmative and it was on that basis that Telstra proceeded to acquire them. 1371 In addition, Mr Akhurst discussed the AFL proposal with Mr Rizzo and Mr Moriarty before the teleconference. Mr Rizzo was neutral to ' less than enthusiastic ' about the proposal, but was prepared to abide by whatever decision Dr Switkowski and Mr Akhurst made. Mr Moriarty was more positive. Insofar as the total bid price of $45 million for the NRL rights was concerned, I accepted Mr Philip's advice that this price was necessary to ensure that FOXTEL continued to have access to NRL programming for its pay TV service. Although I do not recall discussing those matters with Dr Switkowski or any of the other Telstra representatives either during the telephone conference or prior to finalising the terms of the bid documents, it is likely that I discussed those matters with Dr Switkowski and that he supported by views in relation to the NRL rights'. Insofar as there is a minor discrepancy with Dr Switkowski's evidence, I attribute that to Dr Switkowski's lack of familiarity with all the detail of the NRL bid. Mr Philip's evidence, uncertain as it is, suggests that the issue was resolved during the discussion between himself, Mr Macourt and Mr Falloon that followed the teleconference. Mr Marquard recalled that he and Mr Malone had recommended a bid by Fox Sports of $30 million per annum (exclusive of GST), but he could not remember how the offer was authorised. Mr Malone thought authority had been received in telephone discussions with Mr Falloon and Mr Macourt on the morning of 13 December 2000. Mr Macourt was uncertain on the point. The probabilities are that Mr Philip's account is accurate enough. 1375 In any event, at 4.07 pm on 13 December 2000, Mr Philip faxed to Mr Akhurst at Telstra and Mr Blomfield at Foxtel Management a term sheet relating to the NRL ' that need[s] to be signed today, to enable the bid to be lodged tonight '. Mr Philip also faxed the term sheet to Mr Marquard at Fox Sports and Mr Falloon at PBL, but without the covering note referring to the urgency of signing the documents. 1376 At 7.08 pm the same evening, the term sheet was faxed to Mr Philip bearing Mr Akhurst's signature on behalf of Telstra. The document was signed by Mr Philip on behalf of Fox Sports and Foxtel. The term sheet is set out below. The words in bold were added in handwriting as the result of discussions between Mr Philip and Mr Akhurst and initialled by the signatories. If Fox Sports sublicenses the NRL coverage to any person during the term of [the] Fox Sports agreement with NRL (other than sublicensing to Foxtel, Austar and their successors) the proceeds of such sublicensing must be paid to Foxtel. Fox Sports retained the right to sub-license to ' Sublicensees ' (also a defined term). Licensor may not during the Term exercise any rights the same as or similar to any of the Rights or grant any rights the same as or similar to any of the Rights in [Australia] to any other party except in accordance with those Obligations and then only on terms that are the same (including as to price) as set out in this Agreement'. The fee was to be adjusted by the CPI in each year from 2002 to 2006. Fox Sports was also to pay ' kickers ' (extra fees) if its total average monthly subscribers exceeded 2 million or 2.5 million. If the ' Other Pay TV Licensee ' (that is, either of Optus or Optus Vision) entered into an agreement with Fox Sports under which the other Pay TV Licensee was granted the ' Rights ' for the ' Term ', the fee would be halved to $15 million per annum plus adjustments. 1380 Another term sheet (the ' NRL Naming Rights Sponsor Agreement ') set out the terms on which Telstra was to be the naming right sponsor, of the NRL Competition. The NRL Competition was to be known as the ' Telstra Cup '. The arrangement was to be exclusive to Telstra, which was to pay a fee of $4 million per season, plus CPI, in each of the 2002 to 2006 seasons. 1381 At some time during the afternoon or early evening of 13 December 2000, the final Fox Sports offer was formalised in a letter addressed to Mr Moffett at the ' National Rugby League '. The FOX SPORTS offer has been developed to provide the NRL with an uncomplicated cash and contra package. This proposal can be easily analysed. The offer takes into account existing contractual obligations that we understand are owed by the NRL to other third parties. As a result, we believe the offer is capable of immediate acceptance by both parties. FOX SPORTS is currently distributed on the FOXTEL & AUSTAR platforms to more than 1,100,000 households. This represents a reach of 85% of all Australian pay television households. Both the existing FOX SPORTS channels appear in the basic package of channels offered by FOXTEL & AUSTAR. Media reports have suggested that an alternative bid has been made to you which includes a reduction in licence fees of $1M per game if your FTA licensee broadcasts more than two games per week. If these reports are correct, this could seriously erode any fees receivable by the NRL and could negatively impact on your business plans. Our offer does not penalise the NRL in this way and there is no net reduction in revenue receivable by the NRL if the FTA network broadcasts an extra game or games'. The proposal included increases in the rights fees payable (described by Mr Malone as ' kickers ') if monthly subscriber numbers reached levels of two million or 2.5 million. (The ' kicker ' in the former case was $3.3 million in 2001, increasing by 3.5 per cent each year. ) The proposal also included promotional spending of $4.4 million (inclusive of GST) in the first year, rising thereafter by 12 per cent per annum. No representative of C7 was invited to attend. 1386 In his presentation at the meeting, Mr Malone said that this was ' a one time only offer ' and that Fox Sports was ready to sign that night. Mr Malone accepted in evidence that he was putting the bid as ' a take-it-or-leave-it offer '. He made that clear to the meeting by saying that he had been given instructions by the PBL directors not to leave the deal on the table if it could not be concluded that evening. Mr Malone agreed that he emphasised to the meeting the superiority of Fox Sports' offer in the event that a free-to-air broadcaster telecast more than two live matches per week. 1387 Mr Malone, despite what he told the meeting, expected to have another opportunity to bid if the NRL PEC did not regard the offer as the most favourable. He agreed that Fox Sports' offer, although he characterised it as ' strong ', was ' at the low end of the range ' and he also appeared to accept that Fox Sports would have gone higher if necessary. However, he had no instructions that evening that would have allowed him to go higher than $33 million (GST inclusive) per annum. He said that it did not occur to him that the NRL PEC might have called his bluff by requiring a better offer that evening. Mr Malone denied that he was certain when making his presentation that the Fox Sports bid would succeed. He thought that the bid might not be accepted. 1388 After Fox Sports' representatives left the meeting, Mr Moffet and Mr Gallop presented a financial analysis of the competing offers. The analysis had the same figures in the summary as the earlier version of the document ([1349]), except that the NPV of the Fox Sports offer had increased from $123.8 million to $188.7 million. That figure made the NPV of the Fox Sports offer superior to the NPV of C7's offer in the ' probable ' and ' worst ' cases, but inferior on the best case (subscriptions over one million, Nine shows no additional games). However, if the ' probable ' case (subscriptions 500,000 to one million; Nine to take three games per week) was changed to provide for Nine to continue to take two NRL games per week, the NPV of C7's offer was substantially more favourable than Fox Sports' offer: that is, $240.1 million compared with the NPV of Fox Sports' offer of $188.7 million. 1389 On the best case scenario, C7's offer had an NPV of $303.6 million, compared with the NPV of Fox Sports' offer of $188.7 million. (In its Closing Submissions, Seven points out that if C7 had been carried on the Foxtel platform prior to December 2000, its offer would presumably have been assessed on the basis that C7 would have reached more than one million subscribers. As at December 2000, Foxtel had about 698,000 subscribers, Optus had 217,000 and Austar 399,000. The amount that the NRL will receive under the Fox Sports bid is better in a number of circumstances and worse in others, but is more certain than the C7 offer in relation to the amount that the NRL will receive'. It is more certain. They have been very good to us and I think the new rugby league programming that they are going to do will be very good for the game'. • He thought that there were circumstances in which C7's offer was worth more than Fox Sports' offer and vice versa. He did not direct his attention to whether C7 then came within the 500,000 to 1 million bracket (identified in C7's offer), although he agreed that if C7 acquired the NRL pay television rights its subscriber numbers were not likely to fall. • He did not agree that if he thought C7's offer was worth less than Fox Sports he simply would have arranged for Fox Sports not to bid at all and would have relied on News' last right in relation to the NRL pay television rights. News would then have had to deal with PBL as to Fox Sports and Telstra as to Foxtel. • In any event, he did not think that C7's offer was capable of acceptance. • He disagreed that Fox Sports had made a lower bid which was forced through the NRL PEC. Mr Love telephoned Mr Gammell in response to Mr Gammell's attempts to contact NRL ' in order to present an improved offer '. 1393 Shortly after the telephone conversation, Mr Anderson faxed a revision to C7's bid to the NRL Partnership. The higher level of $62.5 million will still apply for subscriber numbers in excess of 1 million'. 1394 Mr Gammell denied that he knew by the time the fax was sent that Fox Sports' bid had already been accepted and that the amended offer was merely designed to secure publicity. There is no reason to doubt Mr Gammell's denial that he knew the outcome of the NRL PEC meeting by this time. After all, Mr Love had refused to tell him a few minutes earlier. 1395 Later on 14 December 2000, NRL issued a media release. The bolded words in the extract below are the subject of a claim by Seven that the NRL Partnership, or NRL, engaged in misleading or deceptive conduct in contravention of s 52 of the TP Act. This represents a reach of ... 85% of all Australian pay television households. FOX SPORTS is also distributed to pubs and clubs and commercial outlets throughout metropolitan and regional Australia. Through these distribution channels, FOX SPORTS reaches almost 4 million people, by far the widest distribution of any Australian sports TV broadcaster'. He knew before he attended the meeting with the AFL on 14 December 2000 that C7's bid for the NRL pay television rights had been unsuccessful. The offer included a branding provision equivalent to cl 4 of the NRL-Fox Sports Licence. Mr Moffett's letter enclosed a licence agreement that had been signed by Mr Philip on behalf of NRLI and by Mr Love on behalf of ARL. 1399 As Mr Anderson of Optus well appreciated, Optus was in a difficult position. If it accepted the NRL Partnership's offer of non-exclusive rights, it would have to show the NRL matches on a channel branded either ' Fox Sports ' or ' Optus '. The former was unlikely because Telstra had opposed the use of the Fox Sports brand on Optus; the latter was unattractive as Optus had no sports channel of its own. If Optus did not accept the NRL's offer, it would have to do without NRL or persuade Telstra to drop its opposition to the supply of Fox Sports to Optus. Discussions took place between the NRL and Optus in mid-January 2001. 1400 Mr Anderson spoke to Mr Chisholm of Telstra on 16 January 2001 concerning Optus' position. The following day, Mr Anderson saw the Minister for Communications and complained about Telstra's refusal to allow the supply of Fox Sports. Mr Anderson requested the Minister's support. 1401 Also on 16 January 2001, Mr George of Optus telephoned Mr Akhurst, indicating that Optus wanted to take a feed of Fox Sports channels from September 2001. Mr Akhurst sought advice from Mr Greg Willis. On 17 January, Mr Willis recommended against acceding to Optus' request, on the ground that Telstra would have no input into how such a channel would be structured and that, in any event, the arrangement would only strengthen Fox Sports' position in future negotiations with Foxtel. 1402 Mr Akhurst told Mr George on 18 January 2000 that Telstra was not inclined to co-operate while Optus was suing it in relation to the roll-out of the Telstra Cable. Mr Akhurst said that he would not stand in the way of Foxtel supplying NRL and AFL content (in the case of the AFL, presumably from 2002) to Optus if the litigation was abandoned. However, the supply of Fox Sports content was another matter. Optus declined Mr Akhurst's proposal (limited as it was to football content). 1403 Presumably as a consequence of his conversation with Mr George, Mr Anderson informed Optus' executives on 18 January 2001 that there was ' a strong possibility that we may lose NRL football this year '. Mr Lattin asserted that if the offer had that effect, it might involve a breach of the TP Act . 1405 Mr Moffett replied the same day. He stated that the wording of the draft licence was clear and that the requirements of the relevant clause could be satisfied by branding the channel that included the NRL ' Matches ' with Optus' primary brand. Mr Moffett also asserted that the restriction did not contravene the TP Act . 1406 Mr Philip was consulted by Mr Gallop in relation to the correspondence with Mr Lattin. Mr Philip's position at the time was that the NRL Partnership would have to insist that NRL programming could not be incorporated into C7's channels, since that outcome was dictated by the terms of the NRL-Fox Sports Licence. In his evidence, Mr Philip described the branding requirement as the ' working out of a strategy ' whereby ' Fox [S]ports would become the exclusive controller of production of all the NRL Pay TV matches '. 1407 Mr Macourt also saw the correspondence. We thought it was an important part of the Fox Sports brand and content, and we wanted to stay associated with Fox Sports'. However, he denied that this was what he wanted to stop. Rather, his concern was with Optus using ' our rights ' in competition with Fox Sports. 1409 At about this time, Mr Philip, in consultation with Mr Akhurst, came up with a proposal that he thought might be more appealing to Optus than the one Optus had previously rejected. Foxtel (including us) would control the content and ensure none of the valuable Foxtel sport was handed over. Foxtel would derive all the licence fees (say $15M, given Optus currently pays $13M for just the NRL). Foxtel could brand it Foxtel etc all over the viewing'. In the course of discussion, Mr Akhurst raised the concept of a channel specifically designed for Optus, to be known as ' Fox Sports 3 '. A term sheet incorporating this concept was sent to Mr George of Optus on the evening of Friday, 19 January 2001. The term sheet included a provision requiring Optus to use the channel only as part of its Australian cable subscription service and preventing Optus from sub-licensing, altering or re-branding the channel. The proposed price of the special purpose channel was $16 million for the 2001 NRL season. 1411 On the same day, Mr George reported to Mr Anderson and others at Optus that News and PBL were working on a proposal for a one year deal to supply Fox Sports 2 (including NRL) to Optus at the same price Optus had negotiated with the NRL for the six year deal on NRL content alone. Mr George noted that this would give Optus no security over sporting content beyond 2001, but that Optus could assume that regulatory assistance would be available thereafter. On 22 January 2001, Telstra advised that it required Fox Sports to exclude from the channel a more extensive list of sports than had been identified in the draft term sheet. Negotiations then ensued. At Mr Akhurst's insistence, the name of the channel was to become either ' NRL on Optus ' or ' Optus Sports '. Mr Akhurst's reason for insisting on the change was that he believed the exclusivity of the Fox Sports channels on Foxtel was an important point of differentiation between the Foxtel and Optus pay platforms. 1413 On 24 January 2001, Mr Akhurst rejected a proposal from Mr Philip that a Fox Sports channel be provided to Optus on an interim basis, until the NRL channel was ready. 1414 The term sheet in its final form was signed on behalf of Fox Sports, Optus Vision and Foxtel Management on 25 January 2001. The channel was to be transmitted between 9 am on Fridays and midnight on Mondays during each weekend of the NRL season (commencing on 16 February 2001 and ending on 1 October 2001). Optus was to pay Fox Sports a fee, exclusive of GST, of $16 million. Fox Sports directed Optus to pay $14 million of that amount to Foxtel. However, Optus could not rebrand or alter the channel. Seven's cause of action based on cl 9 of the Optus-NRL Licence is dealt with in Chapter 21. 10 RETAIL ACCESS DISPUTE [1417] 10.1 TARBS Request [1419] 10.2 ACCC's Inquiry and the Draft Decision [1421] 10.3 Mr North's Strategy [1428] 10.3.1 Mr North's Long-Term Engagement [1428] 10.3.2 Mr North's Strategic Objectives [1432] 10.4 Seven Formally Seeks Access to the Telstra Cable [1435] 10.5 A Declaration Is Made [1439] 10.6 Telstra's Response to Seven's Strategy [1441] 10.7 Foxtel and Telstra Respond to the Access Request [1447] 10.8 TARBS Arbitration [1456] 10.9 Responses to the Judgments [1459] 10.10 Further Discussions within Telstra [1469] 10.11 Full Court Decisions on the Access Appeals [1470] 10.11.1 The Decisions [1470] 10.11.2 Consequences of the Decisions [1471] 10.11.3 Notification of the Access Arbitration [1476] 10.12 Access Arbitration [1477] 10.13 Foxtel's Offer of Carriage to C7 [1478] 10.14 Seven's Response to the Interim Determination [1485] 10.15 Seven Considers Withdrawing Its Access Claim [1495] 10.16 End of the Access Arbitration [1498] 10. Clause 5.2 is reproduced later [2778]. Seven alleges, in substance, that the parties to the BCA gave effect to cl 5.2 by protecting Foxtel's exclusive contractual right to use the Telstra Cable and by taking measures to prevent C7 gaining access to the Telstra Cable for the purpose of supplying pay television services directly to its retail customers. 1418 In this Chapter, I set out the principal events relating to what the parties have described as the ' retail access dispute ' . The analysis of Seven's cause of action based on these events is in Chapter 17. I have described the ' Telecommunications Access Regime ' in Pt XIC of the TP Act in Chapter 4. 1420 On 20 August 1998, TARBS requested Telstra Multimedia and Foxtel to provide access to the Telstra Cable under Pt XIC of the TP Act for the distribution of the Nightmoves Channel and several foreign language channels. Foxtel Management and Telstra responded by claiming that Foxtel had an ' exclusive contractual right ' of access to the Telstra Cable and asserting that the Deeming Statement was invalid. One was into a proposed declaration under s 152AL(3) of the TP Act that the ' Analogue Subscription Television Broadcast Carriage Service ' (that is, the Telstra Cable) be a declared service for the purposes of Pt XIC of the TP Act . The effect of the declaration, if validly made, was to subject the Telstra Cable to the access regime set out in Pt XIC of the TP Act . The other inquiry concerned a proposed ' Declaration of Technology Neutral Subscription Broadcast Carriage Services '. 1422 Mr Mockridge's CEO's report for Foxtel Management's board meeting of 2 February 1999 noted that the declarations, if made, might allow parties other than Foxtel and Telstra to use the Telstra Cable and thus gain access to Foxtel's cable decoder boxes (that is, STUs or set top units). Mr Mockridge reported that, while the proposed declarations were a cause for concern, Foxtel had a defence in that its exclusive right of access under the BCA was a ' protected contractual right ' for the purposes of the statutory access regime. Nonetheless, his report indicated that Foxtel Management would be making a written submission to the ACCC in relation to its inquiry. 1423 On 18 March 1999, Mr Stokes met with Mr Chris North of Wattle Park Partners Pty Ltd. The following day, Mr North sent a letter to Mr Stokes, in the latter's capacity as Chairman of ACE, outlining the services that he (Mr North) could provide. Mr North indicated that his ' expertise span[ned] the technological, regulatory and commercial aspects of the broadcasting, telecommunications and information industries '. He also said that he had advised TARBS in relation to its access request. The [legislation] give[s] you that right of access'. On 25 March 1999 Seven sent a letter to the ACCC supporting the making of the proposed access declaration. Under the existing regime the Seven Network has experienced difficulties reaching mutually acceptable arrangements for carriage of its "C7" sport channels on analogue subscription television broadband services. For example, during discussion of such arrangements Foxtel informed the Seven Network that Foxtel has reservations about carrying the Seven Network's sport channels with "Seven" branding on Foxtel's basic tiers'. 1425 On 3 June 1999, the ACCC issued a draft decision to declare analogue services for pay television. The ACCC's press release noted that a similar service had been declared in 1997, but doubts had been raised about the validity of the declaration. The ACCC also stated that it had not reached a decision as to whether to declare a technology neutral service, which would cover digital services. To discuss at the next [Executive Management Committee meeting]. Please raise it and Shane [Wood] to attend'. 1427 Mr Mockridge's report for the Foxtel Management board meeting of 22 June 1999 (which was postponed until 8 July 1999) reported on the ACCC's draft decision. However, FOXTEL intends to lodge a further submission disagreeing with the draft report by the deadline of 30 June. Once a final decision is made (expected in August), FOXTEL would consider applying for administrative review of the determination in an attempt to overturn it. 1429 Mr North also identified access to pay television infrastructure as a matter of interest to the ACCC. He noted that the ACCC was committed to fighting this issue on behalf of TARBS and to winning it. He considered that the ACCC was keen to secure Seven's support on this issue ' as C7 should also be permitted to offer its own channels on Foxtel's cable service ' . Mr Stokes read this aide-memoire and used it in determining what he should put to Professor Fels at their meeting. 1430 Shortly before 3 August 1999, Mr North and Mr Stokes had a meeting to discuss Mr North's engagement on a longer term basis. Mr North sent a fax to Mr Stokes on 3 August 1999, outlining a proposed course of action on a number of issues. That agreement was amended in December 1999. The agreement, as amended, provided an annual fee ' for provision of consulting and strategic advisory services '. They gave assurances (naturally) to the ACCC and said that there were good commercial reasons (? ) why this would not happen. The ACCC advised in its decision not to oppose the move that [it] would "subsequently monitor the market behaviour" of News and PBL in relation to program rights. However the ACCC would need some HARD EVIDENCE (as discussed in my aide memoire for that meeting) that News, PBL, Telstra or other parties are colluding to take those rights from us. We need to put together a paper trail of any correspondence, affidavits of conversations etc'. Thus at least 16 months before the AFL finally awarded the AFL broadcasting rights to News, Mr Stokes had been advised of the need to gather evidence in support of a complaint to be made to the ACCC about anti-competitive conduct by News, PBL and Telstra. 1433 In August 1999, Mr North prepared a document entitled ' Seven Network Strategic Objectives '. The document dealt, among other matters, with the AFL broadcasting rights, access issues, the anti-siphoning regime and the Olympics channels. Revised Declaration expected to be announced by ACCC in week beginning 23/8. Following further advice from Cassells, ACCC, obtain supporting legal advices on key points of law to support the case for access ... e.g. validity of initial declaration and status of revision, legal status of purported 23/9/96 exclusivity contract. The letter stated that the request was made to enable Seven to provide three pay television broadcasting services. One service was to commence no later than 13 September 1999 and was to be supplied to subscribers on an ongoing basis. The two remaining services were to operate from 13 September 2000 to 2 October 2000, in order to provide coverage of the Sydney Olympic Games. The letter also sought billing information in connection with matters associated with the supply of broadcasting services, together with the use of ' conditional-access equipment '. 1436 The letter sought a response from Foxtel by 8 September 1999. Although drafted by Seven's solicitors, the letter was signed by Mr Wood. This appears to have been pursuant to Mr North's strategy of having Seven sign the letter in order to ' retain the semblance of a genuine attempt at reconciliation '. 1437 On 30 August 1999, Seven made further requests to Telstra Multimedia and to Foxtel for access to the Telstra Cable. The requests were said to be made for the purpose of providing three pay television services on the basis previously outlined. On the same day, TARBS made a further request for 16 additional channels, having originally requested eight channels in 1998. 1438 Seven made further requests for access on 3 and 8 September 1999. These were in substantially the same terms as the previous requests, but were made in the event that earlier requests had not been validly made. This was said to confirm the ACCC's earlier view, outlined in its June 1999 draft report, that it should declare such a service. The ACCC said the declaration would promote competition for retail pay television services and was in the long-term interests of consumers. The ACCC decided, however, not to declare a technology neutral pay television access service, which would also have applied to digital broadcasting over cable. This decision was said to reflect the fact that the deployment of digital technology and services was at an early stage. 1440 The ACCC published a detailed report relating to its decision to declare the analogue subscription television broadcast service. The declaration was gazetted on 8 September 1999. So are they proposing that we tell them where the customers are and they will sell a service that we will then bill?? Seven wants C7 to be carried as a channel on Foxtel. They are not looking for separate access to the HFC network. They just see this as a way to push their way in . They plan to send Telstra/Seven a separate term sheet on C7 which will offer Foxtel a price that is lower than Fox Sports price by a certain percentage, say 30%. This will make for an interesting discussion at the Foxtel Board meeting. Seven wants the Olympics to be carried as a special Pay per View on Tier channel on Foxtel. In my view, this should be very doable as Foxtel would not have to bear any short term cost burden. Query what PBL and News will say here. Peter [Gammell] says that they told [Minister] Alston that the issue was not Telstra's fault and they saw Telstra as cooperative here. Peter thinks that Fels got this one wrong, but ... that it could still be helpful to them'. (Emphasis added. Mr Moriarty recorded that Telstra had been pressing at Foxtel Management board meetings for Foxtel to seriously consider C7, but News and PBL ' are emphatically opposed '. He considered that the legal position was ' very clear cut '. The legislation had grandfathered the entitlement of network owners to enter exclusive content deals so that the rights of the Foxtel Partnership and its ' shareholders ' were protected. They want to be on the Foxtel service. In other words, they do not want to acquire their own customers, bill them, etc. They want Foxtel to do so. And ... as Gerry [Moriarty] correctly says ... News and PBL, and to a lesser extent, Foxtel management do not want to take C7. He claims that he told Alston this. He therefore does not want to give C7 any leverage with the AFL to keep it. Seven knows this to [sic] so ... it is likely to get difficult'. Mr Stokes said it was his strong view that the Telstra Cable was a public asset and exclusivity of use was intended to be short-term. He urged the Government to pursue any avenues available to it to ensure that Telstra complied ' with the letter and the spirit of the telecommunications access regime '. 1446 Mr Mockridge of Foxtel Management and Mr Rizzo of Telstra exchanged communications between 8 and 10 September 1999. Mr Mockridge complained of public comments by Telstra to the effect that it was open to commercial negotiations with parties concerning access to pay television. Mr Rizzo replied that the ACCC's declaration had placed Telstra in a difficult position. In discussions regarding access, Telstra has consistently maintained that our agreement with FOXTEL constrains Telstra from unilaterally offering access to the network for the provision of pay TV services, and that any decision regarding new content on FOXTEL rests with the FOXTEL Board and management'. However, Telstra Multimedia said that it would consider the issues further when it had the opportunity to do so. 1448 Seven responded to Foxtel Management's rejection on 10 September 1999. The letter stated that Seven did not accept Foxtel's protected contractual right contention and sought particulars of Foxtel's claim. Mr Mockridge replied on 13 September 1999, repeating the contention that Foxtel would be deprived of its protected contractual right if Telstra Multimedia were to grant cable access to a third party. He also asserted that Telstra Multimedia was precluded by its contractual obligations to Foxtel from acceding to Seven's access request. Mr Wood responded to Mr Mockridge's letter on 15 September 1999, disagreeing with Foxtel's assertions. 1449 On 17 September 1999, the ACCC wrote to Telstra expressing the view that the Telstra Cable was a ' declared service ' and asking whether Telstra proposed to accede to the requests for access that had been made by Seven and TARBS. The letter recorded that the ACCC had received copies of correspondence directed to Telstra Multimedia. 1450 Telstra responded to the ACCC's letter of 17 September 1999 on 24 September 1999. Telstra aligned itself with Foxtel Management's contentions in the legal proceedings that, by then, had been instituted. FOXTEL has been advised that the application would have reasonable prospects of success. The FOXTEL Partners, FOXTEL and Telstra Multimedia have received several access requests from Seven and TARBS. FOXTEL has responded to those requests on the basis that it is not an access provider and in any event any grant of access would deprive FOXTEL of its protected contractual right'. The CEO indicated that the application would be in the name of FOXTEL only as Telstra were unwilling to join the proceedings at this stage, although FOXTEL was receiving good co-operation from Telstra's legal team on the matter. In October 1999, Foxtel Management instituted separate proceedings under s 39B(1A) of the Judiciary Act 1903 (Cth), challenging the validity of the ACCC Deeming Statement that had been made in June 1997. These proceedings, including cross-claims, were heard together by Wilcox J. His Honour also dealt with a claim by Foxtel Management and Foxtel Cable that neither was a carrier or carrier service provider within Pt XIC of the TP Act . 1454 On 23 September 1999, C7 commenced its own proceedings in the Federal Court, seeking a declaration that Foxtel Management did not have a protected contractual right for the purposes of Pt XIC of the TP Act . These proceedings were heard by Tamberlin J. On 27 March 2000, Tamberlin J delivered a judgment holding that there was no relevant protected contractual right: Seven Cable Television Pty Ltd v Telstra Corporation Ltd (2000) 171 ALR 89. On 31 March 2000, his Honour made declarations to give effect to his judgment: see Foxtel Management Pty Ltd v Australian Competition and Consumer Commission (2000) 173 ALR 362, at 369 [10], per Wilcox J, where the making of the declarations is noted. 1455 The ' public law ' aspects of the disputes were determined by Wilcox J in a judgment delivered on 8 May 2000. In substance, his Honour held that Foxtel Management failed in the proceedings, although he upheld some of its individual contentions. Wilcox J declared that the ACCC's declaration under s 152AL(3) of the TP Act was valid and effective in law: see Foxtel Management v ACCC 173 ALR, at 425. The notice formally invoked the ACCC's arbitral power under Pt XIC of the TP Act. Between October and December 1999, Telstra Multimedia, Foxtel Management and TARBS made submissions on a variety of issues. In August 2000, the arbitration was still continuing. 1458 Seven did not take any steps at this stage to initiate the arbitration process in relation to its access dispute with Telstra Multimedia or Foxtel. Seven in fact did not notify a dispute with the ACCC until late August 2000, after the Full Court had dismissed appeals from the judgments of Tamberlin and Wilcox JJ. The letter expressed the hope that the parties could work cooperatively ' rather than through the arbitration processes that are available to us '. Seven sent a similar letter to Foxtel Management and the Foxtel partners on 30 March 2000. 1460 On 31 March 2000, Foxtel Management was granted leave to appeal against the judgment of Tamberlin J. Telstra Multimedia and was granted leave to appeal on 3 April 2000. 1461 On 3 April 2000, Mr Blomfield confirmed to Mr Wood that Foxtel remained interested in the Olympic channels. However, he advised that Foxtel's position in relation to the issue of carriage of C7 remained as he had previously outlined and, in particular, that the board had decided that Foxtel would pursue the AFL pay television rights directly from the AFL when they became available. Mr Blomfield sent a second letter on the same day to Mr Wood stating that, in view of the appeal, there was no point in discussing the terms and conditions on which Seven would be given access to the requested services. 1462 On 5 April 2000, Mr Blomfield (who had succeeded Mr Mockridge as CEO of Foxtel Management in February 2000) met with Mr Stokes and Mr Gammell. Mr Blomfield made it clear that Foxtel wished to acquire the Olympic channels, but not C7. Seven has written to you twice suggesting that it was imperative that negotiations between our organisations commence immediately and proceed expeditiously. That seems to us to be a reasonable and sensible approach in the circumstances and we do not see how this can possibly disadvantage Foxtel. Foxtel's approach being one of a pattern of delay, is clearly designed to damage Seven. With the Olympics fast approaching it is imperative that the practical and commercial aspects of access by Seven, be resolved as soon as possible. Lest there be any misunderstandings as to our position, let me make it clear that we would rather do a commercial deal than proceed down the road of forced access under the Trade Practices Act , but we will proceed down that road, and soon, if we are compelled to'. Keeping Seven's pay services off the cable obviously enhances Foxtel's competitive position and damages Seven's competitive position. Foxtel does not have a problem carrying the FoxSport [sic] channel, presumably because there are common interests and associations between the owners of Foxtel and FoxSport, and FoxSport is not therefore regarded as a competitive threat. I would like to be confident that Foxtel's refusal to discuss access is not evidence of a conspiracy amongst "Foxtel friends and family" to deny access to people Foxtel regards as outsiders, when Foxtel appears more than happy to provide access to "insiders" like FoxSport. Seven will of course seek to recover its losses through the Courts against Foxtel and Telstra. However, my preference is to resolve this amicably'. This evidence is plainly inconsistent with the terms of Mr Wood's letter of 12 May 2000 and is difficult to reconcile with Mr Stokes' own letter. Mr Stokes ultimately acknowledged that he knew in May 2000 that Seven could initiate an arbitration immediately if it chose to do so. 1468 The strong likelihood is that Mr Stokes knew that Seven could have taken that step after the ACCC had made its declaration in relation to the Telstra Cable, even though Telstra Multimedia and Foxtel made it clear at that time that they did not regard the declaration as valid. No doubt an issue might have arisen as to how far the arbitration could proceed while the litigation challenging the validity of the declaration was pending. However, insofar as Mr Stokes was suggesting that at an earlier stage that he thought that the arbitration had to await the outcome of the challenge to the validity of the ACCC's declaration or of the proceedings addressing whether the Foxtel Partnership could rely on a ' protected contractual right ', I do not accept that evidence. The correspondence raised issues concerning Foxtel and C7, the Olympics and the access dispute. The exchanges have been set out in Chapter 7 ([801]-[805]). The note referred to the Full Court judgments and pointed out that the management of Foxtel had been requested at the April 2000 board meeting to prepare a contingency plan in relation to C7's access claim to the Telstra Cable and Foxtel's STUs (set top units). 1472 On 23 August 2000, C7 wrote to Telstra Multimedia and the Foxtel partners asking for immediate discussions on the terms of C7's access to the Telstra Cable. The letters stated that, despite the history of delays in Telstra and Foxtel, C7 hoped for a cooperative approach rather than having to resort to the arbitral processes available to it. As FOXTEL is under no obligation to include C7 as part of its channel line-up, we assume that you are referring to C7 commencing a competitive retail pay television service which is "carried" on Telstra's network, with access to FOXTEL's STUs. Subject to the possibility of FOXTEL making an application for special leave to appeal to the High Court in relation to any of the findings of the Full Federal Court, FOXTEL is willing to give C7 access to its STUs. 1475 On 29 August 2000, C7 made further access requests, seeking six additional channels, taking the total requested to eight full-time channels and two Olympic channels. Foxtel Management replied on 7 September 2000, asserting that it did not have available capacity and thus was not obliged to supply C7 with the services it had requested. Mr Philip discussed his concerns about the ACCC's draft with Mr Falloon and they agreed to seek a meeting with the ACCC. That meeting took place on 8 February 2001 and was attended by Professor Fels and other senior officers of the ACCC. It appears that during that meeting the ACCC suggested that one way forward was for Foxtel to make offers to C7 and TARBS for carriage of their channels in return for C7 dropping the access claim. Mr Philip and others then worked on drafting offers to C7 and TARBS. 1480 On 21 February 2001, Mr Blomfield wrote to Mr Stokes on a confidential basis attaching a proposal for his consideration. A copy of the proposal was, however, sent to the ACCC. His concerns related to the term of 2 years and the genre restrictions. I impressed upon him that I would work with him on the genre issue once he provided me with some parameters. Since then, I have spoken to Kerry almost daily and he is still working on the channel genres. In our call yesterday, Kerry said he would come back to me today on his timing'. The first was a bare rejection of Foxtel's offer. If access is our objective then Foxtel MUST be more amenable to a negotiated solution prior to a final ACCC determination in order to avoid the latter'. The form of the response may be explained by the fact that Seven's lawyers participated in the discussions within Seven. There is no other driver in reaching our decision and especially not a damages claim. No reference was made to any alleged abuse of market power. However, on 26 March 2001, Mr Gammell commented that the price suggested by The Movie Network was too high. C7's discussions with The Movie Network and the Disney Channel did not produce any agreements. 1486 A ' Corporate Issues Review ' prepared within Seven on 10 April 2001 noted that the ACCC's interim determination had not provided access to Foxtel's call centre, subscriber management system or billing centre. Mr Gammell's evidence was that he did not believe that C7 could recoup sufficient revenue from subscribers to cover the variable and fixed costs of establishing and operating a pay television service by supplying two channels only at the prices specified by the ACCC. For that reason, together with uncertainty about access to Foxtel's STUs and the future allocation of sports broadcasting rights, he said that he did not recommend that C7 should seek retail access to Foxtel. 1487 On 27 March 2001, Mr North reported on discussions he had held with the ACCC. It appears that the impetus for work within Seven on a business plan relating to retail access came from the ACCC's comments to Mr North. 1490 Mr Gammell wrote to Mr Wise and others on 28 March 2001, suggesting that Seven should develop a working model to test out the ' economic dynamics for a package of 4 channels: C7, ESPN and 2 MOVIE channels '. Mr Wood's reply proposed that research should be commissioned on the pricing options. We are running out of time to get on Foxtel with C7 as a driver. While this may seem a problem I think we never had a product that could fly in the market. The product fundamentally changes at the end of September. To go to the market and drive a product we need much more than this. [Our] second channel for instance only has overflow product. [The] result would have been poor both in terms of financials and credibility'. 1492 On 1 June 2001, Mr Wise informed the Seven Network board that the C7 business needed a base revenue stream to be viable. Be that as it may, Seven pursued the issue until February 2002, when the ACCC decided that no action should be taken on C7's request to vary the interim determination. He denied that the email reflected his intention to continue the access case solely for forensic advantage, and not with a view to actually using the cable for retail access. Mr Stokes, however, understood the email as saying that there was no commercial advantage for C7's business in exploiting access if Seven succeeded in ' winning ' its case. Despite Mr Gammell's denial, that is clearly the message he intended to convey by the email. 1497 On about 9 February 2002, Seven's solicitors prepared a ' withdrawal options ' paper relating to C7's access claim to the Telstra Cable. In an email of 23 February 2002 to Mr Wise, Mr Jarman, an in-house lawyer, observed that ' [s]hort term it is clear that the cost of just maintaining the access case is prohibitive '. Mr Jarman pointed out that Seven's long-term plans might be assisted by access to the cable, but the ' [p]roblem is that this long term ideal does not match the short term problems '. This brought the access arbitration to an end. 11 EVENTS RELATING TO THE TERMINATION OF THE C7-OPTUS CSA AND ENTRY INTO THE FOXTEL-OPTUS CSA [1499] 11.1 Background: Licensing of C7 to Optus Vision [1501] 11.1.1 C7 Negotiates with Optus [1501] 11.1.2 C7-Optus CSA [1505] 11.1.3 CWO Deed Poll [1506] 11.2 Background: Optus and Pay Television [1507] 11.2.1 CMM's Woes [1507] 11.2.2 Optus Complains to the ACCC [1515] 11.2.3 The SingTel Implementation Agreement [1518] 11.2.4 Optus' Marketing Campaign [1520] 11.2.5 Responses [1525] 11.2.6 Optus' Position in 2001 [1528] 11.3 Optus Attempts to Ascertain the Termination Date [1529] 11.3.1 Optus Obtains Legal Advice [1529] 11.3.2 Optus and C7 Correspond [1533] 11.3.3 Optus Obtains Further Advice [1537] 11.3.4 Mr Fletcher's Pay TV End Game Memorandum [1540] 11.4 Seven Contemplates a Post-AFL Broadcasting Rights World [1544] 11.5 Optus Considers its Strategy [1550] 11.5.1 Options Are Canvassed [1550] 11.5.2 Optus Revives the Fox Sports Issue [1553] 11.5.3 Fox Sports Provides Optus with an Indicative Term Sheet: August 2001 [1558] 11.6 Optus Engages McKinsey to Review CMM [1562] 11.7 Negotiations between C7 and Optus: July−September 2001 [1567] 11.7.1 A Three Year Supply Contract? 1500 The Chapter recounts events occurring after the allocation of the AFL broadcasting rights and the NRL pay television rights in late 2000 and early 2001 although some transactions, such as the allocation of the AFL broadcasting rights in 2005, are explained elsewhere in the judgment. The Chapter also includes background material relating to the C7-Optus CSA and Optus' problems as a retail provider of pay television services. In Optus' case, Seven proposed the supply of a single sports channel, branded as ' Seven's Super Sport ', operating 24 hours a day. Seven would telecast NRL matches on a separate channel, subject to the rights being made available by Optus, and from time to time would make available an overflow channel. The fee in the first year was to be $10.00 pspm (per subscriber per month), based on an MSG (minimum subscriber guarantee) of 160,000 subscribers. There was to be a reduction of $1.00 pspm for every Foxtel subscriber to whom the channel was sold. As Mr Gammell confirmed in evidence, this was designed to reduce the effective MSG to $9.00 pspm. As News points out in its submissions, the effect of the MSGs included in Seven's proposals to Foxtel and Optus (assuming both proposals were accepted) was to guarantee revenue of at least $46 million in the first year, against a projected cost base for C7 of $40 million for that year. 1502 Shortly after making these proposals, Seven prepared a business plan which contemplated supplying a sports channel to Austar on a tier at $4.00 pspm. The plan also assumed subscriber revenue from Optus of $30 million in the first year, adjusted for inflation thereafter. This reflected Mr Gammell's view that Seven could not proceed with the sports channel business unless it could secure an MSG covering the bulk of the business' projected costs over a 10 year period. Mr Gammell agreed in evidence that the anticipated cost base of $40 million had been subsequently reduced ' to ensure that Seven's costs of producing the channel were substantially underwritten '. 1503 On 10 June 1998, Seven's solicitors sent Optus an annotated version of a draft Channel and Production Supply Agreement. The draft contemplated that Optus would pay an annual fee of $30 million (subject to adjustments). It also contemplated that Optus could sub-license the channel to any party other than Foxtel, but for no more than $5.00 pspm (increased to $7.00 pspm in the final agreement). Optus was entitled to sub-license the channel on a tier without any MSG. 1504 At Seven Network's board meeting of 12 June 1998, Mr Gammell reported that Seven was still negotiating with the shareholders of SportsVision to remove the exclusivity of its sporting rights. He advised that the object was to develop and package Seven's own pay television sports service and to this end Optus was expected to provide an MSG of $30 million per annum. As Mr Gammell said in his evidence, he was confident that Optus would agree to the MSG because it had no access to Fox Sports or any other channel with Australian sports content. The effect of the CWO Deed Poll was that SingTel Optus guaranteed the performance by Optus Vision of its obligations under the C7-Optus CSA and indemnified C7 and its related bodies against any loss in respect of a breach of those obligations by Optus Vision (cll 2, 3). The channels it obtained from SportsVision on an exclusive basis were ' Sports Australia 1 ', ' Sports Australia 2 ', ' ESPN ' and ' Sports AFL Channel '. In June 1998, Optus Vision entered a direct contract with ESPN, the largest United States subscription television sports broadcaster. The contract provided for a payment on a pspm basis, but was not subject to an MSG. Shortly before SportsVision was wound up in July 1998, Optus executed the C7-Optus CSA, the terms of which have been summarised above. 1508 Optus also had the benefit of an exclusive licence of premium movie channels known as ' Movie One ' and ' Movie Extra ', both of which featured first run titles. These channels were supplied by Movie Vision, a wholly owned subsidiary of Optus Vision, which licensed the movies from Hollywood studios or distributors and packaged them into the channels. These arrangements were subject to MSGs. In August 1999, Movie Vision was replaced as a supplier of movie channels with effect from 1 April 1999 by a third party, acting as agent for several Hollywood studios or distributors. 1509 Optus obtained content from a variety of other sources. For example, it took ' The Disney Channel ' from Buena Vista International Inc; ' CNN ' and the ' Cartoon Network ' from Turner International; and the general entertainment channel ' Oh! ' from Warner Bros. In 2001 and in 2002 prior to the Foxtel-Optus CSA, Optus carried 37 channels. 1510 Mr Christopher Anderson was appointed the CEO of Optus in 1997, following the merger of SingTel Optus and Optus Vision. From that time, solving the problems flowing from the losses incurred by CMM (Consumer and Multimedia Division), including those incurred by Optus' pay television business, was one of the main preoccupations of the merged company. From Mr Anderson's perspective, pay television was principally a means of attracting customers onto the Optus network in order to sell more profitable services such as telephony and internet connection. 1511 Management considered a number of options to address the losses incurred by CMM, including the sale of CMM's business operations; shutting down Optus' pay television network; merging CMM's business with Austar; and terminating the pay television business. Despite efforts over some years to sell CMM's business, no potential purchaser made offers that Optus considered to be acceptable. 1512 The extent of the problems besetting CMM is shown by its financial performance. It reported negative EBITDA (earnings before interest, tax, depreciation and amortisation) for the years ended 31 March 1999 (-$109 million), 2000 (-$125 million) and 2001 (-$47 million). According to Mr Anderson, whose evidence I accept, the cash drain during that period was some $300 to $350 million per annum. Of that figure, according to Mr Lee, whose evidence I also accept, some $200 million represented expenditure on capital items such as customer access units, although about $90 million was apparently spent on a project (iDTV) that was not pursued. The lack of profitability of the pay television business contributed materially to CMM's poor financial performance. 1513 As Mr Lee explained, one of CMM's biggest problems was the MSGs that applied to Optus' long-term contracts with the Hollywood studios for the provision of pay television content. Under those arrangements, Optus was required to pay very large sums (amounting to more than $100 million in each of the years 2002/2003, 2003/2004 and 2004/2005). As the long-term studio contracts expired, the minimum annual payments Optus was required to make decreased. 1514 The difficulties experienced by CMM are also illustrated by its relatively poor penetration of the potential customer base for pay television services. An Optus Vision business plan prepared in December 1994 projected that Optus would have approximately 273,000 subscribers by June 1997 and approximately 542,000 by June 1998. The actual numbers were approximately 179,000 in June 1997 and only 177,000 in June 1998. A graph prepared on the basis of subscriber numbers shows the relative performance of each of the major retail pay television platforms from 1996 until October 2002. It will be seen from the graph that Optus never exceeded 266,000 subscribers (June 2002), compared with Foxtel's base of nearly 800,000 at the same time. 1516 On the same date, Mr Keely wrote to the Minister for Communications. They are unlikely to supply this key programming to other operators on fair terms'. Mr Lee, the President and CEO of SingTel, was directly involved in the acquisition, which was finalised on 30 August 2001. 1519 At the time SingTel's intention to offer was made public on 26 March 2001, Mr Lee was well aware that CMM, in particular its pay television business, was making losses and consequently was a drain on Optus' cash-flow. Mr Lee's (and SingTel's) intention and preference at that time was to attempt to create a viable business model for CMM. However, SingTel's offer documentation indicated that SingTel would undertake a strategic review of CMM which would not preclude shutting down the business. When Mr Ebeid became closely involved in Optus' pay television activities in April 2001, Optus had been engaged in a significant marketing campaign for several months. Some 80 per cent of the new subscribers took bundled telephony products. Mr Ebeid also agreed that, in his view, Optus had increased the perception in the first half of 2001 that it was better value than Foxtel. He said that Optus had two objectives: one was to drive Optus' telephony subscribers (which was what Optus really cared about); the other was that Optus was to trial interactive television and to increase subscriber numbers for a possible sale of CMM. 1522 Mr Ebeid also said that he did not believe at the time that pay television would be profitable for Optus in the short term, although he agreed that increasing subscriber numbers would drive the sale of other products of CMM and thus improve its EBITDA position. --- I don't know if I would use the words "a more vigorous competitor", given that we were selling the product for considerably less in terms of the entry pricing. I think anybody could have increased the subscribers, if you were giving the product away a lot cheaper. So a vigorous competitor, to me, would be somebody who would be competing pretty close on some of those things'. The price had been $19.95 pspm from 8 October 2000 and was increased to $24.95 pspm on 1 October 2001. Foxtel's basic cable package was priced at $37.95 pspm from 1 July 2000 to 1 April 2003. The content of each package varied considerably. Optus' Access Package, for example, did not include comprehensive sports coverage, although it did include ' Sky Racing ' and certain other sporting content. 1524 In addition, the period of growth in Optus' subscribers occurred at a time when free telephone lines were incorporated into a package which included pay television. Free line rental was withdrawn on 1 April 2002 as part of the package because it was considered to be uneconomic. The strategy was adopted during a time when the company and the CMM division was sought to be sold and there was a focus on interactive Digital television. On 1 June 2001, Mr Philip reported to Mr Lachlan Murdoch that Telstra was fearful that Optus might be able to match and pass Foxtel's subscriber numbers and end up getting a cheaper per subscriber average price. All present agreed that ' if they [Optus] sustain it for another quarter we need to be able to react '. Mr Macourt reported to Mr Murdoch on the representatives' meeting the following day. This growth is the first in several years and seem attributable to the bundled offer of telephony, internet and PayTV. We don't know how much of this is attributable to a $22 entry price package i.e. no movies or sport'. This is against our current share of 68%. Therefore, we are actually losing share in the markets where we compete. I think we have clearly outlined our proposed solution to a more competitive product. This is true as far as it goes, but account must be taken of CMM's EBITDA of -$125 million in 2000. • Seven refers to a CMM document prepared in September 2001 which reported that CMM was ' trading strongly ' and that the underlying ' growth ' in EBITDA was 25 to 30 per cent (the latter presumably being a reference to diminishing losses). The summary suggested that CMM would surpass $1 billion revenue and be EBITDA positive by 2001-2002. However, the document also stated that the ' structure of the industry must be resolved, or the business will remain unprofitable (EBIT) '. It noted that at existing subscriber levels it was necessary to achieve an increase in ARPU (average revenue per unit) of $22.00 ' to be EBIT breakeven '. Moreover, Mr Ebeid disagreed that the growth in revenue and improvement in EBITDA were driven substantially by increases in pay television subscribers. Mr Ebeid acknowledged that an increase in subscribers would lead to an increase in bundling and thus the take-up of other Optus products. He also accepted that there had been an increase in subscribers of some 70,000 in the eight months up to February 2002. But, as he said, the increase in numbers had only increased the share of revenue derived from pay television from about 11 to 12 per cent, to about 14 per cent. On 25 January 2001, Seven decided not to exercise its right to accept the last offer made by the AFL under the First and Last Deed. 1530 Early in 2001, Mr Ebeid, the Director of Commercial Operations of CMM, formed the view that, given C7's loss of the AFL pay television rights, Optus Vision should terminate the C7-Optus CSA pursuant to its contractual right to do so. Optus' concern was that the key attraction of the C7 channels was their AFL content and that the annual fee of $30 million, adjusted for inflation, was commercially insupportable if the C7 channels no longer had AFL content. 1531 On 25 January 2001, Mr Hutley SC (who ultimately appeared for News in these proceedings) gave advice in conference to Optus as to the termination date available to Optus Vision under the C7-Optus CSA. On this interpretation, Optus Vision would cease to have the AFL pay television rights at the end of the 2001 season. The letter asked whether C7 agreed with this view. The letter appears to have been framed in this way because of concern within Optus that the right to terminate might have arisen as early as December 2000 and that delay in terminating could amount to a waiver of the right. On 5 February 2001, C7 said that it was considering its position. For this reason until the first day of the 2002 AFL Season Seven will still have, and will not have lost, the AFL rights, and accordingly Optus' right of termination under clause 16.2(a) will only arise on the first day of the 2002 AFL season'. (Emphasis added. We do not know this date but if Mr Wood's letter accurately reflects the position, it is a date in February 2002'. Of course, Optus Vision not being privy to this agreement is not aware of its precise terms. For present purposes we assume that the rights that Seven has in relation to the AFL games, or "Spectacles" is as set out in Mr Wood's letter. Whilst the terms of any agreement between AFL and Seven in relation to the AFL television rights do not of themselves determine the position between Optus Vision and Seven under the C7 Agreement, they are critically important because the contractual trigger to Optus Vision's right of termination is Seven's loss of the pay television right for the AFL games. This event is obviously solely governed by the arrangements between Seven and the AFL'. That message forms part of our underlying strategy --- of maintaining an independent Optus TV and growing it through the introduction of digital TV. Our strategy should be to achieve a BSkyB type restructure of the Australian pay TV industry, with Optus ending up with a share in a profitable pay TV operator delivered over a number of networks. Our message to Government should be that this will deliver consumer benefits, and Government should support it rather than blocking it as a substantial lessening of competition. We are the smallest of the three operators. We have the weakest content. The experience of the British pay TV industry is instructive. As separate operators, Sky and British Satellite Broadcasting each lost money. As a merged entity, they have made money'. The benefits would include the monopsony purchasing power available to a single operator; a solution to Optus' ' MSG problem '; and an improved margin on Optus' pay television customers. Mr Fletcher's view was that News and PBL might be persuaded to support the arrangement, but Telstra would only do so if its ' arm were twisted '. This is where the Government came in. 1543 Mr Fletcher's memorandum was the first suggestion in 2001 of a content supply agreement of the kind ultimately entered into in March 2002. However, as has been seen in Chapter 6, there had been discussions as far back as 1997 about a ' Content Co ' which would have involved Foxtel and Optus sharing pay television content. 1545 A document prepared by Mr Jarman of Seven on 10 April 2001 referred to ' the proposed litigation program against the Rights Consortium '. At about this time, Seven was seeking or had obtained legal advice as to the possibilities of a claim against the consortium covering, among other things, the possible closure of C7. Mr Stokes said in evidence that his view at this time was that the continuation of C7 on a retail access basis, but without AFL pay television rights, was likely to be a loss-making exercise. 1546 Mr Wood prepared and Mr Wise submitted a ' C7-Recommended Strategy ' paper for the Seven Network board meeting of 1 June 2001. C7's ' broad objectives ' were said to include developing ' a viable business plan for C7 after losing the AFL as a driver '. The paper acknowledged the difficulties facing C7 without the AFL pay television rights and noted that the C7-Optus CSA could be terminated, while the Austar contract was unlikely to be renewed. It suggested that ' Optus could provide the key for unlocking C7's potential ', through a comprehensive deal whereby C7 would provide its sports channel and take over production of the channels produced by Optus. It would provide our greatest opportunity to develop a viable plan for Foxtel cable access, with the ability to get to purely incremental costs and revenues' . On a commercial basis I believe it is possible to secure this deal, although it would see us exposed in terms of costs until we had access on Foxtel. However, what impact our FIRB [Foreign Investment Review Board] actions have on the final outcome of this is unknown'. The section dealing with subscription television addressed the question ' where is C7 with the loss of the AFL rights? ' The ' key assumptions ' included ' [c]lose at end of February at expiration of Optus agreement '. The paper recorded that any decisions would be ' subject to viable business plans approved by the Board '. The budget for 2001/2002 showed that a loss of $4.4 million (EBIT) was estimated if C7 closed at the end of February 2002. 1549 The Seven Network board meeting of 29 June 2001 discussed the budget paper. In fact, some thought must have been given earlier to these issues within Optus, since advice had already been sought as to the date a right to terminate would arise. Be that as it may, in May 2001, at about the time Mr Fletcher prepared his ' end game ' memorandum, Optus commissioned an assessment from Dangar Research Group Pty Ltd of the impact of potential changes to Optus' sports programming. OTV subs and intenders are only slightly less interested than Foxtel subs and intenders. Of those with any interest in sport, more than 85% consider either the AFL or the NRL as at least "reasonably" important, translating to 60% of the market overall. Lose one of these: 5% --- 12% negative impact. Lose both: 10% − 21% negative impact. A "Super Sports" package could be expected to bring a net increase of 8% − 17%'. Optus carries no sports (apart from ESPN and Sky Racing)'. 1552 It is clear that Mr Anderson and Mr George of Optus each considered that a sports service was essential for Optus to remain viable as a pay television platform. He mentioned to Dr Switkowski that Optus would like to acquire Fox Sports. Mr Anderson emphasised that Optus had no interest in pay television as such and was pursuing ' only the bundling opportunity '. However, Mr Anderson also said that Optus needed to enter long-term supply contracts before the end of 2001 and wanted an arrangement with Fox Sports. And why create more value in [Fox Sports] when we are thinking of equity at a cheap price? On 4 July 2001, Mr Fletcher suggested to his colleagues that Mr Blomfield of Foxtel should be informed that Optus would have no hesitation in raising the issue with the AFL if Foxtel did not offer Optus reasonable commercial terms. Mr Fletcher made detailed comments in internal Optus memoranda on how the phrase ' reasonable commercial terms ' should be interpreted, pointing out that the ACCC's approach to the allocation of costs was ' instructive '. 1556 On 20 July 2001, Dr Switkowski advised Mr Anderson that ' Telstra was still considering it [Optus' proposal] --- but not at this stage '. Mr Anderson suggested that Optus should make contact with Mr Chisholm in his new role as Chairman of Foxtel, particularly as litigation between Telstra and Optus (unrelated to the present case) had been settled. 1557 Accordingly, on 9 August 2001, Mr Anderson telephoned Mr Chisholm and reiterated Optus' interest in Fox Sports. Mr Chisholm told Mr Anderson that he thought that Telstra's reluctance to deal with Optus was ' wrong ' and that he would soon make his views known on this issue. In particular, Mr Ebeid and Mr Keely had discussions with Mr Malone of Fox Sports on the subject. 1559 On 20 August 2001, as a result of these discussions, Mr Malone prepared an unofficial draft term sheet, which was expressed to be subject to Telstra's approval. The term sheet provided for the supply of two full-time channels to Optus for a 10 year period from 1 October 2001. The base price for residential subscribers was to be US$4.75 pspm. Volume discount prices of US$3.25 pspm were to apply for residential subscribers in excess of 250,000 and of US$3.00 pspm in excess of 800,000. For each year in which the channels included NRL coverage a ' Flagfall Price ' of $9.225 million per annum was payable. All prices were subject to CPI increases and GST. There was to be a monthly MSG of 100,000 subscribers. 1560 The draft term sheet was discussed on 21 August 2001 at a meeting between Mr Ebeid of Optus and Messrs Malone and Marquard of Fox Sports. However, we would like to expand our supply arrangement with you beyond simply NRL programming. We are currently formulating a proposal for the supply of the Fox Sports channels to Optus, but we first have some internal matters to finalise'. Mr Ebeid indicated that Optus needed to know where it stood by the end of August 2001. Mr Malone informed Mr Ebeid in early September 2001 that approval from Telstra for such an arrangement was unlikely and that there was no prospect of a deal. At this time, Mr Ebeid was operating on the assumption that if Optus Vision intended to terminate the C7-Optus CSA, it would have to do so before 29 September 2001, the scheduled date of the 2001 AFL Grand Final. On 21 June 2001, a representative of McKinsey outlined the ' proposed scope of the strategic review of CMM ' to SingTel Optus' Integration Committee. Mr Lee and Mr Anderson, among others, participated in this meeting. 1563 Mr Hope of SingTel provided a report on the progress of the review to the Integration Committee on 12 July 2001. He reported that the ' [p]reliminary findings indicated that the economics of pay TV were not favourable '. 1564 On 30 July 2001, McKinsey made a presentation which identified a number of options for consideration, including ' consolidating industry structure and gaining cost savings ... through an Austar ... arrangement ' and falling back to a telephony-only business. Nonetheless Optus was said to be ' in a weak strategic position across a range of key dimensions of the Pay TV business '. The document attributed the increase in subscribers primarily to ' new value bundles ', while ' improved marketing ' was the initiative that had reduced churn. 1565 On 22 August 2001, McKinsey completed a discussion paper entitled ' CMM's Strategic Options '. The ' key messages ' included the view that CMM faced three fundamental problems: a relatively weak pay television position; a difficult industry structure (too many pay television players and excessive costs); and ' [u]nattractive off-network telephony economics '. Monthly revenue per subscriber was $47.00, while monthly costs were $109.00, leaving a gap of about $62.00 to break even on an EBIT basis or $52.00 on an EBITDA basis. Consequently running the business on an ' as is ' basis was unsustainable. The negotiations centred on C7 providing Optus with a ' low cost ' dedicated sports channel for three years from 1 March 2002. 1568 On 25 July 2001, a board meeting of i7 took place, attended by (among others) Messrs Gammell, Wise and Wood. (Emphasis added. I find that the minute accurately recorded what Mr Wise told the meeting. 1569 On 13 August 2001, Mr Ebeid sent an email to Mr Wood at C7, noting that Optus was ' nervous ' about a three year deal ' given current conditions '. Mr Wood responded almost immediately, stating that although he was happy to ' entertain a shorter term, C7 would require comfort as to tenure through guaranteed option terms '. (Emphasis added. The subjects discussed included the steps to be taken by C7 if it was unable to reach agreement with Optus Vision. three months with Optus and notify Austar. He said that the plan at that stage was not to dispute any notice of termination given by Optus Vision, but to negotiate with a view to having the notice take effect on 28 February 2002. Mr Wood anticipated that in these circumstances C7 would continue to supply its channel to Optus Vision until 28 February 2002 pursuant to the C7-Optus CSA, in which case there would be no exclusivity clause. On 24 August 2001, Ms Bean, Optus' Corporate Counsel, sought urgent advice as to Optus' rights to terminate the C7-Optus CSA. She asked whether Optus could terminate on the last day of the AFL season or whether it would have to wait until February 2002, as Seven had asserted. She also asked whether Seven could be compelled to provide a copy of the AFL-Seven Licence. The solicitors tended to the view that C7 would not ' lose ' its rights until the new holder exercised its rights. This was likely to be at the beginning of the 2002 pre-season, in February 2002. However, the solicitors advised that the terms of the AFL-Seven Licence ' could be decisive '. On the basis of our previous communications, including your letter of 1 May 2001, it would seem that the position adopted by you relies on the terms of the current agreement between Seven Network Limited and the AFL. Of course, we have not seen this agreement and therefore we cannot comment on its terms. Accordingly, we consider that the resolution of this issue would be greatly assisted if you would provide us with a copy of the relevant agreement between Seven Network Limited and the AFL. There was no evidence as to the advice, but C7 did not provide a copy of the agreement as Optus had requested. 1574 Mr Keely gave evidence that he regarded C7's refusal to provide a copy of the agreement as having placed Optus in a difficult position. If C7 was right in its assertion as to the earliest termination date, Optus would be in breach if it sought to terminate in October 2001. Mr Keely felt that Optus had to proceed on the assumption that C7 might well have been right. Mr Ebeid gave similar evidence. I accept their evidence. 1575 In an update for Mr Anderson of Optus on 30 August 2001, Mr Ebeid noted that the AFL and NRL seasons ended in the last week of September 2001. The covering email stated that C7 reserved its rights under the C7-Optus CSA. The term sheet provided that C7 would supply a 24 hour, seven day a week sports channel on a non-exclusive basis for inclusion in Optus' pay television program package. The term of the agreement was to be three years from 1 October 2001. The minimum licence fee was to be $17 million (plus GST) in the first year; $18 million in the second; and $19 million in the third. If the number of subscribers to the Optus platform exceeded 400,000, Optus had to pay $5.00 pspm plus GST for the next 300,000 subscribers and $3.00 pspm plus GST for any subscribers over 700,000. Optus had to ensure that the C7 channel would be available to subscribers to the basic tier and that no other sports channel was available on that tier. Optus was to grant C7 an option to acquire the business and assets of the ' Oh! ', ' Ovation ' and ' MTV ' channels produced by Optus on or before 28 February 2002, on terms to be determined. The term sheet recorded that the parties would seek to enter binding Heads of Agreement by Friday, 7 September 2001. 1577 The following day, 6 September 2001, Mr Ebeid reported to Mr Anderson on the status of negotiations with C7. Mr Ebeid said that ' we have achieved a good position ' and that the ' new deal essentially replaces and negates our current Supply agreement '. He noted that C7's option to purchase the three channels compiled in-house, if exercised, would ' get us out of the production game '. As you know we have extended the deadline to its limits. Doing this may also weaken our legal position of terminating the current agreement due to the loss of AFL. This is a real problem for C7 as the deal is effectively not binding until after board approval. They have no where [sic] to go, but have requested we do everything possible to execute this deal beforehand' . The revised draft term sheet provided that additional fees above the minimum would be payable if Optus subscribers exceeded 450,000. In that event, $4.25 pspm (plus GST) was payable for the next 300,000 subscribers and $3.00 pspm for any subscribers over 750,000. Optus could place C7 on the basic tier, as a sports package, or on the premium tier, provided that no other sports channel received more favourable treatment. C7 was to ensure a minimum of 50 hours each week of ' original programming '. I explained the Fox Sports position --- that we had one last chance to begin the rationalisation of [pay television] --- and that would be lost for at least another 3 years if we sign with C7. In a remarkably frank way he told me that the preponderance of opinion within Telstra (including the Telstra board) is that exclusive content is a competitive advantage for Telstra --- the implication being that the relatively modest share of Foxtel losses is money well spent for Telstra in terms of the damage done to us under the industry structure. 1581 On 7 September 2001, Mr Ebeid provided Mr Anderson with a draft ' Sports Update for SingTel '. This identified three sports options for 2002 and estimated the costs of each. Invest in the business, perhaps acquire Austar, launch satellite, push iDTV and seek a part of the undeniable retail telephony/internet/video profit pool that is almost solely the province of Telstra's'. One particular point on which he sought advice was why Optus could not get a one year deal from C7. Optus had the right to produce an NRL channel over the next 22 years at a likely cost of $21 million per annum. News and Foxtel were obliged under the contract with the AFL to sub-license to Optus on reasonable terms, at a likely cost of $20−$30 million per annum. C7 had offered to provide an all year sports channel but the price, at $17 million per annum, was unacceptable to Optus. Nonetheless, Mr Ebeid's recommendation to the Management Committee on 17 September 2001 was that Optus should approve the C7 deal. 1588 The SingTel Optus Executive Group met on 17 September 2001. The attendees included Mr Lee, the President and CEO of SingTel, Mr Anderson and a representative of McKinsey. The proposal for a merger with Austar became known within Optus as ' Project Emu ', while the resale of Foxtel's content on the Optus Service became known as ' Project Alchemy '. A third option, of shutting down the Optus pay television service, was regarded as a ' very difficult option to execute '. The options were to be reviewed on about 15 December 2001. However, he attended the Management Committee meeting shortly thereafter at which he made the recommendation already referred to. He was informed at the meeting of the Executive Group's decision. He was directed to continue paying the current licence fee of $2.8 million per month for three more months. 1591 In October 2001 Optus began discussions with Austar in relation to a possible merger. This development was consistent with the agreement reached at the Executive Group meeting of 17 September 2001 to explore Project Emu. On the flip side, if we don't sign with them in three months, then we will have to pay the difference between $2m and the $2.8m back to them. ($2.4m penalty which would have been paid anyway per Monday night's instructions) I think this is a great outcome for Optus. I advised that the alternative would be legal action and could potentially cost us more than it was worth, especially given we're trying to improve the SingTel/C7 relationship and that there was more at stake in the future. They are concerned that we're trying to get both Foxsports [sic] and C7 on OTV, or that we were buying time to get a better deal with Fox. I said this was not our intention, that it centred on the CMM review. (Emphasis added. 1593 On 20 September 2001, Mr Ebeid sent a without prejudice letter to Mr Wood confirming their discussions. Subject to paragraphs 2 and 3 below, Seven will supply both C7 channels in October and the main C7 channel only in November and December for a reduced price of $2 million per month. If Optus signs a new agreement for C7 to supply one C7 channel for a 3 year term, Seven will charge Optus a reduced price of $1.4 million per month for the C7 Channel supply during October, November and December. Seven will refund to Optus the overpaid amount of $600,000 per month when the new agreement is signed. If a new agreement is not signed, Optus agrees that it will pay Seven $2.750 million per month for the C7 Channel supply during October, November and December. Optus will pay Seven the additional amount of $750,000 per month, for each of the 3 months. During October, November and December 2001, Optus agrees that it will not enter into an agreement with any other Sports Channel supplier for supply of a Sports Channel or Channels to be broadcast by Optus Television. This excludes any agreement for supply of broadcasts of AFL and NRL for the 2002 season'. 1594 Mr Wood responded to Mr Ebeid's letter on 24 September 2001, stating that Mr Ebeid's letter did not fully reflect their discussions and that, in any event, the proposals in the letter would not actually achieve their objectives. He proposed formal amendments to the C7-Optus CSA and the CWO Deed Poll. The proposed amendments included the insertion of cl 8A, providing for an ' Exclusivity Period '. The terms of the proposed cl 8A were broader than those of cl 4 set out in Mr Ebeid's letter of 20 September 2001. Clause 8A prohibited Optus Vision not only from entering into an agreement with any other sports channel provider, but from initiating or participating in discussions in relation to the supply of sports channels. 1595 Mr Ebeid and Mr Wood exchanged a number of emails on 27 September 2001. At 10.24 am, Mr Wood warned that, unless the variations were finalised by the end of the week, the existing terms of the C7-Optus CSA would continue throughout October 2001. Mr Ebeid observed at 12.13 pm that he had hoped to keep the agreement relatively simple, but given the ' formal legal reply from C7 ' it was necessary to ' reply appropriately '. For this reason, unless the variation is executed by each party by close of business tomorrow, C7 will be submitting to Optus November programming for 2 channels and invoicing the requisite fee for October programming'. However, he promised to send the fresh draft that evening. He also complained that it was ' a little unreasonable [to] get 24 hours notice, to sign or else '. 1596 In the evening of 27 September 2001, Mr Ebeid faxed to Mr Wood a marked up copy of Mr Wood's letter showing the amendments required by Optus. The proposed amendments included limiting the Exclusivity Clause to merely prohibiting entry into an agreement with alternative sports channel suppliers, rather than merely prohibiting negotiations with such suppliers. It is sufficient to protect any of Seven's legitimate interests that Vision not enter into any relevant agreement during the exclusivity period. Your proposed terms go beyond this purpose' . The provision you suggest means that Optus could negotiate and effectively conclude a deal with Fox Sports but not execute it until 1 January 2002. This is absolutely contrary to what we have discussed'. C7 expects Optus to do likewise'. Deed Poll executed in connection with this agreement (collectively, the "Agreement"): Vision acknowledges that the parties have expressed different views as to Vision's right to terminate the Agreement under clause 16.2 before the commencement of the 2002 AFL Season. Each party reserves its rights in relation to this issue'. Clause 7 of the letter incorporated the text of the new cl 8A. 1599 At 10.10 pm on Friday, 28 September 2001, Optus sent to Seven's solicitors a copy of the First Variation Agreement signed by Mr Ebeid on behalf of Optus Vision and Mr O'Sullivan on behalf of SingTel Optus (then Cable & Wireless Optus Ltd). The covering note recorded that a further copy would be sent on Tuesday, 2 October 2001 (after the long weekend), with all Optus clauses signed by authorised officers. The note was a response to an email from Seven's solicitors, which had been sent at 10.03 pm on the Friday, confirming that a partially executed copy of the First Variation Agreement would be acceptable provided that a completely executed copy was received by noon on the Tuesday. If the completely executed copy was duly received, Seven would treat the execution of the First Variation Agreement as having occurred on the Friday morning. In fact, Optus sent a formally executed version of the First Variation Agreement to Seven's solicitors on Tuesday, 2 October 2001. This version was executed by Mr Anderson on behalf of SingTel Optus and Optus Vision. 1600 In form, the First Variation Agreement consisted of the letter dated 28 September 2001 from Mr Ebeid to Mr Wood. The letter was signed by Mr Ebeid and was accompanied by pages which provided for the parties to execute the document as a deed. As has been noted, the letter recorded that the parties had expressed different views as to Optus Vision's right to terminate the C7-Optus CSA, pursuant to cl 16.2, before the commencement of the 2002 AFL Season. Each party reserved its rights in relation to that issue. 1601 The substance of the letter set out the agreed amendments to the C7-Optus CSA. • The licence fee was reduced from the minimum of $2.5 million per month (plus GST) to $2 million per month for October 2001 (when the Overflow Channel would be shown) and $1.5 million per month for each of November and December 2001 (in each case plus GST) (amended cl 9.1(a)(iii)). • Optus Vision was to retain the savings from the reduced licence fees if, on or before 24 December 2001, it entered into an agreement with C7 substantially in accordance with the term sheet of 7 September 2001. Otherwise the licence fees for October to December 2001 were to increase by a total of $3.25 million (plus GST) (amended cl 9.1(a)(iv)). In addition, each of C7, Optus Vision and SingTel Optus ratified and confirmed the C7-Optus CSA as amended by the First Variation Agreement and the CWO Deed Poll (cl 10 of the First Variation Agreement). However, I am equally sure that they will want to renegotiate the terms in December/January'. Three main proposals were considered during this period. 1607 The first was the non-exclusive supply of Fox Sports to Foxtel on terms which would enable Fox Sports to supply its channels to Optus. A proposal to this effect was sent by Mr Philip to Mr Sutton of Telstra on 17 August 2001. It provided for a base price for residential subscribers of US$4.75 pspm. This was to be reduced to US$3.25 pspm for residential subscribers in excess of 250,000 and to US$3.00 pspm for subscribers in excess of 800,000. For each year in which the channels included NRL coverage, a ' Flagfall Price ' of $9.225 million applied. 1608 The second proposal was for the exclusive supply of Fox Sports to Foxtel. This proposal was analysed by Mr Sutton in an internal Telstra document of 18 September 2001. Mr Sutton understood the proposal to amount to US$5.44 pspm, increasing annually by the CPI. In addition, $18 million per annum was payable for NRL coverage. Mr Sutton pointed out that the current arrangements provided a flat licence fee of US$5.25 pspm with no CPI increases. The proposal was therefore more expensive than the current arrangements, with the disparity increasing over time. 1609 The third proposal, embodied in a term sheet prepared by Mr Philip on 24 October 2001, provided for the supply by Fox Sports to Optus of two channels: an ' NRL on Optus ' channel and an unbranded channel containing general sports programming, including some Fox Sports programs. Foxtel was to receive the Fox Sports channels at a fee of US$2.65 plus $5.00 pspm, with staged volume discounts cutting in at 250,000 and 1,000,000 subscribers. An annual fee of $9.225 million was payable for NRL coverage. 1610 The Foxtel partners were unable to reach agreement on any of these proposals. The proposal for the non-exclusive supply of Fox Sports to Foxtel was rejected because it provided insufficient benefits to Telstra and required further measures to prevent churn from Foxtel (and Telstra's telephony customers) to Optus. Telstra rejected the terms for the exclusive supply of Fox Sports to Foxtel because it involved a significant increase in the fee payable by Foxtel under the then current arrangements. The supply of an unbranded channel to Optus was said by Telstra to be unsatisfactory in the absence of a bundling arrangement between Foxtel and Telstra. Optus' attention therefore shifted to a campaign to secure changes in the regulatory regime that would provide for programming to be made available on a fair commercial basis to all pay television operators. To this end, as recorded in a report compiled by Mr Fletcher in October 2001, Optus contacted the ACCC, as well as the Minister for Communications and other politicians. 1612 In addition, Optus decided to press the AFL. Accordingly, on 25 September 2001, Mr Anderson wrote to Mr Jackson of the AFL pointing out that, despite promises from Foxtel, no proposal for a sub-licence of the AFL pay television rights had been forthcoming. He requested that the AFL ' urge Foxtel to commence and conclude negotiations with Optus as soon as possible'. Mr Keely wrote another letter to Mr Jackson on 8 October 2001, seeking guidance as to the scope of News' obligations under its agreement with the AFL, to offer access to broadcasting of AFL games. Similar letters were dispatched by Optus to the ACCC and the Minister for Communications. 1613 On 4 October 2001, Mr Buckley of the AFL wrote to Mr Campbell encouraging Foxtel to commence negotiations with Optus as soon as possible and asking for regular updates on progress. On 12 October 2001, the ACCC informed Mr Blomfield of Foxtel that Optus had made a complaint about the failure of Foxtel to offer the AFL pay television rights on commercial terms. 1614 Optus' efforts apparently bore some fruit. In a letter of 2 November 2001, Foxtel set out the terms on which it was prepared to license an AFL channel to Optus. Foxtel offered to provide three live pay television games per week over a term of three years. The proposed licence fee was to be between $21.3 million and $27.8 million in the first year, depending on the costs of creating the channel and on whether Austar was prepared to take the channel. Optus was to have a non-exclusive licence, with no right to sub-license. 1615 Optus rejected Foxtel's offer on 19 November 2001, on the stated ground that it required Optus to bear a disproportionate share of the licence fee payable to the AFL. Accordingly, in Optus' view, the offer was not fair and reasonable. 1616 Further correspondence ensued between the parties. On 5 December 2001, Foxtel revised the proposed licence fee to $18.2 million (including capital expenditure) in the first year, decreasing to $15.5 million in the second and third years (subject to a CPI increase in the third year). Optus characterised the revised offer as also unfair and unreasonable. The parties were therefore unable to reach agreement. Four Optus representatives were present, including Messrs O'Sullivan and Fletcher, and four from Telstra, including Mr Akhurst. A briefing note prepared for Mr O'Sullivan by Mr Fletcher in advance of the dinner dealt with a number of issues, including the question of Foxtel content. At present, we are prevented by program exclusivity arrangements from screening such programming. We seek fair terms for access to this content, where Optus Television would pay a price per subscriber that is no higher than the price per subscriber paid by Foxtel for the content. Such a deal is in all parties' interests because it enlarges the total subscriber base over which program content costs, that are largely fixed costs, can be spread. We believe that the AFL contract with Foxtel requires it to onsell the programming to Optus and Austar on reasonable commercial terms. Bruce Akhurst [sic] said Foxtel planned to sell us AFL and he would inquire into the hold up. He said he had asked the Foxtel JV partners for a proposition on FoxSports being sold to Optus. He was not opposed to it. The hold up was News Limited because Rupert [Murdoch] was in the country'. 1619 In a reply to Mr Fletcher's note, sent also to Mr Anderson, Mr Chamberlain, the Managing Director of CMM, said that the issue that ' consume[s] ' him was ' access to content on economic terms, specifically [Fox Sports] '. He expressed disbelief in Mr Akhurst's assertion that it was not Telstra, but News which was blocking access. Mr Anderson informed Mr Chamberlain that he would raise the issue with Mr Rupert Murdoch the following evening. He added that ' we need to be sure of our facts '. (By this time, Mr Chamberlain had informed Mr Anderson that he intended to return to Cable & Wireless in London and he apparently did so shortly after these events. Mr McLachlan expressed the view that there was a ' clear ' benefit to Foxtel in content sharing. That issue is addressed in Chapter 18. A submission on an amendment to the final determination is being prepared. It was agreed that the damages claim should continue, however, the continuation of the Access Claim is questionable and it will be costly to run the other channels, the content will be difficult to find and it will also be costly to market. The outlook for Pay TV is unsure and rationalisation worldwide must occur'. The Optus representatives had advised in confidence that SingTel had engaged McKinsey to review Optus' pay television operations. Optus' preferred option was to take over Austar at the right price which would give ' critical mass and access to a satellite platform to rival Foxtel '. The executives of Optus, including Mr Anderson, were committed to the C7 deal, including the three-channel option, and wanted to do the deal before Christmas so that they could take ' the $3.4 million savings on offer '. According to Mr Wise, Optus would require C7's programming in January and February 2002 ' regardless as it is stronger than Fox's '. 1625 On 14 November 2001, in an email to Mr Gammell, Mr Stokes observed that Austar was ' seriously looking at keeping C7 '. He remarked that ' [t]hat would not necessarily work for our plan '. In his cross-examination, Mr Stokes said he did not know to what ' plan ' he was referring. He acknowledged that the sentence would make sense if it was understood that the plan was to close C7 at the end of February 2002. However, Mr Stokes denied that such a plan had been put in place at that time. An internal Telstra document of 16 August 2000 identified the benefits to each of the Foxtel partners (but particularly Telstra) of bundling arrangements. News and PBL did not share Telstra's enthusiasm, apparently being concerned that Foxtel might in effect become a wholesaler, dependent on Telstra as a retailer of pay television services. 1627 Following a meeting in late October 2001, Mr McLachlan of PBL circulated a proposal on 31 October 2001 to Messrs Philip, Akhurst and Moffatt. He indicated that the Fox Sports pricing issue and the bundling arrangements ' while separate need to be settled together '. Telstra wished to announce both at its Annual General Meeting to be held in late November 2001. Mr Chisholm, who was a director of Telstra and Chairman of Foxtel, also attended. The issues discussed at the meeting included the sharing of content between Foxtel and Optus; Telstra's proposal to bundle Foxtel with its telephony services; and the supply of Fox Sports to Foxtel. Then there was another theme introduced around, well, maybe this would then lead to including Optus in a broader arrangement, leading to the formation of this ContentCo structure. --- I believe so. --- Yes. --- Well, really, responding to the Optus approach that we merge our content agreements together and that Foxtel then takes responsibility for that'. I made the decision at the 22 November 2001 meeting that Telstra would support the proposed agreements with FOXTEL, News and PBL that were [ultimately] signed on 3 December 2001, because Telstra would obtain the opportunity to bundle FOXTEL with its telephony services, the terms of supply of Fox Sports to FOXTEL would be resolved, and I understood that FOXTEL would be able to expand its subscriber base and acquire a greater range of content and reduce churn. I also thought that Telstra would benefit from a better relationship with its FOXTEL partners in dealing with future issues such as digitisation. I considered that these benefits to Telstra outweighed the likely cost to Telstra of enabling Optus to bundle a more attractive pay television service with its telephony products while being freed of its burdensome content contracts and the cost to FOXTEL of funding Optus' MSG liabilities'. I considered that the proposals were the best compromise Telstra would be able to achieve and it also meant that we would be able to reach a resolution about the Fox Sports supply price to FOXTEL which had been a source of tension amongst the FOXTEL partners for several years. I also thought that the proposals would help improve the FOXTEL business, because FOXTEL would also be distributed by Telstra and Optus, and the FOXTEL partners could work more harmoniously to reach agreements in the future about issues such as digitisation of the FOXTEL service'. The agreement was conditional upon Foxtel securing a reseller agreement with Optus for the Foxtel Service. On the same day, News, Foxtel, PBL and Fox Sports entered an agreement in principle for Foxtel to license Telstra as a reseller of all Foxtel services. Foxtel was to pay Telstra $125 for every ' new ' Foxtel customer secured by Telstra and $2.00 pspm for each Foxtel customer obtained through Telstra. Telstra committed to $2 million per annum for three years on the marketing and promotion of Foxtel. This agreement was subject to the same condition and the same obligations with respect to implementation. Long form agreements were ultimately executed on 20 February 2002. The meeting took most of the morning. Messrs Anderson and O'Sullivan then flew with Mr Packer to Mr Chisholm's farm (Mr Chisholm then being on the Telstra board), where further discussions took place. At 7.02 pm that evening, Mr Anderson gave Mr Lee and others an update by email on the meetings. He explained the reference to Austar in his report as a ' credible threat which was likely to give the Foxtel partners an incentive to deal with Optus on favourable terms '. There was no evidence as to who vouchsafed this information to the News publication. 1638 On 6 December 2001, another meeting took place. The participants included Messrs O'Sullivan and Fletcher of Optus, Mr McLachlan of PBL, Mr Philip of News, and Messrs Akhurst and Sutton of Telstra. The subject matter for discussion was an arrangement for Foxtel to be resold on Optus (that is, content sharing). The briefing notes prepared in advance for the Optus representatives described the discussion as ' exploratory ... not negotiation '. However, the notes also identified a number of ' required outcomes '. A briefing paper prepared on 13 December 2001, apparently by McKinsey and Mr Hardy of Optus, incorporated a chronology which recorded that one of Optus' ' key messages ' at the meeting of 6 December 2001 was that ' industry rationalisation would create substantial future value ' of approximately $3 billion. Optus had sought a share of that value, in the order of $1 billion, and wanted compensation for MSGs, redundancies and other costs or liabilities. The briefing paper of 13 December 2001 incorporated an ' [e]stimated future value calculation for Foxtel ' on the assumption that it would acquire Austar. The chronology in the briefing paper of 13 December 2001 recorded that there had been a favourable response at the second meeting to Optus' requirement that it receive compensation for its MSGs. It was also suggested that content would be supplied to Optus ' at retail less cost savings from Optus provisioning '. Mr Anderson recorded the substance of the conversation in an email he distributed later that day. Mr Anderson told Dr Switkowski that the deal was good for Telstra (as a 50 per cent owner of Foxtel) because it created a $4 billion transfer of value to Foxtel. Mr Anderson warned Dr Switkowski that ' if we can't come to landing ', Optus would be likely to do a deal with Austar. Dr Switkowski's evidence was that he was aware of media speculation about a possible merger between Optus and Austar, but that he considered such a merger to be ' extremely unlikely ' because the combination of two loss-making businesses would not produce a good commercial outcome for either of them. The same email recorded that after his discussion with Dr Switkowski, Mr Anderson had had a conference call with Mr Lachlan Murdoch and Mr James Packer who wanted to know ' where we were in our deliberations '. Mr Anderson repeated Optus' requirements ' for their benefit '. Mr Murdoch and Mr Packer said that they would consider Optus' position and talk to Telstra. News acted on Mr Macourt's recommendation. Mr Blomfield was replaced by Mr Williams on 17 December 2001. Shortly after commencing duties, Mr Williams was informed by Messrs Philip, Akhurst and McLachlan (representing the Foxtel partners) that Foxtel was to pursue a long-term content supply agreement with Optus. Mr Williams was instructed to commence negotiations for such an agreement. Mr Ebeid had said that he believed that he would shortly receive approval from Optus' Executive Committee to sign the term sheet. He pointed out that there were ' considerable financial penalties on Optus if they do not enter into the agreement by 24 December '. 1644 On 7 December 2001, Mr Dalgleish, who had replaced Mr Chamberlain as Managing Director of CMM, recommended to Mr O'Sullivan that Optus ' proceed to urgent approval to execute the C7 agreement, but defer executing [it] until closer to the deadline of [24] December '. We would naturally only seek to do this if we have negotiated alternative content supply. Pay original higher content costs, including reimbursement of lower costs provided in the last three months, and seek to terminate the original agreement on or after February 15 th , 2002. The only other viable sports content partner is Fox Sports. Earlier negotiations with Fox Sports have faltered as a result of Telstra exercising rights of veto on such an arrangement. It is considered highly improbable that discussions could be re-opened on more favourable terms to this proposed arrangement with C7. This would realise significant churn and loss of customer acquisition and resultant EBITDA, and place us in a competitively vulnerable position'. In response, Mr Anderson asked whether Optus should not ' use the present discussions to get a (better) Fox Sports deal? ' He also asked whether signing a long-term agreement with C7 would make ' the chance of any Foxtel deal dead '. It is far better to test the water with Foxtel by trying to get a Fox Sports deal prior to the wider negotiation than to be press ganged into a long term arrangement with C7. We can probably stall until the end of January --- I don't think 7 has anywhere else to go. If this is wrong I would prefer that we cobble together our own sports channel for the summer rather than commit to 7'. Therefore both parties agreed to a short term arrangement, based on the new terms, effectively agreeing to an extension to December 24th. We will honour the same terms, if we fail to finalise extension then we retrospectively repay the deficit and revert to the current agreement (which we may terminate at any time once the AFL season commences). So C7 will not be out of pocket and is protected'. Mr Stokes discussed the matter with Mr Wise who expressed the view that it would do no harm to accommodate Optus, given that Seven wanted Optus to agree to the three year deal. We have two main options we are considering. We can get deeper into pay television with another player and put our business with another player and reach scale. We don't know which way we will go as it is subject to discussions on the whole of the CMM business'. Mr Stokes then agreed to Mr Anderson's request. (Mr Stokes and Mr Anderson disagreed in their recollections of some aspects of this conversation. For reasons I shall explain later, I prefer Mr Anderson's account. However, Mr Anderson acknowledged in his evidence that he understood that the extension of the interim arrangement would be on the same terms as the first arrangement, including the Exclusivity Clause. ) Shortly after the conversation, both Mr Anderson and Mr Stokes sent internal emails recording their respective recollections of what had transpired. 1651 On 20 December 2001, Mr Wood sent Mr Ebeid a draft replacement Variation Agreement and requested its execution by Optus. It appears that Optus did not do so, apparently because discussions continued between the parties. Accordingly, C7 requested a letter in the form of the attached Variation Agreement, duly executed by Optus. Like the First Variation Agreement, the Second Variation Agreement took the form of a letter from Mr Ebeid to Mr Wood. The opening paragraph recorded that the Second Variation Agreement ' replaces in its entirety ' the First Variation Agreement. Each party reserves it [sic] rights in relation to this issue. C7 acknowledges that Optus reserves its right to terminate the Agreement pursuant to Clause 16.2 and that any failure by Optus to do so will not waive or otherwise prejudice Optus' right to exercise such right of termination'. As with the First Variation Agreement, the Second Variation Agreement contained a number of clauses setting out the amendments to be made to the C7-Optus CSA. The agreement took the form of an undated letter corresponding to that sent by Mr Ebeid to Mr Wood on 14 January 2002, with provision for the parties to execute it as a deed. Although the evidence is incomplete, the agreement appears to have been executed as a deed on 31 January 2002 by the Optus parties. However, the agreement has been referred to in submissions as the ' 25 January 2002 letter ', apparently because Mr Ebeid sent to Mr Wood the letter signed by him, but not yet executed as a deed by the parties, on that date. In that letter, Optus requested the NRL to offer Optus the NRL pay television rights in accordance with the terms of the 1998 Optus Pay TV Programming Agreement. Mr Philip suggested to Mr Akhurst that it would be better to renew the ' NRL on Optus ' deal instead. After discussions, Telstra consented to that course. 1656 On 14 January 2002, Mr Ebeid prepared a paper for Optus' Management Committee, which was submitted to the Committee by Mr O'Sullivan. The purpose of the paper was to seek approval to renew a one year licence agreement with Fox Sports to license the NRL on Optus sports channel. Mr Ebeid recommended approval of the proposal. The paper recorded that there had been ' ongoing proposals canvassed with Fox Sports and [its] shareholders to license the premium Fox Sports Channels '. 1657 A term sheet was signed on 15 January 2002. Under the arrangement, Optus was to receive the NRL on Optus channel for a further year, with an option to extend the arrangement for a further three years (2003 to 2005). The licence fee was to be $17.15 million (exclusive of GST). Of this sum, it appears that $800,000 would be retained by Fox Sports and the balance would flow to Foxtel. At the meeting Optus threatened a ' break out ' strategy that involved a merger with Austar and extending national coverage via satellite. Mr Akhurst shared Dr Switkowski's view that this was a negotiating tactic by Optus, since a merger was not likely to be its preferred position. 1659 Over the succeeding week or so, further discussions took place in relation to content supply arrangements. Telstra also modelled the effects of Optus' proposals. On 17 January 2002, Mr Akhurst reported to Dr Switkowski that the modelling suggested that the benefits to Telstra of doing a deal with Optus were vastly less than Optus had estimated. 1660 An inconclusive meeting took place between Telstra and Optus representatives (including Dr Switkowski and Mr Anderson) on 21 January 2002. This was followed by a meeting on 28 January 2002 at Mr Lachlan Murdoch's house between representatives of News, PBL and Telstra. At the meeting, Dr Switkowski supported a further approach to Optus regarding the content proposals and agreed to Foxtel accepting Optus' MSG liabilities up to a capped amount. Mr Williams' note of the meeting valued the liabilities at $460 million, a figure apparently supplied by Mr Sutton on the basis of discussions with Mr Hardy of Optus. 1661 The negotiations continued to encounter difficulties. In particular, Optus' demand for an MSG indemnity from Foxtel and the pricing of satellite capacity to be sold to Foxtel generated disagreement. Discussions in early February 2002 failed to resolve the disagreements. The latter gave evidence that he understood Mr Anderson to be suggesting that Optus should obtain the Fox Sports channels. Mr Ebeid appreciated at the time that what Mr Anderson was proposing would constitute a breach of the Exclusivity Clause. Although Mr Ebeid did not tell Mr Anderson directly of his views, he did remind Mr O'Sullivan of the Exclusivity Clause. Mr Ebeid had also previously reminded Optus executives via emails of the terms of the Exclusivity Clause. 1664 An internal Telstra email of 22 January 2002 recorded that Mr Philip had told Mr Sutton (of Telstra) that Fox Sports had received a call from Optus that morning indicating that Optus wished to discuss a supply deal. Mr Philip conveyed to Mr Sutton that Fox Sports would have to agree by 8 February 2002 or otherwise Optus would have to re-sign with C7. The call from Optus to Fox Sports was (so I find) probably made by Mr O'Sullivan. 1665 On 23 January 2002, Mr Gammell passed on to Mr Stokes information supplied by a former officer of Optus that Foxtel had suddenly become very active in trying to persuade Optus to take Foxtel's programming and that Mr Anderson was ' pushing hard for the Foxtel offering '. Mr Gammell thought that the latest NRL deal was a ' precursor to a greater content deal '. 1667 A handwritten note prepared by Mr Fletcher of Optus on about 11 February 2002 recorded that the aim was to agree on heads of agreement and to reach a binding Fox Sports deal by early the following week. Mr Fletcher agreed in cross-examination that Optus wanted to reach a binding agreement ahead of finalisation of a long form Content Supply Agreement. Mr Ebeid indicated that Optus would like the channel but not at any price. He made it clear that Optus could live without the channel. Mr Williams was concerned by this response, as he thought that Foxtel needed to recoup part of the AFL pay television rights fee from Optus. 1669 On 17 January 2002, Mr Williams received an email from Mr Sutton attaching information he had provided to Telstra executives about the state of negotiations with Optus in relation to the AFL channel. Mr Sutton indicated that negotiations had stalled with an offer of $15 million per annum (plus CPI) for five years. Mr Williams then realised that there was a discrepancy between the expectations of the Foxtel partners as to the revenue to be obtained from Optus and Optus' views as to the value of the AFL channel. On 19 January 2002, Mr Williams expressed the view that the ' picture with both Austar and Optus is not as good as we would like '. We are willing to consider an offer from you on no less favourable terms to those offered to Austar. Mr Williams commented that early results with the take-up of Foxtel were ' exceptionally encouraging ... [Fox Footy] is a clear subscription and upgrade driver and anti churn device '. In that context, Mr Williams said it would be a mistake to slow the marketing. Optus has flatly rejected the $15M offer. It has indicated that the channel is too expensive (notwithstanding the fact that it will deliver direct savings of $24M over and above that which Optus was paying previously)'. As you are aware, FOXTEL's most recent proposal to Optus is for the supply of the FOX Footy channel, as that channel is made available to FOXTEL subscribers, for $10 million for one year. As discussed, this proposal is still subject to the approval of the FOXTEL partners. The agreement reached with Austar was reached in this context. FOXTEL is willing to do so and all offers to date have been in accordance with this requirement. The costs of the FOX Footy Channel are higher than those of the core channel however, obviously Optus now avoids the capex costs associated with delivering three separate state based feeds to Optus. The revised licence fee essentially represents FOXTEL's costs allocated according to current subscriber numbers with an arguably uncommercial basis'. This compares with a budget of $10m in the 2001/02 Financial Year ($20m sub licence for the 2002 calendar year including both Austar and Optus). FOXTEL made an offer to Austar that complied with its contractual obligation and this offer remained open to Austar to accept. He was influenced by his understanding that Austar at the time was experiencing financial difficulties. The Fox Footy Channel was to be available to Optus' residential subscribers as an a la carte channel and Foxtel was to determine the pricing and package options. Optus was to receive a small percentage of the gross subscription revenue as commission. The Foxtel-Optus Fox Footy Agreement was therefore a revenue sharing arrangement. Either party could terminate the Foxtel-Optus Fox Footy Agreement if Optus entered an agreement to distribute the Foxtel Service. 1676 Mr Williams gave evidence that, despite his best efforts to negotiate satisfactory sub-licence arrangements with Austar and Optus for the Fox Footy Channel , the results were lower than had been assumed by Foxtel in its budgeting. --- Well, it was a bit like negotiating with one's hands tied behind one's back. --- We had acquired the subscription television rights. --- And the others knew that therefore they were in an advantaged position relative to negotiating with us, and they did not in any way - they weren't shy about indicating that. They were quite harsh, in fact. --- Very tough'. This compared the AFL business case approved by the board in December 2000 with the forecast which took account of the revenue-sharing arrangements actually concluded with Austar and Optus. The business case estimated the NPV over a five year period of the anticipated arrangements with Optus to be $25.9 million (including sign-on fees). The forecast NPV for the same period was $8.2 million. On 8 November 2001 the SingTel board had approved the appointment of McKinsey and JP Morgan jointly to develop a restructuring strategy for CMM. The brief included formulating plans for the implementation of Project Emu. 1679 JP Morgan prepared a report on the proposed merger on 9 January 2002. On 14 January 2002, Mr O'Sullivan reported unfavourably on the draft business plan for the merger. Mr O'Sullivan considered that a merger exposed Optus to the risk and ' Amber [Austar] comes along for the ride! ' A simple buy-out of Austar presented problems because Optus would have to take over Austar's liabilities and Optus would be actually increasing its involvement in pay television, rather than diluting its interest. One aspect of the opportunity was the financial difficulties Austar faced at the end of 2001. However, by February 2002 Austar had managed to renegotiate with its creditors, and so was no longer pressed to enter into a deal with Optus. Secondly, it was important that Optus not become exposed to the substantial, pre-existing Austar debt. If a new corporate entity was created to operate the merged business, there was the likelihood that it would not be able to take advantage of Optus' substantial accumulated tax losses. Finally, the value of the synergies in the merged entity looked difficult to quantify. It was far from clear that the merger of two loss-making, financially distressed businesses would lead to valuable synergies'. The memorandum recorded that Seven's original budget was prepared on the basis that the C7-Optus CSA would be terminated on 28 February 2002. The estimated loss if C7 closed on that date was $4.4 million. If Seven concluded a three year deal with Optus, the result would be a $7.6 million loss, even factoring in the $17 million per annum guarantee from Optus. The memorandum also recorded that Optus had said that it would not enter into any contractual obligations longer than one year. Mr Wise noted that Optus needed a sports channel and that ' [t]hey probably need us to put some tension in their content negotiations with Fox Sports, both on Fox Sports and AFL '. It is important to recognise the requirement that we must by law mitigate our loss, the Optus deal does that' . If Optus did not accept the three year deal by 31 May 2002, the arrangements would end on 30 June 2002 and Optus would pay a four month ' penalty ', being four ' months on [the] original contract less amounts paid '. However a decision on all aspects of the C7 proposal must be advised to C7 by or on 28 February 2002'. Mr Fletcher's evidence was that he had requested these documents in order to facilitate a deal with Foxtel regarding a sub-licence of Fox Sports 1 and Fox Sports 2 . 1687 On 18 February 2002, Optus' solicitors provided written advice concerning the enforceability of the Exclusivity Clause. An argument may be raised that the exclusivity provided for in clause 8A contravenes certain provisions of Part IV of the [TP Act]. However, in our view, clause 8A is unlikely to be unenforceable by reason of any contravention of Part IV of the Act. There are numerous reasons for this conclusion, however the principal one is that the period of exclusivity runs from 27 September 2001 to 28 February 2002 and this is unlikely to substantially lessen competition within the meaning of the relevant provisions of the [TP Act]. Further, we do not see any application of unconscionability or other vitiating factor arising so as to render clause 8A void or voidable'. The parties acknowledged that they were working towards the execution and performance of a ' long form Content Supply Heads of Agreement '. 1689 The Foxtel-Optus Term Sheet recited that Optus Vision had requested Foxtel to offer it a sports service and that Optus Vision had stated that it would only continue the negotiations for the content supply agreement (' CSA ') if a sports service agreement was entered into. If the CSA was not entered into the agreement would continue for a term of three years, from 1 March 2002 or, at Optus' election, 1 April 2002 (cll 1, 2). • Foxtel sub-licensed to Optus Vision two full-time general sports channels with the same content as the Fox Sports channels, to be branded as ' Optus Sports 1 ' and ' Optus Sports 2 '. It also sub-licensed any Fox Sports overflow channel. The sub-licence was for retail distribution to Optus' subscribers (cll 3, 4, 7). • The base price, exclusive of GST, was US$2.65 plus $5.00 pspm. For each year in which the channels included NRL coverage, a ' Flagfall Price ' of $9.279 million applied. An MSG of 240,000 subscribers applied for the first nine months and 250,000 thereafter. 1690 Mr Anderson was cross-examined as to why Optus had been prepared to commit itself to a three year agreement with burdensome MSGs if, as Mr Anderson claimed, Optus was likely to close down CMM within about three years had the content sharing agreement with Foxtel not been finalised. Mr Anderson's response was that Optus was confident on 20 February 2002 that the content sharing agreement with Foxtel (effected by the Foxtel-Optus CSA of 5 March 2002) would in fact proceed. He acknowledged that ACCC approval was required for the Foxtel-Optus CSA and that an Optus board paper for the meeting of 21 February 2002 had warned that there was a significant risk that the ACCC would not approve the transaction in its then current form. Mr Anderson said that his view at the time was that ACCC approval was likely although he thought that the ACCC might impose conditions on the parties to the agreement. This evidence is supported by the fact that the board paper noted that Optus' strategy was ' to negotiate the offending provisions with Foxtel once the ACCC has identified concerns '. I accept Mr Anderson's evidence. Mr Wise told Mr Anderson that Seven had a different view on Optus' ability to terminate. Mr Wise's email to Mr Stokes and others conveying the conversation recorded Mr Wise's view that ' [a]ll the balls are now stacked in the one basket --- TP action '. The board expressed its appreciation to the team heading the negotiations, but did not specifically authorise the execution of any agreements. Dr Switkowski gave evidence that he authorised the execution of the Foxtel-Optus CSA on behalf of Telstra Media. I infer that he also authorised the execution on behalf of Telstra of agreements that preceded and accompanied the Foxtel-Optus CSA, including the agreements executed on 20 February 2002. 1694 On 20 February 2002, Telstra, Telstra Multimedia, Foxtel Management (as agent for the Foxtel Partnership), TNCL and PBL executed the ' Foxtel-Telstra Resale Term Sheet ', by which the Foxtel Partnership licensed Telstra as a reseller of all existing and future Foxtel services on terms and conditions corresponding to those previously agreed in principle. The Foxtel-Telstra Resale Term Sheet was to continue until terminated by agreement or in consequence of a material breach. The agreement was for the exclusive supply of the channels, except for the Austar territory and was to continue until terminated for breach or by mutual agreement. As previously agreed, base price for residential subscribers was to be US$2.65 plus $5.00 pspm, subject to an MSG of 750,000. A volume discount of 15 per cent was to apply to subscribers in excess of 750,000. For each year in which the channels included NRL coverage, a flagfall price of $18.558 million was to apply. All prices were subject to GST and CPI increases. Foxtel was to be permitted to license Optus to resell the channels. He said that he did so ' [i]n order to counter any complaint that C7 might make that those agreements had some anti-competitive effect '. Mr Williams apparently formed a similar view. 1697 Whatever the precise motivation, on 27 February 2002, Mr Williams sent a letter of offer to Mr Stokes setting out the terms on which Foxtel would carry C7 as part of its pay television service. Channel: A 24 hour 7 day a week sports channel known as C7 (the "Channel"). Licence Fees: If FOXTEL carries the Channel as an a la carte channel then C7 will be paid a per subscriber per month licence fee equal to the greater of an amount nominated by you and a 50/50 revenue split (after GST). Content: The Channel shall be the premier sports channel produced or developed by C7 or in which C7 is involved and C7 shall ensure that the Channel includes sports programming to which it holds the rights with the greatest viewer appeal. The quality of the Channel shall be at least equal to the quality of the Channel in the 6 month period prior to the date of the agreement and C7 shall use its best endeavours to broadcast the maximum number of sports events live'. On 8 March 2002 (although the letter is dated 5 March 2002), Mr Wise responded in writing on behalf of Seven to Foxtel's offer. Mr Wise questioned the motives behind the letter. He pointed out that the offer had coincided with the trade practices litigation to be commenced by C7 against the consortium following Seven's success in the preliminary discovery proceedings in the Federal Court. Nonetheless, Mr Wise indicated that Seven was open to genuine negotiations. For obvious reasons, FOXTEL is not willing to agree to carry channels when it has no information about the content of those channels. A number of channels offered by FOXTEL on an a la carte tier are provided to it on a revenue share basis. As I mentioned in my letter, we will need to discuss pricing if the channel is to be provided on some other basis. He said that there would be little point in C7 providing information about its channels if Foxtel was subject to ' capacity/constraint issues '. Mr Wise asked for an indicative price for a C7 channel carried on basic and noted that C7 had previously been offered at a discount to the cost of Fox Sports. He said that C7 ' would be willing to use a similar appropriate proportional relationship in the future '. This was presumably a reference to the terms of C7's offer of 17 November 1999 which specified prices at a percentage of the price Fox Sports charged Foxtel for its channels. On 20 March 2002, Mr Williams ' in a constructive spirit ' was prepared to formulate a proposal for the carriage of four channels to be supplied by C7 as part of Foxtel's planned digital service. Mr Williams and Mr Wise met on 27 March 2002, but nothing was resolved. The presentation was made to a meeting of the SingTel Executive Committee held on that day. On Project Alchemy, management's objective would be to remove Optus's MSG obligations, obtain Foxtel content at a fair value while maintaining the option to distribute content over all channels. The advantages of the option would be to greatly reduce Optus funding requirement to CMM and reduce its operational risk. However, it would limit Optus's option as a fully integrated Tier 1 provider across all markets and products and the deal could potentially face blockage from the ACCC. The current offer from Foxtel and its partners was unsatisfactory and had been rejected. He explained the value transfer to Optus of the current Foxtel offer with the other options and informed that management would continue negotiations with Austar as well as the Foxtel partners'. Mr Anderson and Mr O'Sullivan, in company with McKinsey, made much the same presentation as they had to the Executive Committee. The board noted that closing CMM would be undesirable as it would involve paying $750 million to content providers and dismissing 3000 employees. The board concurred with the view that Project Alchemy was preferable to Project Emu, but management was asked to negotiate actively on both. Mr Lee agreed in his evidence that, at this particular time, if it had not been possible to pursue Project Alchemy, Project Emu would have been the preferred option for CMM to pursue. 1706 JP Morgan wrote to Mr Anderson on 18 February 2002, summarising the material issues relating to Project Emu. The letter identified a number of concerns and material risks that had to be carefully considered in determining whether to undertake the transaction. One of the concerns was that Austar was carrying a debt of $400 million. Another was Optus' concern as to the ability of Austar's parent to provide appropriate levels of future funding. Mr Anderson said that he had interpreted JP Morgan's advice as indicating that Project Emu was ' extremely difficult '. A paper prepared for the board meeting provided an update on the status of Project Alchemy negotiations with Foxtel and Telstra. C7 might immediately terminate those arrangements (therefore leaving Optus without sport content for up to 6 weeks) and/or seek damages. Optus will defend vigorously any claims brought by C7. Our legal advice is that the risk of damages being awarded against Optus is low'. In addition to a management paper, the board considered a memorandum prepared by McKinsey which advised in relation to the options, particularly the ' evolving Alchemy deal terms ' and ' the emerging "Manage for Cash" plan '. Of the four options, only Project Alchemy and Manage for Cash warranted serious consideration. Project Emu was flawed and Exit Now was ' suboptimal '. Either Project Alchemy or Manage for Cash avoided or deferred several hundred million dollars in exit costs. 1709 The McKinsey paper described three ' fundamental changes ' to the then current operation of CMM that would be required if Manage for Cash were adopted. The reference to improved telephony margins assumed that Telstra would follow Optus' pricing moves. You would have to get comfortable with the "can the team pull this off" --- in our view; the cost and capex improvements are relatively straightforward, the pricing improvements are aggressive, yet achievable'. It was the ' dominant strategic outcome ' and on a ' downside case ' produced a $50 million NPV against a -$160 million NPV for Manage for Cash. In shifting to a "reseller" model for Pay-TV you would solve two problems --- achieving sustainable economies in telephony AND preserving the customer base' . However, this statement was made in the context of comparing Project Alchemy with Manage for Cash on optimistic assumptions, the comparison being favourable to Project Alchemy. The McKinsey document as a whole does not suggest that it was likely that CMM would become a going concern under the Manage for Cash regime, although it apparently regarded this outcome as a possibility. Later, McKinsey recorded that if CMM could not achieve the proposed plan (including the aggressive pricing improvements), it would have to close by 2006. These [sic] leaves 4.4 million of 75% of the market unable to be addressed by the HFC network. This limitation is major barrier to achieving scale economics for CMM. It is also important to note that 80% of the CMM HFC network is overbuilt by Telstra, thereby cutting the theoretical maximum penetration levels for CMM in those area's [sic] in half due to competitive dynamics. For example, established overseas cable operators who have regional monopolies typically reach penetration levels of approximately 60%. In an overbuild situation with Telstra, that maximum penetration would be approximately 30% (assuming 50% market share for each operator). This strategy contemplates that the cash burn could be reduced to between A$100M and A$150M by stopping growth, with a view to stalling any further decisions in relation to the CMM Division until such time that the PayTV and telephony industries have been rationalised (for example, if and when regulators remove barriers to Optus accessing the local loop) at economically viable prices. In the absence of any changes to content pricing this strategy, this model will likely see CMM trading on in a negative cash flow situation for the foreseeable future. The shut down costs associated with exiting the CMM business include satisfying the minimum subscriber guarantees to content providers (current commitments have a $626M cash value), redundancies across the whole division and pulling down the HFC network. The estimated cost of a total shut down is in the range of A$900M-A$1Billion. It relieves Optus of onerous content obligations to a maximum value of $550M. It provides an immediate improvement in per subscriber economics by reducing the cost of content and increasing ARPU [average revenue per unit] (due to Foxtel retail prices being higher than Optus Pay TV). The net benefit of this change per customer would be a $15/mth increase margin and an annual benefit to cash flows and margin of $48M (on a subscriber base of 270,000). It establishes a highly competitive source of Pay TV content for the CMM operations. It keeps CMM's options open in the future by preserving involvement in consumer, telephony, internet and Pay TV and the ability to bundle under the Optus Brand whilst seeking regulatory relief for access on the local loop. The ability to distribute over the HFC network. It was noted that the Exit Now strategy was suboptimal in view of the significant exit costs of around A$1 billion, which would drop over time. Maintaining the status quo was not possible in the structurally flawed industry with CMM generating a negative cashflow of around A$300 million. The Manage for Cash plan would reduce the cash burn to around A$150 million. However, there was no certainty that the industry would have rationalised at economically viable prices down the road . Project Emu was a complex deal which was asymmetric to Optus, requiring Optus to bear too much of the risk and peak funding exposure with little upside. The Board noted Optus Management's recommendation that Project Alchemy was the most attractive option which would add some A$60 million to the bottomline [sic] going forward'. (Emphasis added. I did not think that there was a realistic likelihood of economically viable prices in the CMM division. I believed that the Manage for Cash option would result in continuing losses but at a lower level than simply maintaining the status quo. The benefit of the strategy was that over time, the MSG exit costs reduced dramatically. The redundancy and close down costs also diminished over time. By not seeking to attract any new pay television customers, Optus' connection with pay television would quickly diminish. Once the Manage for Cash strategy was adopted, I believed that it would have become apparent to subscribers and investors alike that Optus was not committed to further investment in pay television. In those circumstances, I did not believe that the Manage for Cash strategy was one which could or should be pursued indefinitely. Rather I believed that it was preferable to incur the exit losses relatively quickly and prevent a long and drawn out closure. It was preferable to minimise that brand damaging process and to permit the company to concentrate its management resources on the profitable areas of the business'. In my opinion, that is the course which SingTel would have adopted. In my opinion, SingTel would not have approved entry into such an agreement under the Manage for Cash option. Such an agreement would involve committing Optus to a large additional MSG type payment whereas the Manage for Cash option was based on minimising expenditure. Although I appreciated that the view submitted by Paul O'Sullivan and Michael Ebeid in the paper considered at the Management Committee meeting on 11 February 2002 as to the importance of a local content sports channel, the Manage for Cash option did not involve attempting to attract any new subscribers. The proposed C7 sports channel would not carry any major local sport. Optus already had ESPN as a sports channel. Committing Optus to a substantial sum for a sports channel with no local major sport would have been contrary to the Manage for Cash option. Any loss of subscribers because of the absence of the C7 sports channel would not have concerned me in the Manage for Cash strategy' . His response was that, although the board had directed that negotiations with Austar should continue in case Project Alchemy did not go ahead, no decision had been made as to which of the two alternatives --- Project Emu or Manage for Cash --- was preferable. Mr Lee said that by February 2002, the Project Emu option was regarded as unattractive and in substance had been ruled out by McKinsey. He said that had Project Alchemy not been achievable, Optus would have continued to explore both Project Emu and Manage for Cash, but in his view Optus management would have recommended Manage for Cash. 1724 Mr Lee pointed to the formidable obstacles that needed to be overcome if any agreement was to be reached with Austar. 1726 Mr Anderson's evidence was to the same effect. He said that by 21 February 2002, he was of the view that a merger with Austar was not a viable option. Emu --- and I have not been back to it in depth, but Emu had all sorts of problems that were coming up at that date. Sock Koong, the financial controller of the whole group, had pointed out that we couldn't transfer tax losses, if I recall. There was a dispute, an arm wrestle, over whether or not it was going to be 80/20 or 50/50 or that sort of number anyway, but more equal between the Austar partners and Foxtel. There was the Austar debt that was a problem. So there was a whole range of things that made the Austar thing, when we started to really work into it, I would have had difficulty recommending it, but --- and I'm sure you have probably quizzed them, I don't know if you have, but I don't think [Mr Lee] would have gone down that line at all'. 1727 Mr Lee was also cross-examined on his evidence that the Manage for Cash strategy would have led to Optus withdrawing from the pay television industry within a short period. Mr Lee accepted that the Manage for Cash strategy was designed to see Optus through a period when the MSGs were at their highest. After that it was an ' open issue ' as to whether the business would be viable or not. He also accepted that if the Manage for Cash option had brought CMM close to cash flow neutral, it would have made sense for Optus to wait for the close-down costs to reduce further before finally closing the division. 1728 Nonetheless, Mr Lee insisted that as at 21 February 2002, when the decision was made to proceed with Project Alchemy, management's view was that Manage for Cash would lead to a shut down of the business over time. Mr Lee pointed out that the strategy involved minimising cash outgoings in ' every way possible ' and also involved cutting capital expenditure and taking no additional pay television subscribers. He also pointed out that, although the strategy included raising prices and reducing bundling discounts, Optus could not know precisely what the effect of these measures would be on the level of churn. 1729 Mr Lee reiterated that management had a more pessimistic view of what was achievable under Manage for Cash than McKinsey. --- Successful to the degree that McKinsey modelled, which was not the same numbers which management put forth on the management paper, which envisaged continuing losses of $100 million to $150 million per annum in cash, even under the manage for cash option, and it was management's view of what was achievable and the financial implications of it. And you see that clearly put in the management paper to the board. --- If the manage for cash met the performance criteria and targets that McKinsey had in the model, then it will become a going concern. If manage for cash met only what management thought was achievable, which was outlined in the paper put forward by Optus management to the Singtel board, the scenario was for continuing losses of between $100 million to $150 million in cash per annum, and that was what management thought at the time was our best guess of the future'. --- That's correct. --- Yes, an immediate exit. They spoke of exit? --- Yes. --- But I qualify that, because if you read carefully into the implications of the option which was titled "Manage for cash", management's view on it was that that would likely indefinitely have cash deficits, and therefore over time it would continue to be problematic, and my view at the time was that this would likely lead to a delayed exit of the business. Seven contends that Mr Lee's evidence (and that of Mr Anderson) was hypothetical and should be given little weight because it was given with the benefit of hindsight by witnesses who knew where their interests lay. The hypothetical nature of evidence and the fact that witnesses are speaking with the benefit of hindsight are matters to be taken into account in determining whether their evidence should be accepted. As I have noted, however, the evidence given by Mr Lee and Mr Anderson was by no means entirely hypothetical. In any event, after giving due weight to the matters raised by Seven, I do not think its challenge to the evidence succeeds. Mr Lee's evidence seems to me both convincing and consistent with the contemporaneous records of deliberations within Optus. I therefore accept his evidence. That's what manage for cash was. --- Yes. --- Yes. --- It's correct according to McKinsey. I don't know how many businesses McKinsey have ever run in their lives. But what you're talking about is slashing capital expenditure, and capital expenditure is not the way that you and I in a normal business reason would think of capital expenditure. In those days it meant growth. So you are talking about not having any capital expenditure, you are talking about putting no new ads on, you are talking about probably slashing programming costs as much as you can by running for bare bones and you are talking about losing 35 per cent or so of your customers each year. My view is that what manage for cash was always a polite way of saying that in the end you're going to run it down and close it. --- It's different, but it really means the same thing. It's just a matter of where you take your snapshot. Manage for cash --- let me say to you manage for cash is another way of exiting the business, only you're doing it in a phased withdrawal until your MSGs run out. If you look at $260 million with no terminal value, I think you'll see that manage for cash preserves your tax losses. When your tax losses run out, you end up losing money again. So it's a blind alley. You're going nowhere. --- Manage for cash? --- Well, on this deal here it's managing probably, they say here, if they run it out, don't they, the tax losses run out and you're back in a worse state in four years. My view is --- and I'm now thinking back four years ago, but my view is that in fact you couldn't have lasted that long because you would be losing 35 per cent of churn, you're putting no new customers on, you're essentially just waiting until it's better that you can do a deal, pay out as much of the MSGs as you can and exit the business'. It was too small. It was dysfunctional. It was subscale. It had too high fixed costs; all of the things. It had poor programming. So I think that after we had gone through this, and Alchemy also had been public knowledge, everyone had known about it, I think if we could not have pulled off Alchemy in that mid-2002 type period going forward, I genuinely think now in 2006, looking back, that there was no way that we could have got away without closing the business down. --- I meant manage for cash. But that, I think, would have meant closure. I suspect that it wouldn't have run out to the three or four years or whatever under the manage for cash scenario. I think that the business would have become much less viable much earlier than that '. (Emphasis added. However, I accept Mr Anderson's account as an accurate statement of his own thought processes at the time and of the likely outcome in the hypothetical situation he was asked to consider. The management team at [Optus] has put in an enormous amount of work on this project over the past 6 months but in the final analysis we were unable to persuade Singtel that the potential rewards from the alliance justified the financing and operational risks'. Mr Wise confirmed that the documents were in the form agreed by Seven and C7. He said he would recommend the board execution of the documents in this form. 1739 On 4 March 2002, Seven and Optus apparently entered an agreement for the supply by C7 of a sports channel to Optus during March (' March Variation Agreement ' ). The fee was $2 million plus GST. The agreement, which appears to have been signed on behalf of C7 but not Seven Network, took the form of a variation to the C7-Optus CSA. It contained no Exclusivity Clause. Clause 5.3(b) of the March Variation Agreement allowed Optus Vision to exercise its right of termination under cl 16.2(a) of the C7-Optus CSA at any time from 28 March 2002 to 15 April 2002. By separate agreements of 1 March 2002 and 4 March 2002, respectively, C7 agreed to provide Optus with certain residual programming and programming for an events channel. Mr Anderson and Optus' company secretary, Mr O'Brien, executed the agreement on behalf of the Optus parties; Mr Akhurst executed it on behalf of Telstra; Mr Philip and Mr McLachlan executed it for Sky Cable; and Mr Williams signed on behalf of Foxtel Management. 1741 The Foxtel-Optus CSA, which was subsequently amended by a Deed of Variation of 20 November 2002, was subject to conditions precedent, including notification by the ACCC that it did not intend to intervene (cl 2.1(a)). Pending satisfaction of the conditions precedent, the Foxtel-Optus Term Sheet remained in force. • The Foxtel-Optus CSA was conditional upon the coming into force of the ' Satellite Services Agreement ' between Optus Networks Pty Ltd and Foxtel Management relating to the provision of satellite services to Foxtel via Optus' C1 satellite (cl 2.1(e)). • Foxtel granted Optus a non-exclusive licence for the term to distribute the ' Foxtel Services ' over the Optus Cable and to certain subscribers by satellite (cl 3.1). Subject to limited exceptions, the ' Foxtel Services ' consisted of all pay television channels and all pay-per-view services provided by Foxtel to its subscribers as at 5 March 2002 or during the term of the CSA (cl 1.1). • Optus was obliged to carry all the Foxtel Services once Optus commenced to provide its services in digital format (cl 15.2(b)). This obligation was imposed because in March 2002 Optus only had a capacity to carry 49 channels (cl 15.2(a)). • Each Foxtel channel broadcast by Optus had to be broadcast in conformity with the ' Channel Queue ' set out in Schedule 6 to the Foxtel-Optus CSA (cl 15.2(b)). The Channel Queue identified four channels, including the Fox Footy Channel, that Optus had to carry from the outset and another 20 channels that it was permitted to carry. For each channel, the Channel Queue specified whether, if broadcast by Optus, it was to be in basic, on a tier or available a la carte. • Subject to certain MSGs, Optus agreed to pay Foxtel monthly fees equivalent to a nominated percentage of the retail price payable by Foxtel's subscribers (excluding installation charges) for the corresponding service tier, multiplied by the monthly average of Optus' subscribers (cll 4.2, 4.4). • Foxtel agreed to meet certain of Optus' liabilities and commitments up to an ' Aggregate Cap ' which could not exceed $550 million (cll 6.2, 6.5). • Optus agreed to make available to Foxtel all channels compiled or produced by it, subject to obtaining any necessary consents (cl 10.2(a)). • If Optus acquired a programming service after 30 January 2002 from a supplier other than Foxtel, Optus could elect the tier on which the service was to be provided, unless ' the new programming is of the same or a similar genre of programming as a Foxtel Service ', in which case Optus had to place the programming on a higher tier than that of the Foxtel Service (cl 15.7). • If Optus acquired any new rights comprising either movies or sports, it was required to ensure that the rights were made available to Foxtel (cl 10.1). This amended a number of agreements including the Fox Sports-Foxtel Supply Agreement. The effect of the amendment was to increase the volume discount available to Foxtel (by lowering the threshold for the application of the discount) and to reduce substantially the flagfall fee payable in respect of the NRL content. Mr Stokes thanked Mr Anderson for the information and said that ' you have really helped me in my Trade Practices case against Foxtel '. 1744 On 12 March 2002, Mr Wise sent an email to Mr Stokes expressing the view that C7 should do a deal with Optus for one month ' to progress the orderly close down of the channel '. While they are in [breach] of this the issue for us is what damages we have suffered '. 1745 On 20 March 2002, Optus deposited $6.325 million into C7's account. This amount represented the top up payment (inclusive of GST), being Optus' liability to pay increased licence fees for the period October 2001 to February 2002 in accordance with the Variation Agreements. On 21 March 2002, Mr Wise wrote to Optus Vision reserving all Seven's rights. The purpose of this letter is to terminate the Agreement in accordance with clause 16.2(a) of the Agreement. Consistent with clause 16.2(a), such termination takes effect immediately upon your receipt of this notice and, in accordance with clause 16.4, such termination is without prejudice to our accrued rights'. My decision was based on my belief that although the business would continue to incur the costs associated with purchasing rights to programming, personnel and production, it was unlikely to return any profit because in the absence of any attractive programming I believed it had little prospect of being accepted for broadcast on any pay television platform. In early May 2002 I instructed Mr Wood to close the C7 business. This involved negotiating an "exit" from remaining rights contracts to which C7 was a party, attending to redundancy of C7's staff or their relocation to other positions in the Seven Network Group, and attending to the sale of equipment or its transfer to other companies in the Seven Network Group'. C7 also contends that your letter dated 28 March 2002, purporting to terminate the Channel Supply Agreement, amounts to a repudiation by Optus Vision of its contractual obligations under the Channel Supply Agreement. As the Channel Supply Agreement is now at end C7 will cease to supply Optus Vision with the Seven Service'. On 29 May 2002, the ACCC informed Foxtel and Optus that it considered that the Foxtel-Optus CSA was likely to have an anti-competitive effect in the market for the acquisition of broadcasting rights for pay television and the market for the wholesale supply of programming for pay television. This letter led to meetings between the ACCC and representatives of Foxtel and Optus. On 21 June 2002, the ACCC confirmed its view that the proposed arrangements were likely to substantially lessen competition in the markets it had identified. In addition, the ACCC had formed the view that the arrangements were likely to have the effect of substantially lessening competition in the market for retail provision of retail television services and in the telecommunications fixed customer access market. This provoked further discussions with the ACCC, concerning the nature and scope of undertakings that might be proffered by the parties to the ACCC. On the following day, Telstra, Foxtel, Optus and Austar provided to the ACCC enforceable undertakings pursuant to s 87B of the TP Act . In those circumstances, the Commission has no current intention to take action against the CSA' . In view of the ACCC's notification, the Foxtel-Optus CSA came into effect on 1 December 2002. 1754 By reason of giving the undertakings to the ACCC, it became necessary for News, PBL and Telstra to amend the Umbrella Agreement and other agreements. This was effected by the ' Implementation Deed ' of 21 November 2002 which, among other things, removed the Foxtel Partnership's exclusive right to use the Telstra Cable. [1834] 12.7.4.3 Professor Hay's Analysis [1845] 12.7.4.4 Seven's Additional Arguments [1849] 12.7.4.5 Conclusion [1856] 12.8 Wholesale Sports Channel Market [1857] 12.8.1 The Issues [1857] 12.8.2 Seven's Submissions [1861] 12.8.3 News' Submissions [1868] 12.8.4 PBL's Submissions [1869] 12.8.5 Correct Question [1870] 12.8.6 Seven's Dilemma [1875] 12.8.6.1 Pleadings: Marquee Sports [1875] 12.8.6.2 Which Alternative? [1878] 12.8.6.3 AFL and NRL as Marquee Sports [1882] 12.8.7 A Premium Sports Channel Market? [1898] 12.8.8 Seven's Experts [1902] 12.8.9 Cumulative Appeal of AFL and NRL [1916] 12.8.9.1 Evidence [1916] 12.8.9.2 A Question of Overlap [1927] 12.8.10 General Sports Channel [1931] 12.8.11 Conduct as Evidence of the Market [1939] 12.8.11.1 Supply of Fox Sports to Foxtel [1941] 12.8.11.2 Supply of Fox Sports to Austar [1952] 12.8.11.3 Supply of Fox Sports to Optus [1957] 12.8.12 Views of Market Participants [1962] 12.8.13 No Wholesale Sports Channel Market as Pleaded [1966] 12.9 Wholesale Sports Channel Market: A Separate Functional Market? [1967] 12.9.1 The Respondents' Contention [1967] 12.9.2 The Contention Should Be Accepted [1972] 12.9.3 A Real World Foundation? [1975] 12.9.4 Additional Obstacles? [1977] 12.9.5 Seven's Role in 2000 and 2005-2006 [1988] 12.9.5.1 Seven's Offer in 2000 [1989] 12.9.5.2 Seven's Success in 2005 [1995] 12.9.6 Conclusion [2002] 12.10 Retail Pay Television Market [2004] 12.10.1 Pleadings [2004] 12.10.2 Seven's Submissions [2006] 12.10.3 News' Submissions [2014] 12.10.4 Reasoning [2019] 12.10.4.1 The Issue [2019] 12.10.4.2 Competing for the Same Viewers [2022] 12.10.4.3 Product Differentiation [2034] 12.10.4.4 The Critical Point: Choice [2038] 12.10.4.5 Churn [2045] 12.10.4.6 Foxtel's Pricing : Satellite Versus Cable [2052] 12.10.4.7 Foxtel's Profitability [2057] 12.10.4.8 Foxtel's Perceptions [2069] 12.11 Conclusion [2077] 12. These questions are of central importance to the case, since Seven's claims under s 45(2) of the TP Act depend on demonstrating that particular provisions or conduct had the purpose or likely effect of substantially lessening competition. Market definition is also central to Seven's case under s 46(1) of the TP Act , that Foxtel took advantage of its substantial degree of market power for a proscribed purpose. 1758 I have already commented on the fact that the parties adduced a great deal of expert evidence on the market questions, much of it repetitive in character. Nor has there been any suggestion that the experts were presenting other than their honestly held opinions on the questions on which each was asked to comment. Of course, this has not prevented the parties from criticising trenchantly the reasoning process of the ' opposing ' experts or from endeavouring to demonstrate that the key assumptions underlying their respective opinions were flawed or unsupported by the evidence. 1761 To a greater or lesser degree each of the experts made useful contributions to the debate, although I found Professor Williams' evidence not to be of particular assistance. Nonetheless, the expert evidence, although useful, cannot determine the market definition questions I must address. I explain later in this Chapter why there are limits to the utility of the expert evidence in this case. 1762 I do not think it would be useful to summarise the evidence of each of the competition experts. The better course is to refer to their evidence in the course of addressing the arguments made by the parties. Yet the parties are agreed that markets are not defined in the abstract, but for the purpose of analysing the processes of competition relevant to the allegations of anti-competitive conduct made in the particular case. Rather, it is the recognition and use of an economic tool or instrumental concept related to market power, constraints on power and the competitive process which is best adapted to analyse the asserted anti-competitive conduct'. 1765 The same point was emphasised by Mason CJ and Wilson J in Queensland Wire Industries Pty Ltd v The Broken Hill Pty Co Ltd [1989] HCA 6 ; (1989) 167 CLR 177. In that case, the issue was whether BHP had misused its substantial degree of power in the steel and steel product market, in contravention of s 46 of the TP Act. In identifying the relevant market, it must be borne in mind that the object is to discover the degree of the defendant's market power. Defining the market and evaluating the degree of power in that market are part of the same process, and it is for the sake of simplicity of analysis that the two are separated. Accordingly, if the defendant is vertically integrated, the relevant market for determining degree of market power will be at the product level which is the source of that power ... After identifying the appropriate product level, it is necessary to describe accurately the parameters of the market in which the defendant's product competes: too narrow a description of the market will create the appearance of more market power than in fact exists; too broad a description will create the appearance of less market power than there is'. A market is the area of close competition between firms or, putting it a little differently, the field of rivalry between them. (If there is no close competition there is of course a monopolistic market. ) Within the bounds of a market there is substitution --- substitution between one product and another, and between one source of supply and another, in response to changing prices. So a market is the field of actual and potential transactions between buyers and sellers amongst whom there can be strong substitution, at least in the long run, if given a sufficient price incentive. Let us suppose that the price of one supplier goes up. Then on the demand side buyers may switch their patronage from this firm's product to another, or from this geographic source of supply to another. As well, on the supply side, sellers can adjust their production plans, substituting one product for another in their output mix, or substituting one geographic source of supply for another. Whether such substitution is feasible or likely depends ultimately on customer attitudes, technology, distance, and cost and price incentives. Accordingly, in determining the outer boundaries of the market we ask a quite simple but fundamental question: If the firm were to "give less and charge more" would there be, to put the matter colloquially, much of a reaction? And if so, from whom? In the language of economics the question is this: From which products and which activities could we expect a relatively high demand or supply response to price change, i.e. a relatively high cross-elasticity of demand or cross-elasticity of supply? Cross-elasticities of supply and demand reveal the degree to which one product may be substituted for another, an important consideration in any definition of a market'. This means that market power ultimately rests upon two factors that act as constraints upon a firm's business behaviour: the numbers of (independent) firms and patterns of substitution for their products within an industry, and the extent to which there are barriers to entry of new firms, which would produce close substitute products, from 'outside' an industry (including the limbo of unborn firms). ... Thus, substitutability becomes the basic concept --- in the economist's sense"'. The economy is not divided into an identifiable number of discrete markets into one or other of which all trading activities can be neatly fitted. One overall market may overlap other markets and contain more narrowly defined markets which may, in their turn, overlap, the one with one or more others. The outer limits (including geographic confines) of a particular market are likely to be blurred: their definition will commonly involve assessment of the relative weight to be given to competing considerations in relation to questions such as the extent of product substitutability and the significance of competition between traders at different stages of distribution'. In our judgment, given the policy objectives of the legislation, it serves no useful purpose to focus attention upon a short-run, transitory situation. We consider we should be basically concerned with substitution possibilities in the longer run. This does not mean we seek to prophesy the shape of the future --- to speculate upon how community tastes, or institutions, or technology might change. Rather, we ask of the evidence what is likely to happen to patterns of consumption and production were existing suppliers to raise price or, more generally, offer a poorer deal. For the market is the field of actual or potential rivalry between firms'. Thus 'the long run' in market definition does not refer to any particular length of calendar time but to the operational time required for organising and implementing a redeployment of existing capacity in response to profit incentives "'. (Emphasis added. Many of them, however, will not have a significant effect and we attempt to exclude them from the relevant market in which we appraise a defendant's power. We try to include in the relevant market only those suppliers --- of the same or related product in the same or related geographic area --- whose existence significantly restrains the defendant's power. This process of inclusion and exclusion is spoken of as market definition'. So, too, is the evaluative judgment required as to the degree of closeness of competition relevant to the assessment of the particular conduct in issue: ACCC v Liquorland [2006] ATPR, at [441], per Allsop J. Thus, in Australian Competition and Consumer Commission v Boral Ltd [2001] FCA 30 ; (2000) 106 FCR 328, the Full Court overturned the trial Judge's finding, in a s 46 case, that there was a single market for the acquisition of materials for use in the construction of walls and paving. The Court held that the relevant market was narrower and was limited to the supply of concrete masonry products. This was so notwithstanding that, to a degree, alternative products were available and that, on occasions, some substitution occurred. Having regard to the conduct of players in the industry, the area of close competition was limited to the supply of concrete masonry products: at 377-378 [179], per Beaumont J; at 384-385 [202]-[203], per Merkel J; at 410 [320], per Finkelstein J. This holding was affirmed by the High Court: Boral Besser 215 CLR, at 423 [134], per Gleeson CJ and Callinan J; at 427 [155], per Gaudron, Gummow and Hayne JJ; at 456-457 [256]-[258], per McHugh J. While they used different language and, to some extent, different sources, they all accepted the principles that have already been summarised. It is useful to record some additional common ground. 1777 First , the experts generally agree that the hypothetical monopolist test is the ' standard analytical tool ' in economic analysis for defining markets. If so, then electric toothbrushes are a proper product market. We can ask not only how many consumers of electric toothbrushes would over time switch to manual toothbrushes (cross-elasticity of demand) but also the extent to which producers of related products (such as electric drills) could and would (in response to the assumed higher prices for electric toothbrushes) convert some or all of their facilities to the manufacture of electric toothbrushes and would succeed in making sales (cross-elasticity of supply)'. (Footnotes omitted. On this test, as explained by Professor Noll a relevant market contains the producer of the benchmark product (a specific product that is produced by a particular firm), plus the smallest number of producers of other products such that, if all these products were offered by a single firm, the single seller could impose a ' small but significant non-transitory increase in price ' (' SSNIP ') above the competitive level. To put the matter another way, two products will be in the same relevant market if all producers of one of those products, acting together, could not profitably impose a SSNIP above the competitive level without losing sales to the producers of the other product. A SSNIP is generally taken to be an increase of 5 to 10 per cent above the competitive level. 1779 Thirdly , as the previous paragraph implies, the relevant price in applying the SSNIP test is the competitive price. This is important because applying the test to the monopoly price results in an over-broad market definition. This mistake is known among economists as the ' cellophane fallacy ' because the United States Supreme Court is usually said to have made the error in the Cellophane Case ( United States v E I du Pont de Nemours & Co 351 US 377 (1956)). Suppose a firm is the sole producer of product A. If this firm sets a monopoly price for A, no further profit-increasing prices are feasible. Consequently, at the monopoly price consumers must be willing to switch their purchases to another product B if there is a further increase in A's price. At any lower price for A consumers prefer A to B, and the producer of A can impose a profit-enhancing price increase. Thus, B is not in the relevant market for A because it does not prevent the producer of A from setting its price above the competitive level, even though B is regarded as a substitute when A is sold at the monopoly price. But one product (cellophane) was supplied by one company and was priced substantially above average cost. Hence, waxed paper and aluminium foil should not have been regarded as in the relevant market for cellophane because they did not force the price of cellophane to the competitive level'. (Footnotes omitted. In this context, it is necessary to consider the effect of a SSNRP: ' a small but significant non-transitory reduction in price ' by a hypothetical monopsonist. (While this was not necessarily common ground among the economists at the outset, it was ultimately not in dispute. Between what set of products can customers and suppliers switch? Within what geographic space ? Is the focus to be on the selling function or the buying function , and how many levels or stages of production and distribution is it appropriate to distinguish in order to assess the scope for substitution through trade or potential trade? Finally, how much time is needed for customers and suppliers to make their adjustments in response to economic incentives? Thus, for example, geographic substitution may be alternative to, or complementary with, product substitution. And the interdependence may be enhanced the longer the time period'. (Emphasis in original. • The geographic dimensions of a market relate to the geographic area or areas in which sellers of the particular product operate and to which buyers can, as a matter of practicality, turn for such goods and services. The geographic dimensions of the market are defined by reference to substitutability. • A supply chain defines the different functions involved in creating and supplying a product or service, for example, manufacturing and wholesaling. It is necessary to identify the appropriate levels in the supply chain in order to understand the competition implications of the conduct at issue. In particular, it is necessary to determine whether each level forms a separate market or whether two or more levels together form a single market (as where manufacturing and wholesaling form a single market because all manufacturers undertake wholesaling and there are no independent wholesalers). • The temporal dimension of a market makes the SSNIP test operational because it identifies the period over which responses of sellers and buyers are to be measured. In general, economists tend to regard a year or so as sufficient for assessing substitutability, but when a new product is introduced a longer period may be needed to allow the market to adjust. (However, this assessment of the relevant period may have to be modified in the light of the principles stated in the authorities: ([1771]-[1772]. However, they disagree as to whether there are separate markets for AFL pay television rights and NRL pay television rights, distinct from markets for AFL free-to-air television rights and NRL free-to-air television rights. As has been seen, it is the competitive price that provides the starting point for determining whether a hypothetical monopolist could profitably impose a SSNIP. Whether or not it is ever possible to apply the test on the basis of purely quantitative data, the experts agree that such an approach is not available in the present case. Further, during the relevant period it is difficult to identify a competitive price for the purpose of applying a SSNIP. The industry employs pricing arrangements that make it difficult to identify consistent pricing data in relation to a product of constant quality. These data deficiencies mean that I will use a qualitative rather than a quantitative approach to assess the extent of substitutability at each level in the industry supplying channels to Pay TV service providers'. (Footnotes omitted. 1786 In the absence of adequate pricing information, the economists were thrown back on so-called ' qualitative assessments '. Dr Smith agreed that without quantitative data, the SSNIP test ' really in effect is an intellectual aid to focus the exercise '. In economics, this apparently can be described, without Orwellian overtones, as ' a thought experiment '. 1787 One consequence of the limitations of the SSNIP test (in the absence of quantitative data) is that in certain respects the economic evidence may not be as helpful as its volume (and the time spent on it in cross-examination) might suggest. This is not to deny the value of economic evidence for certain purposes. Plainly, it can be very helpful in identifying and explaining the economic concepts embodied in the TP Act . It can also be very helpful in explaining how economists go about the task of applying the economic concepts to particular situations. The evidence is, however, apt to be less cogent when the experts are asked to apply economic principles to the particular circumstances of a case. There are at least two reasons for this. 1788 The first is that a ' qualitative assessment ' necessarily involves the exercise of judgment upon which reasonable minds can differ. The sharp differences of opinion in this case among well-qualified experts demonstrate that this is so. Moreover, the exercise of judgment, if the present case is any guide, requires economists who may not have specialist expertise or experience in a particular industry to express their opinions about the application of economic principles to that industry. Even if the witness has expertise or experience in the industry, the lack of quantitative data may require what comes very close to speculation about the likely behaviour of industry participants, although it may perhaps be described as informed speculation. 1789 The second reason is that the qualitative assessments by the expert economists must proceed on the basis of assumed facts since, in the ordinary course, the facts have not yet been established by the Court. Like many competition cases, the present case is extremely complex. In order to deal with the complexities, the parties deemed it appropriate to provide their respective experts with extraordinarily elaborate sets of assumptions upon which to base their evidence. 1790 Seven, for example, prepared ' Assumptions A ', a document of some 350 pages, of which no less than five separate versions were supplied to various experts at various times. Some, but by no means all of the assumptions in Assumptions A were agreed between the parties, as recorded in a sixth version of the document. News prepared an additional set of assumptions, designated ' Assumptions B ', comprising about 80 pages. Two different versions of Assumptions B were supplied to the economic experts at different times. Mercifully the two quite distinct versions of News' ' Assumptions C ' were short, while ' Assumptions D ', largely agreed between the parties, deals with confidential material relating to the award of the AFL and NRL television rights in 2005. 1791 The result is that the economists were asked to express their opinions on a range of questions on the basis of a mountain of material (the various assumptions incorporated references to a multitude of contemporaneous documents). Each of the experts did so with impressive diligence and, for the most part, demonstrated an equally impressive ability to recall during oral evidence the details of many transactions and events. 1792 In the end, however, they were required to express opinions concerning the application of economic principles to an Australian industry with which none of them had detailed practical knowledge or experience. As Dr Smith said in her evidence, this process required them not only to take into account different assumptions, but to interpret the common assumptions. In addition, the experts had to analyse and construe documents such as board papers, emails and formal agreements, some of which were the subject of extensive oral evidence. It is therefore perhaps not entirely surprising that they came to such divergent conclusions on market definition and other issues. 1793 Professor Hay (whose reports were relatively brief) made some rather blunt comments that assist in placing the economic evidence in perspective. He referred in his oral evidence to the fact that the experts had managed to produce over 700 pages of analysis on certain issues. I did not find that it led me, again having only perused it, to be able to draw a firm conclusion on that issue. And, by the way, that is exactly what I anticipated was the case when I started; that even if I did that work, I don't think I would be able to resolve the problem'. The task requires the application of the statutory criteria, informed (as the authorities require) by economic principles. Ultimately, the conclusions must rest on an assessment of the evidence as a whole including, where they are helpful, the opinions and reasoning of the experts. But the fact that ss 45 and 46 of the TP Act incorporate economic principles and concepts does not mean that the application of those principles to the facts is, in effect, to be delegated to the economists who are called to give their expert opinions. Not surprisingly, however, they dispute the inferences that should be drawn from contemporary decisions or expressions of opinion by industry participants. To define those dimensions the best evidence will come from the people who work in the market: the marketing managers and salesmen, the market analysts and researchers, the advertising account executives, the buyers or purchasing officers, the product designers and evaluators. Their records will establish the dimensions of the market; they will show the figures being kept of competitors' and customers' behaviour and the particular products being followed. They will show the potential customers whom salesmen are visiting, the suppliers whom purchasing officers regularly contact, products against which advertising is directed, the price movements of other suppliers which give rise to intra-corporate memoranda, the process by which products are bought, what buyers must seek in terms of quantities, delivery schedules, price flexibility, why accounts are won and lost'. It is, however, important to observe that contemporaneous conduct or expressions of opinion by market participants are often ambiguous on questions of market definition. For example, in a letter of 10 March 1999, referred to by Mr Sumption in his opening submissions, Mr Macourt referred to C7 and ESPN as ' direct competitors of News '. Seven equates News in this context with Fox Sports (of which News was the parent corporation at the time) and suggests that Mr Macourt's comments show that he regarded C7 as a competitor of Fox Sports. However, it is not clear from the letter in what market Mr Macourt thought Fox Sports and C7 were competitors. In his evidence, Mr Macourt said that he regarded the free-to-air broadcasters as significant competitors, suggesting that he may have been thinking of some kind of sporting rights market. --- I can only assume I would have thought SportsVision was a competitor at the time. --- Yes. --- I don't have a specific recollection, but Mr Mockridge's letter you referred to earlier identified Mr Weston as saying Seven was offering a service. --- Yes'. However, I do not think that the questions were free from ambiguity, especially as the passage follows a question in which Mr Macourt was asked to agree that ' rights will cost more if there is competition '. In any event, Mr Macourt's attention was not directed to the issue of close competition, which is central to market analysis. In particular, his attention was not directed to the significance, as he saw it, of the different subscription driving content available or likely to be available on Fox Sports and on C7 as a successor to SportsVision. Mr Macourt's evidence certainly has to be taken into account in determining whether Seven has established the existence of its pleaded wholesale sports channel market. But the evidence is far from decisive and must be evaluated in its proper context. Seven states, correctly, that the point of considering the existence or otherwise of particular markets is to assess the competitive implications of the acquisition by Foxtel of the AFL pay television rights for 2002 to 2006. Seven then says that, since its case is that the Consortium Respondents engaged in a series of actions designed to eliminate C7, it is necessary to deal with the market issues having regard to the purpose it attributes to those parties. 1802 Seven's submissions reflect the close links between market definition questions and other issues in the case. Having placed such emphasis on the anti-competitive purpose of ' killing C7 ', Seven's market submissions have to be assessed in the light of my findings on the purpose of the Consortium Respondents. Contrary to Seven's contentions, I find in Chapter 15 that none of the Consortium Respondents had the substantial purpose of killing C7. While Mr Macourt and Mr Philip, and perhaps others, would have been content --- even very pleased --- to see the end of C7, that was not the objective or end they sought to achieve in arranging Foxtel's successful bid for the AFL pay television rights. To use Seven's own language, the actions of the Consortium Respondents, while aggressive and perhaps ruthless, did not go beyond the ' ordinary workings of vigorous competition '. 1803 Seven's market definition submissions, particularly those relating to the wholesale sports channel market, are permeated by the assumption that the Consortium Respondents engaged in the conduct in question for the purpose of destroying C7 as a competitor of Fox Sports or Foxtel. My findings of fact elsewhere in this judgment mean that the assumption is not soundly based. That must be kept steadily in mind when considering Seven's submissions in relation to the particular markets it propounds. Seven says that the broadcasting rights to AFL matches are purchased by companies which either on-sell the rights to other companies or use the rights themselves in the course of making television broadcasts of AFL matches. The Statement of Claim pleads an NRL sports rights pay television market (' NRL Pay Rights Market ') in comparable terms (par 154). 1805 As has been noted, the parties are in agreement that, from the perspective of a buyer of sports rights, there are markets at least as narrow as an AFL broadcasting rights market and an NRL broadcasting rights market. The question is whether each of these markets should be further subdivided into AFL pay rights and NRL pay rights markets, separate from AFL free-to-air rights and NRL free-to-air rights markets. More specifically, would the demand by FTA broadcasters for the FTA rights for the relevant code constrain the hypothetical single purchaser of the pay TV rights to a competitive price? First, the anti-siphoning regime gives free-to-air broadcasters an effective right of first refusal in respect of sporting events on the anti-siphoning list, including AFL and NRL matches. The free-to-air operators' first right of refusal in relation to AFL and NRL broadcasting rights thus shields them from competition from pay television operators for those rights. Seven relies on Professor Noll's observation that ' [t]he anti-siphoning rules prevent pay-TV from bidding on the first-choice live television rights in any time slot'. Secondly, the free-to-air networks have limited capacity to televise live sport, no matter how popular the particular sport may be. 1808 Seven rejects the Respondents' contention that the measures used in practice to ' circumvent ' the anti-siphoning regime (my word, not the Respondents') mean that free-to-air operators act as a constraint on any attempt by pay television operators to impose a SSNRP for the AFL or NRL pay television rights. Seven's Reply Submissions expressly disavow any reliance on breaches of the anti-siphoning provisions of the BS Act for the purposes of market definition. Rather, Seven contends that the effect of the regime as understood and applied by market participants , gave free-to-air operators a first right of refusal in respect of the AFL and NRL broadcasting rights. According to Seven, the whole point of the anti-siphoning regime is to ensure that classic sporting events remain on free-to-air television and are not transferred to pay television ' simply because of a higher bid '. Moreover, the AFL and the NRL Partnership would find the prospect of too many matches, or the best matches, being reserved for pay television most unattractive. 1809 So far as capacity constraints are concerned, Seven argues that each free-to-air broadcaster must have regard to opportunity costs when evaluating new programming. The practical consequence is that each additional match will be less valuable to the free-to-air broadcaster than the previous one because it will attract less advertising revenue and displace a more valuable programme. As more games are broadcast, the opportunity cost of that game increases because the program that must be dropped is a better program than the previous programs that were dropped'. Thus there will continue to be a set of ' exclusive ' rights available for acquisition by pay television operators, being the residue matches not wanted by free-to-air operators. This was substantially more than the price of $23 million per annum paid by Nine for the first three picks. If Foxtel had offered less than $30 million per annum for the pay television rights (that is, less than the assumed competitive price), the AFL could not have improved its position by offering more rights to free-to-air operators. In respect of the balance, FTA has little or no interest in the matches and thus pay TV is largely unconstrained in acquiring the rights to those matches. As a consequence, the acquisition of each set of broadcasting rights ought to be characterised as in separate markets, as a pay TV monopsony will not be constrained by FTA to pay a competitive price for pay TV rights'. However, News submits that the practical content of pay television rights, in view of the anti-siphoning regime, depends on which free-to-air operator acquires the rights and on the approach taken to the rights. The free-to-air and pay rights are ' intertwined '. Thus, the AFL and NRL pay television rights have no constant existence or scope. 1816 According to News, the correct market analysis, for the purpose of addressing alleged anti-competitive conduct by a buyer of sports rights, requires an assessment of what would occur if all of the free-to-air and pay television operators combined (the hypothetical monopsonist) and sought to reduce the price paid to the AFL or NRL for their respective broadcasting rights. In that event, the AFL or NRL would not be able to defeat a price reduction either by selling the rights to an alternative purchaser or by switching its production to something else. It is for this reason, News contends, that the AFL and NRL broadcasting rights are properly to be considered in separate markets. 1817 News then addresses the appropriate analysis to determine whether there are separate pay rights markets for each of the AFL and NRL. It argues that the test is not (as Seven submits) whether demand by free-to-air broadcasters for the free-to-air rights for the relevant code constrains the hypothetical single purchaser of the pay television rights to a competitive price. The test is rather whether demand by free-to-air broadcasters for broadcasting rights to the relevant code constrains the hypothetical single pay television purchaser of broadcasting rights to a competitive price. 1818 News accepts that the anti-siphoning regime distinguishes between free-to-air operators and pay operators and gives the former a competitive advantage. Nonetheless, it is open to Foxtel and Fox Sports to do what they can, within the law, to obtain the most attractive programming. News says that the reality is that, despite the anti-siphoning regime, dealings with the AFL and NRL pay television rights have resulted in some matches being televised exclusively live on pay television. The impact of the anti-siphoning regime, in practice, is limited and does not prevent pay operators obtaining quality matches on an exclusively live basis. 1819 News also acknowledges that each free-to-air operator has capacity constraints. However, News says that Seven's experts wrongly assumed that the first pick of an AFL or NRL match by a free-to-air operator who has the right of first choice is necessarily the most valuable match. News also says that the experts wrongly assumed that there is a ' linear ' relationship between the first and last games for valuation purposes. The flaw in the assumption is that neither AFL nor NRL matches are sold one by one. Rather, buyers seek to obtain a package of rights and a range of considerations determine how much the buyer is prepared to pay. Moreover, according to News, Seven fails to come to grips with the practice of the free-to-air rights being split between two free-to-air operators. 1820 News further submits that Seven is mistaken in contending that pay television simply gets what free-to-air cannot use. How those rights are divided up is the subject of negotiation between the person seeking to acquire those rights and the sporting bodies (or other owners) seeking to sell them'. The AFL, for example, could avoid the problem of a single buyer of pay rights by declining to pre-define separate free-to-air and pay television rights and electing to allow competitive tensions to arise within and between consortiums of buyers. Professor Noll accepts that if his understanding of anti-siphoning is incorrect, Professors Hay and Fisher are correct that there is no separate market. In an open auction, the bidder with the highest willingness to pay will succeed. In this instance, as News points out, the contravening conduct is said to have occurred on the buying side, in that the loss of the AFL pay television rights is alleged to have caused C7's demise and led to an increase in the market power of Foxtel and Fox Sports as buyers or potential buyers of both AFL and NRL pay television rights. It is for this reason that the parties have focussed upon whether Foxtel and Fox Sports can exert market power by forcing prices for AFL and NRL pay television rights below the competitive price for a sustained period. It is quite clear from the evidence of Dr Smith and Professor Noll that the differences of opinion among the experts rest, to a considerable extent, on different assumptions about the operation of the anti-siphoning regime. Both Dr Smith and Professor Noll assumed that the regime operates in a manner that eliminates, or at least severely limits, the opportunity for pay television operators to acquire exclusive rights to AFL or NRL matches of relatively high quality. Both accepted that in the absence of the anti-siphoning regime, AFL and NRL broadcasting rights would be sold into a single Australia-wide retail television market: that is, they accepted that in the absence of an anti-siphoning regime, free-to-air rights buyers would act as a close constraint on a pay television monopsonist seeking to impose an SSNRP on the AFL or NRL as sellers of pay television rights. 1825 Neither Dr Smith nor Professor Noll, naturally enough, offered a view as to the legality of what Seven described as the devices used to ' circumvent ' the anti-siphoning regime. In any event, as I have explained, Seven does not rely on what it says is the illegality of the arrangements employed by some of the Respondents (and, for that matter, by Seven) to circumvent the anti-siphoning regime (an issue that is addressed in Chapter 21). Instead Seven looks to the practices actually adopted in relation to the bidding for broadcasting rights in support of its market definition case. 1826 In these circumstances, an important difficulty facing Seven becomes apparent from Professor Noll's evidence. In his reply report, Professor Noll stated that under the anti-siphoning regime, once free-to-air networks have acquired broadcasting rights, pay television operators can acquire ' subsidiary rights '. He expressed the view, on the basis of the award of the AFL broadcasting rights in 2000, that the AFL received a higher price for its pay television rights (quality and quantity adjusted) than it received for its free-to-air television rights. This price in turn was lower than the amounts paid by Foxtel. Hence, the willingness to pay of FTA for the rights that were acquired by Foxtel was not a binding constraint in determining the pay-TV prices, so that competition by FTA can not prevent a small but significant, non-transitory reduction in price for pay-TV rights. Consequently, a pay-TV service, by avoiding the competition for rights that ensued in 2000, has something to gain from becoming the only buyer in the future sale of pay-TV rights'. --- That's right. That is the crucial fact separating the experts in this case about market definition and also about substantial lessening of competition. It is whether the anti-siphoning regime is sufficiently binding a constraint on pay television that they don't really get what they want despite their willingness to pay. --- Exactly. That is a legal conclusion, and I'm afraid that's your job, not mine'. 1828 The Respondents interpret Professor Noll's evidence as conceding that if the contractual arrangements utilised in 2000 and 2005 to give the pay television operators greater certainty in relation to content were lawful (the so-called ' circumvention measures '), this would also cause the market for pay and free-to-air television rights to be integrated. I agree with Seven's protest, in its Reply Submissions, that this interpretation misconstrues Professor Noll's evidence. Any concession made by him did not go that far. He insisted that there would be an integration of the pay and free-to-air television rights markets only if Foxtel, or any other pay operator, were to be placed on an equal footing with the free-to-air broadcasters in relation to the selection of games to be broadcast on an exclusive basis. 1829 Nonetheless, it is clear enough that Professor Noll's analysis proceeded on the assumption that the existing regime in practice prevents a pay television operator from bidding on first-choice live television rights in any timeslot. It is for this reason that he referred to pay television as acquiring only ' subsidiary rights '. He did not address in any detail the opportunity for pay television operators to negotiate not merely with the AFL or the NRL Partnership, but with free-to-air broadcasters with a view to forming a bidding coalition. As the evidence shows, negotiations between free-to-air and pay broadcasters can open the way to an agreement concerning the ultimate award of pay television rights and, more importantly, the precise content of those rights. The bargaining chip available to a pay television operator, as Professor Hay pointed out, is the pay television operator's contribution to the consortium's bid. 1830 In Dr Smith's first report, she expressed the view that there are separate markets for free-to-air and pay AFL and NRL television rights. Dr Smith reasoned that the rights available for pay television under the anti-siphoning regime are those not required by the free-to-air networks. In effect, therefore, the regime creates two categories of rights for sports on the anti-siphoning list: one for free-to-air rights and the other for pay television rights. Hence, ' demand is likely to be unresponsive to a SSNIP '. 1831 News, in my view, justifiably criticised Dr Smith's approach in her first report on the ground that she determined the boundaries of the sports rights markets as if the relevant issue was the power of the sellers of rights to raise prices above the competitive level. Presumably for this reason, she spent some time considering whether a SSNIP charged for the rights to a particular type of event would cause much supply side substitution between different types of events, for example by creating a new Australian Rules competition. The answer to that question does not assist in identifying the boundaries of the sports rights markets for the purpose of assessing the power of buyers of sports rights to depress prices below the competitive level. 1832 In her reply report, Dr Smith accepted that in a market where the allocation of rights results from competition between potential buyers, the question is whether a seller of AFL or NRL broadcasting rights could defeat a negative SSNIP (SSNRP) on the part of a hypothetical pay television monopsonist, by offering more rights to the free-to-air networks. Rather confusingly, she then said that it was inappropriate to apply a negative SSNIP test to determine the relevant market because the focus was on buying power. Dr Smith said that the reason a negative SSNIP test could not be applied was because of the operation of the anti-siphoning rules, which (as she understood it) meant that only rights not exercised by the free-to-air networks could become available for pay television. In my opinion, this results in separate markets for the AFL/NRL broadcast rights for FTA and for Pay TV'. She also conceded that it would be possible for a pay television operator to seek a coalition with a free-to-air operator in order to acquire more attractive games and that a free-to-air operator might have legitimate business objectives in forming or joining such a coalition. 12.7.4.2 DOES PAY TELEVISION RECEIVE THE WORST MATCHES? The evidence does not support the validity of this assumption. It is true that the successful News bid in 2000 for the AFL broadcasting rights, supported by the Foxtel Put, resulted, broadly speaking, in Foxtel obtaining the three least attractive AFL games, although the form of the bid appears to have been influenced by the existence of Seven's last right. But other arrangements involving coalitions of rights buyers have contemplated pay television operators securing more attractive games, effectively on an exclusively live basis. 1835 Under the arrangements in place for the NRL broadcasting rights between 2001 and 2006, Nine in fact had the first two choices from seven NRL matches each week, while Fox Sports had the balance available for broadcast on pay television. Although Nine had the first two picks (subject to the practical constraints imposed by the scheduling of NRL matches), it could not meaningfully be said that Fox Sports was simply left with an unattractive and unwanted residue. After all, it had five NRL matches available for broadcast live each week, while Nine effectively could occupy only two time slots over a weekend of matches. 1836 More importantly, the bidding for and award of the NRL and AFL broadcasting rights in 2005 demonstrates that coalitions can be formed between one or more free-to-air operators and a pay television operator under which a bid, if successful, will result in the pay television operator acquiring rights to some attractive matches, effectively on an exclusively live basis. Some of the details of the arrangements entered into form part of the confidential evidence and it is not necessary to outline them in this section of the judgment. They support the proposition that genuine bids were made that, if successful, involved a pay television operator being able, in effect, to make a selection of matches that could not reasonably be regarded as the unattractive residue of the free-to-air rights. 1837 The point can be illustrated by the arrangements made in 2005 between Nine and Fox Sports in relation to the NRL broadcasting rights for 2007 to 2012. Under these arrangements, Nine had the first, second and fifth pick of the eight matches in each round. Fox Sports had the third and fourth picks and all matches not required by Nine. In addition, Nine nominated its time slots as 7.30 pm on Fridays, 3 pm on Sundays and either a second Friday night game or a Monday night game. However, if Nine chose the Monday night game, it had to pay substantial compensation to Fox Sports. 1838 Seven's Reply Submissions seem to accept that under the 2005 arrangements, Nine did not obtain exclusive rights to the ' best matches '. In particular, Nine did not obtain the third selection; Fox Sports retained its position as the exclusive live NRL broadcaster on Saturdays; and Fox Sports retained the Monday night slot unless Nine elected to pay Fox Sports substantial compensation. Nor can the NRL be assumed to be acting in the best interests of a league to ensure that the best matches get the widest possible coverage'. Accordingly, I do not accept the submission. Whether or not Nine got 'what it wanted ' (whatever that means), as Seven suggests, does not detract from the outcome. Negotiations between a free-to-air operator and a pay television operator might result in the latter obtaining exclusive rights to ' better ' matches than some of those taken by the free-to-air operator. 1841 The point is further illustrated by the 2005 Nine-Foxtel bid for the AFL broadcasting rights for 2007 to 2011. Seven seems to accept that, had the bid succeeded, Foxtel would have obtained an improved selection of AFL matches for broadcast on its pay television platform. However, Seven attributes the outcome to the fact that Foxtel was participating in a consortium with only one free-to-air broadcaster which had particular capacity constraints because of its ongoing commitment to NRL content. But this explanation helps make out the Respondents' contention. The precise terms of any arrangement between members of a bidding consortium will depend on a variety of circumstances, including the free-to-air operator's pre-existing commitments, perceived viewer preferences, likely advertising revenues, the pay television operator's assessment of the value of premium sporting events and many other factors. 1842 Even where a bid for broadcasting rights was made in 2005 by a coalition of free-to-air operators (without the participation of an existing pay television operator), it was structured in a way that allowed rights to be sub-licensed to a pay television operator. Depending on the outcome of negotiations between the successful free-to-air bidders and the pay television operator, the latter might well be able, in effect, to select at least some of the more attractive AFL matches for broadcast exclusively live on pay television. 1844 The experience in Australia demonstrates that in practice it is impossible at the outset of the bidding process for the AFL or NRL broadcasting rights to ascertain with certainty the content of the ' pay rights '. The precise content of the bundle of rights ultimately obtained by the pay television operator depends on negotiations between the rights holders and the various bidders, as well as negotiations among bidding coalitions and within individual bidding coalitions. Consequently, the matches taken by a pay television operator are not necessarily the least attractive and, indeed, might even be the first choice for a particular time slot. He argued in his first report that there is no externally imposed boundary between the number of matches shown exclusively on free-to-air television and the number shown exclusively on pay television. The NRL and AFL can therefore set the boundaries in a manner that maximises the overall value of the rights to them. According to Professor Hay, if a hypothetical pay television monopsonist attempted to restrict the quantity of pay television rights purchased from the NRL or AFL, in order to drive down the price paid, the NRL or AFL could shift the boundaries so that more matches are available to free-to-air. He said that it was open to the AFL or NRL not to pre-define the rights, but to encourage various consortiums to be formed and to engage in competitive bidding. If one consortium elected not to pay what the rights were worth, another consortium would win with a different balance of free-to-air and pay television rights. In other words, the AFL and NRL could facilitate the shifting of rights between free-to-air and pay, thereby allowing ' fluidity to work itself out '. 1847 Professor Hay rejected a suggestion put to him by Mr Sheahan that a monopsonist pay television operator would be able to insist on offering a less than a competitive price, even after a competing consortium had acquired the broadcasting rights. Professor Hay explained that the consortium would be able to offer a variety of packages and could threaten to divert all the rights to free-to-air, if necessary enlisting a third free-to-air network or, as News added, even one of the public broadcasters. As News submits, there will be differences among free-to-air operators, and between free-to-air operators and pay operators, as to the value they place upon particular rights. The different attributions of value may well be influenced by the strategic objectives of each operator. 1848 Seven submits that it is fanciful to suggest that one of the National Broadcasters (ABC and SBS) might form part of a bidding coalition or might acquire AFL or NRL broadcasting rights. There is no evidence to support this submission. On the contrary, Mr Frykberg gave evidence that SBS (which he regarded as a commercial channel) had shared the rights to significant sporting events, such as the English Premier League, World Cup soccer and Test cricket and that the ABC had on occasions shared sporting rights with other free-to-air channels. The evidence supports Professor Hay's view that in certain circumstances the National Broadcasters might be prepared to participate in a bidding coalition for AFL or NRL broadcasting rights or to acquire such rights in other ways, for example by a sub-licence from the rights holder. It argues that Nine and Ten actually paid less for the free-to-air rights than Foxtel paid for the inferior pay television rights (bearing in mind the content of those rights). It is said to follow from this experience that competition from free-to-air operators for rights cannot prevent a SSNRP by a pay television operator. The free-to-air operators will simply not be prepared to pay enough. 1850 There are difficulties in drawing general conclusions from the arrangements in place for one set of rights for a closed period. Those particular arrangements are likely to have been influenced by considerations that will not be present on other occasions. In any event, as PBL points out, there was no evidence as to the comparative prices on a quality adjusted basis. Such an analysis would require consideration of such matters as the potential of the final series to drive advertising growth and the strategic importance of a network being identified with one of the premier Australian sports. Moreover, the experience in 2005 relating to the AFL broadcasting rights indicates that the position at that time may have been quite different. In particular, the bid by Nine with Foxtel's support, so far as the raw (confidential) figures are concerned, suggests that, if anything, the free-to-air television rights were valued more highly than the pay television rights on a simple per match basis. 1851 For much the same reasons, in my view, Seven's reliance on the law of one price (the principle under which buyers in the same market will end up paying the same price) does not take matters very far. As Professor Fisher explained in his evidence, that law is of little assistance where rights are not sold game by game, but in packages designed to serve, among other objectives, the strategic purposes of the acquirer. 1852 In the end, the answer to the question posed by Seven depends on what Dr Smith described as a qualitative assessment based on the available evidence. For the reasons I have given, I think that the arguments advanced by Professor Noll and Dr Smith are flawed. In particular, they assumed that the anti-siphoning regime worked in a way that does not correspond to the realities of industry practice. I prefer the analysis of Professor Hay who demonstrated a better grasp of the practical workings of the anti-siphoning regime. 1853 Seven appears to argue that even if the reasoning of Professor Noll and Dr Smith is flawed, the objective circumstances support the contention that free-to-air broadcasters could not constrain a pay television operator seeking to impose a SSNRP on a seller of AFL or NRL pay television rights. Although not explicitly conceding flaws in the reasoning advanced by Professor Noll and Dr Smith, Seven's Reply Submissions seem to put an argument that assumes that their reasoning was indeed flawed. 1854 It is true, as Seven submits, that the anti-siphoning regime, as a practical matter, gives a free-to-air broadcaster certain advantages in negotiating with a pay television operator or in dealing with the AFL or NRL in relation to the selection of matches. However, whether the advantages are important in determining the allocation of rights depends on the value the respective operators place on the particular matches or combination of matches. Price cannot be eliminated from the equation. Similarly, it is true, as Professor Noll suggested, that a free-to-air broadcaster's incremental willingness to pay for the right to broadcast additional matches each week will tend to decrease, at least to some extent , as a consequence of the opportunity costs which arise from capacity constraints. But that does not mean that the price the free-to-air broadcaster is prepared to pay for any particular set of rights will be significantly less than the price a pay operator should be prepared to pay for the same rights in a competitive market. 1855 Seven's case that a free-to-air broadcaster will not constrain a monopsonist purchaser of NRL or AFL pay television rights seeking to impose a SSNRP rests, in my opinion, too heavily on the experience with the allocation of the AFL broadcasting rights in 2000. The experience of the rights bidding in 2005 suggests that general conclusions cannot be drawn from the earlier transaction or series of transactions. On the contrary, the more recent experience suggests that, despite the concentrated nature of the buyers' market (however defined), broadcasting rights can be re-allocated among coalitions so as to constrain a pay television operator seeking to impose a SSNRP in respect of the rights it is prepared to acquire. The evidence may well be consistent with the existence of AFL and NRL broadcasting rights markets, but Seven has not relied on these markets to make out its case under s 45(2) or s 46(1) of the TP Act. In particular, Seven claims that by reason of Foxtel's acquisition of the AFL pay television rights, C7 was unable to compete with Foxtel and Fox Sports in the supply of pay television channels, leaving Foxtel and Fox Sports as the only suppliers of channels which include ' sports programming of a premium or marquee nature '. 1859 The Respondents strenuously dispute the existence of the wholesale sports channel market as pleaded by Seven and, at least in the case of News, support their contention with elaborate and detailed arguments. (PBL's submissions, although adopting News' arguments, were refreshingly succinct. ) In essence, their main contention is that the substitution possibilities between Fox Sports and C7, on both the demand and supply side were limited. Moreover, any attempt to impose a supra-competitive price by a hypothetical monopolist of sports channels would be defeated by vertical integration backwards by the pay television platforms or forwards by the NRL Partnership or the AFL. Naturally enough, the Respondents' contentions provoked equally elaborate and detailed arguments in reply by Seven. 1860 The analysis in this section as to the existence or otherwise of the wholesale sports channel market takes account of the arguments that have been put but does not explicitly address every contention advanced. It argues that the question of market definition should be informed by findings made in relation to Seven's purpose case, since this sheds light on the perception of News, PBL and the other parties as to the likely consequences of their actions. Those actions, so it is alleged, were designed to bring about the demise of C7. As I have recorded, I have rejected Seven's purpose case. 1862 According to Seven, a hypothetical merger of Fox Sports and C7 would create a firm with significant market power, having the capacity to raise the price of its services beyond the competitive level or to reduce the price of its inputs (sports rights) below the competitive level. For example, Fox Sports in 1998 projected a significant increase in rights fees in 1998 and developed a strategy to acquire rights to combat C7's entry into the market place. • Fox Sports expected to generate increased revenue in the absence of C7, a proposition illustrated by its perception of C7 as a threat to its revenue via supply agreements to the pay television platforms. • Telstra played off C7 against Fox Sports in negotiations for the supply of the Fox Sports channels to Foxtel. In particular, Telstra ' benchmark[ed] ' Fox Sports against C7 and put pressure on Foxtel to consider taking C7 instead of Fox Sports, thereby demonstrating that C7 was a real constraint on Fox Sports. Internal Telstra documentation demonstrates that its officers regarded C7 as Fox Sports' key competitor and that C7 was an alternative to the Fox Sports channels on the Foxtel platform. • Optus played C7 off against Fox Sports in supply negotiations after C7 had lost the AFL pay television rights. Optus sought to obtain the Fox Sports channels by threatening to ' breathe life ' into C7. • Austar played off C7 against Fox Sports in supply negotiations in 1998. • Fox Sports and its shareholders considered C7 to be by far the most substantial competitor to Fox Sports. For example, Mr Macourt agreed in evidence that in mid-1998, it was apparent that the most likely source of competition to Fox Sports in the sports channel business, following the collapse of SportsVision, was part of the Seven group. Similarly, in November 2000 an internal Telstra document recorded a view of Telstra management that the effect of the proposed AFL pay television rights acquisition would be to enable Fox Sports to extract monopoly profits. The fact that Foxtel was the only retail platform to be vertically integrated in this sense (through the Fox Footy Channel) shows that the efficiencies were not overwhelming. In any event, the suggestion that the response to a hypothetical monopolist imposing a SSNIP would be backwards integration lacks an empirical basis. The conduct of Foxtel in creating the Fox Footy Channel should be understood as the product of overlapping proprietorial interests in Foxtel and Fox Sports and, more colourfully, as ' the stunted misbegotten progeny of parents with conflicting commercial interests '. 1864 Seven submits that Professor Hay's suggestion that an attempted monopolisation could be defeated by the AFL and NRL integrating forwards is pure supposition, unsupported by any empirical evidence in Australia. In any event, such a move would be difficult and risky and involve significant sunk costs. Any potential new entrant to the wholesale sports channel market, for example a free-to-air operator, would perceive and encounter many difficulties. These include the fact that sports rights are available only every five years or so and are on the anti-siphoning list. The hypothetical entrant may have to join a bidding coalition and, in any event, would face the prospect, if successful, of having to deal with a dominant Foxtel in order to exploit the pay rights. 1865 These arguments and others were developed by Mr Sumption in his final oral submissions. Mr Sumption argued that although premium subscription driving content is commercially necessary for a sports channel supplier, such content is not sufficient to establish a viable business. A channel requires a broader range of programming, in particular to fill the off-season schedule (in this case, summer). He pointed out that the AFL-only channel, the Fox Footy Channel, was not a success, in part at least because it had no fresh summer sports programming. 1866 Mr Sumption contended that the mere existence of Fox Sports, C7 and other sports channels such as ESPN shows that there was a market for the supply of such channels. Furthermore, so he argued, pay television broadcasters in practice bought channels from suppliers instead of compiling the channels themselves. Even if pay television broadcasters could move into channel-making, it would merely demonstrate that there were lower barriers to entry to the wholesale sports channel market, not that there was no market. 1867 Mr Sumption contended that, in any event, an entrant into the market would have to reckon with the close association between Fox Sports and Foxtel. An entrant would know that ' half the retail market would probably be closed to him, irrespective of the merits of his product '. At best, a new entrant could expect to sell to Foxtel only ' at a prodigiously loss-making price '. Mr Sumption referred to the modelling conducted within News suggesting that a higher price could be charged by a channel supplier with a practical monopoly, by selling to all three pay platforms. He contended that the models did not take into account the possibility that Optus and Austar would circumvent the monopoly supplier by producing their own channels. Mr Sumption also relied on Optus' decision in January 2001 to take NRL programming from Fox Sports, rather than exercise its entitlement to obtain the rights directly from the NRL Partnership. At no point, so he argued, had Optus contemplated setting up its own channel. The primary focus must therefore be on the close constraints on Fox Sports as a supplier of sports channels. C7, which depended primarily on AFL content, was not substitutable for Fox Sports, which included NRL content and a variety of other sports such as Rugby Union, English Premier League soccer and international tennis. • The fact that Telstra, Austar and Optus used the availability of C7 as a bargaining chip in negotiations with Fox Sports does not establish that C7 constrained Fox Sports so as to prevent it imposing a SSNIP above the competitive level. To draw such a conclusion, without first identifying the competitive price, has the potential to fall foul of the Cellophane fallacy. • On the supply side, Fox Sports and C7 did not constrain each other. The only opportunity for Fox Sports to become a substitute for C7 was by acquiring the AFL pay television rights when they became available in 2000. Likewise, in order for C7 to become a substitute in supply for Fox Sports, it would have had to acquire the NRL pay television rights when they became available. • The source of the power to charge a high price for Fox Sports and C7 lay in holding the NRL or AFL pay television rights. The opportunity for sports channel providers to derive monopoly rents was likely to be lost to the entities that sell the premium sports rights that in turn constitute the source of the power to charge high prices. Monopoly rents are likely to end up in the hands of the AFL and NRL. Channel suppliers may charge a high price, but it is not a monopoly price. The price merely reflects the cost of an essential input. • The pay television platforms could integrate backwards to acquire the premium sports rights directly and thus prevent sports channel supplier exacting monopoly rents. • The anti-siphoning regime means, in practice, that sports channel suppliers seeking to acquire rights must reach an accommodation with free-to-air operators who can use their position of advantage to skim any monopoly rents that otherwise would accrue to the channel suppliers. • Seven in any event poses the wrong test, namely whether a hypothetical monopolist of premium or marquee sports channels would have the capacity to reduce the price of sporting rights. That question, according to PBL, is relevant to the existence of a sports rights market, not a wholesale sports channel market. • If the correct question is posed, either in terms of the hypothetical monopolist test or the views of market participants about the constraints on Fox Sports as a channel supplier, the evidence does not support the existence of a separate wholesale sports channel supply market. As I have noted, market definition is a tool to facilitate analysis of the processes of competition and of market power. That being the case, the focus, as Dr Smith agreed, must be on the close constraints on Fox Sports as a supplier of sports channels to pay television platforms during the period 1998 to 2000. 1871 This basic proposition, while uncontentious, is important because Seven's submissions often depart from it. At various points in its argument (and in various ways) Seven contends that C7 acted as a constraint on Fox Sports in relation to the acquisition of sports rights, particularly the AFL and NRL pay television rights. That would not be so if, as the Respondents' experts suggest, the merged firm would be so closely constrained by the pay TV retailers, rights owners and FTA networks that it would have no capacity to reduce the price of inputs (rights) or raise its prices. On the other hand, evidence suggesting that a merged firm could either reduce the price of rights , or could raise the price of its services to pay TV retailers, in each case even if only to a small extent, would indicate that sports channels like C7 and Fox Sports were a separate market'. (Emphasis added. Consequently, its submissions contain many references to evidence that is said to show that C7 constrained Fox Sports as an acquirer of sports rights, rather than a supplier or acquirer of channels. For example, as I have noted, Seven relies on evidence suggesting that Fox Sports projected significant increases in rights fees as a result of the entry of C7 as a channel supplier in 1998. Similarly, Seven points to a Fox Sports budget prepared in mid-2000 which recorded that C7's and ESPN's competition for Australian pay television rights had served to inflate costs at a rate far in excess of the CPI. 1873 Whether C7 and Fox Sports (or, for that matter, ESPN) competed for sports rights may be significant in determining whether there is a market for the sale and acquisition of particular sports rights or sports rights in general. But it has little or no bearing on whether there is a wholesale sports channel market in which the sellers are compilers of sports channels and the buyers are pay television platforms with retail subscribers. The correct question, as PBL submits and Seven's experts confirmed, is whether a hypothetical monopolist of the supply of sporting channels could sustain a price to pay television platforms above the competitive level for a non-transitory period. 1874 Some of Seven's submissions are directed to the correct question. However, its submissions are adversely affected by Seven's identification of questions that are, at best, irrelevant and, at worst, misleading. In order to operate a viable television service in Australia, it is necessary to have attractive Australian sports programming as a subscription driver. It is not possible to substitute other types of channels for sports channels, because the pay television service will fail to attract sufficient subscribers to render it a viable service' (par 145(d)) . According to the particulars provided by Seven, the long-term contractual commitments include those relating to the AFL, the NRL, elite Rugby Union, the English FA Premier League soccer and the World Swimming Championships. 1876 The second alternative appears in the section of the Statement of Claim dealing with the effect of lessening competition in the various markets. The only other suppliers of sports channels in Australia are ESPN Inc (ESPN) and TAB Limited (Sky Racing). ESPN provides international sports and is not a substantial subscription driver [while] Sky Racing is a channel which provides specialised horse and greyhound racing coverage, and is not competitive with the Fox Sports channels. The dilemma is that the more Seven stresses the unique character of each of exclusive AFL and NRL content as subscription drivers, the more difficult it is to see a channel containing exclusive AFL live content as a close substitute for a channel containing exclusive NRL content. No doubt it is in theory possible to have two forms of subscription driving content that appeal largely to the same audiences (and indeed Mr Sumption submitted that this was the position in fact). But if each channel containing separate subscription driving content appeals to a largely discrete audience or potential audience, it may be very difficult to conclude that one channel supplier can closely constrain the other if it attempts to impose a SSNIP. 1879 Early in its Closing Submissions, Seven reiterates its pleading that a pay television operator must have access to material that includes a marquee sport and that the only marquee sports in Australia are the AFL and NRL. The primary forensic reason for Seven's emphasis on the unique attractions of AFL and NRL content is clear enough. Its case is that once C7 was locked out of the AFL and NRL pay television rights in 2000, the channel was doomed. 1880 It would be very difficult, if not impossible, for Seven's case to succeed if neither live AFL nor live NRL content was indispensable to C7's survival. Similarly, Seven's case that the acquisition by the consortium of the AFL pay television rights in 2000 substantially reduced competition in the wholesale sports channel market rests on the proposition that other suppliers of sports channels in Australia (ESPN, TAB and others) ' do not provide significant competition to Foxtel or Fox Sports in the supply of pay TV sports channels '. Further ... the AFL and NRL were the only sporting contests potentially available to C7 which were capable of rendering C7 (or any new entrant) sufficiently attractive to platforms to be potentially viable as a premium sports channel'. (Emphasis added. Therefore they are not close substitutes in demand by pay TV operators , because the pay TV operators are seeking to attract both groups of supporters as subscribers and therefore would prefer to have both the AFL and NRL. (If, by way of contrast, the AFL and NRL had substantially overlapping supporters, they would probably be substitutes and therefore in the same market. )' (Emphasis added. While Seven's enthusiasm for this proposition seems to waver occasionally, it is at the heart of Seven's case. For that reason, and also because the proposition is significant for Seven's contention that there is a wholesale sports channel market, it is necessary to consider whether the AFL and the NRL are indeed marquee sports broadly in the sense propounded by Seven. In my opinion they are. 1883 On one view, the proposition is self-evident. The prices paid for the AFL pay television rights for 2002 to 2006 and for the NRL pay television rights for 2001 to 2006 greatly exceeded the price paid for any other sports rights in respect of those periods (other than the special, one-off case of the Olympics). The price paid for each set of rights is obviously a direct reflection of the perception by the successful bidders that the rights had subscription-driving attributes for pay television that no other sporting rights could match. 1884 Table 12.1 sets out in summary form the annual pay television rights fees (and in some cases, free-to-air rights fees) in respect of the 2002 year. Table 12.1, which is derived from Seven's Closing Submissions, may not be precisely correct in every particular, but it is generally accurate. Mr Frykberg, whose evidence I generally accept, said that the utility of sports rights for pay television is affected by a number of factors. The only sports in category 1 that involve a regular, wholly Australian domestic season are the AFL and the NRL Competition. 1888 Mr Frykberg agreed that the AFL and NRL Competitions stand out as the most attractive for the purposes of driving pay television subscriptions. For example, cricket matches in Australia involving the Australian team are almost always broadcast live or nearly live on free-to-air television. Similarly, Rugby Union Internationals or Tri-Nations matches played in Australia (involving the Australian team) are generally shown live on free-to-air television, while overseas matches are often played at times inconvenient for Australian audiences. 1890 The Rugby Union Super 12 competition (now Super 14) includes teams from Australia, South Africa and New Zealand. The Super 12 competition, which is not on the anti-siphoning list, was essentially a creation of News, and the rights have been made available only to News-related pay television platforms. In any event, as measured by the proportion of people who report that they watch premium sports on television, Rugby Union does not enjoy the popularity of the AFL or NRL Competitions, although there are regional variations. 1891 Some events, like swimming championships or World Cup soccer are, in effect, one-off competitions that do little to encourage long-term subscriptions to pay television. International events included in category 1 are usually held at inconvenient times for Australian audiences. Examples are the major tennis tournaments (other than the Australian Open, the most attractive parts of which, in any event, are broadcast on free-to-air television) and the major international golf tournaments. 1892 Mr Harold Anderson, Seven's Director of Sport, gave evidence that he regarded AFL content as a major subscription driver for pay television operators. He offered essentially the same reasons as Mr Frykberg, although he added that matches shown in full exclusively on pay television were attractive to viewers, even when broadcast on a delayed basis. Mr Anderson said that other ' attractive sports ' were needed to enhance the overall attractiveness of the channel but none was sufficient to enable C7 to operate a viable sports channel independently of what he described as a ' must have ' sport such as AFL or NRL. It is not necessary for me to decide whether C7 could have survived without AFL content, but Mr Anderson's evidence supports the proposition that the AFL and NRL have unique subscription driving qualities for pay television platforms in Australia. 1893 Mr Keely and Mr Ebeid of Optus both agreed that the exclusive NRL and AFL content were key audience-driving programs for Optus. Their evidence was consistent with the terms of a letter written by Optus to the ACCC on 22 December 2000. The letter identified the key subscription-driving pay television content as movies and sports programming and pointed to the AFL and the NRL as ' the most popular sports on Pay Television '. 1894 Mr Marquard of Fox Sports was taken to a Fox Sports board paper of February or April 2000. That paper identified the NRL pay television rights as ' key strategic programming ... central to our business '. Mr Marquard agreed that the NRL constituted a central part of Fox Sports' programming for a substantial part of the year and was also central to building up consumer loyalty to Fox Sports. He pointed out that Fox Sports used the expression ' tier 1 ' for marketing purposes and that the Super 12 competition, Australian cricket tours and English Premier League soccer were also in tier 1. However, it is clear that NRL content occupied a position of special importance to Fox Sports. 1895 The evidence to which I have referred is consistent with the contemporaneous documentation which is replete with references to the centrality of AFL or NRL content to the pay television platforms. This includes documentation from Austar which shows that it regarded the NRL as vital to its business. 1896 In my view, AFL and NRL content, if available on an exclusively live or live and exclusive basis, are clearly the most important sports subscription drivers for pay television in Australia. They each have characteristics that no other sporting content can match. The closest is perhaps Rugby Union coverage, but at the relevant times Rugby Union content fell a considerable distance behind AFL and NRL content in its subscription-driving power. 1897 This finding does not necessarily mean that without AFL or NRL content, C7 could not have survived beyond May 2002. Nor does it mean that sports content other than the AFL or NRL lacks any appreciable subscription-driving potential. It does mean that the AFL and NRL can be described as ' marquee sports ' in that they are clearly the two major sports subscription-drivers in the Australian pay television industry. 12.8.7 A Premium Sports Channel Market? Seven instead opts for a wholesale sports channel market which is said to have included at the material times not only Foxtel, Fox Sports and C7, but ESPN and TAB. It is not clear how ESPN and TAB, neither of which produce channels carrying marquee sports (as defined by Seven), can be regarded as ever having been part of the same channel supply market as Fox Sports, Foxtel and C7. Seven's position is not advanced by its description of ESPN and TAB as ' niche participants '. 1899 Professor Noll concluded that sports channels were in a separate market from non-sports channels that are also subscription drivers, a conclusion that seems to be common ground. However, Professor Noll also concluded that the relevant market is for premium sports channels. He regarded a channel as a ' premium sports channel ' if a substantial number of potential subscribers would acquire a pay television service only if it contained access to that channel or another like it. Seven's Closing Submissions acknowledge that Professor Noll described the relevant market ' slightly differently ' from Seven's pleaded market. Seven submits that the difference is immaterial because Professor Noll in his reply report included within his premium sports channel market ESPN and Sky Racing , just as Seven does in its pleaded wholesale sports channel market. 1900 This submission is not entirely convincing. Professor Noll included within the category of premium sports in Australia not merely the AFL and NRL (Seven's ' marquee sports ') but other sports such as cricket, Rugby Union and English Premier League soccer. It may be that Professor Noll regarded their offerings as premium sports or, alternatively, that he was prepared to assume that the channels could add premium sports content and thus compete with an established premium sports channel (there was evidence that ESPN might have been considering acquiring Australian sporting content in about 1998). If Professor Noll intended the latter, an issue would arise as to why other channels, including those with predominantly non-sporting content, could not also satisfy the criteria. 1901 In the end, there may be little conceptual difference between Seven's wholesale sports channel market, which in substance includes channels offering ' attractive Australian sports programming ', and Professor Noll's premium sports channel market, which includes channels carrying an apparently wider range of so-called premium sports, specifically ESPN and Sky Racing . But there is clearly a substantial difference between Seven's category of ' marquee sports ' in Australia and Professor Noll's category of ' premium sports '. Indeed, his understanding of the scope of premium sports is at odds with the concept of marquee sports which underlies the way Seven has presented its case. But his concept of premium sports does not necessarily affect Seven's contention that C7 acted as a close constraint on Fox Sports (and Foxtel) as a supplier of sports channels. However, another aspect of Professor Noll's reasoning sharpens the dilemma confronting Seven. 1903 Like the other experts, Professor Noll concluded that the AFL and NRL pay television rights are sold in separate markets. (Emphasis added. According to Professor Noll, the regional nature of the interest was supported by differential advertising revenue from AFL free-to-air matches shown in different areas of Australia. (Emphasis added. To put the point another way, Professor Noll did not explain why, on the assumptions underlying Seven's case as to marquee sports, C7 would constrain Fox Sports from imposing a SSNIP or could otherwise be regarded as a close competitor of Fox Sports. If the AFL and NRL are separately subscription drivers and have a cumulative effect on the revenue of pay television broadcasters because they appeal to different audiences (the position Seven itself adopts), it would seem to follow that an AFL sports channel supplier would be unlikely to constrain a SSNIP by an NRL sports channel supplier. 1905 Dr Smith's evidence seems to present even more substantial difficulties for Seven. --- That's correct. --- That's correct. --- Because while --- well, first of all, they are tied up with contracts, so you can't substitute within the period of the contract. --- They have rights, contractual rights, which they can use for NRL and they have contractual rights they can use for AFL. --- Yes. --- Yes. --- They could be. So we will get rid of you pursuant to our contractual arrangements" --- assuming they exist --- "and substitute C7"? Why not? --- I can understand that if the price was more than a SSNIP they might be persuaded to do that. Given that NRL appeals to one particular group of subscribers and AFL appeals to a different group of subscribers, just for a very small change in price I don't believe that they would switch between the two . --- Yes, it does'. (Emphasis added. She reiterated her view, but on the basis of several assumptions. In particular, Dr Smith assumed that access to an ' essential input ', in this case the AFL and NRL pay television rights, would not be restricted by exclusive supply contracts. She also assumed that each of the AFL and the NRL Partnership would offer several bundles of pay television rights for a period of three to five years, with the expiry dates aligned. The SSNIP would be constrained to the extent that the Pay TV retailers can threaten to acquire their sports channels from an alternative sports channel supplier. Thus, if the AFL Pay TV rights are split between several sports channel suppliers then an attempt by one of these to impose a SSNIP on its retail PAY TV customer/s will be constrained by the risk that that/those customers will switch demand to an alternative sports channel supplier'. But, as she acknowledged, the general (although not invariable) practice has been for the AFL broadcasting rights and the NRL pay television rights to be awarded on an exclusive basis. Moreover, they have been awarded for a lengthy period, typically five years or thereabouts. Contracts for the supply of channels with premium content to pay television platforms tend to be negotiated shortly after the rights auctions or, alternatively, the contracts are terminable if the channel supplier loses the premium rights. 1912 It seems to me that Dr Smith's contention that a sports channel with exclusive NRL content can be substituted for a sports channel with exclusive AFL content rests on an unrealistic set of assumptions. Mr Hutley put to Dr Smith that if there were sports channel markets at all, they consisted of distinct product markets --- that is, an AFL sports channel market and an NRL sports channel market. When asked to comment on this hypothesis, Dr Smith said that there is competition among sports channel suppliers at the point when rights become available . --- That's competition for rights that are an essential input to enable you to compete in the channel supply market and produce in the channel supply market. As I understand it, that inexorably flows into your position, because you are regarding the NRL rights as a unique product in the sense that there is no close substitute? --- Mm-hm. That seems to lead to the proposition that although one can --- I don't mean this offensively --- mouth the words "competitive price", it is just a concept devoid of content in this context. If that is right, if you agree with that, I would then like you to address what that means to your hypothesis about separate functional markets from acquisition of rights and supply of rights to channel supply and acquisition of channels to retail TV provider [sic] and acquisition of retail TV. They are the three levels of the market? --- I don't think it has anything to do with the functional aspect of it at all. I think that's quite separate from it. I think it has to do with the question of what is the character of the product. Does the functional market supply a series of separate products in separate markets? Or does it provide sports channels which are in a single market? And you are right that, if in fact there is no competition, if they are so different, then for the period of the contract you set up a monopoly and you don't have a competitive price, you have a monopoly price. --- Okay, what it would say is I have a separate channel supply market, the nature of the product market is that, if there is no competition within a relevant time frame, then I will have a series of different product markets within that functional channel market, and they will be NRL, AFL . --- Separate , mm-hmm. --- Assuming exclusivity, yes. Yes, that would be the relevant question '. (Emphasis added. Dr Smith's concessions in cross-examination lead to much the same result. Although she insisted that there was a functionally separate channel supply market, she accepted in substance that there were separate AFL and NRL product markets within the channel supply market. That is, an NRL sports channel would not be a close competitor of an AFL sports channel, even though each had other non-premium sporting content. Contrary to Seven's Reply Submissions, I do not understand Dr Smith's evidence to be based on the assumption that the two channels exclusively showed AFL and NRL content respectively. 1915 For these reasons, Seven's expert evidence provides scant support for the wholesale sports channel market for which Seven contends. The fact that their reports proceed on the basis that the AFL and NRL appeal to largely different audiences does not establish that this is the fact. As I have noted, Seven's position, at least for the purposes of its submissions on the rights markets, is that the AFL and NRL are substantially complementary. The evidence supports Seven's position and, consequently, the assumptions on which Professor Noll and Dr Smith proceed. 1917 Because there was no dispute that AFL and NRL have different levels of popularity in different parts of the country, the point perhaps received less detailed attention in evidence and submissions than otherwise might have been the case. Nonetheless, a number of witnesses gave evidence to this effect. I believed that the NRL pay rights would be a significant subscription driver for C7 in New South Wales and Queensland'. Mr Frykberg agreed that each sport had built strong ties of loyalty for its supporters, but that there were significant regional differences in the enthusiasm for each sport. 1918 Mr Mockridge's memorandum to Mr Lachlan Murdoch of 17 March 1999 recommended that Foxtel take C7 on reasonable terms. Among the advantages Mr Mockridge identified was that Foxtel would achieve greater penetration in Melbourne, which lagged behind Sydney (14.5 per cent compared with 19.5 per cent). Mr Mockridge pointed out that, given that C7 would be on a tier, C7 would derive a benefit only to the extent that Foxtel subscribers upgraded to take C7 on a tier. However, Mr Mockridge expected Foxtel's ' existing subscriber base [to be] light on AFL " nuts" '. 1919 A draft Foxtel board paper prepared in about June 1999 referred to the AFL being a subscription driver in the southern states of Australia. The paper pointed out that not having access to the AFL had hurt Foxtel's penetration in Victoria and, to a lesser extent in South Australia and Western Australia. Mr Macourt said in evidence that he agreed with this assessment at the time. The position had not changed by January 2002, because a Foxtel Sports Marketing Update at that time expressed no doubt that AFL would be ' a huge acquisition driver in southern states '. 1920 Another draft Foxtel paper prepared in October 2000 expressed caution about some of the main assumptions underlying the AFL Business Plan. The paper assumed that if Foxtel carried the AFL it would attract eight per cent more subscribers in the southern states over a 10 year period than it would without the AFL. By contrast, the AFL would attract only a two per cent increase in subscribers in the northern states. The paper noted that this projection was consistent with the 5.6 per cent difference in the then current levels of penetration in Sydney and Melbourne. 1921 The modelling conducted within Foxtel during 2000 repeatedly predicted substantial increases in subscriber penetration in the southern States if Foxtel were to carry AFL programming. While Seven contends that some of the figures were deliberately exaggerated, the fact is that the models proceeded on the basis that AFL programming was the key to achieving greater penetration in the southern States, but that AFL content would have relatively little effect on penetration in the northern States. 1922 A number of documents in evidence prepared for or published by the AFL identify challenges facing the AFL in various parts of Australia, especially New South Wales, Queensland and the Australian Capital Territory. That is why we have increased significantly our investment in game development in New South Wales and the Australian Capital Territory during the past two years. Our vision for the northern states requires long-term investment if we are to bring about generational change in the way the broad community accepts and supports Australian Football . (Emphasis added. In 1997, for example, the average ratings for major ' groups ' of matches varied from 3.6 and 4.6 in Brisbane and Sydney respectively, to 16.6 (Melbourne), 18.8 (Adelaide) and 17.3 (Perth). 1924 Professor Noll cited in his report a survey known as The Sweeney Sports Report . This is an annual national survey of Australians' sporting interests and is conducted throughout the year on the basis of interviews in the capital cities. The survey includes questions on the sports watched by interviewees. Professor Noll cited figures from the 1999/2000 and the 2003/2004 surveys. Oddly enough, the later survey was in evidence, but the former was not. The later survey showed very significant regional variations in viewer preferences. For example, 30 per cent of respondents in Sydney in 2000 watched AFL, while 54 per cent watched NRL. The comparable figures for Melbourne in 2004 were 58 per cent (AFL) and 27 per cent (NRL). The AFL in Brisbane attracted a viewer group of 54 per cent, while the NRL interested 61 per cent. Of course these figures do not distinguish between pay and free-to-air viewing and do not reflect intensity or extent of viewing commitment or relatively transient factors such as the success in the 2003 AFL competition of the Brisbane Lions. Nonetheless, they point to very substantial regional differences. 1925 A paper prepared by Mr Keely of Optus in June 2001 referred to market research which showed that more than 85 per cent of Optus' current or future subscribers considered either AFL or NRL programming to be at least ' reasonably important '. Mr Keely considered that losing the NRL was potentially more damaging than losing the AFL. He estimated that losing one of these sports might have a five to 12 per cent negative impact, while losing both could have a 10 to 21 per cent negative impact. Mr Keely noted that AFL was most important in Melbourne but NRL was most important in Sydney and Brisbane, a factor that accounts for his assessment of the differential impact of the loss of AFL and NRL rights. 1926 The evidence therefore supports the assumption on which both Professor Noll and Dr Smith proceeded, namely that channels with exclusive AFL and NRL content appeal to largely different audiences. This reflects regional differences in Australia and the strong ' tribal ' allegiance of supporters to particular clubs. According to Mr Sumption, the evidence suggested that C7 and Fox Sports were substitutable, not for all consumers, but for a sufficiently large proportion of consumers, to warrant the conclusion that they were in the same market. This was said to be supported by the fact that Mr Philip and Mr Macourt both gave evidence that they regarded C7 and Fox Sports as competitors. 1928 In his closing submissions in chief, Mr Sumption did not refer to any evidence in support of this contention. 1929 Mr Sumption attempted to remedy this deficiency by handing up, on the very last day of the trial, an aide-memoire identifying four documents said to provide evidentiary support for the submission. One of the documents is not in evidence. In my view, none of the others, at least without further explanation from witnesses, supports the proposition advanced by Mr Sumption. 1930 One of the documents, for example, is an internal Telstra paper addressing the possible supply of NRL content to Optus. The paper observed that Optus' loss of NRL programming should make Optus more willing to acquire AFL content from Foxtel because ' Optus TV must have a major Australian winter sport ' (emphasis in original). It is difficult to see how this statement demonstrates a substantial overlap between pay television subscribers who are particularly attracted by coverage of the AFL or the NRL Competition. Another of the documents relied on by Mr Sumption, a ' Pay TV Market Tracking Study' prepared for Foxtel in June 2001, suggests that only a small proportion of people 'very interested ' in watching AFL or NRL on television are very interested in both. If anything, this document is inconsistent with the contention advanced by Seven. This is said to follow from the fact that their content was not limited to AFL and NRL programming, but included many other sports, particularly in the off-season. Seven further submits that a pay television platform can substitute a general sports channel which carries key subscription driving content with another sports channel with different subscription driving content. 1932 There are a number of obstacles in the path of this submission. It is difficult to understand how it can be reconciled with Seven's insistence, first, that C7 could not survive as a channel supplier without either the AFL or the NRL pay television rights and, secondly, that the two sporting codes are substantially complementary. Moreover, some of the evidence on which Seven relies to support the submission relates to possible competition between general sports channels for the acquisition of rights . For reasons I have given, this evidence has little relevance for present purposes. 1933 It is true that, as Seven contends, even sports channels with premium content ordinarily require additional sporting content. Between November and March, the Nine Network broadcasts extensive coverage of cricket played in Australia and the Seven Network broadcasts golf, tennis tournaments held in Australia and rugby union played overseas by the Australian team. Fox Sports has in the past employed, and continues to employ, strategies in those months to attract and retain subscribers. 1934 It is, however, one thing to accept that even a sports channel containing subscription driving content must have additional sporting content. It is another to conclude that one sports channel with subscription driving content is a close substitute for another channel with different subscription driving content. As I have explained, the evidence strongly supports the view that Seven relies on elsewhere in its submissions, namely that channels with exclusive AFL and NRL content are the two key subscription drivers in Australia, but appeal to largely non-overlapping audiences. In those circumstances, it is difficult to see how C7 and Fox Sports could have been close competitors notwithstanding that each had general sporting content in addition to their respective premium sports. As I have explained, Seven's contention is in substance at odds with the opinions expressed by its own experts. 1935 Seven's Reply Submissions contend that even if C7 and Fox Sports should be classified, respectively, as an AFL and NRL channel, they would still be in the same market. This is said to follow primarily because a merged entity would not compete in price for the non-AFL or non-NRL content and would be able to extract additional fees from supporters of both codes. However, the submission rests on assertion only and is not supported by an empirical analysis of whether the merged entity would raise prices above the competitive level for each channel. Such an analysis would require examination of the extent to which non-premium sports shown on the channels were important to viewers (having regard to other sources of such content) and the extent to which the AFL and NRL Competitions have a common supporter base. 1936 Seven relies on Mr Stokes' evidence that if C7 had acquired both the AFL and NRL pay television rights in 2000, Fox Sports nonetheless would not have been administered a ' fatal blow '. We would have been the premier channel for the winter codes without question, but they would have been still a strong competitor'. In giving his answer, Mr Stokes seemed to me to be conscious of the potential difficulties for C7's case if he acknowledged that Seven's conduct in seeking to obtain both the AFL and NRL pay television rights inevitably would have led to the destruction of Fox Sports. I do not regard his evidence as providing support for the proposition that C7 and Fox Sports were close competitors in 2000 even though each carried different ' marquee ' sporting content. 1938 I do not think that the other evidence upon which Seven relies on this issue substantially advances its case. The evidence of the Optus witnesses, for example, supports the view that it needed both AFL and NRL content and additional sporting content. But the evidence does not suggest that one ' general sports channel ' with live and exclusive AFL content would be a close substitute for a second such channel with live and exclusive NRL content. Professor Fisher's evidence is of marginal significance on this issue because he rejected the concept of a separate sports channel market. No doubt in recognition of the difficulties presented by that evidence, Seven analyses in some detail negotiations and contemporary observations that are said to demonstrate that C7 was a constraint on Fox Sports in the supply of sports channels to pay platforms. These negotiations and observations, according to Seven, strongly suggest that there is a separate market for wholesale sports channel suppliers in which C7 and Fox Sports competed. Seven acknowledges that the impact of Telstra's conduct was ' blunted ' by reason of the influence of News and PBL at the board and management level of Foxtel. Nonetheless, Seven says that Telstra played off C7 against Fox Sports and that both Mr Macourt and Mr Philip were concerned about the possible impact of C7 on Fox Sports as a supplier to Foxtel. Moreover, Seven submits that Telstra' records make it clear that C7 was seen by Telstra as direct competition for Fox Sports and that Telstra used C7 in negotiations relating to the pricing of the Fox Sports channels. 1942 There is no doubt that during 1998 and 1999 Telstra attempted to play off Fox Sports against C7 with a view to achieving a better price for the supply of the Fox Sports channels to Foxtel. Mr Philip recognised as much in his evidence. During this period, there were many examples of Telstra acting on the basis that Foxtel could achieve a better long-term deal with Fox Sports by invoking the threat of competition from C7. An illustration can be found in a meeting that took place on 17 December 1998 between Mr Blount and Ms Lowes of Telstra and Mr Lachlan Murdoch and Mr Macourt of News. Ms Lowes' notes record that Mr Blount complained about the proposal that Foxtel pay Fox Sports US$5.25 pspm on a long-term basis, having regard to the Austar pricing of US$3.70 pspm for the Fox Sports channels. Ms Lowes asked at the meeting why Foxtel could not ' leverage a deal between C7 and Fox Sports '. The answer given by Mr Macourt was that Foxtel would be hurt if it did not have the Fox Sports channels. Meantime, they are extracting and seeking permanently to extract the highest sports prices in the industry from Foxtel, knowing that Telstra is funding 50% of this, and News only 25%'. He accepted in his evidence that Telstra's executives had reported to him that research had suggested that C7's ' line-up ' was as attractive as that of Fox Sports. On the basis of this material, Dr Switkowski formed the view that it was in Foxtel's interest to carry C7 and that it was ' possibly ' in Foxtel's interest to carry C7 instead of carrying Fox Sports. 1946 The significance of this evidence for the purposes of market definition must be assessed in context. The context includes the ' interim ' arrangements for the supply of the Fox Sports channels to Foxtel that had been entered into on 13 May 1998, by way of a sub-licence from Austar. In practice, these arrangements could not be altered without the agreement of all Foxtel partners (that is, News, PBL and Telstra). Thus Telstra, in its capacity as a Foxtel partner, was locked into the ' interim ' licence fee of US$5.25 pspm unless it could persuade both its partners to accept the merits of a different set of arrangements. Telstra found itself locked into this unhappy position notwithstanding the view of Telstra executives, virtually from the outset of the interim arrangements, that the price of US$5.25 pspm for the Fox Sports channels was much too high and reflected an attempt by News and perhaps PBL to divert profits from Foxtel (in which they each effectively held a quarter share) to Fox Sports (in which they held a 100 per cent interest between them). 1947 The legal dimensions of the dispute between Telstra and News revolved around the Umbrella Agreement, which governed News' obligation in relation to the ' Alliance ' in the form of the Foxtel Partnership. Internal Telstra documentation makes it clear that Telstra executives understood that a central issue was the reasonableness of the terms on which Fox Sports was being offered and that Telstra's interests were served by asserting that C7 was a sports provider comparable to Fox Sports. 1949 An example is a Telstra briefing document prepared on 1 September 1999 for a meeting that was to be held between Telstra and News to discuss the ongoing dispute. By this time, Telstra was contemplating legal action against News. The 60 page document pointed out that the objective of the Foxtel joint venture arrangement with News was to maximise the profitability of Foxtel. The document said News was attempting to extract profit from Foxtel and transfer it to Fox Sports by persisting with a price of US$5.25 pspm. It also recorded that Telstra had utilised a number of analytical approaches to estimate the value of Fox Sports. These included international comparisons, an assessment of ' fair value ' and a comparison of Fox Sports to the ' only other comparable Australian pay-TV sports provider, C7 '. The analysis suggested that News' offer violated the terms of the Umbrella Agreement and was both unreasonable and unacceptable. 1950 Telstra was attempting to reduce the cost of sports programming to Foxtel because its executives thought that the price of the Fox Sports channels was excessive. Naturally enough, it developed arguments to support its contention. C7 was invoked as a useful point of comparison. But Telstra did not address (and had no occasion to address) issues relevant to whether C7 could constrain a SSNIP by Fox Sports. On Telstra's view, Fox Sports was charging Foxtel very much more than a reasonable or competitive price. Telstra's assessment in the document of 1 September 1999 of C7's attributes did not take account of the fact that AFL and NRL appeal to largely different audiences, but appears to have been based on a comparison of content between Fox Sports and C7 prepared by AT Kearney in August 1999. However, AT Kearney's comparison, which Ms Lowes herself thought was disappointing because it did not answer the real questions, hinted at the issue but did not explore it. 1951 In my view, once the evidence relating to Telstra's conduct in benchmarking Fox Sports against C7 is placed in context, it does not support Seven's contention that there was a separate market for wholesale sports channel suppliers in which C7 and Fox Sports competed. Seven relies on evidence which it says shows that the reduction in the price offered to Austar was the result of threatened competition from C7. PBL argues that it is possible to test the proposition advanced by Seven that, in the absence of competition from C7, Fox Sports would have been able to charge a monopoly price to Austar. PBL says that if Seven is correct, after Foxtel acquired the AFL pay television rights in 2000, the Foxtel-Fox Sports monopoly should have been able to increase the amount extracted from Austar for the supply of the Fox Footy Channel from that previously charged for the supply of C7. In fact, Austar negotiated terms of $2.00 pspm on a tier with Foxtel (for DTH and cable subscribers), precisely the amount it had previously paid for C7 (with its AFL coverage). 1954 PBL's submission may not be a complete answer to Seven's argument because the Fox Footy Channel was an AFL-only service, while C7 offered additional sporting content. In other words, while charging the same price, Foxtel may have been giving less. However, there are other difficulties in the path of giving too much weight to the Foxtel-Austar experience. 1955 The contemporaneous documentation shows that Austar, whatever its negotiating stance, decided that, because most of its customer base was north of Wagga Wagga, it could not afford to be without NRL coverage. This emerges most clearly from Mr Mann's letters of 27 July and 25 August 1998 ([640]-[641]). If anything, the correspondence reinforces the conclusion that C7, a sports channel carrying exclusive AFL matches as its primary subscription driving content, could not act as a close constraint on Fox Sports, carrying exclusive NRL matches as its primary subscription driving content. This conclusion is further reinforced by the fact that Austar was willing to pay very much more for Fox Sports than for C7. In July 1998, it offered to acquire C7, if carried on basic, for $4.50 pspm for the first 200,000 subscribers, reducing to $3.00 pspm for over 300,000 subscribers. By contrast, in September 1998, Austar was willing to pay US$4.75 pspm for the first 250,000 satellite and MDS subscribers to Fox Sports and US$3.25 for each additional subscriber. (At the time $1.00 was equivalent to about US$0.59. Thus, in my view, the evidence does not support the wholesale sports channel market pleaded by Seven. In the course of these attempts, warnings were given to Foxtel that if the channels were not supplied, Optus might be forced to keep C7 alive. (By 2001, it was known that Seven had lost the AFL pay television rights for 2002 to 2006. Conversations to similar effect took place later in 2001, including one between Mr Anderson and Dr Switkowski on 14 June 2001. 1959 These discussions must also be understood in context. Optus had been seeking to acquire the Fox Sports channels for a considerable period. (Optus already was entitled to NRL content in consequence of the Super League settlement and had been offering the C7 channels on its pay platform. ) Optus had been thwarted in its attempts by the exercise of Telstra's veto on the supply of the Fox Sports channels to Optus. In 2001, Optus was aware that it was entitled to terminate the C7-Optus CSA, although the timing of that entitlement was a matter of dispute with Seven. During this period, Optus was considering a number of options for the future, including closing its pay television service. 1960 As Mr Anderson explained in his evidence, the references to breathing life into C7 were part of ' normal commercial negotiation[s] ' designed ultimately to secure the removal of Telstra's veto. Mr Anderson was using advocacy to see if Optus could get the non-exclusive content it had long wanted in the interests of its pay television platform. C7 was an obvious alternative if Telstra persisted in the exercise of its right of veto over the supply of the Fox Sports channels to its telephony competitor. 1961 In my opinion, the evidence relied on by Seven concerning the negotiations between Fox Sports and Optus does not provide substantial support to the proposition that C7 was a close competitor of Fox Sports in any wholesale sports channel market. The evidence relied on, however, is for the most part to the same effect as that already discussed. Furthermore, to the extent that contemporaneous comments of market participants might suggest that C7 and Fox Sports were competitors, the comments often indicate that the participants were perceived as competitors in relation to the acquisition of sports rights, rather than in relation to the supply of sports channels. 1963 Several of the Telstra documents cited by Seven, for example, explicitly referred to Fox Sports' ability to negotiate content supply at lower rates or to negotiate pay rights for ' weak ' sports. A draft PBL business plan for 2002 to 2007, to which Seven refers, is equivocal on the question of C7 and Fox Sports as competitors in a wholesale sports channel market. Among other things, the draft plan describes free-to-air sports as a ' direct substitute ' for Fox Sports (a view contrary to Seven's case on the retail television market) and classifies C7 and ESPN together merely as the ' only other pure sports channel providers '. 1964 Seven also points to Mr Philip's agreement in cross-examination that he regarded C7 as the most significant competitive threat to Fox Sports in the sports channel supply business between 1998 and 2000. However, Mr Philip's perception was also that ESPN represented a significant competitive threat, suggesting that he was not necessarily thinking in terms of close competition. Moreover, his attention was not directed to what seems to me the critical issue, namely the fact that C7 and Fox Sports, by reason of their different marquee sports content, appealed to largely discrete groups of viewers. I do not think that his evidence overcomes the difficulties facing Seven in establishing that there was at the material times a wholesale sports channel market in which C7 and Fox Sports were close competitors. 1965 As I have noted earlier in this Chapter ([1798]), conduct or expressions of opinion by market participants may be ambiguous on questions of market definition. The fact that a person may have described C7 as a competitor of Fox Sports is not necessarily an indicator that the person regarded C7 as a competitor of Fox Sports in the particular wholesale sports channel market pleaded by Seven. I do not mean to suggest that evidence of this kind is only probative of the existence of a particular market if an industry participant specifically directs attention to the precise dimensions of that market. But a comment to the effect that C7 was a competitor of Fox Sports may carry relatively little weight if it does not imply that C7 was a close constraint on Fox Sports as a wholesale sports channel supplier. Whether or not there is or was any market which could be described as a wholesale sports channel market, I agree with PBL's submission that C7 (built around long-term AFL pay television rights) and Fox Sports (built around long-term NRL pay television rights) were not substitutes in demand or supply. Seven has therefore not established the existence of the wholesale sports channel market with the characteristics pleaded by it. 12.9 Wholesale Sports Channel Market: A Separate Functional Market? If a hypothetical single producer of wholesale premium sports channels set out to acquire the NRL and/or AFL rights with the notion of attempting to impose supra-competitive prices on the customers for those channels (the suppliers of pay TV services), there would be nothing to prevent one or more of the providers of pay TV services from integrating backwards, acquiring the rights directly from the leagues, and either including the matches on existing channels or creating speciality channels. Nor would a hypothetical single producer of premium sports channels be able to depress the price paid for the rights to the marquee sports below competitive levels, given the ability of the leagues to integrate forward into the production of sports channels or to sell the rights directly to the providers of pay TV services'. --- It would be unprofitable. Unprofitable because? --- Because I think the networks have alternatives. --- Putting together their own channel. Buying a channel directly from the league. Buying a channel from someone else who is not currently in the channel business. Perhaps, for example, a free-to-air broadcaster might decide to go into the channel supply business. My only point is: looking at any one point in time at who is now producing channels, premium sports channels, simply doesn't tell you anything about the competitive landscape. For one thing, normally there's only going to be two of them, one of them producing an NRL channel and one of them producing an AFL channel. That's almost --- I wouldn't say it's certain, but that's simply the fact. So you look at it and say, "What have I learned about the competitive analysis? " Not much. You need to look over the longer run and look at the alternatives available to leagues on the one hand and to platforms on the other hand. --- Again, at that point, once someone has the rights to, let's say, the AFL games, obviously if I want the AFL I have to deal with them. If you take a longer run perspective and you say, "I think this person may be trying to extract too much," then your longer run strategy is to bid for the rights yourselves or to go to the league and suggest that the league put together a channel. So there are a variety of options you have. --- A channel supplier is someone who is currently actively engaged in the process of maintaining and selling a channel with the rights obviously that are needed for that to occur'. Moreover, according to Professor Hay, a pay television platform integrating backwards is not merely a theoretical possibility, since it is precisely what Foxtel did when it acquired the AFL pay television rights for 2002 to 2006 through News, rather than through a channel supplier. A channel provider can be thought of as yet another seller of rights. It essentially assembles a bundle of pay television programming rights (among other things) to on-sell. Pay television operators can, and do, "go around" channel providers and purchase rights directly (and/or produce the programming themselves). Pay television operators have in the past effectively bypassed channel suppliers (as intermediaries) and themselves compiled channels after acquiring broadcast rights. The most obvious example is Foxtel's production of the Fox Footy channel. I find that the ability of pay television operators to purchase rights directly serves as an immediate constraint on any wholesale sports channel provider. Thereby, the channel providers compete with --- and are constrained by --- these other sellers of rights. Accordingly, channel providers do not themselves constitute a relevant market. For these reasons, there is no relevant wholesale sports channel market nor is there a relevant wholesale channel market'. If you don't do that, it's okay, so long as you realise there can be no market power in the so-called sports channel market because entry is so easy. Is there any practical difference between those two concepts? --- Your Honour, I don't think there is, and I think it is a matter of serious principle that the conclusions at any time to be reached anywhere about market power should not simply depend on the way you choose to define markets. You can do it either way so long as you remember how you are doing it. --- Yes. --- Yes, your Honour'. As I have noted, the characteristics of the pay television industry at the relevant times included the award of exclusive premium sports rights on a long-term basis, ordinarily followed by the negotiation of similarly long-term contracts for the supply of sporting content (terminable in the event of loss of rights). The existence of relatively long term licensing agreements for the AFL and NRL pay television rights prevents supply side substitution except when the rights become available. 1973 As Dr Smith appeared to accept, the constraint on a supplier or potential supplier of sporting content, in these circumstances, comes at the point at which the rights become available. --- Platforms could directly acquire rights, yes. --- Once they acquire the rights, they have to do something with them. If they choose to produce them themselves, then that would be vertical integration. --- Independent channels, yes. By "independent channels" what do you mean? --- I mean parties that are not related by ownership. (Emphasis added. The channel supplier would also be constrained because others, particularly free-to-air operators, could acquire the rights with a view to creating channels with premium sports content (specifically, exclusively live or live and exclusive AFL or NRL content). 12.9.3 A Real World Foundation? The efficiencies are said to be negatived by the survival of non-vertically integrated firms. According to Seven, only Foxtel is vertically integrated into sports channel production. The evidence, however, suggests that, contrary to Seven's submissions, there is a ' real world foundation ' for the Respondents' contentions. While the offer was never accepted, cl 6 shows that the potential was present for the AFL in effect to become a channel supplier and thus integrate ' forwards '. • In September 1998, Ms Lowes of Telstra proposed a list of special events to Mr Philip of News. Telstra's view was that these events, such as the AFL, Rugby World Cup and cricket, should not be included in any deal with Fox Sports, but ' should be purchased separately through special purpose joint ventures '. As News submits, this indicates a potential constraint on Fox Sports, in that Telstra was proposing to acquire rights directly, although the implementation of the proposal encountered obstacles because of the arrangements among the Foxtel partners. • In October 1999, the board of Foxtel Management approved in principle a strategy known as ' Network AFL ' for acquiring the AFL pay television rights. Network AFL contemplated the establishment of a joint venture between the Foxtel Partnership and the AFL. Under the strategy, the joint venture would acquire the AFL pay television rights and be the exclusive distributor, with the non-exclusive rights to be offered to each of the three major pay platforms. Foxtel was to bear the early losses and share the profits with the AFL once they were derived. • From 1998 until 2000, Optus held the right to broadcast NRL matches on pay television by way of a sub-licence from News. During this period, both Optus and Foxtel were involved in a co-operative arrangement for the production of NRL matches for broadcast on the pay television platforms. In the event, Optus retained All Media Sports Pty Ltd to produce the NRL matches allocated to it, while Foxtel engaged Fox Sports for the purpose. In January 2001, Optus and Fox Sports agreed that Fox Sports would supply NRL content to Optus. However, this followed Optus' rejection, on financial grounds, of an offer by the NRL to grant Optus directly the non-exclusive NRL pay television rights. • In late 2000, Austar proposed a joint venture with C7 to take effect if Seven won the NRL pay television rights. The joint venture was to involve the creation of a new NRL-based channel, with additional content to be agreed. (Seven attempts to discount the significance of Austar's interest in a joint venture on the grounds that Austar did not propose creating a sports channel itself and because Austar stated in a letter to the ACCC, written some twelve months later, that it did not create content but merely licensed channels. In my view, the significance of the discussions between Austar and Seven, for present purposes, is that Austar was considering supporting a bid by C7 for the NRL pay television rights. This suggests that, notwithstanding what was said a year later, Austar might well have given serious consideration to acquiring sporting rights and producing a sports channel by means of a joint venture, if a premium sports channel supplier attempted to increase prices to a supra-competitive level. While it is not easy to disentangle the interests of the individual Foxtel partners, the evidence shows that Foxtel had genuine commercial reasons for producing its own AFL channel, rather than accepting a Fox Sports proposal for a similar channel. In particular, as shown by a Foxtel document analysing the competing proposals, the Fox Footy option was considerably cheaper than the Fox Sports alternative. (Mr Sumption emphasised that Fox Footy had not been a commercial success. However, that of itself does not detract from the significance of the venture as an illustration of the alternatives open to a pay television platform seeking to counter an attempt by a hypothetical monopolist sports channel supplier to raise prices above a competitive level. Mr Sumption himself attributed the failure primarily to the absence of any fresh off-season content. The evidence establishes that it would have been open to Foxtel, had it wished to do so, to supplement the AFL content on the channel with other sporting content. The decision to proceed with an AFL-only channel, rather than to incorporate additional sporting content, was a commercial one. Most of these are mentioned in the context of Seven's contention that there are high barriers to entry in the wholesale sports channel market. Of course, this particular contention assumes the existence of such a market, the very point in issue here. However, Seven relies on some of these barriers as demonstrating the unlikelihood of a pay television platform or sporting league (or anyone else) integrating backwards or forwards in response to a channel supplier's attempt to impose a supra-competitive price for its premium sports channel. 1978 Seven identifies many potential obstacles, some of which are of little import. Such conduct may significantly raise the expected cost of entry and so may confer market power on the firm concerned, that is, the strategic conduct is the source of the firm's market power'. They are further undercut by evidence from Seven's witnesses or its own actions. 1981 Mr Stokes was asked by Mr Meagher about his perceptions as to the alternatives available to the AFL and the NRL Partnership when disposing of their sports rights in 2000. Mr Gammell accepted in his evidence that at all material times he believed that ESPN was in a position to develop substantial Australian sports content on its channel. He said that he understood in mid-1998 that ESPN was looking to develop its Australian sports content. 1983 Mr Stokes also agreed that the options available to a sports rights holder included participating in joint ventures with free-to-air operators such as Seven, with a view to onselling channels to pay television operators. Mr Stokes acknowledged that the First and Last Deed negotiated in 1997 involved a possible joint venture between Seven and the AFL. Mr Stokes also agreed that consideration had been given within Seven in July 2000 to a proposal whereby Optus would acquire the NRL pay television rights and Seven would produce the content for Optus and other pay television operators. 1984 Elsewhere in his evidence, Mr Stokes agreed that it was ' pretty easy ' for an organisation such as Seven to set up a new pay television channel. He reiterated that point in the context of explaining C7's bid for the NRL pay television rights. Mr Stokes commented that Seven already had the resources to produce most of the NRL games, in part because Seven's existing resources had been under-utilised. He said that he was satisfied that Seven had the skills, expertise and personnel necessary to produce the NRL content. 1985 In a similar vein, Mr Wood, when questioned about the discussions that Seven had held with Optus in July 2000, said that he saw no impediment at the time to a free-to-air station such as Ten taking over the production and supply of channels to Optus as a pay television operator. The views expressed by Mr Stokes and Mr Wood reflect the fact that free-to-air broadcasters usually have the facilities and expertise required to produce such channels and can do so quite easily. They also tell against Seven's contention that the editorial and compilation functions involved in the creation of a sports channel mean that the supply of the channel cannot be regarded as a close substitute for the pay television rights themselves. The evidence suggests that once the rights have been acquired the rest is relatively easy. The rights are the critical component. 1986 Mr Stokes readily agreed that when Seven was considering acquiring the NRL pay television rights, one possibility was that it would create a new channel built around the rights. In this context, Mr Stokes accepted that if Seven had to create a new channel, it would have had no difficulty in acquiring additional sporting content within about three or four months. Indeed, his evidence was that there would have been no difficulty in acquiring additional sporting content required for two full-time channels, one built around the AFL content and the other around NRL content. There isn't a shortage'. News' written submissions set out in detail rights to various sporting events or competitions that became available during the period 1998 to 2000. News' submissions also set out in some detail the opportunities available to Seven to acquire sporting rights during 2001 and 2002. It is not necessary to recount this material. It is enough to observe that the material amply supports Mr Stokes' own assessment. Indeed, on Seven's case, Foxtel's conduct in refusing to take C7 in 1999 and 2000 was aimed specifically at Seven and its pay television channel supplier. Yet Seven was prepared to participate in the bidding process on each occasion, albeit by the exercise of its last right in 2005. No doubt this was a factor in Seven's decision-making. But as PBL submits, Mr Stokes' willingness to offer $30 million per annum for the AFL pay television rights in December 2000 or January 2001 is explicable only on the basis that he believed, notwithstanding the ' signals ' conveyed by Foxtel, that Seven would obtain carriage on Foxtel if it (Seven) acquired the AFL pay television rights. 1990 Mr Sumption appeared to concede as much in his oral closing submissions. That concession is not surprising (even if it is refreshing), given the evidence. Mr Gammell told the AFL on two separate occasions in August 2000 that C7 would get on Foxtel because Foxtel could not afford to keep C7 off its pay television platform. Mr Wise confirmed the conversations and agreed that Mr Gammell's position reflected his own view at the time. 1991 I am prepared to accept readily that any potential acquirer of premium sporting rights would need to pay careful attention to the likelihood of any sports channel built around those rights being licensed on commercial terms to Foxtel, the principal pay television platform. In theory, it may be possible for such a potential acquirer to discount entirely the prospect of a sale to Foxtel, relying instead on selling the entirety of, say, the AFL broadcasting rights to a combination of free-to-air broadcasters. However, in practice, a prospective new entrant is less likely to be able to meet a hypothetical single channel supplier's attempt to impose a SSNIP for an AFL-based channel by directly acquiring the AFL pay television rights, if the entrant assesses that it is unlikely to gain access to the principal pay television platform. 1992 The experience in 2000 suggests that a potential new sports channel supplier would proceed on the basis that Foxtel would act rationally in its own commercial interests and would negotiate in a reasonably predictable way with a new supplier of an AFL-content or NRL-based channel. If Seven, said to be the target of Foxtel's conduct in 1999 and 2000, was prepared to bid for the AFL pay television rights on the basis that it would be able to sell its AFL channel to Foxtel, it is difficult to see why any other potential premium sports channel supplier would take a different view. The AFL seems to have reached that conclusion, since Seven's solicitors told the ACCC in December 2000 that the AFL was confident that there would be additional bidders the next time around. 1993 It is also material that in December 2000 Seven was prepared to bid $60 million per annum for the NRL pay television rights. On Mr Stokes' evidence, Seven was prepared to bid a full price for the NRL pay television rights in the expectation that C7, with NRL content, could be sold to Foxtel, notwithstanding Foxtel's refusal in 1999 and 2000 to take the C7 channel. Moreover, according to Mr Stokes, Seven was prepared to bid for the NRL pay television rights knowing that it might also succeed in its bid for the AFL pay television rights. This evidence is difficult to reconcile with Seven's contention that any potential sports channel supplier would be deterred from bidding to a competitive level for premium sports rights by any ' signals ' given by Foxtel as to its willingness to negotiate on commercial terms. This success provides further evidence that Seven did not see Foxtel's ' signals ', nor its apparently dominant place in the retail pay television industry, as a barrier to paying what seems to have been a full price for a package of AFL broadcasting rights, including the right to sub-license to pay television operators. 1996 It is true, as Seven points out, that Seven and Ten acquired the AFL broadcasting rights pursuant to the exercise of the last right under the First and Last Deed. It is also true that the form of the final agreement was dictated by the structure of PBL's offer to the AFL and that the initial offer by Seven and Ten sought live and exclusive rights only to five free-to-air AFL matches per round (although later offers extended to all AFL matches). Nonetheless, the simple fact is that Seven and Ten agreed to accept an offer reflecting the terms of PBL's offer. Moreover, Seven made its decision on the explicit basis, set out in its internal communications, that Foxtel would be likely to negotiate on commercial terms for a sub-licence of the AFL pay television rights (that is, the rights to broadcast exclusively on pay television those AFL matches not required by the free-to-air operators). 1997 In making this assessment, Seven doubtless took into account the fact that Foxtel's position in 2005 and 2006, in relation to AFL content, was somewhat different from its position in 2000. By late 2005, Foxtel had been offering AFL content to subscribers for four seasons, whereas in 2000 it had yet to provide such content. Foxtel had a particular incentive in 2005 and 2006 to secure AFL content for the succeeding seasons, in order to avoid ' churn ' (loss of subscribers) if it ceased to provide content highly prized by some subscribers. On the other hand, Seven's assessment in 2000 took into account Foxtel's need to obtain the AFL in order to improve its penetration into the southern States. 1998 In 2005-2006 Seven also contemplated as a serious commercial possibility that the AFL pay television rights, if necessary, could be sub-licensed to other channel suppliers. Contrary to Seven's Reply Submissions, it is not entirely ' fanciful ' to include ESPN in the category of potential sub-licensees, since the evidence suggests that Seven at one time took seriously the possibility of negotiating with ESPN with a view to ESPN taking a sub-licence of the AFL pay television rights. (I should record that Seven made a belated suggestion, apparently based on the AFL's submissions, that the terms of the offer accepted by Seven pursuant to the First and Last Deed permitted it to sub-license the pay rights only to Foxtel or Austar. The point was not developed and, in my view, lacks substance. It is clear that, by the time the evidence closed in this case, the negotiations had not borne fruit and, indeed, the parties were then a considerable distance apart. However, I do not draw the inference that it was unlikely that the negotiations would ultimately result in a sub-licensing agreement on commercial terms between the rights holders and the major pay television platform. The hearing concluded some months before the commencement of the 2007 AFL season and at that stage the negotiations had a long way to go. 2000 Seven submits that PBL went to some lengths to construct its offer for the AFL broadcasting rights in 2005 in a restrictive manner. According to Seven, PBL wished to ensure that the terms of the last offer by the AFL (which had to mirror PBL's offer) would force Seven and Ten to recognise that they needed Foxtel's co-operation to make the acquisition of the AFL broadcasting rights commercially worthwhile. If anything, Seven's submissions highlight the nature of the calculations underlying Seven's decision. Even if PBL had the motives Seven attributes to it, Seven was quite prepared to commit itself to acquiring the AFL broadcasting rights without any agreement with Foxtel being in place. Seven no doubt had fall-back positions available, such as sub-licensing ' surplus ' AFL broadcasting rights to other free-to-air operators. But sub-licensing to Foxtel was always likely to be the most direct avenue for Seven (and Ten) to recoup from a third party a significant portion of the outlay for the AFL broadcasting rights. 2001 Seven submits that I should find that Seven had decided in late 2005 or early 2006 that it would not set up its own sports channel. While there is no evidence that Seven gave active consideration to the option of setting up its own sports channel, there is also no evidence that Seven had ruled it out. Given Mr Stokes' evidence as to the ease with which a free-to-air operator could create a new sports channel incorporating AFL content, it seems to me that the creation of such a channel was a realistic commercial option available to Seven, even though it may not have been the preferred option. Whether as events turned out there would be any particular advantage to Seven in taking this course is not a matter that I need to address. Nonetheless I have addressed that issue. 2003 In my view, Seven has not established that there was such a market. The fundamental reason for so concluding is that an attempt by a sports channel supplier holding the AFL or NRL pay television rights to impose a SSNIP could be met by a pay television platform or a third party acquiring the AFL or NRL pay television rights at a competitive price when they became available. The evidence establishes that it is relatively easy, once the rights have been acquired, to join with an existing channel supplier or free-to-air operator or to set up a new channel. It is not helpful, in the setting in which AFL and NRL pay television rights are acquired and exploited through sports channels, to assess market power by reference to sports channel suppliers. If not, the products or services which constrain the hypothetical monopolist are in the same market as those provided by the monopolist. Seven accepts that a quantitative analysis is not feasible and it is therefore necessary to ' undertake a qualitative approach, drawing inferences from available evidence'. Seven submits that the strong differentiation of pay television content indicates that the demand for it is highly price inelastic. A SSNIP would not cause movement along the demand curve that would render the increase in price unprofitable. 2009 From a supply perspective, the free-to-air networks have no capacity to respond competitively to a SSNIP by retail pay television platforms, since they do not charge viewers a fee and the quality of their service is already maximised by reason of competition between the free-to-air operators. Furthermore, Foxtel's pricing policies, in particular its ability to charge more for satellite than for cable and more for digital than analogue, show that free-to-air operators are not a close constraint on the competitive price for pay television. 2010 Seven emphasises the different business models of pay television and free-to-air operators. The latter seek to attract mass audiences and to sell audiences to advertisers. Pay television retailers, by contrast, attempt to satisfy the breadth of demand for television viewing, arising from ' the heterogeneity of consumers' preferences '. Their business model aims to maximise subscription revenue. Pay television operators therefore, seek to induce consumers to subscribe rather than to maximise subscribers' viewing of pay television channels. Seven notes that the expert economists generally agreed that the greater the degree of differentiation between products, the less strongly substitutable they are (a point Seven was not quite so keen to emphasise in relation to the debate about the wholesale sports channel market). Seven argues that the effect of product differentiation in the present context was to enable Foxtel to increase its prices while also increasing subscriber numbers. In short, Foxtel's product differentiation was designed to develop a strong consumer preference for pay television, such that consumers would be willing to pay a substantial price, including installation fees and minimum term commitments. 2013 Seven also contends that, because free-to-air operators are capacity-constrained, they cannot expand output in response to a SSNIP by a pay television platform. While in theory the free-to-air operators could improve quality, for example by decreasing the volume of advertisements or acquiring highly attractive content, they are unlikely to do so in response to a SSNIP. Among other things, by reason of competition among themselves they would already be likely to be implementing an optimal mix of content and advertising. News' starting point is that the experts agree that free-to-air television constrains pay television to some extent. Thus the critical question for the purposes of definition of the relevant market is whether the constraint is close. According to News, the ' qualitative evidence ' shows that Foxtel was in fact closely constrained by free-to-air television. 2015 News accepts that the pay television platforms have a different business model than that of free-to-air operators. However, it argues that this does not mean that free-to-air television does not constrain pay television platforms. Contrary to Seven's submissions, News says that in truth the aim of any retail television operator, whether pay or free-to-air, is to attract as many viewers as possible. The evidence shows that both media consider that they compete for the same audience. Indeed, according to News, Foxtel has conducted its business on the basis of attempting to attract the maximum number of viewers. 2016 News relies on Foxtel's programming practices to demonstrate that Foxtel attempted to ' counter-schedule ' against the free-to-air broadcasters. Mr Crowley, the Head of Programming at Foxtel, gave evidence that he would examine the free-to-air schedules with a view to providing different programming for persons who were unlikely to be interested in the free-to-air programs or similar programming so as to attract the same or similar kinds of viewers. 2017 News also relies on churn data to support its claim that pay television competed with free-to-air television for viewers. The evidence shows that in 2000 Foxtel was experiencing high rates of churn (that is, subscribers who disconnect from Foxtel in any given month as a percentage of total subscribers at the end of the period), even though Mr Mockridge had succeeded in reducing the rate from 50 per cent to 25 per cent. Since most of the churn was away from pay television altogether (rather than to Optus), News submits that the evidence shows that many subscribers did not consider that pay television represented value for money. High churn suggests that consumers are sensitive about the price to be paid for the product, and it is reasonable to suppose that churn would increase if the price of the product increased'. News, by contrast, contends that firms often seek to differentiate their products from competitors which provide a close constraint on their pricing. According to News, the evidence shows that Foxtel from at least 1998 sought to differentiate itself from the free-to-air networks, principally by acquiring exclusive content, not only in sports, but in other areas. This conduct was economically rational only if Foxtel had been closely constrained by the free-to-air networks. Thus pay television is not a public good. 2020 Dr Smith pointed out that there is nothing unique in the notion that a public good can closely constrain the pricing of a product for which people have to pay. She gave as an example free newspapers, which may constrain (or be said to constrain) the pricing behaviour of subscription newspapers. The question that has to be answered is whether the public good sufficiently constrains the pricing and production decisions of the subscription products as to be a close economic substitute . That question, as Dr Smith acknowledged, requires an evaluative judgment (a ' thought experiment ') as to whether, in this case, free-to-air television constrains a pay television platform from profitably raising its prices by about five to ten per cent over a period of time that is appropriate to the market definition issue. 2021 Dr Smith accepted that pay television operators were ' ultimately constrained ' by the free-to-air operators, but maintained that the constraint was insufficient to place them both in the same market. By ' ultimately constrained ', Dr Smith meant that the demand for retail pay television services was influenced by the offering of the free-to-air networks and that there was some competition for programming. News relies on evidence that suggests, perhaps not surprisingly, that pay television, like free-to-air television, seeks to maximise its viewing audience. 2023 Similarly, Mr Delaney, the Executive Director for Content, Product Development and Delivery at Foxtel, gave evidence of his approach while CEO of XYZ from May 2000 until May 2002. (XYZ is jointly owned by Austar and Foxtel and produces and distributes a range of pay television channels, although none is apparently a sports channel. ) Mr Delaney said that during his time at XYZ he strove to increase and retain the number of viewers who subscribed to and watched the Foxtel and Austar platforms. --- Both, your Honour. --- Yes, your Honour. Roughly aligned'. 2026 In assessing the significance of this evidence, the views of Professor Hay are relevant. He said nothing in his reports about the retail pay television market, but he was asked in cross-examination about reports he had prepared in 1995 and 1997 in relation to a proposed merger of Foxtel and Austar. As Professor Hay correctly said in evidence, he did not express the view on either occasion that free-to-air television and pay television were necessarily in separate markets. He did opine, however, that the ' prudent position ' for the ACCC to adopt was a ' conservative one '. Thus, several years down the track, it may turn out that free TV and pay TV are best seen as comprising a single market. But at most, that is only a possibility (and, in my opinion, an unlikely one) '. (Emphasis added. 2028 What is significant about Professor Hay's reasoning in 1995, for present purposes, is his view on the competition between free-to-air television and pay television operators for audiences. Thus, it is hardly surprising that free TV networks lobbied for the anti-siphoning legislation. (A second motive for supporting the legislation would be the concern that competition from pay TV would bid up the cost of sporting events. ) However, even though more meals eaten at home mean less eating in restaurants, this does not mean that supermarkets and restaurants are in the same market . By the same token, the availability of some sporting events on free TV says little about the ability of a monopoly pay TV provider to extract supra-normal prices for the broad cluster of programs being provided (including the considerable number of major sporting events that apparently will be available on pay TV despite the legislation). ' (Emphasis added. The fact that pay television seeks to attract viewers from the general body of free-to-air television viewers (virtually everyone) does not necessarily mean that free-to-air operators are in the same retail market as pay television platforms. In particular, it does not mean that free-to-air television operators constrain pay television platforms from profitably imposing price increases of from five to 10 per cent over a period of time. Nor is the position changed by the fact that pay television operators may choose to schedule certain programs with an eye to free-to-air programming. That is a manifestation of the fact that pay television operators must both attract and retain subscribers from the general body of television viewers. The operators must also offer programming that is sufficiently attractive to justify subscribers paying the required fees, notwithstanding the availability of a free television viewing alternative. It is how the product is made attractive that is particularly important. 2030 Mr Williams of Foxtel gave evidence consistent with this analysis. He said that he regarded a greater than 50 per cent share of television viewing by Foxtel's subscribers (that is, where existing subscribers watch pay television more than 50 per cent of the time they devote to television viewing) as a measure of subscribers' satisfaction with Foxtel's programming. But the need for Foxtel to ensure that its subscribers were sufficiently satisfied with Foxtel's programming to maintain their subscriptions, having regard to a free-to-air ' alternative ', does not mean that free-to-air television operators constitute a constraint, in the relevant economic sense, on the pricing of Foxtel. 2031 Furthermore, it is not correct to say that pay and free-to-air television simply compete for viewers. The objective from the perspective of pay television platforms is to provide subscribers and potential subscribers with offerings they are prepared to pay for. Hence the emphasis, not so much on mass audiences, but on offering channels and programs that appeal to strong minority preferences that are not catered for, or are catered for insufficiently, on free-to-air television. 2032 As Professor Fisher agreed, it is not correct to say that the aim of pay television is to attract as many viewers as possible. Rather it is to attract as many paying subscribers as possible. The question must always be asked what are consumers prepared to pay for? Not just what are they prepared to watch. This is the fundamental point of difference between pay television and free to air television'. As has been seen in Chapter 4, the BS Act requires that subscription fees, not advertising revenue, be the predominant source of revenue for subscription television licensees. In fact, pay television operators derive only a very small proportion of their revenue from advertising. In the four financial years from 1 July 1998 to 30 June 2002, advertising revenue constituted between 1.7 per cent and 4.1 per cent of C7's total revenue from operations. Mr Williams estimated that in the 2001/2002 year, Foxtel derived between five and 10 per cent of its revenue from advertising, but ' probably closer to 5 per cent '. News refers, for example, to Mr Mockridge's evidence that pay television pursued exclusivity wherever it could, just as free-to-air television did. By way of example, pay television broadcasts first-run movies that cannot be broadcast on free-to-air television because pay television has an ' earlier window for release of a movie '. Mr Williams said that Foxtel needs original content to differentiate its service from the Commercial and National Broadcasters. He gave as illustrations content commissioned by Foxtel in areas not well provided for in free-to-air television, such as music, comedy, documentary and children's programming. Mr Williams pointed out that, in order to defray costs, Foxtel sometimes worked with the free-to-air broadcasters, particularly in commissioning Australian drama, although in more recent times there had been less emphasis on joint ventures. 2035 While this evidence is not in dispute, the parties disagree as to the significance of pay television's differentiation of its product from free-to-air television. News contends that a firm acts rationally in differentiating its product from another product only if it is closely constrained by the firm producing the second product. It follows, so News argues, that the evidence of product differentiation actually indicates that free-to-air television and pay television are in the same market. 2036 News submits that Dr Smith's evidence supports its argument. It is true that Dr Smith agreed with the theoretical proposition that it is not rational for a firm to continue to modify its product so as to further differentiate it from another product unless the second product is in the same market. However, Dr Smith qualified her answer. She pointed out that a firm may engage in product differentiation in order to create a demand where none has previously existed. In that situation, the pay television platform (if it is the product differentiator) is developing its product in order to increase its subscriber base and profitability. You want to maintain that differentiation, you want to make your product more appealing, but you also want to grow your market. So what you are looking to do is to develop your product, perhaps that's a better terminology, in different ways to attract consumers not just from free-to-air but who have done all sorts of other things perhaps in the past or who know what they have been doing. So it is in fact development of the product which may mean doing things differently, so loosely described as differentiation'. He agreed, for example, that a manufacturer of cellophane might stress the differences between its product and grease-proof baking paper, even though the products are not in the same market. The attraction of pay television --- an attraction that requires consumers to pay for the service --- does not rest merely on ' product differentiation ', although that is part of it. The critical point is that pay television offers subscribers something that free-to-air television (and other forms of entertainment) cannot: a very wide choice among a range of programs in the subscriber's own home. The choice includes access to subscription driving content that is exclusive to pay television. 2039 The point was recognised by Mr Mockridge and Mr Williams in their evidence. Perhaps curiously, the cross-examination focussed on Foxtel's efforts to differentiate its content from free-to-air television, rather than on more general strategies for expanding its subscriber base. Nonetheless, both Mr Mockridge and Mr Williams gave broader answers than particular questions required. Each answer identified choice of programming as the fundamental differentiator between pay television and free-to-air television. It's television, it's often the same thing, but there's a much greater choice. That's the differentiator' . (Emphasis added. (Emphasis added. The subscriber is prepared to pay for the choice and opportunity to access exclusive content within that field of choice. He or she has the added benefit that pay television, which derives only a small proportion of its revenue from advertising, has fewer advertisements than free-to-air television. 2042 A similar point was made in a submission made to the ACCC on Foxtel's behalf in about June 1999. The decision to subscribe to Pay TV is thus based on a perception of the quality and quantity of Pay TV which justifies the cost of paying for a service which can be received for free'. It seems to me that Dr Smith is well justified in arguing that the willingness of subscribers to pay substantial fees for pay television when free-to-air networks are available without charge suggests that the demand for pay television is relatively price inelastic. However, I do not think it is simply a matter of inferring from the willingness of subscribers to pay $40 to $50 pspm that a small but significant price increase will not lead to a loss of subscribers in favour of free-to-air television. 2044 The evidence in this case has focussed on the subscription-driving potential of premium sports, particularly AFL and NRL content, rather than other subscription-driving programming, such as movies. The evidence suggests that subscribers or potential subscribers have very strong preferences for the exclusive AFL or NRL content that is available on pay television. It is these preferences that fuel the high prices paid for the AFL and NRL pay television rights, compared with the prices paid for other sporting content. The willingness of subscribers to pay substantial monthly fees in order to satisfy their preferences from the wide range of choices available on pay television (including subscription-driving content exclusive to pay television) suggests that small but significant increases in fees would not cause them to ' switch ' to free-to-air television. Under the current regime, free-to-air television cannot offer the same range of choices. Nor can it satisfy the preferences of consumers in the way pay television does. High churn suggests that consumers are sensitive about the price to be paid for the product, and it is reasonable to suppose that churn would increase if the price of the product increased'. The point might be more persuasive if News linked increases in churn rates directly to increases in Foxtel's prices or to improvements in the quality of free-to-air television. But News does not attempt to make either link. Mr Mockridge, for example, accepted in evidence that Australian free-to-air television offered the same general quality of programming over the period he was CEO of Foxtel. 2047 Similarly, if it was clear that the prices charged by Foxtel during the relevant period were at competitive levels, the point made by News might carry more weight. But News does not suggest that it can demonstrate the proposition to be true. High rates of churn are consistent with subscribers forming the view that discretionary expenditure on entertainment is better directed to forms of entertainment other than pay television, or perhaps is better redirected to other household priorities altogether. 2048 In any event, I think that Dr Smith was correct when she suggested that the high rates of churn experienced by the industry were in part the result of pay television being a relatively new product in 1999 and 2000. News criticises Dr Smith's suggestion on the ground that it was mere speculation and was not grounded in economic concepts. 2049 This evidence seems to me to be consistent with pay television being a relatively new phenomenon throughout the period 1998 to 2002 (but particularly in the first half of that period). During its transitional phase, the behaviour of both the pay television platforms and subscribers had not yet fallen into a predictable pattern. Professor Hay, in his 1995 report to Optus, seems to have anticipated that there would be a transitional period. (Emphasis added. 2051 The report to Foxtel, along with much other evidence, shows that an important reason for subscribers giving up Foxtel was their perception that it did not represent ' value for money '. But this reason does not demonstrate that free-to-air television acted as a close constraint on pay television in the relevant sense. For example, call centre staff at Foxtel were directed to ascertain from those subscribers who gave ' value for money ' as the reason for disconnecting, the value comparison they had in mind. Mr Mockridge agreed that very few subscribers gave free-to-air television as the reason for concluding that pay television did not give value for money. This evidence, in my opinion, tends to suggest that free-to-air television did not act as a close constraint on pay television operators. Seven points out that ever since Foxtel's satellite service was launched on 1 March 1999, the price charged pspm for its basic satellite service has always been substantially higher than the price of its basic analogue cable service. In the third quarter of 1999, for example, the price of Foxtel's basic satellite service was $46.95 pspm (exclusive of GST), while the price of the analogue cable service was $34.95 pspm. By the last quarter of 2002, when the Foxtel-Optus CSA came into force, the differential had been reduced from $12.00 pspm to $10.00 pspm. ($47.95 pspm for satellite, compared with $37.95 pspm for cable). Nonetheless the differential (20.9 per cent of the satellite pspm price) was still substantial. 2053 Seven argues that the substantial differential is indicative of price discrimination practised by Foxtel and therefore of the exercise of market power by it. Moreover, so Seven contends, the differential suggests that free-to-air television was not a close constraint on the price charged by Foxtel for its satellite service. This is said to follow from the fact that only a minority of Foxtel's satellite subscribers from 1998 to 2002 could choose Optus as an alternative platform, while the great majority of Foxtel's cable subscribers could choose Optus if they wished (because the Telstra and Optus Cables largely serviced the same geographic areas). Seven submits that if free-to-air television had been a close constraint on Foxtel, it would not have been able to charge its satellite subscribers substantially more than its cable subscribers. 2054 I do not understand News to dispute the logic of Seven's argument. News essentially seeks to explain the price differential as resting on differences in the cost structure of satellite and cable services. My impression is that they do not. For example, the fact that Foxtel adopted uniform national pricing for cable subscribers seems to me readily explicable by the attention a differential pricing policy based on regions would have invited from regulators, if not consumers. The narrowing of the differential over time does not alter the fact that the gap remained substantial. The payment to Telstra cannot fully explain the extent of the differential. Ascertaining the true costs of installation of cable and satellite subscriptions seems to me a complex exercise which the evidence does not allow me to undertake with any confidence. 2056 In my view, the differential pricing policy adopted by Foxtel tends to support, although perhaps not very strongly, Seven's contention that free-to-air television did not closely constrain Foxtel's pricing during the period 1998 to 2002. At the very least, the evidence is consistent with Seven's position. Elements of the calculations, in the later years at least, were said to be confidential. There is no need in this judgment to reproduce the precise figures showing the extent of the negative cash flows. 2058 News relies on Foxtel's lack of profitability to show that Foxtel had been constrained by the free-to-air operators during the relevant periods. One of the reasons Professor Hay gave for being more ' agnostic ' about the existence of a separate retail pay television market than in 1995 and 1997 was his understanding that Foxtel had been unprofitable during the intervening period. If the answer is no and there is no likelihood they will be able to do so in the future , that ought to lead you to the conclusion that the constraint is an effective one from free-to-air, which in turn ought to lead to the conclusion that they are all in one market'. (Emphasis added. These included transfer pricing (by which revenue could be diverted to a related entity), inefficiency and the pursuit of strategic objectives rather than profitability. Professor Hay readily accepted that the material he had perused did not enable him to draw a firm conclusion on the significance of Foxtel's lack of profitability. He doubted whether, as an economist, even if he had undertaken more intensive work, he would have been able to resolve the problem. 2060 Professor Noll rejected a suggestion put to him in cross-examination that it was extraordinary that a firm such as Foxtel, if it had monopoly and monopsony powers in the retail pay television market, should have suffered substantial losses over a long period. Foxtel isn't a normal firm. It has three owners with whom it has transfer prices. So the decision about the profitability of Foxtel is in part a decision about the profitability of its owners, and the transfer prices are set accordingly'. He suggested, for example, that the accounts for 2002/2003 indicated that the sum of Fox Sports profits and the revenue derived by Telstra from Foxtel's use of the Telstra Cable exceeded the EBITDA loss. Professor Noll also suggested that, in assessing the value of Foxtel to Telstra, it is necessary to consider the value of Telstra's retained telephony business attributable to its interest in Foxtel. 2062 News criticises Professor Noll's analysis and similar comments by Dr Smith as ' mere assertions '. It is true, as they both recognised, that they were not in a position to test the hypothesis that Foxtel was the vehicle for boosting the separately recorded profits of its owners. It is equally true that News has not demonstrated that the hypothesis is without empirical support. Telstra's determination to retain its interest in Foxtel (one of the matters which News says shows that there was no transfer pricing) may well be explained, in large measure, by Foxtel's value to Telstra's telephony and telecommunications business. Moreover, the evidence concerning the price paid by Foxtel for Fox Sports until the disputes among the Foxtel partners were resolved is consistent with News (and, later, PBL) favouring Fox Sports' interests over Foxtel's, even if it is not conclusive on that question. 2063 News relies on the evidence of Professor Williams to demonstrate that Foxtel lacked market power over the period 1995 to 2004. In essence, Dr Williams examined Foxtel's cash flows, after eliminating interest payments, and concluded that the negative returns over a period of nine years were inconsistent with the exercise of market power. He also opined that Foxtel's projected cash flows in its 2002 business plan did not anticipate that Foxtel would earn monopoly profits over the succeeding decade. 2064 Professor Williams' analysis did not take account of the issues raised by Professor Noll. The analysis also suffers from the difficulty that, as he acknowledged, caution must be exercised in using accounting data to draw inferences about a firm's ability to derive monopoly profits. In this respect, Professor Williams implicitly accepted the validity of the work done by Professor Fisher, News' competition expert. 2065 Professor Fisher is the co-author of an influential paper entitled ' On the Misuse of Accounting Rates of Return to Infer Monopoly Profits '. As Professor Fisher explained in evidence, the basic point made in that article is that the critical concept in determining whether a firm is making monopoly profits is the firm's ' economic rate of return ', not its ' accounting rate of return '. The two concepts are different and are not necessarily related. (Emphasis added. --- Well, that's true, but that is not to say that one cannot under some circumstances actually reach some inferences. For example, in the present case there is, as you know, a series of accounting statements which show negative cash flows for Foxtel over a long period of time, and that's before depreciation. Now, it may perfectly well be true --- one cannot know --- that off there in the future is a great balloon of profit which is going to be made . But there is no evidence, so to speak, that that is likely to happen, and it certainly hasn't happened for a very long time, and one has to have, you know, a serious amount of faith to suppose that this is going to be consistent with earning monopoly returns. You can't prove it won't happen'. (Emphasis added. This exercise involved a good deal of uncertainty and was sensitive, among other things, to the discount rate chosen. The value of Professor Williams' analysis for present purposes is also affected by the fact that he did not (and indeed could not) take into account more recent accounting information produced by Foxtel. That information, in my view, does not rule out the realistic chance of, in Professor Fisher's phrase, a ' great balloon of profit ' in the future. 2068 The result is that I do not regard Foxtel's history, until recently, of negative cash flows as inconsistent with it operating within the retail pay television market identified by Seven, nor with Foxtel having a substantial degree of power within that market. This concession has prompted the parties to swap sides on the significance of such references for the purposes of market definition. Seven, having enthusiastically cited contemporaneous comments implying that Fox Sports and C7 may have competed in a single wholesale sports channel market, now seeks to discount contemporaneous comments implying that Seven and Foxtel may have competed in a single retail television market. News, having discounted contemporaneous documentation implying that Fox Sports and C7 may have been competitors in a single wholesale sports channel market, now enthusiastically cites contemporaneous material implying that Seven and Foxtel may have competed in a single retail television market. 2070 I repeat the note of caution I have sounded about reliance on contemporaneous records for the purposes of market definition. They may be very important, but the context of the records must be taken into account. As Dr Smith accepted, free-to-air television was a constraint on pay television platforms such as Foxtel and was seen as such by officers of Foxtel and News. But the question is whether the free-to-air operators acted as a sufficiently close constraint on pay television platforms to justify regarding them as in the same market. 2071 News accepts the proposition that business people tend to talk of ' markets ' in a different sense from that used by economists. Mr Mockridge made the same point in his evidence when a draft Foxtel document was drawn to his attention which asserted that ' Foxtel has a commanding lead in a growing market '. A Foxtel planning document prepared in November 2002, for example, referred to a possible competitive threat from free-to-air operators if they are permitted to ' multichannel '. The document noted a correlation between increases in the number of free-to-air broadcasters and lower rates of take-up of pay television. The same document, however, argued that Foxtel competes in the ' entertainment market ', which was said to include DVDs, cinema, free-to-air television, the internet and even magazines and books. Mr Williams, the author of the planning document, described in his evidence Foxtel's corporate mission as ' standing out from and complementing other entertainment sources '. 2073 A similar ambiguity is evident in a Foxtel memorandum sent to Telstra (with a copy sent to Mr Mockridge) on 23 November 1999. The memorandum recorded that although Foxtel had ' clear leadership ' in pay television, it was not complacent about Optus, particularly the possibility that it might use pay television as a ' loss leader '. Having identified this threat, the memorandum stated that Foxtel's main competitor was free-to-air television, which was due to launch a digital service in 2001. Mr Mockridge, for example, accepted that he acted as an advocate for Foxtel in its dealings with the ACCC and that this meant pressing the argument that free-to-air and pay television were in the same market. He also accepted that his understanding of Foxtel's interests in this regard influenced the content of documents created within Foxtel. I do not doubt that Mr Mockridge honestly held the views he expressed, but those views reflected the interests of Foxtel. 2075 Other factors should be borne in mind. In my view, there is some force in Seven's submission that the identification of free-to-air operators as competitors of Foxtel may reflect, in part, the ' cellophane fallacy '. To the extent that Foxtel was charging above the competitive price, churn may have been more readily seen as a loss of subscribers to the free-to-air ' competition '. This, however, would not necessarily mean that free-to-air television was a close constraint on Foxtel's ability to change a supra-competitive price for its pay television service. 2076 Another factor influencing the perception of Mr Mockridge and others at Foxtel is likely to have been the link between Seven, as a free-to-air operator, and C7, as a supplier of sports channels. I have found that News and Foxtel were genuinely concerned about Seven's role as a gate-keeper of the AFL pay television rights by virtue of its control of the AFL broadcasting rights. Seven was seen as primarily interested in the free-to-air business and as having a secondary interest in pay television. That link, in my view, influenced perceptions within Foxtel and News. It is necessary therefore to take this market into account when addressing the issues identified earlier in this Chapter. 13 SEVEN'S EFFECTS CASE UNDER SECTION 45(2) OF THE TRADE PRACTICES ACT [2078] 13.1 Legislation [2078] 13.2 Structure of Seven's Case: A Guide for the Perplexed [2089] 13.2.1 Seven's Primary Effects Case [2092] 13.2.2 Alternative Markets [2096] 13.2.3 Other Provisions [2098] 13.2.4 What Happens if the Case against the Consortium Respondents Succeeds? [2099] 13.2.5 What Happens if the Case against the Consortium Respondents Does Not Succeed? [2103] 13.2.6 Purpose Case: What Does It Add? [2104] 13.3 Seven's Pleaded Effects Case [2107] 13.3.1 AFL and NRL Proposals [2109] 13.3.2 Master Agreement and Master Agreement Provision [2112] 13.3.3 Giving Effect to the Master Agreement Provision [2115] 13.3.4 Rights Sub-Licence Agreement [2116] 13.3.5 Markets [2117] 13.3.6 Consequences of Acquiring the AFL Pay Television Rights [2119] 13.3.7 Effect on the Retail Pay Television Market [2122] 13.3.8 Effect on the Wholesale Sports Channel Market [2126] 13.3.9 Effect of the Master Agreement Provision [2129] 13.3.10 Effect of the Acquisition Agreements [2132] 13.3.10.1 News-Foxtel Licence [2135] 13.3.10.2 Nine Put [2136] 13.3.10.3 News-Nine Licence [2137] 13.3.10.4 NRL Bidding Agreement [2138] 13.3.10.5 Fox Sports-NRL Pay Rights Agreement [2139] 13.4 Seven's Submissions [2140] 13.4.1 Markets [2141] 13.4.2 Existence of the Agreements [2142] 13.4.2.1 Master Agreement [2142] 13.4.2.2 Rights Sub-Licence Agreement [2150] 13.4.3 Effect of The Master Agreement Provision [2153] 13.4.4 'Competition on the Merits' [2165] 13.4.5 Logic of Seven's Case [2172] 13.4.6 Anti-Competitive Means [2174] 13.4.7 Effect on the Wholesale Sports Channel Market [2177] 13.4.8 Effect on the AFL and NRL Pay Rights Markets [2178] 13.4.9 Effect on the Retail Pay Television Market [2179] 13.4.10 Seven's Submissions on Particular Provisions [2184] 13.4.10.1 News-Foxtel Licence Provision [2185] 13.4.10.2 Rights Sub-Licence Provision [2186] 13.4.10.3 Nine Put Provision [2187] 13.4.10.4 NRL Bidding Agreement [2188] 13.5 Consortium Respondents' Submissions [2189] 13.5.1 No Markets [2190] 13.5.2 No Agreements [2191] 13.5.3 Competition on the Merits [2193] 13.5.4 Agreements Did Not Cause Seven's Demise [2195] 13.5.5 Master Agreement Provision Did Not Have the Alleged Effect on Competition [2196] 13.5.6 Substantial Lessening of Competition [2199] 13.6 Construction of s 45(2) of the TP Act [2204] 13.6.1 'Provision' [2204] 13.6.2 Prospective or Retrospective? [2205] 13.6.2.1 Structure of s 45(2)(a)(ii) and (b)(ii) [2205] 13.6.2.2 Common Ground [2209] 13.6.2.3 Preferred Construction of s 45(2)(b)(ii) [2213] 13.6.2.4 Authorities on s 45(2)(b)(ii) [2224] 13.6.3 Effect: Direct and Immediate? [2228] 13.6.4 'Likely' [2231] 13.6.5 'Substantially Lessening Competition' [2234] 13.6.6 Assessing whether Competition Has Substantially Lessened [2238] 13.6.7 Severance [2240] 13.7 Existence of the Master Agreement [2243] 13.7.1 Principles [2243] 13.7.2 Arrangement or Understanding [2246] 13.7.2.1 An Ambiguity [2247] 13.7.2.2 Was There an Arrangement or Understanding? [2258] 13.8 Existence of the Rights Sub-Licence Agreement [2265] 13.9 Effect of the Master Agreement Provision on the Retail Pay Television Market [2269] 13.9.1 Application of s 45(2)(a)(ii): Was It Likely That News Would Acquire the AFL Broadcasting Rights? [2271] 13.9.1.1 Two Assumptions [2272] 13.9.1.2 Seven Fails to Put Its Best Bid Forward [2273] 13.9.1.3 Was It Likely that News' Bid Would succeed? [2277] 13.9.2 Application of s 45(2): Was the Master Agreement Provision Likely to Substantially Lessen Competition in the Retail Pay Television Market ? 2079 Section 45(2) of the TP Act is also concerned with provisions of contracts, arrangements or understandings that have the purpose of substantially lessening competition. In this Chapter I briefly explain the relationship, as I understand it, between Seven's ' effects ' case and its ' purpose ' case, but the substance of Seven's purpose case under s 45(2) is addressed in Chapters 14 and 15. It is, however, convenient to set out the relevant statutory provisions here. News' Closing Submissions estimated, plausibly in my view, that Seven had advanced some 100 alternative contentions in support of that case. 2090 Seven's Closing Submissions not only advanced a very large number of alternative claims, but failed to identify which of them should be regarded as its principal contentions. Indeed, the submissions were devoid of any guide as to how I should attempt to work my way through the plethora of alternatives. Nor did the submissions descend to an explanation of the relationship between Seven's case on the purpose of the many provisions it identified and its case on the effect or likely effect of those provisions on competition. 2091 Following the correspondence and the directions hearing preceding the final oral submissions, to which I have referred in Chapter 1, Seven and each of the Respondents filed summaries of their respective arguments. Seven's Case Summary clarified some (but by no means all) of the matters that had been left obscure by its written submissions. The Case Summary also identified, for the first time, a number of causes of action addressed in Seven's Closing Submissions on which Seven no longer relies. The filing of the Case Summary did not, however, deter Mr Sumption from advancing additional or modified arguments in his final oral submissions which, in turn, prompted yet further responses from the Respondents. Nonetheless, the Case Summary first outlines Seven's case on what the Statement of Claim describes as the ' Master Agreement Provision '. 2093 According to the Case Summary, the Consortium Respondents (News, Foxtel (Sky Cable and Telstra Media), PBL and Telstra) made an arrangement or understanding at the teleconference held on 13 December 2000 to secure, among other things, the AFL broadcasting rights and the NRL pay television rights. The understanding required the Consortium Respondents to give effect to a proposal containing two elements, one relating to the AFL broadcasting rights and the other relating to the NRL pay television rights. It was this understanding that constituted the Master Agreement Provision. News and Telstra in particular intended and expected this to weaken Optus as a competitor of Foxtel and it can be inferred that it [presumably the exit of C7] did. It can be seen to have paved the way for the CSA [of 5 March 2002]'. 2100 Nine's liability is said to be most directly dealt with in the claims based on the so-called ' Nine Put Provision ' and the ' News-Nine Licence Provision ' (expressions which are defined in the Statement of Claim ([2115]). On Seven's case, the Nine Put Provision was an integral part of the AFL Proposal and had the same effect on competition in the various markets as the Master Agreement Provision. The News-Nine Licence Provision gave effect to the Nine Put and was a necessary prerequisite to the ' News-Foxtel Licence' . Its effects included C7 going out of business and a substantial lessening of competition in each of the markets identified by Seven. 2101 If neither of these claims against Nine succeeds, Seven relies on the 'Rights Sub-Licence Agreement Provision' . According to Seven, each of Foxtel, Nine and Ten knew that its own acquisition of rights was conditional upon the overall arrangements with News being put into place. News was to acquire the AFL broadcasting rights, with the ability to off-load those rights to the sub-licensees on predetermined terms. The effects of the Rights Sub-Licence Agreement Provision are said to have been the same as those of the Master Agreement Provision. 2102 Seven accepts that the liability of Fox Sports depends on Seven succeeding in relation to the ' NRL Bidding Agreement Provisions ' or, alternatively, the ' Fox Sports-NRL Pay Rights Agreement Provisions ' (also referred to in this judgment as the ' NRL-Fox Sports Licence Provisions ' ). The liability of the NRL Partnership depends on Seven's success in its case based on the NRL-Fox Sports Licence Provisions. (These expressions are also defined in the Statement of Claim. Seven says that the Respondents' purpose is relevant, for example, to market definition and to establishing a basis for inferring the effect or likely effect of particular provisions. (It should be noted, however, that as Mr Sumption accepted, ' purpose ' in this sense is not necessarily the same as ' purpose ' in the sense employed by s 45(2)(a)(ii) and (b)(ii) of the TP Act . If this narrow approach were to be adopted, Seven might succeed in establishing that one of the provisions on which it relies in fact resulted in C7's exit from the market and a substantial lessening of competition, yet Seven might fail to establish that the provision had or was likely to have that effect. In these circumstances, Seven says that it might succeed in its purpose case notwithstanding that its effects case fails. • Seven maintains that a corporation may have the purpose of substantially lessening competition in a market, even though it is in fact impossible for it to achieve that objective (for example, because the market which the corporation wishes or attempts to influence in truth does not exist). In other words, a corporation may contravene s 45(2)(a)(ii) or (b)(ii) of the TP Act by making a contract or arrangement containing a provision the purpose of which is to substantially lessen competition in a market as subjectively understood by the corporation . This is so, Seven argues, whether or not the corporation's understanding is correct. It follows that Seven might succeed on its purpose case where its effects case fails because the relevant markets are not found objectively to exist. One answer the Respondents give to Seven's case based on the bidding for the AFL broadcasting rights and the NRL pay television rights in 2000 is that the bidding was merely ' competition on the merits '. Mr Sumption's response was that, even if it is insufficient for Seven to show that it had been denied an essential input for C7's business, the Consortium Respondents had employed ' anti-competitive means '. Mr Sumption acknowledged that, in this context, the concept of ' purpose ' as applied to ' anti-competitive means ' is again being used in a different sense than ' purpose ' is used in s 45(2) of the TP Act . Nonetheless, it is a third instance of the purpose of the Respondents (or some of them) being relevant to the issues in the case. I do this notwithstanding that, on my market findings, much of Seven's effects case falls away. I think it is convenient to record the substance of the case pleaded by Seven, not least because of the virtual inevitability of an appeal. 2108 The bolded expressions in this section for the most part reflect the terminology in the Statement of Claim, although in some cases I have departed from that terminology in the interests of uniformity. It should be noted that the expression ' Foxtel ' is defined in the Statement of Claim to mean ' Sky Cable and Telstra Media [which] together carry on business in partnership trading under the business name "Foxtel". The proposals were developed by Mr Philip with the assistance (in relation to the AFL pay television rights) of Mr Frykberg. The agreement was express and was partly in writing and partly oral. To the extent it was written, it consisted of the 13 December 2000 drafts of the Foxtel Put, the Nine Put and the Ten Put (terms which are defined later in the Statement of Claim). Further, in giving effect to the Master Agreement Provision, each of the Consortium Respondents engaged in conduct in contravention of s 45(2)(b)(ii) of the TP Act. It was a provision of the Foxtel Put (' Foxtel Put Provision ') that if News made the request, the agreement would require Foxtel to acquire the exclusive pay television rights to three AFL matches for $30 million per annum (plus GST and adjustments) and to contribute a proportion of ' contra '. The Foxtel Put Provision also required News to pay Foxtel $500,000 for each pay television match broadcast by a free-to-air broadcaster earlier than 14 days after the date the match was played (pars 104-105). It was a provision of the Nine Put (' Nine Put Provision ') that if News made the request, the agreement would require Nine to acquire the exclusive free-to-air television rights to three AFL matches in each round, plus certain other matches, for $23 million per annum (plus GST and adjustments), contribute a proportion of contra and pay News $500,000 for any other match Nine broadcast earlier than 14 days after the date it was played (pars 106-107). The Ten Put contained a provision (' Ten Put Provision ') requiring Ten to acquire the exclusive free-to-air television rights to two AFL matches in each round, plus all finals and certain other matches, for $23 million per annum (plus GST and adjustments), contribute a proportion of contra and pay News $500,000 for any other match broadcast by it within 14 days of the match being played (pars 108-109). The News-AFL Licence Provisions also required News to acquire the AFL pay television rights for $30 million per annum (plus GST and adjustments) plus the provision of editorial support (pars 110-111). The relevant provision of the News-Foxtel Licence (' News-Foxtel Licence Provision ') was equivalent to the Foxtel Put Provision (pars 116-117). The relevant provision of the News-Nine Licence (' News-Nine Licence Provision ') was equivalent to the Nine Put Provision (pars 120-121). The relevant provision of the News-Ten Licence (' News-Ten Licence Provision ') was equivalent to the Ten Put Provision (pars 124-125). This agreement contained provisions (' Fox Sports-NRL Pay Rights Agreement Provisions '), whereby Fox Sports acquired the NRL pay television rights for $30 million per annum (plus GST and adjustments), the fee to be reduced to $15 million if the NRL Partnership granted the NRL pay television rights to Optus Vision and to be increased by certain percentages if and when Fox Sports' total monthly subscribers exceeded two million or 2.5 million. The NRL Partnership also agreed not to grant NRL pay television rights to any other party on terms more favourable than those contained in the Fox Sports-NRL Pay Rights Agreement (pars 132-133). (The Fox Sports-NRL Pay Rights Agreement is referred to elsewhere in the judgment as the ' NRL-Fox Sports Licence '. This contained a provision (' Rights Sub-Licence Provision ') that News would, upon acquiring the AFL pay television rights, sub-license those rights to Foxtel or, upon acquiring the AFL broadcasting rights, sub-license the AFL pay television rights to Foxtel and the AFL free-to-air television rights to Nine and Ten (pars 239-240). By reason of these matters, the Foxtel Put Provision had the effect or likely effect that News would be the successful bidder for the AFL broadcasting rights (par 246). However, Seven says, in the alternative, that the provisions had the effect of substantially lessening competition in three other markets. (ii) A retail pay television market, being an Australia-wide market for the retail supply of pay television services, the principal suppliers of which are Foxtel, Optus and Austar (par 140). The applicants say that Foxtel, at least since November 1998, has had a substantial degree of power in the retail pay television market (par 142). (iii) An AFL pay rights market, being a market in Australia for the acquisition and supply of pay television rights to broadcast AFL matches (par 153). (iv) An NRL pay rights market, being a market in Australia for the acquisition and supply of pay television rights to broadcast NRL matches (par 154). Further, since at least November 1998, in order to reach a sufficiently critical mass to be economically viable, it is important that a retail pay television operator in Australia has access to a sports channel that incorporates a ' must have ' sport, known as a ' marquee sport '. This is because the most important single factor driving pay television subscriptions is live and exclusive coverage of marquee sports (par 161A(b)). (Emphasis added. The C7 channels and in particular, AFL programming, were a major point of differentiation between the pay television services offered by Optus and Foxtel and provided an incentive for subscribers to subscribe to Optus rather than Foxtel (par 163). 2121 The acquisition of the AFL pay television rights by Foxtel and C7's failure to acquire the NRL pay television rights had the consequence that Foxtel filled the last remaining gap in its line-up of marquee sports and could increase its subscriber numbers at Optus' expense (par 164(a), (c)). Optus was required to obtain attractive Australian sports programming from Foxtel and thus had a strong incentive to terminate the C7-Optus CSA and enter into content supply agreements with Foxtel (pars 164(d), 194). Optus was therefore not able to compete effectively with Foxtel in circumstances where Foxtel controlled price and other terms of supply of Optus' programming (par 169). Following the acquisition by Foxtel of the AFL pay television rights and C7's failure to acquire the NRL pay television rights, C7 was unable to compete with Foxtel and Fox Sports in the supply of pay television sports channels (par 177). Moreover, there was no other significant competition to Foxtel and Fox Sports in the supply of pay television sports channels (par 178). Foxtel and Fox Sports became the only suppliers of channels that incorporated attractive Australian sports programming and the only suppliers of channels incorporating ' marquee sports '. There was (and is) no competition between Foxtel and Fox Sports as they ' supply complementary channels only ' and have overlapping ownership (pars 179-180). In March 2002, Optus purported to terminate and Austar did not renew their respective content supply agreements (pars 211-212). Following these events, C7 ceased operations on 7 May 2002 and thereafter Fox Sports became the dominant supplier of channels incorporating Australian sports content (pars 213-214). 2130 The parties to the Master Agreement gave effect to the Master Agreement Provision by entering into and procuring the entry into the 12 Acquisition Agreements (par 224). The effect or likely effect of each of the relevant provisions of the Acquisition Agreements was the same as the effect or likely effect of the Master Agreement Provision (par 228). 2133 In any event, the effect or likely effect of the Master Agreement Provision must be considered together with the effect or likely effect of each of the Acquisition Agreement Provisions (par 229). Further, the effect or likely effect of each Acquisition Agreement Provision must be considered together with the effect or likely effect of each of the other Acquisition Agreement Provisions and the Master Agreement Provision (par 230). 2134 The Statement of Claim pleads the effects on competition of each of the Acquisition Agreements in turn. I summarise here the pleadings concerning those Acquisition Agreements on which Seven relies in its final submissions. The order of presentation reflects that of Seven's submissions, rather than that of the Statement of Claim. Foxtel supplies services in, among others, the retail pay television market and the wholesale sports channel market. Foxtel also supplies and acquires services in, among others, the AFL pay rights market (par 289). The effect of the News-Foxtel Licence Provision was that Foxtel acquired the AFL pay television rights (par 292B). For this reason also (taking into account matters already pleaded relating to the effect of the Master Agreement Provision), News and Foxtel contravened s 45(2)(a)(ii) and (b)(ii) of the TP Act (pars 292C-292D). Foxtel also acquires and supplies services in, among others, the AFL pay rights market, while Fox Sports acquires services in among others, the NRL pay rights market (par 309). By reason of the effect or likely effect of the NRL Bidding Agreement Provisions as previously pleaded (pars 228-229), in entering into the NRL Bidding Agreement each of Telstra, Foxtel and Fox Sports contravened s 45(2)(a)(ii) and (b)(ii) of the TP Act . For the same reasons as apply to the summary of Seven's pleadings, I have not confined the outline of its submissions to the case based on the retail pay television market. For the sake of clarity, I also refer in this section to certain arguments advanced by the Respondents. It says therefore that no issue arises as to whether the terms of s 45(3) of the TP Act are satisfied. The Master Agreement was intended, according to Seven, ' to secure both the AFL broadcast rights and the NRL pay, internet and naming rights '. 2143 In its Closing Submissions, Seven devotes a chapter (Chapter 6) to an anticipated submission by the Respondents to the effect that the acquisition of the AFL broadcasting rights by News involved a series of bilateral arrangements between News and the sub-licensees, rather than multi-party arrangements among the members of a consortium. Seven apparently assumed that the Respondents would rely on Mr Philip's rather optimistic evidence that he sought to keep the negotiations between News and each of the proposed sub-licensees quite separate from each other and that, accordingly, there was no meeting of minds necessary to constitute an arrangement or understanding for the purposes of s 45(2) of the TP Act . 2144 As Seven's Reply Submissions observe, however, the Respondents have chosen not to take issue with Chapter 6 of Seven's Closing Submissions. The only significant point of difference between the parties, so far as the existence of the Master Agreement is concerned, is whether there was an agreement or understanding dealing with both the AFL broadcasting and NRL pay television rights. 2145 The Respondents' position, exemplified by PBL's Closing Submissions, is that there was no overarching agreement between News, PBL, Telstra and Foxtel relating to both the AFL and NRL pay television rights. PBL submits that a number of essential elements of each of the AFL and NRL Proposals were not dealt with at all at the 13 December 2000 teleconference. For example, there was no mention of the Nine Put, which was executed on 14 December 2000, or the Ten Put, which was also executed on that day. 2146 In any event, PBL contends that there was no connection between the AFL and NRL Proposals. The decision by Fox Sports to proceed with the bid for the NRL pay television rights was made separately from any decision at the 13 December 2000 teleconference and was made without Telstra's participation. Further, there was no connection between the NRL and AFL bidding processes, other than that they were co-incident in time and involved some of the same individuals. Neither bid was contingent on the other. 2147 Seven, however, submits that in order to appreciate the scope of the arrangement made on 13 December 2000, it is necessary to examine the events leading up to that day. Mr Philip and Mr Frykberg had formulated a proposal containing many of the elements of the understanding reached on 13 December 2000. The proposal that News should acquire the AFL broadcasting rights and sub-license the AFL pay television rights to Foxtel had the support of News, PBL and Foxtel. But it had encountered resistance from Telstra and therefore from Telstra's representatives on the Foxtel Management board. In particular, on 8 December 2000, Telstra had rejected a proposal that Telstra support a bid for the AFL pay television rights at $30 million per annum (plus adjustments). 2148 According to Seven, Mr Philip not only sought Telstra's support for Foxtel's involvement in News' bid for the AFL broadcasting rights but he also sought Telstra's support for Fox Sports' bid for the NRL pay television rights. Seven contends that there was a clear link between the acquisition of the AFL and the NRL pay television rights. The link, so Seven argues, reflects the circumstances surrounding the 13 December 2000 teleconference, which had been convened to discuss both the bids for both the AFL broadcasting rights and the NRL pay television rights. There are obvious reasons why the understanding between the parties would extend to both sets of rights. It was seen as highly undesirable that Foxtel secure AFL rights, but then C7 obtain NRL rights. One of the stated objects of the AFL rights acquisition was to obtain the last remaining gap . There was no desire to create another one. The objective of securing the premium rights into the hands of Foxtel/Fox Sports would be frustrated if C7 acquired either AFL or NRL. The fact that there were two separate rights to acquire does not stand in the way of there being an understanding to acquire both'. (Emphasis in original. PBL submits that the only point in pleading an agreement whereby News, on acquiring the AFL broadcasting rights, would sub-license them to Foxtel, Nine and Ten, is to connect Nine with the alleged contraventions of the TP Act. This is being done, so it is argued, in circumstances where Seven cannot establish any separate claim in relation to Nine's acquisition of the AFL free-to-air television rights. 2151 PBL submits that the fact that Nine, Ten and Foxtel knew of each other's participation in a bid organised by News does not establish an agreement or understanding betwween them. There was no meeting of minds. On the contrary, each of the parties was concerned to maximise the benefit to itself, for example in relation to the ' flip-flop '. Moreover, Nine and Ten each made its own decision independently on 14 December 2000. 2152 In its Reply Submissions, Seven contends that, as a matter of law, an arrangement can exist without direct discussions among all participants. A series of bilateral communications is sufficient, provided that the parties share a common purpose. In this case, the parties shared a common purpose, namely supporting News' bid for the broadcasting rights to be parcelled out between them in a pre-determined manner. Further, each party knew in general terms how the rights were to be parcelled out. What they were doing made no sense except as a common undertaking. The News bid was the winning bid. (Seven had a right to match the free-to-air bid, but this did not affect the disposition of the AFL pay rights). It follows that the direct effect of the Master Agreement, in relation to the AFL pay rights, was that Foxtel acquired those rights and C7 did not'. The actual effect of the Master Agreement was that those rights were acquired. That suffices, so Seven contends, to establish a contravention of s 45(2)(a)(ii) of the TP Act. The Master Agreement Provision contemplated and required that, if News' bid was successful, the AFL pay television rights would be sub-licensed to Foxtel. This is said to be sufficient for the Master Agreement Provision to have had the proscribed effect. However, the Master Agreement Provision also facilitated in other respects the News bid for the AFL broadcasting rights. It follows, so Seven argues, that the likely and actual effect of the Master Agreement Provision was that Foxtel would acquire the AFL pay television rights, in circumstances where C7 was bound to be unsuccessful in its attempt to secure the NRL pay television rights. 2158 If Mr Philip's evidence was false and News was not prepared to bid more than $25 million per annum for the NRL pay television rights, the Master Agreement Provision ensured Telstra's support for a higher bid. In these circumstances, the Master Agreement Provision had the likely and actual effect of enabling Fox Sports to acquire the NRL pay television rights over C7. 2159 Seven's Reply Submissions seek to develop the cryptic observation made in Seven's Closing Submissions that the actual effect of the Master Agreement Provision was that Foxtel acquired the AFL pay television rights. Seven points to authorities that support the proposition that the ' effect ' of a contract involves a backwards-looking assessment. While some cases concern proposed contracts or contracts which ' have ceased in their incipience ', others concern contractual provisions which have actually been performed. In the latter category of cases, of which the present is an example, an assessment of the effect of the contract is informed by the facts and is therefore ' present or retrospective '. 2160 Seven's Reply Submissions point out that s 45(2)(a)(ii) of the TP Act prohibits the making of a contract or arrangement, or arriving at an understanding, if a provision of the proposed contract, arrangement or understanding would have or be likely to have the effect of substantially lessening competition in a market. Seven says that s 45(2)(a)(ii) incorporates a temporal element: that is, the use of the word ' would ' reflects the fact that the prohibition is on making a contract or arrangement or arriving at an understanding. Section 45(2)(a)(ii) therefore necessarily requires the Court to assess the prospective effect of a provision in the contract, arrangement or understanding. However, Seven contends that where a contract is performed (as in the present case), it is permissible to examine the actual effect of the contract and draw any reasonable inference when assessing the likely effect of the relevant provisions. 2161 Seven also relies on s 45(2)(b)(ii) of the TP Act which, so it argues, the Respondents have ignored in their submissions. (If the Respondents did ignore s 45(2)(b)(ii), in my view, it was because Seven's Closing Submissions did not make the argument apparent. ) Seven submits that conduct in ' giving effect ' to a provision may be continuing conduct, requiring the assessment of the effect of the provision to be undertaken a considerable time after the agreement was formed or first came into operation. Accordingly, the Court should assess the effect and likely effect of giving effect to a provision on each occasion that such a ' giving effect ' occurs. 2162 For example, on Seven's case, the Consortium Respondents gave effect to the Master Agreement Provision, which came into operation on 13 December 2000, by entering into the News-AFL Licence on 19 December 2000 and the News-Foxtel Licence on about 21 January 2001. In determining whether giving effect to the Master Agreement Provision in this way had or was likely to have the effect of substantially lessening competition, it is necessary to take account of events that had occurred at the times the licences came into force (that is, at the times the parties gave effect to the Master Agreement Provision). Moreover, Seven submits that it is also permissible to take into account the fact that Foxtel ultimately acquired the AFL pay television rights and that Fox Sports ultimately acquired the NRL pay television rights in determining the effect of the Master Agreement Provision. Seven advances further submissions in relation to s 45(2)(b)(ii), to which I refer below. 2163 Seven submits that News' submissions are flawed insofar as they suggest that, for the purposes of s 45(4) of the TP Act , regard may only be had to agreements in force on the date the relevant contract, arrangement or understanding was entered into. News' submissions are said to be based on a mistaken view as to the time when a substantial lessening of competition must be assessed. Further, once the ' temporally extended nature of assessment under s 45(2)(b)(ii) is grasped ', News' submissions are ' manifestly wrong '. According to Seven, ' [e]ffects are accretive '. 2164 Even if (contrary to Seven's contentions) it is necessary to consider the likely effect of the Master Agreement Provision at the date the Master Agreement came into force, Seven says that it was likely to have the relevant effect. In particular, Seven rejects News' argument that Seven's conduct in not making its best bid for the AFL pay television rights on 14 December 2000 prevented the Master Agreement Provision having that likely effect. Seven submits that it did not ' deliberately [pull] ... its punches '. In any event, so it contends, Seven's conduct did not amount to a ' supervening event ' that broke what otherwise would be the chain of causation between the Master Agreement Provision and its effect. This concession seems to have prompted the Respondents to argue that the bidding for the pay television rights simply constituted, in Professor Fisher's phrase, ' competition on the merits ' and was therefore outside the scope of s 45(2) of the TP Act. Seven contends that s 45(2) of the TP Act does not require the use of anti-competitive means for a provision to have the effect or likely effect of substantially lessening competition. A ' subjectively innocent arrangement' that is not the result of anti-competitive conduct, such as predation, tying, refusing to deal or price discrimination, nonetheless contravenes s 45(2) if it results in a substantial lessening of competition. It is therefore not to the point, so Seven contends, that the transactions by which Foxtel and Fox Sports acquired the AFL and NRL pay television rights might have involved competitive bids. 2167 Mr Sumption developed this point in his final oral submissions, in the process elevating the significance of s 45(2)(b)(ii) of the TP Act to Seven's case . According to Mr Sumption, the fact that the sub-paragraph uses the present tense shows that the language is directed to the Court hearing the case. He also relied on the fact that Parliament's concern with minimising the anti-competitive effect of conduct reflects the public interest and not merely the private interests of particular parties. Accordingly, so he argued, the sub-paragraph should be construed with the statutory purpose in mind. 2169 Mr Sumption identified an issue of principle which arises from the Respondents' insistence that the bidding for the AFL and NRL pay television rights amounted to ' competition on the merits '. But if the provision of a contract, arrangement, or understanding has the consequence of substantially lessening competition in the relevant market, s 45(2) is contravened notwithstanding that the parties making or giving effect to the contract, arrangement or understanding have not employed anti-competitive means to do so. The first, which is common ground, is that the purpose of competition law is to protect competition, not competitors. The second is that where a firm engages in legitimate competitive conduct, any consequences flowing from that conduct cannot amount to a substantial lessening of competition. Seven says that the second proposition is misconceived as a matter of law. 2171 In the present case, so Mr Sumption submitted, C7's demise as a firm constraining Fox Sports in the wholesale sports channel market was attributable to its failure to acquire an essential input for its business (either the AFL or NRL pay television rights). That failure came about by reason of the conduct of News, PBL, Foxtel and Fox Sports in making an arrangement which effectively monopolised the essential inputs. So a contravention of s 45(2) of the TP Act is made out. Mr Sumption also accepted that the logic of Seven's position, once Fox Sports had a real chance of acquiring the NRL pay television rights, was that News or Foxtel simply could not lawfully bid for the AFL pay television rights. It could sell the ' unique input ' (the AFL pay television rights) in segments or, alternatively, apply to the ACCC for authorisation under s 88 of the TP Act . Foxtel had assessed the bid to be loss making over the term of the agreement and, in any event, the cost of the rights was likely to be more expensive than acquiring the same content through C7. Thus its bid was ' predatory '. • Foxtel refused to negotiate for the carriage of C7 from June 1999 to December 2000. • Foxtel made statements to the AFL to the effect that Foxtel would not take C7, even if C7 acquired the AFL pay television rights. In particular, C7 could not match an important feature of Foxtel's bid, namely that Foxtel could guarantee the availability of live AFL content to a large subscriber base, whereas C7 could offer no such assurance. 2176 Seven also submits that certain aspects of the Master Agreement Provision had ' an anti-competitive tendency '. In particular, the ' tying ' of Foxtel's acquisition of the AFL pay television rights with the bid by Nine and Ten for the AFL free-to-air rights and the ' bundling ' of News' media support with the bid for the AFL broadcasting rights gave the News offer features that Seven's bid could not match. In those circumstances, the likely and actual effect of the Master Agreement Provision was a substantial lessening of competition in the AFL and NRL pay rights markets. The problem has been compounded in this case by Seven's insistence on presenting and persisting with a very large number of alternative contentions. In view of the findings I have made as to the markets pleaded and relied on by Seven, the only aspect of Seven's s 45(2) effects case that I must address is whether any of the agreements, arrangements or understandings identified by Seven contained provisions that had the effect or likely effect of substantially lessening competition in the retail pay television market . 2180 Perhaps not surprisingly, given the thrust of Seven's submissions, this issue received (relatively) little attention in the written and oral submissions and the arguments were not systematically developed. References to the issue are scattered among the various written submissions, sometimes subsumed in argument on other issues. When I asked Mr Sumption during his closing address to clarify Seven's position, should I find that there was no wholesale sports channel market, his initial response was that he could not see how Seven's s 45(2) effects case could succeed. However, he subsequently modified that response, stating that Seven could ' succeed only on the basis of the knock-on effects in the retail pay [television] market '. Mr Sumption referred to Seven's written submissions for further elaboration of the argument. 2181 In the written submissions, Seven contends that Foxtel's acquisition in December 2000 of the AFL pay television rights, together with C7's failure to secure the NRL pay television rights, had the effect or likely effect of substantially lessening competition in the retail pay television market. Seven maintains, nonetheless, that there was also an anti-competitive effect at the retail pay television level. 2182 Seven relies on the evidence of Dr Switkowski that he thought that Foxtel had obtained a strategic advantage in relation to Optus, as a pay television provider, by controlling AFL content and that Foxtel had increased its prospects of out-competing Optus. Seven also relies on the evidence of Professor Noll and Dr Smith to the effect that the rights acquisition gave Foxtel a ' gate-keeper ' role in respect of AFL programming and that this permitted Foxtel to determine conditions of access to such programming by Optus and Austar. With fewer resources available to engage in pro-competitive conduct, Optus and Austar would have been less of a competitive constraint than had Foxtel not acquired the AFL pay television rights. 2183 Seven does not press its pleaded allegation that Foxtel's acquisition of the AFL pay television rights caused a substantial lessening of competition in the retail pay television market by removing a major point of differentiation between Optus and Foxtel, with the result that Foxtel acquired significantly more attractive programming than Optus. According to Seven, ' [p]ut simply, the effect was to send C7 out of business '. There were therefore no ' intermediate steps ' between the News-Foxtel Licence and the acquisition of the rights. Thus, the likely and actual effect of the rights acquisition and the likely and actual effect of the News-Foxtel Licence Provision were one and the same. The effect or likely effect of Foxtel's acquisition of AFL pay television rights was to substantially lessen competition in each of the four markets relied on by Seven. Accordingly, by entering into the News-Foxtel Licence containing the News-Foxtel Licence Provision, and in giving effect to the News-Foxtel Licence Provision, each of News, Sky Cable and Telstra Media engaged in conduct in contravention of s 45(2)(a)(ii) and (b)(ii) of the TP Act . Nonetheless, it was a necessary prerequisite to the finalisation of the AFL Proposal and also defined the content of the AFL pay television rights available for acquisition by Foxtel. Section 45(4) of the TP Act permits the effect of the Nine Put Provision to be assessed together with the other agreements to which News was a party. In consequence, the effect and likely effect of the Nine Put Provision were the same as the effect and likely effect of the Master Agreement Provision. Seven says that the NRL Bidding Agreement was an essential plank in the arrangements contemplated and required by the Master Agreement Provision. In particular, the NRL Bidding Agreement was designed to ensure that Fox Sports retained control of the NRL pay television rights and it was entered into as one aspect of the ' overarching plan ' reflected in the Master Agreement Provision. In relation to the cause of action against Telstra, the NRL Bidding Agreement Provisions may be considered together with other agreements to which Telstra and Telstra Media were parties. Similarly, in respect of the cause of action against Sky Cable, the effect of the NRL Bidding Agreement Provisions may be considered together with the effect of other agreements to which Sky Cable was a party. In these circumstances, the effect and likely effect of the NRL Bidding Agreement Provisions were equivalent to the effect and likely effect of the Master Agreement Provision. I have accepted this contention in relation to the wholesale sports channel market, the AFL pay rights market and the NRL pay rights market. The only market that I have found existed at the material times is the retail pay television market. Accordingly, on my findings, the retail pay television market is the only market relevant to Seven's effects case. In substance, as I have noted, the Respondents contend that there was no understanding reached at the teleconference of 13 December 2000 that the AFL Proposal and the NRL Proposal (as pleaded) would be carried out together. According to the Respondents, the proposals were ' coincident in time ' but otherwise unconnected. 2192 PBL (supported by News) also disputes the existence of the Rights Sub-Licence Agreement (which Seven says was entered into at the time the Foxtel, Nine and Ten Puts were executed). Otherwise there is no dispute as to the existence of the contracts or understandings relied on by Seven. This submission is related to the question of the time at which the anti-competitive effect of a provision is to be assessed. However, the Respondents also argue that the test of whether a provision has the effect or likely effect of substantially lessening competition must be formulated and applied in a manner which does not strike down conduct simply because it happens to damage a particular firm. On this basis, they say that it was not an effect or likely effect of the Master Agreement Provision (if there was such a provision) that News would acquire the AFL broadcasting rights or that Fox Sports would acquire the NRL pay television rights. The ' direct or immediate ' effect of the Master Agreement Provision, at most, was that bids would be made at particular prices for the AFL and NRL pay television rights. There was no agreement that ' winning ' bids should be made. 2197 According to the Respondents, in determining what was likely to occur at the time the Master Agreement Provision came into existence, it is necessary to take account of the contingencies that had to be satisfied before the bids could succeed. In particular, it was not likely that News would succeed if Seven was prepared to make a competitive bid for the AFL pay television rights. The Respondents contend that News' bid succeeded only because Seven chose not to make a competitive bid for the AFL pay television rights. The absence of such a bid from Seven was not something that was likely at the time the Master Agreement Provision came into existence. 2198 News, supported by the other Consortium Respondents, submits that, in any event, the Master Agreement Provision (and other provisions) had no effect on the acquisition by Fox Sports of the NRL pay television rights. PBL, supported by the other Consortium Respondents, submits that, on the assumption that all their other arguments are rejected, none of the provisions had the effect or likely effect required by s 45(2) of the TP Act . Austar, instead of receiving AFL coverage via Foxtel would have received it from C7 on much the same terms (that is, about $2.00 pspm on a tier). Optus would have continued to acquire C7 on the onerous terms of the C7-Optus CSA (that is, subject to the MSG of $30 million per annum). 2203 Insofar as Seven's complaint is that the acquisition of the AFL pay television rights in 2000 caused Optus to enter the Foxtel-Optus CSA in March 2002, there was no causal relationship between the two. If Seven had successfully retained the AFL broadcasting rights or the AFL pay television rights in 2000, the parties to the Foxtel-Optus CSA would have had the same incentive to enter that arrangement. The notion of a single supplier of content to all pay television platforms was considered as early as 1997 and Optus' strategy until 2001 was that sporting content should be available non-exclusively on all retail platforms. The real impetus for what became the Foxtel-Optus CSA was SingTel's decision, after it finalised its acquisition of Optus in August 2001, to review CMM. The word ' provision ' in s 45(2) is used in a comprehensive, rather than in a technical sense reflecting usage in contract law. 13.6.2 Prospective or Retrospective? 2206 The prohibition on the making of a ' contract ' (using that expression to incorporate making an arrangement or arriving at an understanding) therefore applies in three separate circumstances, each of which is defined by reference to the characteristics of a provision of the proposed contract. 2208 The prohibition on giving effect to a provision of a contract therefore also applies in three separate circumstances, each of which is defined by reference to the characteristics of the provision of the contract. Giving effect to a provision of a contract includes (s 4(1)) doing an act or thing in pursuance of or in accordance with, or enforcing or purporting to enforce, the provision. This follows from the fact that the effect of a contract which, by hypothesis, is unimplemented, can only be judged prospectively. The drafting of s 45(2)(a)(ii) reflects this reality. The statutory prohibition is directed to the making of a contract, where a provision of the proposed contract would have or be likely to have the proscribed anti-competitive effect. 2210 It is also common ground, at least so far as the proceedings before me are concerned, that the expression in s 45(2)(a)(ii) of the TP Act ' would ... be likely to have the effect ' of substantially lessening competition means a real chance or possibility of having that effect. (I refer to the principal authorities below ([2231]-[2233]). It seems to me to follow that the quoted expression widens the scope of the prohibition in s 45(2)(a)(ii). If that expression had not been incorporated in s 45(2)(a)(ii), the prohibition would have applied only to the making of a contract if a provision of the proposed contract ' would have ' the effect of substantially lessening competition. A statute in that form would require proof of the specified effect on the usual standard: that is, on the balance of probabilities. 2211 That the expression widens the scope of s 45(2)(a)(ii) is consistent with the well-known judgment of Deane J in Tillmanns Butcheries Pty Ltd v Australasian Meat Industry Employees' Union (1979) 27 ALR 367, to which both Seven and the Respondents refer in their submissions. That case concerned the secondary boycott provisions of s 45D, which proscribed certain conduct that would have or be likely to have the effect of causing substantial loss or damage to a business. Even though conduct be engaged in for such a purpose it will be outside the proscription contained in the sub-section unless it "would have or be likely to have" that effect. Plainly the reference to "would be likely to have" is meant to convey a lower degree of likelihood than the reference to "would have". In the case where conduct has not occurred, a court would be constrained to determine whether conduct "would have" the specified effect by reference to the ordinary standard of whether it was more likely than not that it would. In such a case, if "likely" is interpreted as meaning "more likely than not", it would add little to the practical scope of the section. On the other hand, if conduct had run its ordinary course and had not had the specified effect, it would be but rarely that a court would feel justified in disregarding the lesson of the event and finding that while the conduct did not have the specified effect it had been more likely than not that it would have that effect (see per Dixon J in Willis v Commonwealth [1946] HCA 22 ; (1946) 73 CLR 105 at 116)'. Dixon J said that, where the facts concerning remarriage are available (the widow remarried five months after her husband's death), they are to be preferred to prophecies (73 CLR, at 116). In the light of Deane J's analysis, I do not read the reference to Willis v Commonwealth to mean that, in assessing the likely effect of conduct (in the sense of a real chance or possibility) at a given time, the actual course of events necessarily determines the outcome of the assessment. Rather, the actual course of events is to be taken into account in making the assessment of likelihood at the relevant date. But in my opinion, contrary to Seven's submission, this language does not imply that the prohibition applies whenever a provision to which a corporation gives effect ' causes ' a substantial lessening of competition in a market. In particular, the language does not imply that s 45(2)(b)(ii) is contravened by giving effect to a provision where, as events subsequently turn out, the provision can be said to have ' caused ' a substantial lessening of competition in a market. 2214 In my view, the use of the present tense in s 45(2)(b)(ii) of the TP Act is explained by the fact that the subparagraph applies where a corporation gives effect to a provision of an existing contract (or arrangement or understanding). In contrast to s 45(2)(a)(ii), s 45(2)(b)(ii) assumes that a contract is in force at the time the proscribed conduct (giving effect to a provision of the contract) takes place. Indeed, the paragraph expressly contemplates that the contract might even have been made before s 45(2) of the TP Act was itself enacted. Consequently, the proscribed conduct may take place long after the contract itself was made. For example, in Dowling v Dalgety Australia Ltd (1992) 34 FCR 109, the contract (containing the rules of the Goondiwindi Livestock Auction Sales Association) was made in 1965, but the conduct complained of did not occur until 1985, two decades later. Use of the word ' has ' in s 45(2)(b)(ii) acknowledges that, once a contract is in force, it may be possible to determine, by reference to a particular time, that a provision of the contract already has the effect of substantially lessening competition. (The use of the word ' has ' instead of ' has had ' reflects the fact that a provision may have a continuing effect on competition. ) The expression ' is likely to have ' indicates an intention to prohibit a corporation from giving effect to a provision in a contract where the provision, at the time the corporation engages in the conduct, is likely to have the effect of substantially lessening competition. 2217 This construction of s 45(2)(b)(ii) of the TP Act explains the apparent shift in language within s 45(2). It is also consistent with the authorities, such as Tillmanns Butcheries v AMIEU , that interpret the references in s 45(2) to the likely effect of a provision on competition as broadening the scope of the statutory prohibitions. If Seven's construction is correct, an applicant would generally not be concerned about the likely effect of a provision to which the respondent has given effect. It would be much more straightforward in the typical case to attempt to demonstrate that the provision ultimately ' caused ' a substantial lessening of competition and that the lessening of competition was not the consequence of a supervening independent event. 2218 Furthermore, if Seven is correct, an applicant need not show that, at the time the respondent gave effect to the provision, it was even likely (in the sense that there was a real chance) that the provision would have the effect of substantially lessening competition. The inquiry ceases to be prospective and no longer focuses on the circumstances that prevailed at the time the alleged conduct took place. 2219 It must be remembered that a contravention of s 45(2) can attract civil penalties: s 76(1). On Seven's approach, a corporation can be penalised for giving effect to a provision which, with the benefit of hindsight, caused a substantial lessening of competition. A penalty can be imposed regardless of whether such an outcome was likely at the time the corporation gave effect to the provision. As I point out in Chapter 14 ([2404]), this is not a conclusion that should be reached lightly if another construction is not merely plausible, but is entirely consistent with the statutory language. 2220 I do not think it is an answer to suggest, as Mr Sumption did, that a corporation alleged to have contravened s 45(2)(b)(ii) by giving effect to a provision could have applied to the ACCC for an exemption under s 88 of the TP Act . That course assumes that the corporation appreciates that giving effect to a particular provision might have the effect of substantially lessening competition. If, viewed prospectively, there is no real chance of the provision substantially lessening competition, the corporation is not likely to appreciate that giving effect to the provision will in fact substantially lessen competition. 2221 The construction I favour does not mean that events which post-date the televant conduct cannot be considered in determining whether the provision concerned was likely to have the effect of substantially lessening competition. Subsequent events may shed considerable light on what was likely at the material time. As Deane J concluded in Tillmanns Butcheries v AMIEU , it would be odd if the actual course of events could not be taken into account in determining what was the likely effect of a provision at a particular time. But that is not the same thing as applying a causation test in the manner proposed by Seven. 2222 The analysis thus far leads to the conclusion that s 45(2)(b)(ii) of the TP Act requires the likely effect of a provision to be assessed at the date the allegedly contravening conduct takes place --- that is, the date the corporation gives effect to a provision of the contract or arrangement. It is perhaps arguable that the assessment of the likely effect should be made at the date the original contract or arrangement was made, rather than on the date the corporation gives effect to a provision of the contract or arrangement. News submits that this is the preferable approach, but does not develop the argument. 2223 It may not make a great deal of difference in the present case which of the two dates is chosen for the purpose of applying s 45(2)(b)(ii), since the Master Agreement Provision specifically contemplated a number of further agreements should either or both of the bids have succeeded. In any event, I think the better construction of s 45(2)(b)(ii) is that the relevant time for assessing the likely effect on competition of a provision is the date the alleged contravenor gives effect to the provision. This conclusion applies to the conduct of the Consortium Respondents in giving effect to the Master Agreement Provision. The same principle applies to Seven's case based on the Consortium Respondents (or some of them) giving effect to provisions in other contracts, arrangements or understandings. However, none of the authorities appears to be precisely in point, since the particular argument advanced by Seven does not seem to have been put in the earlier cases. 2225 There are judicial observations which, taken in isolation, support the Respondents' position. For example, in Trade Practices Commission v TNT Management Pty Ltd (1985) 6 FCR 1, Franki J considered the expression ' has or is likely to have a significant effect on competition ', which then appeared in s 45(4) of the TP Act . 2226 Seven also refers to judicial observations which, taken in isolation, perhaps appear to support its view. For example, in Dowling v Dalgety 34 FCR, at 134, Lockhart J noted that the ' effect of a contract is a relatively simple concept requiring examination of the results '. However, I do not understand Lockhart J to have decided that s 45(2)(b)(ii) incorporates a causation test of the kind urged on behalf of Seven in these proceedings. Similarly, Franki J's comment in TPC v TNT 6 FCR, at 50, that the word ' has ' requires the question to be tested against the ' established facts ', was not accompanied by an examination of precisely how this is to be done. In Rural Press Ltd v Australian Competition and Consumer Commission [2002] FCAFC 213 ; (2002) 118 FCR 236 (affirmed on this issue in Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75 ; (2003) 216 CLR 53), to which Seven refers, the question of construction presented by Seven in the present case did not arise for consideration. 2227 In my view, the construction of s 45(2)(b)(ii) of the TP Act that I prefer is consistent with the authorities. 13.6.3 Effect: Direct and Immediate? They rely on the reasoning of the Trade Practices Tribunal (Deane J, Mr H N Walker and Professor Maureen Brunt) in Re Application by Concrete Carters Association (Victoria) (1977) 31 FLR 193. The Tribunal in that case dealt with an application for an authorisation by an association of owner-drivers. The association sought authorisation for a contract with the producers of pre-mixed concrete which regulated the rates and conditions for the carriage of such concrete. The association argued that in the absence of authorisation the unions representing the owner-drivers would achieve much the same result by industry-wide negotiations. The likely direct or immediate effect of an agreement or arrangement between the applicants and producers as to industry-wide rates and conditions pursuant to which the applicants would carry the product would be a substantial lessening of competition in relation to rates and conditions in the market in which the applicants operate. It is possible that, upon analysis and overall assessment, the detriment to the public constituted by any such lessening of competition would, as the applicants maintain, be insignificant or negligible for the reason that in the absence of the agreement or arrangement, competition would be lessened to a similar or greater extent by other factors which would then become legitimately operative. Such an overall assessment or analysis is, of course, vital in assessing the detriment to competition which is to be put into the scales in the ultimate weighing process. It does not however alter the fact that the direct and immediate effect of the agreement or arrangement would be a substantial lessening of competition. It is, in our view, to this direct and immediate effect that the provisions of s. 45 refer '. (Emphasis added. The reasoning of the Tribunal was directed to the particular factual issue presented by the prospect of union intervention. Nor do I think the observations of Franki J in TPC v TNT 6 FCR, at 49-50, which were directed to s 45 prior to its amendment in 1977, advance matters. Moreover, there is no textual warrant for limiting the operation of s 45(2) in this way. Whether a provision has or is likely to have the effect of substantially lessening competition is a factual question. It should not be resolved by introducing artificial limitations into the statute. 1) [2003] FCA 388 , at [25], per Sackville J. 2232 French J elaborated on the interpretation of the word ' likely ' in Australian Gas Light Co v Australian Competition and Consumer Commission [2003] FCA 1525 ; (2003) 137 FCR 317. Care must be taken not to substitute a judicial gloss for the words of the TP Act . The word can offer no quantitative guidance but requires a qualitative judgment about the effects of an acquisition or proposed acquisition. The judgment it requires must not set the bar so high as effectively to expose acquiring corporations to a finding of contravention simply on the basis of possibilities, however plausible they may seem, generated by economic theory alone. On the other hand it must not set the bar so low as effectively to allow all acquisitions to proceed save those with the most obvious, direct and dramatic effects upon competition ... The assessment of the risk or real chance of a substantial lessening of competition cannot rest upon speculation or theory. To borrow the words of the Tribunal in [ Re Howard Smith Industries Pty Ltd and Adelaide Steamship Industries Pty Ltd (1977) 28 FLR 385], the Court is concerned with "commercial likelihoods relevant to the proposed merger". The word "likely" has to be applied at a level which is commercially relevant or meaningful as must be the assessment of the substantial lessening of competition under consideration --- Rural Press Ltd v Australian Competition and Consumer Commission [2003] HCA 75 ; (2003) 216 CLR 53 at [41] '. Accordingly, it is enough for Seven to show that there is or was a real chance that the impugned conduct will or would have the effect of substantially lessening competition in a market. I record that the Respondents wish to preserve their entitlement to argue on appeal that ' likely ' means ' more probable than not '. The word ' substantially ' has been interpreted to mean that the lessening of competition must be ' at least real or of substance ' or ' of significance ': Radio 2UE Sydney Pty Ltd v Stereo FM Pty Ltd (1982) 44 ALR 557, at 564, per Lockhart J; Hecar Investments No 6 Pty Ltd v Outboard Marine Australia Pty Ltd (1982) 62 FLR 159, at 167, per Franki J. Lockhart J in Radio 2UE v Stereo FM also thought that there was force in the view that ' substantially ' in s 45(2) means ' considerably '. It is by no means clear that these descriptions add very much to the statutory language. As I have already observed, it is of limited assistance to substitute a judicial gloss for the statutory language. 2235 Even so, in Rural Press v ACCC , the High Court did provide further guidance as to the meaning of ' substantially '. The joint judgment of Gummow, Hayne and Heydon JJ (with whom Gleeson CJ and Callinan J agreed) found it unnecessary to choose between more and less demanding formulations that can be found in the case law. The answer to that question, as with the assessment of a ' likely ' effect, requires a qualitative judgment: AGL v ACCC 137 FCR, at 417 [351], per French J. That judgment must take into account s 4G of the TP Act , which requires references to the lessening of competition to be read as including preventing or hindering competition. The test is not a "before and after" test, although, as a matter of fact, the existing state of competition in the market may throw some light on the likely future state of competition in the market absent the impugned conduct'. The mere fact that one can conceive of other less restrictive alternatives by which a commercial objective might be achieved is not sufficient of itself to lead to a conclusion that the conduct has the effect of lessening competition ... The comparison required is between practical alternatives likely to be adopted; not between mere theoretical models'. The phrase ' in so far as ' marks the limit of the severance that must be undertaken by the Court: SST v Rieson 225 CLR, at 533 [52]. Section 45(2)(a)(ii) is therefore predicated upon the existence of a contract, arrangement or understanding. 2244 The word ' contract ' has its ordinary meaning of an agreement enforceable at law: Hughes v Western Australian Cricket Association (Inc) (1986) 19 FCR 10, at 32, per Toohey J. The words ' arrangement ' and ' understanding ' are usually treated as more or less synonymous, although it has been suggested that the requirements for arriving at an understanding may be ' somewhat different and more easily satisfied than the requirements for making an arrangement ': TPC v TNT 6 FCR, at 25, per Franki J. However, in order for there to be an arrangement or understanding for the purposes of s 45(2), there must be a meeting of the minds of those said to be parties to the arrangement or understanding. There must be a consensus as to what is to be done and not merely a hope as to what might be done or happen: Trade Practices Commission v Email Ltd (1980) 43 FLR 383 at 385 (Lockhart J); Ira Berk at FLR 291 per Smithers J. Ordinarily, an arrangement or understanding involves communication between the parties arousing expectations in each that the other will act in a particular way: Email at 395. There is no necessity for an element of mutual commitment between the parties to an arrangement or understanding, although in practice such an arrangement or understanding would ordinarily involve reciprocity of obligation: Trade Practices Commission v Service Station Association Ltd (1993) 44 FCR 206 at 230-1 ... per Lockhart J'. I have also summarised the respective submissions made by the parties and I have made findings about the events leading up to and at the teleconference of 13 December 2000. There is no need to repeat that material. The infelicity arises because the Statement of Claim alleges (par 100) that News, PBL, Telstra and Foxtel made an arrangement, or arrived at an understanding ' to secure both the AFL broadcast rights and NRL pay ... rights ' (emphasis added). This formulation invites many of the criticisms of Seven's case made by the Respondents. 2248 Seven's submissions by no means resolve the uncertainty about what the pleading is intended to mean. Seven insists that there was an arrangement at the teleconference of 13 December 2000 ' dealing with both AFL and NRL rights ' (emphasis in original). Seven also says that there was an understanding to ' carry out both proposals ', which I take to be a reference to the pleaded AFL and NRL Proposals. Each of these, it will be recalled, involved the making of bids for the respective rights. One bid was to be made by News and was to be supported by put agreements and other arrangements. The other was to be made by Fox Sports and was to be supported by Telstra's offer for the naming and internet rights and other arrangements. Nonetheless, Seven's Reply Submissions reiterate that the understanding was to acquire both sets of rights. 2249 It is important to appreciate what, in substance, was agreed at the teleconference. The understanding contemplated, in substance, that two bids would be made for two distinct sets of rights and that each bid would be supported by defined arrangements involving Telstra and Foxtel. In particular, the understanding did not require or contemplate that News or Fox Sports would make bids on terms that would ensure that either or both would be successful. 2251 The contents of Fox Sports' bid for the NRL pay television rights were decided at the teleconference, including the quantum of the cash component of the bid. The precise amount of News' bid for the AFL broadcasting rights was not determined at the teleconference. However, the price to be paid by Foxtel (assuming, as all parties did, that News would exercise the Foxtel Put if its bid was successful) was part of the understanding reached among the parties. The understanding encompassed a bid by News that divided the fees payable between defined AFL free-to-air rights and defined AFL pay television rights. 2252 The success of Fox Sports' bid, as a practical matter, may have been assured because Mr Philip (a member of the NRL PEC) was determined that it should succeed, although this was not part of the understanding. But the success or otherwise of News' bid for the AFL broadcasting rights depended on the approach or approaches taken by Seven to the rights. From the perspective of the participants at the teleconference, Seven might have bid for the entirety of the AFL broadcasting rights (as it did); separately for the AFL free-to-air and pay television rights (as the AFL preferred); or it may have relied on its last right in relation to the AFL free-to-air rights (perhaps in combination with a separate bid for the AFL pay television rights, a tactic belatedly and unsuccessfully attempted by Mr Stokes on 14 December 2000). 2253 The arrangement made at the teleconference did not incorporate an understanding that the bids to be made for the AFL and NRL pay television rights would exceed a commercially reasonable price. Mr Philip expended a good deal of time and effort, not to mention integrity, in persuading Mr Akhurst of the commercial benefits of each bid to Foxtel and therefore Telstra. Mr Stokes' own evidence was that the $30 million per annum pay television rights component of News' bid for the AFL broadcasting rights (supported by the Foxtel Put) was a good price for the buyer. Telstra's agreement to and support for the proposed bids was not predicated on any understanding on its part that the bids, insofar as they related to the AFL and NRL pay television rights, were commercially unreasonable or above a competitive price. On the contrary, Telstra's understanding was that the bids were required to be at these levels in order to meet the competition from Seven. 2254 Insofar as Seven's case rests on an interpretation of the understanding reached at the teleconference which is at odds with the findings I have recorded, I reject it. If, for example, Seven's version of the Master Agreement is that it was intended to incorporate an understanding by the participants that News and Fox Sports (and through them Foxtel) would necessarily ' secure ' the AFL and NRL pay television rights, it simply does not accord with the facts. 2255 The Respondents are therefore correct to submit that any understanding reached at the teleconference contemplated only the making of bids for the two sets of rights, supported in each case by specific arrangements with Foxtel and Telstra. As I have indicated, there was no arrangement, express or implied, that the parties to the teleconference would do whatever was required to make successful bids for either or both sets of rights. Whether either or both of the bids succeeded would depend, at least to a considerable extent, on events beyond the control of the participants in the teleconference. In particular, much would depend upon the nature and content of the bids made by Seven for the AFL free-to-air and pay television rights and whether Seven would choose to exercise its last right in relation to the AFL free-to-air rights. 2256 I have real doubts as to whether my findings are consistent with the way Seven has pleaded and presented its case in relation to the Master Agreement and the Master Agreement Provision. In the end, however, despite the infelicity of Seven's pleadings and the ambiguities in its submissions, I do not think that Seven has rested its entire case on the proposition that the parties to the teleconference reached an understanding that Foxtel and Fox Sports would do whatever was necessary to obtain the AFL and NRL pay television rights (the former as an incident of the AFL broadcasting rights). 2257 Not without hesitation, I have concluded that Seven's case has been presented in a way that encompasses the findings I have made. That is, Seven's submissions, at least in part, proceed on the basis that the understanding reached at the teleconference involved only the making of bids for the two sets of rights by News and Fox Sports, with each bid being supported in pre-determined ways by Foxtel, PBL and Telstra. It is this understanding that Seven says had the purpose or likely effect of substantially lessening competition in the various markets. I do not think that there is any material unfairness in interpreting Seven's case this way, as the Respondents appear to have had no difficulty in responding to Seven's submissions insofar as they adopt this interpretation of the Master Agreement Provision. 13.7.2.2 WAS THERE AN ARRANGEMENT OR UNDERSTANDING? It is understandable why this contention has been given such prominence, given Seven's pleaded case. At the least, it conflates questions of the motivation, or perhaps the purpose, of the parties to the teleconference with the content of the understanding they reached at the time. 2259 In one sense, it is true, as Dr Switkowski said in evidence, that the two bids were unconnected (apart from Foxtel's desire to secure both sets of rights and the fact that the bidding for the two sets of rights was to occur more or less simultaneously). The bid for the NRL pay television rights, which was accepted by the NRL PEC on the evening of 13 December 2000, did not depend upon the success or failure of the bid for the AFL broadcasting rights. Equally, the bid for the AFL broadcasting rights, which was accepted by the AFL on 14 December 2000, did not depend on the success or failure of the bid for the NRL pay television rights (although the outcome of that bid was known before News made its final presentation to the AFL on 14 December 2000). It is also true, as Telstra suggests, that Foxtel had given consideration to acquiring the AFL pay television rights in early 1999, while Telstra's involvement in Fox Sports' bid for the NRL pay television rights dated only from the latter part of 2000. 2260 Nonetheless, the fact is that the representatives of News, PBL, Telstra and Foxtel agreed at a single discussion that both bids should be made. There was plainly a meeting of the minds of all those present. All parties knew and understood that News, PBL, Telstra and Foxtel would each have a role to play in relation to the making of each of the bids. All representatives knew and understood, not only that both bids would be made, but that both might succeed (as indeed they did). It is therefore not surprising that Mr Macourt agreed in evidence that the outcome of the teleconference was an agreement between the parties ' that the bids for both NRL and AFL would proceed on the basis proposed by Mr Philip'. I do not doubt that Dr Switkowski's view of the relationship (or absence thereof) between the two bids was honestly held. However, his perception was influenced by the limited extent of his involvement in the negotiations leading up to the teleconference and his lack of familiarity with the details of the proposed bid for the NRL pay television rights. 2262 In the course of negotiations and discussions preceding the teleconference, the two proposed bids were discussed together. On a number of occasions, for example, Mr Philip discussed both the AFL and NRL pay television rights in communications with Telstra. In particular, his handwritten fax of 9 December 2000 to Mr Akhurst sought Telstra's support for both sets of rights. Mr Philip acknowledged that he reported to Mr Macourt and Mr Falloon ' as Fox Sports directors ' on the progress of his negotiations in relation to both the AFL and NRL pay television rights. The 13 December 2000 teleconference itself was described in the documentation as an ' AFL/NRL Meeting '. 2263 PBL points out that not all issues arising out of the proposed bids were addressed at the teleconference, such as the details of the Nine and Ten Puts. But this does not, however, negate the existence of an understanding substantially to the effect of that I have described and for which I interpret Seven as contending. News, PBL and Foxtel, through their representatives, were aware of the proposed terms of the Nine and Ten Puts (which were in fact executed the following day). Mr Akhurst was aware that put options would also be entered into by Nine and Ten, although he did not know the details. The fact that Nine was to take AFL free-to-air television rights was referred to at the meeting in the presence of the Telstra representatives. It is not necessary for the existence of an arrangement or understanding that every element of a proposal be examined in detail or be the subject of express agreement. 2264 I therefore conclude that an understanding or arrangement was reached between News, PBL, Telstra and Foxtel on 13 December 2000. The arrangement contemplated that News would make a bid for the AFL broadcasting rights and that Fox Sports would bid for the NRL pay television rights. The parties understood that News' bid would be supported by a put option with Foxtel, providing for Foxtel to take a sub-licence of the AFL pay television rights at a price of $30 million per annum (adjusted for inflation and GST). The parties understood that News' bid would also be supported by other agreements providing for sub-licences of the AFL free-to-air television rights. Fox Sports' bid for the NRL pay television rights was to be $35 million per annum in cash (adjusted for inflation plus GST) and was to include contra and production. Fox Sports' bid was to be supported by Telstra offering $5 million per annum for internet and naming rights. The existence of the understanding is not affected by the fact that not all representatives were aware of the details of the proposed put agreements with Nine and Ten. I think that Seven has made out the existence of the agreement, which is said to have been made on or about 14 December 2000. 2266 Insofar as the Respondents submit that an arrangement or understanding requires direct discussions between the alleged parties, that is not correct: News Ltd v Australian Rugby Football League Ltd (1996) 64 FCR 410, at 573-575, per curiam . In the present case, the Foxtel Put, the Nine Put and the Ten Put were executed on the same day, 14 December 2000. This was the day after the teleconference of 13 December 2000 at which PBL (the parent of Nine) and Foxtel were represented. At the teleconference, the participants had agreed that bids would be made for each of the AFL broadcasting and NRL pay television rights. Reference had been made at the teleconference to Foxtel's support for News' bid. Lengthy discussions with Foxtel, Nine and Ten, co-ordinated by Mr Philip, had preceded the teleconference. These discussions were directed to securing agreements that would support News' bid for the AFL broadcasting rights. 2267 The covering letters of 14 December 2000 from Nine and Ten to Mr Philip, enclosing the respective put agreements, were in substantially identical terms. Each of Nine and Ten acknowledged that similar arrangements were to be entered with the other. Mr Philip, who represented both News and Foxtel at the teleconference, was effectively the ringmaster orchestrating the inter-related arrangements. 2268 I would be prepared to infer that Foxtel, Nine and Ten entered into an arrangement or understanding that they would support the acquisition of the AFL broadcasting rights by News and, to that end, each would enter into a put arrangement with News. Accordingly, I find that Seven has made out the existence of the Rights Sub-Licence Agreement. One difficulty is to determine what is left of that contention once Seven's suggested construction of s 45(2)(b)(ii) is rejected. For example, Seven argues that, but for News' and Fox Sports' acquisition of the AFL broadcasting and NRL pay television rights, Optus would not have entered the Foxtel-Optus CSA and therefore the anti-competitive effect of that agreement would not have occurred. This argument appears to assume, in my view incorrectly, that a corporation contravenes s 45(2)(b)(ii) if it gives effect to a provision which, in the light of subsequent events, can be said to have ' caused ' a substantial lessening of competition in a particular market. Another difficulty is that Seven's submissions concerning the effect of the Master Agreement Provision on the retail pay television market do not make it clear how far, if at all, Seven intends to rely not only on s 45(2)(b)(ii), but on s 45(2)(a)(ii). 2270 It is asking a great deal of a Judge, especially in a complex case such as this, in effect to reformulate submissions so that they conform to what is ultimately held to be the correct construction of the relevant statutes. Even so, I shall attempt the task, consistently with my understanding of Seven's position concerning the effects of the Master Agreement Provision on the retail pay television market. 13.9.1 Application of s 45(2)(a)(ii): Was It Likely That News Would Acquire the AFL Broadcasting Rights? The issue, then, so far as the Master Agreement Provision is concerned, is whether there was a real chance that it would substantially lessen competition in the retail pay television market. That question is to be answered at the time the Master Agreement was made (that is, 13 December 2000). However, the assessment should take into account subsequent events, although these do not necessarily determine what was ' likely ' at the relevant time. As I have explained, assessing whether there was a real chance that the Master Agreement Provision would substantially lessen competition in the retail pay television market requires a qualitative judgment of the kind identified by French J in AGL v ACCC . This is because at the time the Consortium Respondents entered into the Master Agreement, neither they nor any objective observer could reasonably have anticipated that Seven would fail to take whatever steps were commercially necessary and feasible to maximise its chances of obtaining the AFL pay television rights. Yet that is precisely what happened. 2274 In a case which has many extraordinary features, perhaps the most extraordinary is that Seven has consistently maintained that securing the AFL pay television rights was essential to C7's commercial survival after 2001, yet the evidence clearly establishes that Seven failed to make its best offer for those rights. Mr Stokes admitted that News had secured the AFL pay television rights for a ' good ' price and that there was no impediment to Seven matching News' bid in a timely fashion. On Mr Stokes' own analysis of the content of the AFL pay television rights secured by News, his assessment that the price paid by News was ' good ' was an understatement. 2275 Seven's failure to maximise its chances of securing the AFL pay television rights was primarily due to two factors. One was an apparent misinterpretation of the First and Last Deed, which led Mr Stokes and others within Seven to assume that Seven would have a second opportunity to secure the AFL pay television rights. The second factor was Seven's adamant refusal, for tactical reasons, to contemplate separate bids for the free-to-air and pay television rights (remembering that the content of the pay television rights can vary according to constraints imposed either by the potential licensor or the potential licensee). As Mr Wise explained, Seven's insistence on bidding for all rights had its origins in Seven's belief that no-one else was likely to be interested in the free-to-air rights and that a bid for both sets of rights would therefore increase Seven's chances of obtaining the pay television rights without competitive bidding. Seven's refusal to countenance a separate bid for the AFL pay television rights continued until the AFL had already announced its decision to award the rights to News. At that point, Mr Stokes changed his mind and indicated that Seven was prepared to make an offer for the AFL pay television rights alone that in substance matched the pay rights component of News' offer. 2276 In my view, if the chances of News and Fox Sports obtaining both sets of pay television rights is assessed as at 13 December 2000, there was no reason for any of the Consortium Respondents or, for that matter, any objective observer to think that Seven would not take every reasonable commercial step available to it to secure the AFL pay television rights. As I have explained, the understanding reached at the teleconference of 13 December 2000 was not that the Consortium Respondents would do whatever was required to obtain the AFL broadcasting rights (including the pay television rights) and the NRL pay television rights. The arrangement, so far as the AFL broadcasting rights were concerned, was that News should make a bid for the rights and that its bid should be supported by the various put options and other arrangements agreed at the meeting. In particular, the Master Agreement Provision contemplated the execution of the Foxtel Put by which Foxtel undertook to acquire the AFL pay television rights (comprising three exclusively live matches) for $30 million per annum (plus adjustments). There was nothing in the arrangement or understanding that required or even contemplated that News' bid, insofar as it embraced the AFL pay television rights, would preclude Seven from making a superior offer for these rights, if it chose to do so. Mr Stokes' evidence made it clear that the Foxtel Put was not set at a fee that was higher than reasonable commercial considerations could justify. The AFL bidding process involved the making of sealed bids and there was nothing that prevented Seven from matching or exceeding News' bid if it chose to do so. 2278 Of course, the fact is that News did acquire the AFL broadcasting rights, including the AFL pay television rights (as defined in News' bid). To conclude that the Master Agreement Provision, as at 13 December 2000, would not be likely to have the effect that News and Fox Sports would acquire between them both the AFL and NRL pay television rights therefore seems to be odd. The apparent oddity dissipates somewhat when it is recognised that Seven itself was essentially responsible for the demise of C7 by reason of its failure to maximise its chances of securing the very rights that it considered central to C7's commercial survival. There was nothing in the Master Agreement Provision that was intended to dissuade Seven from putting its best offer forward for the AFL broadcasting rights or for the AFL pay television rights or, indeed, that had such an effect. 2279 It is true, as Seven points out, that the AFL's decision to accept News' offer was influenced by factors other than price. However, in the AFL's words, News' bid was ' clearly a financially superior offer '. This was the most important consideration for the AFL. Had Seven offered significantly more for the AFL pay television rights than News, the AFL would have been extremely unlikely to refuse the superior financial offer. In any event, had Seven determined to do everything reasonable within its power to secure the AFL pay television rights, it would certainly have addressed any non-monetary issues that were of concern to the AFL. 2280 It follows that if the matters are viewed objectively as at 13 December 2000, no objective observer could reasonably have anticipated that Seven would fail to take commercial steps well open to it to secure the AFL pay television rights offered by the AFL. Had Seven taken those steps, I think that the strong likelihood is that it would have succeeded in securing the rights it considered so important to the survival of its pay television arm. 2281 That finding, however, does not resolve the question posed by s 45(2)(a)(ii) of the TP Act adversely to Seven. The question is whether Seven has established that on 13 December 2000 there was a likelihood, in the sense of a real chance, that the Master Agreement Provision would have the effect of depriving Seven of both the AFL and NRL pay television rights. As to the NRL pay television rights, it was plainly more than likely that Fox Sports would succeed in its bid. In relation to the AFL pay television rights, the fact is that the parties to the Master Agreement spent a good deal of time and effort in formulating a bid that was intended to have a very good commercial chance of succeeding and in fact did succeed. In these circumstances, I think that Seven has shown that the Master Agreement Provision was likely (in the requisite sense) to have the effect that News would acquire the AFL broadcasting rights (including the pay television rights) and that Seven would not acquire those rights. 2282 In my opinion, insofar as Seven's failure to acquire the AFL pay television rights was critical to the fate of C7, Seven was largely the author of its own misfortune. Nonetheless, I consider that Seven has made out that the likely effect of the Master Agreement Provision, assessed as at 13 December 2000, was that News would acquire the AFL broadcasting rights and that Foxtel, through News' exercise of the Foxtel Put, would take a sub-licence of the AFL pay television rights. 2283 I also assume for the purpose of considering the effect of the Master Agreement Provision, without deciding the point, that Seven can establish that C7's failure to acquire either the AFL or NRL pay television rights led to its demise. 13.9.2 Application of s 45(2): Was the Master Agreement Provision Likely to Substantially Lessen Competition in the Retail Pay Television Market? The question that must be addressed, therefore, is whether the Master Agreement Provision, as at 13 December 2000, was likely, in the relevant sense, to have the effect of substantially lessening competition in the retail pay television market. 2285 On the construction of s 45(2)(b)(ii) of the TP Act that I prefer, the question that must be addressed is whether, at the date or dates any of the Consortium Respondents gave effect to the Master Agreement Provision, it was likely, in the relevant sense, to have the effect of substantially lessening competition in the retail pay television market. Seven would also be able to succeed in its case under s 45(2)(b)(ii) if, at the material time or times, the Master Agreement Provision already had the effect of substantially lessening competition in that market. Since Seven does not advance any such contention, it is only the first question that must be addressed in relation to s 45(2)(b)(ii). 2286 Seven's submissions in relation to s 45(2)(b)(ii), concerning the effect of the Master Agreement Provision on competition in the retail pay television market, do not specifically identify the conduct which is said to constitute giving effect to the provision. However, the pleadings suggest that the relevant conduct was entering into the various agreements implementing the arrangements embodied in the Master Agreement. These agreements include the Foxtel Put and the News-Foxtel Licence. I am prepared to assume that the parties entering these agreements gave effect to the Master Agreement Provision, in the sense that they did an act in pursuance of or in accordance with the Master Agreement Provision: TP Act , s 4(1) (definition of ' give effect to '). For present purposes, the execution of the News-Foxtel Licence on 25 January 2001 can be taken as representative of conduct giving effect to the Master Agreement Provision. 2287 By 25 January 2001, News had already acquired the AFL broadcasting rights, including the AFL pay television rights. There is therefore no need to consider whether the acquisition of those rights was likely as at that date, although I have found in any event that the acquisition of the rights was likely once the Master Agreement was entered into on 13 December 2000. So far as the News-Foxtel Licence is concerned, the question is then whether the Master Agreement Provision was likely, as at 25 January 2001, to have the effect of substantially lessening competition in the retail pay television market. 2288 Once it is accepted that the Master Agreement Provision was likely to prevent Seven from acquiring either the AFL or NRL pay television rights, none of the submissions suggests that the likely effects on competition in the retail pay television market would be different if the date selected is 13 December 2000 rather than 25 January 2001, or vice versa . Determining whether the Master Agreement Provision, or whether giving effect to the Master Agreement Provision, was likely to have the effect of substantially lessening competition in that market requires a comparison to be made between the likely state of competition in the market with and without the impugned conduct. The impugned conduct is the making of the Master Agreement and the entry into the various agreements contemplated by the Master Agreement Provision. In undertaking the comparison, the existing state of competition in a market is not determinative of the likely state of competition without the impugned conduct, but it may shed light on the likely state of competition in the absence of such conduct. Seven's approach is no doubt influenced by the need to steer a course between advocating that Foxtel had substantial market power and inviting the conclusion that Foxtel had so much market power that there was no competition on price or quality in the market. Be that as it may, Seven's experts supported the view that, before the execution of the Foxtel-Optus CSA in March 2002, Optus was no more than a weak constraint on Foxtel as a provider of a retail pay television service. 2290 Dr Smith said that for most of the two year period preceding the Foxtel-Optus CSA, Optus ' really imposed no pricing constraint upon Foxtel '. She considered that Optus had the potential to be a closer constraint on Foxtel, since she thought that Optus had the ability to win market share away from Foxtel if it chose to introduce cut-price packages. Professor Noll characterised Optus as a ' weak ' competitor of Foxtel, but seemed to be more equivocal than Dr Smith. He accepted that the price of Foxtel's service was the same in areas where Optus was available and in areas where it was not. Professor Noll also accepted that Optus had not affected Foxtel's price in the short run. It wasn't an entity that had a substantial effect on the monopoly power of Foxtel'. I have referred to CMM's woes in Chapter 11 ([1507]-[1514]. The resolution of those disputes was made more difficult by the requirement of unanimity for decision-making imposed by the Umbrella Agreement. Telstra's aspiration to bundle Foxtel with its telephony services was opposed by Mr Philip of News, because he feared that Telstra would acquire the bulk of Foxtel's retail customers and thus reduce Foxtel to a wholesaler of its own service. Telstra opposed resolution of the Fox Sports supply issue on the terms proposed by its Foxtel partners because the responsible executives within Telstra saw the proposal as a device for transferring value from Foxtel to Fox Sports, to the disadvantage of Telstra. Telstra also opposed the supply of Fox Sports to Optus, because additional premium pay content would strengthen the hand of Telstra's major telecommunications competitor in its bundling of pay television and telephony products. 2294 The idea that content sharing might provide a solution to some of these problems was revived within Optus by Mr Fletcher's ' end game ' memorandum of May 2001. The perceived urgency of finding a solution for CMM's financial woes was intensified by SingTel's takeover of Optus which effectively got under way in March 2001. 2295 The McKinsey review of CMM was established in June 2001, even before the formal completion of SingTel's takeover of Optus. It was the McKinsey review and its consideration by Optus' senior management and board that prompted Optus to embrace Project Alchemy (the content sharing proposal ultimately embodied in the Foxtel-Optus CSA). Nonetheless, the circumstances that induced Optus to prefer Project Alchemy to the other options long pre-dated SingTel's takeover of Optus and McKinsey's review of CMM. These circumstances were also present long before the AFL, in December 2000, awarded the AFL broadcasting rights for 2002 to 2006, including the AFL pay television rights, to News. 2296 Optus' need to stop CMM's haemorrhaging of cash was not materially affected by Seven's failure to obtain the AFL pay television rights. Seven's loss of the AFL pay television rights ultimately allowed Optus to terminate the C7-Optus CSA and thus relieve itself of the burden under the C7-Optus CSA of paying a minimum licence fee of $30 million per annum (CPI adjusted) for the supply of C7. But Optus' fundamental problems remained. Similarly, the circumstances that gave rise to the disputes among the Foxtel partners long pre-dated the award of the AFL broadcasting rights in December 2000. News' success in obtaining the AFL broadcasting rights did not alter the fact that the Foxtel partners were in dispute on important issues. 2297 By January 2001 (and from the time the Master Agreement was entered into) the dynamics among the Foxtel partners had changed. Dr Switkowski was instrumental in bringing about a more conciliatory approach by Telstra to the aspirations of its Foxtel partners, reflected in the making of the Master Agreement itself. He effectively discarded the more combative approach of the ' Cold War Warriors ' within Telstra and opened the way to greater cooperation. Moreover, Telstra had powerful incentives to reach an accommodation with its partners on the issues that divided them. While Optus' CMM was struggling, its ability to bundle pay television with telephony services was a threat to Telstra's telephony operations. Without an agreement among the Foxtel partners, Telstra would not have been able to counter the threat from Optus by offering its own bundled services. The evidence shows that Telstra was concerned about this threat (for example, Mr Philip's report to Mr Lachlan Murdoch of 1 June 2001 recorded Telstra's worry that Optus would take Telstra's telephony customers). 2298 The resolution of the disputes among the Foxtel partners owed something to Optus' renewed, vigorous pursuit of a content supply agreement. Optus' strong interest in such an agreement dovetailed to some extent with Telstra's desire to bundle Foxtel's service with its telephony products. The supply of Foxtel to both Telstra and Optus as resellers of the Foxtel content largely overcame News' objections to Telstra's proposal that Foxtel should be supplied on a wholesale basis to it. Fox Sports, in which News and PBL were partners, had negotiated with Optus in 1998 for the supply of the Fox Sports channels. A content supply agreement offered the opportunity for Fox Sports to place its channels on Optus, since Telstra's opposition to the supply of Fox Sports to Optus could be overcome by concessions to Telstra on other issues. Once agreement could be reached on the matters of concern to Telstra, its objections to a long-term deal between Foxtel and Fox Sports could be overcome. 2299 The imperatives that gave rise to the resolution of the disputes among the Foxtel partners and to the conclusion of a content supply agreement would have been present even if News had not acquired the AFL broadcasting rights in December 2000 and Foxtel had not acquired the AFL pay television rights. The explanations given by Mr Lee and Mr Anderson of the problems faced by CMM do not suggest that the problems would have been ameliorated in any significant way had Seven retained the AFL pay television rights. Nor does their evidence suggest that the solutions preferred by Optus would have been any different. Similarly, it is difficult to see why the nature of the disputes dividing the Foxtel partners and the pressures for resolving those disputes would have been any different had Seven, instead of News, acquired the AFL pay television rights. 2300 I have explained in Chapters 6 and 11 my reasons for accepting the evidence of Messrs Lee and Anderson. Of course, in late December 2000 or early 2001, SingTel had not yet taken over Optus and Mr Lee was not yet involved in Optus' affairs. No doubt these were influenced to some extent by the fact that SingTel effectively took over Optus in about June 2001. But the decisions SingTel and the management of Optus faced would have had to be addressed by Optus even had SingTel had not become involved. There is no reason to think that the deliberations would have produced different outcomes had SingTel (and Mr Lee in particular) not participated. The views of Mr Lee and Mr Anderson (the latter of whom remained with Optus throughout the period when CMM's role was reassessed) were not substantially different. 2302 In my view, of the two alternatives I have identified, the second was much more likely. The considerations that ultimately prompted Optus to opt for Project Alchemy over Manage for Cash would have been present even if Seven had acquired the AFL pay television rights. Optus wanted, among other things, assistance in meeting its MSGs. Furthermore, had Optus had been unable to terminate the C7-Optus CSA (because Seven retained the AFL pay television rights) the desirability of a content supply agreement on terms similar to those in fact negotiated would have been even more apparent to Optus. 2303 Seven argues against this conclusion on the ground that the decision by Optus to enter the Foxtel-Optus CSA was made in an ' as is ' world, in which C7 could no longer offer Optus an independent subscription driving wholesale sports channel. But this argument overlooks the fact that the problems faced by Optus' CMM were of long standing and had become more acute over the years. The cash haemorrhage from CMM's pay television operations took place during the period when Optus had access to C7's ' subscription driving content '. 2304 Seven also draws a distinction between Optus sharing content with other pay television platforms (that is, on a non-exclusive basis as was proposed in 1998) and being reduced to a mere reseller of Foxtel programming (effectively the position under the Foxtel-Optus CSA). By early 2001, Optus' CMM had experienced years of heavy losses and Optus needed help to offset the burden of the MSGs payable under long-term content supply agreements. In August 2001, McKinsey identified Optus' fundamental problems as including a relatively weak pay television position and a difficult industry structure (too many players and excessive costs). Optus' position in 2001 was therefore very different than it was in 1998 and would have been just as different even if Seven had retained the AFL pay television rights. 2305 One of the options advanced by McKinsey was ' play to win ', but this proposal centred on Optus being able to acquire Austar. By early 2001, Optus seems to have given no consideration to acquiring Austar as a possible solution to the problems facing CMM. The idea was apparently first mooted within Optus as part of the CMM review in mid-2001, although speculation about a possible merger was published in the financial press in June 2001. 2306 An observer looking ahead in, say, January 2001 perhaps might have formed the view that there was a real chance that Optus would consider taking over or merging with Austar, even though the idea had not yet surfaced. But such an observer, in my opinion, would not have concluded that there was a real chance that Optus would actually decide to pursue that option. As Mr Lee explained, once the take-over proposal was analysed, it became apparent that Project Emu (as the proposal became known) presented too many problems to be implemented. Those problems led Mr Lee to conclude in February 2002 that, although the board had asked for the proposal to remain on Optus' agenda as a possibility, it was unlikely to be acceptable as a commercially sound strategy for Optus to follow and was clearly inferior to the Manage for Cash option. There is nothing to suggest that if Seven had retained the AFL pay television rights, a merger of Optus and Austar would have been a more likely option. 2307 Seven also submits that it was ' highly unlikely ' that Foxtel would have agreed to assume Optus' MSG obligations under the C7-Optus CSA. The evidentiary basis for this submission is unclear, particularly given the extent of the MSGs in fact assumed by Foxtel under the C7-Optus CSA. In any event, the submission pays no regard to the fact that cl 9.3 of the C7-Optus CSA allowed Seven to license the C7 channel to Optus. In that event, the fees payable by Optus were to be reduced by $2 million per annum, plus 25 per cent of the licence fees paid by Foxtel. 2308 Had Seven retained the AFL pay television rights, there is every reason to think that Foxtel would have taken AFL content via C7. Much evidence points in this direction. After all, the whole point of the arrangements between the Foxtel Partnership, Optus and the individual Foxtel partners was to share content. If Seven had indeed retained the AFL pay television rights, the strong likelihood is that ' industry rationalisation ' could have been achieved in a way that accommodated the minimum payment obligations imposed on Optus by the C7-Optus CSA. 2309 In my view, looking at the circumstances prevailing on 13 December 2000 or 25 January 2001, the very strong likelihood was that, in the absence of the conduct alleged to have contravened s 45(2)(b)(ii) of the TP Act , the major pay television retailers would have entered into an agreement on terms similar to those incorporated in the Foxtel-Optus CSA. That being the case, the allegedly contravening conduct was not likely to have had the effect of substantially lessening competition in the retail pay television market. The weak competition provided by Optus to Foxtel in the retail pay television market would have become even weaker. 2310 The other, much less likely, alternative was that Optus would have adopted something like the Manage for Cash strategy, as a means of winding down the pay television business in a reasonably orderly fashion. Had such a strategy been adopted, the very strong likelihood is that Optus would have left the pay television business within a period of three to four years. During that period Optus would have wound down its pay television activities and, in particular, would not have sought to attract new subscribers or to replace those it lost through churn. As Mr Lee and, more particularly, Mr Anderson explained, a plan that sought to pare back costs and not actively to seek subscribers was in substance an exit strategy, albeit one to be implemented over a period of time. The principal object of any such strategy would have been to cushion the financial impact of Optus' MSGs, rather than to keep the business going. Despite the guarded optimism by McKinsey that CMM might have survived (an optimism not shared by Optus' management), had an approach similar to Manage for Cash been adopted, it would have resulted in Optus ceasing to be a retail supplier of pay television within a relatively short time. 2311 The ' counter-factual ' requires an assumption to be made that Seven acquired the AFL pay television rights in respect of 2002 to 2006. On that assumption, even if it is accepted that there was a real chance on 13 December 2000 or 25 January 2001 that Optus would have selected a Manage for Cash strategy (or something very like it), there would have been no real chance that competition in the retail pay television market would have been substantially lessened. Under the Manage for Cash strategy, the strong likelihood is that Optus would have left the retail pay television market within a few years, following a winding down process. Consequently, Optus would have been removed as any kind of constraint, weak or otherwise, on the Foxtel Partnership in the retail pay television market. Accordingly, if the allegedly contravening conduct had not occurred, and if Seven had acquired the AFL pay television rights, competition in the retail pay television market would not have been any more robust than in the events which did occur. The contracts implementing the Master Agreement were entered into December 2000 and January 2001. As I have noted, Seven does not suggest that there is any reason to differentiate between the contracts entered into during this brief period, so far as their effects on competition in the retail pay television market are concerned. In any event, I see no basis in the evidence for making different findings as to the effect on competition of provisions in those contracts or of the Master Agreement Provision itself at different times in December 2000 and January 2001. The circumstances I have identified were present throughout that period. 2315 For the reasons in this Chapter, I reject Seven's effects case under s 45(2) of the TP Act . 2316 I add, for the sake of completeness, that in Chapter 15 I reject Seven's contention that Foxtel, through News, overbid for the AFL pay television rights. I also reject Seven's claims that Foxtel took advantage of its market power by refusing to negotiate with C7 for the carriage of its channels and by making statements to the AFL to the effect that Foxtel would not take C7's channels even if C7 acquired the AFL pay television rights. These findings may be significant in relation to Seven's argument that the Consortium Respondents employed anti-competitive means to obtain the AFL pay television rights. However, in view of the conclusion I have reached in this Chapter, it is not necessary to consider the significance of the findings for that argument. 14 SEVEN'S PURPOSE CASE UNDER SECTION 45(2) OF THE TRADE PRACTICES ACT [2317] 14.1 Scope of Chapter [2317] 14.2 Relevance of 'Purpose' [2323] 14.2.1 Purpose of Substantially Lessening Competition [2324] 14.2.2 Foxtel's Taking Advantage of Market Power for an Anti-Competitive Purpose [2326] 14.2.3 Seven's Claim under s 45D [2328] 14.3 Seven's Pleaded Purpose Case under s 45(2) [2329] 14.3.1 Master Agreement Provision [2331] 14.3.1.1 Purpose and the Retail Pay Television Market [2331] 14.3.1.2 Purpose and the Wholesale Sports Channel Market [2337] 14.3.1.3 Purpose and the Pay Rights Markets [2338] 14.3.2 News-Foxtel Licence Provision [2339] 14.3.3 Rights Sub-Licence Provision [2340] 14.3.4 Nine Put Provision [2341] 14.3.5 News-Nine Licence Provision [2342] 14.3.6 NRL Bidding Agreement Provisions [2343] 14.4 Seven's Submissions on Purpose: General [2344] 14.4.1 News, PBL and Foxtel [2345] 14.4.2 Telstra [2357] 14.4.2.1 Seven's Closing Submissions [2357] 14.4.2.2 Seven's Reply submissions [2364] 14.5 Seven's Submissions as to the Purpose of the Provisions [2367] 14.5.1 Master Agreement Provision [2367] 14.5.2 Purpose in Relation to Markets [2369] 14.5.2.1 Wholesale Sports Channel Market [2370] 14.5.2.2 AFL Pay Rights Market [2375] 14.5.2.3 NRL Pay Rights Market [2377] 14.5.2.4 Retail Pay Television Market [2378] 14.5.3 News-Foxtel Licence Provision [2379] 14.5.4 Rights Sub-Licence Provision [2380] 14.5.5 Nine Put Provision [2382] 14.5.6 News-Nine Licence Provision [2384] 14.5.7 NRL Bidding Agreement Provisions [2385] 14.6 Construction of s 45(2): Purpose [2388] 14.6.1 Common Ground [2388] 14.6.2 Is a Shared Purpose Required? [2390] 14.6.2.1 The Issue [2390] 14.6.2.2 Authorities [2393] 14.6.2.3 Preferred Construction [2402] 14.6.3 An Impossible Purpose? [2414] 14.6.3.1 Seven's Contention [2414] 14.6.3.2 Universal Music v ACCC [2416] 14.6.3.3 Preferred Construction [2423] 14.6.3.4 Ascertaining Whether the Purpose is to Substantially Lessen Competition [2428] 14.7 Did the Consortium Respondents Have the Purpose of Substantially Lessening Competition? [2432] 14.8 Shared Purpose? Provisions Other Than the Master Agreement Provision [2439] 14.8.1 Nine Put Provision [2441] 14.8.2 News-Nine Licence Provision [2446] 14.8.3 Rights Sub-Licence Provision [2447] 14.8.4 NRL Bidding Agreement Provisions [2450] 14.9 Shared Purpose? Master Agreement Provision [2452] 14.9.1 Was Telstra Responsible for Including the Master Agreement Provision? [2452] 14.9.2 Did Telstra Have the Proscribed Purpose? Seven contends that the Consortium Respondents made contracts or arrangements, or arrived at understandings, containing various provisions which had the purpose of substantially lessening competition. Seven also alleges that the Consortium Respondents gave effect to the various provisions. 2318 The Chapter addresses two issues of construction that are important to Seven's case. One issue is whether, in order for a contravention of s 45(2) to be made out by reason of an anti-competitive purpose, all the parties responsible for including a provision in a contract (including an arrangement or understanding) must share that purpose. If so, Seven's case based on a particular provision (such as the Master Agreement Provision) will fail unless all the parties responsible for its inclusion in the contract have the purpose of substantially lessening competition. 2319 The second issue of construction is whether s 45(2) can be contravened where the alleged anti-competitive purpose, even if achieved, could not have the effect of substantially lessening competition in a market. Seven argues that an alleged contravenor can have the proscribed purpose notwithstanding that it is in fact impossible for the alleged contravenor to achieve the purpose. In particular, Seven contends that a party can contravene s 45(2) by having the purpose of substantially lessening competition in a market which it believes exists, even if the market does not in fact exist. 2320 The second issue of construction leads to a related question: where a party seeks to achieve a particular objective (such as killing C7), but that objective, even if achieved, cannot have the effect of substantially lessening competition in a market, does the party have the purpose of substantially lessening competition? 2321 I commence the Chapter with an explanation of why findings as to the purpose or purposes of the Consortium Respondents are significant to the issues in the proceedings. I then outline Seven's pleaded purpose case under s 45(2) of the TP Act and address the issues of construction I have identified. Since I conclude that a contravention of s 45(2) of the TP Act by reason of an anti-competitive purpose cannot be made out unless all parties responsible for including the provision in the contract shared that purpose, I consider whether Seven can show that to be the case in relation to each of the provisions upon which it relies. That analysis requires findings to be made as to Telstra's purpose. I also consider whether, on the findings I have made, the purpose alleged against the Consortium Respondents is one that can be said to involve substantially lessening competition. 2322 As will appear, it is not strictly necessary for me, in addressing Seven's purpose case under s 45(2) of the TP Act , to make findings as to whether the Consortium Respondents, other than Telstra, had the purpose of substantially lessening competition. However, findings on that issue will be significant if my analysis in this Chapter is wrong and, in any event, bear on other issues in the case. Accordingly, I deal with these factual questions in Chapter 15. It is necessary to go elsewhere in Seven's submissions to ascertain why the proposed findings as to the purpose of the Consortium Respondents are significant. This part of Seven's case is addressed in Chapter 16. Seven claims that the Consortium Respondents, together with Nine and Fox Sports, engaged in conduct in concert that ' hindered ' or ' prevented ' Foxtel, Optus or Austar acquiring goods or services from C7 for the purpose of destroying or at least causing significant harm to the business of C7. This part of Seven's case is addressed in Chapter 21. The pleadings refer to the various markets on which Seven relies to make out its case. It is necessary to bear in mind that I have rejected three of the four markets on which Seven relies to make out its case, namely the wholesale sports channel market, the AFL pay rights market and the NRL pay rights market. It is also necessary to bear in mind that the Statement of Claim defines ' Foxtel ' to mean the business carried on in partnership by Sky Cable and Telstra Media (par 8). In particular, C7 was threatening Foxtel's monopoly in relation to the Telstra Cable and was threatening to compete with it over the same infrastructure (par 198(b)). 2333 A substantial purpose of Foxtel entering into the Master Agreement incorporating the Master Agreement Provision was ' to kill C7 ' (par 198(c)). News and PBL were ' privy to [Foxtel's] purpose ', while Telstra was ' aware ' of Foxtel's purpose (par 198(d), (f)). Telstra was also aware that the likely effect of Foxtel obtaining the AFL pay television rights was that C7 would cease to operate (par 198(g)). 2334 The terms of the AFL Proposal, reflected in the Foxtel Put, were such that to the knowledge of News, Foxtel, PBL and Telstra, Foxtel was unlikely to make a profit from the acquisition of the AFL pay television rights except by curtailing competition in the retail pay television market (par 198(i)). Telstra's own assessment was that the acquisition of the AFL pay television rights was ' value dilutive ' for Foxtel and would be likely to result in a significant loss for Foxtel over the five year term of the rights proposal (par 198(j)). Telstra thus endorsed an acquisition of the AFL pay television rights which its management had concluded was financially unjustified. Foxtel's assessment was to the same effect as that of Telstra (par 198(k)). Further, a substantial purpose of News and PBL, as the ultimate shareholders of Foxtel and Fox Sports, was to remove or substantially lessen C7's ability to compete against Foxtel and Fox Sports (par 198(q)). 2335 Alternatively, a substantial purpose of the Master Agreement Provision was to enable Foxtel to secure the AFL pay television rights (and to prevent C7 from acquiring the NRL pay television rights) so as to reduce the competitive strength of Optus in the retail pay television market (par 199). 2336 By reason of the matters pleaded in the Statement of Claim, a substantial purpose of the Master Agreement Provision was to substantially lessen competition in the retail pay television market (par 201). The purpose of the parties was to remove C7 from the wholesale sports channel market or to prevent it from competing effectively in that market, thus ensuring that Optus and Austar became dependent on Foxtel and Fox Sports for the supply of Australian sports programming. Alternatively, the purpose of News and Foxtel was the same as their purpose in entering into the Foxtel Put: that is, preventing C7 from competing against Foxtel in the retail pay television market by supplying services in competition with Foxtel over the Telstra Cable, pursuant to the access regime in Pt XIC of the TP Act (par 292A). Accordingly, a substantial purpose of the NRL Bidding Agreement Provisions was the same as the purpose of the Master Agreement Provision (par 310). In those Chapters, Seven does not address the legal significance of its submissions on the facts, leaving that to other parts of its Closing and Reply Submissions. In this section, I summarise Seven's factual submissions as to the purpose of the Consortium Respondents. The summary is relevant to the analysis in this Chapter and in Chapter 15. Rather, Seven's case is that News, Foxtel and PBL had the purpose of eliminating or damaging C7 ' so as to cause a substantial lessening of competition by making Fox Sports dominant ' (emphasis in original). Seven puts its contention in this way in order to avoid the riposte that it is of the essence of competition that a firm will attempt to harm its competitors. According to Seven, the purpose of News, Foxtel and PBL ' was not merely to strike at a competitor, but was to strike at competition '. 2346 Seven says that from the first half of 1998, News formulated a strategy to make Fox Sports the exclusive supplier of Australian sports programming to all other pay television platforms. This strategy involved promoting the interests of Fox Sports, in which News initially had a 100 per cent (later 50 per cent) interest, over the interests of Foxtel, in which News initially had a 50 per cent (later 25 per cent) interest. News' strategy was, however, frustrated by the creation of C7 and its success in June 1998 in entering into a ten year supply agreement with Optus (the C7-Optus CSA). 2347 News saw C7 as the only significant competitor to Fox Sports in the supply of premium sports channels and in the acquisition of sports rights. News fully appreciated the benefit to Fox Sports if competition from C7 was removed. This perception, according to Seven, was shared by PBL once it acquired its interest in Fox Sports. Foxtel, whose CEO was appointed by News, aligned itself with News and PBL in relation to issues concerning C7. News, PBL and Foxtel also saw C7 as a potential competitor in the retail pay television market. 2348 Seven says that News and PBL took every opportunity to stifle C7 as a competitor. Their actions included vetoing any carriage of the C7 channels by Foxtel and participating in the arrangements leading to the acquisition of the AFL pay television rights by Foxtel. The availability of the AFL broadcasting rights in 2000 gave News and PBL the opportunity to bring about the termination of the C7-Optus CSA (by creating the circumstances in which Optus could exercise its right of termination) and, in effect, to remove C7 as a competitor to Fox Sports. It was for this reason that News and PBL supported Foxtel's acquisition of the AFL pay television rights, even though they well understood that this was a much more expensive option than acquiring more or less equivalent rights by agreement with C7. 2349 In the lead-up to the acquisition of the AFL pay television rights, News and PBL maintained their opposition to Foxtel taking the C7 channels. They did so because otherwise Foxtel would have been able to negotiate down the price of the Fox Sports channels and C7 may have become entrenched as a strong competitor to Fox Sports. Seven points to evidence suggesting that modelling conducted by Foxtel in 1999 showed that the carriage of the C7 channels would have been profitable for Foxtel. Indeed, Seven argues that in 1999, executives within Foxtel thought that a deal with C7 could be consummated on terms satisfactory to Foxtel, at a price slightly less than C7 had already offered. Ultimately, however, Foxtel (principally through Mr Mockridge) harmonised its interests with those of News and made concessions to Fox Sports at Foxtel's own expense. 2350 Seven also places considerable reliance on a number of internal Telstra memoranda. These suggest, so Seven argues, that the Telstra representatives on the Foxtel Management board held the view that News and PBL wanted C7 to fail and that it was this that prompted Foxtel's refusal to take the C7 channels. Seven says that the perception of the Telstra representatives was that by forcing Foxtel to take sporting content from Fox Sports at inflated prices, profits were effectively being diverted from Foxtel to Fox Sports and that News and PBL intended to ' kill C7 '. According to Seven, Telstra's perception was completely accurate. 2351 Seven recognises that there is evidence suggesting that one reason why News and PBL opposed Foxtel carrying C7 was that they wanted to resolve a long-term supply arrangement between Foxtel and Fox Sports. Seven submits that, even if this was a reason for their opposition, their actions were consistent with a desire to prevent competition between Fox Sports and C7. Specifically, News and PBL prevented Foxtel from carrying C7 so as to ensure that Fox Sports had an advantage in its commercial negotiations with Foxtel. 2352 Seven also recognises that News' witnesses gave evidence that one reason for being opposed to Foxtel taking C7 was that, by late 1999, a view had been formed that to do so would interfere with Foxtel's or News' negotiations for the AFL pay television rights. Seven submits that Foxtel's decision to acquire the AFL pay television rights from the AFL (through News) was inexplicable except as conduct designed to hinder C7 from competing with Fox Sports. The direct acquisition of the rights was understood by the Foxtel partners to be an inferior option and, in any event, was never the subject of a careful comparison with the option of taking sports content from C7. 2353 Seven argues that, even on Foxtel's own analyses, the direct acquisition of the AFL pay television rights was less profitable than the acquisition of AFL pay television rights through C7, as had been discussed in 1999. In any event, even if News and PBL were motivated by the desire to preserve the option of direct acquisition of the AFL pay television rights, they engaged in ' exclusionary conduct ' which contravened the TP Act . 2354 Seven rejects the contention advanced by the Respondents that the quality of the C7 channels provided a genuine reason for Foxtel to decline to take them. In truth, Seven contends, the refusal to take the C7 channels was a refusal in principle, unaffected by any issue as to quality or the terms on which the C7 channels could be obtained. According to this material, Mr Blomfield (who did not give evidence) said that the acquisition of the AFL pay television rights by Foxtel was ' about killing C7 '. Seven also relies on Dr Switkowski's acknowledgement in his evidence that Telstra executives had expressed the view to him that News' refusal to countenance C7 on Foxtel was contrary to Foxtel's interests and favoured Fox Sports on pricing. 2359 In addition, Seven draws attention to contemporaneous internal Telstra documents complaining about the lack of concern displayed by News and PBL for Foxtel's best interests and suggesting that both wanted C7 to fail. It also relies on internal Telstra documentation which recorded concerns about the reliability of the assumptions underlying financial models prepared within Foxtel relating to the proposal for the acquisition of the AFL pay television rights. 2360 Seven invites me to make a finding that Telstra appreciated that, if C7 failed to acquire the AFL pay television rights, it would cease to have a viable business and Fox Sports would become a monopoly supplier of popular Australian sports content. To the extent that Dr Switkowski and Mr Akhurst gave evidence to the contrary, Seven asks me not to accept that evidence. 2361 Seven contends that Telstra had a motive for joining in the purpose of News and PBL to destroy C7 and create a monopoly for Fox Sports. The principal motive lay in Telstra's view that significant additional value could be unlocked from the Foxtel business if the scope of the business were to be expanded. Seven identifies, for example, a presentation to senior executives of Telstra by Mr Akhurst in April 2000. In that presentation, Mr Akhurst suggested that an expanded Foxtel business could be worth as much as $4.9 billion, compared with a value on a stand alone basis of between $1.3 and $2.2 billion dollars. An important component of the plan to add value to Foxtel, from Telstra's point of view, was the role played by Foxtel in Telstra's telephony defence --- that is, assisting Telstra to offer a full range of services, including pay television, to prevent the loss of revenue to its telephony competitors. 2362 The difficulty from Telstra's perspective was that an expansion of Foxtel's business required the cooperation of News and PBL. According to Seven, Telstra regarded support for the acquisition of the AFL pay television rights by Foxtel as a way of building trust within the Foxtel Partnership. Greater trust would assist Telstra to make progress on other issues, including Telstra's desire to offer bundled products and to expand Foxtel's business. 2363 Seven gives two answers to the Respondents' argument that Dr Switkowski and Mr Akhurst were the decision-makers within Telstra and that they disclaimed knowledge of any plan by News and PBL to destroy C7 or create a monopoly for Fox Sports as a supplier of Australian sporting content. One answer is to invite me to reject the evidence of Dr Switkowski and Mr Akhurst. A second answer is that the knowledge or state of mind of Mr Greg Willis, the head of Telstra's Media division, should be attributed to Telstra, even if I find that Dr Switkowski and Mr Akhurst did not share his views or understanding. According to Seven, there is no doubt that Mr Willis, and other Telstra executives, knew of the monopolistic aspirations of News and PBL. The Closing Submissions identify a ' motive for [Telstra] joining the purpose of News and PBL ' (emphasis added) --- that is, the motive of unlocking the value of the Foxtel business --- but it is not entirely clear whether Seven asserts that Telstra in fact shared that purpose. 2365 Seven's case is made somewhat clearer in its Reply Submissions, although not so as to eliminate all ambiguity. Telstra participated in the acquisitions knowing that they were designed, in part, to bring about the death of C7 because Telstra wanted to keep its Foxtel partners happy, and so as to secure strategic advantages for Foxtel vis-à-vis Optus'. (Emphasis added. A further substantial purpose was to ensure that C7 did not acquire alternativemarquee sporting content, in the form of the NRL pay television rights. All parties to the Master Agreement shared this purpose. 2368 Seven anticipates the possibility that I might find that Telstra did not share the subjective purpose of News, PBL and Foxtel. However, it submits that this should not affect the conclusion as to the purpose of the Master Agreement Provision. The Agreement resulted from the ' capitulation ' of Telstra and the purpose of the three moving parties constituted at least a substantial purpose of the Master Agreement Provision. Seven contends, in the alternative, that the Master Agreement Provision was formulated by News and inserted into the Master Agreement at its insistence and that the purpose of the Master Agreement Provision should be regarded as that of News. These submissions raise questions of statutory construction that I address later in this Chapter. The ultimate object was to ensure that Fox Sports became the dominant supplier of Australian sports programming to all pay television platforms and that competition for rights (and thus rights fees) would be reduced. 2371 Whether they appreciated it or not, News and PBL acted on the basis that there was a separate wholesale sports channel market in which C7 was the only significant competitor to Fox Sports. Their actions were only consistent with an understanding that, in the absence of C7, Fox Sports would not be constrained to any significant extent by close competitors. The understanding of News and PBL is therefore powerful evidence of the existence of a wholesale sports channel market. Similarly, it is not to the point if it be the case that News and PBL did not think in terms of a wholesale sports channel market. The consequence of eliminating C7, or rendering it an ineffective competitor to Fox Sports, was substantially to lessen competition in the wholesale sports channel market. 2373 According to Seven, Foxtel's purpose was the same as that of News and PBL. For example, News' financial models assumed that in the absence of competition, rights costs would inflate at three per cent per annum less than if there were competition. Similarly, News understood that the frustration of its plan to sell Fox Sports non-exclusively to all platforms because of C7's advent was likely to increase the fees paid for sports rights. Thus, a substantial purpose of News and PBL in eliminating C7 was the substantial lessening of competition for the acquisition of sports rights in the AFL pay rights market. This conclusion is not affected by the fact that it was ultimately the Foxtel Partnership, rather than Fox Sports, that bid for the AFL pay television rights, since there was no prospect of competitive bidding between the Foxtel Partnership and Fox Sports for sports rights. 2376 The purpose of Foxtel was the same as the purpose of News and PBL, while Telstra joined in the purpose of News, PBL and Foxtel. The purpose of the News-Foxtel Licence Provision was to substantially lessen competition in each of the four markets relied on by Seven. 2381 The Rights Sub-Licence Provision was an aspect of the arrangement formulated by News for the acquisition of the AFL pay television rights by Foxtel. So far as News and Foxtel were concerned, the critical aspect of the arrangement was that Foxtel would acquire the AFL pay television rights. The purpose of News and Foxtel in relation to the Rights Sub-Licence Provision was the same as their purpose in relation to the News-Foxtel Licence Provision. That purpose may be seen as a substantial purpose of the Rights Sub-Licence Provision, in the sense described by Gummow J in News Ltd v South Sydney District Rugby League Football Club Ltd [2003] HCA 45 ; (2003) 215 CLR 563, at 586 [62]. Seven advances a related argument on the question of purpose. 2383 The Nine Put was formulated by News as an integral aspect of News' bid for the AFL broadcasting rights, the purpose of which was to acquire the AFL pay television rights for Foxtel. A substantial purpose of the Nine Put Provision was therefore the same as the purpose of the News-Foxtel Licence Provision. The parties to it were Fox Sports, Foxtel (Sky Cable and Telstra Media) and Telstra. The pleaded terms of the Bidding Agreement Provisions have been set out in Chapter 13. 2386 Seven submits that the purpose of Telstra and Foxtel in entering into the NRL Bidding Agreement, including the NRL Bidding Agreement Provisions, was to implement the overall arrangements contemplated by the Master Agreement. Having made provision for the acquisition of the AFL pay television rights, the NRL Bidding Agreement was designed to prevent C7 from obtaining an alternative to its AFL pay television rights in the form of the NRL pay television rights. A substantial purpose of the NRL Bidding Agreement Provisions was therefore to shore up the impact of the acquisition by Foxtel of the AFL pay television rights, and thus to substantially lessen competition in the relevant markets. 2387 Seven submits that although Fox Sports was a party to the NRL Bidding Agreement, four of the five directors of Fox Sports were present at the teleconference of 13 December 2000 representing News and PBL and had the mental state that characterised the purpose of News and PBL. Section 45(2)(b)(ii) of the TP Act provides that a corporation shall not give effect to a provision of a contract (including an arrangement or understanding) if that provision has the purpose of substantially lessening competition. Section 4F deems a provision to have had or to have a particular purpose if the provision was included in the contract, or is to be included in the proposed contract, for that purpose or for purposes that included or include that purpose and the purpose was or is a substantial purpose. The relevant purpose is that of the provision. • The purpose of a provision is to be ascertained by reference to the subjective purpose for its inclusion in the contract, although this test does not exclude consideration of the circumstances surrounding the making of or giving effect to the contract: Hughes v Western Australian Cricket Association (Inc) (1986) 19 FCR 10, at 38, per Toohey J; ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1990) 27 FCR 460, at 474-477, per curiam ; News v South Sydney 215 CLR, at 573 [18], per Gleeson CJ; at 580-581 [41]-[44] per McHugh J; at 585 [60], per Gummow J; at 636-637 [212], per Callinan J. • The purpose is the effect that the parties sought to achieve through the inclusion of the provision in the contract: Tillmanns Butcheries Pty Ltd v Australian Meat Industry Employees' Union (1979) 27 ALR 367, at 383, per Deane J; News v South Sydney 215 CLR, at 586 [63], per Gummow J. The motive for conduct is the reason for seeking that end. The appropriate description or characterisation of the end sought to be accomplished (purpose), as distinct from the reason for seeking that end (motive), may depend upon the legislative or other context in which the task is undertaken ... [I]n the context of competition law, it is necessary to identify purpose by describing what is sought to be achieved by reference to what is relevant in market terms'. • A purpose may be a proscribed purpose if it is one of a number of purposes, provided it is a ' substantial ' purpose: s 4F(1)(b). (Section 4F uses the expression ' deemed ' not in order to create a statutory fiction, but for a definitional purpose: News v South Sydney 215 CLR, at 585 [60], per Gummow J. ) In this context, ' substantial ' means ' considerable or large ': Dowling v Dalgety Australia Ltd (1992) 34 FCR 109, at 139, per Lockhart J; Monroe Topple & Associates Pty Ltd v Institute of Chartered Accountants in Australia [2002] FCAFC 197 ; (2002) 122 FCR 110, at 136 [97], per Heerey J (with whom Black CJ and Tamberlin J agreed). As Heerey J said in the latter case (at 136 [97]), the question is whether the proscribed purpose ' loom[ed] large among the objects the corporation sought to achieve by the conduct in question '. On one reading, the Closing Submissions accept, subject to one qualification, that the subjective purpose for including a provision in a contract must be common to all parties to the contract. The qualification, drawn from observations in ASX v Pont Data 27 FCR, at 477, is that in certain circumstances it will be appropriate to look solely to the purpose of the party or parties as the result of whose efforts the provision was included in the contract. In a footnote to the Closing Submissions, Seven adds the comment that several passages in News v South Sydney ' carry an implication that the relevant purpose must be shared '. 2391 News' and PBL's Closing Submissions interpret Seven as correctly conceding that, ordinarily, the purpose of a provision must be a purpose common to all the parties responsible for its inclusion in a contract. Not surprisingly they also endorse Seven's interpretation of the High Court's observations in relation to News v South Sydney . News argues that Seven's concession is compelled by authority. 2392 Seven appears to have had something of a change of heart by the time it filed its Reply Submissions, doubtless prompted by a realisation of where its apparent concession might lead. This evaluation, in the case of a simple two party agreement where purposes are common, will be straightforward. (Emphasis in original. ASX v Pont Data concerned agreements whereby ASX was to supply Pont with financial data in electronic form. Each agreement contained restrictions on the use that Pont could make of the data, in particular on resupply of the information. Pont alleged, among other things, that the provisions had the purpose of substantially lessening competition in the wholesale financial information market. The trial Judge, Wilcox J, found that Pont had signed the agreements only because otherwise it faced losing access to critical data. Moreover, Pont had unsuccessfully objected to inclusion of the provisions in the agreements. 2394 The Full Court pointed out (27 FCR, at 475) that s 46 of the TP Act strikes at the unilateral activity of a monopolist in taking advantage of its power for a particular purpose, while s 45 operates upon contracts between two or more parties some of whom may not have the proscribed purpose. Their Honours observed that where not all the parties have the necessary subjective purpose, the question is how one determines whether the contract they make (or a provision of the contract) has a particular purpose. This indicates that s 4F, in this operation, requires one to look to the purposes of the individuals by whom the provision was included in the contract, arrangement or understanding in question . It therefore directs attention to the "subjective" purposes of those individuals'. (Emphasis added. (Emphasis added. Nonetheless, the carefully considered views of the Full Court have persuasive force and, in any event, I think that the reasoning is sound. However, it will be seen that the reasoning in ASX v Pont Data does not address the approach to be taken in circumstances where two or more parties are responsible for the insertion of a provision in a contract, but where not all of those parties share the subjective purpose of substantially lessening competition. That is the point at which the submissions in the present case diverge. 2398 There is authority supporting the proposition that, in order to come within s 45(2) of the TP Act , the relevant purpose must be common to all parties responsible for the inclusion of the provision in a contract. In Carlton & United Breweries (NSW) Pty Ltd v Bond Brewing New South Wales Ltd (1987) 16 FCR 351, T Co granted B Co, a brewer, head leases of a large number of hotels, thus interposing B Co between the owner and the individual licensees. In proceedings for interlocutory relief, Wilcox J held that the applicant, another brewer, had failed to establish that a provision of the agreement had the purpose of preventing or limiting the supply of goods to particular persons or classes of persons within s 4D(1)(b) of the TP Act . I have no doubt that it was a purpose of [B Co] to reduce the supply of beer by [the applicant] to operators of the hotels with which the agreement was concerned, but there is no evidence to indicate that this was a purpose shared by [T Co]. It was conceded in the Supreme Court by Mr Spalvins, the chief executive of [T Co], that, at the time of the agreement, he was aware that [B Co] wished to acquire the leases in order to improve its market share; but to say that a party is aware of the purpose of another party is a very different thing from saying that the former shared the latter's purpose. So far as the evidence indicates, there is no reason to suppose that Mr Spalvins, or [T Co], was actuated by any purpose other than that of obtaining the best bargain which was commercially attainable'. 2399 Wilcox J's reasoning was followed by Young J in Stokely-Van Camp, Inc v New Generation Beverages Pty Ltd (1998) 44 NSWLR 607, at 617. However, Young J's comments were obiter dicta and, like Wilcox J, his Honour did not find it necessary to examine the operation of s 4F of the TP Act . See, too, Rural Press Ltd v Australian Competition and Consumer Commission [2002] FCAFC 213 ; (2002) 118 FCR 236, at 266 [105], per curiam . 2400 Seven does not suggest that its contention has been authoritatively upheld in Australia. However, it claims support from dicta of Gummow J in News v South Sydney . At first glance, such an approach might appear to conflict with the terms of s 4D(1)(b), which speaks not of human or corporate actors but of the provision itself having the purpose of preventing, restricting or limiting the supply or acquisition of the relevant goods or services. A construction which fixes upon subjective intent also may be difficult to apply to a multipartite contract, arrangement or understanding. However, s 4F of the Act doubtless has a role to play in such circumstances. The phrase "the provision was included in the contract ... for that purpose or for purposes that included or include that purpose" suggests that s 4F requires examination of the purposes of the individuals by whom the provision was included in the contract, arrangement or understanding in question. Moreover, s 4F contemplates that a provision may be included in a contract, arrangement or understanding for a plurality of purposes and, in such circumstances, directs that the relevant purpose must be "substantial". This is a further indication that the Act requires examination of the purposes of individuals, the inevitable multiplicity of which may be contrasted with an examination of the "objective" purpose of an impugned provision. In this way, the introduction of a "substantial purpose" test avoids difficulties in discerning the relevant purpose of multiple parties to a contract, arrangement or understanding'. (Emphasis added. It is therefore not surprising that the passage does not speak unequivocally to that issue. I think that his Honour's observations are capable of bearing the meaning attributed to them by Seven. On the other hand, as News suggests, Gummow J may have been concerned only to explain why the ' substantial purpose ' test in s 4F of the TP Act suggests that s 4D (and presumably s 45(2)) applies where the subjective purpose of the parties responsible for the provision, rather than an objectively ascertained purpose, included the substantial lessening of competition. This is no easy task, because the text of ss 45(2) and 4F of the TP Act is of even less assistance than usual in cases of statutory ambiguity. The fundamental reason for this is that, as Gummow J noted in News v South Sydney (in relation to s 4D), s 45(2) of the TP Act does not speak of human or corporate actions, but of the provision itself having the purpose of substantially lessening competition. A process of judicial exegesis has taken the rather curious statutory language to refer to a subjective purpose: cf News v South Sydney 215 CLR, at 580 [41], per McHugh J. It is not surprising in these circumstances that s 4F does not clearly indicate whether it is directed to the position of a single corporation which has multiple purposes or to that of a number of corporations each of which has a different purpose or set of purposes. Frequently, there is simply no "right" answer to a question of construction'. Nonetheless, on balance, I prefer a construction that limits the operation of s 45(2) to cases where the substantial purpose of each of the parties responsible for including the relevant provision in a contract is to substantially lessen competition. Several factors point to this conclusion. 2404 First, if Seven's construction of ss 45(2) and 4F is correct, a party to a contract may be exposed not only to claims for damages and other relief, but to civil penalties under the TP Act because another party to the contract has included a provision for the ' substantial purpose ' of substantially lessening competition. The ' innocent' party will be liable to penalties notwithstanding that it had neither knowledge of, nor a reasonable opportunity to ascertain, the substantial anti-competitive purpose of the other party or parties. 2405 A hypothetical example loosely based on the present case illustrates the point. The AFL might have been held liable under s 45(2) of the TP Act for entering into the AFL-News Licence if, entirely unknown to it, News' purposes for obtaining the AFL broadcasting rights included the substantial purpose of lessening competition. It is true that an innocent party, like the AFL in this hypothetical example, would only be liable if it was also responsible for including the relevant provision in the agreement. But it is easy to envisage circumstances in which one party responsible for including a provision in a contract has no inkling of the anti-competitive purpose of another party sharing responsibility for including the provision in the contract. 2406 Seven points out that s 45(2) of the TP Act already imposes a form of strict liability, in that a party to a contract may be held liable by reason of the anti-competitive effect of the provision of that contract, whether or not the party recognises the effect. However, on the construction of s 45(2) that I have held in Chapter 13 to be the better view, the issue will be whether, at the relevant time (the making of or giving effect to the contract) the provision has already had the effect of substantially lessening competition or is likely to have that effect. Ordinarily, all parties to a contract are in a position to assess objectively the actual or likely effect on competition of a particular provision in a contract. Ascertaining the subjective purpose or purposes of a contracting partner for including a provision in the contract is likely to be a very different undertaking. Not only does the innocent party have to assess the various purposes of each of the other parties to the contract, but it has to make an assessment of the substantiality of any anti-competitive purpose in relation to the other purposes held by each. 2407 Secondly, on Seven's construction of ss 45(2) and 4F of the TP Act, the Court is required to evaluate the collective substantiality of anti-competitive purposes among a range of purposes held (or not held) by multiple contracting parties. The Court, on this approach, is required to go beyond ascertaining the varying purposes held by each of the parties to the contract. It must determine whether the proscribed purpose is a substantial purpose when, by hypothesis, that purpose has not been held by one or more of the parties responsible for inclusion of the particular provision in the contract. 2408 There is no shortage of difficult judgments the TP Act requires the Court to make . But any assessment of the substantiality of a particular subjective purpose held by some, but not all, parties to a contract necessarily moves away from any meaningful assessment of subjective purpose. Inevitably it must rely on objective criteria such as (in Seven's language) ' the degrees of responsibility of the various parties for the inclusion of the provision '. It is difficult to see how an assessment of this kind can be reconciled with the insistence of the High Court in News v South Sydney that s 4D (and, accordingly, s 45(2)) is concerned with the subjective purpose of those parties to a contract responsible for the inclusion of a particular provision in the contract. 2409 Thirdly, as I have already noted, s 45 is a penal provision. As Allsop J pointed out in that case (at 45,185 [47]), this does not mean that the Court adopts a literal analysis ' with an eye to the discernment of textual ambiguity through finely spun distinctions '. 2410 In my view, the present is a case for the application of these principles. The construction I prefer is consistent with the statutory language − textual ambiguity is present without any judicial straining of language. Unless the construction urged by the Consortium Respondents is adopted, there is a clear risk that corporations and individuals will be exposed to penalties for commercial decisions that involve neither a conscious determination to engage in anti-competitive conduct, nor an opportunity to ascertain that anti-competitive conduct has occurred or is likely to occur. 2411 Mr Sumption argued in his oral submissions that if there can be no contravention of s 45(2) of the TP Act unless all those responsible for including a provision in the contract have the proscribed anti-competitive purpose, there is a danger that a person who deliberately sets out to subvert competition will avoid the consequences by contracting with a commercial innocent. Perhaps there is such a risk, but it is ameliorated by the fact that s 45(2) applies whenever the contractual provision is likely to have the effect of substantially lessening competition. Moreover, the risk Mr Sumption identifies is more than matched, in my opinion, by the risk that an innocent party will be held liable by reason of the unascertainable purpose or purposes of other parties to the contract. 2413 None of the parties supported this construction and Mr Sumption specifically disavowed it. I therefore have not given it further consideration. 14.6.3 An Impossible Purpose? Seven points out that a party may have a proscribed purpose to do that which is impossible to achieve. That no doubt explains the reference to purpose, in para (a) of s 47(10) of the Act, as an alternative to effect and likely effect. The paragraph is satisfied if the relevant corporation has the requisite purpose, regardless of whether or not that purpose has been, or was or is likely to be, achieved. It may conceivably be satisfied even in a case where the court finds the purpose could never in fact have been achieved; although that finding would be relevant in determining whether to infer the proscribed purpose'. Examples are where the anti-competitive conduct is nipped in the bud by the regulator or the market participants to whom the alleged contravenor's conduct is directed refused to bow to persuasion or threats: Universal Music v ACCC 131 FCR, at 586 [246], per curiam . Viewed from the time the allegedly contravening conducts occurs, an objective observer might conclude that there never had been any possibility of a substantial lessening of competition in any existing market. 2418 The Court in Universal Music v ACCC did not, however, hold that a proscribed purpose will be present where the object sought to be achieved by those including a provision in a contract is incapable of substantially lessening competition in any existing market. The proposition accepted in that case was that a party may have the purpose required for contravention of s 47 (and, it follows, s 45(2)), even though the purpose could never be achieved in practice. The Court did not need to consider whether a party can have the proscribed purpose of substantially lessening competition in a market if the object to be achieved can only substantially lessen competition in a market which, by hypothesis, does not exist. 2419 In Universal Music v ACCC , there was no real dispute that the relevant market was the wholesale market for recorded music in Australia (131 FCR, at 542 [34]). The material question arising in that case was whether the appellants had engaged in certain conduct for the purpose of substantially lessening competition. The conduct involved closing the accounts of music retailers in order to deter them from engaging in the lawful parallel importation of recordings under particular labels. The retailers whose accounts were closed were all small traders. Thus the cessation of supply to them could have had no significant effect on competition in the wholesale market for recorded music. 2420 Nonetheless, the Full Court considered that the appellant's objective was to snuff out intra-brand competition before it gained a foothold. The Court upheld a finding, based on the whole of the evidence, that each corporate appellant had the purpose of deterring all its retail account holders from purchasing parallel imports (131 FCR, at 591 [264]). 2421 The Court then proceeded to consider whether that purpose involved a substantial lessening of competition in the relevant market, within the meaning of s 47(1)(a) of the TP Act . But the competition contemplated by s 47(10)(a) is competition in the relevant market considered as a whole; not competition with a particular market participant. A question of degree arises, about which a judgment must be made'. 2422 The Court in Universal Music v ACCC was concerned with purpose in relation to an existing market. The construction question presented by Seven in the present case therefore did not arise. There is nothing in the Court's reasoning that suggests that a contravention of s 45(2) can occur when the object sought to be achieved by the alleged contravenor is incapable of lessening competition in an existing market, but is capable of lessening competition in a market which ' exists ' simply in the corporate mind of the alleged contravenor. If anything, the reasoning of the Court suggests otherwise. (Emphasis added. The prohibition in s 45(2) is directed (relevantly) to a corporation which makes a contract containing a provision, or which gives effect to a provision in a contract, where those responsible for including the provision had the purpose of substantially lessening competition in a market which actually exists. In other words, the object sought to be achieved must be capable of substantially lessening competition in an actual market. 2425 The only answer Seven offers to this textual argument is an assertion that s 45(3) embraces a market as subjectively understood by the alleged contravenor. However, in my view, the language of s 45(3) does not support Seven's position. On its plain meaning, it contemplates that s 45(2) is concerned with conduct undertaken with the purpose of substantially lessening competition in an existing market, not in an imaginary market. 2426 Textual considerations aside, other factors suggest that Seven's construction should not be accepted. If it were to be accepted, a corporation whose principal decision-maker was under a complete misapprehension as to the nature or parameters of the market could be penalised or be held liable to damages or other relief, because he or she authorised entry into a contract containing a provision incapable of substantially lessening competition in any existing market. It is one thing to impose penalties on a corporation which has the subjective purpose of substantially lessening competition in an existing market, even though there may be circumstances, beyond the corporation's control, which make it unlikely or perhaps impossible for the corporation to achieve its objective. It is quite another thing to impose penalties on a corporation which never had an object capable of substantially lessening competition in an existing market. In the first case, the object is harmful, in the sense that if achieved, it would have led to a substantial lessening of competition in an existing market. In the second, the object is harmless, in the sense that, even if achieved, it could not have led to any substantial lessening of competition. 2427 It is also difficult to determine how the purpose of substantially lessening competition in a non-existent market could be established. It is hard enough to make judgments about the characteristics or boundaries of a market on the basis of orthodox evidence, such as the behaviour of market participants or the expert opinions of economists. To attempt the exercise on the basis of the subjective thought processes (or, possibly, the conflicting thought processes) of corporate decision-makers would seem to present virtually insoluble problems. How is the Court to determine the boundaries of the market if the decision-maker has not given any clear thought to that issue? How is the Court to assess the extent to which competition would have been lessened in a market which, by hypothesis, never existed? A market, after all, is an instrumental concept, designed to assist analysis of the processes of competition and the sources of market power: Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd [2003] FCAFC 149 ; (2003) 129 FCR 339, at 399 [293], per Heerey and Sackville JJ. Often the party concerned would simply not have adverted to this question. Whether the proscribed purpose has been proven may be a matter of inference from all the circumstances, including the objective evidence: Universal Music v ACCC 131 FCR, at 588-589 [256], 589-590 [259]---[261]. 2429 Nor does the conclusion I have reached mean that the impossibility of the alleged contravenor achieving its objective immunises it against a contravention of s 45(2) of the TP Act based on an anti-competitive purpose. The fact that the alleged contravenor could never have effectuated its objective, for example because the regulator had already intervened or because target corporations were resistant to threats or blandishments, is not necessarily fatal to the existence of the practice proscribed by s 45(2). 2430 The question posed by s 45(2)(a)(ii) and (b)(ii), in my view, is whether the object sought to be achieved by the alleged contravenor, if effectuated, is capable of substantially lessening competition. If so, a contravention of s 45(2) may be made out regardless of whether the alleged contravenor appreciated that the objective, if achieved, would substantially lessen competition in any existing market. On the other hand, if the objective, even if achieved, was incapable of substantially lessening competition in an existing market, no contravention of s 45(2)(a)(ii) or (b)(ii) will be established. As News v South Sydney explains, the purpose with which s 45(2) is concerned is the end sought to be achieved. The end sought to be achieved will not usually be framed by the alleged contravenor in terms of a particular market. More commonly, the objective will be framed more prosaically, such as deterring retailers of recordings from lawfully engaging in parallel importation of the product. • Secondly, the Court must inquire whether the object sought to be achieved, if effectuated, was realistically capable of substantially lessening competition in any relevant market. If so, a contravention of s 45(2) may be made out. If not, no contravention can be established. The critical factual issue is the object that party sought to achieve by including the relevant provision in the contract. Once identified, the question is whether the object, if actually achieved, was realistically capable of substantially lessening competition in an existing market. 2433 Seven's purpose case rests on the contention that the parties to the Master Agreement Provision and to the other contracts upon which Seven relies had the object of ' killing C7 ' --- that is, eliminating C7 as an entity capable of carrying on business in the various pleaded markets. I have found that the only pleaded market that existed at the times the Master Agreement or other contracts or arrangements were made (or the provisions given effect) was the retail pay television market. Thus, assuming Seven can establish that the parties had the alleged object or purpose of killing C7, the question is whether that was an object or purpose which, if effected, was realistically capable of substantially lessening competition in the retail pay television market. 2434 In Chapter 12, I have found that neither the Master Agreement Provision nor any of the other provisions relied on by Seven was likely to have the effect (in the sense that there was a real chance they would have the effect) of substantially lessening competition in the retail pay television market. These findings were made on the assumption that the provisions were likely (in the same sense) to have the effect of causing C7 to cease business because the acquisition of both the AFL and NRL pay television rights by News and Fox Sports would have denied C7 inputs essential to its survival. Any lessening was going to occur in any event. 2435 In my view, these considerations must be taken into account in assessing Seven's purpose case under s 45(2) of the TP Act . That case rests on the contention that each of the Consortium Respondents had the objective of killing C7. For present purposes I assume that the factual contention can be made out (this factual issue is addressed for Telstra in this Chapter and for the other Consortium Respondents in Chapter 15). 2436 The critical question, then, is whether that objective, assuming it to have been carried into effect, was realistically capable of substantially lessening competition in the retail pay television market. The answer to that question is, in my opinion, no. The demise of C7 would not have led to any substantial lessening of competition in the retail pay television market. Any lessening of competition in that market would have occurred in any event. In other words, regardless of C7's fate, Optus would have ceased to provide even weak competition to Foxtel in the retail pay television market. 2437 Seven does not seem to make any submission in support of its pleaded case that the Consortium Respondents had the objective of killing C7 in order to prevent it entering the retail pay television market via the Telstra Cable. Be that as it may, I have found that C7 never had any genuine intention to avail itself of retail access via the Telstra Cable. Thus the demise of C7 would not have prevented it entering the retail pay television market since it had no intention of doing so in any event. 2438 For these reasons, Seven's purpose case under s 45(2) must fail. This conclusion applies to each of the six provisions on which Seven relies for its case. 14.8 Shared Purpose? Nonetheless, I propose to do so. In this section, I explain why Seven cannot make out that the parties to the Nine Put Provision, the News-Nine Licence Provision, the Rights Sub-Licence Provision and the NRL Bidding Agreement Provisions had the shared purpose of substantially lessening competition. For reasons I shall explain, the News-Foxtel Licence Provision falls into a separate category. 2440 In the following section, I consider whether the parties responsible for the inclusion of the Master Agreement Provision in the Master Agreement had the shared purpose of substantially lessening competition. This requires an assessment of Telstra's purpose. It follows that if one or more parties responsible for the inclusion of the provision in the contract does not share the proscribed anti-competitive purpose, there can be no contravention of s 45(2). 2442 The Nine Put was entered into between News and Nine on 14 December 2000. Nine agreed that, if required by News, it would acquire from News certain of the AFL free-to-air television rights. Seven identifies the Nine Put Provision as the term in the Nine Put stipulating that the licence agreement between News and Nine would require Nine to pay $23 million per annum (plus adjustments) and contribute contra, in return for the entitlement to take exclusive rights to three AFL matches in each round and certain other benefits. 2443 Seven pleads that News included the Nine Put Provision in the Nine Put and that it had the purpose of substantially lessening competition in the four markets identified by Seven. No allegation is made that Nine, the other party to the contract, shared the proscribed purpose. 2444 Seven does not appear to explain why a finding should be made that only News was responsible for the inclusion of the relevant provisions in the Foxtel Put. In any event, I am not satisfied that I should make such a finding. This was not a case like ASX v Pont Data , where one party to a contract imposed a provision on the other, against the express wishes of the latter. On the contrary, Nine was a willing party to the Nine Put. Although it was News that could trigger the requirement that Nine take the defined AFL free-to-air television rights, both parties understood that News would act in this way if and when it acquired the AFL broadcasting rights. The Nine Put Provision, as identified by Seven, was of benefit to Nine since, in return for its promise to pay a fee, it effectively received the licence to televise three AFL matches exclusively live each week. Nine was jointly responsible with News for including the Nine Put Provision in the Nine Put. 2445 For these reasons, I conclude that Seven has not shown that the Nine Put Provision had the purpose of substantially lessening competition within the meaning of s 45(2) of the TP Act . It follows that Seven has not made out that the News-Nine Licence Provision had the purpose of substantially lessening competition within the meaning of s 45(2) of the TP Act . Seven pleads that the Rights Sub-Licence Agreement contained a provision that News would, upon acquiring the AFL broadcasting rights, sub-license the AFL pay television rights to Foxtel and the AFL free-to-air television rights to Nine and Ten. In Chapter 13 ([2265]ff), I find that Seven has established the existence of the Rights Sub-Licence Agreement as pleaded. 2448 Seven alleges that the purpose of News and Foxtel in entering into the Rights Sub-Licence Agreement, which incorporated the Rights Sub-Licence Provision, was a substantial lessening of competition. No allegation is made that Nine and Ten, both parties to the agreement, shared that purpose. 2449 In my opinion, there is no basis for finding that only News and Foxtel were responsible for including the Rights Sub-Licence Provision in the agreement. Each of Nine and Ten, so far as the evidence goes, freely entered into the agreement and agreed to the terms identified by Seven as the Rights Sub-Licence Provision. Each stood to benefit from those terms, even though the benefits were accompanied by reciprocal obligations. I therefore conclude that Seven has not made out its purpose case in relation to the Rights Sub-Licence Provision. It alleges that Foxtel and Telstra, but not Fox Sports, had the purpose of substantially lessening competition in entering into the agreement containing the NRL Bidding Agreement Provisions. 2451 The same reasoning that applies to the other provisions also applies to the NRL Bidding Agreement Provisions. Seven seeks to meet the problem by submitting that officers of Fox Sports participated in the teleconference of 13 December 2000. But this fact cannot overcome the absence of a pleading that Fox Sports shared the alleged purpose of Foxtel and Telstra. 14.9 Shared Purpose? Seven submits that News was responsible for formulating both the AFL and NRL Proposals and that the Master Agreement Provision resulted from the ' capitulation of Telstra '. This is said to bring the present case within the principle applied in ASX v Pont Data . 2453 The inclusion of the Master Agreement Provision in the Master Agreement (leaving aside the question of whether the two were co-extensive) was not the responsibility of News alone. Section 4F of the TP Act speaks of a provision being ' included in the contract ' for a particular purpose. It does not speak of a provision being formulated by a party for a particular purpose. The fact that one party has formulated or drafted a provision does not necessarily mean that that party is exclusively responsible for including the provision in the contract. As I have explained, the facts of ASX v Pont Data involved a term being imposed by one party to a bipartite contract on the other party, against its will. 2454 The Master Agreement, including the understanding comprising the Master Agreement Provision, was the product of negotiations among the four parties. Specifically, Telstra's participation in the understanding was the product of negotiations and discussions principally between Mr Akhurst and Mr Philip, but also at the teleconference in which Dr Switkowski participated. Telstra's assent to the understanding may have been procured, at least in part, by Mr Philip's deliberate misrepresentations in the fax of 9 December 2000. But in no sense could its assent be described as a capitulation. Telstra, represented by Dr Switkowski and Mr Akhurst, formed the view that there were good commercial reasons for Telstra to support the Master Agreement Provision. 2455 I find that Telstra was jointly responsible with the other parties to the teleconference for the inclusion of the Master Agreement Provision. It follows that if Telstra did not have the purpose of substantially lessening competition, Seven cannot establish that the Master Agreement Provision had the purpose proscribed by s 45(2) of the TP Act . 14.9.2 Did Telstra Have the Proscribed Purpose? Seven seeks to establish that Telstra joined in that purpose when agreeing to the Master Agreement Provision. Seven does not say that Telstra itself sought the objective of killing C7, but that it participated in the acquisition of the AFL and NRL pay television rights (by which I assume it means the Master Agreement Provision) knowing that the acquisition was designed, at least in part, to bring about the death of C7. 2457 Seven's submissions appear to assume that Telstra can be found to have had the purpose proscribed by s 45(2) of the TP Act if it knew that the Master Agreement Provision was intended by News to kill C7, even if Telstra itself did not have that objective. Having regard to the comments made by Wilcox J in CUB v Bond Brewing ([2398]), its is far from clear that the assumption is well-founded. It is certainly arguable that knowledge by one party, when it agrees to a contract or arrangement, that another party has a proscribed purpose does not suffice, of itself, to attribute the same purpose to the first party. The difficulty is not resolved by Seven's use of the ambiguous expression ' joined in ' in its Reply submissions. 2458 I shall, however, proceed on the basis that if Telstra agreed to the Master Agreement Provision, knowing that News, Foxtel and PBL had the purpose of substantially lessening competition, it also had the purpose proscribed by s 45(2) of the TP Act . When considering whether a corporation has entered into, or given effect to, a contract with the subjective purpose of substantially lessening competition, whose thought processes are to be taken into account in making the assessment of purpose? 2460 As the Privy Council explained in Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500 , the search is not for the ' directing mind and will ' of the corporation. Rather the task is to apply the relevant ' rules of attribution ' that determine which acts count as those of the corporation. That in turn depends on the proper construction of the substantive rule. 2461 Section 45(2) of the TP Act, read with s 4F, directs attention to the subjective purpose of the corporation or corporations responsible for including a provision in a contract. To determine the purpose of the corporation it is necessary to ascertain the persons within the corporation who made the decision to include the provision in the relevant contract. In a particular case this might involve questions of authority under the corporation's constitution, but no such issue arises here. The question is who were the decision-makers within Telstra responsible for the inclusion of the Master Agreement Provision. 2462 In my view, the evidence clearly establishes that the decision-makers within Telstra in relation to Telstra's commitment to the Master Agreement Provision were Dr Switkowski and Mr Akhurst. Seven, anticipating a finding that neither Dr Switkowski nor Mr Akhurst had the objective of killing C7, seeks to characterise Mr Greg Willis as a decision-maker. Seven's Reply Submissions point out that Mr Willis was present at the Foxtel Management board meeting of 9 November 2000 which gave approval in principle to Foxtel entering a put option at a fee of $17.5 million per annum for three pay television games per week. 2463 It is important to bear in mind that there was a serious division of opinion within Telstra as to the commercial value to Foxtel of acquiring the AFL pay television rights for $30 million per annum by means of News' exercise of the Foxtel Put. Mr Fogarty and Mr Greg Willis, among others, were opposed to Telstra supporting the News bid, even at a fee of $17.5 million per annum. They were also opposed to an increase in that figure. Mr Willis wrote to Mr Philip as late as 8 December 2000 expressing the view that Telstra was not comfortable moving beyond the proposal agreed to at Foxtel's board meeting of 9 November 2000. 2464 Mr Greg Willis reported to Mr Akhurst. Mr Akhurst was the decision-maker within Telstra who determined that Telstra should give support in principle to the Foxtel Put proposal (in its then form) at the Foxtel board meeting of 9 November 2000. That decision made ' in consultation with Messrs Rizzo and Willis ', but it was Mr Akhurst's decision. 2465 The spokespersons for Telstra at the teleconference of 13 December 2000 were Dr Switkowski and Mr Akhurst, although the notes recorded Mr Willis as making a contribution to the discussion. The decision that had to be made at that meeting was quite distinct from the decision of the Telstra board on 9 November 2000, since the board had endorsed in principle a licence fee of $17.5 million per annum, not the $30 million per annum under discussion at the teleconference. Mr Willis participated in the teleconference, but at a different location from Mr Akhurst and Dr Switkowski. Mr Akhurst conveyed Telstra's support for the terms of the Fox Sports bid for the NRL pay television rights. When Telstra went ' off-line ', it was Dr Switkowski who made the critical decision to commit Telstra to the terms of the Foxtel Put. By this time, Mr Willis' memorandum, if not irrelevant, had been overridden. As Dr Switkowski said, ' Mr Willis didn't get a vote '. Indeed, he did not participate when the Telstra representatives went off-line to determine the appropriate course of action in relation to the AFL pay television rights. Mr Willis was not one of Telstra's decision-makers in relation to the Master Agreement. First, as I have explained, I accept Dr Switkowski's evidence as to his state of mind and reasoning process in giving Telstra's support to the bids for the AFL and NRL pay television rights. I have made specific findings concerning these matters in Chapters 8 and 9. Even Seven's Closing Submissions acknowledge that Dr Switkowski's denial that he was unaware of the ' kill C7' statements made by Mr Blomfield to Telstra officers ' probably [had] the ring of truth '. The killing of C7 formed no part of his objective in committing Telstra to the Master Agreement Provision. More particularly, Dr Switkowski was not aware that any other party to the Master Agreement had the objective of killing C7. He did not commit Telstra to the Master Agreement Provision knowing that it was designed to kill C7. 2468 Secondly, although I have some reservations about aspects of Mr Akhurst's evidence, I accept the substance of his explanation as to his state of mind and objectives in deciding to support Fox Sports' bid for the NRL pay television rights and (to the extent his contribution was important) the Foxtel Put in relation to the AFL pay television rights. While I consider that Mr Akhurst appreciated that there was a risk that if Seven lost the AFL pay television rights C7's survival would be threatened, he saw this as an incident of the ordinary processes of competition for the AFL pay television rights. 2469 Mr Akhurst wanted Foxtel to have the AFL pay television rights because he thought they were important for the success of the business and because he thought the rights would give Foxtel greater control over its own destiny. He was influenced in his judgment by Mr Chisholm's strong advocacy of Foxtel acquiring the AFL pay television rights and by Dr Switkowski's assessment of the benefits flowing from Telstra's support of the Foxtel Put. Mr Akhurst also saw benefits to Telstra in its role in supporting the Fox Sports bid. Mr Akhurst was not aware that News, PBL or Foxtel had the objective of killing C7 (if they did). His objective was to secure commercial advantages for Foxtel and Telstra. 2470 Thirdly, a good deal of the cross-examination of Dr Switkowski and Mr Akhurst appeared to be directed to showing that Telstra's decision to agree to the Master Agreement Provision was motivated, in part at least, by a desire to improve relations with News and PBL. It was put to both that Telstra was interested in Foxtel expanding the scope of its activities, thus increasing the value of Telstra's interest in Foxtel. Dr Switkowski and Mr Akhurst each accepted that one factor in their decision was a desire to improve relations between Telstra and the other Foxtel partners. Perhaps in other circumstances the desire to improve the relationship might have provided a motive for Telstra to adopt or support News' or PBL's anti-competitive objectives (assuming they existed). But the evidence does not demonstrate that in this case the desire to improve relations with the Foxtel partners prompted Dr Switkowski or Mr Akhurst to adopt or support any anti-competitive objective that News or PBL may have sought to achieve. Some of the points, in effect, have been answered by the findings I have made. For example, although it is true that Mr Willis was very concerned about the validity of Foxtel's modelling, Dr Switkowski formed his own assessment that the assumptions, although aggressive, could be achieved in practice. 2472 In this connection, Seven's submissions sometimes appear to proceed on the basis that changes to a financial model frequently reflect a manipulative and perhaps dishonest determination to reach a pre-determined ' bottom line '. It is quite clear from the evidence that modelling can serve a number of purposes. One is to predict likely financial outcomes given particular assumptions which represent the best estimate that can be made of the future effect of crucial variables, such as penetration rates, subscription fees and programming costs. Another is to identify the targets that must be achieved in order to produce profitable outcomes. Obviously enough, altering the assumptions underlying a particular model may have a malign purpose, depending on the circumstances. But reconstituting a model so as to change a negative NPV to a positive NPV is not necessarily a cynical exercise. Indeed, if the changes in assumptions are clearly identified, it is hard to see how a sophisticated reader can be misled. It is odd that Seven should be so critical of the modelling within News and Foxtel, when it was quite prepared to make offers involving commitments of hundreds of millions of dollars with no modelling at all. 2473 Seven relies on the fact that Dr Switkowski and Mr Akhurst were aware that Optus and Austar could terminate their content supply agreements if Seven lost the AFL pay television rights. But that fact is in no way inconsistent with both of them being unaware of any purpose News, PBL and Foxtel may have had of substantially lessening competition. Similarly, as I have already explained, the fact that Mr Akhurst appreciated that the loss of the AFL pay television rights created a risk that C7 might not survive is consistent with him believing (as he did) that any such consequence would flow from the ordinary processes of competition in relation to the AFL pay television rights. 2474 Perhaps Seven's principal ' key point ' is that Telstra was informed by Mr Blomfield in two conversations with Mr Fogarty in October or early November 2000 that Foxtel's purpose was to kill C7. (The second conversation included other Telstra officers. ) Seven also points to two emails from Mr Brenton Willis to Mr Fogarty, on 11 and 13 December 2000 respectively, which refer to Mr Blomfield having stated to Telstra that Foxtel had the objective of killing C7. 2475 The fundamental difficulty facing Seven is that there is no evidence that Mr Willis' emails came to Mr Akhurst's attention. The emails were not forwarded to him and they were not referred to in any subsequent correspondence that came to his attention. Mr Akhurst denied in his written statement that he became aware of the emails at the material times. Mr Akhurst also denied that he had been told that Foxtel or News had the wider objective of killing C7 or that Mr Blomfield had made statements to that effect. 2476 Mr Akhurst was not seriously challenged on his evidence that he had not seen the emails. This is not surprising. The second email was sent to Mr Fogarty nine minutes before the teleconference of 13 December 2000 actually commenced. At the time, Mr Fogarty was in Sydney and Mr Akhurst was with Dr Switkowski in Melbourne. Mr Fogarty had the opportunity to refer to Mr Willis' first email in his (Mr Fogarty's) briefing papers, forwarded to Mr Akhurst on 13 December 2000. Mr Fogarty did not do so. Indeed, Mr Fogarty (who was a party to both conversations with Mr Blomfield) never referred to the conversations in any written or electronic communications with Mr Akhurst. 2477 Mr Akhurst was asked in cross-examination, somewhat obliquely, whether anybody at Telstra had mentioned to him that a Foxtel representative had indicated that Foxtel wanted to kill C7. He denied that any such thing had been said and was not pressed further on the issue. Because of my reservations about aspects of Mr Akhurst' evidence, I have carefully considered whether I should accept his denial, notwithstanding that the issue was not pressed in cross-examination. I have taken into account that Telstra called neither Mr Fogarty nor Mr Brenton Willis as witnesses. In the end, however, the issue turns on whether I accept Mr Akhurst's denial. 2478 In my view, Mr Akhurst's denial receives support not only from the fact that Mr Fogarty chose not to comment in writing or via electronic means on Mr Willis' emails after 11 December 2000, but from the absence of any reference to the conversation with Mr Blomfield in any of Mr Fogarty's communications to Mr Akhurst. There are many possible reasons why Mr Fogarty chose not to refer to Mr Blomfield's comments. Perhaps the most obvious is that he gave the comments little credence or that he understood them to be hyperbole on Mr Blomfield's part. 2479 It is of course possible that Mr Fogarty did not refer to the conversations in memoranda or emails because he informed Mr Akhurst verbally. Given the strong differences of opinion on the question of the Foxtel Put and the indication that Mr Fogarty was by no means shy in expressing his views, I think this is very unlikely. In any event, I accept Mr Akhurst's denial that he was told of Mr Blomfield's comments. This conclusion applies to the News-Foxtel Licence Provision as it does to the other provisions on which Seven relies. 2481 I have also concluded that Seven cannot make out its case in relation to any of the provisions, other than the News-Foxtel Licence Provision, because it has not demonstrated that all parties responsible for including the provision in the relevant contract shared the proscribed purpose. The reasoning thus far does not apply to the News-Foxtel Licence Provision because Seven alleges that both News and Foxtel (Sky Cable and Telstra Media) had the purpose of substantially lessening competition. 2482 If I am wrong in my construction of s 45(2) of the TP Act , it will be necessary to determine whether News and Foxtel (and indeed PBL) had the purpose attributed to them by Seven. It is to this issue that I now turn. 15 SEVEN'S PURPOSE CASE AGAINST NEWS, FOXTEL AND PBL [2483] 15.1 Purpose of Destroying a Competitor [2485] 15.1.1 Competition and Competitors [2487] 15.1.2 Statutory Prohibitions [2491] 15.2 News' Evidence on Purpose [2495] 15.3 Seven's Principal Contentions [2500] 15.4 A Strategy in 1998? [2503] 15.4.1 Context [2504] 15.4.2 Mr Macourt and the Financial Models [2505] 15.4.3 Four Further Matters [2518] 15.4.4 Findings [2527] 15.5 'Kill C7' [2529] 15.5.1 Mr Blomfield's Comments [2529] 15.5.2 Usage of 'Kill C7' [2531] 15.5.3 Significance of the Comments [2536] 15.6 Overbidding for the AFL Pay Television Rights? [2545] 15.6.1 Seven's Contention [2545] 15.6.2 Five Difficulties with Seven's Contention [2550] 15.6.3 Models [2560] 15.6.3.1 Flip-Flop [2563] 15.6.3.2 Penetration Rates and NPV [2567] 15.7 Assessment [2580] 15.8 Inferior Option? [2588] 15.9 Direct Acquisition of the AFL Pay Television Rights [2595] 15.9.1 Was the Acquisition Inexplicable? However, such findings will be important if the construction I have given to s 45(2) is incorrect. Moreover, findings as to the purpose of News, Foxtel and PBL may be significant for Seven's case that Foxtel took advantage of its substantial market power in the retail pay television market in contravention of s 46(1) of the TP Act (dealt with in Chapter 16). As I have explained in Chapter 12, the findings also have some bearing on questions of market definition. 2484 I therefore consider in this Chapter whether Seven has established that News, Foxtel and PBL had the purpose alleged against them, namely to ' kill C7 ' in order to achieve dominance for Fox Sports and thereby substantially lessen competition in the various pleaded markets. I have outlined in Chapter 14 Seven's general submissions in relation to the purpose of News, Foxtel and PBL, although I supplement the outline in this Chapter. The oddity stems from the assumption, seemingly implicit in Seven's submissions, that the substantial objective of destroying a competitor constitutes, of itself, the purpose of substantially lessening competition. 2486 If this assumption is indeed implicit in Seven's submissions, it seems to me to encounter two obstacles. The first is a proposition recognised not only by the Respondents' experts (at considerable length) but, more importantly for my purposes, by the High Court. The proposition is that competition is necessarily ruthless and that competitors often try to injure and even eliminate each other. The second is that when Parliament wishes to characterise a purpose of eliminating or substantially damaging a competitor as anti-competitive behaviour, it says so specifically and defines the circumstances in which the behaviour is prohibited. Competition by its very nature is deliberate and ruthless. Competitors jockey for sales, the more effective competitors injuring the less effective by taking sales away. Competitors almost always try to "injure" each other in this way. This competition has never been a tort ... and these injuries are the inevitable consequence of the competition s. 46 is designed to foster'. Competition damages competitors. If the damage is sufficiently serious, competition may eliminate a competitor. The critical question in the present case is whether [Boral's] behaviour involved the taking advantage of a substantial degree of power in a market. If it did, then acting with one or more of the purposes set out in s 46(1) was illegal. If it did not, then [Boral's] conduct amounted to lawful, vigorous, competitive behaviour. Plaintiffs treat this as a smoking gun. Far from it, such a statement reveals [the firm] to be a price taker. In perfect competition, firms must sell at the going price, no matter what their own costs are. High costs do not translate to the ability to collect a high price; someone else will sell for less. Monopolists set price by reference to their costs ... competitors set price by reference to the market. If the objective is achieved, competitors will necessarily be damaged. If it is achieved to a sufficient extent, one or more of them may be eliminated. That is inherent in the competitive process. The purpose of the statute is to promote competition; and successful competition is bound to cause damage to some competitors. Professor Hovenkamp, a leading antitrust scholar, argues that jury trials in the United States are an unfortunate way to decide contested issues in complex anti-trust cases. In the minds of many jurors "intending" to knock out a rival sounds evil. The fact is that such intentions are the subject of hundreds of business seminars every day. In markets of every type sales personnel are urged to "destroy" or "kill" the competition or to sink new rivals before they have a chance. But this is nothing more than the rhetoric of competition, which anti-trust seeks to preserve but jurors often misinterpret'. A corporation contravenes the TP Act if it takes advantage of a substantial degree of market power for the purpose of eliminating or substantially damaging a competitor: s 46(1)(a). (Seven does not allege that Foxtel took advantage of its market power for that purpose, although it relies on the other purposes identified in s 46(1)). Certain kinds of behaviour, such as so-called secondary boycotts, may contravene the TP Act if the corporation engages in the behaviour for the purpose of causing substantial loss or damage to the business of another person: s 45D(1)(a)(ii). 2492 There is, however, no general provision in the TP Act which equates an intent to cause harm to a competitor with having the ' purpose of ... substantially lessening competition ' (the language used in s 45(2)(a)(ii) and (b)(ii)), even if the competitor has a significant share of the relevant market. If it were otherwise, the making of a contract for the distribution of a technologically superior product, designed (literally) to decimate the sales of a competitor and to destroy the competitor, would contravene s 45(2)(a) of the TP Act . It is difficult to see why, in the absence of substantial market power, a corporation which seeks legitimate commercial objectives such as the manufacture of superior products should contravene the TP Act , even if it acts with the deliberate intent of harming competitors. 2493 In the course of oral submissions, I asked Mr Sumption whether there was a difference between two situations. The first is where a corporation decides upon a course of action, such as the acquisition of sporting rights, notwithstanding that its officers contemplate that one consequence of the acquisition will be to force a competitor out of business or to reduce its operations. The second is where the officers of the corporation actively desire that the competitor be forced out of business. You can say, "I would be delighted to be rid of these people," but nevertheless rebut a suggestion that a transaction that was likely to have that effect was designed to do so. It is very difficult to rebut that suggestion if there is actually no other commercial rationale or no plausible rationale for entering into that [transaction]'. The Respondents appear to be content to approach the question of purpose on this basis. News submits that the relevant decision-makers for News (in its own capacity and as an equal shareholder in Sky Cable, one of the Foxtel partners) were Mr Macourt and Mr Philip, although primarily the former since Mr Philip reported to him. News contends that the evidence of Mr Macourt and Mr Philip demonstrates that killing C7 was not a substantial part of News' purpose. In that event I would have caused News to exercise its put agreement option to FOXTEL. I considered the acquisition of the AFL rights ultimately by FOXTEL to be in its interests and therefore the interests of News. As a director of FOXTEL my purpose in entering into the FOXTEL put agreement was to acquire on behalf of FOXTEL the AFL pay TV rights. My purpose in procuring News to enter into the Nine and Ten put options ... was to enable News in the event that it was successful in acquiring the free to air rights from the AFL to transfer those rights or sublicense those rights to Nine and Ten and thereby remove the exposure of News to the AFL in respect of the free to air rights'. --- I don't think I ever --- I don't think I think about it in terms of having as little competition. I wanted FoxSports to be successful and to be the most successful sports business possible. If that meant other channels were unsuccessful, then so be it'. The explanation, according to Seven, lies in the decision by News and Foxtel to pursue a strategy of killing C7 as an entity capable of competing in any of the relevant markets. 2501 Seven challenges the evidence of Mr Macourt and Mr Philip. However, Seven mounts its challenge primarily by pointing to many communications and transactions that it says illustrate or demonstrate that News and Foxtel had a substantial objective of killing C7 and that PBL aligned itself with that objective. 2502 It is convenient to commence by examining three propositions that are central to the way Seven puts its case. The reliability of the claims made by Mr Macourt and Mr Philip can then be assessed in the context of the relevant events. 15.4 A Strategy in 1998? It needs to be borne in mind that there is nothing inherently wrong with the objective of becoming a dominant supplier of a product or service, provided that attaining that objective does not require the use of anti-competitive means or conduct in contravention of the TP Act . In order to assess the cogency of Seven's contention that News had formulated an anti-competitive strategy it is necessary to place the events of mid-1998 in context. Thus News' interest in the rights pre-dated C7's entry into the business of supplying channels with sporting content. • Prior to its collapse on 5 May 1998, Australis supplied what became the Fox Sports channels to Austar. • From 13 May 1998, Austar supplied Foxtel with what became the Fox Sports channels under an interim licence. This arrangement continued until 2002 because the dispute among the Foxtel partners prevented a long-term arrangement for the supply of Fox Sports to Foxtel being finalised. • Seven's business plan of May 1998 contemplated that its sports channel would be shown on both Optus and Foxtel. • On 12 June 1998, News bought Australis' 50 per cent interest in Fox Sports from the receiver, thereby acquiring 100 per cent of the shares in Fox Sports. • Prior to its liquidation on 29 June 1998, SportsVision supplied AFL content to Optus. After the liquidation, production of the SportsVision channels moved to Seven's sports channels. • With the collapse of SportsVision, Optus feared the consequences of the loss of Australian sports content and asked News for the non-exclusive supply of Fox Sports to Optus. • In June 1998, News negotiated with Optus for the supply of Fox Sports. The negotiations were frustrated by Telstra's opposition to the proposed arrangement. Telstra was motivated by its concern about the impact on Foxtel of supplying Fox Sports content to Optus, a competitor of Foxtel. • On 30 June 1998, the C7-Optus CSA was executed. • From about mid-1998, parties interested in the AFL pay television rights thought there was a likelihood that the AFL would dispose of the 2002-2006 rights within a few months. Mr Macourt was closely questioned by Mr Sumption about the financial models prepared by Mr Parker under his direction in May and June 1998. The cross-examination confirmed that the models were prepared on two principal alternative hypotheses: that Fox Sports would be supplied exclusively to Foxtel and Austar, or that Fox Sports would be supplied non-exclusively to all three retail pay television platforms. The modelling showed that the second alternative was likely to be very much more profitable than the first. The modelling also incorporated different assumptions as to the rate of inflation of sporting rights costs, depending on whether there was an alternative sports programmer. Seven maintains that the modelling shows that News had a strategy for establishing Fox Sports as a monopoly supplier of sports programming. 2506 Seven also points to the fact that in 1997 Optus and News had worked towards a single content company to supply all pay television platforms. In addition, it relies on clauses inserted into the June 1998 proposals for the non-exclusive supply of Fox Sports to Foxtel and Optus, that would have prevented the retail platforms from incorporating programming not supplied by Fox Sports, with limited exceptions such as ESPN and AFL programming. Another proposed clause would have required Optus and Foxtel to provide non-exclusive pay television rights to Fox Sports for all AFL programming on the same terms as it was supplied to Optus and Foxtel. 2507 I am not persuaded that this and the other material relied on by Seven establish that in 1998 News or Mr Macourt had embarked on a strategy of destroying C7 as a means of establishing the dominance of Fox Sports. I leave to one side the fact that if there was any such strategy it plainly did not succeed, since C7 secured a long-term supply agreement with Optus on 30 June 1998. It is, however, important to bear in mind that in 1998 the pay television industry was not only new in Australia, but in a considerable state of flux. 2508 Following the demise or impending demise of Australis and SportsVision, Fox Sports was seeking to supply all three pay television platforms. Seven contemplated that it might achieve the same result through its new sports channel (at least for so long as it retained the AFL pay television rights). Fox Sports' objectives were frustrated by Telstra's opposition to any content supply arrangement between Fox Sports and Optus. However, News' conduct, in my view, did not go beyond the deliberate, ruthless and aggressive behaviour that is characteristic of competition, as distinct from conduct which had the objective of destroying C7. 2509 Mr Macourt frankly acknowledged that, in 1998 and later, he thought that Fox Sports would be better off financially without competition from C7 and that he would have preferred it if C7 had gone out of business. I also think it clear enough --- indeed News does not deny --- that News was concerned in 1998 about possible inflation in the costs of acquiring sports rights. Mr Macourt denied, however, that his preference for the disappearance of a competitor (hardly a unique hope among business people) was a factor in News' strategy for the pay television business between 1998 and 2002. 2510 If attention is focussed on 1998, I see no conflict between Mr Macourt's acknowledged preference that C7 should go out of business and his assertion that News' commercial strategy was motivated by a determination to maximise Fox Sports' position in the market by legitimate commercial means, rather than a determination to kill C7. Mr Macourt explained the assumptions in the financial modelling on the basis that, at the time, there were only two relevant hypotheses: either there would be competition for sports rights or there would not. If the latter, he considered at the time that it was reasonable to expect a lower rate of inflation in the cost of sports rights. 2511 The evidence suggests that if Fox Sports had succeeded in its efforts to supply content to Optus, the latter may not have agreed to take C7. Mr Keely of Optus, for example, gave evidence that in June 1998 he regarded C7's (potential) sports programming as inferior to that of Fox Sports and that he would have preferred to take Fox Sports. Mr Gammell said that if he had not been able to secure an MSG from Optus, he would not have recommended that Seven proceed with the C7 business. Thus a ' dominant ' position for Fox Sports as a supplier of high quality premium sports content, at least in the short term, was by no means out of the question. 2512 Mr Macourt rejected the proposition that if Fox Sports managed to supply all three platforms a competitor would be unable to create a rival sports channel. 2513 The plausibility of Mr Macourt's denial that his objective was to kill C7 is enhanced by his opposition, expressed at the Foxtel Management board meeting of 8 July 1999, to the direct acquisition by Foxtel of the AFL pay television rights. It would be very curious indeed, had Mr Macourt been party to a plan designed to destroy C7, that he would have opposed a necessary (but not sufficient) step towards achieving the desired objective. Seven seeks to discount the significance of Mr Macourt's opposition at this stage because (as he said in his evidence) it was based on his belief that Foxtel was unlikely to succeed in any bid. But if Mr Macourt was committed to the objective, as Seven insists, it is hardly likely that he would have been deterred at the outset by the practical difficulties facing Foxtel in acquiring the AFL pay television rights. 2514 There is no doubt that News prepared financial models on the assumption, among others, that there might be only one supplier of Australian premium sports content. But this was a distinct possibility, at least until the execution of the C7-Optus CSA, without News engaging in any anti-competitive behaviour. Prior to the execution of the C7-Optus CSA, C7's position as a supplier of premium sports content was uncertain. 2515 As Seven points out, the letter of 23 July 1998 from Mr Macourt to Mr Moriarty of Telstra attached models showing the same assumptions as to the inflation of sports rights costs as the earlier models. By this time, C7 and Optus had entered into the C7-Optus CSA, a fact referred to in the letter. Thus it was unlikely that Fox Sports could have assumed that in the future there would be no competition for sports rights from other channel suppliers (leaving aside free-to-air operators). 2516 I do not, however, interpret the models or the letter as indicating that the C7-Optus CSA had stimulated News to develop or refine a strategy of acquiring the AFL pay television rights in order to destroy C7. The most likely explanation for the models incorporating different rates of sports rights inflation depending on the existence or absence of competition is that this approach had been adopted in the earlier models. I do not think that Mr Macourt intended the letter to convey that News was planning to acquire the AFL pay television rights in order to remove C7 as a competitor. The letter uses the aggressive language of competition and talks of ' several important rights ' becoming available, not merely the AFL pay television rights. Moreover, it would have been extraordinarily foolish of Mr Macourt to propose to Mr Moriaty, at a time when News and Telstra were in conflict, an anti-competitive strategy specifically designed to remove a competitor. I do not assess Mr Macourt as likely to have acted so foolishly. 2517 I should add that Mr Macourt's evidence satisfies me that he could not recall the details of particular assumptions or why they had been adopted in the models (including an assumption in one model that the AFL pay television rights could be acquired for what Mr Macourt, in the witness box, regarded as a plainly unrealistically low price). The absence of Mr Parker from the witness box, in my opinion, carries the matter no further. Mr Parker was an accountant whose role was to prepare models based on assumptions supplied to him by Mr Macourt and others. There is no reason to think that Mr Parker would have been able to shed further light on the matters upon which Mr Macourt's recollection was imperfect. The first was the drafting of the clauses to which I have referred. This was the work of Mr Philip. As it happened, Telstra made it clear that the provision requiring Fox Sports to approve sporting content on Foxtel was unacceptable and, of course, no agreement was entered into between Fox Sports and Optus. Clearly enough the provision giving Fox Sports the right to approve content was intended by Mr Philip, if accepted by Foxtel and Optus, to prevent C7 being taken on those platforms without the approval of Fox Sports. 2519 Mr Macourt said that he saw the provision as applicable to content supplied by all sports providers over the term of the agreement (not just C7) and as an attempt to protect Fox Sports, by making it a gate-keeper of sports programming for Foxtel. I accept that that was his understanding, although he appreciated that the only channel supplier against whom the provision would be likely to operate in 1998 was C7. There may have been issues about the lawfulness of the clause drafted by Mr Philip (issues have been raised in relation to equivalent provisions in the present proceedings). Nonetheless, I do not think that it, either alone or in combination with other matters relied on by Seven, justifies reaching a conclusion, contrary to Mr Macourt's evidence, that News had decided in 1998 on a strategy of killing C7 in order to achieve market dominance for Fox Sports. 2520 The second matter is Mr Macourt's response to questions concerning his rejection of Seven's proposal for the supply of C7 to Foxtel, made on 7 June 1998 ([598]). Clearly, price was his major (and justifiable) concern. However, Mr Macourt said in evidence that one reason he rejected the offer was because he did not want Foxtel to carry a channel from a competitor (by which he meant Seven, not its sports channel). I accept the qualification Mr Macourt put, namely that it would have been difficult to reject the channel if the price was ' demonstrably good '. The qualification is consistent with Mr Macourt's evidence that he was conscious that, as a director of Foxtel Management, his duty was to make decisions in the interests of the Foxtel Partnership, not simply to act in News' or Fox Sports' interests regardless of the consequences for Foxtel. It follows from this evidence (which I accept represented his understanding of his obligations) that Mr Macourt did not reject the proposal simply because he determined that Foxtel should never take C7. Further, a buyer's distaste for assisting a perceived competitor by declining to take its branded product, whatever issues that may raise in competition law, is not the same as deciding to implement a strategy of destroying the competitor. 2521 The third matter arises out of the negotiations between News and Austar preceding the Fox Sports-Austar CSA of 3 September 1998. In the course of the negotiations, Austar complained in a letter to Optus (which was entitled to sub-license C7 to Austar) that it was being forced to choose between C7 and Fox Sports. As I follow Seven's submission, it argues that the Austar prize gave News a further incentive to eliminate C7. 2522 The Fox Sports-Austar CSA was to continue until 2006. It is somewhat difficult to understand how the prospect of renegotiating a contract that was not due to expire until 2006 could have provided a powerful incentive for News to eliminate C7 in 1998. In any event, Austar decided to acquire both Fox Sports (on basic) and C7/ESPN (on a tier). Despite Austar's protestations, it did not have to select one channel to the exclusion of the other. Moreover, the contemporary documentation relied on by Seven, such as the letter from Messrs Macourt and Philip to Mr Rupert Murdoch of 21 October 1998, is couched in the language of competition, not that of exterminating a competitor. It is true, as Seven points out, that in the lead-up to the Fox Sports-Austar CSA, News refused to permit Austar to compile NRL coverage on any channel of its choosing. But there were commercially justifiable reasons for this stance. 2523 The fourth matter is Seven's claim that the pricing dispute between News and Telstra concerning the supply of Fox Sports to Foxtel was linked to News' objective of killing C7. As I follow Seven's argument, it is that News prevented Fox Sports and C7 from competing against each other for the supply of content to Foxtel, with the objective of destroying C7. This was designed to leave Fox Sports in a dominant position in the market and, presumably, improve its chances of benefiting from the transfer pricing (that is, the diversion of revenue from Foxtel to Fox Sports) which Seven says was incorporated into the terms of the content supply arrangements between Fox Sports and Foxtel. 2524 This argument would have force if the pricing dispute between News and Telstra (later involving PBL) was a subterfuge, designed to mask a plan to drive C7 from the marketplace. However, there can be little doubt that the dispute was genuine and vigorous, if not bitter. News wanted Fox Sports to supply Foxtel at a price substantially higher than Telstra thought was reasonable or appropriate. It is quite possible that News' insistence on the higher price was because it preferred Fox Sports to benefit from its content supply arrangements with Foxtel, if necessary at the expense of Foxtel. In any event, the part that C7 played in the dispute was essentially to be adopted by Telstra as a bargaining chip in its efforts to force down the price paid by Foxtel for the Fox Sports channels. 2525 Mr Macourt agreed that he had adamantly opposed Foxtel taking C7 until the dispute with Telstra was resolved. He was asked by me why he regarded resolution of the dispute as a precondition to Foxtel taking C7. --- So that without a fall-back sports program, I didn't think it was likely that Telstra would pursue that course. But with a fall back I thought there was reasonable probability they would'. It is consistent with the terms of the letter he wrote to Mr Rizzo of Telstra on 30 July 1999 ([747]-[748]), in which he complained of Telstra's apparent desire ' for some inexplicable reason ' to strip Foxtel of the Fox Sports channels and replace them with a sports channel supplied by a free-to-air operator. Moreover, by early 1999 Telstra was indeed contemplating legal action. A Telstra Pay Television Sub-Committee information paper prepared in January 1999 recorded the view that News had breached its good faith obligations by seeking to benefit its own financial interests to the detriment of Foxtel (by seeking to have Foxtel pay an excessive amount for Fox Sports). The paper recommended that legal action be considered. Dr Switkowski confirmed that legal action was actively under consideration at this time. I am not satisfied that News' position, to the effect that Foxtel should not take C7 until resolution of the Fox Sports pricing issue, had anything to do with the asserted objective of killing C7, whether as a means of securing market dominance for Fox Sports or otherwise. While perhaps some of News' tactics conceivably could have attracted scrutiny under the TP Act , I do not think that Mr Macourt, as the decision-maker for News, had the objective attributed to him by Seven. Nor am I satisfied that Mr Philip had that objective. 2528 I should add that PBL did not acquire its interests in Foxtel or Fox Sports until December 1998 (although it had exercised its option in relation to Foxtel in October 1998). Thus in mid-1998, when the modelling took place within Foxtel and Fox Sports negotiated with Optus, PBL had no involvement in either Foxtel or Fox Sports. It therefore was hardly likely to have been party to any objective of killing C7 at this time. These referred to comments made by Mr Blomfield in conversations in late October or early November 2000, that there was a wider objective of killing C7. Telstra's answers to interrogatories, recording Mr Blomfield's comments, were admitted into evidence only against Telstra. However, the emails are evidence that Mr Blomfield made the comments attributed to him in conversations with Mr Fogarty of Telstra. In the absence of Mr Blomfield and Mr Fogarty from the witness box, I accept that the statements to the effect recorded in the emails were made by Mr Blomfield to Mr Fogarty, although due allowance must be made for the lapse of time between the conversations and the sending of the emails more than a month later. (I appreciate that neither Mr Blomfield nor Mr Fogarty can be regarded as within PBL's camp, but the emails were admitted into evidence for all purposes. What is not clear from the evidence is the context in which Mr Blomfield made his remarks to Mr Fogarty and what they were intended to convey. In particular, it is not clear whether Mr Blomfield was expressing his own view, reporting someone else's view, recording Seven's position or even repeating media speculation. Nor is it clear in what sense he was using the expression ' killing C7 '. If Mr Blomfield's use of the expression was unique, or nearly so, his remarks might have particular significance. 2532 Mr Stokes' evidence was not, however, correct. Mr Stokes himself told the ACCC in November 1999 that should Foxtel acquire the AFL pay television rights, it would kill C7. Moreover, Mr Stokes agreed in evidence that the phrase had been used as the equivalent of losing the AFL broadcasting rights. Mr Gammell used the expression in his conversation with Mr Falloon on 4 November 1999 and, indeed, claimed that he had coined the expression. Mr Gammell agreed that he had subsequently used the expression and that it had been employed within Seven to describe what were asserted to be the consequences of Seven losing the AFL pay television rights. Mr Gammell also thought that Mr Stokes ' may well have ' used the expression from time to time. Clearly Seven's senior executives were anxious, in their dealings with the ACCC and others, to link the loss of the AFL pay television rights to drastic consequences for C7's business. 2533 The point is reinforced by the evidence of Mr Wise. 2534 Mr Wise also recalled that the expression had been used in the newspapers. His recollection was accurate. A number of other newspaper articles published at about this time referred to News' bid for the pay television rights (as well as the free-to-air television rights) as being likely to ' blow up ', ' wipe out ' or result in the death of C7. The probabilities are that all the authors of these articles were briefed by Seven in advance of publication and that the briefings included reference to the dire consequences for C7 of the loss of the AFL pay television rights. The answers to interrogatories (admissible only against Telstra) indicate that the conversations occurred in late October or early November 2000. If this is correct, the conversations pre-dated the newspaper articles to which I have referred. On the other hand, there was a gap, apparently of over a month, between the conversations and the emails. During this period, Mr Willis had seen the newspaper commentary and this may well have affected his recollection. Moreover, the expression ' killing C7 ', by late October or early November 2000, had gained wide currency, in no small measure because Seven's senior executives had used it in an attempt to link the potential loss of the AFL pay television rights to drastic consequences for C7's business. 2537 In assessing the significance of Mr Blomfield's comments, it is necessary to take into account that the Foxtel parties did not call him as a witness. As Seven points out, although Mr Blomfield's employment with News was terminated on 18 December 2001, apparently in circumstances involving dissatisfaction with his performance, he signed confidentiality undertakings in his employment contract and in a deed of release of 5 April 2002. In the absence of those undertakings, there would have been no impediment to Seven seeking to interview Mr Blomfield for the purposes of obtaining a statement for use in these proceedings. However, Seven submits that the undertakings prevented Mr Blomfield from divulging any confidential information to Seven's solicitors, even for the purposes of taking a statement for use in the proceedings: see the very carefully reasoned decision of Campbell J in AG Australia Holdings Ltd v Burton [2002] NSWSC 170 ; (2002) 58 NSWLR 464. Moreover, it appears that News' solicitors met with Mr Blomfield in connection with this case, but did not call him as a witness. Thus it appears that News had the opportunity to obtain a statement from Mr Blomfield yet did not seek to adduce evidence from him. 2538 News submits that Mr Blomfield should not be regarded as in its camp because of the circumstances in which his employment was terminated and because in recent years he has had no business connection with News. News also points out that there is evidence that Seven's solicitors communicated with Mr Blomfield over a period of several months, apparently in connection with this case. The content of those communications has not been revealed because Seven has claimed client legal privilege over the communications. 2539 I cannot draw inferences adverse to Seven from its claim to privilege in respect of the communications between its solicitors and Mr Blomfield. Furthermore, I would not readily attribute any impropriety to Seven's solicitors. This point is relevant because Seven's submissions plainly imply that its solicitors were unable to interview Mr Blomfield because of the constraints imposed by the confidentiality provisions in his contracts. In my view, it would have been less than proper for Seven's solicitors to be party to such submissions if they had indeed interviewed Mr Blomfield with a view to his giving evidence in this case. 2540 In the circumstances I have outlined, I think it is appropriate, in the absence of an explanation by News as to why it did not call Mr Blomfield, to regard him as within News' camp and available to be called as a witness. News' failure to call Mr Blomfield therefore lends support to an inference that his comments to Mr Fogarty in late October or early November 2000 reflected his view that News or Foxtel had the objective of killing C7 when seeking to acquire the AFL pay television rights. Furthermore, I think it appropriate to take into account that News' assiduous policy of deleting electronic communications deprived Seven of the opportunity to examine whether News' internal communications shed light on what Mr Blomfield was intending to convey to Mr Fogarty although, as I have already noted, that policy did not apply to communications within Foxtel. 2541 Nevertheless, after giving due weight to the availability of inferences adverse to News, in my opinion the totality of the circumstances I have identified makes Mr Blomfield's comments of limited assistance in determining whether News (or, a fortiori , PBL) had the purpose attributed to it by Seven. Insofar as Seven interprets Mr Blomfield as having asserted that Foxtel's bid (through the Foxtel Put) for the AFL pay television rights was designed to destroy C7, the contemporaneous Foxtel documentation does not directly support that interpretation. (By ' directly ', I mean that, apart from the otherwise equivocal material from which Seven seeks to draw inferences, no emails or other internal Foxtel communications suggest that Foxtel or News had the intention of destroying C7. I shall refer in more detail to that material later. On Seven's case, Mr Blomfield knew all this yet made no protest; more than this, he helped effectuate the plan. This is also not a conclusion to be reached lightly, even taking account of the inferences available due to Mr Blomfield's absence from the witness box. 2543 I leave to one side for the moment the evidence of Mr Macourt and Mr Philip, both of whom denied having the purpose or objective of killing C7 in relation to the acquisition of the AFL pay television rights. However, Mr Mockridge, who was CEO of Foxtel Management until February 2000, denied that he had ever been told by representatives of News or PBL that they had the objective of killing C7's business. Nor did he have an expectation himself that the loss of the AFL pay television rights would kill C7's business. While Mr Mockridge had ceased to be CEO of Foxtel nine months before Mr Blomfield made his comments, it would be extremely odd, given the way Seven presents its case, if Mr Mockridge was unaware that the objective of the Foxtel partners was to kill C7 if that had been their objective all along. I accept Mr Mockridge's evidence. 2544 The fact is that at the time Mr Blomfield made his comments to Mr Fogarty and others at Telstra, the expression ' killing C7 ' was not only in widespread use, but the expression had been promoted by Seven (even though the particular newspaper articles to which I have referred had not yet appeared). In the circumstances I have identified, the comments made by Mr Blomfield are to be given some weight in assessing whether News, Foxtel or PBL had the purpose attributed to them by Seven, but in my view they are far from decisive or even persuasive. Whether the parties had that purpose must be assessed by reference to the totality of the evidence. 15.6 Overbidding for the AFL Pay Television Rights? According to Seven, the financial models were manipulated to present an optimistic picture for Telstra. Despite poorer quality pay television rights, notably through a reduction in the number of live games from four to three and the introduction of the flip-flop ([971]ff), the models were amended to improve the predicted performance of the AFL channel. The evidence of Mr Frykberg supports a finding that Foxtel and News were well aware of the significant disadvantage'. At best, they were recklessly indifferent to whether the News proposal was likely to be profitable for Foxtel. It was ... an offer which made economic sense only on the footing that in the longer term Fox Sports would benefit by the removal of competition in the market in which it operated ...' (Emphasis added. 2548 By the time Seven filed its written submissions, its representatives doubtless realised that Mr Stokes had made certain concessions in his evidence concerning the reasonableness of the price paid by Foxtel for the AFL pay television rights. Seven's Reply Submissions address this difficulty by contending that the overbidding case ' is a case of subjective overbidding, not objective overbidding '. Moreover, Foxtel managed to achieve its anti-competitive objective. This is not, in my view, an easy position to maintain. First , Seven's submissions on this point are substantially based on the assumption that in 1998 News formulated a plan to dominate pay sports rights by killing off the incipient C7. Seven's contentions about the purpose of Foxtel's indirect bid, through News, for the AFL pay television rights in late 2000 seem to me to attempt to place square facts into round holes. The attempt reflects the fact that Seven's submissions interpret the relevant events through the prism of their starting point. I do not accept the starting point. 2551 Secondly , in my opinion Seven places altogether too much significance on the financial modelling undertaken by Foxtel in late 2000. The submissions --- and indeed a good deal of the cross-examination --- appear to have been based on an assumption that financial models are necessarily designed to predict likely financial outcomes. The assumption is that models must be based on the most realistic predictions that will determine the profitability of a particular endeavour. 2552 That indeed may be the objective underlying the preparation of particular financial models. But, as I have previously suggested, this case demonstrates, if the point needs demonstration, that financial models may be prepared with other objectives in mind. It is not necessarily to engage in ' manipulation ', much less in dishonesty, to prepare models working backwards from a given outcome, such as attributing a positive NPV to the exploitation of particular rights over a given period. The point of the exercise may be to isolate the financial targets (the variables) that must be achieved in order to attain the desired outcome. For example, what must a pay television operator charge and what penetration rates must it achieve in order to produce a positive return for compiling and distributing a particular sports channel? 2553 Despite Mr Philip's general unreliability as a witness, he gave what seemed to me to be reasonably frank evidence on this aspect of the case. In his statement, he volunteered that he had asked Mr Boyd to prepare models that showed a positive NPV for the acquisition of the AFL pay television rights at prices, respectively, of $25 million and $30 million per annum. He said that he wanted the models in this form in order to convince Telstra to support Foxtel's bid. Mr Philip agreed that he saw the acquisition of the AFL pay television rights as a strategic acquisition and that he did not necessarily expect it to be cashflow positive. He accepted that he was nonetheless perfectly content to ask for models that showed the acquisition to be cashflow positive. 2554 Mr Philip had no compunction about deliberately misleading Telstra. He did exactly that in his fax of 9 December 2000 to Mr Akhurst seeking Telstra's support for the Fox Sports bid. On one view, the preparation of the model showing a positive NPV for an acquisition of the AFL pay television rights for $30 million involved an element of deception on Mr Philip's part, since he himself did not necessarily accept that the financial outcome would be positive. But he said in his evidence, fairly enough in my view, that it was a matter for Telstra to evaluate for itself the validity of the assumptions incorporated into the model. The model prepared on Mr Philip's instructions exposed the assumptions sufficiently for Telstra to make its own assessment. 2555 As has been seen, there were in fact sharp divisions of opinion within Telstra as to whether the assumptions were realistic. But the senior decision-makers within Telstra, including Dr Switkowski, were not under any illusions as to what targets had to be achieved if the acquisition of the AFL pay television rights was to generate positive returns to Foxtel. 2556 Thirdly , as Dr Switkowski and others made clear, in this context assumptions in financial models are essentially predictions or estimates as to future business performance or economic measures. They cannot substitute for the exercise of judgment in decision-making by the responsible executives. This may require decisions to be made for ' strategic ' reasons, rather than on the basis of financial predictions or modelling. There is something more than passing strange about Seven's complaint about Foxtel's ' manipulation ' of financial models to achieve a predetermined outcome. After all, Mr Stokes, on his own account, was prepared for Seven to offer hundreds of millions of dollars for the NRL pay television rights over a period of years without troubling to carry out any modelling at all. Mr Sumption's answer is that it is worse to have a model that undermines one's case than to have no model at all. At the very least, however, Seven's ' seat of the pants ' approach (to use Mr Sumption's language) suggests that very large financial decisions in this industry often involve very broad-brush, even instinctive, judgments, in which the results of modelling play a minor part or perhaps no part at all. 2557 Fourthly , there is no escaping the elephant in the room. The fact is that Mr Stokes thought that the bundle of AFL pay television rights acquired by Foxtel for $30 million per annum was a good deal. The concessions he made, bearing in mind that he had been prepared for C7 to pay $30 million per annum for one exclusive AFL pay television game, cannot be explained on the ground that his belated offer to the AFL on 14 December 2000 merely reflected the value of Optus' MSG. In any event, Mr Wise's confused explanation of how he came to justify Seven's bid of $60 million per annum for the AFL broadcasting rights suggests that if he had undertaken an analysis on the basis of accurate information he would have been able to support a considerably higher bid. 2558 Furthermore, Seven's bid was influenced by its misapprehension about the future course of the bidding process and its determination (until after the presentation to the AFL had concluded) that its bid should cover both the free-to-air and pay television rights. As Mr Wise and Mr Stokes explained, that strategy was originally a product of Seven's desire to maximise its chances of securing the AFL broadcasting rights without the inconvenience of a competitive process (because they thought that no one else was interested in the free-to-air television rights). In substance, the strategy backfired. I do not accept Mr Sumption's submission that Mr Stokes' evidence is irrelevant to the issue of Foxtel's alleged overbidding for the AFL pay television rights. 2559 Fifthly , the uncontested evidence is that Mr Frykberg told Mr Philip in early December 2000 that a bid of up to $30 million per annum would be required to obtain the AFL pay television rights. No suggestion was put to Mr Frykberg that he was party to or aware of any objective of killing C7, nor that his advice might have been distorted by the prospect of his earning a success fee. If it is accepted (as I do accept) that Mr Frykberg was not aware of any malign objective, his advice to Mr Philip could only have been based on his assessment of what was needed to beat a likely bid for the rights by Seven. Of course, Mr Frykberg's advice is not necessarily inconsistent with Mr Philip and Mr Macourt having the objective attributed to them by Seven. But it tends strongly against a belief on their part that a $30 million per annum bid for the AFL pay television rights was predatory, as distinct from a bid reasonably likely to succeed in a competitive auction for the rights. News and PBL respond with equally detailed analyses of their own. I have outlined in Chapter 8 the essential content of the models and there is no need to repeat the account here. In my view, the evidence is consistent with News and Foxtel acting on the perception that the acquisition of the AFL pay television rights was highly desirable in the interests of Foxtel as a retail pay television platform, particularly as a subscription driver for the southern States. The evidence is also consistent with them deciding to support a bid (through the Foxtel Put) that had a good chance of succeeding in a competitive auction for the AFL pay television rights. 2561 There is no doubt that Mr Macourt and Mr Philip were extremely keen to secure the AFL pay television rights for Foxtel. Mr Philip was prepared to engage in forceful advocacy (and more) to achieve the result. He was prepared to lie to Telstra to obtain its support for Fox Sports' bid for the NRL pay television rights, but he seems not to have resorted to similar deception in endeavouring to persuade Telstra to support the Foxtel Put, perhaps because he did not need to. 2562 It is clear enough that Mr Philip, despite his reticence to acknowledge the fact in the witness box, appreciated that there was a risk that C7 would cease to be commercially viable if its bids for the AFL and NRL pay television rights both failed. Mr Philip, like Mr Macourt, would not have been in the least perturbed if he knew that C7 was likely to collapse as a consequence of losing the AFL pay television rights. But a lack of concern --- or even pleasure --- at that outcome does not demonstrate that Mr Philip (or Mr Macourt) actively sought the destruction of C7, particularly if there were good commercial reasons for Foxtel to seek the AFL pay television rights. Nor does a lack of concern about C7 of itself support the contention that Foxtel offered (indirectly) a predatory price to the AFL for the pay television rights in order to bring about C7's demise. It emphasises, in particular, the introduction of the flip-flop as a development which must have had, and have been understood to have, a substantial negative impact on the value of the AFL pay television rights ultimately obtained by Foxtel. Undoubtedly the flip-flop turned out to be disadvantageous to Foxtel. But in my view, in late 2000, while the flip-flop was plainly seen as a negative, neither News nor Foxtel fully appreciated the likely significance of the flip-flop for Foxtel's future pay television operations. 2564 Both Mr Macourt and Mr Philip said that, although they resisted the introduction of the flip-flop, they did not regard it as ' blindingly obvious ' (as Seven submits it was) that the flip-flop would have a significant adverse effect on the value of the pay television rights. I would not accept Mr Philip's assertion to this effect if it was unsupported by other evidence. However, Mr Frykberg, who was more experienced in relation to AFL content than either Mr Macourt or Mr Philip, miscalculated the likely significance of the flip-flop because he underestimated the extent of the parochial allegiances of AFL fans. At the time, he believed that the flip-flop would not necessarily result in Nine and Ten broadcasting the games with greater viewer appeal. Moreover, he conveyed his belief to Mr Philip. 2565 In the light of Mr Frykberg's evidence, I accept Mr Philip's claim that in late 2000 he thought that the flip-flop would ' potentially [work] out okay for Foxtel ', even though he regarded it as an undesirable feature of the proposed arrangements. I also accept Mr Macourt's evidence that, on the basis of his experience with the ratings of NRL games on pay television, he did not consider that the flip-flop would necessarily result in the broadcasting of inferior AFL games on pay television. 2566 The miscalculations were not confined to Mr Macourt and Mr Philip. Mr Campbell, who conducted modelling with Mr Boyd for Foxtel, first learned of the flip-flop from Mr Frykberg on 27 October 2000. At first, Mr Campbell proceeded on the misconception that under the flip-flop, when free-to-air television covered a local game in, say, Adelaide, pay television would be able to show that game non-exclusively and would have exclusive rights to the ' national ' games. Mr Campbell therefore did not see the flip-flop, as he understood it, as much of a negative. When he was disabused of this particular misconception in late November 2000, he thought that the flip-flop would have a negative impact in cities outside Melbourne, but that Foxtel could still expect a very considerable boost in the Melbourne market. In making this assessment he, too, underestimated the significance of subscribers' interest in local AFL games, rather than better ' quality ' games. The model that accompanied Mr Mockridge's paper to the Foxtel Management board meeting of 26 October 1999 assumed an increase of 2.9 per cent. The financial model accompanying Mr Blomfield's paper of 6 December 2000 incorporated a figure of 30 per cent. This corresponded to 163,000 additional subscribers rather than a mere 8,000. The increased penetration rates were critical to producing a positive NPV. 2568 The most substantial increases in assumed penetration rates occurred in a model prepared on about 1 December 2000 by Mr Boyd. Mr Boyd prepared the model at Mr Blomfield's request. Mr Blomfield told Mr Boyd that the Foxtel Management board meeting of 9 November 2000 had agreed (as it had) that the models should assume equal penetration rates in the southern and northern States. Mr Blomfield directed Mr Boyd to assume that equalisation would be achieved over a five year period. 2569 Mr Boyd initially believed that the earlier models had already assumed equal penetration rates, but he discovered that this was incorrect. He then proceeded to implement the instruction he had received by incorporating into the model a penetration rate of 30 per cent, to be achieved in 2006. The model incorporated alternative rights fees of $17.5 million per annum and $25 million per annum. 2570 The next models were prepared on 5 December 2000, on the basis of assumed alternative rights fees of $25 million and $30 million per annum. The first model produced a positive NPV of $13.1 million, while the second model produced an NPV of -$5.8 million. This prompted Mr Philip to ask Mr Boyd to prepare a revised model assuming rights fees of $28 million and $30 million. The latter was to assume higher penetration rates for the southern States in the early years and was also to assume that 30 per cent penetration would be reached earlier. Mr Boyd complied and produced a model with a positive NPV of $2.3 million. 2571 The parties disagree as to whether the substantial increase in penetration rates in the models pre-dated Mr Philip's involvement in the modelling process. News says the substantial changes in the assumed penetration rates occurred before Mr Philip's involvement; Seven says that Mr Philip instigated the major changes. The evidence on the point is unclear. However, I think it more likely that Mr Philip asked Mr Blomfield on or shortly before 1 December 2000 to request Mr Boyd to prepare a model assuming equal penetration rates in southern and northern States. Given (as I have found) that the Foxtel Management board had agreed to equalise the penetration rates on 9 November 2000, in my view, nothing of substance turns on the precise date of Mr Philip's involvement in the modelling process. 2572 A number of witnesses gave evidence that they thought that the assumptions about penetration rates and the feasibility of achieving the targets embodied in the final model were reasonable. Mr Macourt was not consulted about the model before its preparation and did not compare it with earlier versions, largely because he thought they lacked adequate detail. His evidence was that he thought the assumptions contained in the model were reasonable and that the NPV, if anything, was conservative because no terminal value had been attributed to the AFL pay television rights. 2573 Contrary to News' submissions, I interpret Mr Macourt's cross-examination as challenging his evidence on this point. His evidence requires careful examination. He was reluctant to accept that in July 1999 he had been concerned about the (then) projected cost of Foxtel acquiring the AFL pay television rights. While that was some 17 months before Foxtel finally committed itself to a bid of $30 million per annum for the rights, his reservations about bidding in mid-1999 (at a projected fee of $15 million per annum) shows that he had been troubled about the cost to Foxtel of acquiring the rights. Moreover, Mr Macourt's analysis of the final model was cursory and, on his own evidence, he paid little attention to the assumptions built into the model. 2574 There is no doubt that Mr Macourt understood that Foxtel's acquisition of the AFL pay television rights would be expensive and that it would not be easy to make good the projections embodied in the model. But I am not prepared to reject Mr Macourt's denial that the reason or a substantial reason, as he saw it, for Foxtel being prepared to bid $30 million per annum was that ' it made sense for News to pay a large premium to push C7 out of the market '. There is a substantial gap between accepting a significant risk that models may not prove to be accurate and deliberately entering a transaction known to be loss-making in order to drive a competitor out of the market. That gap is more difficult to bridge when the price being offered is thought to be the amount required to succeed in a competitive auction. Moreover, as I have found in Chapter 8 ([1042]ff), Mr Macourt's conversation with Mr Gammell on 4 December 2000 tends against the conclusion that his objective in supporting News' bid for the AFL pay television rights was to destroy C7 as a viable supplier of premium sports channels. 2575 Mr Campbell said that he had been told by Mr Blomfield to achieve a particular result in the modelling exercise, namely a positive NPV at a rights fee of $30 million per annum. Nonetheless, he said that if he did not think that the numbers were achievable, he would have told Mr Blomfield. He thought the assumptions were optimistic, but not wildly so. Furthermore, they were supported by inquiries he made within Foxtel. 2576 Mr Campbell was questioned as to the extent of his inquiries and the cross-examination showed that they were in fact superficial. But there is no reason to doubt that Mr Campbell did make inquiries, such as they were, in order to test the assumptions and that the information he obtained was consistent with the assumptions incorporated into the model. While Mr Campbell's state of mind is not central to the case, I do not think that there is a sound basis for rejecting his evidence that he thought at the time that the assumptions were within the bounds of reasonableness and were achievable. Optimism is one thing; belief that a venture is necessarily loss-making is another. 2577 Mr Boyd said that the assumptions incorporated into the models were aggressive, but not unreasonable. In particular, he thought that the accelerated rate of penetration assumed in the final model was achievable because the total number of subscribers did not increase from the earlier model. The only change was to assume that the subscriber growth would occur over a shorter period. 2578 Mr Philip's position was not entirely consistent throughout his evidence. In substance, he maintained that he believed, on the basis of conversations with Mr Macourt, that the assumptions built into the final model were not unreasonable. He added that he had not paid much attention to the assumptions himself. I would not be prepared to accept Mr Philip's evidence on these matters if it stood uncorroborated. The circumstances, however, lend support to his claim. 2579 Clearly enough, Mr Philip was galvanised into action by Mr Frykberg's advice that a bid of $30 million per annum would be needed to secure the AFL pay television rights, having regard to the likely competition. His response was to instruct Mr Boyd to prepare a $30 million model which showed a positive NPV as the outcome. The other findings I have made lend support to Mr Philip's evidence that he was unsure as to whether the acquisition of the rights would prove to be cashflow positive; that he did not think that the acquisition would necessarily be loss-producing; and that he considered that the amount being offered by Foxtel, through the Foxtel Put, was not appreciably above a reasonable price in a competitive auction. Accordingly, despite Mr Philip being an unreliable witness --- and indeed a witness capable of dishonesty in his dealings --- I am not satisfied that he saw the bid by Foxtel as necessarily loss-making for it. Nor am I satisfied that his objective in constructing the bid was to ' overbid ' in order to destroy C7. Of the two, Mr Macourt was the more senior decision-maker, but his role was only a little more important than that of Mr Philip. Mr Philip, among other positions held by him, was a director of Sky Cable and Fox Sports. His contract of employment suggested that he reported directly to News' CEO (Mr Lachlan Murdoch and, from October 2000, Mr Hartigan). However, during the relevant periods, Mr Philip in fact reported to Mr Macourt on a regular basis. Nonetheless, Mr Philip's role was not limited to providing legal advice. As he said in evidence, he was deeply involved in executing commercial strategies devised by News in the field of sports rights acquisition. Furthermore, despite his reticence on the subject, his role included making judgments on commercial issues. 2581 In his oral reply submissions on behalf of Seven, Mr Sumption invited me to find that Mr Philip had the full authority of News to bid and make the relevant commercial judgments on its behalf. Mr Sumption accepted that Mr Macourt was senior to Mr Philip and could have overruled him. However, he continued to consult with Mr Macourt (whose office was next-door to his) on a regular basis. It is true that, as Mr Macourt accepted, the organisation of the put options and the acquisition of the AFL broadcasting rights by News was planned and executed by Mr Philip, in conjunction with Mr Frykberg. But Mr Macourt was still the senior decision-maker and continued to participate in the decision-making process, including the decisions made at the teleconference of 13 December 2000. There is no reason to doubt Mr Philip's evidence that he not only consulted frequently with Mr Macourt on commercial issues, but deferred to Mr Macourt's experience and authority when there were differences of view. There was no formal delegation of authority to Mr Philip and no informal abdication by Mr Macourt of his responsibilities as the senior executive (subject to the role of Mr Lachlan Murdoch). 2583 I should add that Mr Blomfield was engaged by News and appointed by News to be CEO of Foxtel Management. Mr Blomfield acted on instructions and did not determine whether News or its associated entities would become parties to the Master Agreement Provision. Foxtel Management is not alleged to have been a party to the Master Agreement. 2584 My overall assessment of a very large amount of material is that News, through Mr Macourt and Mr Philip, thought that there were good commercial reasons for Foxtel to acquire the AFL pay television rights. A judgment was made that, in order to have a good chance of succeeding in a competitive auction for the AFL pay television rights, a bid of $30 million per annum would be required. The decision to support a bid at this price did not rest simply or even primarily on the results of modelling, but took account of other considerations, such as the ' strategic ' advantages of controlling the presentation of the AFL and avoiding the perceived problems of dealing with Seven as a free-to-air operator in charge of the rights. I do not regard the strategic advantages as having included the destruction of C7 as a specific objective, although both Mr Macourt and Mr Philip would have regarded that consequence with equanimity, if not enthusiasm, if it came about. 2585 The models based on a rights fee of $30 million per annum were constructed for a variety of purposes. One was to persuade Telstra of the merits of the acquisition by presenting a positive NPV as the likely outcome of a successful bid. Another was to expose the assumptions that would have to be made good in order to produce a positive cashflow. A third was to provide a measure of comfort among the Foxtel partners for the bid. All persons involved in the exercise appreciated that the assumptions were both aggressive and optimistic. The consensus was that the targets were achievable, but that there was a significant risk that they would not be realised within the time-frame spanning the period for which the rights were to be granted. The Foxtel Put was by no means a commercially safe bet. 2586 As events turned out, the scepticism amply on display within Telstra proved to be well justified. In my view, that is not inconsistent with the News and Foxtel executives holding the more optimistic views I have identified. As Dr Switkowski pointed out, there were some ' Cold War warriors ' within Telstra who displayed a degree of ' emotions and ferocity ' in their dealings that Dr Switkowski thought ' should have been left behind '. While some of their predictions turned out to be sound, their assessment was not the only reasonable commercial view that could have been taken. 2587 It follows that I do not think that the entry into the Foxtel Put involved ' subjective overbidding ', as Seven submits. While the commercial judgment supporting a bid at $30 million per annum for the AFL pay television rights was flawed, I do not think that the bid was made in the knowledge by the decision-makers that it was certain or even very likely to be loss-making over the term of the rights agreement. There was clearly a significant commercial risk, as the decision-makers perceived, but News and Foxtel, like Mr Stokes, were prepared to run the risk. 15.8 Inferior Option? Everything would have depended upon which AFL matches C7 could have offered and the terms upon which any offer might have been made. That, in turn, would have depended, in part, on the price C7 paid for the rights. 2589 Seven approaches this difficulty by relying on the evidence of Mr Williams, who was CEO of Foxtel Management at the time he gave evidence. Mr Williams was asked to compare what Seven described as ' the proposed pay TV schedule included in Seven's offer to the AFL of 14 December 2000 ' with Foxtel's entitlement under its arrangement with News. It was put to Mr Williams that the schedule provided three nationwide slots for pay television in each week, plus additional live games in other cities. On this basis, Mr Williams agreed that the AFL coverage would be a ' significant improvement ' over that available to Foxtel under the News-Foxtel Licence. 2590 As PBL points out, the schedule put to Mr Williams was never put to Foxtel. It was therefore not feasible for Foxtel, prior to the teleconference of 13 December 2000, to make the comparison Mr Williams was asked to make in the witness box. A more substantial problem for Seven is that the presentation it made to the AFL did not lock it into a commitment to a particular pay television schedule. Seven told the AFL that it would offer ' live and exclusive coverage of up to three matches, depending on scheduling of matches ' on pay television (emphasis added). 2591 In his cross-examination, Mr Wise conceded that this language was chosen quite deliberately because Seven did not wish to guarantee three matches per week for pay television. He accepted that Seven wished to have the flexibility to decide how many games would be broadcast on pay television. Although Mr Wise maintained that the presentation was intended to define the pay television rights in a ' conclusive way ', clearly it did not. The comparison Mr Williams was asked to make was not helpful in comparing Foxtel's entitlement under the Foxtel Put and any alternative programming that might have been provided through C7's channels. 2592 No doubt it is true, as Mr Williams accepted, that direct negotiations between Foxtel and Seven might well have led to a precise definition of the pay television rights, just as ultimately occurred in the agreement between Fox Sports and Foxtel. That proposition does not mean that Foxtel had a ready means, while the bidding process was under way, of comparing the position, should its bid succeed, with its position should it acquire AFL content by taking C7's channels. 2593 It is also significant that the last proposal that Foxtel had received from C7 was its ' final offer ' of 17 November 1999. The fee structure proposed in C7's offer was very much higher than the earlier proposals made by C7 to Foxtel, and in effect, required Foxtel to take C7 on basic. Mr Stokes acknowledged that, if Foxtel had accepted the offer, it would have cost Foxtel many multiples of the price which had been the subject of earlier negotiations between Seven and Foxtel. No doubt these considerations have played some part in Seven's forensic decision not to rely on Foxtel's rejection of the offer as a contravention of s 46 of the TP Act. The November 1999 offer had been C7's most recent proposal, subject only to Mr Wood's somewhat disingenuous letter of 6 December 1999 in response to Foxtel's rejection of the proposal. Any comparison between C7's November 1999 offer and the cost of directly acquiring the AFL pay television rights for 2002 to 2006 would have been very difficult. As News' submissions suggest, the comparison would have involved an assessment of many imponderables. Nonetheless, there is no basis for concluding that the comparison would have demonstrated that the cost of direct acquisition would have been greater than the cost of taking C7 on the terms C7 put forward in November 1999. On the contrary, the likelihood is that any comparison would have been distinctly adverse to C7. This is said to support the contention that News and Foxtel (with the support of PBL) sought to acquire the AFL pay television rights directly, rather than from C7, not simply because it was in the interests of Foxtel to obtain attractive sporting rights, but substantially because the acquisition was part of the plan to kill C7. According to Seven, the decision to acquire the rights was ' inexplicable except as conduct designed to hinder C7 from competing with Fox Sports '. The direct acquisition of the rights ' was, and would have been perceived to be, an inferior option '. 2596 To some extent, I have already addressed this contention. I have found that the reason Mr Macourt refused to contemplate taking C7 on Foxtel was his view that the Fox Sports pricing dispute had to be resolved first. (I shall return to Foxtel's refusal to take C7's channels in Chapter 16. ) I have also found that Foxtel did not engage in ' subjective overbidding ' for the AFL pay television rights and that News and Foxtel did not know, in December 2000, that the direct acquisition of the AFL pay television rights was ' an inferior option ' to taking C7. Nonetheless, I shall consider, relatively briefly, whether the decision-makers at News and Foxtel considered that they had legitimate grounds for seeking to acquire the AFL pay television rights directly. 2597 It is important to appreciate, as I have previously pointed out, that News was interested in acquiring the AFL pay television rights as early as 1997, when the Docklands Stadium Consortium Agreement was signed. It is also important to bear in mind that the responsible executives at News and Foxtel considered, at all times, that the acquisition of AFL content was critical to Foxtel increasing its penetration rates in the southern States. The AFL was the last sporting link for Foxtel and thus the rights, in one form or another, were commercially important to it. Indeed this much is common ground, since the significance of AFL content to Foxtel forms an essential plank in Seven's case under s 46 of the TP Act. It follows that this is not a case where a large and well-resourced corporation acquires an asset that is of marginal or purely speculative value to its operations and the true economic worth of the asset lies only in the harm the acquisition will occasion a competitor. 2598 The planning within Foxtel to acquire the AFL pay television rights began in February 1999, with Mr Mockridge's draft outline. The outline noted that Seven, the current holder of the rights, had a vested interest in maximising free-to-air coverage and giving as little as possible to pay television. This analysis led to the Foxtel Management board authorising Mr Mockridge, on 23 March 1999, to lead efforts to obtain the AFL pay television rights on a non-exclusive basis. By this time Mr Mockridge had suggested to Mr Lachlan Murdoch that Foxtel should consider taking AFL content from C7. However, Mr Mockridge made it clear that an arrangement with C7 would not be to the exclusion of dealing directly with the AFL for the acquisition of the rights. This approach was confirmed in a note he distributed at a meeting on 8 April 1999, which envisaged that Foxtel could take the AFL pay television rights ' short term from C7 and long term directly '. 2599 The ' AFL Strategy ' paper distributed to Foxtel Management board members in late June 1999 is an important document. The paper identified the AFL as the ' one remaining gap ' in Foxtel's programming and explained why direct acquisition of the AFL pay television rights was important to Foxtel. The fact is that the concerns about Seven's role as a gate-keeper were repeatedly expressed in circumstances which suggest that they were indeed genuinely held. Mr Harold Anderson, Seven's Director of Sports at the relevant time, agreed in his evidence that his experience in New Zealand was that a pay television operator should not leave a free-to-air operator as the gate-keeper to determine what rights the pay television operator should have. That this observation had force in the present context was demonstrated by evidence of the difficulties C7 experienced on the occasions when Seven's executives decided that its free-to-air television outlets needed to be given priority as to sporting content over the interests of C7. 2603 A very considerable amount of cross-examination was devoted to establishing that concerns about Seven's gate-keeping role might have been met by entering into agreements precisely defining Foxtel's entitlements, just as occurred in relation to the Foxtel Put. No doubt this has force as a theoretical proposition, as some witnesses, including Mr Williams, acknowledged. But Foxtel operated in a commercial world of rivalry, lack of trust (particularly in relation to Seven's real or exaggerated litigious propensities) and uncertainty as to what terms might be negotiated. The potential difficulties were nicely illustrated by the terms of Seven's final presentation to the AFL (in the context of a bid for the AFL broadcasting rights), which were carefully structured to preserve flexibility for Seven's free-to-air AFL programming. They are also illustrated by C7's retreat, in its letter of 9 June 1999, from the commitment it had given in May 1999 to ensuring that two exclusively live AFL matches would be shown on C7 each week. 2604 Mr Macourt said in evidence that he had been influenced by the fact that Seven could have allowed more pay television games on SportsVision but it had not, indicating a preference for protecting its free-to-air operations. Do you follow my point? --- I think so. I'm not sure I agree with it. I'm sure you can find an example that proves me wrong, but my perception is, no, I don't agree. --- That's right. We want you to show more games per week live", it's easier, isn't it, to negotiate that if you are dealing with somebody who is an associated company of the holder of the free-to-air rights than it is if you are not; that's logic, isn't it? --- I can see the logic. It depends on what the alternative is. If you are negotiating with the owner of the rights, then the owner of the rights can dictate to the free-to-air broadcaster what rights and how they are prepared to sell those rights. Our experience is that it has been easier to do that than it has been to negotiate with free-to-air broadcasters on those rights'. 2605 A further aspect of the gate-keeper role was the concern expressed within Foxtel at the threat posed by the possibility that legislative changes would open the way to free-to-air networks being permitted to engage in multi-channelling. Mr Mockridge's AFL Strategy paper for Foxtel Management's 8 July 1999 board meeting made the point that if Seven was left with monopoly control of AFL content and if multi-channelling was permitted, Seven would be in an excellent position to attack Foxtel's subscriber base. In fact, at about this time Seven was making submissions to the Commonwealth Government arguing in favour of multi-channelling for free-to-air operators. 2606 The point, it seems to me, is not whether there was an alternative commercial approach available to Foxtel to satisfy its desire to acquire AFL content. The question is whether its decision to attempt to acquire the AFL pay television rights directly from the AFL, rather than acquire AFL content through C7, indicated that News and Foxtel had a substantial purpose of killing C7 in order to achieve market dominance, rather than a legitimate commercial objective intended to enhance Foxtel's product in the marketplace. The fact that genuine concerns were held within Foxtel about Seven's gate-keeper role suggests a negative answer to the question. The parties in effect invited me to undertake a kind of royal commission into the comparative attributes and deficiencies of Fox Sports and C7. I said during the hearing that I failed to see the point of this exercise. My scepticism did not deter the parties from referring me to a vast amount of material relating to the merits or demerits of each service, the bulk of which I regard as largely irrelevant to the issues in this case or simply unhelpful. However, the critical question for present purposes is whether News or Foxtel considered that quality issues with C7 added weight to the arguments for seeking the AFL pay television rights directly from the AFL. 2608 I do not doubt that some of the references to the quality of C7 in the correspondence drafted within News or Foxtel were self-serving or perhaps intended to score points. But the contemporaneous documentation suggests that the quality of C7 was a genuine concern to News and Foxtel. As I have noted, the issue was explicitly raised in the AFL Strategy paper for the Foxtel Management board meeting of 8 July 1999. A little earlier, on 24 May 1999, Mr Freudenstein included in the term sheet he sent to Mr Wood detailed provisions as to content, scheduling and production, designed to ensure that Foxtel was ' happy with the quality and content of the channel '. Mr Macourt told Mr Gammell at their meeting of 4 December 2000 that the quality of C7 was flawed and that the business had been run for the benefit of Seven, not pay television. The teleconference of 13 December 2000 included a number of comments by Mr Philip and Mr Moriarty to the effect that C7's quality was poor. 2609 The material relating to the objective ' quality ' of C7 is, to a limited extent, relevant to this issue. Optus had raised issues of the quality of C7 with Seven on a number of occasions. It is a reasonable inference that these complaints were known, at least in outline, in the industry. The fact that subscribers to C7 made a significant number of complaints that its AFL games were sometimes shown concurrently on free-to-air television was also likely to be widely known in the industry. Similarly, the complaints within Seven itself that C7 games usually received four-camera coverage, compared with the standard nine-camera coverage for free-to-air games, would have struck a chord with informed viewers and people within the industry. I accept that both Mr Macourt and Mr Philip appreciated that C7 might well suffer serious and perhaps even irremediable harm if Foxtel's bid succeeded. As I have found, I do not think that either would have been perturbed by this possible consequence. 2612 I do not think, however, that the evidence warrants a conclusion that News or Foxtel actually sought the objective of destroying C7 as a means of securing market dominance for Fox Sports (or Foxtel), as distinct from the objective of acquiring rights thought to be of considerable value to Foxtel's business. The killing of C7 was neither the primary purpose nor a substantial purpose of News' and Foxtel's bid for the AFL pay television rights. Thus the purpose of the Master Agreement Provision, so far as News was concerned, was not the substantial lessening of competition in the sense advanced by Seven. The same conclusion applies to the other provisions relied on by Seven for its case under s 45(2) of the TP Act . 2613 I do not understand Seven to submit that, if I find that News did not have the purpose of substantially lessening competition in entering into the Master Agreement or the other contracts identified by Seven, such a purpose should be attributed to PBL. In any event, I see no basis for doing so. 2614 It follows that, independently of the reasoning in Chapter 14, Seven has not made out a contravention of s 45(2) of the TP Act by reference to the purpose of News and PBL, either separately or as partners (through Sky Cable) in the Foxtel Partnership. Nor is any such case made out against Sky Cable or Telstra Media. 16 SEVEN'S CASE BASED ON SECTION 46 OF THE TRADE PRACTICES ACT [2615] 16.1 Legislation [2616] 16.2 Seven's Pleaded Case [2619] 16.2.1 Case against Foxtel [2619] 16.2.2 Ancillary Claims against News, Telstra and PBL [2630] 16.3 Construction of s 46(1) [2632] 16.3.1 Common Ground [2632] 16.3.2 Application of s 46 to a Partnership [2645] 16.3.3 Disputed Issue of Construction [2647] 16.4 Seven's Submissions [2653] 16.4.1 Overview [2653] 16.4.2 Refusals to Accept C7's Proposals [2661] 16.4.2.1 16 April 1999 Letter [2661] 16.4.2.2 13 May 1999 Letter [2664] 16.4.2.3 9 June 1999 Letter [2665] 16.4.3 Refusal to Deal [2666] 16.4.4 Statements to the AFL and the NRL Partnership [2672] 16.4.5 Overbidding [2676] 16.4.6 Taking Advantage of Market Power [2677] 16.5 Telstra's Submissions [2683] 16.6 Reasoning [2687] 16.6.1 Rejection of C7's 'Offers' [2688] 16.6.1.1 16 April 1999 Letter [2688] 16.6.1.2 13 May 1999 Letter [2696] 16.6.1.3 9 June 1999 Letter [2698] 16.6.2 Refusal to Deal [2711] 16.6.2.1 Some Refinements [2711] 16.6.2.2 Factual Findings [2715] 16.6.2.3 Threshold Pleading Issue [2716] 16.6.2.4 What Did Foxtel Forego? [2727] 16.6.3 Statements to the AFL [2746] 16.6.3.1 Factual Issue [2746] 16.6.3.2 Relief [2758] 16.6.4 Statements to the NRL Partnership [2764] 16.6.5 Aggregation of Conduct [2770] 16. The case is pleaded against ' Foxtel ', defined to mean Sky Cable and Telstra Media which ' together carry on business in partnership trading under the business name "Foxtel" ' (par 8). In this Chapter, I use ' Foxtel ' in the same sense as the Statement of Claim. The fact that the case is pleaded against Foxtel (that is, Sky Cable and Telstra Media) is a matter of some significance. 2620 According to the Statement of Claim, Foxtel has, and has had since November 1998, a substantial degree of power in the retail pay television market (par 142). During the period from November 1998 to April 2000, C7 negotiated with Foxtel for the supply of the C7 channels for incorporation into the ' Foxtel Service ' (par 63). On 30 November 1999, Foxtel refused C7's offer to supply channels, stating that this would ' interfere with our negotiations for the AFL rights ' (par 64). Foxtel maintained this refusal thereafter (par 65). 2621 From November 1998 until December 2001, the C7 channels contained ' attractive programming ', including AFL matches, that was not otherwise available to Foxtel subscribers (par 400). The terms on which C7 offered to supply its channels to Foxtel included a term that Foxtel could terminate the supply agreement if C7 ceased to hold the AFL pay television rights (par 401). Nonetheless, Foxtel did not accept four separate ' offers ' made in April, May, June and November 1999 by or on behalf of C7 for the carriage of its channels on the Foxtel Service (par 401A). 2622 Further, from 9 June 1999 (the date of the third offer) until December 2000, Foxtel determined not to negotiate with C7 for the carriage of its channels on the Foxtel Service (par 401B). This was so notwithstanding that, at least since November 1998, Foxtel viewed the AFL pay television rights as the one remaining gap in its programming which, if filled, would permit subscriber numbers in the southern States to be brought into line with the northern States (par 198(2)(p)). 2623 By refusing to take the C7 channels, Foxtel deprived itself of programming that would have attracted subscribers, produced additional revenue and assisted it to compete with Optus (par 402). Furthermore, when acquiring the AFL pay television rights, Foxtel knew that it had agreed to pay an amount likely to result in a loss to it over the term of the agreement (pars 403-404). 2624 Foxtel was aware that the AFL would be influenced in granting the AFL pay television rights by whether the successful licensee would be able to broadcast AFL games on the Foxtel Service (par 405). Foxtel's representatives, or representatives of News, PBL and Telstra, stated to both the AFL and the NRL Partnership that C7 would not be able to broadcast its channels on the Foxtel Service (par 406). Moreover, had Foxtel faced significant competition from other pay television providers, it would not have been able to refuse to negotiate with C7 or to enter transactions which were likely to result in Foxtel sustaining a loss (par 408). Accordingly, Foxtel engaged in conduct in contravention of s 46 of the TP Act (par 415). 2629 The Statement of Claim also pleads that Foxtel took advantage of its substantial market power in the retail television market, but that claim is not pressed. 2631 Sky Cable engaged in the conduct pleaded against it under the direction of News Pay TV and PBL Pay TV, acting through their agent Pay TV Management Pty Ltd (par 564). Accordingly, News Pay TV and PBL Pay TV were knowingly concerned in Foxtel's contraventions of the TP Act (par 565). The principles stated in this section appear to be common ground. Alternatively, Foxtel took advantage of its substantial market power for the purpose of deterring or preventing Optus from engaging in competitive conduct in the retail pay television market. 2635 There is a close relationship between questions of market definition, degree of power in the market and whether the alleged contravenor has taken advantage of its market power: Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd [2003] FCAFC 149 ; (2003) 129 FCR 339, at 396 [278], per Heerey and Sackville JJ. In identifying the relevant market, it must be borne in mind that the object is to discover the degree of the defendant's market power. Defining the market and evaluating the degree of power in that market are part of the same process, and it is for the sake of simplicity of analysis that the two are separated ... After identifying the appropriate product level, it is necessary to describe accurately the parameters of the market in which the defendant's product competes: too narrow a description of the market will create the appearance of more market power than in fact exists; too broad a description will create the appearance of less market power than there is'. But, as the decision in [ Melway Publishing Pty Ltd v Robert Hicks Pty Ltd [2001] HCA 13 ; (2001) 205 CLR 1] shows, they are two questions, not one. The appellant in that case conceded that it had a substantial degree of power, but it was held that its conduct did not involve taking advantage of that power. In the present case, both questions are in issue'. But market power has aspects other than influence upon the market price. It may be manifested by practices directed at excluding competition such as exclusive dealing, tying arrangements, predatory pricing or refusal to deal ... The ability to engage persistently in these practices may be as indicative of market power as the ability to influence prices'. Such capacity may be absolute or relative. Market power may or may not be total; what is required for the purposes of s 46 is that it be substantial'. The question is simply whether a corporation with a substantial degree of market power has used that power for a proscribed purpose, thereby undermining competition: Queensland Wire 167 CLR, at 191, per Mason CJ and Wilson J. In other words, the statutory expression does not mean anything materially different from ' use ': Melway Publishing v Hicks 205 CLR, at 17 [26], per Gleeson CJ, Gummow, Hayne and Callinan JJ. 2641 On the other hand, the words ' take advantage of ' do not extend to any kind of connection between market power and a purpose proscribed by s 46(1). Section 46(1) distinguishes between "taking advantage" and "purpose". The conduct of "taking advantage of" a thing is not identical with the conduct of protecting that thing. To reason that Rural Press and Bridge took advantage of market power because they would have been unlikely to have engaged in the conduct without the "commercial rationale" --- the purpose --- of protecting their market power is to confound purpose and taking advantage. If a firm with market power has a purpose of protecting it, and a choice of methods by which to do so, one of which involves power distinct from the market power and one of which does not, choice of the method distinct from the market power will prevent a contravention of s 46(1) from occurring even if choice of the other method will entail it'. 2642 In determining whether a corporation has taken advantage of its market power, it is enough that the corporation does something that is ' materially facilitated ' by the existence of the power, even though the conduct may not have been absolutely impossible without the power. Thus s 46 is contravened if a corporation's market power makes it easier for the corporation to act for the proscribed purpose than otherwise would be the case: Melway Publishing v Hicks 205 CLR, at 23 [51], per Gleeson CJ, Gummow, Hayne and Callinan JJ. 2643 In Melway Publishing v Hicks , the joint judgment (205 CLR, at 23 [50]) interpreted the decision in Queensland Wire as resting on a finding that if there had been a competitive market for Y-bar, BHP would not have been able (as it did) to refuse to supply Y-bar to QWI (which wished to use the Y-bar to make star picket fences in competition with a BHP subsidiary). The important thing was that, once it was concluded that in a competitive market BHP would have been constrained to supply QWI, and that BHP's ability to refuse to supply resulted from the absence of such constraint, it followed that, in refusing to supply (for an anti-competitive purpose), BHP was taking advantage of its market power'. Section 46 only requires the Court to assume, for the purposes of the comparison, a sufficient level of competition to deny a substantial degree of power to any competitor in the market: Melway Publishing v Hicks 205 CLR, at 23 [52]. Even so, this necessarily requires the Court to make assumptions that are contrary to the present fact of uncompetitive conditions: NT Power Generation Pty Ltd v Power and Water Authority [2004] HCA 48 ; (2004) 219 CLR 90, at 144 [147], per McHugh ACJ, Gummow, Callinan and Heydon JJ. In addition Pt IV of the TP Act , including s 46, has the extended operation provided for in s 6(2). Thus, for example, s 46 can apply to the conduct of a natural person if that person's conduct takes place in interstate trade or commerce: s 6(2)(a)(ii), (h). 2646 A partnership is not an entity to which s 46 applies: Eastern Express Pty Ltd v General Newspapers Pty Ltd (1992) 35 FCR 43, at 60-61, per Lockhart and Gummow JJ. It cannot be liable under the section on the basis of a shared position of substantial market power with another unrelated corporation. The only circumstance in which the aggregation of market power may be considered is where a corporation occupies its position of substantial market power acting through or together with its related corporations as defined in ss 46(2) and 4A(5) of the Act. While aggregation of the market power of a number of unrelated corporations is impermissible, it is important to recognise that a corporation can gain a position of substantial market power through its agreements, arrangements or understandings with others; and market power gained through acting in concert with others must add to the corporation's individual market power. Additional market power thus gained must enhance a corporation's individual market power. An individual corporation may have, as one of the weapons in its armoury, gained through agreements, arrangements or understandings, a facility to increase its market power and this must be considered as relevant to the factual matrix involved in determining the extent of that corporation's market power in a market. In this sense jointly held power and control in relation to a market is a matter which must be taken into account when considering the individual market power of a corporation for the purposes of s 46'. The Respondents submit that the better view is that the test is satisfied only if the conduct could not have occurred if the corporation, lacking substantial market power, were to act in an economically rational manner. They contend that, on this approach, the question is whether the conduct complained of could not have occurred in a competitive market because, without market power, it would have been commercially impossible for the alleged contravenor to act in that way. 2648 The point was raised in Rural Press v ACCC . The issue in an action brought by the ACCC was whether Rural Press, a publisher of regional newspapers, had taken advantage of its market power in region A by threatening to compete with Waikere Printing, another publisher of regional newspapers, in region B. The object of Rural Press was to dissuade Waikere Printing from a competitive foray into region A. Rural Press had no market power in region B. This, generally speaking, involves a process of economic analysis having regard to the purpose of s 46, namely to promote competition rather than the private interests of particular persons or corporations ... But the process does not require it to be assumed that the corporation is operating in a perfectly competitive market. (Emphasis added. But that did not involve any use of its market power in region A. A new entrant into the region A market, even if lacking market power, could have made the same credible threat in relation to region B provided it had the requisite facilities and expertise. The Court held that the mere use by a corporation of resources derived from the region A market, where it has market power, to facilitate conduct in the region B market, where it has no such power, does not involve taking advantage of power in the region A market: 118 FCR, at 277 [146]. 2651 In the High Court, the ACCC argued that the Full Federal Court had applied the wrong test by asking whether Rural Press ' could ' have engaged in the same conduct in the absence of market power. The joint judgment pointed out that precisely this test had been applied in Melway Publishing v Hicks . Their Honours said the test meant what it said. What gave those threats significance was something distinct from market power, namely their material and organisational assets. As the Full Federal Court said, Rural Press were in the same position as if they had been new entrants ... to market [A], lacking market power in it but possessing under-utilised facilities and expertise'. The offers are identified in Seven's Closing Submissions as those made by Mr Wood to Mr Mockridge or Mr Freudenstein on 16 April 1999, 13 May 1999, 9 June 1999 and 17 November 1999. However, Seven does not rely (for very good reasons) on Foxtel's rejection of the 17 November 1999 offer as giving rise to a discrete cause of action. 2654 Seven says that the evidence justifies a finding that by refusing C7's offers and refusing to negotiate with C7 for the carriage of its channels, Foxtel effectively deprived itself of the ability to fill the gap in its sports programming line-up for a period of two and a half years, until the end of the 2001 AFL season. Foxtel thereby deprived itself of the ability to compete more effectively against Optus. Moreover, it denied itself the opportunity of deriving additional profits from the carriage of C7's channels. Seven's primary position is that Foxtel decided not to take C7 under any circumstances during the period from June 1999 to December 2000. 2655 Seven relies on three other matters, individually or together, as showing that Foxtel took advantage of its substantial power in the retail pay television market. He contended, however, that this reason actually assists Seven's case because it is consistent only with Foxtel wishing the AFL to gain the false impression that C7 would never get onto the Foxtel platform, even if C7 succeeded in obtaining the AFL pay television rights. 2660 Seven's submissions in relation to s 46 of the TP Act proceed on the basis that Foxtel had a substantial degree of power in the retail pay television market. Seven submits, relying on the decision of the Full Federal Court in Eastern Express v General Newspapers 35 FCR, at 60-62, per Lockhart and Gummow JJ, that the conduct of Foxtel should be understood as the conduct of each of the partners (Sky Cable and Telstra Media), acting through its agent, Foxtel Management. It contends that the pricing proposed in the offer was ' consistent with an amount that Foxtel's management would have recommended that Foxtel pay '. Seven invites me to find that Foxtel's modelling showed that the carriage of C7 on the terms offered by it would have been very profitable for Foxtel. Even so, Foxtel rejected the offer. 2662 In Seven's Reply submissions, the letter is no longer characterised as an offer. Seven now says that its case does not depend on the letter being an offer in the strict contractual sense, notwithstanding that the Statement of Claim refers to ' written offers ' and alleges that the offers were not accepted. Rather, the conduct relied upon in Seven's Reply Submissions is the failure of Foxtel ' to accept those terms for incorporation into an agreement between Foxtel and C7 '. 2663 Seven submits that a price comparison with Austar is irrelevant because Foxtel's refusal to accept the terms had nothing to do with price. Foxtel never suggested that the price was too high and, in any event, C7 was offering it more than the agreement with Austar provided (44 AFL matches versus 16 per annum). It should therefore be considered together with the earlier letter. Seven recognises that the letter actually proposed an increase in the price that Foxtel would have to pay for the supply of C7's channels. Once again, however, Seven submits that the rejection of the offer had nothing to do with price or the terms of the offer. In any event, Foxtel appreciated that the offer, if accepted, would still have proved profitable for its business. 2667 In its Reply Submissions, Seven answers the Respondents' contention that a commercially rational Foxtel, on the counter-factual hypothesis that it lacked market power, could have refused C7's April and June 1999 offers because the price proposed was more than Austar's and for the same content. Seven says that this was not the reason for Foxtel's refusal and that a corporation takes advantage of market power notwithstanding that its conduct could have been (but was not in fact) done for a different reason. Foxtel's conduct was undertaken for the wider purpose of preventing competition between C7 and Fox Sports. 2668 Seven contends that Foxtel clearly regarded the absence of AFL programming as a significant gap in its line-up, and that such programming would have enabled it to compete more effectively against Optus. In refusing C7's offers and in declining to negotiate for the carriage of C7, Foxtel effectively deprived itself of the ability to fill the gap for two and a half years, until the end of the 2001 AFL season. Indeed, Seven maintains that Foxtel's conduct, in breaking off negotiations with C7 in mid-1999 and in persisting with its refusal to deal with C7, lacked any business rationale. Its bidding for the AFL pay television rights against a potential supplier had the inevitable consequence that the cost of rights would be substantially inflated. 2669 Seven submits that in May 1999 Mr Mockridge had at least an open mind as to the benefits of Foxtel acquiring C7. But by the time of the July 1999 board meeting he knew that News would not support Foxtel taking C7 until the long-term arrangements with Fox Sports had been finalised. PBL shared this view. Mr Mockridge's draft board paper for the October 1999 Foxtel board meeting proposed taking C7 as an interim arrangement, but he removed the paragraph in the face of Mr Lachlan Murdoch's refusal to contemplate taking C7 until the Fox Sports issue was resolved. 2670 Because of the disputes between the Foxtel partners and the intractable opposition of News and PBL to Foxtel carrying C7 (as Telstra fully realised at the time), there was no occasion for News or PBL to exercise a formal veto at a board meeting. Accordingly, Seven argues there was no point putting the question to the board. 2671 Seven further argues that even if Foxtel's reason for declining to take C7 was not to kill C7, but to put off the issue until resolution of the Fox Sports question or to secure a negotiating advantage in the bidding for the AFL pay television rights, Foxtel still used its market power for a proscribed purpose. In any event, Seven submits that a finding should be made that Foxtel communicated to the AFL that it would not carry C7 as part of the Foxtel Service (not merely that carriage on the Foxtel Service could not be guaranteed). Seven also seeks a finding that Foxtel was successful in persuading the AFL that C7 would not be carried on Foxtel. The AFL therefore proceeded on the basis that the C7 channels would not be carried on the Foxtel Service and that, if it granted the pay television rights to C7 exclusively, the AFL content would not be available to Foxtel's subscribers. 2673 Seven submits that the documents recording the AFL's consideration of the bids show that it took the view that C7 had low penetration and was unlikely, even if Seven succeeded in its bid, to get on to the Foxtel Service. Thus the AFL was influenced by its perception that there was no guarantee that C7 would have anything like the number of subscribers that Foxtel would be able to deliver with non-exclusive supply on the Foxtel, Optus and Austar platforms. 2674 Seven also relies on statements made by or on behalf of Foxtel to the NRL Partnership as conduct that involved taking advantage of Foxtel's market power. Seven invites me to find that Foxtel told the NRL Partnership that C7 would not be able to broadcast its channels on the Foxtel Service and that it also told the NRL that there was considerable uncertainty about whether and when C7 would gain access to the Telstra Cable. These statements (which Seven does not suggest were untrue) were important to the NRL Partnership (through the NRL PEC), because of the NRL PEC's concern to ensure maximum coverage for NRL matches. 2675 Seven submits that in making these statements to the NRL Partnership, Foxtel took advantage of its market power in the retail pay television market. That power gave Foxtel's threat added credibility. There is no need to repeat either the description or the analysis. Seven submits that the present case is different from Rural Press v ACCC , because Foxtel was not merely acting to protect its market power. On the contrary, by refusing to take the C7 channels and, in effect, threatening the AFL, Foxtel's conduct was ' materially facilitated by its market power '. Seven identifies two ways in which Foxtel utilised its market power in relation to its decision not to negotiate with C7 for the carriage of its channels during the period from June 1999 until the end of December 2000: its statements to the AFL and its entry into the Foxtel Put. 2678 First, Foxtel's market power gave ' content and significance ' to its refusal to take the C7 channels and to its threat that AFL matches would not be shown to Foxtel subscribers even if C7 acquired the AFL pay television rights. It was only because Foxtel already had a dominant share of the retail pay television market that it could credibly threaten to deny itself subscription-driving content, such as the AFL, if that content could only be obtained through C7. 2679 Seven argues that if Foxtel had been operating in a competitive pay television market with its competitors eager to take AFL content, Foxtel would have found it commercially impossible to refuse to take C7. Furthermore, a threat to refuse to carry C7 would not have been taken seriously by any third party. It was only because Foxtel had a dominant share of the retail pay television market that the refusal to take C7 was such a ' potent negotiating tactic '. Foxtel's conduct was materially facilitated by its market power. According to Seven, the conclusion that Foxtel utilised its market power in this sense does not depend on a finding that it expected to be able to recoup the costs of its conduct by any future exercise of its market power. 2680 Secondly, Foxtel refused to accept attractive and profitable programming, in circumstances where it would not have engaged in that conduct in the absence of market power. If it lacked market power, it would have been exposed to a competitive response. Foxtel could ' afford ' to refuse to carry C7 only because it contemplated deriving supra-competitive profits later in a market in which it had substantial market power. In particular, by declining to deal with C7, Foxtel deprived itself of attractive programming that would have assisted it to compete with Optus (which already had C7). 2681 The absence of any analysis of the profitability of a direct acquisition compared with the profitability of carrying C7, both from the period from June 1999 to 2001 and in the later period from 2002 to 2006, was indicative of strategic conduct. That is, Foxtel hoped to confer the benefits of a sports channel supply monopoly on its associate, Fox Sports, and to benefit itself by entrenching its dominant position in the retail pay television market. 2682 Seven submits that Foxtel's conduct in refusing to take the C7 channels can be understood only as part of a strategy to maximise its long-term profits by entrenching its dominant position in the retail pay television market. It argues that in a competitive market, a profit-maximising firm would be unlikely to refuse to acquire an input that was likely to attract additional customers and increase profits. Seven contends that the rationale for Foxtel's conduct − obtaining a strategic benefit by gaining dominance in the retail pay television market − would not have existed in a competitive market. The critical issues raised by News should emerge clearly enough from my reasoning in this Chapter. 2684 I should record, however, that Telstra seeks to distinguish the position of Telstra Media from that of its Foxtel partner, Sky Cable. Telstra submits that when conduct is the result of a ' positive decision ' by Foxtel, it may be possible to attribute the market power of the firm to each partner. But when the conduct of the firm involves a failure to act because of an actual or likely use of the veto power of one of the partners, it is not permissible to attribute the market power of the partner exercising the right of veto, nor of the firm, to the partner not exercising that right of veto. Accordingly, if Foxtel did not take the C7 channels because of Sky Cable's actual or threatened veto, neither the market power of the Foxtel Partnership, nor of Sky Cable, can be attributed to Telstra Media. 2685 According to Telstra, even if Telstra Media had market power, a mere failure by Foxtel to do something did not involve the exercise of market power by Telstra Media. This follows, so Telstra argues, because Telstra Media, unlike Sky Cable, was always willing to accept C7 on the Foxtel platform on appropriate commercial terms. If Seven's case cannot succeed even if that assumption is made in its favour, there is no need to consider whether Telstra's contentions should be accepted. As I have noted, the pleaded case is that Foxtel did not accept the offer, either before or after its amendment by the letter of 13 May 1999. By depriving itself of attractive programming, Foxtel is said to have taken advantage of its market power in the retail pay television market. 2689 Seven's Reply Submissions attempt to recast the pleaded case. They rely on what is said to be Foxtel's conduct in failing to accept the ' indicative ' terms, contained in the letter of 16 April 1999, for incorporation into a subsequent agreement, presumably to be arrived at by a process of negotiation between the parties. This, however, is not the pleaded case the Respondents were required to answer. Nor is it the case argued in Seven's Closing Submissions which, consistently with the pleadings, speak of Foxtel ' refusing C7's offer of April 1999 '. The vagueness of Seven's revised position is illustrated by its assertion that Foxtel's refusal to accept the terms set out in C7's letter was not conduct that occurred at any particular time. In my opinion, it is not open to Seven to use its Reply Submissions to reconstruct a case outside the pleadings. 2690 The letter of 16 April 1999 was plainly not an offer capable of acceptance by Foxtel. Moreover, it expressly invited further negotiations. Even if the Statement of Claim is not to be read as alleging that the letter was a formal offer in the contractual sense, it is difficult to follow how Foxtel could have been expected to signify its willingness to accept some or all of the indicative terms without further discussions. It is even more difficult to see how it can be an exercise of market power to seek genuine clarification of indicative terms or to engage in negotiations as to the terms of a possible agreement. 2691 I have outlined in Chapter 7 ([692]ff) the events that followed C7's April 1999 letter. Negotiations and discussions continued between the parties. Foxtel raised what seem, on their face, to be perfectly legitimate commercial issues requiring resolution before an agreement could be reached. This phase of the negotiations culminated in Mr Freudenstein's letter of 24 May 1999, enclosing the draft term sheet he had prepared. There is no basis for finding (if Seven intends to make this submission) that the negotiations were not carried out by Foxtel in good faith, nor that the dealings were structured in a manner designed to cause harm to C7. The fact that Mr Freudenstein's term sheet did not specify a price genuinely reflected the point made in his covering note, namely that Foxtel wished to resolve other issues, including questions of quality, before proceeding to price negotiations. 2692 Nor is there a basis for concluding that any delay by Foxtel in concluding this phase of the negotiations reflected a decision by News that no agreement could be concluded with C7. It is true that Mr Mockridge had been told in March 1999 by Mr Lachlan Murdoch that News did not support the taking of C7 while the Fox Sports pricing issue remained unresolved with Telstra. Mr Mockridge clearly appreciated, as his internal memorandum of 29 March 1999 showed, that in the absence of a long-term agreement governing the supply of Fox Sports to Foxtel, the latter would be unlikely to enter any arrangement to take C7. 2693 Mr Mockridge said, however, that he remained optimistic that the dispute concerning Fox Sports could be resolved. He also said that until 24 May 1999, he had been prepared to negotiate with C7 with a view to taking its channels and it was not until late June 1999 that he changed his mind. Mr Mockridge's evidence is supported, among other things, by the note he prepared for Mr Rupert Murdoch in early April 1999 and the handwritten annotations he made on Mr Freudenstein's report of 5 May 1999 and on Mr Wood's letter of 13 May 1999. I accept his evidence. 2694 In my view, Seven has not made out its pleaded case in relation to Seven's letter of 16 April 1999. In any event, in my opinion there is no basis for finding that the course of negotiations between Foxtel and C7 until early June 1999 was materially influenced by News' determination that there should be no deal with C7 until the Fox Sports pricing issue had been resolved. Negotiations were conducted in a manner that might have been expected between two parties at arm's length. So far as Mr Mockridge was concerned, a deal with C7 was still possible. I therefore do not accept Seven's submission that by the end of May 1999, Foxtel had declined to take C7 and had broken off negotiations for taking the channels. 2695 Foxtel's response to C7's letter of 16 April 1999 was not materially facilitated by its power in the retail pay television market. In the absence of such power, Foxtel could have (and, if it matters, probably would have) acted in the same way. No contravention of s 46(1) has been established by Foxtel's refusal to accept the proposal made by C7 in its letter of 16 April 1999. Insofar as Seven relies on Foxtel's failure to accept the substance of the terms proposed in the 13 May 1999 letter as a contravention of s 46(1) of the TP Act , it faces the same difficulties as its case based on the earlier letter. My findings are the same. 2697 News correctly points out that C7's letter of 13 May 1999 promised Foxtel something that C7 could not deliver. The letter agreed to rebrand the channel to a name that did not include any reference to Seven. However, C7 could not make good on this commitment without the consent of Optus, which turned out not to be forthcoming. In view of the conclusion I have reached, it is not necessary to consider the significance of this point in the present context. No negotiations took place between Foxtel and C7 in relation to the June 1999 term sheet submitted by Mr Wood. As I have found, the letter was a genuine proposal (even if it had deliberate ambiguities) and was intended to elicit a commercial response from Foxtel. After the proposal had been made, Mr Wood attempted to engage in negotiations with Mr Freudenstein, but was unable to make contact with him until 30 June 1999. At that time, Mr Freudenstein informed Mr Wood that the whole idea of Foxtel taking C7 would be discussed at the forthcoming Foxtel Management board meeting, although he also told Mr Wood that the pricing proposed by C7 was too high. 2699 The issue was indeed discussed at Foxtel Management's board meeting of 8 July 1999 (postponed from 22 June 1999). In the meantime, the draft AFL Strategy papers, prepared within Foxtel Management, proposed an agreement to carry C7 from 1 July 1999 until 31 December 2001 (when the new rights period would commence). The drafts proposed that C7 should be carried as a stand alone channel to be sold by Foxtel to subscribers for $6.95 pspm. Foxtel would pay no more than $3.10 pspm (compared with $5.00 pspm in C7's June 1999 term sheet) and would provide an MSG of $4 million per annum. The business case, also prepared within Foxtel Management, produced a positive NPV of between $27.48 million and $70.32 million. 2700 The final AFL Strategy paper presented to the meeting proposed that consideration of the potential carriage of C7 be deferred until an assessment could be made as to whether a decision to take C7 would detract from the proposed bid by Foxtel to acquire the AFL pay television rights directly. (At that stage, the AFL pay television rights were expected to be awarded by the end of 1999, although the rights themselves related to the years 2002 to 2006. ) The paper argued the case for Foxtel to acquire the rights directly. While the paper set out the terms of C7's proposal, it recommended against taking the proposal further, in part because it was thought undesirable for Seven to be able to show the AFL that C7 could secure arrangements to supply all pay television platforms. The board meeting neither accepted nor rejected the recommendations in the AFL Strategy paper, but contemplated that informal discussions between Foxtel and the AFL would take place. Telstra continued to contend that C7 should be regarded as a comparator of Fox Sports for the purposes of resolving the pricing dispute relating to the supply of Fox Sports to Foxtel. 2701 There were two reasons for the disinclination of Foxtel Management at this time to pursue negotiations with C7 on behalf of Foxtel. Neither had to do with the price asked by C7, nor with the other proposed terms of supply. The first reason was that Mr Mockridge had formed the view by late June 1999 that Foxtel should seek the AFL pay television rights directly. He considered that any decision concerning the supply of C7 to Foxtel should be deferred until Foxtel could assess the extent to which a decision to take C7 would adversely affect its bid to acquire the pay television rights directly from the AFL. Mr Mockridge's principal concern, reflected in the final AFL Strategy paper and the discussion at the 8 July 1999 board meeting, was that he did not want Seven to gain an advantage by presenting itself to the AFL as an established supplier to all pay television platforms. 2702 The second reason was that News made it clear, through Mr Macourt, that it was not prepared to negotiate for the carriage of C7 on Foxtel, even on a temporary basis, until the pricing dispute relating to the carriage of Fox Sports on the Foxtel platform had been resolved. The dispute was between News (supported by PBL) and Telstra. Mr Macourt's concern, as I have found, was that Telstra would initiate legal proceedings based on News' alleged breaches of the Umbrella Agreement, as a means of forcing Foxtel to replace Fox Sports with C7 on the Foxtel platform or to renegotiate the price paid by it to Fox Sports. Mr Macourt was not motivated by a blanket desire to prevent C7 gaining access to the Foxtel platform, regardless of price or whether C7 was taken on basic or on a tier. Nor was his objective in taking this stance to bring about the destruction of C7, in order to increase Fox Sports' dominance in any market. 2703 Mr Macourt's concern, no doubt in accordance with the views expressed to him by Mr Lachlan Murdoch, was to prevent Telstra using the carriage of C7 on the Foxtel platform as a means of furthering its objectives in the pricing dispute. Mr Macourt appreciated that Telstra thought that the price paid by Foxtel to Fox Sports under the ' interim ' arrangements was unreasonably high and represented, in effect, a transfer of profits from Foxtel to Fox Sports. He also appreciated that Telstra wished to invoke the Umbrella Agreement to force News to accept a lower price for Fox Sports by demonstrating that the price then charged to Foxtel was unreasonably high and thus in breach of the Umbrella Agreement. Telstra was seeking to use the availability of C7 as a content supplier to Foxtel as a basis for arguing that the price under the interim arrangement was unreasonable for the purposes of the Umbrella Agreement, and therefore should be lowered. 2704 The disinclination of Foxtel, through Foxtel Management, to negotiate for the carriage of C7 on the Foxtel Service does not mean that if such negotiations had taken place, the terms proposed by C7 on 9 June 1999 would have been acceptable to, or accepted by, Foxtel. Mr Mockridge regarded a number of features of C7's proposal to be unacceptable. This was unacceptable to Mr Mockridge because he thought that such an option would give Seven a strategic advantage in the parties' negotiations with the AFL. • The proposed prices were higher than Mr Mockridge was prepared for Foxtel to pay (as Mr Freudenstein informed Mr Wood on 30 June 1999). In particular, Mr Mockridge understood the pricing to be higher than that paid by Austar for the same service. • On Mr Mockridge's understanding, C7's term sheet did not provide for two exclusively live games per week, despite Foxtel having emphasised that this was its minimum position. This represented a retreat from the earlier commitment by Seven, a retreat made necessary by Optus' unwillingness to consent to the rebranding. 2705 Foxtel's unwillingness to negotiate in relation to C7's 9 June 1999 term sheet is a component in Seven's case that Foxtel, during the period from 9 June 1999 until the end of December 2000, determined not to negotiate with C7 for the carriage of its channels on the Foxtel Service. I shall consider that aspect of Seven's case shortly. Assuming the term sheet of 9 June 1999 was an offer capable of acceptance (in the sense used in the Statement of Claim), Seven has not shown that in a more competitive market Foxtel would have accepted that offer. 2707 I put to one side Mr Mockridge's (genuine) concerns that C7's proposed option to renew the supply agreement would give it an advantage in the bidding for the AFL pay television rights, since Seven's position is that Foxtel's capacity to deny C7 a negotiating advantage was itself a manifestation and exercise of Foxtel's market power. The rest of Foxtel's concerns, especially as to price and the supply of exclusively live games, would have remained in a competitive market. Had further negotiations taken place, assuming competitive market conditions, Foxtel would not have accepted C7's proposal without substantial modification. An agreement on different terms ultimately might have been reached. But that is not sufficient to make out Seven's pleaded case. 2708 I appreciate that Seven contends that it is necessary to ascertain why Foxtel refused to accept the offer. It submits that if the refusal was for reasons that would not have been rational in a competitive market, it does not matter that Foxtel could or would have rejected the offer for other reasons. In these circumstances, Foxtel would still have taken advantage of its market power for (so Seven says) one of the proscribed purposes. 2709 There are two answers to this contention. First, Seven, by its pleading, has taken upon itself to prove that if Foxtel had faced significant competition from other pay television service providers, it would have accepted the offer. This was the basis on which the case was fought and explains why the Respondents focussed on the unacceptable features of the ' offer '. Seven has not made out the case it has attempted to prove. 2710 The second is that, as I have already noted, Foxtel's refusal to negotiate in relation to the 9 June 1999 letter is a component in Seven's broader ' refusal to deal ' case and needs to be considered in the context of that case. I now turn to that issue. Some matters emerge from the confusion with reasonable clarity. 2712 First, Mr Sumption, in his oral closing submissions, accepted that one reason for News and PBL refusing to support the idea that Foxtel should negotiate with C7 to take its channels was their determination that negotiations should not take place until the Fox Sports pricing dispute with Telstra had been resolved. However, Mr Sumption contended that even if that were so, Foxtel had taken advantage of its market power for the purpose of marginalising C7. 2713 Secondly, News does not dispute that, following Foxtel Management's board meeting of 8 July 1999, Foxtel adopted a strategy of deferring any negotiations with C7 until after the AFL pay television rights for 2002 to 2006 had been dealt with. News says that Foxtel adopted the strategy in order to give itself an advantage in bidding (through News) against Seven for the AFL pay television rights. 2714 Thirdly, Seven's primary position is that the refusal to deal with C7 was part of a strategy designed to enable Foxtel to acquire the AFL pay television rights and, by that means, to destroy C7. However, Seven contends that, even if News' ' deferral ' scenario is correct, Foxtel had nonetheless used its market power. • By June 1999, Mr Mockridge had formed the view, for what he saw as sound commercial reasons, that Foxtel should acquire the AFL pay television rights directly from the AFL. He had also formed the view, reflected in the AFL Strategy paper for the Foxtel Management board meeting of 8 July 1999, that Foxtel should not consider a deal with C7 until Foxtel had concluded an agreement with the AFL or had decided that such an agreement was not feasible. • The Foxtel Management board, at its meeting of 21 September 1999, encouraged Mr Mockridge to continue his contacts with the AFL with a view to securing the AFL pay television rights, perhaps through a joint venture with the AFL. • Mr Mockridge's draft AFL Strategy paper, prepared for Foxtel Management's 26 October 1999 board meeting, sought approval for Foxtel to make an offer to the AFL for the AFL pay television rights. It also recommended that if Foxtel succeeded in its bid, an interim deal should be negotiated with C7 until the end of 2001. The latter recommendation was removed from the final version because Mr Lachlan Murdoch made it clear that News would not agree to C7 being taken on the Foxtel Service until the Fox Sports pricing dispute between News and Telstra had been resolved. The board approved the recommendation to negotiate directly with the AFL. It was implicit in the board's endorsement of the recommendation that Foxtel would not pursue negotiations for the carriage of C7 until the outcome of the bidding process was known. • Foxtel Management rejected Seven's offer of 17 November 1999 on valid commercial grounds. The terms of the rejection, however, made it clear that, in any event, Foxtel was not interested in taking C7 because to do so would interfere with Foxtel's negotiations for the AFL pay television rights. • Telstra Media did not agree at any time between June 1999 and December 2000, whether at a Foxtel Management board meeting or otherwise, that Foxtel should not negotiate for the carriage of C7 until the Fox Sports pricing dispute had been resolved. On the contrary, Telstra wanted negotiations to take place in order to assist it to achieve its objective of reducing the price paid by Foxtel for Fox Sports. Nonetheless, by agreeing to the recommendation that Foxtel Management negotiate directly with the AFL on behalf of the Foxtel Partnership, the Telstra representatives appreciated that there would be no negotiations with C7 pending the outcome of the bidding for the AFL pay television rights. • The decision by News, supported by PBL, not to negotiate with C7 until the Fox Sports pricing dispute was resolved was not the product, in whole or in substantial part, of an objective of destroying C7. • Mr Mockridge's view that Foxtel should not negotiate with C7 until the AFL pay television rights bidding process had run its course had nothing to do with any objective of destroying C7. His reasons were explained in his evidence ([733]-[735]). Mr Falloon shared Mr Mockridge's view, as seen by his contribution to the discussion at the Foxtel Management board meeting of 8 July 1999. • Throughout the period from July 1999 to December 2000, Foxtel expected the AFL pay television rights to be awarded within a period of a few months. In particular, in July 1999, the Foxtel Management board understood that the rights would be awarded by the end of that year (that is, within a period of about five months). Seven's written submissions make no reference to this contention. 2717 The first reference to the argument appears in Seven's Case Summary, filed after its Reply Submissions. The Applicants say that if Foxtel proceeded on this basis this is a purpose falling within s.46(1)(c) [ASR 8.35-70]'. There is nothing in these paragraphs, however, that seeks to make out the argument identified in the Case Summary. 2718 I asked Mr Sumption in his oral closing submissions what Seven's position was if I were to find that a substantial reason for Foxtel's refusal to deal with C7 was News' and PBL's unwillingness to allow Foxtel to negotiate with C7 until the Fox Sports pricing dispute with Telstra had been resolved. Mr Sumption accepted that one of the reasons for Foxtel refusing to take C7 was News' desire (supported by PBL) to secure long-term arrangements relating to the supply of Fox Sports to the Foxtel platform. He said that a finding to that effect, on the basis that News was seeking to avoid competition from C7, would be enough of itself for Seven to succeed in its claim under s 46(1) of the TP Act . Mr Sumption acknowledged that, if this claim succeeded, the measure of damages would be smaller than Seven's claims for the ' whole scheme '. 2719 In response to my inquiry as to whether a case to this effect had been pleaded, Mr Sumption initially said he was unsure. He later submitted that the pleading of the cause of action under s 46 of the TP Act covered the case sought to be made in par 68 of Seven's Case Summary. This was so because the Statement of Claim (par 414) alleged that ' Foxtel ' had taken advantage of its power in the retail pay television market for the purpose of deterring or preventing C7 from engaging in competitive conduct in the wholesale sports channel market and the wholesale channel market. 2720 Mr Sumption's response prompted a protest from Mr Hutley that no s 46 case had been pleaded that Foxtel had refused to take C7 because News and PBL had refused to support negotiations with C7 until the Fox Sports pricing issue had been resolved. Mr Hutley, in his closing submissions, contended that the Statement of Claim did not cover the argument Seven had belatedly raised and that the Respondents would be prejudiced by any application to amend the pleadings at such a late stage. In the event, Seven made no application to amend further the Statement of Claim. 2721 In my view the pleadings do not cover the contention identified by Seven in par 68 of its Case Summary. There is no express reference in the pleadings, or (so far as I am aware) in any particulars, to the Foxtel Partnership resolving not to negotiate with C7 because of the Fox Sports pricing issue. This is not surprising, because the primary focus of Seven's case from the beginning has been that ' Foxtel ' (meaning Sky Cable and Telstra Media as partners in the Foxtel Partnership) determined not to deal with C7 at any time or on any terms and that this was an element of the conduct of the Foxtel Partnership engaged in for the purpose of destroying C7 as a viable channel supplier. 2722 The key allegation made by Seven is that during the period from 9 June 1999 until the end of December 2000, Foxtel determined not to negotiate with C7 for the carriage of C7's channels on the Foxtel Service (par 401B). If that allegation was intended to cover what can be described as the Fox Sports contention (that is, that Foxtel had determined not to negotiate with C7 until the Fox Sports pricing issue had been resolved), it is extremely odd that the allegation is limited to the period of 18 months ending with the award of the AFL pay television rights to Foxtel. The Fox Sports pricing issue was not resolved between the Foxtel partners until many months after December 2000. The dispute therefore constituted an impediment to Foxtel taking the C7 channels well beyond December 2000. 2723 More importantly, the allegation made by Seven is that Foxtel (Sky Cable and Telstra Media carrying on business as partners under the name ' Foxtel ') determined not to negotiate with C7. No allegation is made that News or PBL (or, for that matter, Sky Cable) separately made that determination. It is abundantly clear that Telstra did not share the view of News and PBL that the Foxtel Partnership should not negotiate with C7 until the Fox Sports pricing issue had been resolved. 2724 If the Statement of Claim was intended to embrace the Fox Sports contention, the pleading should have alleged the material facts necessary to demonstrate that Foxtel determined not to negotiate with C7 until the Fox Sports pricing dispute had been resolved. In the absence of the material facts being identified, it is quite unclear how the pleaded ' determination ' can be sheeted home to each of the Foxtel partners. Is it because Sky Cable (or News and PBL through Sky Cable) exercised its veto power? If so, precisely how was this a decision of the Foxtel Partnership? What is Telstra Media alleged to have done in relation to the Fox Sports pricing issue? 2725 If Seven intended to rely on the Fox Sports contention only against Sky Cable (or against News and PBL), the Statement of Claim should have spelled out how Sky Cable took advantage of its market power to prevent Foxtel dealing with C7. In particular, if Seven wished to make out a case based on something other than a ' determination ' of Foxtel, that something should have been precisely identified. Sky Cable and Telstra Media (and News, PBL and Telstra) were entitled to be told the case they had to meet. They were also entitled to conduct the proceedings on the basis that Seven's case was bounded by a fair reading of the Statement of Claim. 2726 It follows that, in the absence of any application to amend the pleadings (which doubtless would have been vigorously opposed), Seven cannot rely on the Fox Sports contention as an independent basis for establishing its pleaded cause of action under s 46(1) of the TP Act . 16.6.2.4 WHAT DID FOXTEL FOREGO? Seven contends that in making this determination, Foxtel forewent the opportunity to fill the last significant gap in its sports programming line-up for a period of two and a half years. Seven also contends that Foxtel (through Foxtel Management) knew that the C7 channels could be obtained for the Foxtel platform on terms that would be ' very profitable ' for Foxtel. 2728 Seven considerably overstates the first of these contentions. As I have previously pointed out, the Statement of Claim alleges, for the purposes of Seven's s 46(1) cause of action, that Foxtel determined not to negotiate with C7 in the period from 9 June 1999 until the end of December 2000. No allegation is made in this context of a determination not to negotiate during any period after December 2000. (There is an allegation in par 198(2)(p) of the Statement of Claim, in quite a different context, that the Foxtel Partnership refused to take C7 from November 1998 until December 2001. However, this allegation is not incorporated into the pleaded cause of action under s 46(1) of the TP Act. On the pleadings and on the findings I have made, Seven is in effect limited to a claim that Foxtel decided not to negotiate with C7 because a refusal to negotiate would have enhanced Foxtel's prospects of successfully bidding against Seven for the AFL pay television rights. 2730 In July 1999, when Mr Mockridge suggested direct negotiations with the AFL, he and the members of the Foxtel Management board thought that the award of the AFL pay television rights would be finalised by the end of 1999. As I have found, at any given time between June 1999 and December 2000, the AFL's decision was thought to be no more than five or six months away, if that. For example, Mr Mockridge told the Foxtel Management board at the 7 February 2000 meeting that the AFL wanted to deal with the rights within the next two months. Mr Mockridge and representatives of the Foxtel partners thought that the decision not to negotiate with C7 until the AFL awarded the pay television rights would deprive the Foxtel platform of AFL content for no more than a few more months. Once the rights had been awarded, there was no impediment to discussions with C7 (other than News and PBL's wish that the Fox Sports pricing issue should be resolved). Seven also acknowledges that the ten year model did not take into account the MSGs incorporated into C7's 16 April 1999 ' offer ', but points out that this model assumed a 10 per cent take-up rate. Seven nonetheless says that the models indicate that C7 would have been profitable for Foxtel. Indeed, Seven contends, by reference to an analysis of the models and the terms of C7's 16 April 1999 letter, that Foxtel's ' adjusted profit ' from the carriage of C7 would have been somewhere between $1.98 million and $3.53 million per annum over the years 2000 to 2003. 2733 As News points out, the final version of the AFL Strategy paper represented Mr Mockridge's views, while the drafts did not. The final version recorded, by reference to C7's 9 June 1999 letter, that Foxtel would require a tier penetration of 23 per cent to break even if it was to carry C7. Mr Mockridge, whose evidence I accept, confirmed in evidence that at the time he regarded Mr Freudenstein's most conservative take-up assumptions (that is, a tier penetration rate of 20 per cent) as unacceptably optimistic. It is also true, as News points out, that Mr Freudenstein's models did not precisely adopt the terms offered by C7 and, in some respects, assumed terms more favourable than those put forward by C7. 2734 News submits that the board of Foxtel Management, which had the benefit of Mr Mockridge's views but not of Mr Freudenstein's, cannot be regarded as having foregone any opportunity to make a profit out of the carriage of C7. On the contrary, News contends that Foxtel was not foregoing anything of value by deferring consideration of taking C7 on the Foxtel platform until after the bidding for the AFL pay television rights had been resolved. 2735 News' submissions seem to me to understate somewhat the perceived value to Foxtel of taking the C7 channels during the period 1999 to 2000, pending the award of the AFL pay television rights. By the same token, I think that Seven's submissions substantially overstate the perceived benefits. Seven's assessment gives insufficient weight to Mr Mockridge's genuine scepticism about the assumptions incorporated into the models, which he conveyed to the Foxtel Management board. 2736 The decision by the Foxtel Management board not to consider taking the C7 channels until the AFL pay television rights had been awarded was seen at the time by the representatives of News and PBL as likely to involve some costs to Foxtel. In my view, Mr Mockridge and representatives of the Foxtel partners must have understood that Foxtel, by declining to deal with C7, was foregoing an opportunity to derive some profits from the carriage of the C7 channels pending the award of the AFL pay television rights. In addition, they would have understood that Foxtel would probably secure some advantages from the Foxtel Service filling its one remaining premium sports ' gap ' sooner rather than later. 2737 The nature of the opportunity foregone by Foxtel must, however, be assessed in context. At any given time from mid-1999 to the end of 2000, the AFL was expected to make its decision within, at most, five or six months. A decision not to negotiate with C7 until the AFL awarded the pay television rights did not preclude negotiations with C7 once the AFL had awarded the rights. The decision left it open to Foxtel, if it succeeded in its bid for the AFL pay television rights, to take the C7 channels from a time very shortly after the AFL awarded the rights until the commencement of the new rights period in 2002 (by which time C7 would no longer be able to supply AFL content). 2738 The Foxtel Management board and Mr Mockridge believed that the costs to Foxtel (including opportunities foregone) of not taking the C7 channels, pending the award of the AFL pay television rights, were very modest. In my opinion, any fair assessment of the likely profits foregone (bearing in mind that the Foxtel Partnership was understood to be depriving itself of the C7 channels for only a short period) would not have exceeded $500,000 to $750,000. The intangible benefits foregone by not taking the C7 channels for a short period would have been of little consequence to Foxtel. Having regard to what the representatives of Foxtel and the Foxtel partners thought was at stake in the bidding for the AFL pay television rights, the costs of not negotiating with C7 pending the outcome of the bidding contest were minor. 2739 The question is whether, in these circumstances, the conduct of Foxtel in refusing to deal with C7 until the AFL awarded the pay television rights was materially facilitated by Foxtel's substantial degree of power in the retail pay television market. This requires consideration of whether Foxtel could have acted in the same way in a competitive market. As the authorities establish, this does not mean a perfectly competitive market, but a hypothetical market in which there is a sufficient level of competition to ensure that no participant has a substantial degree of power in the market. Similarly, there would have been competitive pressures on other retail pay television platforms to take AFL content from Foxtel, should it have acquired the AFL pay television rights. The AFL would therefore have been likely to conclude that, whoever won the rights, the probabilities were that AFL content would find its way on to all retail pay television platforms. 2743 Nonetheless, it is one thing for a bidder for the AFL pay television rights already to have secured carriage on all pay television platforms; it is another thing for the bidder (and the AFL) to rely on future commercial negotiations to bring about that outcome on satisfactory terms. In the former case, the terms of carriage would be known, even though there might be no assurance that the arrangements would continue into the new rights period. In the latter case, negotiations, by hypothesis, would take place within the constraints imposed by a competitive retail pay television market, but they would necessarily involve some degree of uncertainty that might prove to be troubling for (in this case) the AFL. There are many possible impediments to establishing satisfactory commercial relationships, even if a potential buyer of sporting content is operating in a competitive market. 2744 Whether Foxtel could have denied itself access to the C7 channels pending the outcome of the bidding process, assuming a competitive retail pay television market, depends on the costs it would have incurred (including the opportunities foregone) by pursuing this strategy, compared with the assessed benefits of taking that course. On the findings I have made, the costs would have been low, partly because the AFL's decision was expected within a short period and partly because the foregone benefits that Foxtel denied itself by not taking C7 were very modest by the standards of this industry. The benefits would no doubt have been difficult to assess precisely, because the assessment would have involved determining the likely response of the AFL to the uncertainties of future negotiations between C7 and Foxtel. In my view, it would have been commercially rational for Foxtel, assuming a competitive retail pay television market, to have denied a competing bidder a perceived advantage in the bidding process for the AFL pay television rights if the costs of doing so were both very modest and short-term. 2745 It follows that, in my view, Foxtel, in refusing to deal with C7 pending the award of the AFL pay television rights, did not take advantage of its substantial power in the retail pay television market. The presentations made to the AFL by Mr Mockridge were all verbal. He was taken at length to various drafts that were prepared within Foxtel Management, some of which he annotated. That is,] together we have access to 400+250=650k [subscribers] gross by 20k+ a month while Optus has 180k and is static[. That is, the] conclusion is that C-7 Sports channel with Optus/Ch7 is a dead-end and counter-productive to AFL's longer term distribution objective'. --- That's the proposition. --- That was my view in preparing this submission to the AFL, yes. --- I think in terms of this presentation that is the implication of that remark, yes. --- I think I make a distinction between the submission and what my position might have been in regard to C7. --- Correct. --- Yes'. He also made the point that the AFL was a sophisticated negotiator and was hardly likely to believe that, if Seven succeeded in obtaining the AFL pay television rights, Foxtel would simply refuse to negotiate with C7. Understandably enough, however, Mr Mockridge could not remember the precise contents of his conversations with the AFL. 2752 In my view, it is unlikely that Mr Mockridge said unequivocally that Foxtel would not take C7 even if Seven obtained the AFL pay television rights. It seems to me quite plausible that Mr Mockridge would have assessed that his AFL audience was sophisticated enough to take such an unvarnished assertion with more than a grain of salt. Rather, the likelihood is that Mr Mockridge would have implied that Foxtel would be quite prepared not to take C7, leaving it unclear whether this would come about because of a blanket refusal to deal with C7 or simply because of the parties' likely inability to come to commercial terms. The fact that the AFL documents do not record any unequivocal statement that Foxtel would not take C7, even if Seven obtained the AFL broadcasting rights, tends to support this interpretation of Mr Mockridge's position. 2753 The precise information conveyed by Mr Mockridge to the AFL does not seem to me to be of crucial significance because a more or less verbatim record is available of a presentation made to the AFL by Mr Blomfield in the company of Mr Lachlan Murdoch, Mr Campbell and others, on 9 May 2000. (This was after Mr Mockridge had ceased to be CEO of Foxtel Management in February 2000. Maximum exposure for the game - maximum revenue share for the code. C7 has been offered to FOXTEL and we have declined. Each channel may require their own set top box, their own sales team, separate accounts. (Emphasis added. He did not state explicitly that Foxtel would not deal with C7, but he implied that C7 would find it extremely difficult, for one reason or another, to get onto the Foxtel platform even if Seven succeeded in its bid. In substance, he was content to convey the impression that if the AFL wanted AFL content to be broadcast on every platform, it could achieve that result with certainty only by awarding the AFL pay television rights to Foxtel. 2755 That this was the substance of the message conveyed to the AFL and understood by it is supported by a paper prepared for the AFL's Broadcast Negotiating Committee on 30 May 2000, three weeks after Mr Blomfield's presentation. The paper assessed the strengths and weaknesses of Seven's proposals. Among the strengths was the existence of a direct relationship between a free-to-air operator and a pay television operator (suggesting that the AFL saw benefits in a single entity or a joint venture controlling all AFL broadcasting rights). There is no guarantee to end up on Foxtel'. (An alternative, although I think less probable, explanation is that the AFL understood Foxtel to have made such a threat, but the AFL did not take the threat literally in view of its perception of the realities of the marketplace. ) The AFL understood that there could be no guarantee that C7 would be on the Foxtel platform, since that outcome depended on successful negotiations between the parties once the AFL pay television rights had been awarded. 2757 It follows that Seven has not made out its pleaded case that representatives of Foxtel told the AFL that C7 would not be given the opportunity to broadcast its channels on the Foxtel platform. In any event, for much the same reasons as I have given in relation to Foxtel's refusal to deal with C7 pending the award of the AFL pay television rights, I do not think that Foxtel's making of the statements to the AFL was materially facilitated by its substantial degree of power in the retail pay television market. If the market had been competitive, Foxtel could rationally have made the statements it did in order to capitalise on the uncertainty as to whether C7 would be taken by the Foxtel platform once the AFL pay television rights had been awarded. The possible combinations and permutations in this case are virtually limitless. It is therefore not surprising that Seven does not appear to have specifically addressed the question of what relief, if any, should flow from a finding that Foxtel's conduct in making statements to the AFL contravened s 46(1) of the TP Act . 2760 The Statement of Claim is not clear on the point. It alleges that Foxtel's statements to the AFL ' reinforced ' certain consequences flowing from other contraventions of s 46 of the TP Act (par 472). They include C7 being prevented from acquiring the AFL pay television rights (par 468). It may be that Seven intends to assert that, if the relevant statements had not been made to the AFL, Seven's bid for the AFL broadcasting rights (including the pay television rights) would or might have succeeded. 2761 If Seven intends to advance such a claim, it cannot succeed. The evidence suggests that the AFL's preference for News' bid over that of Seven had nothing to do with the statements that were made to the AFL. It is true that the paper prepared for the AFL's Broadcasting Negotiating Committee in May 2000 recorded that there was no guarantee that C7 would end up on Foxtel. However, there is nothing in the later AFL documentation assessing the competing bids which suggests that the statements played any part in the final decision to award the pay television rights to Foxtel (through News). Indeed, there is nothing in the AFL's contemporaneous records to suggest that, as the time for awarding the rights came closer, the AFL thought that Foxtel would not take the C7 channels if Seven succeeded in its bid. 2762 On the contrary, Seven's bid failed because the AFL considered that News was offering a much higher price and that the other terms of its bid were satisfactory. As I have found in Chapter 8, Seven put itself out of the running by not making its best bid for the AFL pay television rights and, in that sense, was the author of its own misfortune. There was no causal relationship between the statements made by Foxtel to the AFL concerning C7's access to the Foxtel platform and any loss sustained by Seven. 2763 In the absence of proof of any compensable loss to Seven, I would not be disposed to grant declaratory relief in respect of any contravention of s 46 of the TP Act that may have occurred by reason of Foxtel making the statements to the AFL concerning the carriage of C7. The contraventions took place some seven years ago and, like so many other matters in this case, the transactions of which they were part have been superseded by subsequent events. Without minimising the importance of any breach of s 46, the contraventions here were not of major significance and had no discernible impact on the recipients of the statements. Had the Statement of Claim not added the complaint about the statements to the more serious alleged contraventions of s 46 of the TP Act , the complaints of themselves are unlikely to have warranted the institution of proceedings in this Court. 2765 Seven says that a statement to this effect was of particular significance since the amount offered by C7 for the NRL pay television rights depended on the number of subscribers to the pay television services carrying NRL content. It was a reply to Mr Gallop's request for information concerning the litigation relating to the use of the Telstra Cable . The entirety of Ms Ireland's letter, with the possible exception of one sentence, provides information relating to C7's application for ' retail access ' (to use Seven's term) via the Telstra Cable. Seven does not suggest that any of the information provided by Ms Ireland was inaccurate or misleading. That was a perfectly accurate statement and, in my view, carried no implication as to whether or not C7 would be taken on the Foxtel Service if C7 succeeded in acquiring the NRL pay television rights. 2769 Given this interpretation of Ms Ireland's letter, its contents do not give rise to any issue under s 46(1) of the TP Act . The admissions in the Respondents' defences carry Seven's s 46 case no further. If none of the conduct complained of by Seven constituted a contravention of s 46 of the TP Act , it is difficult to see how the conduct as a whole could constitute such a contravention. Indeed, I do not understand Seven to argue that if its individual claims fail it should nonetheless succeed by reference to the totality of the conduct. 2771 It follows that Seven's case based on s 46 of the TP Act cannot succeed. 17 SEVEN'S CASE BASED ON DENIAL OF ACCESS TO THE TELSTRA CABLE [2772] 17.1 Clause 5.2 of the BCA [2773] 17.2 Seven's Pleaded Case [2781] 17.3 Respondents' Admissions [2790] 17.4 Seven's Submissions [2792] 17.5 An Important Finding [2795] 17.6 Did Giving Effect to cl 5.2 of the BCA Have the Effect of Substantially Lessening Competition? In this Chapter I consider whether Seven has made out that case. The parties to the agreement were Telstra Multimedia and Foxtel Management on behalf of the Foxtel Partnership. Seven pleads that the effect of cl 5.2 was that Telstra Multimedia could not permit any party other than Foxtel to use the Telstra Cable (the cable network owned by Telstra Multimedia and used by Foxtel to provide its pay television service) (par 45). 2776 Sky Cable makes admissions in its Defence as to the effect of cl 5.2 of the BCA with which Seven appears to be content. • An ordinary pay television broadcast is not a ' Narrowband Service ' and thus falls within the definition of ' Service '. • If C7 was to establish its own retail pay television platform on the Telstra Cable, it would be an ' Other Service Provider ' within the meaning of cl 5.2. • As Seven notes, the definition of ' Broadband System Service ' is uninformative. Under the BCA, Telstra Multimedia provided both the physical means of distribution and the distribution service for carriage of Foxtel broadcast signals to STUs of individual customers. The requests commenced on 25 August 1999 and continued until December 2000. However, Seven does not seek to press a case that Foxtel or Telstra Multimedia continued to give effect to cl 5.2 of the BCA after the Full Federal Court handed down its decision in favour of Seven in the ' protected contractual right ' proceedings on 18 August 2000: Foxtel Management Pty Ltd v Seven Cable Television Pty Ltd [2000] FCA 1159 ; (2000) 102 FCR 464. Thus the only pleaded matters on which Seven now relies are those that occurred prior to 18 August 2000. 2782 By refusing C7's requests and resisting the supply of any services to C7, Foxtel and Telstra Multimedia gave effect to cl 5.2 of the BCA (par 377). This conduct constituted a contravention of s 45(2)(b)(ii) of the TP Act (par 392C) because at the time Foxtel and Telstra Multimedia gave effect to cl 5.2, the effect or likely effect of the clause was to substantially lessen competition in a market (par 392B). An important factor for the AFL in awarding the AFL pay television rights was the number of viewers to whom the proposed licensee would be able to broadcast (par 379). In assessing Seven's offer, the AFL proceeded on the basis that the C7 channels would not be, or were unlikely to be, broadcast to members of the public connected to the Telstra Cable (par 380A). The effect or likely effect of the failure by C7 to acquire the AFL pay television rights was to substantially lessen competition in the various markets relied on by Seven (par 382). Accordingly, Foxtel and Telstra Multimedia had engaged in conduct in contravention of s 45(2)(b)(ii) of the TP Act (par 383). 2789 Seven pleads a similar case in relation to the NRL pay television rights (pars 389-392C). It makes broadly similar admissions in relation to the insufficient capacity ground based on the Telstra Cable's lack of capacity to satisfy C7's request (par 52(b)). 2791 The Telstra Respondents make more or less equivalent admissions in their Defence (par 73). The issue of whether C7 was going to be available to Foxtel subscribers was a matter of importance both to the AFL and the NRL PEC. According to Seven, the denial of access to C7 created a perception that its prospects of getting on to the Telstra Cable were uncertain. 2793 Seven submits that if the ACCC's Interim Determination had been made prior to the award of the AFL pay television rights in December 2000 (instead of the date that the Interim Determination was actually made, 5 April 2001), Foxtel would have come under pressure to make a commercial offer to C7. Thus when Seven came to make its offer to the AFL for the pay television rights (as part of the broadcasting rights), a significant amount of the uncertainty surrounding its prospects of gaining access to Foxtel subscribers would have been removed. In the case of the NRL, the delay was likewise prejudicial in circumstances where the quantum and attractiveness of C7's offer was determined by assessments as to the likely number of subscribers. (Emphasis in original. In or about mid 1999, in consultation with others including Mr Stokes and Mr Wise, Seven Network developed a retail access strategy. I considered that C7 could, given its existing wholesale arrangements with Optus and Austar, potentially in the alternative to wholesale access to Foxtel, offer its sports channels on a retail basis. Accordingly, I considered that C7 should offer its sports channels directly to viewers on the [Telstra] [C]able, by seeking access to the [Telstra] [C]able under the access regime in the [TP] Act. I considered, however, that this could only be done in conjunction with a continuation of the wholesale supply to Optus and Austar. The existence of wholesale access arrangements with Optus and Austar gave C7 a revenue base to largely cover the cost of production and obtaining rights. I considered that such a revenue base was essential given the likely additional and extensive costs of establishing a retail Pay TV presence for C7'. Mr Gammell agreed that he had taken on this role at Mr Stokes' request. 2796 It will be recalled that Ms Lowes advised her colleagues at Telstra that her view, based on conversations with Mr Gammell, was that C7's efforts to secure retail access via the Telstra Cable were really designed to pressure Foxtel to take the C7 channels. The significance of Ms Lowes' understanding of Seven's position lies in Mr Gammell's responses when he was asked about his conversations with Ms Lowes. --- Yes. --- Something similar I would have imagined, yes. --- Along those lines. Not quite in those words, but yes. --- No. --- That's correct. --- That was true too. You say you wished to run a retail business to Ms Lowes? --- It wasn't our preference. --- Yes. --- Yes'. Nonetheless, he claimed that, although it was not Seven's preference to run a retail business, Seven was prepared to do so and he had told Mr Lowes that. --- The way we regarded it, your Honour, was that we had to have more subscribers, if we could not get them via wholesale we would do it via retail, but it would not have been our preference. But if there was no other choice, you have to make do with what you can do. --- Because, to our way of thinking, Foxtel would ultimately think it would be preferable to enter into a wholesale access agreement with us than to have a competitor on a retail access basis who would not have the same intention with their --- I mean, they would be at risk of losing their customers on their cable to another retail access provider. --- Yes, your Honour. --- Yes, your Honour'. 2798 Mr Stokes acknowledged that he knew Mr Gammell had met with Ms Lowes around August or September 1999. However, he denied that Mr Gammell had told him what he (Mr Gammell) had conveyed to Ms Lowes about Seven's objectives. Mr Stokes also maintained that from mid-1999 until the end of 2000, he intended that C7 should run a retail pay television business if it could get access at commercial value. 2799 When taxed on this evidence, Mr Stokes agreed that he had accepted Mr North's advice that Seven should use the access application as a pressure-point to be applied to Foxtel. An example of this strategy is the use Mr Stokes made of his letter of 12 May 2000 to Mr Blomfield, in which he threatened to take the ' road of forced access ... if we are compelled to '. Mr Stokes sent a copy of the letter to Dr Switkowski in order (as Mr Stokes said in evidence) to alert him to the issues that it raised, including the possibility that Telstra would be sued for any delay in C7 gaining access to the Foxtel platform. Mr Stokes agreed that the object was to concentrate Telstra's mind ' on endeavouring to secure Foxtel to agree to a commercial deal to take the C7 channels '. --- No. --- No. --- No. --- No. --- Yes. --- That is correct. --- No. --- Sorry, no. --- To undertake any feasibility study, we need some basis. We had no concept of any basis on which access was going to be granted to us. --- Reasonably, yes. --- Yes. --- Yes. --- Yes. --- No. --- I didn't feel I needed to, Mr Hutley. --- No. Didn't you want to know if the whole thing was just an illusion? --- I was satisfied in my mind that it wasn't'. On 30 October 2000, Ms Rothery advised Mr Gammell of the need for Seven to obtain expert advice for the forthcoming ACCC arbitration. She thought that an expert was needed to plot the ' various possible ways of getting the C7 signal to the cable '. She also thought that information was needed on how Seven could set up a separate subscriber billing system if the ACCC would not agree to Seven using Foxtel's system. 2802 It is difficult to resist the conclusion that, if Mr Stokes and Mr Gammell had been serious about utilising access to the Telstra Cable, Seven would have addressed the issues posed by Ms Rothery very much earlier. Mr Stokes accepted that, as at May 2000, Seven lacked the capability to utilise access to the Telstra Cable. It simply did not have the technical capacity, the equipment, the staff or the business plans to do so. 2803 As appears from the account in Chapter 10, the ACCC provided the impetus for Seven to develop a business plan that would be implemented if Seven gained retail access to pay television subscribers via the Telstra Cable. The ACCC pointed out to Mr North in late March 2001 that the absence of a business plan made it impossible for the ACCC to assess the commercial impact of C7 gaining access to the Telstra Cable. At that point, Seven finally engaged consultants to assist in the presentation of its case to the ACCC. 2804 I do not accept Mr Stokes' or Mr Gammell's evidence that they ever had any serious intention of taking advantage of retail access via the Telstra Cable, should it have become available. The absence of even the semblance of any business plan tells against their evidence on the point which, not surprisingly, was not at all convincing. In my view, what Mr Gammell told Ms Lowes was true. Seven's request for access, and the litigation it instituted to pursue that request, were simply designed to put pressure on Foxtel and on the Government in the manner Mr Gammell described so frankly to Ms Lowes. 17.6 Did Giving Effect to cl 5.2 of the BCA Have the Effect of Substantially Lessening Competition? On my reading of the Statement of Claim, an essential element in Seven's case is that, had the parties to the BCA not given effect to cl 5.2, Seven would have availed itself of retail access via the Telstra Cable. Seven says that had C7 gained access to the Telstra Cable for its channels, it would have provided competition to Foxtel in the retail pay television market. Seven also says that C7's role as a direct provider of pay television services to retail customers was likely to have changed the perception of the AFL and the NRL Partnership in the bidding process and thus was likely to have increased Seven's chances of securing both sets of rights. 2806 This case breaks down, in my opinion, because Seven never had any intention of availing itself of retail access, even if the opportunity had become available to it well before December 2000. It pursued the retail access claim (which it knew would be vigorously resisted) solely as a means of exerting pressure on Foxtel and Telstra in relation to the carriage of C7 on Foxtel and the multi-channelling issue. Had Seven been granted access to the Telstra Cable, it would not have taken advantage of its entitlement. Nothing would have changed. The conduct of the parties to the BCA, in giving effect to cl 5.2, was therefore not likely to have the effect of substantially lessening competition in any market. 2807 Seven, however, also puts its case in an alternative way. In those circumstances it would have been apparent to the AFL and the NRL Partnership that the C7 channels would be so broadcast. This does not depend (as your letter appears to assume) on C7 commencing or having already commenced to provide a retail service'. That perception would have been altered in a significant respect if C7 had obtained an interim determination providing that it was entitled to obtain access. There is no suggestion that C7 would in fact have gained access prior to the disposition of rights, because this of course would have taken a further (possibly lengthy) period. Contrary to [News'] submission ... [Seven does] not concede ... and indeed it is not the case, that C7 never had any intention of obtaining retail access. However, [Seven] submit[s] that this issue, given inordinate attention by the Respondents, is irrelevant to the particular cause of action under consideration because the AFL and the NRL Partnership were dealing with the matter at a level of perception and impression'. The fundamental difficulty with Seven's alternative contention is that it assumes that Seven could have misled the AFL and the NRL Partnership as to its true intentions in relation to retail access. If Seven never had any intention of availing itself of retail access, it was hardly likely, in the absence of misleading conduct, that the perception of the AFL or the NRL Partnership would have been materially affected. In assessing the likely effects on competition of giving effect to a particular provision, it is not appropriate to assume, in the counter-factual world, that a party will either misrepresent its intentions, or be successful in misleading the representee. 2810 In any event, Seven's alternative case appears to proceed on the basis that each of the AFL and the NRL Partnership was influenced by its perception that C7 would not, or might not, reach Foxtel's audience. The argument assumes that the mere fact that C7 was entitled to retail access via the Telstra Cable would be enough to alter the perception regardless of whether Seven intended to avail itself of its entitlement to access. There is no evidence to support such a heroic assumption. 2811 A further difficulty in Seven's path is that had Foxtel and Telstra Multimedia not relied on cl 5.2 of the BCA to resist C7's requests for retail access via the Telstra Cable, they certainly would have relied on other grounds to resist C7's requests for access. For example, the letter of 9 September 2000 from Foxtel's solicitors rejected Seven's access requests on at least two grounds that had nothing to do with cl 5.2 of the BCA. Telstra Multimedia adopted a similar position. The overwhelming likelihood, therefore, is that even if Foxtel and Telstra Multimedia had not given effect to cl 5.2 of the BCA, Seven would not have been able to establish an entitlement to access to the Telstra Cable any sooner. Seven's case founded on s 45(2)(b)(ii) of the TP Act , insofar as it relates to cl 5.2 of the BCA, therefore cannot succeed. Its pleadings and submissions identify the relevant markets as the wholesale sports channel market, the AFL pay rights market, the NRL pay rights market and the retail pay television market. I have held that Seven has established the existence of only the last of these markets. Accordingly, I limit the analysis in this Chapter to Seven's case based on the purpose and effect of the provisions in relation to competition in the retail pay television market. 2815 Seven accepts that the Foxtel-Optus Fox Footy Agreement and the Foxtel-Optus Term Sheet were subsumed by the Foxtel-Optus CSA once it took effect. While Seven formally maintains its claims in respect of the first two agreements, its submissions focus on the Foxtel-Optus CSA. In these circumstances, I shall further limit my analysis to Seven's case in relation to the Foxtel-Optus CSA. Section 45(2) also prohibits entering into contracts which contain, or giving effect to a provision which is, an ' exclusionary provision '. 2821 If Foxtel and Optus had not entered into and given effect to the Foxtel-Optus CSA Provisions, Optus would have continued to offer different programming from Foxtel and would have competed on price, quality and nature of programming (par 324). 2822 By reason of the matters pleaded in pars 321 to 324, the effect or likely effect of the Foxtel-Optus CSA Provisions was to substantially lessen competition in the retail pay television market (par 325). Accordingly, Foxtel and Optus engaged in conduct in contravention of s 45(2)(a)(ii) and (b)(ii) of the TP Act (pars 337, 337A). 2825 The News, Foxtel, Telstra and Optus respondents admit, as alleged by Seven, that a substantial purpose of the Foxtel-Optus CSA was to enable both Foxtel and Optus to obtain a greater range of programming, while lowering the cost of that programming. However, they otherwise deny the allegations as to the purpose of the Foxtel-Optus CSA Provisions made by Seven in the Statement of Claim. But for the Foxtel-Optus CSA Provisions, Foxtel and Optus would have been or would have been likely to be in competition with each other in relation to the acquisition of programming from programming suppliers (par 340). A substantial purpose of the Foxtel-Optus CSA Provisions was to restrict or limit the acquisition by Optus and Foxtel of programming from programming suppliers (par 341). 2827 By reason of the matters pleaded in pars 338-341, the Foxtel-Optus CSA contains an exclusionary provision within the meaning of s 4D of the TP Act (par 342). But for the Foxtel-Optus CSA, Optus would have entered into a supply agreement with C7 to replace the C7-Optus CSA (par 344(a)) and as a consequence of the Foxtel-Optus CSA C7 has ceased to operate (par 344(b)). Seven argues that this can be seen, for example, from the fact that Foxtel and Telstra expressed concerns in mid-2001 about the success of Optus' marketing campaign, which had produced an increase in the number of Optus' subscribers. Moreover, the Foxtel-Optus CSA Provisions reduce, if not eliminate, any incentive for Optus to acquire content independently of Foxtel. If, for example, Optus acquired a new sports or movie channel, it would be obliged to offer it (or cause it to be offered) to Foxtel. Further, if Foxtel decided not to carry the channel, Optus could only broadcast the content on a higher tier than the equivalent content on Foxtel. 2832 As to the pricing, Seven submits that the effect of the Foxtel-Optus CSA Provisions was that price competition between Foxtel and Optus was reduced significantly. By reason of the lack of product differentiation identified above ... Foxtel and Optus were providing very similar products. That must naturally give rise to price-signalling between them and ultimately price-matching. There is little reason for Foxtel and Optus to charge significantly different prices for such almost identical pay TV services'. It relies on the evidence of Mr Williams (Foxtel's CEO) to support this contention ([1756]). It also relies on the opinions expressed by Professor Noll and Dr Smith, to the effect that subsequent to the Foxtel-Optus CSA there were simply no mechanisms that allowed competition on either price or quality between the two retail pay television platforms. 2834 Seven accepts that, had the Foxtel-Optus CSA not been executed, Optus probably would have implemented the Manage for Cash strategy. Despite this, Seven argues that Optus would have continued to act as a competitive constraint on Foxtel, might have merged (or entered a joint venture) with Austar and would have been unlikely to close its retail pay television business. 2835 Seven's submissions on this issue depend, in part, on its contention that the evidence of Mr Lee and Mr Anderson should not be accepted in certain respects. I have explained elsewhere ([458]-[459], [460]-[464]) my reasons for accepting their evidence as their honest assessment of what would have occurred had Foxtel and Optus not entered a content supply agreement in March 2002. 2836 Seven contends, however, that even if I accept the evidence of Messrs Lee and Anderson as an honest evaluation of Optus' options both at the time and in retrospect, I should not accept their assessment as accurate. Seven identifies a number of matters that it says point to a different conclusion. It says that a purpose of the CSA Provisions was to limit the acquisition by the Foxtel Partnership and Optus of programming from suppliers. 2839 Seven recognises that ' programming suppliers ' might be considered to be a broad class of persons. Nonetheless, it contends that programming suppliers can constitute ' particular persons or classes of persons ' for the purposes of s 4D(1)(b) of the TP Act . It follows, according to Seven, that the Foxtel-Optus CSA Provisions are ' exclusionary provisions ' under the meaning of s 4D. The difficulty confronting Seven is that it accepts that in that situation Optus would have adopted the Manage for Cash strategy. The evidence of Mr Lee and Mr Anderson was to the effect that the Manage for Cash strategy was very likely to lead to the closure of CMM within a few years (Mr Anderson thought closure was inevitable). I have accepted that both witnesses were giving a truthful account of their assessment of CMM's position and prospects, both in early 2002 and in retrospect. The objective circumstances relating to CMM could be such that the honestly held assessments of Messrs Lee and Anderson should not determine whether in truth there was a real chance, in March 2002, that CMM, including its retail pay television operations, could have survived as a business beyond the short winding-down period envisaged by Messrs Lee and Anderson. In assessing Seven's contentions on this issue a number of factors must be kept in mind. 2842 First , as I discuss in Chapter 20, on any view CMM in 2001 and 2002 was a business that had (in Mr Anderson's words in evidence) ' serious, serious problems ', of which the greatest was its retail pay television service. I have referred to CMM's substantial negative EBITDA over the period 1999 to 2001 ([1512]). 2843 It is also necessary to take into account that under the accounting standards adopted by SingTel (Singapore GAAP [Generally Accepted Accounting Principles]), CMM recorded an ' operational EBITDA ' of -$175 million for the year ended 31 March 2001 and -$145 million for the year ended 31 March 2002. Mr Lee said that Singapore and Australian accounting practices differed, in that the Singapore GAAP required Optus ' to expense customer acquisition costs at the time [they were] incurred '. Mr Lee's uncontradicted evidence was that the Singapore GAAP more closely reflected the cash nature of the business and was more consistent with International Financial Reporting Standards than the Australian GAAP. 2844 The EBITDA for CMM contrasted starkly with the performance of Optus' Mobile Division (EBITDA of $799 million in 2001/2002) and the Optus Business Division (EBITDA of $262 million in 2001/2002). In the 2001/2002 financial year, the EBITDA margins were 14 per cent for CMM, 17 per cent for Optus Business and 33 per cent for Optus Mobile. The contrast between the divisions puts in stark perspective Seven's contention that CMM's performance had improved in 2001 and early 2002. 2845 Secondly , CMM's troubles had been subject to detailed analysis both by McKinsey and by Optus itself in the period leading up to the Foxtel-Optus CSA. McKinsey's discussion paper of 22 August 2001, prepared well into the period of ' improved ' performance identified by Seven, concluded that CMM faced fundamental problems and had both a weak strategic position and an unsustainable cost structure. By February 2002, McKinsey thought that only two options for CMM warranted serious consideration: Project Alchemy (which would reduce Optus essentially to a reseller of pay television content) and Manage for Cash. The latter envisaged a drastic curtailment of CMM's operations but with the prospect, according to McKinsey, of achieving ' roughly break-even steady state free cash flows in the next 3-4 years ' if certain financial objectives, including aggressive pricing improvements, could be achieved. 2846 Thirdly , Optus' management and McKinsey had different views about CMM's prospects under the Manage for Cash strategy. Optus' management took a ' slightly more pessimistic ' approach (to use Mr Lee's words). The management paper prepared for Optus' board meeting of 21 February 2002 was plainly sceptical about McKinsey's assessment that Manage for Cash could produce a roughly break-even outcome inside three to four years. McKinsey's assessment was more optimistic than that of Optus' management, but even McKinsey by no means confidently asserted that the improvements in performance would be achieved. In any event, it is hardly surprising that Optus' management took a less rosy view of CMM's prospects than did McKinsey. After all, it was management that bore responsibility for making the critical decisions affecting CMM's future. The contemporaneous documentation recording management's concern as to CMM's viability is consistent with the evidence of Messrs Lee and Anderson as to the most likely outcome had Optus chosen to implement the Manage for Cash strategy. Not only did the management paper for the critical board meeting of 21 February 2002 express scepticism about the viability of CMM under Manage for Cash, but the board minutes reflected the same scepticism. No attempt would be made to attract Foxtel subscribers or non-pay television subscribers to Optus. • Optus was to save $25 million to $30 million per annum by reducing sales and marketing, program production and provisioning expenses. This measure involved making about 200 marketing and sales employees redundant. • Optus was to raise the price of its bundled product in order to achieve an increase of $14.00 pspm in telephony ARPU. Both Mr Lee and Mr Anderson said that it would have been inconsistent with the Manage for Cash strategy for Optus to make significant commitments to the purchase of new programming, particularly since the strategy assumed that subscriber numbers would diminish rapidly. 2850 A second inevitable consequence of Manage for Cash would have been high rates of churn among subscribers. Even with a relatively vigorous marketing program, rates of churn for Optus subscribers were high. An internal Optus analysis of 1 March 2000, for example, showed ' [a]nnualised churn ' of 47 per cent for non-bundled customers, although it indicated that this rate could be reduced by up to 75 per cent for subscribers taking at least three products. Mr Anderson's view was that Manage for Cash would produce rates of churn of about 35 per cent per annum. I see no good reason to doubt the reliability of his estimate. Even if some of CMM's operations had survived, the very strong likelihood is that Optus' pay television operations would not have continued beyond that period. During the winding down period, Optus would have played an ever-diminishing role in the retail pay television market, as its subscriber base declined and as it worked off its MSGs. In particular, Optus would have had little or no impact in the markets (however defined) for the acquisition of subscription driving content, including sports programming and movies. However, I add some further comments to address specific points made by Seven. 2853 As I have already explained, the financial performance of CMM in 2001 had not improved to the extent that Seven suggests. Moreover, the increase in Optus' subscriber numbers (from about 200,000 to a peak of about 266,000) must also be placed in context. As Mr Ebeid of Optus pointed out in his statement, the increase was partly attributable to an unsustainable short-term policy of not charging subscribers telephone line rentals. In addition, during this period Optus took advantage of the fact that it was the only supplier that could bundle pay television and telephony services. That advantage, too, was bound to be short-lived, since Telstra was soon to acquire the ability to bundle Foxtel with its own telephony services. Indeed, the Foxtel-Telstra Resale Term Sheet, which enabled Telstra to bundle the Foxtel Service with Telstra telephony services, was executed on 20 February 2002, two weeks before the Foxtel-Optus CSA itself was executed. As Optus points out, the quid pro quo for the Foxtel-Telstra Resale Term Sheet was the Foxtel-Optus Term Sheet executed on the same day. Thereafter both Optus and Telstra could offer bundled services with similar pay television content. 2854 I do not accept Seven's submission that closing down the whole of CMM would simply have been too difficult a decision for Optus to make. There may be times in any business when apparently drastic decisions have to be made because of economic imperatives. Seven says that this litigation is the outcome of just such a decision. Mr Lee was clear as to what would have happened. I have reproduced above ([1720]) the portion of Mr Lee's statement in which he outlined what would have happened under the Manage for Cash strategy. But if shutdown were the only possibility other than trading on as is, then I think we would be forced into that circumstance. It was not our preferred choice of action. --- If we had no choice other than to shutdown or face $300 million of cash losses every year, we would have shut it down. --- In the end we had choices because we were able to negotiate outcomes with Foxtel, [and were] able to then avoid having to go down a shutdown path. But if we had not, then my view --- and I think it is a view that the board would have supported --- would be that, despite the pain, the write-offs, the loss of jobs and the brand damage, it would still be economically the rational decision to take to maximise shareholder value, and we would have taken that decision'. 2855 I also do not accept Seven's submission that statements made at the time of SingTel's acquisition of Optus would have made it difficult for Optus to close down CMM or CMM's retail pay television operations. The outcome of this review will be guided by SingTel's desire to maximise shareholder value'. That evidence receives support from the contrasting language used in the bidder's statement unequivocal endorsement of the value of Optus' other divisions. 2856 I have referred in Chapter 11 ([1722]-[1726]) to the evidence of Mr Lee and Mr Anderson as to whether Optus would have pursued Project Emu (a take-over of, or merger with, Austar), had Project Alchemy (a content supply agreement with Foxtel) not been achievable. Having regard to their evidence, I do not think that, as at the date of execution of the Foxtel-Optus CSA (5 March 2002), there was a real chance that Project Emu would be implemented. It remained on the agenda, but the obstacles to Optus taking over or merging with Austar were too great for the idea to have significant prospects of success. 2857 Despite Seven's submissions, there is no evidence that Optus could have sold CMM as a going concern. It had tried over time to do that and failed. Moreover, the longer the Manage for Cash strategy continued, the less the prospect (if ever there was a prospect) of selling CMM or its pay television operations. Nor is it clear how Optus could have imposed a competitive constraint on any other market, for example a market (however defined) for the acquisition of sports programming. In any event, it seems to me clear that pending Optus' departure from the pay television business over a three to four year period, it would not have provided any significant constraint on Foxtel in the retail pay television market. If that is so, the Foxtel-Optus CSA did not have the effect or likely effect of substantially lessening competition in a market. Nonetheless, I should refer to the expert evidence. Accordingly, the opinions expressed in their reports are of no assistance on the question of whether the Foxtel-Optus CSA had the effect or likely effect of substantially lessening competition. He was asked whether, before he could conclude that the Foxtel-Optus CSA had not substantially lessened competition, he would not need to exclude possibilities such as take-over by or merger with a more solvent firm, or reorganisation of the firm in an insolvency administration. It seems to me, under the assumptions I was asked to make, comparing the alternative world, the world without the CSA, you have got to ask: given the reasons Optus was doing badly, which I think I have described as partly a sense in which --- I don't want to overstate it --- there may not be room for two cable-based pay TV suppliers in a country the size of Australia. ... If that is the reason Optus is failing, or at least one of the reasons, that basically their share of the market has shrunk to where basically their costs per subscriber simply don't permit them to make a profit, having them taken over by somebody else isn't going to change that. Or, put differently, had they survived in some form, I do not see them as making any significant --- having any significant effect on whatever ability Foxtel may have to increase prices. If a firm is doing that badly, what it is going to do, it's going to follow the dominant firm's prices. It's not going to invest heavily in new programming initiatives, it's basically going to milk the cow. It's going to take out of the business what it can, and the way to do that is not to rock the boat. So under any of a variety of permutations, if I thought that was going to be the end result, that Optus would not be a boat rocker, then it seems to me it is safe for me to conclude that the CSA did not have any significant adverse effect on competition. --- Not necessarily failing in the legal sense. They were doing so badly that I think their best strategy under the circumstances was basically to simply match the pricing of Foxtel, not be really aggressive in competing. That's the way they would maximise their income until the time that they decided simply it was worth going out of the business. --- I think the assumptions I was asked to make was that they would what I think is called manage for cash, which I take to mean get as much money out of the business [as] you can while you can and then exit. The firm adopting that strategy as a general matter will basically not be aggressive on price in a quality competition. They will take [the] prices of their dominant competitor and basically price up to that level'. However, the findings I have made, in my view, establish that his opinion correctly analyses the circumstances of the present case. Given the Manage for Cash strategy, Optus would not have ' rock[ed] the boat ' on price, quality or any other aspect of its service. On the contrary, the strategy called for Optus not to engage in price competition, seek better quality programming or attempt to attract new subscribers. 2866 It follows, in my opinion, that neither the making of the Foxtel-Optus CSA, nor giving effect to the Foxtel-Optus CSA Provisions, had the effect or likely effect of substantially lessening competition in the retail pay television market. In the absence of the Foxtel-Optus CSA, it is very likely that Optus would have closed down its pay television operations within three to four years. Pending the close-down of its pay television operations, Optus would not have provided any significant constraint on Foxtel on the price or quality of the services provided to retail pay television subscribers. The Statement of Claim pleads that removal of product differentiation between Foxtel and Optus was a substantial purpose of the Foxtel-Optus CSA Provisions and that this involved a substantial lessening of competition in the retail pay television market. However, par 322 of the Statement of Claim identifies two purposes (lowering the cost of programming and conferring greater bargaining power on Foxtel and Optus in negotiating with programming suppliers) that have nothing to do with competition in the retail pay television market. The two purposes identified in par 322 are concerned with competition in a market (however defined) for the acquisition of programming, rather than in the retail pay television market. The former is not a market on which Seven relies for its purpose case in relation to the Foxtel-Optus CSA. (Paragraph 325 of the Statement of Claim also refers to the retail television market, but this is not pressed. They are relevant only to a lessening of competition in an unpleaded market for the acquisition of certain kinds of programming. The fifth matter relied on by Seven, Mr McLachlan's memorandum of 25 October 2001, recorded arguments which Mr McLachlan apparently intended to use in a meeting to persuade Telstra to support content sharing. Mr McLachlan's arguments were founded on the proposition that content sharing would actually enhance competition between Telstra or Optus for bundled pay television and telephony services (a business from which Telstra had hitherto been excluded). The memorandum does not suggest that PBL's objective was to remove product differentiation between Foxtel and Optus and thus reduce competition in the retail pay television market. 2869 As has often happened in this case, Seven's Reply Submissions take a different tack from its Closing Submissions. The Reply Submissions argue that the purpose of the Foxtel-Optus CSA Provisions was to allow both the Foxtel and Optus platforms access to a greater amount of each other's programming content. The Reply Submissions make no reference to the evidence relied on by Seven in the Closing Submissions, and only passing reference to the impact of the Foxtel-Optus CSA on the ability of Foxtel or Optus to acquire content more cheaply. 2870 Seven's Reply Submissions argue that the purpose of a provision may be inferred from its effect. For reasons I have explained, the effects of the CSA Provisions did not include a substantial lessening of competition in the retail pay television market. But for the Foxtel-Optus CSA, Optus would have remained in the pay television business for only three to four years and, in the period leading up to the closure of its business, would not have sought, to compete actively for subscribers, whether by way of price, content or otherwise. Without the Foxtel-Optus CSA, after a period of three to four years Foxtel would have been the only pay television operator to offer content in the geographic areas in which both Foxtel and Optus operated at the time the parties entered into the Foxtel-Optus CSA. In these circumstances, the obvious inference is that none of the parties to the Optus-Foxtel CSA had the purpose of substantially lessening competition in the retail pay television market. 2871 In assessing the purpose of the parties to the Foxtel-Optus CSA, other factors must also be borne in mind. It is difficult, for example, to see how Optus' acquisition of AFL content can be attributed to the Foxtel-Optus CSA. Optus acquired the right to AFL content via the Foxtel-Optus Fox Footy Agreement of 19 February 2002, before the Foxtel-Optus CSA was executed. In any event, under the terms of the AFL-News Licence, News was obliged to offer AFL content to Optus on reasonable terms. Dr Smith agreed in her evidence that, in circumstances where Optus had access to AFL content until the end of the 2001 season, the acquisition by Optus of AFL content in 2002 was pro-competitive, because it increased Optus' chances of staying in the pay television business. 2872 Similarly, Optus acquired the Fox Sports channels via the Foxtel-Optus Term Sheet of 20 February 2002, which also pre-dated the Foxtel-Optus CSA. The Foxtel-Optus Term Sheet was closely linked to the agreement between the Foxtel partners permitting Telstra to bundle its telephony services with the Foxtel Service. Had the Foxtel-Optus CSA not been entered into, Optus would still have acquired the Fox Sports channels as the quid pro quo for Telstra being able to offer bundled services. --- I would think it was part of the competitive process, yes'. It had also relinquished its entitlement to exclusivity with The Movie Network Channels Pty Ltd in 2000. Foxtel commenced broadcasting the Disney Channel in December 1999, but had not taken up the Movie Network channels at the time the Foxtel-Optus CSA was executed. Thus in March 2002, Foxtel already had the Disney Channel and there was no impediment to it acquiring the Movie Network channels on a non-exclusive basis. 2874 Moreover, as both Dr Smith and Professor Noll acknowledged in their evidence, product differentiation is not necessarily competition-enhancing and lack of product differentiation may indeed increase competition in a market. Where there is differentiation between products in a market, Professor, the competition between those products is less intense than if there were lesser differentiation; is that correct? --- Well, it may or may not be, depending on what the effects of the differentiation are. But is it right as a general proposition that the greater the differences between products in the market the less strongly substitutable they are one for the other? --- Usually but not always. --- Again, generally true; not always. Seven's Reply Submissions seem to argue that it is not merely a question of a reduction in product differentiation, but how the reduction is achieved. According to Seven, the Foxtel-Optus CSA Provisions removed Foxtel's ability to differentiate its content and Optus' incentive to differentiate its content. This is said to be ' plainly anti-competitive '. 2876 It is not clear to me why, even if some or all of the parties to the Foxtel-Optus CSA sought to achieve a reduction in product differentiation, this of itself would necessarily establish the purpose of substantially lessening competition in the retail pay television market. A reduction of product differentiation, particularly in subscription driving content, might materially improve the offerings available to subscribers to each platform and, depending upon the circumstances, increase the prospect of price competition. If, for example, both retail platforms offer AFL and NRL content, they could appeal to the same groups of sporting enthusiasts, instead of to two largely discrete groups. Whether greater price competition would occur might depend upon how the content is offered to subscribers and what scope there would be for each platform to undercut the other. (Seven does not rely in its purpose case on any objective of reducing price competition between Foxtel and Optus. The retail pay television market in Australia has not been one in which the participants have sought to differentiate their content. In particular, Optus had not sought to differentiate its content from Foxtel. It had abandoned exclusivity in movie programming. Optus, like Foxtel, had NRL content. It had sought unsuccessfully to acquire the Fox Sports channels. While only Optus (and Austar) had AFL content prior to 2002 (through C7), that was not the consequence of any strategy Optus itself had adopted. Rather it was the product of Foxtel's desire to acquire the AFL pay television rights directly from the AFL. Even putting to one side the content agreements entered into in late February 2002, the Foxtel-Optus CSA merely formalised a position that was very likely to come about in any event if Optus was to continue offering pay television services beyond the short term. 2878 With this background in mind, the evidence in my opinion does not support Seven's contention that the parties to the Foxtel-Optus CSA had a substantial objective of reducing the extent of content differentiation between Foxtel and Optus. Mr Lee and Mr Anderson's objectives were to stem CMM's heavy losses and to allow Optus to continue offering bundled pay television and telephony services beyond the short period contemplated by the Manage for Cash strategy. From Optus' perspective, the CSA Provisions were essential to it remaining as a participant in the retail pay television market. 2879 Dr Switkowski had three objectives in supporting Telstra Media's role as a party to the Foxtel-Optus CSA. 2880 The first of the objectives identified by Dr Switkowski oversimplifies the ways in which Foxtel would benefit from achieving increased penetration of the Foxtel Service among potential retail subscribers once the Foxtel-Optus CSA came into force. Nonetheless, I accept his evidence and that of Mr Akhurst as to the objectives Telstra sought to achieve. 2881 It was, no doubt, an inevitable consequence of the Foxtel-Optus CSA Provisions that Foxtel and Optus would offer largely the same content, particularly subscription-driving programs. But none of the objectives Telstra sought to achieve included a reduction in content differentiation between the two pay television platforms. Nor did any of the objectives, whatever their significance in other markets, constitute the purpose of substantially lessening competition in the retail pay television market . 2882 Mr Macourt was not involved in negotiating the terms of the Foxtel-Optus CSA, although he discussed commercial issues raised by the negotiations with Mr Philip from time to time. I thought the sales of both platforms were suffering because consumers perceived that they were only receiving half the programming for their subscription. This was particularly so in movies. I thought that the agreement would lift the penetration of subscription television across the board. Whether it would lift it more for FOXTEL than Optus depended on the marketing and sales strategies of each company. I also thought it would improve FOXTEL's competitive position in negotiating with all programming suppliers particularly the Hollywood studios'. But the three objectives he identified seem to me consistent with contemporaneous documentation and the terms of the Foxtel-Optus CSA. While Mr Philip was not a reliable witness, I do not think that his objective was to bring about a reduction in product differentiation between Foxtel and Optus. From his perspective, that outcome was merely a consequence of the other objectives he sought to achieve through the Foxtel-Optus CSA. 2885 In my view, Seven has not established that any of the parties to the Foxtel-Optus CSA had the purpose alleged by Seven in the Statement of Claim. Seven has therefore not made out its case that the purpose of the Foxtel-Optus CSA Provisions was to substantially lessen competition in the retail pay television market. The fact that Seven's submissions on s 4D are brief is not a cause for criticism. But in the context of this case, the brevity of the submissions suggests that Seven only faintly presses its contention that the parties to the Foxtel-Optus CSA contravened s 45(2) of the TP Act by entering into an agreement containing an ' exclusionary provision ' and by giving effect to the Foxtel-Optus CSA Provisions. The concept of competition implies the existence of a market. Neither the Statement of Claim nor Seven's submissions identify the market in which it says Foxtel and Optus were competing for the acquisition of ' programming '. 2888 The market relied on by Seven is apparently concerned with the supply and acquisition of any kind of programming, not merely subscription driving content or indeed programming limited to any particular genre. It is not clear whether the market is ' in Australia ', since the Statement of Claim refers to programming provided by the Hollywood studios. The significance of this is that s 4E confines the concept of a market for the purposes of the TP Act , in the absence of a contrary intention, to a ' market in Australia '. 2889 Since Seven does not define the market in respect of which Foxtel and Optus were said to be in competition, it is not easy to determine precisely why Seven says that they were ' competitive with each other ' at the time they entered the Foxtel-Optus CSA. In effect, I am invited to undertake the inquiry in a market definition vacuum. 2890 Bearing that difficulty in mind, I do not think that Seven has established that on 5 March 2002 Foxtel was or was likely to be (but for the Foxtel-Optus CSA) in competition with Optus in relation to the acquisition of programming. By that date, the choices facing Optus were either entry into the Foxtel-Optus CSA or adoption of the Manage for Cash strategy. An integral component of the Manage for Cash strategy was that Optus would not acquire new programming. Indeed, for some time Optus had not sought to acquire exclusive programming from suppliers, but to acquire non-exclusive content from Fox Sports and Foxtel. By the time the Foxtel-Optus CSA was executed, Optus had secured access to AFL content and to the Fox Sports channels. 2891 Viewed as at 5 March 2002, Optus was neither in competition nor likely to be in competition with the Foxtel Partnership in relation to the acquisition of programming. Had the Foxtel-Optus CSA not proceeded, Optus would not have competed with the Foxtel Partnership for the acquisition of programming for its pay television platform. Nonetheless, their Honours expressed the view that the class had been adequately defined. They pointed out that even if s 4D required the identity of members of the class to be ascertained, it would have been possible to draw up a list of advertisers who had used the River News and that would have constituted a sufficient class for the purposes of the section. 2896 The joint judgment in Rural Press v ACCC 216 CLR, at 90 [88], referred to the judgment of the Full Court of this Court in ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1990) 27 FCR 460. In that case, the Full Court suggested that persons may constitute a particular class within the meaning of s 4D of the TP Act , if the distinguishing feature of the class ' is that its members are objects of an anti-competitive purpose ': 27 FCR, at 488, per curiam . The joint judgment in Rural Press v ACCC observed (216 CLR, at 90 [88]) that ASX v Pont Data had not been overruled by the High Court in News v South Sydney . Only Callinan J in News v South Sydney had criticised the decision (215 CLR, at 638-639 [217], 640-641 [228]), while McHugh and Gummow JJ, (the latter of whom had been a member of the Court in ASX v Pont Data ) had accepted it as correct (215 CLR, at 581 [46], 589-590 [74]-[77]). This is a compound concept involving a certain kind of purpose, having as its object particular persons or classes of persons. The particularity of the persons or classes of persons who are the objects of the purpose as defined and proscribed is essential to the concept of an exclusionary provision. The significance of a finding that a provision is an exclusionary provision within s 4D and s 45(2)(a)(i) and (b)(i) is that such a finding engages a per se legislative prohibition. It becomes unnecessary to consider whether it has the purpose or effect of substantially lessening competition in a market. Contracts, arrangements or understandings between competitors commonly involve some form of prevention, restriction or limitation of supply or acquisition of goods or services. If two hairdressers in a suburban main street were to have an understanding that one would provide services to men, and one would provide services to women, it may be unlikely that their understanding would involve a substantial lessening of competition in a market. It would be surprising if it were held, nevertheless, to contravene the Act. To the extent to which it had an anti-competitive purpose, that purpose would not be "directed toward" particular persons or classes of persons. If it were not so, the references to particular persons or classes of persons would be redundant. In its original form, the proscribed purpose was of preventing, restricting or limiting supply to or acquisition from particular persons. The words "or classes of persons" were added in 1986, following some decisions that were thought to reveal an undue narrowness in the legislation it its original form. Those words were clearly intended to widen the provision, but not to change its entire character. The proscribed purpose must still be one that is directed toward particular persons or classes of persons. Parliament did not delete the word "particular" and substitute the word "any". Nor did it remove all reference to persons as objects of the proscribed purpose. The legislative history, as well as the text, tends strongly against a reading of the section which requires only that a provision of a contract, arrangement or understanding has the purpose of preventing, restricting or limiting, in any way, supply or acquisition. Supply or acquisition will always be to or from persons. Ordinary principles of construction require that the references to particular persons or classes of persons be given work to do; they are not mere drafting verbosity. A court construing a provision in an Act "must strive to give meaning to every word of the provision". A court will seek to avoid a construction of a statute that renders some of its language otiose. Here, that consideration is powerfully reinforced by the legislative history, which shows that the reference to particular persons was originally an essential feature of s 4D, and that the addition of the reference to classes was intended to expand it, not to make it superfluous. However, a purpose of the kind defined and proscribed must exist, and must be directed toward particular persons or classes of persons, for the legislative prohibition to apply'. 2898 The facts of the present case differ from Rural Press v ACCC , in that the class of persons at whom the CSA Provisions are said to be directed is not defined by reference to geographical location. The ' class ' here is defined by reference to a limitation imposed by the CSA Provisions on the acquisition of programming: that is, the class consists of all programming suppliers, anywhere in the world, whose products and services Foxtel and Optus are prevented from attempting to acquire in competition with each other. The application of s 45(2) (read with s 4D), if otherwise satisfied, therefore appears to turn on whether the Full Federal Court's statement of principle in ASX v Pont Data 27 FCR at 488, is correct. 2899 It is a brave, not to say foolish, trial judge who ventures unnecessarily into dangerous waters in which swirl differing but non-binding views of members of the High Court. I shall therefore only say, without expressing a final view, that the opinion expressed by Gleeson CJ and Callinan J in Rural Press v ACCC appears, with respect, to have considerable force. If that opinion represents the correct construction of s 4D, Seven has not established that making the Foxtel-Optus CSA, or giving effect to the CSA Provisions, was directed at a class of persons within the meaning of s 4D of the TP Act . In particular, I conclude that Seven has not shown that the purpose or effect of the relevant provisions was to substantially lessen competition in the retail pay television market. 19 SEVEN'S CAUSES OF ACTION BASED ON ITS FAILURE TO ACQUIRE THE NRL PAY TELEVISION RIGHTS [2901] 19.1 Causes of Action [2901] 19.2 Legislation [2903] 19.3 Was C7's Bid for the NRL Pay Television Rights Genuine? [2907] 19.4 Breach of Confidence Claim [2910] 19.4.1 Seven's Pleaded Case [2910] 19.4.2 Seven's Submissions [2914] 19.4.2.1 Confidentiality [2914] 19.4.2.2 Disclosure of Confidential Information [2918] 19.4.2.3 Relief Claimed [2921] 19.4.3 News' Submissions [2924] 19.4.3.1 Confidentiality [2925] 19.4.3.2 Alleged Misuse of the Information [2927] 19.4.3.3 Consequences of the Alleged Disclosure [2930] 19.4.4 PBL's Submissions [2931] 19.4.4.1 Confidentiality [2931] 19.4.4.2 Consequences of the Alleged Disclosure [2936] 19.4.5 ARL's Submissions [2937] 19.4.5.1 Confidentiality [2938] 19.4.5.2 Mr Philip not a Representative of the NRL Partnership [2941] 19.4.5.3 Consequences of the Alleged Disclosure [2944] 19.4.6 NRL's Submissions [2947] 19.4.7 Confidential Information: Principles [2948] 19.4.8 Was the Information Confidential? [2956] 19.4.8.1 Findings of Fact [2956] 19.4.8.2 Conclusions on Confidentiality [2974] 19.4.9 Disclosure of Information Relating to C7's bid [2983] 19.5 Press Release Claim [2995] 19.5.1 Seven's Pleaded Case [2995] 19.5.2 Seven's Submissions [2998] 19.5.3 NRL Ltd's Submissions [3003] 19.5.4 Reasoning [3007] 19.6 Fair Process Claim [3017] 19.6.1 Seven's Pleaded Case [3017] 19.6.2 Seven's Submissions [3022] 19.6.2.1 Making of the Representation [3022] 19.6.2.2 Lack of Reasonable Grounds [3024] 19.6.2.3 Departure from the Fair Process Representation [3025] 19.6.2.4 Reliance [3027] 19.6.2.5 Relief [3028] 19.6.3 News' Submissions [3032] 19.6.3.1 Making of the Representation [3032] 19.6.3.2 Departure from the Fair Process Representation [3034] 19.6.3.3 Reliance [3038] 19.6.3.4 Relief [3039] 19.6.4 ARL's Submissions [3041] 19.6.5 Reasoning [3046] 19.6.5.1 Representation as a Construct [3046] 19.6.5.2 Were the Alleged Statements Made? [3049] 19.6.5.3 Representations Allegedly Made to Mr Stokes [3052] 19.6.6 Four Additional Alleged Representations [3059] 19.6.7 Authority [3066] 19.6.8 Reliance [3079] 19.7 Fair Process Contract Claim [3084] 19. It will be recalled that, at a meeting held on 13 December 2000, the NRL PEC resolved to accept an offer by Fox Sports for the NRL pay television rights and also resolved to enter into a separate names, sponsorship and internet rights agreement with Telstra. The agreement between the NRL Partnership and Fox Sports was executed on the evening of 13 December 2000, following the conclusion of the PEC meeting. The agreement between the NRL Partnership and Telstra was executed on 15 December, two days later. The disclosure concerned the terms of C7's offer of 5 December 2000, to acquire the NRL pay television rights. Seven claims that Mr Philip disclosed the confidential information relating to the bid to News, Foxtel, PBL, Telstra and Fox Sports, in circumstances which each of them knew breached confidentiality. Seven also says that these parties misused the confidential information to Seven's disadvantage. Seven claims that the press release falsely stated that the agreement between Fox Sports and the NRL Partnership in respect of the NRL pay television rights was worth ' almost $400 million ' and that the ' guaranteed figure from Fox Sports was higher than that of C7 '. In consequence the members of the NRL Partnership (ARL and NRLI) are said to have engaged in misleading or deceptive conduct in contravention of s 52 of the TP Act. Seven seeks only declaratory relief in respect of this cause of action and does not press its pleaded claim for damages. These representations are said to have been misleading or deceptive in contravention of s 52 of the TP Act , in that the NRL Partnership or the NRL had no reasonable grounds for making them and in any event departed from the representations without informing Seven. News says that Seven engaged in a careful and deliberate strategy that was designed to ensure that C7 would never be forced to take the NRL pay television rights on the terms it had purported to offer. According to News, the true purpose of C7's participation in the bidding was to put pressure on News to abandon its bid for the AFL pay television rights. In any event, Seven was content to force News to pay as much as possible for the NRL pay television rights. 2908 News contends that Seven's strategy involved making what could be presented as a very high offer, but one which included terms that Seven knew would be unacceptable or unattractive to the NRL. This was done initially, so News argues, in order to delay the NRL bidding process until after the AFL pay television rights had been awarded. Later, however, Seven appreciated that bidding for the NRL pay television rights was likely to harm its bid for the AFL pay television rights and this realisation prompted it to bring the NRL bidding process to ' an abrupt end '. 2909 Although News puts the genuineness of C7's bids at the forefront of its submissions, it is not necessary to deal with the issue of genuineness unless Seven otherwise makes out the elements of at least one of the four causes of action upon which it relies. I think the better approach is to consider first whether, on the evidence, Seven has made out the elements of the four causes of action which arise out of the bidding process for the NRL pay television rights or is otherwise entitled to relief, independently of the genuineness or otherwise of Seven's bids for the NRL pay television rights. If Seven does not succeed in relation to any of the causes of action, it will not be necessary to consider the genuineness of C7's bid. The four offers are said to have been made on 16 November 2000, 27 November 2000, 5 December 2000 and 12 December 2000 (par 475). Seven alleges that the terms of each offer, including the amounts offered were confidential. The confidentiality is said to have arisen from the nature of the bidding process, including the fact that C7's bids were expressed to be confidential and that the NRL Partnership had agreed, on 20 November 2000, to keep the bids confidential (par 476). 2911 Seven pleads that by reason of these matters the NRL Partnership owed C7 a duty of confidence in respect of the terms of the C7 offers, including the amount C7 was offering for the NRL pay television rights (par 477). Seven alleges that in breach of this duty of confidence the terms of the offer of 5 December 2000, including the proposed price, were disclosed to Foxtel, News, PBL, Telstra and Fox Sports ' by a representative of the NRL Partnership '. Seven also alleges that the confidential information was used by Fox Sports to make a rival bid; by Foxtel, Fox Sports and Telstra to enter into the NRL Bidding Agreement; and by Mr Philip, through his dealings with Mr Akhurst, to induce Telstra to support the payment by Foxtel to Fox Sports provided for in the NRL Bidding Agreement (that is, the agreement of 13 December 2000 entitled ' Internet and Sponsorship Rights --- Fox Sports/Foxtel ') and to agree to acquire the NRL internet and naming rights (par 480). Seven alleges that without disclosure of the confidential information, Telstra would not have supported the NRL Proposal, entered into the Master Agreement or entered into the NRL Bidding Agreement (par 481). 2913 Finally, Seven pleads that by reason of these matters (pars 475 to 481), each of Mr Philip, News, Foxtel, PBL, Telstra, Fox Sports, and NRLI and ARL (as partners in the NRL Partnership) has breached an equitable obligation of confidentiality owed to C7 (par 482). It will be recalled that the offer provided for a cash payment of up to $62.5 million per annum, including GST, for the NRL pay television rights, depending upon the ' total number of homes subscribing to the Pay TV services that carry the NRL Product '. The offer also provided for ' contra ' of $4 million per annum to promote the NRL Competition on the 7 Network and its affiliates. Seven submits, however, that none of the alleged public disclosures affected the confidential quality of the offer made on 5 December 2000. First, the previous offers made by C7 were either expressed to be confidential or were the subject of assurances from the NRL Partnership that they would be treated as confidential. While Mr Anderson's facsimile communicating the 5 December 2000 offer to the NRL Partnership did not expressly claim confidentiality, Seven says that it was implicit that the offer should be treated as a confidential communication. Secondly, the parties to the bidding process understood that all bids were to be treated as confidential by the NRL Partnership. 2919 Seven invites me to reject Mr Philip's claim that the figures recorded in his handwritten faxes of 9 and 12 December 2000 were simply derived from a newspaper article and not from C7's offer. It submits, among many other arguments, that Mr Philip's conduct in destroying his copies of the handwritten faxes and in asking Mr Akhurst and Mr Falloon to do the same (at least in relation to the first fax) suggests that Mr Philip believed that he was unlawfully disclosing confidential information. 2920 Seven submits that the recipients of the information concerning C7's offer of 5 December 2000 knew that the information was confidential. Seven says that this was true of the recipients of the handwritten faxes and of the persons attending the ' principals ' meeting of 13 December 2000. Notwithstanding the confidentiality of the information, it was used at the meeting to formulate the bid by Fox Sports for the NRL pay television rights and the bid by Telstra for the internet and naming rights. Seven contends that the confidential information was instrumental in persuading Telstra to support the bid for the NRL pay television rights and to make its own bid for the internet and naming rights. It claims this relief on the basis that the disclosure of the confidential information and its unauthorised use led to Fox Sports making its successful offer for the NRL pay television rights. Seven argues that the offer could only have been made once Telstra's support was assured. By reason of the disclosure of the confidential information, C7 suffered a detriment in that its prospects of winning the NRL pay television rights were diminished. 2922 Seven's claim for an account of profits rests on the proposition that News, Fox Sports, PBL and Telstra each made a profit as a direct result of the breach of the duty of confidence and their misuse of confidential information. The specific example given is that the retention of the NRL pay television rights enabled Fox Sports to preserve its contract with Austar. 2923 The alternative claim for equitable compensation is said to be based on the assumptions incorporated in ' Scenario 3 '. Scenario 3 assumes that C7 was unsuccessful in retaining the AFL pay television rights for the period 2002 to 2006, but was successful in obtaining the NRL pay television rights for 2001 to 2006. But it says that the fact that his conduct was ' silly and very stupid ' does not demonstrate that his conduct involved a breach of confidence. News invites me to find that Seven orchestrated the ' leaking ' to the press of the details of C7's written offer of 16 November 2000. It also invites me to find that Seven made a ' calculated disclosure ' to the media of the details of C7's written offer of 27 November 2000. According to News, the disclosure was made by Mr Tim Allerton, who conducted a public relations firm (City Public Relations Pty Ltd) which had a monthly retainer from ACE (Mr Stokes' private company). News says that Mr Stokes gave directions to Mr Allerton to brief selected members of the press about the offer and that Mr Gammell and Mr Francis were both ' in on the strategy '. 2926 News points out that C7's offer of 5 December 2000 was not subject to an express reservation of confidentiality. It submits that if Seven had wished to make the offer confidential, it would and should have done so explicitly. News contends that Seven has provided no plausible reason for its failure to provide explicitly for the confidentiality of the 5 December 2000 offer. In any event, News invites me to find that Seven leaked details of that offer to a Sydney Morning Herald journalist, Mr Roy Masters, in the expectation that he would use the information to ' push Seven's line '. Such a finding, News contends, is inconsistent with any assertion of confidentiality in the offer of 5 December 2000 and is therefore fatal to Seven's case based on breach of confidentiality. News submits that Mr Philip had reason to be concerned about providing information concerning C7's bid for the NRL pay television rights, even though he did not consider it to be genuinely confidential. 2928 News invites me to accept Mr Philip's evidence that it simply did not occur to him that the $33 million figure referred to in his fax as ' the C7 offer we need to beat ' was almost exactly the cash component of C7's offer, exclusive of GST. News submits that, at worst, Mr Philip inadvertently disclosed that figure, as he arrived at the figure quoted in his fax quite independently of his knowledge of the terms of C7's offer. News also submits that Mr Philip's disclosure that the C7 offer included $4 million in ' contra ', although admittedly derived in part from C7's offer, cannot be regarded as having revealed any confidential information. 2929 News disputes Seven's contention that Mr Philip disclosed confidential information at the meeting of ' principals ' on 13 December 2000. It submits that the evidence shows that Mr Philip did not provide specific information at that meeting concerning the contents of any of C7's offers. News says that it is highly unlikely that it (News) would have been placed in the position of having to exercise its first and last rights in relation to the NRL pay television rights, because Fox Sports would simply have raised its bid to the level necessary to secure the rights. Even if Telstra had not supported Fox Sports' bid, News (contrary to Mr Philip's assertion to Mr Akhurst) would have filled the gap. In any event, had it been necessary, News would have exercised its last rights to acquire the NRL pay television rights, thus preventing C7 from acquiring them. However, PBL puts forward additional arguments. 2932 PBL points out that Seven's submissions rely heavily on the confidentiality deeds executed by directors and employees of Seven in late November and early December 2000. This follows from Seven's conduct on and after that date in actively and intentionally leaking the terms of the offers to journalists and making them known to the NRL clubs. Moreover, Mr Stokes had conceded in his evidence that ' nothing from 1 December was confidential ' because the details of the latest offer then current had been revealed in an article by Mr Roy Masters published in the Sydney Morning Herald. In particular, the offer of 5 December 2000, and the letters varying that offer were not expressed to be confidential. In any event, the terms of the 5 December offer, as amended, had also been published in an article by Mr Masters in the Sydney Morning Herald , on 7 December 2000. 2935 PBL further submits that the evidence does not show that Mr Falloon (of PBL) had or should have had any understanding that C7's bids for the NRL pay television rights were to be regarded as confidential. PBL had not been privy to the communications between the NRL and Seven. Even if Mr Philip's fax of 9 December 2000 did contain confidential information and was copied to Mr Falloon, he (Mr Falloon) had no reason to conclude that the information was in fact confidential. Even if Telstra had not supported Fox Sports' bid, News would still have exercised its last right of refusal in relation to the NRL pay television rights. It makes three additional submissions, although the first appears to overlap with News' submissions. In particular, shortly before 1 December 2000, Mr Stokes had directed and authorised the briefing of media representatives in relation to C7's proposal of 27 November 2000 and thereafter C7 did nothing to establish a new relation of confidence with the NRL Partnership. 2939 ARL points out that the pleaded obligation of confidence is not said to arise in contract, but in equity. It submits that the authorities establish that an equitable obligation of confidence arises only where it is unconscionable for the recipient of information to publish or use it. ARL contends that it cannot be unreasonable or unconscionable to disclose to third parties so-called ' confidential information ' when the party asserting confidentiality has disclosed that information to the world, especially where the disclosure is surreptitious. 2940 ARL further says that C7's ' sealed auction ' submission carries no weight in the light of C7's deliberate and surreptitious disclosure of the earlier bids. In any event, C7's submission overlooks the NRL Partnership's express rejection of any limitation on the way the sale of the NRL pay television rights was to proceed. This is so because any disclosure by Mr Philip of the terms of the offer was not as a representative of the NRL Partnership or of ARL. 2942 ARL submits that Mr Philip, when he sent the fax of 9 December 2000 to Mr Akhurst or attended the meeting of 13 December 2000, was not acting in the ordinary course of the NRL Partnership's business or with the authority of the NRL Partnership. ARL points out that, under the Partnership Agreement, the NRL PEC has exclusive non-delegable powers in relation to contracts concerning ' Key Revenue Rights '. Mr Philip was one of three NRLI directors on the NRL PEC, and held other positions with News, Fox Sports and NRLI. But he was not an office holder of ARL. 2943 According to ARL, when Mr Philip sent his fax to Mr Akhurst, he was acting on behalf of News or Fox Sports, not the NRL Partnership. Moreover, ARL points out that there is no pleaded case that ARL was in any way involved in the meeting of 13 December at which Mr Philip is said to have divulged confidential information. If Mr Philip did divulge such information, it was in his capacity as a director or agent of News or Fox Sports. 2945 ARL contends that in order to make out ' Scenario 3 ' of Professor McFadden's analysis, Seven must prove that, but for the breach of confidence, C7 would have acquired the NRL pay television rights. Seven fails on this issue, so ARL argues, because there is no evidence to show that, but for the disclosure, C7's proposal would have been ' clearly and indisputably superior ' to any offer from Fox Sports ultimately considered by the NRL PEC. 2946 ARL further argues that even if Seven overcomes this barrier, it has not shown that the C7 offer would have been accepted by the NRL PEC. This is so because the proposal was not capable of acceptance or was unacceptable to the NRL PEC (as News submits). In any event, Mr Philip would not have voted in favour of C7's proposal being accepted. They traverse essentially the same ground as the other submissions. Certainly there is no occasion to consider potentially controversial questions such as whether confidential information can be regarded as property, or whether detriment to the plaintiff is an essential element of an action based on an alleged breach of confidence: cf Attorney-General v Guardian Newspapers Ltd (No 2) [1988] UKHL 6 ; [1990] 1 AC 109, at 281-282, per Lord Goff; Equity: Doctrines and Remedies (4th ed), at [41-050], [41-080]ff. 2949 Actions based on breach of confidence, generally speaking, fall into two broad classes. The first is where a person is under a contractual obligation, express or implied, not to use or publish certain information. The second class invokes the equitable jurisdiction to restrain or grant other relief in respect of breaches of confidence: Deta Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] VR 167, at 190-191, per Fullagar J. Seven makes no claim founded on contract. Therefore it is only the equitable principles relating to confidential information that are relevant to this case. 2950 The equitable jurisdiction to deal with cases of breach of confidence is said to be ancient: see Coco v AN Clark (Engineers) Ltd (1968) 1A IPR 587, at 590, where Megarry J traced its origins at least to the time of the Statute of Uses 1535 . The initial question to be addressed is whether the information has been imparted in confidence so as to bind the conscience of the defendant (or respondent) in a particular way: Smith Kline & French Laboratories (Australia) Ltd v Secretary, Department of Community Services and Health (1990) 95 ALR 87, at 101, per Gummow J. Secondly, that information must have been imparted in circumstances importing an obligation of confidence. Thirdly, there must be an unauthorised use of that information to the detriment of the party communicating it'. 2953 There is a somewhat imprecise quality to the elements of a claim based on breach of confidentiality articulated in these statements. This is perhaps not surprising, given the infinite range of circumstances in which the principles might be invoked. As Gleeson CJ observed in ABC v Lenah Game 208 CLR, at 227 [45], the difficulty in any given case is to determine what a ' properly formed and instructed conscience ' has to say about the particular circumstances. The circumstances include the nature of the allegedly confidential information and the manner in which it was communicated to the defendant. 2954 There is a factual dispute in this case as to whether Seven ' leaked ' details of C7's bids for the NRL pay television rights to the media in late November and early December 2000. Mr Sumption accepted that if Seven leaked details of the bid of 5 December 2000, its breach of confidentiality claim was bound to fail. That concession is clearly right, since it could hardly be said in those circumstances that the details of the bid were confidential. 2955 Mr Sumption also accepted that if Seven leaked details of the two bids by C7 predating its bid of 5 December 2000, but not the third bid, a reasonable bystander would not so readily conclude that the third bid was confidential. The reference to a ' reasonable bystander ' may have been to Megarry J's suggestion in Coco v Clark 1A IPR, at 591, that the ' reasonable man ' test can be pressed into service when determining whether information has been communicated in circumstances importing an obligation of confidence. Not everyone approves of this ' infiltration into equity of the "reasonable man" as the exemplar of equitable standards of conduct ': Equity: Doctrines and Remedies (4th ed) , at [41-020]. Perhaps the better way of putting the point is that it is very difficult to regard information as being confidential, or having been communicated to the recipient in circumstances importing an obligation of confidence, if the information is very similar in character to that which the communicator has previously chosen for its own purposes to place in the public domain: cf Lennon v News Group Newspapers Ltd [1978] FSR 573. 19.4.8 Was the Information Confidential? The information comprises three key elements of C7's bid for the NRL pay television rights, which was communicated to the NRL PEC through Mr Moffett, under cover of C7's letter of 5 December 2000. To determine whether this information was confidential it is necessary to make findings about the public release of information concerning C7's first two bids for the NRL pay television rights. It is also necessary to make findings about the circumstances surrounding the communication of C7's third bid to the NRL PEC. 2957 News invites me to find that Seven ' orchestrated ' leaks to the media of the contents of the first C7 offer of 16 November 2000. There is evidence which points in this direction. Mr Masters' article in the Sydney Morning Herald of 20 November 2000 can be read as suggesting that Seven disclosed the terms of C7's bid to the NRL clubs. Mr Masters was regarded by Seven's public affairs representative, Mr Francis, as being ' on our C7 rugby league payroll ' and as Seven's ' old faithful warhorse ' . Moreover, Mr Stokes admitted that very shortly after the Seven board meeting of 17 November 2000, at which C7's first bid was approved, he telephoned Mr Hill (a director of both ARL and NRL Ltd) ' to tell him we were making an offer '. 2958 In his email of 23 November 2000, Mr Francis informed Mr Stokes, among others, that Seven had been careful not to leave its fingerprints on any story in the press in the previous ten days. As Mr Stokes accepted, Mr Francis is likely to have known of the terms of C7's first offer for the NRL pay television rights. Mr Stokes agreed that he understood at the time that Mr Francis was briefing the press on a basis that was not attributable to Seven. While no doubt Mr Francis was briefing the press on AFL-related matters at the time, there is no particular reason to interpret his ' fingerprints' comment as limited to briefings on those matters. 2959 I think that the likelihood is that Mr Francis, on behalf of Seven, gave information to selected reporters about aspects of C7's first bid for the NRL pay television rights. I am reinforced in that conclusion by the findings I make later concerning the leaking of the contents of C7's second bid. However, I am not satisfied that the leaks were such as to divulge the substance of C7's bid. The articles in the News publications did not accurately disclose the terms of the bid and Mr Masters' article carries the extent of disclosure no further. Mr Stokes' admission in relation to his conversation with Mr Hill does not establish that he disclosed the substance of the bid at that point. 2960 The details of C7's second bid of 27 November 2000 were revealed to the CEOs of the NRL clubs at the meeting on 30 November 2000. There were obvious commercial advantages to this course and an equally obvious risk that confidentiality would not be respected by all those present at the meeting. However, the disclosure by Seven was on the basis that the CEOs and the clubs maintained confidentiality. As the minutes record, the confidential nature of the offer was stressed to all those attending the meeting. In my view, this disclosure did not, of itself, result in the terms of the offer made to the NRL PEC ceasing to be confidential. 2961 At 4.50 pm on 30 November 2000, Mr Ray Hadley disclosed on Radio 2UE the substance of important elements of C7's second bid. Mr Hadley's on-air presentation suggests that it may have been one of the club CEOs who had leaked the contents of the bid, presumably immediately after the meeting of 30 November. Mr Francis' email of 30 November 2000 provides some support for this view. However, on 1 December 2000 several articles appeared which provided yet more details of C7's bid. In particular, the article by Mr Masters ( Sydney Morning Herald ) on that day correctly sets out the key terms, including the ' three-tiered ' pricing arrangement. The article in the Australian Financial Review also accurately reported the tiered pricing arrangement. 2962 Mr Allerton's email of 1 December 2000 to Mr Stokes makes it clear that he had ' briefed ' Mr Hadley, as well as Mr Masters and Mr Collins, all of whom ' pushed our line '. The coverage was said to be ' great ' and Mr Allerton was clearly pleased Seven did ' not have any fingerprints on it '. The email evinces no concern that further confidential information about C7's bid, beyond that revealed by Mr Hadley, had been reported in the media. 2963 As I have recorded, Mr Stokes was in China on 30 November 2000, the day of the CEOs' meeting, and on the following day, 1 December 2000. He spoke to Mr Allerton by telephone for three minutes in the afternoon (AEST) on 30 November 2000 (apparently before Mr Hadley's program) and for thirteen minutes on the following day, after the press reports had appeared. Mr Stokes was questioned about these communications and somewhat reluctantly conceded that he had asked Mr Allerton to brief the press, although he characterised it as a ' defensive reply '. I don't recall it. What you probably did, Mr Stokes, was ask him to disclose to the world the offer that Seven had made to the NRL; correct?---No. You asked him to brief the press about the Seven offer, didn't you?---I --- yes, I may well have done. Yes, I did, yes. I think it may have been a defensive reply that we were making at the time'. Seven submits that Mr Allerton could have made a ' defensive reply ' without revealing the terms of the bid. It relies on Mr Francis' email of 30 November 2000, in which he referred to keeping within ' the relative confines of commercial confidentiality ' and to the confidentiality of the bid having been ' blown by the verbal club presidents '. 2965 I think that the likelihood is that, whoever was the immediate source for Mr Hadley's report on the radio, Mr Allerton or Mr Francis provided Mr Masters and other journalists with details of C7's offer of 27 November 2000 for the NRL pay television rights. Mr Masters was clearly provided with full details of the bid. Even if a club official was Mr Hadley's source, there is no particular reason to think that the official would have leaked to other journalists detailed information about the bid. • It is clear that Seven's representatives were in close contact with Mr Masters, who was regarded as firmly within Seven's camp. There were obvious advantages to Seven providing details of the bid to a sympathetic journalist, who would then be very well equipped to convey Seven's side of the story to the public. • Mr Francis' email of 30 November 2000, although referring to the ' relative confines of commercial confidentiality ', accepted that confidentiality had been blown by ' the verbal club presidents '. This can be interpreted as Mr Francis regarding any confidentiality previously attaching to the bid as having been superseded. • Mr Allerton's email of 1 December 2000 did not express any concern or disappointment that Mr Masters and Mr Collins had revealed even more details about C7's bid than had Mr Hadley. On the contrary, the tone of that email and that of Mr Francis' email of 4 December 2000 was one of self-satisfaction. • In his evidence, Mr Stokes seemed reluctant to admit that he had asked Mr Allerton to brief the press about C7's offer. Moreover, he had an obvious motive to cause the details of C7's offer to be released, particularly if aspects of the bid had already been disclosed by one commentator. I do not accept that any instruction by Mr Stokes to Mr Allerton or Mr Francis required them to maintain the confidentiality of C7's bid. • Mr Francis was available to be called as a witness (indeed he was in court from time to time), but Seven chose not to do so. Therefore I was deprived of the opportunity to hear from Mr Francis precisely what was conveyed to Mr Masters and the other journalists by or on behalf of Seven. Mr Francis' absence from the witness box makes it easier for me to draw the inference, that is otherwise available on the evidence, that he or Mr Allerton at the very least disclosed to Mr Masters the full details of C7's bid. • Much the same applies to Mr Allerton, who was also not called to give evidence. Mr Allerton, through City Public Relations Pty Ltd, had a monthly retainer from ACE. Part of his brief was to give journalists background information in the interests of Seven. The invoices for Mr Allerton's work at this time were directed to Seven. He is plainly within Seven's camp. • Mr Allerton and City Public Relations Pty Ltd produced only a few documents relevant to the issues under consideration in response to subpoenas, apparently because the computer system in operation at the time had been disposed of. I draw no adverse inference from the disposal of the computer system, but the disposal eliminates the possibility that Mr Allerton or City Public Relations Pty Ltd retained records which would support Seven's position. It is unclear whether a plan was developed in advance to deal with that eventuality. However, when it became apparent that some information had been or was about to be leaked by a club official, Mr Stokes gave authority to Mr Allerton and Mr Francis to make available to Mr Masters and other journalists the complete contents of C7's bid. This was to be done as part of Seven's efforts to influence favourable media coverage of C7's bid and to create pressure on Fox Sports to offer considerably more to the NRL PEC if it wished to secure the NRL pay television rights. 2967 On balance, I think that the initial leak to Mr Hadley on 30 November came from a club official. However, I find that Mr Allerton or Mr Francis, with Mr Stokes' approval, provided full details of C7's bid to Mr Masters and other journalists. The material was duly published, as Mr Stokes, Mr Allerton and Mr Francis intended. 2968 In these circumstances, it is clear that, once Mr Masters' article was published, the contents of C7's second bid for the NRL pay television rights were no longer confidential. Now, you knew that it was Seven's position that from 1 December 2000 it was the position of Seven, which you were a party to, that nothing about the NRL offer was confidential; that's correct, isn't it? --- I accept that nothing from 1 December was confidential. It had all been covered in that, certainly in that article, yes. --- Not that I am aware of, Mr Hutley'. 2970 Whether or not Mr Stokes realised that the letter made no claim to confidentiality, Seven adduced no evidence suggesting that the omission was an oversight or had been remedied by a subsequent communication to the NRL PEC. Seven's submissions do not offer any convincing reason, nor indeed do they refer to any reason grounded in the evidence, for failing to claim confidentiality for the third offer. Given the disclosure of C7's second offer in the media, it might have been expected that, if Seven wished to preserve confidentiality, it would have taken some pains to advert expressly in its letter of offer to its desire to preserve confidentiality. 2971 I infer that the absence of any reference to confidentiality in C7's third letter of offer was not accidental. This inference is stronger because C7's letters of 6 and 7 December 2000, which clarified elements of C7's bid, were also not expressed to be confidential. The absence of any such claim probably reflected a perception by Mr Gammell and others within Seven that, in view of the publication of the details of C7's second offer and in view of Seven's interest in maintaining a public debate about the merits of the competing offers, there was no particular point in maintaining confidentiality at this stage of the negotiations. 2972 In any event, important aspects of C7's third offer soon found their way into the press. Mr Masters' article in the Sydney Morning Herald of 7 December 2000 reported that C7 had removed certain demands from its bid, but that it insisted on retaining the ' discount ' of $1 million for each additional game televised by Nine. According to Mr Masters, an ' insider ' had described the clause ' as insurance against "an act of bastardry" by Packer '. The article did not refer to the fact that Seven's offer had been reduced in certain respects, but asserted that the ' floor price ' (that would apply if Nine stripped C7 of more NRL games) was higher than the Fox Sports bid. 2973 I infer that Mr Allerton or Mr Francis, or possibly someone else from Seven, provided to Mr Masters such information relating to C7's third bid that was thought to be helpful in pushing Seven's case in the media. I am assisted in reaching this conclusion by Mr Masters' reference to an ' insider ' and by the absence of Mr Allerton and Mr Francis from the witness box. In any event, the information was not communicated to the NRL PEC in circumstances imparting an obligation of confidentiality on the members, including Mr Philip. 2975 C7 did not treat its second bid for the NRL pay television rights as confidential. Accepting that the initial leak to Mr Hadley came from one of the club officials, Seven was not compelled to counter the leak by itself leaking the full contents of its bid to other journalists. As Seven's own submissions recognise, it was not essential for C7, if it wished to make a ' defensive reply' , to divulge full details of its bid to Mr Masters and others. If Seven was genuinely concerned about maintaining the confidentiality of its current and future bids it could (and presumably would) have explained publicly that the leak had occurred without its authority. No doubt that course may have created a risk of implicitly confirming the accuracy of the leak, depending on the way the complaint was framed. But taking such a position would have demonstrated Seven's concern to preserve the confidentiality of the bidding process. 2976 Seven relies on the differences between C7's second and third offers to support its argument that the disclosure of the terms of the second bid did not detract from the confidential character of the third bid. This argument may have carried some weight if C7 had expressly reserved confidentiality for the third bid and the subsequent written clarification of its terms. Even that conclusion is doubtful given Seven's clandestine disclosure of the terms of the second bid, at least without Seven ' coming clean ' about its conduct and explaining to the NRL PEC why its third bid was nonetheless to be regarded as confidential. 2977 Be that as it may, Seven deliberately chose to communicate its third offer of 5 December 2000 without claiming confidentiality for its terms. It followed the same course in relation to the clarifications of the bid in the letters of 6 and 7 December 2000. In short, Seven chose to communicate its final offer without attempting to clothe it with confidentiality. Members of the NRL PEC were entitled to conclude that C7 was no longer concerned about the confidentiality of its bid. 2978 Seven also relies on the various expressions of confidentiality by C7 and Mr Moffett on behalf of the NRL PEC prior to 5 December 2000. But those expressions were generally directed to particular communications and, in any event, were plainly overtaken by Seven's conduct in publicly disclosing the terms of C7's second bid. Similarly, it is difficult to see the relevance of Seven obtaining signed confidentiality undertakings from executives in mid-November 2000, in the light of its subsequent conduct. 2979 Seven further says that the bidding process was supposed to be similar to that of a sealed auction where rivals do not know each other's bids and the highest bid wins. This submission is not supported by the evidence. The NRL PEC made it clear to Seven that the bidding process would be conducted entirely at its discretion. In any event, any assumptions about the bidding process had been overtaken by the events which occurred before C7 made the third offer on 5 December 2000. 2980 The conclusions expressed thus far have been reached independently of Seven's disclosure to Mr Masters of aspects of its final bid. In my opinion, this would be enough, of itself, to deny the quality of confidentiality to the contents of that bid. At the very least, it reinforces the conclusions I have reached. 2981 Finally, I note that Seven supports its contentions by referring to Mr Macourt's evidence that he felt constrained at the Fox Sports board meeting of 5 December 2000 not to confirm the accuracy of the press reports that had appeared concerning the competing bids. It is not clear whether Mr Macourt appreciated the circumstances of the disclosures as I have found them to be. In any event, his view at the time cannot alter the significance of the findings of fact I have made. 2982 It follows that Seven's case in breach of confidentiality does not clear the first hurdle. Since the information was not clothed with the necessary quality of confidentiality, it is not to the point that Mr Philip may in fact have disclosed it in his fax of 9 December 2000 to Mr Akhurst or, indeed, in some other communication. Nor is it to the point that Mr Philip may even have believed that the information he was disclosing was confidential. Nonetheless, in view of Mr Philip's denial that he intended to communicate to Mr Akhurst the substance of C7's bid of 5 December 2000, I think it is appropriate to record a finding on that factual issue. 2984 I have already recounted much of the evidence relating to this question in Chapter 9. It will be recalled that Mr Philip admitted that he asked Mr Akhurst to destroy the latter's copy of the fax of 9 December 2000 and I have found that Mr Philip made a similar request to Mr Falloon. Mr Philip made these requests in order to erase what otherwise would have been a paper trail. I have recorded Mr Philip's extraordinary admissions in his third written statement, to the effect that a number of representations in the fax were outright lies and that he had made them in order to persuade Telstra to support a revised bid by Fox Sports for the NRL pay television rights. Mr Philip reluctantly agreed that if his evidence was right, and if Telstra was influenced by his statements to support the increased bid, then it was possible that he had succeeded in defrauding Telstra. 2986 Mr Philip's admissions do not inspire confidence in his truthfulness. On his own account, he was prepared to tell lies in an attempt to persuade Telstra to contribute funds that otherwise Mr Philip's employer would have had to contribute to the project. Whether or not this amounted to ' fraud ', it was disgraceful conduct. Nonetheless, Mr Philip's admissions of dishonest conduct do not necessarily mean that he was not telling the truth in the witness box. Indeed, News submits that Mr Philips' willingness to make admissions against his own interests supports the conclusion that his evidence in the proceedings, at least on this point, was truthful and should be accepted. 2987 I focus here on Mr Philip's claim that his fax to Mr Akhurst was not intended to disclose the terms of C7's offer of 5 December 2000 to the NRL Partnership. In my fax to Bruce Akhurst the $39 million consists of the $34-$35 million for the rights and $4 million contra (see paragraph 6 of my fax). I did not treat the $6 million as part of the bid from the NRL's point of view. The $6 million was my estimate of the cost to be incurred by Fox Sports in producing the NRL coverage but which I wanted to count as a contribution by Fox Sports in my argument that Telstra's contribution of $10 million was less than the contribution which was being made by the Fox Sports shareholders. In describing the C7 offer in the way that I did I assumed that C7's production costs would be the same as Fox Sports (that is, $6 million) and that C7 would offer the same level of contra as the Fox Sports offer. I then chose a figure of $33 million for the rights so that, when added to the $4 million and the $6 million, it was $2 million less than the proposed Fox Sports bid'. He claimed that the critical figure in his mind, at the time he wrote the fax, was $39 million per annum. This figure, he said, was derived from Mr Masters' article in the Sydney Morning Herald of 1 December 2000. The article had referred to C7's ' three-tiered deal ', the lowest tier of which required $25 million to be paid to the NRL Partnership and $14 million to the clubs. According to Mr Philip, he felt that Fox Sports had to ' measure up ' to the expectations in the public mind created by the press articles appearing on and after 1 December 2000. 2989 Mr Philip acknowledged that C7's second offer of 27 November 2000 was actually for $39 million cash plus $4 million contra. He accepted that the explanation given in his first written statement implied that an offer by Fox Sports of $39 million, inclusive of contra, could be publicly presented ' as being in the same ballpark ' as C7's offer of $39 million plus contra. He reached the figure of $33 million cash per annum for the rights, recorded in par 1 of the fax, simply by deducting an arbitrary $2 million from what he regarded as a publicly defensible bid by Fox Sports (that is, $35 million cash plus $4 million in contra). 2990 Mr Philip agreed in cross-examination that his practice, when analysing offers for pay television rights, was to assess monetary bids exclusive of GST. He acknowledged that there was not a single figure in the fax to Mr Akhurst that was inclusive of GST. He also acknowledged that the figure of $33 million per annum appearing in par 1 of the fax was almost exactly equivalent to C7's minimum cash offer in its bid of 5 December 2000 ($36.5 million), when presented exclusive of GST. The figure that appears in paragraph 1? --- Yes. --- Yes. At the time you drafted this fax you knew that the C7 cash component of the offer taken at the lowest level was 36.5 million inclusive of GST; am I right about that? --- Yes. --- I accept that. In relation to how I recall preparing this document, to me that's happenstance. I'm just trying to understand what you are saying. Had you intended to record the C7 cash component offer at the lowest level exclusive of GST, may I take it that it would have been recorded as 33 million? There's no other figure, is there, in here that says, for example, 25.1 million or 6.23 million? It would have been recorded, wouldn't it, as 33 million ?--- I don't know. If I approached it that way, a lot of things might have been different. I can't answer that question, I'm sorry. You can't answer that. But your evidence is that the $33 million figure, it is a pure coincidence that it just happens to be very close to the actual C7 cash component offer exclusive of GST? --- Yes, it is. --- Yes, it is. That's my evidence. --- I accept that I knew it, but that wasn't --- I wasn't thinking about that at the time. --- To be honest, that has not occurred to me until I have read recent press reports about arguments raised in this case'. Similarly, on his own evidence, he was concerned, at the very least, that he was at risk of being accused of revealing confidential information to Telstra. Hence his desire, ineffectually carried out, to erase the paper trail. Mr Philip's fax of 9 December 2000 actually purported to describe the key terms of C7's offer. And in substance it did precisely that. 2993 News appears to concede that, if the terms of C7's bid were confidential, Mr Philip ' inadvertently communicated the information to Mr Akhurst '. I do not accept Mr Philip's evidence that the disclosure was inadvertent. His explanation as to how he arrived at the figures in par 1 of the fax is implausible and appeared to be implausible when he was giving his explanation in the witness box. His assertion that it never occurred to him that the figure of $33 million per annum coincided with the terms of C7's 5 December bid (on a GST-exclusive basis) defies credulity. 2994 If I had not found that the information disclosed by Mr Philip lacked the quality of confidentiality, I would have found that Mr Philip deliberately disclosed to Mr Akhurst, in his 9 December 2000 fax, that C7's lowest tier bid for the NRL pay television rights was approximately $36.5 million inclusive of GST. I would also have found that Mr Philip disclosed to Mr Akhurst that the contra component of C7's third bid amounted to $4 million. Further, I would have found, as Mr Philip accepted, that par 8 of the fax disclosed the fact that C7's bid had terms in it that prevented the NRL Partnership obtaining any value for the internet naming rights. The second statement is said to have been misleading and deceptive because it could only be true on the basis of unrealistic assumptions (pars 484(b), 500). 2997 Seven pleads that it relied on the representations, as did the clubs participating in the NRL Competition (pars 486-487). Seven further says that had the representations not been made it would have attempted to induce the clubs to require the NRL Partnership to reconsider its decision (par 487(b)). Finally, Seven alleges that, by reason of the making of the representations, it lost the opportunity to acquire the NRL pay television rights (par 488). Seven acknowledges that the figure appears to be a calculation derived in part from a document entitled ' Review of C7 and Fox Sports Pay TV Offers ' prepared within the NRL Partnership for presentation to a meeting of club CEOs and in part from other documents. However, Seven contends that the calculation reflected unrealistic assumptions about the number of Fox Sports subscribers and an attribution of value to the NRL Partnership for production costs when the NRL Partnership would not have incurred those costs in any event. 2999 Seven submits that the ' guaranteed figure ' representation conveyed to the ordinary reader that, on realistic assumptions, the NRL Partnership was certain to receive more revenue from Fox Sports under the NRL-Fox Sports Pay Rights Agreement than it would have received from C7 had it accepted C7's offer. On that reading, the representation was false. This conclusion is said to follow from the proper interpretation of C7's final offer of 12 December 2000 (comprising the offer of 5 December 2000 subject to amendments in the letters of 7 and 12 December 2000). Seven says that the amount payable under C7's tiered offer depended not on the number of subscribers taking the C7 service itself, but upon the total number of homes connected to pay television platforms that carried the C7 channels broadcasting NRL content. On this basis, so Seven contends, it was wholly unrealistic to assume (as Seven says the NRL Partnership did) that platforms carrying the C7 channels would have fewer than 500,000 subscribers. Similarly, Seven says that it was unrealistic for the NRL Partnership to assume that Nine would broadcast three NRL matches per week live on free-to-air television. As Mr Macourt conceded, on the basis of these assumptions, the C7 bid was more than $50 million greater than the Fox Sports offer (and, therefore, the same amount greater than the value of the Fox Sports/NRL pay rights agreement which reflected the terms of that offer)'. This claim, however, was abandoned when Seven filed its Case Summary. Seven submits that there is a strong public interest element in the subject of the press release because the announcement was eagerly awaited and was of great importance to the NRL Competition, the clubs, fans and the game. A declaration would also ' go some way towards preventing conduct of the [same] kind ... being repeated '. News adopts NRL Ltd's submissions on behalf of its subsidiary, NRLI. 3004 NRL Ltd argues that the language of the media release should be understood as conveying an ' element of broad approximation ' when it referred to the ' total value of the deal [being] almost $400 million '. In any event, it says that Seven has failed to identify all the elements in Fox Sports' bid that were advantageous to the NRL Partnership and accordingly has failed to allocate an appropriate value to each component. NRL Ltd illustrates this point by reference to what it says is the value of ' in-programme promotion ' to be provided by Fox Sports. It points out that Mr Stokes, in a letter to the AFL, assessed ' in-programme promotion ' to the AFL as having been worth $30 to $40 million over a period of time. Once this and other advantages of the Fox Sports bid are taken into account, it was not inaccurate to describe the ' total value ' of the deal as amounting to nearly $400 million. 3005 NRL Ltd submits that the ' guaranteed figure ' representation must be understood as referring to the ' worst case scenario '. The worst case would include Nine taking extra free-to-air NRL games. If Nine exercised its entitlement to the full, C7's bid would involve a licence fee of $25 million, which would be less than the Fox Sports fee payable in the same circumstances. NRL Ltd says that, having regard to the fact that the media release was issued five years before the trial commenced, a declaration would lack any utility. It points out that, in the interim, the NRL Partnership has disposed of the NRL pay television rights for the next licence period, expiring in 2011. Any possibility of similar conduct in the future is so remote in time as to deprive the declaration of any practical significance. There is no dispute, however, that the Court has jurisdiction to make a declaration that a party has acted in a misleading or deceptive manner, in contravention of s 52 of the TP Act. This is so even if no other relief is sought by or is available to the applicant: Federal Court of Australia Act 1976 (Cth), s 21(1) ,(2); Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (No 2) (1993) 41 FCR 89, at 97-98, per Sheppard J; at 108-112, per Hill J. Equally, Seven does not dispute that the declaratory remedy is discretionary, in the sense that I am not obliged to make a declaration even if Seven establishes that the two impugned representations in the media release of 14 December 2000 were misleading or deceptive. 3008 It seems to me that there is some force in NRL Ltd's submission concerning the meaning of the representations conveyed by the press release. However, the short answer to Seven's claim for declaratory relief is that, even if it establishes that the media release of 14 December 2000 contained misleading or deceptive representations, I would refuse, in the exercise of my discretion, to grant purely declaratory relief. 3009 There are circumstances in which an applicant, which either does not seek or fails in its claim for other relief, nonetheless will succeed in obtaining a declaration that the respondent has engaged in misleading or deceptive conduct. Tobacco Institute v AFCO (No 2) was just such a case. The Full Federal Court dissolved injunctions granted by the trial Judge ( Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc ( 1992) 38 FCR 1), but made a declaration that a portion of an advertisement concerning the effects of passive smoking, which had been published seven years earlier, had been misleading or deceptive contrary to the provisions of s 52 of the TP Act. The Full Court took this course notwithstanding that AFCO had not sought declaratory relief at first instance and had applied to amend its claim for relief only after the Full Court delivered its first judgment. 3010 Sheppard J, with whom Foster J agreed, pointed out (41 FCR, at 100) that the question whether the advertisement was misleading or deceptive had been the central issue at the trial which had ' lasted for many months '. All four Judges dealing with the issue had firmly rejected the Tobacco Institute's contention that the advertisement was not misleading or deceptive. It did not ultimately press that claim (so I infer) because it recognised that the evidence did not establish the elements of reliance and causation necessary to make out a claim for damages under s 82 of the TP Act. In other words, Seven failed to prove the elements essential to demonstrating that it had suffered loss or damage by reason of the allegedly misleading or deceptive conduct. Unlike the applicant in Tobacco Institute v AFCO (No 2), Seven did not litigate this cause of action in the interests of the wider community, but in its own interests. There is, of course, no reason why Seven should not act in its own interests, but its motivation needs to be borne in mind when considering whether it is in the public interest (as Seven claims) that purely declaratory relief should now be granted. 3012 The forensic reality is that when Seven abandoned its claim for damages in respect of this cause of action, it sought to salvage something by pressing its claim for a declaration. In support of its position, Seven invoked the public interest in the Court expressing its disapproval of the NRL Partnership's conduct in issuing a media release containing misleading representations. No doubt it can always be said that there may be some value, however small, in the Court expressing its disapproval of conduct which contravenes s 52 of the TP Act. But, in my view, that does not foreclose the question of whether the Court, as a matter of discretion, should grant a declaration without the applicant pressing any claim for other relief. 3013 The media release was published two years before these proceedings were commenced and more than six years before delivery of this judgment. Few people would remember an advertisement which was part of a public relations battle fought long ago and which has well and truly been overtaken by events, not least the award in 2005 of the NRL pay television rights for the period 2007 to 2011. No evidence was led to establish that anyone reading the advertisement suffered any financial loss or significant detriment. It is true, as Mr Sheahan submitted, that the media release was issued to the public at large. But given the lapse of time, the absence (so far as the evidence goes) of any apparent adverse effect on the clubs or those interested in the NRL and the reallocation of the NRL pay television rights in 2005, it is hard to see how a declaration issued by the Court at this stage could have any significant practical utility. 3014 I mention two other points. First, the media release representations played only a minor part in these proceedings. Had Seven not incorporated its claim for declaratory relief into the multitude of causes of action pleaded in the statement of claim, it is difficult to believe that Seven would have been sufficiently troubled by the media release to bring proceedings for a declaration based solely on account of the contents of that document. Seven, after all, was far from helpless in any public relations contest. Secondly, Seven maintains other claims for relief against the NRL Partnership founded on alleged contraventions of s 52 of the TP Act. The denial of declaratory relief in respect of the media release does not affect the pursuit of claims which do have practical utility. 3015 A third point, although I would have reached my conclusion in any event, is that I do not regard it as in the public interest that a party, especially an applicant in mega-litigation, should be able to insist on the Court resolving every factual issue it chooses to present, no matter how devoid of practical significance that issue may be. There is a strong public interest in the limited resources of the Court being directed to the resolution of disputes that truly matter. Perhaps it is time courts recognised this point more robustly. 3016 In my view, there would be little or no utility in granting declaratory relief to Seven in respect of any misleading or deceptive conduct involved in the issue of the media release of 14 December 2000. Therefore, on the assumption that Seven could establish the misleading and deceptive character of the representations of the media release, I would decline in the exercise of my discretion to make a declaration to that effect. I was informed that Seven did not press certain allegations against the NRL Partnership or NRL Ltd. The following takes into account what I was told. 3018 Seven pleads that the NRL Partnership or, alternatively, NRL Ltd, represented to C7 that C7's offer ' would be treated in a fair and impartial manner ' (" the fair process representation ") (par 497). The representation is said to have been made by representatives of the NRL Partnership or of NRL Ltd to representatives of C7 in the course of seven separate conversations or meetings held between October 2000 and 4 December 2000 (pars 490-496). Seven alleges that each representation was made by or on behalf of the NRL Partnership or NRL Ltd (pars 490-496, 496A-496C). 3019 Seven pleads that, at the time the fair process representation was made, neither the NRL Partnership nor NRL Ltd had reasonable grounds for making the representation and to that end it relies on the deeming effect of s 51A of the TP Act (par 498). Alternatively, Seven alleges that, subsequent to the making of the fair process representation, the NRL Partnership (or alternatively NRL Ltd) engaged in conduct inconsistent with the representation. It is said that the NRL Partnership did so in circumstances where C7 was, to the knowledge of the NRL Partnership and NRL Ltd, relying on the representation (pars 499, 501). In particular, Seven says that the NRL Partnership accepted the Fox Sports offer for the NRL pay television rights which it knew to be inferior to that of C7 (par 500). In departing from the fair process representation without informing C7, the NRL Partnership's conduct amounted to misleading and deceptive conduct in contravention of s 52 of the TP Act (par 502). 3020 Both Seven and C7 are said to have relied on the conduct (that is, the making of the fair process representation) to their detriment (par 504). C7 and Seven Network are alleged to have suffered loss and damage as a result of the contravention (par 506). The loss or damage is said to include the loss of the benefits they had been induced to expect if they went to the trouble and expense of participating in the bidding process. Those benefits comprised the valuable opportunity of participating in a bidding process for the NRL pay television rights which accorded with the fair process representation (par 506A). (ii) In late October or early November 2000, Mr Love told Mr Stokes that the best bid would win the NRL pay television rights and that C7's offer would be treated fairly. (iii) On 13 November 2000, at a meeting with Mr Moffett and Mr Gallop, Mr Anderson asked whether it was worth C7 making a bid in circumstances where the NRL was ' pretty much owned by News '. Mr Moffett replied that he had independent decision-making responsibility and a ' responsibility to get the best possible deal for rugby league '. (iv) In about mid-November 2000, Mr Love or Mr Politis told Mr Gammell at a meeting at the Quay Apartments that they represented the independent and impartial face of the NRL and would ensure that there would be a proper process and a fair deal. (v) At a meeting held at NRL Ltd's offices at Fox Studios on or about 21 November 2000, Mr Moffett told Mr Wood that the News bloc on the NRL PEC was balanced by other members who would make a rational decision as to which bid would be accepted. (vi) At a meeting at his home on 25 November 2000 with Mr Hill (a director of ARL and NRL Ltd) and Mr Politis, Mr Stokes was told by Mr Hill that members of the NRL PEC would withdraw from a meeting if there was a conflict of interest in relation to a particular decision. (vii) Statements were made to Mr Gammell by Mr Moffett or Mr Gallop at a meeting held on 4 December 2000 that Seven submits should be interpreted as supporting the pleaded representation. NRL Ltd filed statements made by Messrs Gallop and Moffett and ARL filed statements by Messrs Love, Hill and Politis, but none of these persons gave evidence. Accordingly, so it argues, the presumption in s 51A of the TP Act applies and, in the absence of evidence to the contrary, the representation must be deemed to have been made without reasonable grounds and thus to have been misleading or deceptive. According to Seven, the Respondents adduced no evidence to the contrary. From this it follows that accepting Fox Sports' bid over C7's was conduct inconsistent with the representation that the bidding process would be fair and impartial'. It relies, for example, on the fact that C7 was not even informed about the NRL PEC's meeting of 13 December 2000 at which the decision was made, while Fox Sports was permitted to make a presentation to the same meeting. Moreover, the News appointees in the NRL PEC participated in the decision without declaring any conflict of interest. Mr Stokes and Mr Gammell, for example, each gave evidence that he would have taken the steps open to him to ensure a fair and impartial bidding process if he had been aware that the representation was false. These steps would have included informing the NRL clubs of the situation and of what they stood to gain from C7's offer. It says that it is entitled to be compensated for the loss of opportunity to participate in a bidding process for the NRL pay television rights which accorded with that representation. Given the superiority of C7's offer over that of Fox Sports, the compensation should be assessed on the basis that its superior offer would have been accepted. This approach is said to be consistent with the decision of the High Court in Murphy v Overton Investments Pty Ltd [2004] HCA 3 ; (2004) 216 CLR 388. The assessment of the value of Seven's damages claim rests on ' Scenario 3 ': that is, the loss of the opportunity to acquire the NRL pay television rights and to obtain a profit from their use or sale. 3030 Seven recognises that its claim for damages based on its loss of opportunity to acquire the NRL pay television rights cannot succeed if News would have validly exercised its last right to match C7's offer conferred by the NRL-News Pay Rights Agreement of 14 May 1998 . News could not have exercised the last right until after 13 December 2000, by which time C7 would have lost the AFL pay television rights. The exercise of the last right therefore would have had the anti-competitive consequences addressed elsewhere in Seven's submissions. News submits that the evidence relating to the other four conversations relied on by Seven either should be rejected or be found insufficient to support the making of the fair process representation. In support of its submissions, News points to written communications from the NRL Partnership which it says were quite inconsistent with the alleged representation. 3033 In any event, so News argues, assuming the statements were made as alleged, they were not made on behalf of NRL Ltd or the NRL Partnership. It says that the only way to give substance to the representation is by analysing the bases on which Seven contends that the NRL Partnership departed from the fair process representation. The evidence suggests that sporting organisations take other factors than money into account when awarding rights. Any representations that were made could not be construed as denying the NRL PEC the right to exercise its judgment as to what was in the interests of the NRL Partnership. • C7 had ample opportunity to make the bid that it wanted and to amend its proposals prior to 13 December 2000. It was never held out to C7 that it would receive a further opportunity after that date. • It was made plain to Seven that the News representatives would participate in the decision and Messrs Gammell, Wood and Anderson understood this to be the case. For example, C7 never addressed fully the ' fundamental issues ' with its bid that had been raised by Mr Moffett in his letter of 20 November 2000 in response to C7's first offer. C7's final offer of 5 December 2000 (as subsequently amended) was in a form which C7 knew would be unacceptable to the NRL Partnership because it would be unable to offer the same rights to Optus on the same terms (as the NRL Partnership was obliged to do). 3037 News submits, further, that a mere departure from the fair process representation cannot be misleading or deceptive conduct for the purposes of s 52 of the TP Act . C7 could only have been misled by the representation in the first place (assuming it had been made) or by a failure to correct it before departing from its terms. News says that Seven's arguments simply overlook the fact that the NRL Partnership declined to give the assurances C7 sought concerning the decision-making process. In any event, Mr Stokes' evidence shows that he placed no reliance on the fair process representation (assuming it was made). The flaw identified by News is that the loss identified by Seven is attributable to the NRL Partnership's departure from the fair process representation. It was not caused by the representation itself. According to News, the departure from the representation was not misleading or deceptive. In any event, Seven failed to address the issue of what C7 would have done if the representation had not been made. 3040 News points out that Seven does not persist with its pleaded claim that, if the fair process representation had not been made, it simply would not have engaged in the bidding process. Rather, Seven submits that C7 would have taken steps to ensure that the process was fair and impartial. However, News contends that the only rational conclusion from the evidence is that Seven would have declined to bid for the NRL pay television rights. Thus the only damage that could have been suffered by Seven was ' the trouble and expense of participating in the NRL bidding process '. However, as News notes, that claim appears to be no longer pressed. In addition, it makes supplementary submissions. 3042 ARL contends that there is no basis for concluding that any statements made by Messrs Love, Politis and Hill were made on behalf of the NRL Partnership or NRL Ltd. ARL submits, on the contrary, that the Seven representatives were well aware that Messrs Love, Politis and Hill could not have been speaking on behalf of News or the News appointees to the NRL PEC. 3043 ARL submits that Seven is incorrect in suggesting that Fox Sports' offer was known by the NRL Partnership to be inferior. According to ARL, there was nothing unrealistic about assuming that the lowest payment tier in C7's offer would apply, or that Nine would take additional NRL matches on its free-to-air channel. Moreover, ARL contends that Seven is precluded from relying on a number of additional matters it claims demonstrate that the acceptance of Fox Sports' offer was not based on a fair and impartial comparison of the two competing bids. The reason given by ARL is that the matters relied on by Seven fall outside the scope of the pleadings. 3044 ARL also says that if, contrary to its submissions, the Court finds that the fair process representation was made on behalf of the NRL Partnership, evidence was adduced suggesting that the NRL Partnership had reasonable grounds for making the representation. The adducing of that evidence means that s 51A(2) of the TP Act , as a matter of construction, does not operate to deem the representation to have been made without reasonable grounds. According to ARL, the onus of establishing lack of reasonable grounds rests with Seven and has not been discharged by it. 3045 Finally, ARL criticises Seven's damages case on the ground that it converts a lost opportunity of participating in a fair bidding process into a certainty that its offer would have been accepted. ARL also argues that there is no evidence as to what the NRL clubs would have done had Seven informed them of the departure from the fair process representation. The fair process representation is said to emerge from interchanges between different people that took place in different words and in different contexts. In order to accommodate the differences, Seven formulates a representation in general terms (that C7's offer would be treated in a fair and impartial manner). Yet on Seven's own case, the representation so formulated does not correspond precisely with the language used in any of the conversations. 3047 Seven then, in substance, interprets the representation it has formulated to give rise to what News aptly enough describes as ' imputations '. These are employed to support Seven's submission that the NRL PEC departed from the representation by deciding to accept Fox Sports' offer. It is not easy to see, for example, why the various statements on which Seven relies constituted a representation that the News representatives on the NRL PEC would not participate in the decision to award the NRL pay television rights, or would declare a conflict of interest if they did (as Seven's submissions appear to suggest). Even the responses Mr Gammell claimed were made to his query concerning a potential conflict of interest did not go that far. No doubt an undeclared conflict of interest on the part of a decision-maker might indicate that the decision-making process is not being carried out in a ' fair and impartial manner ', depending on what that expression, read in context, means. But the expression is Seven's. It was not used by the alleged representators. 3048 I am doubtful whether, even if the conversations alleged by Seven took place in precisely the terms it pleads, the fair process representation would be made out. However, in view of other findings I make it is not necessary finally to resolve this question. • Assuming the fair process representation was made, did Seven rely on it? The first is that not one of the statements is supported by contemporaneous documentation. The evidence supporting the making of the statements consists exclusively of evidence of oral exchanges, unaided by notes made at or near the time the conversation allegedly occurred. Moreover, there is not a single example of any of the seven alleged statements being confirmed or recorded in contemporaneous correspondence prepared by or on behalf of C7 or Seven Network. Secondly, there is no evidence that anyone at Seven complained that the conduct of the NRL PEC departed from representations made earlier on behalf of the NRL Partnership. Thirdly, it is very difficult to reconcile the evidence given by Mr Stokes and Mr Gammell, in particular, with the correspondence passing between Seven and the NRL PEC (or NRL Ltd acting on behalf of the NRL PEC). Mr Wood asserted in the fax, however, that Mr Moffett had stated that the NRL PEC would act independently in the best interests of the NRL and the clubs when assessing offers for the pay television rights. (The conversation between Mr Wood and Mr Moffett is not one of those relied on by Seven. However, on 17 November 2000, Mr Anderson recorded in a fax to Mr Moffett that Seven expected ' impartiality to be an important part of the process ' and that it also expected that those directors with a conflict of interest would not participate in the decision-making. • Once again this assertion provoked a firm response. Mr Wood also accepted that he had passed on the substance of this conversation to Mr Gammell. Mr Moffett's unequivocal statement in the conversation is hardly consistent with the fair process representation. • Mr Stokes admitted that he had read the relevant portions of Mr Moffett's letter of 8 November 2000 and accepted what had been said there. • Mr Stokes initially gave evidence that, from the time C7's letter of 17 November 2000 was dispatched, he believed that the News nominees on the NRL PEC would not participate in the decision to award the NRL pay television rights. He claimed to have maintained this belief until the rights were actually awarded. His later evidence is not easy to reconcile with his earlier evidence. --- Yes. --- That they were going to vote, that's correct'. He conceded that at least until the end of September he was confident that Seven would reacquire the AFL pay television rights. • In the light of that confidence, he admitted that at least until the end of September 2000 he had not been concerned about the possibility of Seven acquiring the NRL pay television rights. While he subsequently sought to retreat from this admission, his retreat was unconvincing. It is therefore unlikely that he commenced a conversation at this time by stating that Seven wished to make a very serious offer to buy the NRL pay television rights. • According to Mr Stokes, he told Mr Moffett that Seven would get back to him with an offer. No offer was in fact made by Seven until 13 November 2000. • Despite Mr Stokes saying that he regarded Mr Moffett's assurance as important, the minutes of the strategy group meeting of 28 August 2000 and 4 September 2000 make no mention of the assurance. Nor was the assurance mentioned in any correspondence with the NRL. Specifically, it was not mentioned in the letter Mr Wood sent to Mr Moffett on 19 October 2000 making inquiries about the NRL pay television rights. While I do not regard as decisive the fact that Mr Stokes himself did not make notes at the time, the absence of any reference to the assurance in the correspondence is telling. • Mr Stokes gave evidence that he told Messrs Anderson and Wood ' in general terms ' about Mr Moffett's assurance and that he ' probably ' told Mr Gammell about it. None of the three gave evidence supporting Mr Stokes' recollection. It is true, as Seven submits, that Mr Stokes' evidence as to who he told arose in cross-examination. But there was nothing to prevent Seven adducing evidence from Messrs Anderson, Wood and Gammell on the point or, if necessary, seeking leave to do so. • It is odd, to say the least, that Mr Moffett should have assured Mr Stokes that the NRL Partnership would act with total propriety and preserve confidentiality and then, in the same conversation, apparently divulge to Mr Stokes the substance of News' then current offer. Mr Stokes also claimed in both his statement and oral evidence that Mr Love confirmed at the outset of the conversation that he was in charge of the NRL. In fact, Mr Love was chairman of directors of ARL and a member of the NRL PEC. It is unlikely that Mr Love would have mis-stated his own position. • Mr Stokes gave inconsistent evidence as to whether he got the idea of splitting the consideration for the rights between the NRL PEC and the clubs from the NRL. His account in his written statement implies that Mr Love made the suggestion. His oral evidence is consistent with that implication. Later, however, Mr Stokes attributed the idea to Mr Anderson and Mr Gammell, denying that he had had a discussion on the topic with anybody from the NRL. Nonetheless he subsequently asserted that his written statement was correct and that his earlier oral evidence was incorrect. • Mr Stokes said that Mr Anderson was with him when he made the call to Mr Love and that Mr Anderson had told him that Mr Love was the head of the NRL. Mr Anderson's evidence was that it was likely that he had told Mr Stokes of the positions Mr Love in fact occupied. Mr Anderson did not give evidence corroborating Mr Stokes' account of the conversation. --- Not without referring to it, no. --- Yes. --- Yes. --- Yes. --- Yes. --- That is correct'. Seven submits that this concession can be understood as consistent with Mr Stokes' evidence that he believed the News nominees would not participate in the decision. In fact, Mr Stokes said in his evidence that he did not expect the News nominees to play any part in the decision. In my view, Mr Stokes' concession does not sit easily with his account of the conversation with Messrs Hill and Politis. 3057 I am far from satisfied on the balance of probabilities that the conversations recounted by Mr Stokes, insofar as they are relied on by Seven to support the fair process representation, took place. It is possible that Mr Stokes had conversations with the people he identifies at about the times he recalls. But I am not persuaded that any conversations that took place included the assurances or representations on which Seven relies. Mr Stokes' evidence on these issues was sketchy, inconsistent, unconvincing and, in many respects, quite implausible. It was unsupported by documentary evidence and, indeed, at odds with contemporaneous records. 3058 In reaching this conclusion, I have taken into account the fact that none of the other parties to the alleged conversations was called to give evidence. As I have explained elsewhere, while this is a consideration that must be given due weight, the failure to call these witnesses does not compel me to accept Mr Stokes' account of the conversations. The first of these is the conversation that took place on 13 November 2000 at which Mr Moffett is alleged to have assured Mr Anderson that he had responsibility to ' get the best possible deal for Rugby League '. Mr Anderson accepted in his cross-examination that he understood Mr Moffett to be conveying no more than that he was charged with the responsibility for obtaining offers for the rights and that the ultimate decision would be one for the NRL Partnership. Given that this meeting occurred soon after Mr Moffett's letter of 8 November 2000, Mr Anderson's evidence is not surprising. That evidence is consistent with the fact that Mr Anderson, in his letter to Mr Moffett sent very soon after the meeting, made no mention of any assurance given at the meeting. Indeed, Mr Moffett's response to that letter reiterated that an extension of time for making an offer would be granted ' on the same basis as stated in my letter of 8 November '. Accordingly, I cannot accept that anything was said at the meeting of 13 November 2000 that supports the fair process representation. 3060 The second of the four additional conversations, according to Seven, took place in Sydney in mid-November or early December 2000, when either Mr Love or Mr Politis told Mr Gammell that the NRL would follow a fair and independent process. Mr Gammell and Mr Anderson (who was also at the meeting) gave conflicting evidence on important points. 3061 One such point was the date of the meeting. Mr Gammell was in Perth from 17 November to 3 December 2000. In his third statement, Mr Gammell placed the meeting on 14 or 15 November 2000, before C7 made its first offer on 16 November 2000. In his cross-examination, Mr Gammell said he was certain that the meeting had taken place before 30 November 2000 which, if correct, means it could not have occurred after 16 November 2000 (since Mr Gammell was not in Sydney). Mr Anderson, however, said that the meeting took place after C7's second offer was made to the NRL Partnership on 27 November 2000. He accepted that it was possible that the meeting had occurred on 4 December 2000, after Mr Gammell's return to Sydney. 3062 The differences as to the date of the meeting are not merely trivial, for two reasons. First, Mr Gammell and Mr Anderson gave conflicting accounts of what was discussed at the meeting. According to Mr Anderson, Mr Love had before him a copy of C7's offer and discussion took place concerning C7's ' subscriber based offer '. Mr Gammell, on the other hand, denied that the offer had been discussed at all and, indeed, it could not have been had the meeting taken place in mid-November 2000. Secondly, if the meeting was held after 27 November 2000, any representation could not have influenced the making of the first two offers by C7 for the NRL pay television rights. Although it is not critical to my finding as to the contents of this conversation, I think that Mr Anderson is more likely to be correct in his recollection as to the timing of the meeting. The date of 4 December 2000 is supported by emails of 1 December 2000 which refer to a forthcoming meeting with the NRL, involving both Mr Gammell and Mr Anderson. 3063 Mr Gammell conceded that certain aspects of his recollection as to what was said at the meeting may have been faulty. Mr Anderson's account of the meeting did not include the statements attributed by Mr Gammell to Mr Politis or Mr Love. Having regard to these matters, to the evidence to which I have referred and to the absence of any contemporaneous record of this conversation, I am not prepared to accept Mr Gammell's account of the statements made by Mr Politis or Mr Love at least, insofar as those statements are relied on by Seven to support the making of the fair process representation. 3064 The third of the four conversations is said to have taken place between 21 November and 5 December 2000, in the course of which Mr Moffett told Mr Wood that the News bloc was balanced by other members who would make a rational decision. (Contrary to Seven's Closing Submissions, Mr Wood's account did not refer to any conflict of interest. ) Even if Mr Wood's account of the conversation is accepted, I do not think the comment supports the fair process representation. 3065 The final conversation on which Seven relies occurred on 4 December 2000. It is difficult to understand how Mr Gammell's account of what was said by Mr Moffett or Mr Gallop supports the making of the fair process representation. After all, on Mr Gammell's own account, Mr Moffett or Mr Gammell said that they and no-one else would decide what was in the best interests of the NRL and that they would work out how the media rights would be sold. First, Seven's pleaded case does not allege that any of the statements was made on behalf of ARL, otherwise than in ARL's capacity as a member of the NRL Partnership. Secondly, the question of authority has to be considered on the assumption, contrary to my findings, that the statements allegedly made by Messrs Love, Politis and Hill were in fact made. The inference is that C7 perceived an advantage in creating a division between two ' independent camps '. • Secondly, both Mr Stokes and Mr Gammell knew the structure and decision-making process of the NRL Partnership. • Thirdly, Mr Gammell admitted inviting Messrs Love and Politis to the Quay Apartments meeting because they were ARL, not News, appointees on the NRL PEC. Mr Gammell also accepted that nothing said by Messrs Love and Politis at the meeting was said on behalf of a News company or the News appointees to the NRL PEC. They were not concerned to ascertain how the NRL Partnership or the NRL PEC would act. Thus if, for example, Mr Love told Mr Stokes that the best bid would win, he was merely expressing a view as to how ARL representatives on the NRL PEC would view the bids and was not making any commitment on behalf of the NRL Partnership. Similarly, anything said by Messrs Politis or Hill to Mr Stokes at his home on 25 November 2000 could only have been said on behalf of interests independent of News. 3069 Seven points out that Mr Love was a director of ARL and a member of the NRL PEC and probably had a power of attorney from ARL to do things and execute documents on its behalf (as contemplated by the NRL Partnership Agreement). Seven also points out that, on Mr Stokes' account, Mr Love had confirmed that he was in charge of ' the NRL '. It follows, so Seven argues, that Mr Love had the express or implied authority of the NRL partners (ARL and NRLI) to make the statements he did. Alternatively, Seven contends that Mr Love had the apparent authority of the NRL partners to make the statements to Seven. 3070 Seven advances similar contentions in relation to Mr Politis, except that there is no suggestion that Mr Politis purported to be in charge of or to represent ' the NRL '. Seven also says that Mr Politis, by participating in a meeting with Mr Hill and Mr Stokes, represented to Mr Stokes that Mr Hill had authority to make statements about the NRL pay television rights bidding process on behalf of the NRL Partnership. It argues that Mr Hill had express or implied authority as a director of ARL and NRL Ltd to make the statements he did on behalf of the NRL Partnership. 3071 The general structure of the NRL Partnership and the role and composition of the NRL PEC have been addressed elsewhere ([252]ff). The NRL Partnership Agreement provided that the partners (ARL and NRLI) agreed to conduct the ' Business ' (that is, the business of owning and operating the NRL Competition) (cl 3.1). Each partner held an equal interest in the NRL Partnership (cll 6.2, 6.3). Each partner was to appoint three members of the NRL PEC, the decisions of which were binding on the partners (cl 5.1). The Chairman of the NRL PEC was to be nominated by each partner in alternate years, but was not to have a casting vote (cl 5.5). However, certain powers were ' exclusive and non-delegable ' (cl 5.8). 3073 Seven's submissions do not address the specific provisions of the NRL Partnership Agreement, in particular the clauses governing the composition, voting procedures and the exclusive power and authority of the NRL PEC. In the light of these provisions, it is difficult to see how Messrs Love or Politis, let alone Mr Hill (who was not a member of the NRL PEC), could have had actual authority to make representations on behalf of the NRL Partnership as to the decision-making process to be used in connection with the allocation of the NRL pay television rights. Any decision with respect to the NRL pay television rights was entrusted exclusively to the NRL PEC, the members of which were appointed equally by each partner. The structure of the NRL PEC recognised that there might well be disagreements between the partners as to such decisions and that these would need to be resolved within the decision-making processes of the NRL PEC laid down in the NRL Partnership Agreement. 3074 It is equally difficult to see how statements made by Messrs Love, Politis or Hill can be said to have been made with the ostensible authority of the NRL Partnership, as distinct from that of ARL. A representation by a person that he or she has authority to bind another does not of itself create ostensible authority. It is therefore always necessary to look at the conduct of the principal (or the person to whom he has actually delegated authority)'. But the NRL Partnership does not appear to have done anything that could be regarded as clothing the three directors of ARL to speak on its behalf. 3076 This conclusion is reinforced by the understanding of Mr Stokes and Mr Gammell of the structure of the NRL Partnership. By 20 November 2000, when Mr Gammell saw the letter from Mr Moffett to Mr Anderson responding to C7's first offer, he knew and understood the structure of the NRL Partnership and the NRL PEC. He was also well aware of the potential for C7 to create a division between the NRL partners and, indeed, formulated the proposal for the sharing of revenue with the clubs partly in order to generate just such a division. Before the meeting at his home on 25 November 2000, Mr Stokes had been told by Mr Gammell that the NRL was controlled by a board which included three News representative and three people ' independent of News '. Although Mr Gammell's knowledge was more detailed than that of Mr Stokes, neither Mr Gammell nor Mr Stokes suffered from any misapprehension as to the relationship between the NRL Partnership and ARL nominees on the NRL PEC. 3077 If any representations made to Seven by Messrs Love or Politis were made without the authority (actual or ostensible) of the NRL Partnership, the same conclusion would seem to follow in relation to the authority of NRL. Neither Mr Love nor Mr Politis was a director of NRL. Seven's submissions do not explain why NRL should be understood to have clothed Mr Love and Mr Politis with authority to make representations to Seven on NRL's behalf. 3078 Mr Hill was a director of NRL Ltd. However, the only representation he is alleged to have made concerned the procedures of the NRL PEC when its members faced a conflict of interest. Mr Hill was not a member of the NRL PEC, and ARL was not represented on that body. It would not be useful to address at length the question of reliance on the basis, contrary to my findings, that the representations alleged by Seven were actually made by or on behalf of the NRL Partnership or NRL Ltd. It is enough to say that, even on that basis, Seven would have considerable difficulty establishing that it relied on the fair process representation in the manner for which it contends. 3080 One difficulty is presented by contemporaneous documentation indicating clearly that at least one of C7's principal objectives in the bidding process was to ' ramp ' the price that Fox Sports would have to pay for the NRL pay television rights. That objective, which was supported by a vigorous public relations campaign, would have prompted C7 to bid for the NRL pay television rights regardless of any representation made by the NRL Partnership as to the fairness of the bidding process. 3081 Another obstacle is presented by Mr Stokes' evidence concerning the nature and source of his beliefs as to the bidding process. --- That they would have a process in place --- I didn't have to be aware of the process, but there would be a process in place which took into account gaining the highest possible value for what they were selling, for the rights they were selling. --- Yes. --- Yes. --- Yes'. Seven submits that the passage should be understood in the context of an answer Mr Stokes had given before lunch, in response to a question from me. In that earlier evidence, Mr Stokes had referred to one of the three conversations he had recounted as contributing to his understanding on the question of corporate governance. But the subsequent questioning was, in my view, clear in its import and the answers admit of no ambiguity. It is enough to demonstrate that contravention of a relevant provision of the Act was a cause of the loss or damage sustained'. The contract is said to have included a term requiring the NRL Partnership to treat Seven's offer for the NRL pay television rights in a fair and impartial manner. As the claim based on the fair process representation fails on the facts, so the fair process contract claim must fail. 20 SEVEN-OPTUS CAUSES OF ACTION [3085] 20.1 Pleadings [3085] 20.1.1 Seven's Pleaded Causes of Action [3085] 20.1.2 Optus' Cross-Claim [3087] 20.2 Optus' Misleading Conduct Case against Seven [3089] 20.2.1 Optus' Case and Seven's Response [3090] 20.2.2 Letter of 1 May 2001 [3098] 20.2.3 Significance of a Representation as to a Matter of Law [3099] 20.2.4 What Representations Were Conveyed? [3101] 20.2.5 Representation with Respect to a Future Matter? [3112] 20.2.6 Were the Representations Misleading or Deceptive? [3116] 20.2.6.1 First Representation [3116] 20.2.6.2 Second Representation [3125] 20.2.7 Relief [3136] 20.2.7.1 Optus' Claims [3136] 20.2.7.2 Sections 82 and 87 of the TP Act [3140] 20.2.7.3 Reliance [3148] 20.2.7.4 Counter-factual World [3154] 20.2.7.5 Application of s 87(1A) of the TP Act [3169] 20.2.7.6 Damages Claim [3175] 20.3 Seven's Misleading Conduct Claims against Optus [3176] 20.3.1 Seven's Case [3176] 20.3.2 Representation of 28 September 2001 [3179] 20.3.2.1 Interpreting Seven's Submissions [3179] 20.3.2.2 Making of the Representation [3187] 20.3.2.3 Was the Representation False? [3193] 20.3.3 Failure to Disclose: 18 December 2001 [3199] 20.3.3.1 Was the Failure to Disclose Misleading conduct? [3199] 20.3.3.2 Reliance [3207] 20.3.4 Representation of 25 January 2002 [3208] 20.3.4.1 Reliance [3215] 20.3.5 Conclusion [3216] 20.4 Seven's Claims in Contract [3217] 20.4.1 Did Optus Breach the Exclusivity Clause? [3218] 20.4.1.1 Seven's Submissions [3218] 20.4.1.2 Optus' Submissions [3219] 20.4.1.3 Reasoning [3222] 20.4.2 CWO Deed Poll [3233] 20.4.3 Was Seven Entitled to Accept Optus' Repudiation of the C7-Optus CSA? [3234] 20.4.4 Did SingTel Optus Induce a Breach of Contract by Optus Vision? [3242] 20.4.4.1 Seven's Submissions [3242] 20.4.4.2 Reasoning [3244] 20.4.5 Is Seven Entitled to Exemplary or Aggravated Damages? [3247] 20.4.5.1 Seven's submissions [3247] 20.4.5.2 Reasoning [3249] 20.5 Deceit Claim [3255] 20.6 Optus' Defences [3257] 20.6.1 Did Seven Breach the C7-Optus CSA by Failing to Supply the AFL-Seven Licence on Request? [3258] 20.6.1.1 Optus' Submissions [3258] 20.6.1.2 Reasoning [3260] 20.6.2 Is the Exclusivity Clause Void for Uncertainty? [3266] 20.6.2.1 Optus' Submissions [3266] 20.6.2.2 Reasoning [3268] 20.6.3 Is the Exclusivity Clause Unenforceable as a Common Law Restraint of Trade? [3272] 20.6.3.1 Optus' Submissions [3273] 20.6.3.2 Principles [3276] 20.6.3.3 Pre-Existing Freedom [3278] 20.6.3.4 Legitimate Interest to Protect? [3279] 20.6.3.5 Was the Exclusivity Clause Reasonable? [3290] 20.6.4 Is the Exclusivity Clause Unenforceable by Reason of the TP Act? [3295] 20.6.4.1 Optus' Submissions [3295] 20.6.4.2 Exclusive Dealing [3302] 20.6.4.3 Exclusionary Provision [3305] 20.6.5 Did Seven Breach cl 3A.2? [3306] 20.6.6 Waiver, Estoppel and the Like [3308] 20. The terms of the Exclusivity Clause have already been set out ([1601]). (ii) By reason of the same conduct, SingTel Optus breached cl 2 of the CWO Deed Poll, by which it guaranteed Optus Vision's obligations under the C7-Optus CSA. Accordingly, Seven is entitled to be indemnified by SingTel Optus for any loss and damage suffered by it (pars 612-616). (iii) Optus' purported termination of the C7-Optus CSA on 28 March 2002 was both ineffective and constituted a repudiation of the agreement. This was so because Optus, by ceasing to perform the C7-Optus CSA, had committed a fundamental breach of the agreement, thus entitling Seven to terminate it. Seven accepted Optus' repudiation and validly terminated the C7-Optus CSA on 6 May 2002. Seven is therefore entitled to claim damages for Optus' breach of the C7-Optus CSA (pars 617-624). (iv) SingTel Optus induced Optus Vision to breach the Exclusivity Clause, opening the way to a claim by Seven for exemplary and aggravated damages against SingTel Optus (pars 625-628). (v) Prior to entry into the First and Second Variation Agreements, Optus represented to Seven that Optus would not enter into discussions or negotiations with persons other than C7 of the kind prohibited by the Exclusivity Clause. The representations were made either falsely or without reasonable grounds and amounted to misleading or deceptive conduct, in contravention of s 52 of the TP Act. In reliance on the representations, Seven refrained from insisting on the execution of a term sheet to replace the C7-Optus CSA and thus suffered loss and damage (pars 632-638, 644-645, 648-649). Optus admits making a statement to the effect of the pleaded representations, but denies the other allegations made by Seven relating to the representations. (vi) Optus made representations to Seven about the state of their negotiations concerning the Fox Sports channels, without revealing the true state of the negotiations or Optus' intention to continue negotiations in order to obtain the Fox Sports channels (pars 629-631, 639-643, 646-649). Of the four representations pleaded by Seven (par 631), Optus admits making three statements to that effect, but otherwise denies the allegations. (vii) Optus Vision was knowingly concerned in SingTel Optus' contraventions of the TP Act, and vice versa. Each therefore bears accessorial liability for the contraventions of the other (pars 650-651). (viii) The representation by Optus made prior to the entry into the Second Variation Agreement, to the effect that Optus would comply with the Exclusivity Clause, was intentionally misleading. The making of the representation therefore constituted the tort of deceit (pars 652-655). This allegation supports Seven's claim for exemplary and aggravated damages. Optus' major allegations are summarised below. Paragraph references are to the Cross-Claim. (i) Prior to Optus entering the First Variation Agreement, Seven represented to it that the C7-Optus CSA could not be terminated until the beginning of the 2002 AFL season and that the terms of the AFL-Seven Licence supported that interpretation. Seven also represented to Optus that it believed the truth of the statements it made about the termination date. The representations were false. Optus in fact had the right to terminate the C7-Optus CSA at the end of the 2001 AFL season since, by that time, Seven no longer had ' the pay television rights to AFL games ' within the meaning of cl 16.2(a) of the C7-Optus CSA. Moreover, Seven did not believe the representations it made to Optus (pars 19-20). Seven's conduct was misleading or deceptive, in contravention of s 52 of the TP Act (pars 22-26). Since Optus relied on the representations when entering the First and Second Variation Agreements, it is entitled to have them, or the Exclusivity Clause, set aside (pars 27-28). (ii) Seven breached the C7-Optus CSA by failing, upon request, to provide Optus with a copy of the AFL-Seven Licence. As a consequence of this breach, Optus could not ascertain for itself when its right to terminate the C7-Optus CSA arose and, accordingly, decided to enter into the First and Second Variation Agreements. Optus therefore suffered loss and damage equivalent to any judgment to which Seven would otherwise be entitled (pars 29-35). (iii) Seven engaged in the practice of ' exclusive dealing ' in contravention of s 47(1) of the TP Act. It did so by supplying sports channels to Optus Vision on condition that Optus Vision would not acquire sports programming (other than the supply of AFL match broadcasts and NRL match broadcasts) from any person, including Foxtel or Fox Sports, other than Seven (par 37). For the purposes of this contention, Optus pleads that Seven was a competitor of Foxtel and Fox Sports in the retail television market or the wholesale sports channel market (par 39). It also says that Seven's conduct had the purpose or was likely to have the effect of substantially lessening competition in the relevant markets (par 40). (iv) The Exclusivity Clause was an ' exclusionary provision ' within the meaning of s 4D(1) of the TP Act. Thus by entering the First and Second Variation Agreements, Seven made a contract or arrangement containing an exclusionary provision contrary to s 45(2)(a)(i) of the TP Act (pars 45-46). (v) The Exclusivity Clause constituted an unreasonable restraint of trade under the general law and was therefore unenforceable by Seven (par 57). (vi) Seven is estopped from asserting, or has waived, any right to relief in relation to the entry into and the negotiation of the Foxtel-Optus Term Sheet and the Foxtel-Optus CSA. This is said to flow from the fact that Seven's officers knew that Optus had negotiated with Foxtel in December 2001 and early 2002, yet took no steps to enforce the Exclusivity Clause until 19 August 2004 when it amended the Statement of Claim (par 48). (vii) Seven breached its obligations under cll 3A.2 and 36 of the C7-Optus CSA to use reasonable endeavours to procure that Optus was offered Fox Sports programming on terms no less favourable than those accorded to any other person in respect of the supply of Fox Sports (pars 54-56). (viii) The Exclusivity Clause is void for uncertainty. Alternatively, it should be construed so as not to preclude Optus from having discussions and negotiations with Foxtel about content sharing or from entering into content sharing agreements (par 58). 3088 Optus seeks declaratory relief, damages and other relief, including orders setting aside the First and Second Variation Agreements or, alternatively, the Exclusivity Clause. If this claim is made out and Optus is entitled to the relief it seeks, Seven's claims for breach of the Exclusivity Clause cannot succeed. Mr Wood's letter of 1 May 2001, together with his letter of 13 August 2001, made unambiguous representations to Optus that Seven had the AFL pay television rights until at least the commencement of the 2002 AFL season. The letters also constituted representations as to a future matter, namely the state of affairs that would subsist in relation to Optus' right of termination until the first day of the 2002 season. Thus Optus is entitled to rely on s 51A of the TP Act , which applies to representations with respect to a future matter. 3091 Optus says that the representations made by Seven were false and, insofar as they were with respect to a future matter, that Seven had no reasonable grounds for making them. Thus the representations amounted to misleading or deceptive conduct. That conduct was instrumental in causing Optus' legal advisers to change their position and to advise Optus that, in the absence of Optus having access to the terms of the AFL-Seven Licence, Mr Wood's assertion as to the termination date appeared credible. These orders would have the effect, so Optus contends, of restoring the C7-Optus CSA during the period October 2001 to February 2002. Optus says that it in fact paid the full fees required under the C7-Optus CSA for that period, by reason of the top up payment of $5.75 million, plus GST, made on 20 March 2002. 3095 Optus also seeks damages on the basis that, had the misleading conduct not occurred, Optus would have terminated the C7-Optus CSA or indicated its intention of doing so. The parties would have negotiated an extension until the end of February 2002, but on terms not including the Exclusivity Clause or a top up arrangement. Optus says that it is entitled to damages amounting to $6.325 million, being the top up payment of $5.75 million, plus GST. 3096 Seven submits that none of the statements made by Mr Wood conveyed the representations alleged by Optus, as the statements did no more than convey that there was a reasonable basis for the views expressed. Moreover, Seven says that any representations made on its behalf concerned existing contractual rights, not future matters. Although they contain a conclusion that Optus could exercise its right of termination at a future point in time, this was no more than a consequence of the meaning given to the contractual rights in question'. Whatever representations were made, Seven submits that they have not been shown to be misleading or deceptive. For this reason until the first day of the 2002 AFL Season Seven will still have, and will not have lost, the AFL rights, and accordingly Optus' right of termination under clause 16.2(a) will only arise on the first day of the 2002 AFL season'. At common law, a false representation may not be actionable unless the representation is of fact, rather than a representation as to the law or an expression of opinion: Heydon v NRMA Ltd [2000] NSWCA 374 ; (2000) 51 NSWLR 1, at 108 [329], per Malcolm AJA; at 148 [431], per McPherson AJA; Inn Leisure Industries Pty Ltd v D F McCloy Pty Ltd (No 1) (1991) 28 FCR 151, at 165 per French J. However, under s 52 of the TP Act , the making of a representation of law or an expression of opinion may amount to misleading or deceptive conduct, depending upon the circumstances: SWF Hoists and Industrial Equipment Pty Ltd v State Government Insurance Commission [1990] ATPR 41-045, at 51,608, per von Doussa J; Inn Leisure Industries v McCloy , 28 FCR at 166, per French J. 3100 In determining what representation is conveyed by particular communications, ' [m]uch will depend on the context and the circumstances ': Heydon v NRMA 51 NSWLR, at 108 [330], per Malcolm AJA. It may do no more than convey what is, on the face of it, the untutored opinion of the representor. As such it would be unlikely, if wrong, to constitute misleading or deceptive conduct. If the represented opinion were not in fact held by the representor, then that would be a misrepresentation of fact and able to be characterised as misleading or deceptive conduct. ... Expert advice as to the law may convey the representation that it is based upon an underlying body of knowledge, experience or expertise possessed by the person proffering it or to which that person has access. The situations in which advice, expert or otherwise, as to the law may be misleading or deceptive for the purposes of s 52 will depend upon the context and circumstances in which it is proffered and the representations implied or expressed that accompany it'. On 30 January 2001, three months before Mr Wood sent his letter, Optus had asked C7 whether it agreed that the right to terminate available under cl 16.2 of the C7-Optus CSA could arise only from the end of the 2001 AFL season. Mr Wood's letter was a belated response to that query. When he sent the letter, Mr Wood could not have known of the content of Optus' legal advice or indeed whether Optus had obtained advice. But the terms of his letter show that Mr Wood fully appreciated that the timing of Optus' right to terminate the C7-Optus CSA depended on the terms of the AFL-Seven Licence. As Mr Wood realised, the right to terminate arose under the C7-Optus CSA when C7 or a related body ' does not have, or loses, the pay television rights to AFL games for any reason ' (cl 16.2(a)). Whether Seven no longer had, or had lost, the rights depended on the effect of the AFL-Seven Licence, since it governed the duration of Seven's pay television rights to AFL games. 3102 Curiously enough, by 1 May 2001 Optus had not asked Seven for a copy of the AFL-Seven Licence in order to ascertain its terms. Indeed, Optus did not request a copy from Seven until 28 August 2001, after Mr Wood had sent the letter of 13 August 2001 which, in effect, repeated the representations contained in the earlier letter. 3103 As Mr Wise and Mr Wood must have known and as will become clear, the strategy of pushing for 28 February 2002 as the earliest date on which Optus could exercise its right to terminate the C7-Optus CSA was doomed to failure if Optus had, or gained access to, a copy of the AFL-Seven Licence. Both Mr Wood and Mr Wise knew that Optus had not requested a copy from Seven and that it was hardly likely that the AFL would provide a copy to Optus directly. When Optus belatedly sought a copy from Seven, its response was simply to ignore the request. There was no expression of surprise from Seven that Optus had not already sought or obtained a copy of the AFL-Seven Licence. I infer (and it does not seem to be disputed) that at the time Mr Wood sent the letters both he and Mr Wise must have realised that Optus did not have a copy of the AFL-Seven Licence. 3104 Seven's submissions acknowledge that it is important to take into account the fact that Seven's conduct was directed at Optus specifically. It accepts that an assessment of the character of its conduct will be influenced by what Mr Wood knew of Optus' position and the nature of the dealings that had taken place between Seven and Optus: Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60 ; (2004) 218 CLR 592, at 604-605 [36]-[37], per Gleeson CJ, Hayne and Heydon JJ. However, Seven submits that the factors that should be taken into account include Optus' commercial sophistication; its knowledge that the representations concerned contracts which raise questions of interpretation on which reasonable minds might differ; and its appreciation that Seven had an interest in pressing for a later termination date, while Optus itself preferred an earlier date. I agree that these are matters to take into account in determining what representations were conveyed by Mr Wood's letters. But they do not necessarily negate the case Optus seeks to make. 3105 It is important to bear in mind that without a copy of the AFL-Seven Licence, Optus lacked the critical document it needed to make an informed judgment about the timing of its right to terminate the C7-Optus CSA. As I have explained, Mr Wood and Mr Wise were aware of the disadvantage under which Optus laboured throughout 2001. 3106 Above all, however, it is necessary to pay careful attention to what Mr Wood said, particularly in his letter of 1 May 2001. He asserted that under Seven's ' present arrangements with the AFL ' it had the right to broadcast ' the AFL Spectacles ' until at least the commencement of the 2002 season in about February 2002. It was on the basis of this assertion that Mr Wood was able to say that Optus' right of termination under cl 16.2(a) of the C7-Optus CSA would arise only on the first day of the 2002 season. 3107 The letter explicitly (and correctly) linked the timing of the exercise of Optus' right to terminate the C7-Optus CSA under cl 16.2(a) to the terms of the AFL-Seven Licence. Mr Wood's letter used language derived from the agreements with Seven, the terms of which were known to him but (as he appreciated) were not known to Optus. The very foundation for Mr Wood's statement that Optus' right to terminate arose only on the first day of the 2002 season was his assertion that Seven, under the AFL-Seven Licence, had the right to broadcast AFL games on pay television until at least the commencement of the 2002 AFL season. In my opinion, when read with the letter of 1 May 2001, it conveyed the same representations. 3110 Paragraph 19(e) of Optus' Cross-Claim pleads a representation by Seven that the wording of the AFL-Seven Licence supported Mr Wood's assertion as to when Optus could exercise its right to terminate the C7-Optus CSA. The first of the two representations I have found were made by Seven does not precisely correspond to the language used in par 19(e) of the Cross-Claim. It is, however, to the same effect and I think is embraced by the pleading. Certainly there is no injustice to Seven in reading the pleading this way. 3111 Similarly, it seems to me that the second of the representations I have found were made by Seven is in substance covered by par 19(f) of the Cross-Claim. It is not clear what, if anything, the words ' and reflected their views without qualification ' add to the pleading. Again, there is no injustice to Seven in reading the Cross-Claim as embracing the second representation. Seven's submissions proceed on the basis that it must meet a case that Mr Wood and others within Seven did not believe that there was a reasonable basis for the statement that Optus' right to terminate the C7-Optus CSA arose only at the start of the 2002 AFL season. Seven therefore attempts to meet the case that arises on the findings I have made. 20.2.5 Representation with Respect to a Future Matter? Thus the fact that Mr Wood's letter of 1 May 2001 conveyed a representation as to his and C7's state of mind does not necessarily mean that it did not also convey a representation with respect to a future matter. 3113 However, it is still necessary to determine whether the representation can be said to be ' with respect to any future matter ' for the purposes of s 51A(1) of the TP Act . That expression is not defined in the TP Act and applying it to the circumstances of a particular case can involve a difficult process of characterisation. This is illustrated by the difference in opinion between members of the Full Federal Court in Sykes v Reserve Bank . The majority in that case considered that the Reserve Bank had made a representation with respect to a future matter, namely the release date of a new $5 note. Emmett J, in dissent, took the view that the Bank had merely expressed its expectation as to the timing of the release and was not making a prediction. For that reason, so his Honour held, the Bank could not be said to have made a representation as to a future matter. 3114 There is no doubt that Mr Wood's letter of 1 May 2001, in one sense, referred to something that was to happen in the future, namely the date on which Optus would become entitled to exercise its right to terminate the C7-Optus CSA by reason of Seven's loss of the AFL rights. But the statement in the letter about that date was an inevitable consequence of the assertions made by Mr Wood as to the factual and legal position at the date of the letter. The letter gave a particular operation to cl 16.2(a) of the C7-Optus CSA which was based on the effect of the AFL-Seven Licence. That in turn depended on an agreement already in existence and on events that had already occurred (that is, the award of the AFL pay television rights for 2002 and beyond to a party other than Seven). If what Mr Wood said about the effect of the AFL-Seven Licence was correct, the consequences for the exercise of Optus' right to terminate could be stated with certainty at the date of the letter. In other words, as Seven submits, the letter contained no element of prediction, forecast or projection. Whether the statements in Mr Wood's letter were right or wrong could have been ascertained on the date the letter was written. 3115 For these reasons, in my view, Mr Wood's letter of 1 May 2001 cannot be said to have made a representation with respect to a future matter. The same is true of his letter of 13 August 2001. There is therefore no occasion to consider the application of s 51A of the TP Act to the representations contained in the letters. 20.2.6 Were the Representations Misleading or Deceptive? Seven contends that not only was there a reasonable basis for the statements, but that they were correct. According to Seven, on its true construction, cl 16.2(a) of the C7-Optus CSA conferred a right of termination on Optus that could not be exercised until the commencement of the 2002 season. 3117 This is a bold claim. I suspect that its forensic purpose is not to demonstrate that the suggested construction of cl 16.2(a) is correct or even likely to be correct, but to pass muster as a barely arguable proposition. If it is arguable, the first of the two representations made by Seven was not misleading or deceptive. And if Seven's construction argument is reasonably arguable, it would make it more likely that Seven's executives believed at the time the letters were sent that the argument was indeed plausible and thus that the second representation was not misleading or deceptive. 3118 Seven's construction argument is not easy to follow. Seven points out, correctly, that the expression ' pay television rights to AFL games ' in cl 16.2(a) of the C7-Optus CSA is not a defined expression. Seven submits that the expression must encompass those rights necessary to enable C7 to comply with its obligation, imposed by cl 4.4 of the C7-Optus CSA, to include certain content on the C7 channels. Seven then says that the effect of the AFL-Seven Licence and the AFL Copyright Agreement (the terms of which have been summarised at [826]-[832]) was that Seven had the right to broadcast AFL games from the 1993-2001 seasons in perpetuity (albeit on a non-exclusive basis after the expiry of the AFL-Seven Licence). Finally, Seven says that it follows that C7 had the rights necessary for it to comply with the requirements of cl 4.4 of the C7-Optus CSA until the start of the 2002 Ansett Cup (the pre-season competition), at which point C7 had to broadcast replays of that competition (cl 4.4(b)(i)). However, Seven does not explain why the conclusion follows. 3119 There is no evidence that anyone within Seven put forward, or even thought of, this argument in the course of discussions about Optus' right of termination under the C7-Optus CSA. This is not perhaps surprising because it seems to me that the argument, insofar as it can be understood, lacks a plausible foundation. The fact that C7 had a non-exclusive right in perpetuity to broadcast games played during the period 1993-2001 hardly assists in determining precisely when Seven can be said no longer to have, or to have lost, the pay television rights to AFL games. Similarly, it is not easy to see why the terms of cl 4.4 of the C7-Optus CSA lead to or support the conclusion that Seven had the AFL pay television rights until the start of the Ansett Cup competition in 2002. 3120 The C7-Optus CSA provided for the supply to Optus, on a non-exclusive basis, of the ' Seven Service '. The minimum AFL content of the Seven Service was determined by cl 4.4. The critical obligations imposed on C7 were to supply a minimum number of exclusively live AFL games (cl 4.4(d)(i)) and a higher minimum combined number of exclusively live, non-exclusive live and delayed broadcasts of AFL games. (The expression ' delayed broadcast ' was not defined. However, the C7-Optus CSA distinguished that expression from ' replayed AFL games '. This suggests that a delayed broadcast is one that commences after the match itself but before the conclusion of the live match or at least within a very short time thereafter. ) Clause 4.4 used the expression ' in each AFL season ', or very similar expressions, on four separate occasions to specify the minimum obligations of C7 with respect to the broadcasting of AFL games on the C7 channels. 3121 Clause 16.2(b) of the C7-Optus CSA expressly recognised that Seven's AFL pay television rights had been granted by a separate agreement with the AFL. Clause 16.2 implicitly recognised that whether Seven ' does not have, or loses ' the rights would be determined by the terms of that agreement --- that is, the AFL-Seven Licence. No one reading cl 16.2 of the C7-Optus CSA on its own could be sure whether the time at which Seven no longer had the AFL pay television rights would coincide with the end of an AFL season. Whether that would or would not be the case would depend on the terms of the AFL-Seven Licence. 3122 The AFL-Seven Licence expressly granted Seven the exclusive right to ' broadcast live and delayed coverage [of AFL matches] by way of pay television ' for specified ' AFL Seasons ', the last of which was the 2001 AFL Season (cl 3(a)). The definition of ' AFL Season ' made it clear that the ' AFL Seaso n' ended with the last finals match. The rights fees were specified ' insofar as they relate to and confer rights in respect ' of each AFL Season. 3123 It seems to me to make perfectly good sense as a matter of ordinary language to speak of Seven no longer having the AFL pay television rights after the end of the 2001 AFL season. Its rights were granted in respect of matches played in that season. Once the season ended, there were simply no further matches in respect of which Seven had pay television rights. Clause 16.2(a) of the C7-Optus CSA was plainly intended to confer on Optus a right to terminate which could be exercised as soon as the 2001 AFL season ended. That was the point at which C7's existing rights expired (cl 16.2(b)) and beyond which it would no longer have the rights to broadcast any new AFL matches on its pay television channels. In essence, the only rights C7 had thereafter were to replay old matches and those rights continued in perpetuity. 3124 Sometimes agreements mean more or less what they say. I do not think it was ever reasonably arguable that on the proper construction of cl 16.2(a), when read with the AFL-Optus Licence, Seven had the AFL pay television rights beyond the end of the 2001 AFL season. In any event, it was not reasonably arguable that Seven had the rights until the start of the 2002 AFL season. Thus in my opinion the first representation made by Seven to Optus in Mr Wood's letters constituted misleading or deceptive conduct for the purposes of s 52 of the TP Act . The absence of such advice does not necessarily mean, however, that the senior executives of Seven did not believe, on the basis of their own reading of the contracts or other material, that there was such an argument. The issue was explored in evidence with three witnesses: Mr Wood, the signatory to the letters; Mr Wise, to whom Mr Wood reported; and Mr Stokes. 3126 In one of his written statements, Mr Wood stated that C7 held the right to broadcast AFL matches ' until the end of the 2001 AFL season '. In his cross-examination, Mr Wood confirmed that this statement reflected his state of mind throughout 2000 and 2001. At no stage in his evidence did Mr Wood suggest that the negotiating position he put to Optus concerning its right to terminate the C7-Optus CSA reflected his belief that the position was correct or arguably correct. Mr Wood gave cogent reasons why it was advantageous for C7 to put to Optus that it could not terminate the C7-Optus CSA until February 2002. But he did not say that he believed that the contention he was advancing was arguable, whether on the basis of the contractual documentation with which he was familiar or on some other basis. 3127 The assertions made in Mr Wood's letters of 1 May and 13 August 2001 concerning the date Optus' right of termination could be exercised did not reflect his personal views. Mr Wood believed that C7's rights continued only until the end of the 2001 season and, so I infer, that Optus' right of termination arose at that time. Mr Wood did not believe that there was an arguable case that Optus' right of termination did not arise until February 2002. 3128 This does not necessarily mean that Mr Wood was dishonest in his dealings with Optus. He may have been told by Mr Wise what negotiating strategy to adopt and, if so, he may have thought that this circumstance warranted putting the position he did concerning the termination date, regardless of his personal views. This possibility, however, does not detract from the finding I have made as to his state of mind. 3129 Mr Wise knew that Mr Wood was representing to Optus that Optus could not terminate the C7-Optus CSA until February 2002 and indeed authorised Mr Wood to do so. Mr Wise accepted that the representation was important because it improved Seven's bargaining position in relation to any arrangement with Optus extending or continuing the operation of the C7-Optus CSA. But Mr Wise in his evidence maintained that the termination date was a ' grey ' area, which was not defined in the contract. It was therefore in order for Seven to assert to Optus that it could not terminate the C7-Optus CSA until February 2002. 3130 Mr Wise was confronted with the minutes of a meeting of the board of i7 held on 25 July 2001, which recorded a statement by him that the C7-Optus CSA ' lapse[d] at the end of the 2001 AFL Season '. After initially acknowledging that the minutes accurately recorded what he had said, Mr Wise sought to withdraw the concession. He fell back on the familiar claims by some of Seven's witnesses that the minutes were inaccurate and did not record what he conveyed at the meeting. 3131 I have explained my reservations about the reliability of aspects of Mr Wise's evidence. I do not accept that the minutes of the i7 board meeting were inaccurate. I find that Mr Wise expressed the view recorded there. That was in fact his view when Mr Wood made the representations to Optus. Mr Wise did not believe that there was a plausible argument for ' push[ing] out ' the termination date under the C7-Optus CSA until February 2002. Rather he sought a negotiating advantage for Seven, knowing that Optus did not have access to the contractual documentation that would enable it to check Seven's assertions on that issue. 3132 Two other matters support this finding. First, in an email sent by Mr Wise to Mr Stokes and others on 20 May 2001, Mr Wise said that C7's product ' fundamentally changes at the end of September '. Mr Bannon did not ask Mr Wise about this email, but Mr Meagher did. Mr Wise agreed that the comment was a reference, in part, to the fact that C7, without AFL content, would lose a subscription driving product at the end of September 2001. While Mr Wise was not addressing specifically the question of a termination date, the view expressed by him just three weeks after Mr Wood's letter of 1 May 2001 was consistent with the view expressed by him at the meeting of 25 July 2001. Secondly, as Mr Wise admitted, he had participated in misleading the AFL in November 2000. Misleading Optus was not entirely foreign to his method of operation when negotiating for a favourable outcome for Seven. 3133 Mr Stokes knew that the representations concerning the termination date were being made to Optus in the context of negotiations concerning the First and Second Variation Agreements. He accepted that the representations did not reflect his view, which (he said) was that the right of termination arose at the end of 2001. However, Mr Stokes said that Mr Wise had told him of another interpretation that he had ' expressed and ... was negotiating on '. 3134 I accept that Mr Wise told Mr Stokes of the negotiating position that he proposed Seven should adopt. I do not accept (and indeed Mr Stokes did not specifically say) that Mr Wise had suggested to Mr Stokes that the February 2002 termination date was reasonably arguable. I find that Mr Stokes did not believe that Seven's representations on the termination date were reasonably arguable. 3135 It follows that the second representation made by Seven to Optus was also misleading or deceptive and thus Seven contravened s 52 of the TP Act . Optus' submissions do not analyse in any depth how the remedial provisions of ss 82 and 87 of the TP Act apply to the circumstances of the present case. Nonetheless, Optus relies on each of these provisions to support its claim for relief, apparently leaving it to the Court to work out the details. 3137 Optus says that the first relief to which it is entitled is an order pursuant to s 87 of the TP Act setting aside in whole or in part the First and Second Variation Agreements or an order declaring the Exclusivity Clause unenforceable. Optus does not descend to the detail of nominating the subsections of s 87 on which it relies. Presumably, however, it relies on s 87(1A), (2)(a), (b) and (ba) of the TP Act . As I have noted, Optus finished up paying the full amount due under the C7-Optus CSA for that four month period, since it had to top up the reduced payments under the First and Second Variation Agreements as the result of not entering into a three year deal with Seven. 3139 Optus also claims damages, presumably under s 82(1) of the TP Act . It asks for a finding that, but for Seven's misleading conduct, Optus would have terminated the C7-Optus CSA, or indicated its intention of doing so. In this situation, the parties would have agreed to extend the agreement until the end of February 2002 on terms which reflected the reduced licence fee and did not include the Exclusivity Clause. Section 87(1A) confers powers to make certain orders subject to a number of conditions (cf Mayne Nickless 114 FCR, at 122 [49]). An application may be made for an order under s 87(1A), including orders under s 87(2), in relation to a contravention of Pt V of the TP Act even if a proceeding has not been instituted under any other provision of the TP Act in relation to that contravention: s 87(1C). 3142 Section 82 of the TP Act provides a cause of action to those who have suffered loss or damage by conduct contravening, inter alia , s 52 of the TP Act : I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41 ; (2002) 210 CLR 109, at 125-126 [50], per Gaudron, Gummow and Hayne JJ. Secondly, it identifies those by and against whom that action lies. Thirdly, the section specifies the injury for which the action lies as the suffering of loss or damage. Fourthly, it stipulates a causal requirement that the plaintiff's injury must be sustained "by" the contravention. Finally, the measure of compensation is "the amount of" the loss or damage sustained'. It is enough to demonstrate that contravention of a relevant provision of the Act was a cause of the loss or damage sustained'. Section 87(1A), however, is concerned not only with cases where loss or damage has been suffered, but with cases where it is likely to be suffered: I & L Securities v HTW Valuers 210 CLR, at 125 [45]. 3144 The onus of establishing that an applicant has suffered loss or damage as a result of misleading conduct lies on the applicant. In a case where the loss or damage arises because of a contractual commitment said to have been induced by misleading conduct, the onus is on the claimant to establish that he or she was induced to enter the contract by the misleading conduct: Gould v Vaggelas [1985] HCA 75 ; (1985) 157 CLR 215, at 237-238, per Wilson J. However, if a material representation is made which is calculated to induce the representee to enter the contract and the representee does so, there is a ' fair inference of fact that [the representee] was induced to do so by the representation ': Gould v Vaggelas 157 CLR, at 236, per Wilson J. 3145 Similar principles apply to a claimant who seeks to establish that he or she is likely to suffer loss or damage by the misleading conduct for the purposes of satisfying s 87(1A) of the TP Act : Marks v GIO 196 CLR, at 504 [20], per Gaudron J. It appears that in the expression ' likely to suffer ' in s 87(1A) of the TP Act the word ' likely ' means ' real chance or possibility ' rather than ' more likely than not ': Marks v GIO 196 CLR, at 504-505 [22], per Gaudron J; Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353, at 364, per Mason P (with whom Priestly JA agreed). 3146 It is important to appreciate that the fact that a person has been induced by misleading conduct to enter a contract does not of itself establish that the person has suffered or is likely to suffer loss or damage. This may be the case even if the person does not obtain benefits from the contract that he or she was led to believe would be present. Examples of such cases include Marks v GIO and Gates v City Mutual Life Assurance Society Ltd [1986] HCA 3 ; (1986) 160 CLR 1. • If so, did Optus suffer loss or damage by that conduct, or is it likely to suffer loss or damage by that conduct? Mr Wood agreed that the representation improved Seven's bargaining position, since Seven was able to argue that it could simply rely on the terms of the C7-Optus CSA and had no particular need to enter into an interim agreement. Mr Wood also agreed that if Seven had acknowledged in December 2001 that the C7-Optus CSA was terminable at the end of December, Seven would have been placed in a weaker negotiating position in relation to the Second Variation Agreement. The representation that Optus could not exercise its right of termination until 28 February 2002 was integrally related to the two representations I have found were made by Seven in Mr Wood's letters. 3149 Mr Wise accepted that, prior to December 2001, Seven had ' leverage ' to push for an exclusivity arrangement because Optus could not be sure as to when its right to terminate the C7-Optus CSA arose. Mr Wise agreed that, as the end of February 2002 approached, Seven had lost the ability to capitalise on the uncertainty in negotiating for a further exclusivity period. He also agreed that Seven's position as to the termination date was commercially important in relation to discussions about the interim arrangements. It was the key, as far as he was concerned, to extending the operation of the C7-Optus CSA at least until the end of February 2002. 3150 Optus' initial legal advice was that its right to terminate the C7-Optus CSA could be exercised at the end of the 2001 season. Mr Keely's evidence (which I accept) was that Mr Wood's letter of 1 May 2001, insofar as it asserted a termination date of February 2002, had not been anticipated by Optus. The advice by Optus' solicitors, which was expressly based on the assumption that Seven's rights under the AFL-Seven Licence were as Mr Wood had suggested, was that Mr Wood's position looked to be credible, but would depend upon verification by reference to the terms of the AFL-Seven Licence. This advice caused alarm within Optus because of the possibility that Optus would have a liability to pay $16 million pursuant to the C7-Optus CSA, over and above its approved budget, for the period from October 2001 to February 2002. 3151 Both Mr Keely and Mr Ebeid gave evidence, which I also accept, that Optus considered that it effectively had no choice, in the light of the legal advice and its inability to obtain the AFL-Seven Licence, to assume that Seven's position as to the termination date might be correct. Optus in fact acted on this basis, notwithstanding Mr Ebeid's unsuccessful attempt to convince Mr Wood that Optus had legal advice that the termination date was the end of the 2001 season. No doubt Mr Ebeid's attempt was unsuccessful because Mr Wood realised that it was unlikely that Optus had received any such advice. 3152 Mr Ebeid's evidence was that, had he known that Optus had a right to terminate at the end of the 2001 season, he would not have recommended that Optus enter the First Variation Agreement. Instead he would have proposed that Optus renegotiate a fresh arrangement. Mr Ebeid's recommendation may not have turned out to be important, given the intervention of the SingTel Optus Executive Group in September 2001. But it is clear that the uncertainty about the termination (from Optus' point of view) played a part in the inclusion of the Exclusivity Clause in the First Variation Agreement and, subsequently, in the Second Variation Agreement. Mr Ebeid attempted to limit the scope of the Exclusivity Clause, but failed to persuade Mr Wood. Clearly, the uncertainty as to the termination date enhanced Seven's bargaining position on this issue and correspondingly diminished Optus' bargaining position. 3153 Seven's representation as to the termination date played a significant part in Optus' agreement to enter the First and Second Variation Agreements on the terms on which it did. In particular, it played a significant part in Optus' agreement to the Exclusivity Clause in its final form. Seven's representation carried weight only because Mr Wood made the two additional representations in his letters of 1 May and 13 August 2001. Had Optus known either that Mr Wise and Mr Wood did not believe that Seven's position was reasonably arguable, or that the AFL-Seven Licence could not reasonably be understood as supporting Optus' position, Seven would have lost a key bargaining chip in its negotiations with Optus. 3155 The parties' apparent agreement as to the relevant question does not extend to the answer to that question. Seven submits that, in the absence of any misleading conduct by C7, Optus' position would not have been materially different. Optus would have entered into a short term content supply arrangement with C7, including the Exclusivity Clause. Optus, by contrast, submits that, in the absence of the misleading conduct, it would have agreed on some form of interim arrangement but without an Exclusivity Clause. Moreover, Optus asserts, without elaboration, that any interim arrangement would have been on terms incorporating a reduced licence fee. It is this assertion which underpins Optus' claim that it sustained loss or damage for the purposes of s 82 of the TP Act and that the loss or damage is equivalent to the top up payment made by it to Seven in March 2002. 3156 Sometimes it is not at all difficult to ascertain what would have happened had one party not engaged in misleading or deceptive conduct. In other cases the assessment of the ' counter-factual ' is less clear cut. The present case involves some degree of uncertainty since, in the absence of Seven's misleading conduct, the parties would have been negotiating on a different hypothesis as to the date on which Optus became entitled to exercise its rights to terminate the C7-Optus CSA. There is therefore necessarily an element of evaluation and judgment in making a finding as to the likely outcome of the hypothetical negotiations. 3157 The starting point must be the position in early September 2001. At that point, Mr Wood and Mr Ebeid had reached what in substance was an agreement in principle for a three year deal for the supply of C7 channels to Optus Vision. The agreement was not final because it was subject to approval by each corporation's decision-makers. Despite Mr Ebeid's obvious enthusiasm for consummating the agreement, Mr Anderson immediately warned that there was no chance of it being ' wrapped up quickly ' because the proposal would ' run into the CMM review '. 3158 It was the CMM review that created a new reality within which negotiations had to take place (and would have had to take place in the counter-factual world). On 17 September 2001, the SingTel Optus Executive Group resolved to see whether it was possible to ' roll ' the C7-Optus CSA for a further three months ' and to seek to maintain our options on a more favourable future contract until after that time '. These were Mr Ebeid's instructions for his negotiations with Mr Wood from that point. 3159 If there had been no misleading conduct by Seven, Optus would not have been labouring under the belief that the earliest termination date available to it was probably 28 February 2002. Any statement by Seven to that effect would have lacked credibility in the absence of the misleading representations that were made by Mr Wood. There were sound reasons for Optus to preserve the opportunity at least to discuss or negotiate possible arrangements with an alternative content supplier, even though the chances of Fox Sports becoming available were thought to be slim. Not the least of these was the existence of Project Alchemy (whereby Optus would effectively become a reseller of Foxtel content) as a live option within Optus. 3162 The negotiating tactic that Mr Wood employed to good effect was to assert to Optus that if it did not agree to what became the First Variation Agreement, including the Exclusivity Clause drafted by C7, the C7-Optus CSA would simply continue in force until the end of February 2002. In that case, Optus would have had to incur the higher level of fees for the succeeding four months, a commitment that was not provided for in Optus' budget. The tactic was effective largely because Optus was operating under the misapprehension, induced in part by C7's misleading conduct, that it could not safely terminate the C7-Optus CSA until February 2002. Optus was therefore to some extent in the position of a contractual supplicant seeking a concession from C7. Mr Ebeid yielded on the Exclusivity Clause because he saw that there was little choice. 3163 No doubt in the counter-factual world Mr Wood would have argued for the broader version of the Exclusivity Clause, essentially for the reasons he gave in his exchange with Mr Ebeid. It is true that C7 would not have been totally bereft of bargaining power, since Optus needed to maintain continuity of sporting content in order to preserve Optus' options. But C7 was also vulnerable and needed an agreement. As Mr Stokes accepted in cross-examination, an ongoing sports deal with Optus was essential to C7's business after its loss of the AFL pay television rights. Absent its misleading conduct, C7 would have lacked the key negotiating advantage it exploited so effectively in late September 2001. In my view, that would have made the difference so far as the form of the Exclusivity Clause is concerned. 3164 In the counter-factual world, the parties would have had to negotiate the precise financial and content supply terms of the interim arrangement. There is a possibility that, as Optus submits, it would not have agreed to make a ' top up ' payment if it did not ultimately enter into a three year deal with C7. Alternatively, it is possible that Optus would have insisted on a reduced payment rather than a complete top up. But given the parties' respective objectives and Optus' need to secure continuity of sporting content (whether or not at precisely the same levels provided for in the First and Second Variation Agreements), I am not satisfied that the outcome on the top up payment would have been as Optus suggests. In my opinion, Optus' submissions do not identify any convincing reason why the negotiations would have produced the outcome for which it contends. 3165 In the counter-factual world, the likelihood is that the parties would have renegotiated a further short extension of the First Variation Agreement after its expiry, on much the same terms. This would have happened in about December 2001, at about the time Mr Stokes and Mr Anderson in fact agreed to the extension. A further short extension would have suited the interests of both C7 and Optus Vision at that time. 3166 On the findings I have made, Optus would not have contravened any Exclusivity Clause incorporated in Variation Agreements. Any discussions or negotiations with Foxtel, Fox Sports or another party would not have contravened a more narrowly drafted provision. While entry into an agreement such as the Foxtel-Optus Term Sheet (which in fact was executed on 20 February 2002) would have contravened a narrower Exclusivity Clause, there would have been no reason for Optus to enter into any such formal arrangement until the expiry of any interim arrangement with C7. Optus' entry into the Foxtel-Optus Term Sheet a few days before the Second Variation Agreement expired was preceded by legal advice that recognised that Optus was already in breach of the Exclusivity Clause in the C7-Optus CSA. That would not have been Optus' position had a more restrictive Exclusivity Clause been in place. There is no reason to think that Optus would have breached such an Exclusivity Clause by prematurely entering an agreement when there was no commercial imperative to do so. 3167 I add two comments. First, the form of any interim arrangement made between C7 and Optus in the counter-factual world may have been different from the form taken by the First and Second Variation Agreements. These agreements amended the C7-Optus CSA, which continued in force subject to the amendments. Optus is likely to have terminated the C7-Optus CSA in late September 2001, when it became entitled to do so. Whether the interim arrangements following the termination would have taken the form of amendments to a revived C7-Optus CSA or would have been incorporated in an entirely fresh agreement is not a matter of substance. 3168 Secondly, in making findings I have paid close attention to the events that actually occurred, especially between September 2001 and February 2002. I have borne in mind the evidence of witnesses as to what they might have done in the counter-factual world. Sometimes evidence of that kind is helpful, even though it is given with knowledge of the issues in the case and with the benefit of hindsight. I have found, for example, the evidence of Mr Lee and Mr Anderson of Optus to be important in assessing what course Optus would have taken had it not entered into the Foxtel-Optus CSA. In the present context, however, I have not found the hypothetical evidence particularly helpful. This is so because Optus was induced to enter the First and Second Variation Agreements containing the Exclusivity Clause by the misleading conduct I have identified. Optus is being sued for damages for breach of a provision to which it would not have agreed but for C7's misleading conduct. The proceedings against Optus based on the Exclusivity Clause expose it to loss or damage. I would reach this conclusion whether the word ' likely ' is given the meaning of ' real chance or possibility ' or ' more likely than not '. 3170 It follows that Optus satisfies s 87(1A)(a) of the TP Act . The Court therefore may make such order as it thinks appropriate against C7 provided it considers (relevantly) that the order will prevent or reduce the loss or damage likely to be suffered by Optus. In my view, it is clear enough that an order that has the effect of relieving Optus from any liability in damages to C7 by reason of Optus' breach of the Exclusivity Clause would prevent the loss or damage likely to be suffered by it. 3171 Section 87(1A) confers a discretion on the Court. The fact that Optus satisfies the statutory prerequisites does not mean that Optus is entitled to an order under s 87(1A), much less that it is entitled to a particular order under s 87(2). Nevertheless, in exercising its discretion under s 87, the court will consider the conduct of the parties after they had knowledge of the misleading quality of the conduct ... On this approach the court must consider all the circumstances before it in the exercise of its discretion'. In any event, even though Optus breached the Exclusivity Clause (assuming it to be valid and enforceable), I think that in the circumstances I have found it should be granted relief. Optus simply would not have been in the position in which it found itself after September 2001 had C7 not engaged in the misleading conduct that induced Optus to agree to the Variation Agreements containing the Exclusivity Clause. No other remedy is available to Optus to overcome the effect of C7's misleading conduct. 3173 This leaves the question of the form of any relief. As Mason P observed in Akron Securities v Iliffe 41 NSWLR, at 367, there may be a range of arguably appropriate remedies available under s 87(1) or (1A), when read with s 87(2). A declaration of voidness is unnecessary in the present context and may create other difficulties: Trade Practices Commission v Milreis Pty Ltd (1977) 29 FLR 144, at 160-161, per Brennan J. In my view, it is appropriate to make an order pursuant to s 87(2)(ba) of the TP Act refusing to enforce the Exclusivity Clause. Alternatively, it may be enough simply to dismiss Seven's damages claim against Optus: cf Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238 , at [8]-[9], per Hodgson JA; at [104], per Basten JA. In particular, I am not satisfied that in the counter-factual world Optus would have avoided the top up payment it in fact made to C7 in March 2002. Optus' claim for damages under s 82 of the TP Act therefore fails. Seven may be acting on the footing that its misleading conduct case can succeed even if its contract claim fails, for example because the Exclusivity Clause is set aside or rendered unenforceable under s 87(1A) of the TP Act . Nor does Seven address the relationship between Optus' case based on misleading and deceptive conduct and its own misleading conduct case. Nonetheless, I propose to consider Seven's claims under s 52 of the TP Act since they may be available notwithstanding Optus' success in its misleading conduct claim. 3177 Seven pleads that Optus made a number of false representations in the lead-up to the execution of the First and Second Variation Agreements. It also alleges that Optus engaged in misleading or deceptive conduct by failing to reveal certain information to Seven. On that assumption, Seven submits that the representation was false because at all times Optus' senior officers intended to negotiate, if possible, an arrangement for the supply of the Fox Sports channels. 3180 To that extent, Seven's submissions seem to develop a case pleaded in the Statement of Claim (par 638(a)). However, the submissions do not attempt to develop the pleaded case insofar as the Statement of Claim invokes s 51A of the TP Act (pars 632, 637). The question presented by Seven's submissions is whether, assuming that its initial assumption is correct, it has established that Optus' representation as to its future conduct was false when made because Optus never intended to comply with the Exclusivity Clause. The question presented by the submissions (despite the pleadings) is not whether Optus had reasonable grounds for making a representation as to a future matter, namely that it would not engage in discussion or negotiations of the kind identified in the Exclusivity Clause. 3181 In a sense, the way Seven has chosen to present its case attempts to resurrect the law as it was prior to the enactment of s 51A of the TP Act. Thus the mere fact that a representation as to future conduct did not come to pass did not establish that the representation was misleading or deceptive when made, although it may have been evidence that the representor did not genuinely believe at the time of the representation that the future conduct would take place: Bill Acceptance 50 ALR , at 250, per Lockhart J; Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82, at 88, per curiam. The significance of the fact that the representor did not genuinely believe that the future conduct would take place depended on the nature of the representation. If the representor conveyed that he or she had a particular state of mind or belief, the absence of such a state of mind or belief could constitute misleading or deceptive conduct: Global Sportsman 2 FCR, at 88 per curiam . 3182 It is this situation to which s 51A of the TP Act is directed. Section 51A(1) provides that where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading. There is now a body of authority identifying when a promise amounts to a representation with respect to a future matter for the purposes of s 51A(1) of the TP Act. In particular, the cases have considered whether contractual promises, or promises made in contractual negotiations, can be characterised as representations with respect to a future matter: Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217, at 235-241, per Ormiston J; Concrete Constructions Group Ltd v Litevale Pty Ltd [2002] NSWSC 670 ; (2002) 170 FLR 290 (S Ct NSW), at 343-349 [154]-[173], per Mason P; Frontier Touring Co Pty Ltd v Rodgers (2005) 223 ALR 422 (S Ct NSW), at 442-443 [27]-[29], per Barrett J. 3183 The High Court, however, has yet to have the last word on this issue. Since the enactment of s 51A, there has been authority that a breach of promise may contravene s 52 in its operation with s 51A if there is an implied representation by the promisor of an intention or capacity to perform the promise, and there are no reasonable grounds for making that representation. However, in some future cases of the present type, where the breach of contract is found in the failure by a professional adviser who has made a representation about future matters (for example, rental levels) to qualify it by a statement about their uncertainty, it may be necessary to give close attention to the question how the breach of contract falls, if at all, within the language of s 51A(1) and (2)'. It submits that the letter of 28 September 2001 should be understood as conveying a representation, in effect, with respect to a future matter, namely that Optus would not act inconsistently with the terms of the Exclusivity Clause. The point of putting the case that way would seem to be to take advantage of s 51A of the TP Act in order to establish that the representation was misleading, as indeed the pleadings suggest. Yet, as I have noted, the written submissions do not rely on s 51A for this purpose and do not attempt to make out a case that Optus had no reasonable grounds for making the representation with respect to a future matter. Instead they assert that Optus never intended to comply with the Exclusivity Clause. This assertion seems to be designed to establish the falsity of a representation that Seven has not specifically alleged, namely that the letter of 28 September conveyed a representation that Optus then had an intention not to act inconsistently with the terms of the Exclusivity Clause. 3185 The lack of clarity, if not confusion, in Seven's submissions creates a difficulty in how to approach them. I do not think it appropriate to consider the possible application of s 51A of the TP Act when Seven, in its submissions, does not ask me to take that course and has not explained how, in light of the facts, s 51A is satisfied. Because Seven has not invoked s 51A, Optus has not had the opportunity to respond to whatever arguments Seven might have put forward on that issue. In my view, this case is large and complex enough without having to reconstruct Seven's arguments so that they are internally consistent. 3186 The most sensible approach, it seems to me, is to consider first whether Optus' letter of 28 September 2001 conveyed a representation that would be falsified if indeed Optus never intended to comply with the Exclusivity Clause. The threshold question would then be whether Optus' letter represented that Optus had the intention, as at 28 September 2001, of acting consistently with the requirements of the Exclusivity Clause during the period 27 September 2001 to 31 December 2001. If that representation was conveyed, it would have been misleading or deceptive for the purposes of s 52 of the TP Act if (as Seven submits) Optus never intended to comply with the Exclusivity Clause. The origins of the Exclusivity Clause lay in the negotiations between Mr Ebeid and Mr Wood. By 19 September 2001, an agreement ' in principle ' had been reached between them. Mr Ebeid reported on that date that the agreement in principle included a guarantee that Optus would not negotiate with any other sports provider during the three month period of the interim arrangement. Mr Ebeid acknowledged in evidence that he had told Mr Wood that Optus was not buying time simply to get a better deal for Fox Sports and that Optus did not intend to use the arrangement for that purpose. 3188 Mr Ebeid's ' without prejudice ' letter of 20 September 2001 included a term whereby Optus agreed not to enter into an agreement with any other sports channel provider. In response, Mr Wood drafted what became the Exclusivity Clause in broader terms than Mr Ebeid had proposed. The new draft clause prohibited Optus or its related companies not only from entering any agreement relating to the supply of sports channels, but from initiating or participating in discussions or negotiations in relation to the supply of sports channels. 3189 When Mr Ebeid protested on 27 September 2001 about the breadth of the Exclusivity Clause, Mr Wood stuck to his position. He justified his insistence on the broader version on the ground that Mr Ebeid had told him that Optus had ceased its negotiations with Fox Sports (which was in fact true). Mr Wood also pointed out to Mr Ebeid that on the narrower wording Optus would be free to negotiate a deal with Fox Sports during the period of the interim arrangement and simply defer executing the formal documentation until 1 January 2002 (which was also true). 3190 In my view, some care should be taken before construing a contractual undertaking or promise as importing a representation as to the state of mind of the person giving the undertaking or making the promise. In Concrete Constructions 170 FLR, at 349, Mason P observed that there are policy reasons for restraint when a court is asked to infer the making of, or reliance upon, a representation as to capacity to perform express contractual promises. Similar policy reasons suggest that restraint should be exercised when determining whether a contractual promise to do or refrain from doing something in the future carries with it a representation as to the existing state of mind or intention of the representor. 3191 In the end, however, every case must turn on its facts. In this case, the critical point is that in the course of the negotiations that produced the Exclusivity Clause in its final form, Mr Ebeid gave Mr Wood an assurance that Optus was no longer negotiating with Fox Sports. Moreover, Mr Wood put to Mr Ebeid C7's concerns about the possibility of Optus negotiating or engaging in discussions during the three month period covered by the First Variation Agreement. I infer that Mr Ebeid understood Mr Wood's concerns and ultimately assented to allay them by agreeing to incorporate the Exclusivity Clause into the First Variation Agreement. I have already explained why I think that Mr Ebeid assented. For present purposes, I am concerned with the course of dealings that in fact took place between Seven and Optus. 3192 It is true that Seven does not rely on these circumstances, of themselves, as constituting a representation by Optus that it did not intend to engage in negotiations or discussions concerning the supply of sports channels during the period covered by the First Variation Agreement. Nonetheless, the significance for Seven's s 52 case of Optus' acceptance of the Exclusivity Clause in the form drafted by Mr Wood must be assessed in the context of the dealings between Mr Wood and Mr Ebeid. Seven put its specific concerns about the possibility that Optus would negotiate with third parties and Optus, by agreeing to the Exclusivity Clause, allayed Seven's concerns. The letter of 28 September 2001 therefore can be understood as conveying a representation that Optus did not intend to act inconsistently with the terms of the Exclusivity Clause. 20.3.2.3 WAS THE REPRESENTATION FALSE? To establish its contention Seven must show, on the balance of probabilities, that the senior officers of Optus intended, on 28 September 2001, to negotiate with Foxtel or some other party for the supply of the Fox Sports channels notwithstanding the terms of the Exclusivity Clause. In response to a double barrelled question, Mr Anderson denied that at that time he knew full well of cl 8A and its effect, yet had no intention of complying with it. In answer to a later question, Mr Anderson denied that on 28 September 2001 he ' fully intended to continue to seek the acquisition of Fox Sports for Optus '. 3195 I have considered Mr Anderson's evidence in the context of the established facts. These include Mr Anderson's role as a signatory to the First Variation Agreement; the dinner at Tetsuya's on 9 October; the subsequent emails to which Mr Anderson was a party; and Mr Anderson's conversation with Mr Rupert Murdoch on 11 October 2001. I have also taken into account the references in emails sent by Mr Anderson in mid-2001 and at other times relating to sporting content. I accept Mr Anderson's evidence that as at 28 September 2001 he gave little thought to the Exclusivity Clause and had not formed a view at that time that Optus should continue to negotiate with Foxtel for the supply of the Fox Sports channels. His evidence that there were many other substantial matters claiming his attention at the time and that he gave little attention then to the question of sports content on the Optus platform rang true. I also accept his evidence that his relatively brief discussion with Mr Murdoch on 11 October 2001 did not descend to particularity in the provision of sports channels to Optus. 3196 It may be that in September and October 2001, Mr Anderson distinguished in his own mind between discussions relating to the restructuring of the pay television industry and discussions relating specifically to the supply of the Fox Sports channels to Optus. His evidence can be read as suggesting that he made that distinction at some point, at least in the period following the execution of the First Variation Agreement. For that reason he may not have understood discussions on restructuring of the pay television industry to have been caught by the Exclusivity Clause. But this point was not developed in cross-examination, for example, with a view to showing that Mr Anderson might perhaps have been reckless in failing to ascertain whether cl 8A, as a matter of construction, inhibited discussions about the broader question of restructuring of the pay television industry. The thrust of the cross-examination was that Mr Anderson was not to be believed when he denied that on 28 September he had no intention of complying with the Exclusivity Clause. In my view, that attack on his credit did not succeed. 3197 Seven invited me to draw inferences adverse to Optus from its failure to call Mr O'Sullivan (who participated in the meeting at Tetsuya's). But as Optus pointed out, Seven's pleadings did not identify the meeting at Tetsuya's as having any particular significance on this issue. Indeed, the cross-examination of Mr Anderson on his state of mind after the meeting at Tetsuya's was initially said to be relevant because it went to Seven's claim for aggravated damages. It was apparently only as forensic afterthought that the questions were supported by reference to the claim that Optus always intended to negotiate with Foxtel. 3198 In any event, Mr O'Sullivan's absence from the witness box does not provide a satisfactory basis for me to take a different view of Mr Anderson's credibility. In the light of Mr Anderson's evidence and the other matters to which I have referred, I am not prepared to infer from Mr O'Sullivan's participation in the meeting at Tetsuya's that he intended on 28 September 2001 that Optus should continue to negotiate with Foxtel for the supply of Fox Sports to Optus, regardless of the terms of the Exclusivity Clause. I am not satisfied on the balance of probabilities that the senior officers of Optus intended, on 28 September 2001, to negotiate with Foxtel or any other party for the supply of sports channels to Optus notwithstanding the terms of the Exclusivity Clause. It follows that Seven has not shown that the representation made by Optus on 28 September 2001 was misleading or deceptive. Mr Anderson insisted that he had explained two options to Mr Stokes: the first was for Optus to get out of the pay television content business; the second was to go with ' another player ', a reference to Austar. Mr Stokes agreed in his cross-examination that Mr Anderson had referred to getting out of the pay television content business. 3200 Mr Stokes claimed that Mr Anderson had said in the conversation that he was pushing for the three year deal with Optus. Mr Anderson's denial that he said this is supported by the contents of the contemporaneous emails (or, more accurately, the absence in them of any reference to such a remark). Mr Stokes, somewhat implausibly, adamantly refused to concede that the absence of any contemporaneous record of such a remark by Mr Anderson, suggested that his (Mr Stokes') recollection after some years might be wrong. 3201 A further difficulty with Mr Stokes' account is that in one of his written statements he said that, if he had known that Mr Anderson had met with Messrs Murdoch, Packer and Chisholm in early December 2001 and that Mr Anderson had communicated with the Foxtel partners since mid-2001, he would not have agreed to the Second Variation Agreement. In his cross-examination, Mr Stokes acknowledged that, prior to the conversation with Mr Anderson, Mr Wise had recommended that the extension sought by Optus be granted and that he (Mr Stokes) was minded to grant the request that he knew Mr Anderson would make. More particularly, Mr Stokes agreed that he had read the article in The Australian of 4 December 2001 which reported, among other things, that Mr Anderson had met with Messrs Packer and Murdoch and that Optus was ' focusing on ways to share programming with Foxtel '. 3202 I do not accept Mr Stokes' explanation that he regarded the article as ' rumour and speculation ', especially given that he made no inquiries as to the truth of the matters reported in the article. Clearly enough, Mr Stokes knew perfectly well on 18 December 2001 that Mr Anderson had spoken recently to at least two of the Foxtel partners about proposals for program sharing. 3203 Mr Anderson's evidence, which I accept, was that he was intending to be ' upfront with Mr Stokes ' in the brief conversation they had. The two options he put to Mr Stokes were those that Optus was considering. One of those options (getting out of the pay television content business) appeared unlikely to Mr Anderson because of Telstra's unfavourable attitude to the proposal at the time. However, that option implied that Optus would have to acquire content from another supplier. Mr Anderson quite reasonably (and correctly) assumed that Mr Stokes would have known that discussions about that very topic, in the context of industry reorganisation or rationalisation, had already taken place between Optus and News and PBL, if not Telstra. To say this is certainly not to impose any general duty of disclosure; the question is simply whether, having regard to all the relevant circumstances, there has been conduct that is misleading or deceptive or that is likely to mislead or deceive. To speak of "mere silence" or of a duty of disclosure can divert attention from that primary question. Although "mere silence" is a convenient way of describing some fact situations, there is in truth no such thing as "mere silence" because the significance of silence always falls to be considered in the context in which it occurs. That context may or may not include facts giving rise to a reasonable expectation, in the circumstances of the case, that if particular matters exist they will be disclosed'. 3205 In the circumstances prevailing at 18 December 2001, it was not misleading or deceptive for Mr Anderson not to tell Mr Stokes specifically that Optus had been discussing content sharing with Foxtel and that it intended to continue pursuing that course. What Mr Anderson told Mr Stokes in their conversation was accurate. Mr Anderson's reference to Optus getting out of the pay television content business was calculated to alert Mr Stokes to Optus' intention to pursue content sharing as an option. In any event, Mr Anderson correctly believed that Mr Stokes would have been well aware that the discussions with the Foxtel partners had taken place. It was also reasonable for Mr Anderson to believe that, if Mr Stokes had concerns about the continuation of those discussions, he would have raised them with Mr Anderson. Nor did Mr Anderson mis-state Optus' reasons for seeking an extension of the interim arrangement. 3206 In short, Mr Anderson's conduct, including his failure to inform Mr Stokes of the discussions with Foxtel, cannot be characterised as misleading or deceptive for the purposes of s 52 of the TP Act. Mr Stokes had his own reasons for agreeing to Mr Anderson's request. They are what influenced him to agree on Seven's behalf to the Second Variation Agreement. Seven says that the January letter, which records the Second Variation Agreement, should be understood as a representation that Optus would act consistently with the constraints imposed by the Exclusivity Clause. That representation is said to have been false because, at the time the letter was sent, Optus intended to pursue its negotiations with Foxtel, whether in the context of a content supply agreement or otherwise. 3209 Just as Seven does not invoke s 51A of the TP Act in relation to the letter of 28 September, so it does not invoke s 51A in its submissions relating to the January letter. Despite its pleadings, Seven does not rely on the letter conveying a representation as to a future matter so as to obtain the benefit of s 51A. For reasons I have given, the most appropriate way to approach Seven's submissions is to consider whether the letter of 25 January 2002 conveyed a representation that Optus intended to act consistently with the requirements of the Exclusivity Clause. 3210 Mr Wood prepared a document designed to record the terms of the extension of the First Variation Agreement. Mr Stokes and Mr Anderson had already agreed on 18 December 2001 that the First Variation Agreement should be extended on the same terms. The letter of 25 January 2002, although taking the form of a letter from Optus to C7, was intended to be a contractual document. When executed as a deed on 31 January 2002 (or perhaps when signed by Mr Ebeid on 25 January 2002), the letter recorded the terms of the Second Variation Agreement already agreed between Mr Stokes and Mr Anderson (as the Statement of Claim appears to acknowledge (par 596)). 3211 Neither the sending of the letter on 25 January 2002, nor its subsequent execution as a deed, was preceded by any assurances as to what Optus was or was not doing in relation to the supply of content for its platform. On the contrary, Seven was fully aware at the time that Optus had been dealing with Foxtel for the supply of content. Mr Stokes had known of the existence of dealings since reading the article in The Australian on 4 December 2001. Mr Gammell's ' doomsday scenario ' email of 23 January 2002 recorded his understanding that Foxtel had become active in trying to persuade Optus to take Foxtel's programming and that Mr Anderson had been pushing hard for the Foxtel offering. 3212 In these circumstances, Optus' sending of the letter of 25 January 2002 conveyed no more than a representation that it was prepared to execute an agreement extending the First Variation Agreement and containing cl 8A, which it did six days later. If the letter is assessed on the date Optus executed it as a deed, it conveyed no more than Optus' contractual commitments, including a commitment not to act in contravention of cl 8A. 3213 If by 25 January 2002 Optus' conduct in December 2001 and January 2002 had breached the Exclusivity Clause, it would already have been exposed to the possibility of an action for breach of contract by Seven. Similarly, a contravention by Optus between the sending of the letter on 25 January 2002 (or its execution as a deed on 31 January) and 28 February 2002 would have exposed Optus to an action for breach of contract. But, in my opinion, the letter cannot be read as conveying a representation that Optus' intention at the time was to cease the discussions it had already undertaken and to desist from such discussions for the succeeding month or so. 3214 If it matters, I would also find that the letter of 25 January 2002 conveyed no representation by Optus as to any future matter. In the circumstances prevailing in late January, the letter conveyed Optus' intention to enter a contract, no more and no less. That decision was made on 18 December 2001 by Mr Stokes. The letter of 25 January merely recorded the terms of the Second Variation Agreement. Not surprisingly, there was no evidence that anyone at Seven relied on the letter as a representation. It is therefore unnecessary to deal with Seven's contractual claims and Optus' defences to those claims. Nonetheless I shall address the issues on liability identified in the parties' submissions. 20.4.1 Did Optus Breach the Exclusivity Clause? In particular, Optus breached the First Variation Agreement by participating in the meetings with the Foxtel partners on 3, 6 and 10 December 2001. These constituted discussions or negotiations with parties other than C7 for the supply, or incorporation into the Optus pay television platform, of the Fox Sports channels. Similarly, Optus breached the Second Variation Agreement by the discussions with Foxtel that took place in January and February 2002 in relation to the supply of content including Fox Sports channels. Optus also breached the Exclusivity Clause by entering the Foxtel-Optus Term Sheet on 20 February 2002. Against that background, the meetings did not constitute discussions or negotiations in the sense described above'. However, Optus invites me to accept Mr Fletcher's evidence that there was ' no specific discussion of the supply or sub-licensing to Optus of the Fox Sports Channels '. Optus maintains that the December discussions should be characterised as ' exploratory in nature only '. They were entered into for the purpose of determining whether it was worthwhile participating in negotiations which might lead to an agreement. Moreover, the subject matter of the discussions was not sports content, but ' industry rationalisation '. 3221 If the Exclusivity Clause is enforceable and is to be construed as prohibiting a dealing with Fox Sports, Optus accepts that the entry into the Foxtel-Optus Term Sheet on 20 February 2002 was in breach of the Exclusivity Clause. In addition, Optus Vision was required to immediately cease any existing negotiations or discussions with, and decline or terminate any offers made by, any person other than C7 in relation to the same matters. 3224 Optus does not dispute that the discussions that took place on 3, 6 and 10 December 2001, in which Optus was involved, centred around the achievement of a content sharing agreement. Nor does it suggest that the exception in the Exclusivity Clause relating to AFL and NRL match broadcasts covers the discussions that occurred. Its point appears to be that the interchanges (to use a neutral term) did not reach the level of ' discussions or negotiations ' within the meaning of the Exclusivity Clause. 3225 The Exclusivity Clause was expressed in very broad terms. It prohibited Optus Vision, not merely from initiating discussions or negotiations in relation to the supply of any sports channel, but from encouraging or participating in such discussions or negotiations. Moreover, in distinguishing between negotiations and discussions, but extending the prohibition to both, the Exclusivity Clause was clearly intended to prohibit conversations between Optus and possible content suppliers that fell short of ' negotiations ', yet could properly be described as ' discussions '. 3226 No doubt conversations would have to go beyond a threshold in order to be caught by the Exclusivity Clause. An unsolicited telephone call to Mr Anderson from Foxtel, for example, raising the possibility of Foxtel supplying a sports channel to Optus would not involve a contravention if Mr Anderson merely listened to what was said and indicated that he could not take the matter further during the exclusivity period. 3227 But what happened here went well beyond any threshold. Mr Anderson's own reports on the conversations with Messrs Murdoch, Packer and Chisholm on 3 December 2001 show that Mr Anderson engaged in discussions concerning the supply of the Foxtel Service, which obviously included sports channels, to Optus. Mr Anderson was not merely a passive recipient of unsolicited information. He put forward, albeit in general terms, the conditions upon which Optus would insist if it were to take the Foxtel Service as suggested by Messrs Murdoch and Packer. The discussion with Mr Chisholm required Mr Anderson to fly, presumably willingly, to Mr Chisholm's farm. Those discussions produced an agreement to set up a working party to explore the ' Foxtel option '. 3228 Optus refers to handwritten notes prepared by Mr Fletcher of the meetings of 6 and 10 December 2001. The notes are said to show that there was no mention of Fox Sports or sporting content. However, it is clear that the discussions involved the supply of content, including sporting content, by Foxtel to Optus. 3229 Mr Fletcher's notes of the meeting of 6 December 2001 refer to ' exploratory discussions ' and the need for confidentiality. They record that the purpose was to explore content distribution through Optus. A proposal under consideration apparently involved Optus stopping production and getting Foxtel programming. Reference was made to ' value drivers ' which included movies, but (so I infer) would have included sports programming. 3230 The notes of the 10 December 2001 meeting indicate that the issues discussed included Optus' MSGs, the point identified by Mr Anderson in his discussions on 3 December 2001. They also indicate that the content to be supplied was discussed. While the notes apparently make no specific reference to sports channels, the proposed ' redistri[butions] deal ' was obviously to include sporting channels. 3231 It is true that the discussions in early December 2001, as Mr Anderson said in his evidence, took place in the context of a proposal for industry restructuring. It would also seem to be true that, as Mr Fletcher said, the meeting of 10 December 2001 concluded with the Optus participants forming the view that ' there were very substantial hurdles to be overcome '. But none of this alters the fact that Optus was willingly engaged in discussions (if not negotiations) ' in relation to the supply ... or other incorporation into the Optus pay television platform of any sports channel '. There is no basis, either in the language of the Exclusivity Clause or the circumstances in which it came to be included in the C7-Optus CSA, to read it so as to prohibit only discussions specifically limited to the supply of sports channels. 3232 It follows that if, contrary to my holding, the Exclusivity Clause were valid and enforceable, Optus breached it by engaging in the discussions of 3, 6 and 10 December 2001. Optus concedes (on the same assumption as to validity and enforceability) that it breached the Exclusivity Clause by entering the Foxtel-Optus Term Sheet on 20 February 2002. Thus, Optus breached the C7-Optus CSA as amended by both the First and Second Variation Agreements. So much follows from cl 2 of the CWO Deed Poll. 20.4.3 Was Seven Entitled to Accept Optus' Repudiation of the C7-Optus CSA? This is said to enable Seven to sue for loss of the benefit of the C7-Optus CSA. 3236 The parties' submissions on this aspect of the case can fairly be described as perfunctory, particularly bearing in mind the uncertainties of the law in this area: see J W Carter, Breach of Contract (2 nd ed, Law Book Co Ltd, 1991), at [756]. It is by no means clear, for example, that the Exclusivity Clause should be regarded as an essential term of the C7-Optus CSA (as distinct from the First and Second Variation Agreements). Optus chose not to address Seven's assertion that it should be so regarded. 3237 It will be recalled that the First and Second Variation Agreements took the form of amendments to the C7-Optus CSA. The Exclusivity Clause might well satisfy the test of essentiality laid down in Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632, at 641-642, per Jordan CJ, if the relevant contract is taken to be the First or Second Variation Agreement (the High Court allowed an appeal but no doubt was cast on Jordan CJ's formulation: Luna Park (NSW) Pty Ltd v Tramways Advertising Pty Ltd [1938] HCA 66 ; (1938) 61 CLR 286). The test may be considerably more difficult to satisfy if the relevant contract is (as Seven's submissions suggest) the C7-Optus CSA itself. As the parties have chosen not to debate this question, I shall not do so. 3238 Seven does not explain clearly why Optus' breach of the Exclusivity Clause, even if it be assumed to be an essential term of the C7-Optus CSA, should have prevented Optus exercising its apparently independent contractual right to terminate the C7-Optus CSA. That right was available to Optus, not as a consequence of any breach of contract or repudiatory conduct by Seven, but by reason of Seven's loss of the AFL pay television rights. It is true that, in some circumstances, a party which has repudiated its obligations under a contract will not be able to terminate the contract by reason of what otherwise would be a fundamental breach by the other party. However, that is not always the case. In particular, it is not necessarily the case where the party in breach of an essential term of the agreement exercises an independent contractual right to terminate the agreement before the innocent party accepts the breach as a repudiation of the agreement. It merely provides the other party with a right of election to treat the contract as terminated if it wishes to do so. If and so long as it does not do so, all obligations under the contract remain alive'. Seven took no action to accept Optus' repudiation of the agreement (if that is what it was). Indeed the terms of the Exclusivity Clause were spent before Optus exercised its right on 28 March 2002, as provided for in the March Variation Agreement. Seven does not suggest that Optus' right to terminate the C7-Optus CSA under cl 16.2(a) was expressed to be dependent on Optus' compliance with the Exclusivity Clause during the period October 2001 to February 2002. It is difficult to see why the two should be regarded as inter-dependent in some way. As both parties knew at the time they entered the First and Second Variation Agreements, Optus intended to terminate the C7-Optus CSA no later than the commencement of the 2002 AFL season, subject to any agreed extension, such as that provided for in the March Variation Agreement. 3241 In my view, the validity of Optus' exercise on 28 March 2002 of its right to terminate the C7-Optus CSA was not affected by any antecedent breach by Optus of the Exclusivity Clause. But Optus' termination of the C7-Optus CSA did not affect any accrued rights of the parties (cl 16.4), including any accrued right for breach of the Exclusivity Clause. 20.4.4 Did SingTel Optus Induce a Breach of Contract by Optus Vision? Seven submits that to establish SingTel Optus' intention, it is sufficient to demonstrate, as is obvious, that SingTel Optus knew not only of the First and Second Variation Agreements, but of the Exclusivity Clause. This is because exemplary damages cannot be awarded for breach of contract: Hospitality Group Pty Ltd v Australian Rugby Union Ltd [2001] FCA 1040 ; (2001) 110 FCR 157, at 191 [142]-[143], per Hill and Finkelstein JJ. In my view, as I explain below, even if Optus Vision breached the Exclusivity Clause and even if SingTel Optus committed the tort of inducing breach of contract, Seven is not entitled to exemplary or aggravated damages. 3245 I note that different views have been expressed as to whether one company within a group subject to common management commits the tort of inducing breach of contract by causing or encouraging another company within the group to breach its contract with a third party. However, a contrary view was expressed by Young CJ in Eq, although it was not necessary to decide the point: LMI Australasia Pty Ltd v Baulderstone Hornibrook Pty Ltd [2002] NSWCA 74 , at [94]-[98]. 3246 In the absence of detailed argument on the issues of principle, it is preferable for me not to express an opinion about the conflict. 20.4.5 Is Seven Entitled to Exemplary or Aggravated Damages? Seven says this is precisely such a case, since Optus fully intended to disregard the Exclusivity Clause and indeed sought legal advice about the consequences of doing so. Exemplary damages are needed having regard to the benefits derived by Optus from its cynical conduct and the need to deter Optus from similar conduct in the future. 3248 Seven also submits that it is entitled to aggravated damages for the tort of inducing breach of contract. Seven recognises that aggravated damages are compensatory, rather than punitive in character. Nevertheless, they may be awarded to compensate an applicant whose injury is aggravated by conduct which is ' high-handed, malicious, insulting or oppressive ': Carson v John Fairfax & Sons Ltd [1993] HCA 31 ; (1993) 178 CLR 44, at 71, per Brennan J, citing Broome v Cassell & Co Ltd [1972] UKHL 3 ; [1972] AC 1027, at 1085, per Lord Reid. But as was explained by Windeyer J in Uren v John Fairfax & Sons Pty Ltd [1966] HCA 40 ; (1966) 117 CLR 118 at 153, "[e]xemplary damages must always be based upon something more substantial than a jury's mere disapproval of the conduct of a defendant". Accordingly, an award of this type will be "unusual and rare" .... As Mahoney P cautioned in Trend Management v Borg (1996) 40 NSWLR 500, at 509 ..."if exemplary damages are to perform the function which the Australian law has assigned to them, it is important that the seriousness of the conduct involved be not diluted. When awarded, it gives a windfall to the plaintiff. In the case of the economic torts, in which intention is an element and damages are "at large", a defendant must be guilty of something bordering on the malicious before the remedy will be granted'. This finding removes one plank of Seven's argument that exemplary damages should be awarded against Optus in the present case. 3251 It is true that, as Seven submits, Mr Anderson knew that Optus was in breach of the Exclusivity Clause (assuming it to be valid and enforceable) when it entered into the Foxtel-Optus Term Sheet on 20 February 2002. It is also true that Optus obtained and acted on legal advice that C7 was unlikely to suffer any compensable loss if Optus entered into that agreement. Seven characterises Optus' actions in obtaining and acting on that advice as cynical. 3252 Although Optus knowingly breached the Exclusivity Clause, in my opinion, its conduct fell a long way short of being so outrageous as to warrant damnification by an award of punitive damages. The entry into the Foxtel-Optus Term Sheet occurred just a few days before Optus became entitled to terminate the C7-Optus CSA by reason of C7's loss of the AFL pay television rights. It was hardly praiseworthy conduct for Optus knowingly to breach the Exclusivity Clause. But equally, it was hardly conduct that would shock a tribunal of fact (certainly not a tribunal that has listened to and read the evidence in this case, including evidence as to Seven's own commercial conduct). Nor can Optus' conduct, whether in holding discussions or negotiations with Foxtel or in entering into the Foxtel-Optus Term Sheet, be regarded as bordering on the ' malicious '. Optus had genuine commercial reasons for taking the course it did. Its conduct was not malicious, in the sense of intending to inflict gratuitous harm on Seven. 3253 As was recognised in Hospitality Group v ARU , there is a difference between conduct warranting disapproval and conduct justifying an award of aggravated damages. To make such an award in this case would come close to holding that every deliberate breach of contract by one company within a group will render the holding company liable to exemplary damages, at least if both companies are under common management. This is not the law. 3254 Similarly, there is no basis for an award of aggravated damages in this case. Aggravated damages are compensatory in nature: New South Wales v Ibbett [2006] HCA 57 ; (2006) 231 ALR 485, at 492 [33], per curiam. Such an award depends upon showing that the injury to the innocent party has been aggravated by conduct which is insulting or reprehensible: Uren v John Fairfax & Sons Ltd [1966] HCA 40 ; (1966) 117 CLR 118, at 151, per Windeyer J. The injury to Seven does not answer that description. Seven says that Optus knew that the representation was false, by reason of the prior breaches of the Exclusivity Clause. These breaches, it contends, were known to Mr Anderson, a director of both SingTel Optus and Optus Vision. Seven says that it relied on the deliberately false representations when it entered the Second Variation Agreement and suffered loss as a result. 3256 Seven's cause of action in deceit is concerned only with the representation said to be contained in the letter of 25 January 2002, that if Seven entered into the Second Variation Agreement Optus would act in accordance with the terms of the Exclusivity Clause. The findings I have already made in relation to the letter are fatal to Seven's claim founded on Optus' alleged deceit. The claim therefore fails. Nonetheless, I address Optus' arguments although not always in detail. 20.6.1 Did Seven Breach the C7-Optus CSA by Failing to Supply the AFL-Seven Licence on Request? Optus says that it was plainly ' necessary or desirable to give full effect ' to Optus' right to terminate under the C7-Optus CSA that Seven should make available on request the underlying contract that determined whether Seven had lost the AFL pay television rights. The damages for breach of contract are said to be the same as those recoverable under s 82 of the TP Act in respect of Seven's misleading and deceptive conduct. 3261 I would be inclined to resolve the question of construction in favour of Optus, in the sense that I think there might be circumstances in which cl 21(a) of the C7-Optus CSA could have obliged Seven to provide Optus with a copy of the AFL-Seven Licence. In construing cl 21(a), it is appropriate to take account of the understanding of the parties at the time they entered the C7-Optus CSA, particularly their knowledge that ascertaining the date on which Optus could terminate the C7-Optus CSA would require reference to the terms of the AFL-Seven Licence: cf Park v Brothers 222 ALR, at 432 [39] per curiam . At the time the parties entered the C7-Optus CSA, as between Seven and Optus only Seven had or was entitled to have a copy of the AFL-Seven Licence. There is no dispute that Seven at all material times had a copy of the AFL-Seven Licence. 3262 The critical question, however, is whether Optus' letter of 28 August 2001 to Seven requesting a copy of the AFL-Seven Licence enlivened an obligation on Seven, pursuant to cl 21(a) of the C7-Optus CSA, to accede to the request. Optus' letter of 28 August 2001 merely stated that resolution of the question of the termination date would be ' greatly assisted if you would provide us with a copy of the [AFL-Seven Licence] '. The letter made no reference to cl 21(a) of the C7-Optus CSA and made no suggestion that Seven was obliged to accede to the request. The tone of the letter was that of a polite request, accompanied by assurances of confidentiality, but with no hint that the request was made pursuant to the C7-Optus CSA or that there might be legal consequences if Seven failed to respond. When no reply was received, Optus did not trouble to follow up the request. 3263 No doubt politeness is a virtue. No doubt, too, as Mr Stokes recognised, it was less than polite for Seven simply to ignore Optus' request. But the question is whether Seven failed to ' use reasonable efforts ' to do what was necessary or desirable to give full effect to the C7-Optus CSA, given that its attention was never drawn to the obligation Optus now asserts arose under the terms of the C7-Optus CSA. 3264 Optus sought legal advice before sending its letter. Whether the absence of any reference in the letter to Seven being obliged to accede to the request was the product of that advice was not made clear in the evidence. Whatever the explanation for the form of the letter, Optus never suggested that it was entitled to make the request under the C7-Optus CSA, nor that Seven was obliged to comply with the request. In a commercial arrangement of this kind, what is ' reasonable ' must depend on the circumstances. They will determine whether a polite request is just that or is intended to have contractual consequences. 3265 In the circumstances I have described, I do not think that Seven failed to ' use reasonable efforts ' to do what was desirable to give full effect to the C7-Optus CSA. It may well have been different if Optus had made it clear that it was relying on cl 21(a) or some other contractual provision in making its request. But a mere request for assistance, without any hint that contractual consequences would follow, was not apt to enliven cl 21(a) of the C7-Optus CSA. 20.6.2 Is the Exclusivity Clause Void for Uncertainty? 3267 Optus also submits that the exception provided for in the Exclusivity Clause, relating to the supply of AFL and NRL match broadcasts for the 2002 season or any future season, is uncertain. Would cl 8A, for example, prevent Optus from discussing with Fox Sports the supply of a sports channel consisting of AFL and NRL coverage? Yet another problem, so Optus contends, is the uncertain relationship between cl 3A.2 and cl 8A of the C7-Optus CSA. Clause 3A.2 provided that Seven would use ' reasonable endeavours ' to procure the supply of Fox Sports to Optus Vision on terms no less favourable than those accorded to any other person. If an agreement lacks certainty it is said to be void unless the uncertain portions can be severed, in which case the balance of the agreement is enforceable: Cheshire and Fifoot's Law of Contract (8th Aust ed, LexisNexis Butterworths, 2002), at [6.1]. As long as it is capable of a meaning, it will ultimately bear that meaning which the courts, or in an appropriate case, an arbitrator, decides is its proper construction: and the court or arbitrator will decide its application. The question becomes one of construction, of ascertaining the intention of the parties, and of applying it ... So long as the language employed by the parties, to use Lord Wright's words in Scammell (G) & Nephew Ltd v Ouston [[1941] AC 251] is not "so obscure and so incapable of any definite or precise meaning that the Court is unable to attribute to the parties any particular contractual intention", the contract cannot be held to be void or uncertain or meaningless. In the search for that intention, no narrow or pedantic approach is warranted, particularly in the case of commercial arrangements. Thus will uncertainty of meaning, as distinct from absence of meaning or of intention, be resolved'. It may be true, as Optus suggests, that the words ' discussions ' and ' negotiations ' are not easy to apply to the many and varied situations that might arise for consideration. But these are ordinary English words perfectly capable of being construed in context in a manner with which the Courts are familiar. I have already applied the language of the Exclusivity Clause to the circumstances of this case. Similarly, any arguable conflict between cl 3A.2 and cl 8A of the C7-Optus CSA must be resolved according to orthodox principles of interpretation. 3271 There is no substance in Optus' contention that cl 8A of the C7-Optus CSA is void for uncertainty. 20.6.3 Is the Exclusivity Clause Unenforceable as a Common Law Restraint of Trade? Nonetheless the common law doctrine of restraint of trade survives the enactment of the TP Act, and it does so despite the overlap between that doctrine and the competition provisions of that legislation: see TP Act, s 4M; Peters (WA) Ltd v Petersville Ltd [2001] HCA 45 ; (2001) 205 CLR 126, at 140-141 [31]-[33], per Gleeson CJ, Gummow, Kirby and Hayne JJ. Thus Optus is entitled to rely on common law principles if they render the Exclusivity Clause unenforceable. The restraint is therefore invalid unless it is assessed to be reasonable in the interests of both parties. According to Optus, the authorities establish that a provision which merely protects a party against competition, as distinct from protecting it against some hazard or prejudice to which it might be exposed by a transaction, cannot be reasonable. 3274 Optus submits that Seven had no legitimate interest to protect the restraint of trade. Seven wished to preserve its bargaining position, which rested on the dilemma faced by Optus. If Optus chose not to exercise the right of termination it risked affirming the C7-Optus CSA; if it did exercise the right of termination it faced a programming gap. Optus says that if it had terminated the C7-Optus CSA, Seven would have continued to supply Optus until the end of February 2002. Further, Optus argues that Seven is hardly in a position to insist on the benefit of the uncertainty relating to the date of termination when it had insisted that the right to terminate did not arise until February 2002, at the earliest. However, a restraint may be enforced if the enforcing party shows that circumstances exist which make the restraint reasonably necessary for the protection of the parties concerned and reasonable in the interests of the public: Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535, at 565, per Lord Macnaghten; Lindner v Murdock's Garage [1950] HCA 48 ; (1950) 83 CLR 628, at 633, per Latham CJ; Buckley v Tutty [1971] HCA 71 ; (1971) 125 CLR 353, at 376, 379-380, per curiam. Whether there is a restraint for the purposes of the doctrine is to be answered by having regard to the practical workings of the restraint, not merely its legal form: Peters v Petersville 205 CLR, at 134-135 [14], per Gleeson CJ, Gummow, Kirby and Hayne JJ. • The test of whether a contractual or other restraint is reasonable between the parties is whether the restraint exceeds what is necessary for the reasonable protection of the party in whose favour the restraint operates: Buckley v Tutty 125 CLR, at 376, per curiam . Reasonableness is assessed by ascertaining the legitimate interests of the party seeking to enforce the restraint and determining whether the restraint is more than adequate for the purpose of protecting those interests: Esso Petroleum [1968] AC at 301, per Lord Reid; Bridge v Deacons [1984] AC 705, at 714, per Lord Fraser; Queensland Co-operative Milling Association v Pamag Pty Ltd [1973] HCA 24 ; (1973) 133 CLR 260, at 267-268, per Walsh J; at 279, per Stephen J. • The onus of showing that the restraint goes no further than is reasonably necessary to protect the interests of the person in whose favour the restraint operates lies on that party: Buckley v Tutty 125 CLR at 377, per curiam . • The notion of reasonableness involves a balancing of competing considerations. The more onerous the restraint, the more difficult it is for the parties seeking to enforce the restraint to satisfy a court that it was, in all the circumstances, no more than was reasonably necessary for the protection of that parties' interests: Adamson v New South Wales Rugby League Ltd (1991) 31 FCR 242, at 266, per Wilcox J; see also at 247-248, per Sheppard J. • There is an overlap between the criteeria of reasonableness in the interests of the parties and reasonableness in the interests of the public. Nonetheless, in order to justify a restraint of trade, both tests must be satisfied: Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Ltd [1973] HCA 40 ; (1973) 133 CLR 288, at 307, per Walsh J. • The time at which the reasonableness of the restraint is to be assessed is the date of the agreement imposing it: Lindner v Murdock's Garage 83 CLR, at 653, per Kitto J; Amoco v Rocca 133 CLR, at 318, per Gibbs J. However, the Court may take into account future events that could have been foreseen: Lindner v Murdock's Garage 83 CLR, at 653. Under the C7-Optus CSA, absent the Exclusivity Clause, Optus was free to negotiate with other channel suppliers. Indeed cl 3A.2 explicitly recognised that Optus wished to acquire the Fox Sports channels for its platform. In fact, Optus actively negotiated with Fox Sports from July to early September 2001, but the negotiations ended because of Telstra's opposition to the proposal for the supply of the Fox Sports channels to Optus. The terms of cl 8A clearly prevented Optus from engaging in negotiations or even discussions with alternative channel suppliers for the periods during which the First and Second Variation Agreements were in force. Seven does not dispute this conclusion. 20.6.3.4 LEGITIMATE INTEREST TO PROTECT? As such, so Optus argues, cl 8A was designed merely to protect C7 from competition and cannot be regarded as reasonable in the interests of the parties or in the public interest. 3280 Optus relies on the decision of the Privy Council in Vancouver Malt and Sake Brewing Co Ltd v Vancouver Breweries Ltd [1934] AC 181. In that case the appellants held a brewer's licence, but had never brewed liquor other than sake. The respondents brewed only beer. The appellants and the respondents were the only brewers in Vancouver. The appellants purported to sell the goodwill of their licence, except insofar as it related to the manufacture of sake, to the respondents. The sale price was $15,000. The appellants covenanted that for a period of fifteen years they would not manufacture or sell beer. 3281 Lord Macmillan pointed out ([1934] AC, at 190) that the restraint was not necessary to render a sale effectual in the interests of both parties, since nothing had been sold other than the appellants' liberty to brew beer. In ICT Pty Ltd v Sea Containers Ltd (1995) 39 NSWLR 640, the New South Wales Court of Appeal held invalid a provision in an agreement for the sale of ferries by a shipbuilder to a ferry operator, whereby the shipbuilder agreed not to sell ferries to any service operating within a radius of 100 nautical miles of the ports served by the ferry operator. The Court cited (39 NSWLR, at 671) Vancouver Malt v Vancouver Breweries with approval when rejecting the ' general proposition ' put forward by the trial Judge that a business investment, as such, may constitute an interest entitled to protection. 3283 The Court in ICT v Sea Containers noted that the validity of contractual constraints initially arose for consideration by the Courts in connection with contracts for the sale of goodwill and contracts of service. Suppliers may protect their distribution outlets and customer base ... A sporting association may impose restraints on its players to protect its clubs and enhance the quality of its competitions ... Professional associations may impose restraints to maintain ethical standards ' . (Citations omitted. The Court held (39 NSWLR, at 672) that a purchaser of capital equipment is not entitled to protection against competition from a later purchaser of similar equipment. A purchaser is entitled to contract for a first call on the supplier's equipment (as the ferry operator in fact had done in ICT v Sea Containers ). But the limitation imposed on the shipbuilder was a ' bare restraint '. Given the modest consideration received by the shipbuilder and the ' tenuous interest (if any) entitled to protection ', the restraint was held to be unreasonable (39 NSWLR, at 673). 3285 In the present case, C7 and Optus were parties to an agreement by which C7 supplied a sports channel to Optus. The authorities recognise that, depending on the circumstances, a covenant which protects a supplier of goods or services against competition in relation to the supply of those goods or services to a particular purchase may be upheld, notwithstanding the restraint of trade doctrine: Queensland Co-operative v Pamag 133 CLR, at 268, per Walsh J; at 278, per Stephen J. Thus Queensland Co-operative v Pamag itself upheld an agreement by a bakery, which had borrowed funds from a flour miller, to purchase all its requirements of flour from the miller for the period of the loan. However, Heydon J acknowledges that the approach of Stephen J, in particular, finds support in the judgments in Peters American Delicacy v Patricia's Chocolates . In that case, the majority upheld a provision requiring a retailer to buy all its ice cream requirements from a manufacturer for a period of five years, provided the manufacturer adhered to specified prices for the ice cream products: 77 CLR, at 581, per Latham CJ; at 582, per Rich J; at 599, per Williams J. 3287 In the present case, it was Optus that decided to negotiate a short term arrangement with C7. Optus wished to keep its options open pending its review of CMM and to defer making a decision about the three year arrangement it had been discussing with C7. Optus also wanted to avoid the potential problem that its conduct might affirm the C7-Optus CSA and thus cause it to lose the right of termination available to it by reason of C7's loss of the AFL pay television rights. As I have already explained, from Optus' point of view, continuity of sports content on its platform was important in preserving its options and in improving its bargaining position vis-à-vis C7. 3288 In these circumstances, C7 had a ' legitimate interest ' in seeking to prevent its major ' customer ' from exploiting a short term interim arrangement requested by it to improve its bargaining position in relation to securing long term sporting content. Indeed Mr Ebeid, in his fax to Mr Wood of 27 September 2001, explicitly recognised that C7 had a legitimate interest in preventing Optus from entering an agreement with another channel supplier during the exclusivity period. His complaint was that C7's proposed Exclusivity Clause went further and prevented even negotiations or discussions with a third party. Mr Wood justified the more sweeping restraint on the ground that otherwise Optus could use the three month period to conclude a deal with a third party, and simply defer signing it until the New Year. 3289 The same analysis applies to C7's interest in incorporating the Exclusivity Clause in the Second Variation Agreement and thus maintaining it as part of the C7-Optus CSA for the period 1 January to 28 February 2002. 20.6.3.5 WAS THE EXCLUSIVITY CLAUSE REASONABLE? Three considerations are of particular importance. 3291 First, the restraint imposed by the Exclusivity Clause, although widely expressed, was put in place for short periods. It was to continue only for the term of each of the Variation Agreements. The initial period during which the exclusivity was to operate was only three months. That period was extended for a further period of two months by the Second Variation Agreement. I was not referred to any case in which a restraint intended to operate for such short periods has been held to be void under the common law restraint of trade doctrine: cf J D Heydon, The Restraint of Trade Doctrine (2nd ed), at 180-182. 3292 Secondly, C7 and Optus negotiated on an ' equal footing ': Amoco v Rocca 133 CLR, at 320, per Gibbs J. Whatever issues might arise about Seven's conduct in attempting to persuade Optus that its right to terminate the C7-Optus CSA was not exercisable until the start of the 2002 AFL season, this is far from a case of a powerful supplier imposing an onerous restraint on a hapless and helpless customer. 3293 Thirdly, cl 8A provided an exception for discussions in negotiations relating to the supply of AFL match and NRL match broadcasts for the 2002 season or any future season. Thus Optus was not prevented from engaging in such discussions or negotiations with Fox Sports or any other party, provided that the resultant term sheet did not allow those broadcasts to appear on a more favourable tier than the C7 channel. 3294 Optus points in its submissions to several matters that it says suggest that the Exclusivity Clause was unreasonable. In my view, none of them, individually or collectively, alters the view I have expressed. 20.6.4 Is the Exclusivity Clause Unenforceable by Reason of the TP Act ? However, it submits that Seven's purpose in requiring the insertion of the Exclusivity Clause was ' nakedly anti-competitive ', in that Seven wanted to avoid competition from Fox Sports for the supply of sports channels to Optus Vision. While cl 8A operated for only five months, Seven intended it to operate for a longer period and to lead to a new three year deal. The range of transactions possible in this market is limited by the small number of buyers and sellers. The Exclusivity Clauses substantially lessened competition in this market by making it possible for Optus, one of the three buyers, to acquire channels from only one of the sellers'. By preventing Optus from obtaining essential sports programming from Fox Sports, the Exclusivity Clauses had the purpose (and likely effect) that Optus' ability to overcome its incapacity to constrain Foxtel in the retail market would be impeded in a real and substantial way'. It puts forward several alternative arguments as to why the definition of ' exclusionary provision ' is satisfied, in particular the requirement that a contract be made between persons who are ' competitive with each other ' ( TP Act , s 4D(1)(a)). Optus contends that the Exclusivity Clause had the purpose of preventing, restricting or limiting the acquisition of sports channels by Optus Vision from ' particular persons ' (Fox Sports) or ' classes of persons ' (sports channel suppliers other than C7) and thus satisfies the language of s 4D of the TP Act . 3300 Finally, Optus contends that Seven's purpose in entering the First and Second Variation Agreements was to substantially lessen competition. Thus, so it argues, Seven breached s 45(2)(a)(ii) of the TP Act . 3301 Optus submits that by reason of the contraventions of the TP Act , cl 8A of the C7-Optus CSA, as inserted by the First and Second Variation Agreements, is void and unenforceable. In Chapter 12, I have found against the existence of the wholesale sports channel market (upon which Optus relies for the purposes only of this argument). 3303 None of the experts was asked whether the Exclusivity Clause, which was to operate for two successive periods totalling five months, was likely to substantially lessen competition in the retail pay television market (which I have found did exist at the material times). Nor do Optus' submissions explain why the restraint imposed by the Exclusivity Clause for such a short period had the effect or likely effect of impeding Optus in its efforts (such as they were) to constrain Foxtel in the retail pay television market. Indeed the submissions run directly counter to the arguments advanced by Optus on other aspects of the case. 3304 For similar reasons, Optus cannot successfully invoke s 45(2)(a)(ii) of the TP Act . The Exclusivity Clause has not been shown to have had the purpose of substantially lessening competition in the retail pay television market. The findings I have made elsewhere in this judgment would preclude any such case succeeding. 20.6.5 Did Seven Breach cl 3A.2? Optus relies on the fact that Seven produced no documents in response to a notice to produce seeking any documents evidencing steps taken by Seven to comply with cl 3A.2. It also relies on the fact that Mr Stokes had become aware by 4 December 2001 that Foxtel and Optus were engaging in content sharing discussions. Optus submits that Seven should thereupon have consented to such discussions taking place, so as to relieve Optus from the threat of any non-compliance with cl 8A of the C7-Optus CSA. Any conflict between cl 3A.2 and cl 8A should be resolved in favour of the former. 3307 The evidence does not support Optus' contentions. Before December 2001, Telstra refused to countenance the supply of Fox Sports to Optus. There was nothing Seven could have done to alter this state of affairs. Nor was Seven asked by Optus to do anything in or after December 2001. Seven could not reasonably have been expected to volunteer its consent to discussions reported in the media, when its consent was not sought. In any event, even if Seven was under some obligation to consent to a course without being asked, the absence of consent made no difference to Optus' conduct. It is not necessary to examine the submission in detail as it is without substance: cf Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd [2006] FCAFC 40 ; (2006) 149 FCR 395, at 421-422, [113], per Finn and Sundberg JJ. 3309 The most remarkable aspect of the rather curious submissions from both parties on this topic is Seven's contention that it was not in any event bound by the March Variation Agreement. It asserts that Seven Network did not execute the March Variation Agreement, apparently choosing to ignore the fact that one copy of the Agreement appears to be executed on behalf of C7. (A little judicial detective work, based on the evidence, suggests that the Agreement was signed on behalf of C7 by two directors, Mr Lewis and Ms Howard. ) Seven also attempts to sidestep Mr Wise's written confirmation that the documents provided to him by Optus were in the form agreed between the parties, by asserting that there was an understanding that the Agreement would not be binding until ' the boards of Seven and C7 execute[d] them '. If anything, this submission is even more baseless than Optus'. 21 FURTHER CAUSES OF ACTION [3310] 21.1 Breach of the Anti-Siphoning Regime [3312] 21.1.1 Relief Claimed [3312] 21.1.2 Seven's Pleadings [3319] 21.1.3 Reasoning [3325] 21.1.3.1 Seven's Case [3325] 21.1.3.2 An Understanding as Alleged? [3332] 21.1.3.3 A Disproportionate Penalty? [3337] 21.1.3.4 Additional Comments [3343] 21.2 Seven's Case under s 45D of the TP Act [3346] 21.2.1 Legislation [3346] 21.2.2 Seven's Pleading [3349] 21.2.3 Seven's Submissions [3354] 21.2.4 Reasoning [3355] 21.2.4.1 Any Practical Significance? [3355] 21.2.4.2 Hindering or Preventing [3358] 21.2.5 Conclusion [3366] 21.3 Optus-NRL Licence [3367] 21.3.1 The Issue [3367] 21.3.2 Seven's Pleading [3368] 21.3.3 Seven's Submissions [3371] 21.3.4 Reasoning [3378] 21.3.4.1 Damages [3378] 21.3.4.2 Claim for Declaratory Relief [3388] 21.3.5 Conclusion [3399] 21. Foxtel Cable is said to have breached cl 10(1)(e) of Pt 6 of Sch 2 to the BS Act which, as I have explained in Chapter 4, is a key element in the statutory anti-siphoning regime. As I followed its original damages case, Seven alleged that, in some way, breaches of the anti-siphoning regime enabled Foxtel to obtain the AFL pay television rights and Fox Sports to obtain the NRL pay television rights, thereby contributing to C7's demise. 3315 This rather far-fetched claim appears to have been abandoned by Seven. It has not, however, persisted with that claim. As explained in Chapter 12, Seven does not rely on any alleged contravention of the statutory anti-siphoning regime in support of its arguments on market definition. 3317 Since Seven neither claims damages in respect of any contravention of the anti-siphoning regime nor relies on any alleged contravention to bolster its market definition case, it is not entirely clear what utility there would be in purely declaratory relief. It may be that, despite the changes to the regulatory regime that were introduced after December 2000 and despite the apparent lack of interest by the regulator in these matters, declarations would vindicate the public interest in the enforcement of the statutory regime: cf Foxtel Cable Television Pty Ltd v Nine Network Australia Pty Ltd (1997) 73 FCR 429, at 430-431, per curiam ([318]). In any event, I am prepared to approach Seven's claim that Foxtel Cable contravened the anti-siphoning regime on the basis that there may be utility in granting only declaratory relief, should a contravention be made out. 3318 I am also prepared to assume, without deciding, that Seven has a 'special interest in the subject matter of the action' to give it standing to seek declaratory relief: Shop Distributive & Allied Employees Association v Minister for Industrial Affairs (SA) [1995] HCA 11 ; (1995) 183 CLR 552, at 558, per curiam; Bateman's Bay Local Aboriginal Land Council v The Aboriginal Community Benefit Fund Pty Ltd [1998] HCA 49 ; (1998) 194 CLR 247, at 256 [21]-[23]; 266-268 [42]-[52] per Gaudron, Gummow and Kirby JJ (with whom Hayne J agreed). Similar provisions in the Ten Put, the News-AFL Licence and the News-Ten Licence applied to Ten (par 521). 3321 Further, News and Nine were each party to an understanding, the substance of which was that Nine would not exercise any right it had to broadcast any of the Foxtel exclusive matches (par 520A). 3324 By reason of the loss of the AFL and NRL pay television rights and the effect of that loss, C7 suffered special damage as a result of Foxtel Cable's breaches of its subscription television licences (par 528). The legal ingenuity, which was largely Mr Philip's contribution to the endeavour, was enlisted in order to ensure that Foxtel and Fox Sports achieved reasonable commercial certainty in the scope and content of their respective pay television rights without breaching the statutory anti-siphoning regime. 3326 On one view, the incorporation into the agreements of a right to televise an event subject to an obligation to make a very large payment might have been designed to subvert the objective of the anti-siphoning regime as identified by the Court in Foxtel v Nine Network . 3327 Seven's written submissions do not make clear the precise time at which Foxtel Cable is said to have acquired the rights to broadcast the Foxtel exclusive matches. The Statement of Claim merely pleads that Foxtel sub-licensed the AFL pay television rights to Foxtel Cable (par 512), without specifying when this occurred. 3328 As best I can make out, Seven's case appears to be that Foxtel Cable acquired the rights to the Foxtel exclusive matches shortly after the execution of the last of the Foxtel Put (14 December 2000), the AFL-News Licence (19 December 2000) and the News-Foxtel Licence (about 25 January 2001). At that time, Foxtel Cable (in the language of cl 10(1)(e)) acquired the right to televise, on a subscription television broadcasting service, an event that is specified in a notice under s 115(1) of the BS Act . The ' event ' comprised the three Foxtel exclusive matches, which were included within the anti-siphoning list. Seven says that if Foxtel Cable acquired its right to televise the AFL exclusive matches at a time when no free-to-air broadcaster had the right to televise the event, Foxtel was in breach of cl 10(1)(e). 3329 Seven's case makes the assumption that it is irrelevant that the three Foxtel exclusive matches to be shown on pay television could not be precisely identified until Nine and Ten had made their selection of five free-to-air matches in each round. (Pursuant to cl 6 of each of the Nine Put and Ten Put, these selections had to be made by Nine and Ten six weeks in advance of each round of matches. ) Although the assumption is disputed by News, I proceed on the basis that it is also correct. In its Closing Submissions, Seven does not base its case simply on the terms of the various licences, but relies on a number of documents to establish the existence of the pleaded understanding. 3333 In my view, these documents do not establish that there was an understanding that neither Nine nor Ten would exercise their respective contractual rights to broadcast live the Foxtel exclusive matches upon payment of a fee of $500,000 per match. The understanding so far as Nine was concerned was that embodied in the AFL-News Licence and the Nine Put: that is, that if Nine exercised its rights in respect of any of these matches it would pay $500,000. In my opinion, the position was the same in relation to Ten. 3334 None of the Respondents' witnesses was specifically asked about the understanding alleged by Seven. In particular, none was asked whether it was understood that neither Nine nor Ten would exercise its contractual right to broadcast Foxtel exclusive matches upon payment of $500,000 per match, even if there were sound commercial reasons for them to do so. --- I wouldn't use the word "share", but they --- I think it's obvious that they knew of each other's existence, and it's obvious from the mechanics of the agreements that other entities other than themselves were taking other rights from News'. It is one thing to show that there were multilateral arrangements in place, notwithstanding Mr Philip's heroic attempts to create the impression of a series of independent bilateral agreements. It is another to establish that the multilateral arrangements encompassed the particular understanding on which Seven relies in its case that Foxtel Cable contravened the anti-siphoning regime. 3336 No doubt Foxtel expected that neither Nine nor Ten would choose to exercise its right to broadcast live any of the Foxtel exclusive matches. That expectation, which turned out to be justified, would have been based on the knowledge that if either chose to exercise its contractual right, it would have to pay the very large fee stipulated by the News-Nine Licence or the News-Ten Licence. The fact that they had that expectation does not demonstrate that there was an understanding that neither Nine nor Ten would exercise their respective contractual rights, even if commercial circumstances warranted them in paying the specified fee. In my view, the evidence does not establish the existence of an understanding in the terms alleged by Seven. 21.1.3.3 A DISPROPORTIONATE PENALTY? Again, I proceed on the basis that this assumption is correct, although it is not necessarily free from difficulty. 3338 Seven's submissions do not make it clear how the proportionality of what it describes as the ' penalty ' for broadcasting the Foxtel exclusive matches is to be assessed. As News points out, there may be aspects of free-to-air broadcasting that make the rights to matches very valuable for reasons that are not easy to quantify precisely in monetary terms. In particular, the value of a given match or series of matches may not merely be reflected in a mathematical calculation derived from the general contractual arrangements entered into for the AFL free-to-air or pay television rights. 3339 Seven points out that the figure of $500,000 for each Foxtel exclusive match was first mooted by Mr Philip in his memorandum to Mr Frykberg of 29 August 2000. Mr Philip chose that figure, so his memorandum suggests, because it was ' unlikely ' that the free-to-air television operators would broadcast the Foxtel exclusive matches if they had to pay the fee. 3340 Until December 2000, the proposal for News to acquire the broadcasting rights contemplated that Foxtel would take a sub-licence of the AFL pay television rights for $17.5 million per annum (plus adjustments) for three matches per week. Nine was to pay $20 million for three free-to-air AFL matches per week and Ten $23 million for two free-to-air AFL matches per week plus the finals. Seven says that the figure of $500,000 per Foxtel exclusive match compares with $265,151 per regular season AFL pay television match ($17.5 million divided by 66 regular season AFL pay television matches). Following this logic, the figure of $500,000 per match can be compared with $363,636 per regular season AFL free-to-air television match ($40 million, after making an allowance for finals matches, divided by 110 regular season AFL free-to-air matches). 3341 By the time the various put agreements and licence agreements came into force, Foxtel had agreed to pay $30 million per annum (plus adjustments) for the pay television rights to three AFL matches each week of the regular season. The value of each Foxtel exclusive match, assessed on a purely mathematical calculation, was therefore $454,545 ($30 million divided by 66 regular AFL season matches). This figure is only marginally (less than 10 per cent) lower than the figure of $500,000 per Foxtel exclusive match specified in the News-Nine Licence and the News-Ten Licence. 3342 On this material, I cannot conclude that the fee provided by the News-Nine Licence and the News-Ten Licence for each Foxtel exclusive match constituted a ' penalty ' so disproportionate that it effectively prevented Nine and Ten from exercising their contractual rights to broadcast any or all of the Foxtel exclusive matches. The fee of $500,000 per match may have discouraged Nine and Ten from exercising their contractual rights in respect of the Foxtel exclusive matches, but it did not ' prevent ' them from doing so as Seven alleges. The structure and detail of any statutory anti-siphoning regime are, of course, matters for Parliament. So, too, are the merits of the policies underlying any such regime. 3344 The current regime appears to involve a mixture of objectives. At one level, the aim is presumably to ensure (or at least encourage) the live broadcasting of certain popular sporting events on free-to-air television, rather than have live coverage reserved exclusively for pay television subscribers. At another level, the regime may be designed to provide a form of programming protectionism in favour of free-to-air television operators and against the interests of pay television platforms. To the extent that the statutory regime serves the latter purpose, the form of the current regime may reflect successful lobbying of successive Governments by free-to-air television operators, rather than broader public policy objectives. 3345 Whatever the objectives of the current anti-siphoning regime, the time may have arrived for a review of its practical operation. This case reveals the techniques that have been employed for allocating ' marquee ' sporting rights between free-to-air television operators and pay television platforms. It appears that these techniques are now widely used and indeed have been used for some time within the industry. If the techniques are thought to achieve a satisfactory accommodation of the competing interests, including those of free-to-air viewers, there will presumably be no need for change. If, on the other hand, the ability, in practice, of free-to-air television operators and pay television platforms to agree in advance on a carve-up of marquee sports rights is thought to be inconsistent with the objectives of the regime, a review would no doubt suggest legislative amendments. However, s 45D(2) provides that a person is taken to engage in conduct for a purpose mentioned in s 45D(1) if the person engages in conduct for purposes that include that purpose. 3352 Seven also repeats its allegations concerning the purpose of the Master Agreement Provision (par 396). Seven points out that liability under s 45D of the TP Act does not depend on a finding that the alleged contravener had the purpose, or the relevant conduct had the effect or likely effect, of substantially lessening competition in a market. While that proposition is correct, it does not in my view overcome the problem identified by News having regard to the findings I have made. 3356 Seven has chosen to plead its s 45D case by incorporating allegations about the purpose or effect or likely effect of the pleaded provisions including the Master Agreement Provision. Those allegations are framed in terms of a purpose or effect of substantially lessening competition in specified markets. The alleged contraventions are said to have come about by virtue of the understanding whereby Foxtel and Fox Sports were to acquire the AFL pay television rights and the NRL pay television rights respectively, to the exclusion of C7. The understanding is said to have been entered into for the substantial purpose of killing C7. 3357 I have made findings of fact adverse to Seven in relation to both its case on purpose and on the alleged effect of substantially lessening of competition in the various pleaded markets. I have rejected Seven's claim that each of those parties entered into the Master Agreement having the purpose of killing C7. I have also rejected Seven's claim that the effect or likely effect of the various provisions pleaded by Seven was the substantial lessening of competition in any of the markets identified by Seven. The factual foundation for Seven's pleaded case under s 45D of the TP Act is therefore wanting. In that case, a group of milk vendors in New South Wales, each with a regional monopoly, acted in concert to withhold supplies of milk from Jewel, which conducted a supermarket chain in New South Wales. The purpose and likely effect of the conduct was to damage Jewel and to force it to cease purchasing milk from Victorian suppliers. Jewel claimed relief against the milk vendors by reason of their alleged contravention of s 45D(1)(b) of the TP Act . Section 45D at that time was in a different form, but Seven does not suggest that the drafting changes to s 45D effected in 1996 by the Workplace Relations and Other Legislation Amendment Act 1996 (Cth), Sch 17, are material to the present question. Their Honours held that conduct which prevents a fourth person (Jewel) from acquiring supplies, does not constitute conduct which hinders or prevents third persons (Jewel's customers) from acquiring goods or services from the fourth person (Jewel). True it is that supply and acquisition are reciprocal activities but, as s. 45D(1) is expressed to relate only to supply to and acquisition from a target corporation, it distinguishes between those activities and the activities which are reciprocal to them. To give effect to that distinction, it is necessary to exclude from the net of s. 45D(1) conduct which impedes an activity mentioned in the sub-section (supply to or acquisition from a target corporation) merely by impeding the reciprocal activity which the sub-section does not mention (acquisition or supply by a target corporation). I would construe s. 45D(1) as requiring proof of conduct other than mere hindering or preventing of the supply of goods by the target corporation before it can be said that acquisition of those goods and services from the target corporation is hindered or prevented'. (Emphasis in original. For the reason stated, this did not amount to conduct which, in the sense in which s. 45D(1) uses the terms, hindered or prevented Jewel's customers from acquiring New South Wales milk --- or any other milk, for that matter --- from Jewel: there was simply no New South Wales milk available for acquisition'. It is hard to see why the ratio of Devenish v Jewel should be confined to the case where there is identity between the goods or services withheld from the target corporation (or which the target is prevented from acquiring) and the goods or services the target's customers are thereby prevented from acquiring. Particularly is this so where the target (C7) claims that the services that its customers cannot acquire (C7's channels) are unavailable precisely because the parties acting in concert have prevented the target from acquiring an ingredient (AFL sporting content) that it says is essential to the supply of the services (the channels) to the target's customers. 3365 The second ground also seems to me to rest on a distinction without a difference. Seven's case is that the AFL pay television rights were central to C7's very survival, not least because the loss of the AFL pay television rights exposed it to the loss of the benefits of the C7-Optus CSA and of the C7-Austar CSA. The reasoning of the majority in Devenish v Jewel does not suggest that the result in that case would have been different if the goods withheld from Jewel had been essential to its very survival as a supermarket chain. Had the goods been essential to Jewel's survival, it would presumably have sustained even greater loss or damage to its business than was occasioned or threatened by the conduct of the milk vendors. But the reasoning of the majority would still have prevented Jewel from gaining redress pursuant to s 45D(1) of the TP Act . Whether Jewel might have had a cause of action under any other provision of the TP Act is a separate question. As has been explained in Chapter 9, the Optus-NRL Licence set out the basis on which Fox Sports, with Foxtel's consent (required under the Umbrella Agreement), supplied Optus with the ' NRL on Optus ' channel during the 2001 season. Section 4D has been reproduced in Chapter 18, but I again reproduce s 4D(2) in this Chapter. Other relevant statutory provisions include ss 4F and 45(2) of the TP Act ([2080], [2084]). Alternatively, the parties gave effect to an agreement containing an exclusionary provision, in contravention of s 45(2)(b)(i) of the TP Act (par 374). 3370 The relief sought by Seven includes declarations that in entering into the Optus-NRL Licence or in giving effect to cl 9, each of Foxtel, Fox Sports and Optus has engaged in conduct in contravention of s 45(2)(a)(i) and (b)(i) of the TP Act . This objective was to be achieved by preventing Optus from sub-licensing NRL programming to C7. The protection of the Fox Sports brand was, at most, an incidental purpose of the parties to the Optus-NRL Licence. 3372 Seven contends that whether an exclusionary provision has the purpose of preventing, restricting or limiting the supply or acquisition of goods or services must be determined by reference to the subjective purpose of the parties to the contract. The relevant purpose need not be common to all parties. In this case, so Seven argues, cl 9 was inserted into the Optus-NRL Licence at the behest of Fox Sports. This was the culmination of a strategy driven by Mr Philip, a fact that was evident from documentation prepared from September 2000 onwards. Consequently, Fox Sports' subjective purpose was to prevent Optus from incorporating NRL coverage on non-Optus owned channels such as C7, as Optus had done in the past. 3373 Seven submits that at the time of entry into the Optus-NRL Licence, Foxtel and Optus were in competition in relation to the acquisition of pay television sports channels. Seven argues that it is not necessary for all parties to a contract containing an exclusionary provision to be competitive with each other, so long as at least two of the parties are competitive in this way. It is therefore irrelevant that Fox Sports was not in competition with Foxtel or Optus. 3374 The Statement of Claim does not expressly plead that the contraventions of s 45(2)(a)(i) and (b)(i) by the parties to the Optus-NRL Licence caused Seven loss or damage. Seven's Closing Submissions make no reference to any loss or damage said to flow from the contraventions. Nor is any mention made of how an award of damages, presumably pursuant to s 82 of the TP Act , might be calculated. 3375 In these circumstances, it is hardly surprising that News and PBL argue in their written submissions that Seven has failed to identify any loss or damage attributable to the alleged contraventions. It follows, so they contend, that Seven cannot be awarded any damages. Perhaps out of an abundance of caution, News' written submissions also provide reasons why a damages claim would fail in any event. 3376 Not for the first time, Seven's Reply submissions raise a new issue. He submitted that Seven's damages claim was misconceived. If Seven's damages claim lacks substance, the only other relief sought by Seven are the declarations set out earlier. 3379 I must confess to considerable difficulty in following Seven's damages claim, insofar as it is founded on cl 9 of the Optus-NRL Licence. Seven's Reply Submissions start with the proposition, apparently central to its damages case based on cl 9 of the Optus-NRL Licence, that but for Optus' unlawful conduct in relation to C7 (misleading or deceptive conduct, deceit and breach of contract), Optus would at some point in late 2001 or early 2002 have entered a new content supply agreement with C7 in place of the C7-Optus CSA. As I read Seven's Reply Submissions, they make Seven's damages claim based on cl 9 of the Optus-NRL Licence dependent on the success of its other causes of action against Optus. 3380 In Chapter 20, I have rejected Seven's case against Optus founded on misleading or deceptive conduct, deceit and breach of contract. It would seem to follow, given the way Seven presents its damages claim, that it cannot establish any loss or damage flowing from any contravention of s 45(2) of the TP Act by reason of the inclusion of cl 9 in the Optus-NRL Licence. In any event, it is difficult to see what loss or damage, whether in the form of a lost opportunity or otherwise, could be said to have been suffered by Seven ' by ' the conduct of the parties to the Optus-NRL Licence responsible for the inclusion of cl 9, assuming that their conduct contravened s 45(2) of the TP Act , ( TP Act , s 82(1)). Clause 9 of the Optus-NRL Licence must be placed in the context of a much larger canvas. 3381 The Optus-NRL Licence was executed on or about 25 January 2001. During the preceding three years, C7 had not held the NRL pay television rights and, indeed, had never held the NRL pay television rights. From 1998 to 2000, Optus held the non-exclusive NRL pay television rights by way of a sub-licence from News pursuant to the Optus Pay TV Programming Agreement. 3382 Under cl 4.5 of the C7-Optus CSA, C7 was obliged, while Optus held NRL pay television rights, to include NRL programming in the C7 channels at no additional cost to Optus, unless Optus elected otherwise. Although Optus was obliged to bear the costs of production of NRL matches for broadcast on its platform, C7 derived no additional revenue from supplying the NRL coverage to Optus through its channels. In consequence, as News points out, C7 simply had a sub-licence from Optus to incorporate NRL programming into the C7 channels supplied to Optus (but not to any other pay television operator, such as Austar). 3383 Clause 9 of the Optus-NRL Licence prevented Optus from sub-licensing, altering or rebranding the ' NRL on Optus ' channel which was to be provided for the 2001 NRL season (February to the end of September 2001). During this period, the C7 channels continued to be supplied to Optus. The channels included ' marquee ' sports content because C7 retained the AFL pay television rights notwithstanding the events of December 2000, until the end of the 2001 AFL season. 3384 In the absence of cl 9 of the Optus-NRL Licence, the likelihood is that the previous arrangement between Optus and C7 in relation to NRL coverage would have continued for the term of the Optus-NRL Licence. Seven submits that, but for the parties to the Optus-NRL Licence agreeing to the insertion of cl 9 and giving effect to its terms, C7 would have been in a position to make a valuable contribution to Optus, enabling Optus to broadcast a ' consolidated sports offering including one premium sport namely, the NRL '. Hence, so it argues, Optus would have been more likely to enter a new content supply agreement with C7. 3385 Seven seems to accept that C7 derived no revenue from the placement of NRL programming in the channels supplied to Optus; that C7 had premium sporting content on its own channels in 2001 in the form of AFL programming; that the Optus-NRL Licence lasted only for the 2001 NRL season; and that there were many factors that contributed to Optus terminating the C7-Optus CSA and not replacing it with any further content supply agreement with C7. Seven does not point to any evidence suggesting that, had Optus retained the ability to incorporate NRL programming into the C7 channels during the 2001 season, that would have made the slightest difference to the course of events. In particular, Seven does not identify any evidence supporting its contention that C7, in those circumstances, would have had better prospects of securing a further content supply agreement from Optus. 3386 No such proposition was put to any of Optus' witnesses. More importantly, the events leading to Optus' decision to terminate the C7-Optus CSA and enter into the Foxtel-Optus Term Sheet and the subsequent Foxtel-Optus CSA do not provide any basis for thinking that removing cl 9 from the Optus-NRL Licence would have increased C7's chances of securing a further content supply agreement from Optus. These events came about because of CMM's poor financial performance, the resolution of the disputes among the Foxtel partners and C7's loss of the AFL pay television rights. They were not influenced by Optus' inability to place NRL programming on branded C7 channels during the 2001 NRL season. 3387 The suggestion that cl 9 of the Optus-NRL Licence denied C7 the opportunity to bid for the AFL or NRL pay television rights for 2007 and beyond as an operating business, in my opinion, is fanciful. Not all appear to be particularly compelling. It is necessary, however, only to consider their submission that Seven has not established that Foxtel and Optus were ' competitive with each other ' within the meaning of s 4D(1) of the TP Act . As Seven points out, s 4D(2) speaks not only of persons who are in competition with each other, but of those who are likely to be in competition with each other. In this context, as I have explained elsewhere ([2231]-[2233]), ' likely ' means a ' real chance or possibility '. 3391 Seven identifies the critical question to be whether, as at 25 January 2001 (the date of the execution of the Optus-NRL Licence), there was a real chance or possibility that Foxtel and Optus would be in competition for the acquisition of channels incorporating NRL programming. Seven propose an affirmative answer to this question. Seven acknowledges that by 25 January 2001, Foxtel had secured the Fox Sports channels containing NRL content until 2006. However, Seven argues that, at the expiration of that period, Foxtel and Optus again would be ' likely to be ' in competition for the acquisition of a channel with NRL programming. 3392 PBL relies on the closing words of s 4D(2) to support a narrow construction of the ' services ' in respect of which competition or likely competition must exist. PBL says that Foxtel and Optus could not have been in competition (or likely to be in competition) for these services simply because Foxtel had already acquired them before 25 January 2001. 3394 In my view, PBL's submissions take too narrow a view of the expression ' services to which the relevant provision of the contract ... relates '. As Seven points out, PBL effectively contends that an agreement for the supply of goods or services ' relates ' only to the particular goods or services which are the subject matter of the agreement. If this interpretation is correct, s 4D would have little room for operation, since the particular goods or services will usually be within the exclusive control of the supplier before the parties enter into the supply agreement. 3395 There is, however, another obstacle confronting Seven's argument. Seven maintains that there was a real chance or possibility, as at 25 January 2001, that Foxtel and Optus would compete for the acquisition of channels incorporating NRL content. Seven does not explain what form that competition would or might take. 3396 If Seven means that there was a real chance or possibility that Foxtel and Optus would compete for the exclusive right to take a sports channel with NRL content, that had not happened prior to January 2001. The reason is that the arrangements in relation to the supply of NRL content to Foxtel and Optus were governed by the 1998 Super League settlement. At the time the Optus-NRL Licence came into effect, there was no reason to think that there was anything more than the remotest prospect of Optus competing with Foxtel for the exclusive right to take NRL sports channels. 3397 If Seven means that there was a real chance or possibility, some years down the track, that Foxtel and Optus might each seek non-exclusive access to NRL sports channels, that prospect would not put them in competition for the channels. If one obtained non-exclusive access to the channels in, say, 2006 or beyond, that would not preclude or inhibit the other from gaining similar non-exclusive access. 3398 In any event, as at 25 January 2001, as I have found in Chapter 18, Optus' future as a retail pay television provider was very doubtful. The only realistic possibilities open to Optus were to negotiate a content supply agreement with Foxtel (which eventuated) or implement a Manage for Cash strategy in relation to CMM. In neither case was there a real chance or possibility that Optus would compete with Foxtel for the acquisition of an NRL sports channel or, indeed, for any other pay television sports channel. 22 NEXT STAGE [3400] 22. Since Seven has failed to make out any of the causes of action on which it relies, the proceedings will be dismissed. The orders I make today will include directing Optus to bring in Short Minutes of Order in relation to the disposition of its Cross-Claim. However, I do not intend to make final orders at this stage. 3401 The issue of costs looms large in this case. It is therefore necessary to provide a timetable for the filing of any evidence and (brief) submissions on that topic. 3402 As I have explained, I also propose to give the parties an opportunity to make brief submissions as to whether I should address any issues relating to relief, including the assessment of damages. No such issues arise on the conclusions I have reached, but they may arise if an appeal is successful. I have not attempted in this judgment, for example, to assess the damages that would be awarded to Seven if, contrary to my conclusions, it had succeeded in establishing one or more in the many causes of action upon which it has relied. The major reason for not doing so is that there are a very large number of possible combinations and permutations and I simply do not know where to begin. 3403 In giving the parties the opportunity to make submissions as to the issues that might be addressed in a supplementary judgment, I make no commitment to follow any particular path, even if all the parties agree. This case has consumed a vast amount of Court time and public resources. Nonetheless, I intend to take into account what the parties choose to put forward (if anything). Optus, on or before 24 August 2007, file and serve draft Short Minutes of Order disposing of the Cross-Claim. 2. The Respondents file and serve, on or before 24 August 2007, any evidence upon which they rely in relation to costs. 3. The Respondents file and serve, on or before 24 August 2007, written submissions as to costs. 4. Seven file and serve, on or before 7 September 2007, any evidence in reply on the question of costs. 5. Seven file and serve, on or before 7 September 2007, written submissions on costs. 6. The written submissions on costs of each group of Respondents not exceed ten double-spaced pages in length. 7. Seven's written submissions on costs not exceed 15 double-spaced pages in length. 8. Seven file and serve, on or before 24 August 2007, written submissions as to whether any further findings should be made in relation to damages or other relief (' further findings ') and, if so, what issues and evidence would need to be addressed. 9. The Respondents file and serve, on or before 7 September 2007, written submissions as to whether any further findings should be made and, if so, what issues and evidence would need to be addressed. 10. Seven's submissions as to any further findings should not exceed 15 double-spaced pages in length. 11. The written submissions of each group of respondents as to any further findings should not exceed ten double-spaced pages in length. 12. The proceedings be adjourned until 17 September 2007, at 10.15 am. • Each Australian Football League State of Origin match. • Each match in the Rugby League State of Origin Series. • Each Rugby League international 'Test' matches involving the senior Australian representative team, whether played in Australia or overseas. • Any other match involving the senior Australian representative team whether played in Australia or overseas (only listed on the anti-siphoning list from 11 May 2004). • Each match in the Rugby World Cup tournament. • Each ' Test ' cricket match involving the senior Australian representative team played in Australia or the United Kingdom. • Each one day cricket match (including World Series Cricket matches), involving the senior Australian representative team, whether played in Australia or overseas. • Each one day cricket match involving the senior Australian representative team played in Australia or the United Kingdom, or as part of a series in which at least one match of the series is played in Australia. • Each World Cup one day cricket match. • The English Football Association Cup final. • Each match in the Federation of International Football Associations World Cup tournament. • Each match in the Wimbledon (the Lawn Tennis championships) tournament. • Each match in the French Open tennis tournament. • Each match in the men's and women's singles quarter-finals, semi-finals and finals of the French Open tennis tournament. • Each match in the United States Open tennis tournament. • Each match in the men's and women's singles quarter-finals, semi-finals and finals of the United States Open tennis tournament. • Each match in each tie in the Davis Cup tournament when an Australian Representative team is involved. • Each round of the Australian Open tournament. • Each round of the United States Masters tournament. • Each round of the United States Open tournament. • Each round of the United states Professional golf Association Championship tournament. • Each round of the British Open tournament. • Each race in the Federation Internationale de l'Automobile Formula 1 World Championship (Grand Prix) held in Australia. Ch 3 [180] ABA Australian Broadcasting Authority. Ch 4 [304] ABC Australian Broadcasting Corporation. Ch 4 [345] ACCC Australian Competition and Consumer Commission. Ch 1 [52] ACE Australian Capital Equity Pty Ltd. Ch 3 [192] Acquisition Agreements The Foxtel Put, Nine Put, Ten Put, News-AFL Licence, News-Foxtel Licence, News-Nine Licence, News-Ten Licence, NRL Bidding Agreement and the Fox Sports-NRL Pay Rights Agreement. Ch 13 [2115] AFL free-to-air television rights The rights to broadcast AFL matches as part of a free-to-air television service. Ch 13 [2109] AFL pay television rights The rights to broadcast AFL matches as part of a subscription television service. Ch 13 [2109] AFL pay rights market A market in Australia for the acquisition and supply of pay television rights to broadcast AFL matches. Ch 12 [1804] AFL Proposal News' proposal pleaded in par 99 of the Statement of Claim. Ch 13 [2110] AGS Australian Government Solicitor. Ch 7 [629] Application Fifth Further Amended Application filed 22 June 2006. Ch 2 [76] ARPU Average Revenue Per User. Ch 11 [1528] Australis Australis Media Ltd. Ch 6 [492] CEO Chief Executive Officer. Ch 3 [192] CMM Consumer and Multimedia Division of SingTel Optus. Ch 3 [270] Commercial Broadcasters 7 Network, Nine Network, Ten Network and their regional affiliates. Ch 4 [346] Consortium Respondents Alleged parties to the Master Agreement: News, PBL, Telstra and Foxtel. Ch 2 [91] Cross-Claim Second Further Amended Cross-Claim, filed 9 February 2006, by Optus against Seven. Ch 2 [121] EBIT Earnings before Interest and Tax. Ch 7 [605] EBITDA Earnings before Interest, Tax, Depreciation and Amortisation. Ch 11 [1512] Fair Process Representation The alleged representation, made by NRL Partnership and NRLI to Seven, that C7's bid for the NRL pay rights would be treated in a fair and impartial manner. Ch 2 [112] Foxtel Used variously to refer to the Foxtel Partnership, the Foxtel partners, the Foxtel Platform or the Foxtel Service. Ch 2 [81] Foxtel partners Sky Cable and Telstra Media Ch 2 [83] Foxtel Partnership The partnership comprising Sky Cable and Telstra Media conducting a retail pay television business under the name ' Foxtel '. Ch 2 [103] i7 i7 Ltd. Ch 3 [192] Liberty Sports Liberty Sports Australia Pty Ltd. Ch 6 [495] McKinsey McKinsey & Company. Ch 11 [1562] MCN MultiChannel Network Pty Ltd. Ch 3 [251] MDS Multipoint Distribution Service. Ch 6 [496] MSG Minimum Subscriber Guarantee. Ch 3 [267] National Broadcasters ABC and SBS. Ch 4 [345] Nine Network Free-to-air television broadcasting network known as the Nine Network . Ch 3 [216] NPV Net Present Value. Ch 7 [594] NRL National Rugby League Ch 2 [84] NRL Competition National Rugby League Competition. Ch 3 [200] NRL Partnership The partnership between ARL and NRLI relating to the conduct of the NRL Competition. Ch 2 [84] NRL Pay Television Rights The rights to broadcast NRL matches as part of a subscription television service. Ch 13 [2109] NRL Pay Rights Market A market in Australia for the acquisition and supply of pay television rights to broadcast NRL matches. Ch 12 [1804] NRL PEC NRL Partnership Executive Committee. Ch 2 [111] NRL Proposal Fox Sports' proposal pleaded in par 99 of the Statement of Claim. Ch 13 [2111] Optus Cable Optus' hybrid fibre coaxial cable network. Ch 3 [262] Optus Vision Media Optus Vision Media Pty Ltd. Ch 6 [506] Pay TV Management Pay TV Management Pty Ltd. Ch 3 [198] Premier Sports Australia Premier Sports Australia Pty Ltd. Ch 6 [495] Pspm Per Subscriber Per Month. Ch 4 [359] Respondents All respondents to the proceedings, other than those against whom the proceedings were discontinued. Ch 1 [5] SBS Special Broadcasting Service. Ch 4 [345] SingTel Singapore Telecommunications Ltd. Ch 3 [269] SportsVision SportsVision Australia Pty Ltd. Ch 6 [507] SSNIP Small but Significant Non-transitory Increase in Price. Ch 12 [1778] Statement of Claim Fifth Further Amended Statement of Claim filed 22 June 2006. Ch 2 [76] TAB TAB Ltd. Ch 12 [1857] Tallglen Tallglen Pty Ltd. Ch 3 [260] TARBS TARBS World Television Australia Pty Ltd. Ch 6 [561] Telstra Cable Telstra Multimedia's hybrid fibre coaxial cable network. Ch 2 [86] Ten Network Free-to-air television broadcasting network known as the Ten Network. Ch 8 [832] AFL-News Licence 'News/AFL --- Pay TV and Other Rights Term Sheet', 19 December 2000. Ch 3 [197] AFL-Seven Licence Consolidated licence agreement between AFL and Seven covering both the AFL-Seven Original Licence and the AFL-Seven Licence Extension. Ch 8 [826] AFL-Seven Licence Extension 'AFL Licence Extension Agreement', 15 November 1996. Ch 3 [182] AFL-Seven Original Licence ' Agreement ', 8 November 1993, relating to AFL broadcasting rights. Ch 3 [182] BCA 'Broadband Co-operation Agreement', 14 April 1997. Ch 2 [97] BSD Side Agreement 'Foxtel/Australis Restructure --- BSD Side Agreement', 25 July 1997. Ch 3 [233] C7-Austar CSA 'Heads of Agreement', 5 March 1999 Ch 3 [188] C7-Optus CSA 'Channel Production and Supply Agreement', 30 June 1998. Ch 2 [115] CWO Deed Poll ' Optus Guarantor ', 10 September 2001. Ch 3 [269] Exclusivity Clause Clause 8A of the C7-Optus CSA, inserted by the First Variation Agreement, 28 September 2001. Ch 2 [115] First and Last Deed ' Deed ', 3 September 1997. Ch 3 [197] First Variation Agreement ' Variation Agreement ' varying the C7-Optus CSA, 28 September 2001. Ch 2 [115] Fox Sports-Austar CSA 'Fox Sports Supply to Austar --- Agreement', 3 September 1998. Ch 3 [247] Fox Sports-Austar Interim Licence 'Interim Arrangement', 13 May 1998. Ch 6 [544] Fox Sports-Foxtel Supply Agreement ' Term Sheet ', 20 February 2002. Ch 3 [246] Fox Sports-NRL Pay Rights Agreement ' Australian Subscription Television Rights - National Rugby League to Sports Investments Australia Pty Limited ', 13 December 2000. The name shown here is the name given to the agreement in the Pleadings, but note that this agreement is also referred to in the judgment as the NRL-Fox Sports Licence (see below) Ch 13 [2115] Fox Sports-NRL Pay Rights Agreement Provisions Provisions of the Fox Sports-NRL Pay Rights Agreement pleaded in par 133 of the Statement of Claim. These provisions is also referred to in the judgment as the NRL-Fox Sports Licence Provisions (see below). Ch 13 [2115] Fox Sports Option Deed 'Fox Sports Option Deed', 3 December 1998. Ch 3 [244] Foxtel-Austar Term Sheet 'Foxtel/Austar --- Term Sheet', 2 May 1998. Ch 6 [540] Foxtel-Optus CSA 'Content Supply Agreement', 5 March 2002. Ch 2 [103] Foxtel-Optus CSA Provisions Provisions of the Foxtel-Optus CSA pleaded in par 222 of the Statement of Claim C 18 [2918] Foxtel-Optus Fox Footy Agreement 'Fox Footy Channel Arrangement', 19 February 2002. Ch 11 [1675] Foxtel-Optus Term Sheet ' Term Sheet ', 20 February 2002. Ch 2 [116] Foxtel Partnership Agreement 'Deed of Amendment and Restatement Amending and Restating the Foxtel Partnership Agreement dated 14 April 1997', 3 December 1998. Ch 3 [225] Foxtel Pay TV Rights Programming Agreement 'Foxtel Pay TV Rights Programming Agreement', 14 May 1998. Ch 9 [1164] Foxtel Put 'Pay Television --- News/Foxtel', 14 December 2000. Ch 13 [2115] Foxtel Put Provision A provision of the Foxtel Put pleaded in par 105 of the Statement of Claim. Ch 13 [2115] Foxtel-Telstra Resale Term Sheet 'Foxtel/Telstra Resale Term Sheet', 20 February 2002. Ch 11 [1694] Implementation Deed ' Implementation Deed ', 21 November 2002. Ch 6 [515] Management Agreement 'Management Agreement', 14 April 1997. Ch 3 [229] March Variation Agreement 'Variation Agreement', 4 March 2002. Ch 11 [1739] Master Agreement An arrangement made at a teleconference on 13 December 2000, pleaded in par 100 of the Statement of Claim. Ch 2 [84] Master Agreement Provision A provision of the Master Agreement pleaded in par 102 of the Statement of Claim. Ch 2 [88] Merger Agreement A series of agreements between News, ARL, NRL Partnership and Optus resolving the Super League dispute, 14 May 1998. Ch 3 [255] News-AFL Licence 'News/AFL --- Pay TV and Other Rights Term Sheet', 19 December 2000. Ch 13 [2115] News-AFL Licence Provision A provision of the News-AFL Licence pleaded in par 111 of the Statement of Claim. Ch 13 [2115] News-Foxtel Licence 'Pay Television --- News/Foxtel' 25 January 2001. Ch 13 [2115] News-Foxtel Licence Provision A provision of the News-Foxtel Licence pleaded in par 117 of the Statement of Claim. Ch 13 [2115] News-Nine Licence 'AFL Free To Air Term Sheet --- News/Nine', on or about 25 January 2001. Ch 13 [2115] News-Nine Licence Provision A provision of the News-Nine Licence pleaded in par 121 of the Statement of Claim. Ch 13 [2115] News-Ten Licence 'AFL Free To Air Term Sheet --- News/Ten, on or about 25 January 2001. Ch 13 [2115] News-Ten Licence Provision A provision of the News-Ten Licence pleaded in par 125 of the Statement of Claim. Ch 13 [2115] Nine Put 'AFL Free to Air Term Sheet --- News/Nine' on or about 14 December 2000. Ch 13 [2115] Nine Put Provision A provision of the Nine Put pleaded in par 107 of the Statement of Claim. Ch 13 [2115] NRL Agreements A series of agreements annexed to the Merger Agreement, 14 May 1998. Ch 6 [58] NRL Bidding Agreement 'Internet and Sponsorship Rights --- Fox Sports/Foxtel', 13 December 2000. Ch 13 [2115] NRL Bidding Agreement Provisions Provisions of the NRL Bidding Agreement pleaded in par 130 of the Statement of Claim. Ch 13 [2115] NRL-Fox Sports Licence ' Australian Subscription Television Rights - National Rugby League to Sports Investments Australia Pty Limited ', 13 December 2000. This agreement is also referred to in the judgment as the Fox Sports-NRL Pay Rights Agreement (see above) on the basis that it was given that name in the Pleadings. Ch 9 [1377] NRL-Fox Sports Licence Provisions Provisions of the NRL-Fox Sports Licence pleaded in par 133 of the Statement of Claim. These provisions are also referred to as the Fox Sports-NRL Pay Rights Agreement Provisions (see above). Ch 13 [2102] NRL Free-to-Air Licence 'NRLP Australian Free-to-Air Television Rights Licence Agreement', 14 May 1998. Ch 9 [1161] NRL Naming Rights Sponsor Agreement 'NRL Naming Rights Sponsor Agreement', 13 December 2000 Ch 9 [1380] NRL-News Pay Rights Agreement ' Australian Pay Television Rights --- NRL to News ' (Annexure J to the Merger Agreement), 14 May 1998. Ch 3 [196] NRL Partnership Agreement 'Partnership Agreement --- NRL Partnership', 14 May 1998. Ch 3 [253] NRL Services Agreement ' NRL Services Agreement ' (Annexure D to the Merger Agreement), 14 May 1998. Ch 3 [256] Optus-NRL Licence The 'Optus/NRL Licence Agreement', 25 January 2001. Ch 9 [1414] Optus Partners Funding Deed 'Optus/Partners Funding Deed ' , 15 May 1998. Ch 9 [1168] Optus Pay TV Programming Agreement Agreement by which News sub-licensed the NRL pay television rights to Optus Vision, 14 May 1998. Ch 9 [1164] Optus Vision Heads of Agreement ' Main Heads of Agreement ', 30 December 1994. Ch 6 [498] Optus Vision Shareholders Agreement Optus Vision Joint Venture: Optus Vision Shareholders Agreement', 19 May 1995. Ch 6 [505] PDJV Agreement 'Programming Distribution Joint Venture Agreement', 14 July 1995. Ch 6 [512] Program Rights Agreement 'Program Rights Agreement', 14 April 1997. Ch 6 [525] Program Rights Deed ' Program Rights Deed' , 3 December 1998. Ch 6 [556] Rights Sub-Licence Agreement Pleaded in par 239 of the Statement of Claim. Ch 13 [2116] Rights Sub-Licence Agreement Provision A provision of the Rights Sub-Licence Agreement pleaded in par 239 of the Statement of Claim. Ch 13 [2116] Second Variation Agreement ' Variation Agreement ' amending the C7-Optus CSA, 25 January 2002. Ch 2 [115] Tallglen Agreement 'Sports Programming Licence Agreement', 19 May 1995. Ch 6 [508] Ten Put 'AFL Free to Air Term Sheet --- News/Ten', 14 December 2000. Ch 13 [2115] Ten Put Provision A provision of the Ten Put pleaded in par 109 of the Statement of Claim. Ch 13 [2115] TNC Heads of Agreement 'Heads of Agreement between The News Corporation Limited, Telstra Corporation Limited, the Joint Venture between The News Corporation Limited and Telstra Corporation Limited, Australis Media Holdings Pty Limited and Galaxy Network International Pty Limited', 9 March 1995. Ch 6 [501] Umbrella Agreement 'Umbrella Agreement as amended and restated on 14 April 1997', 9 March 1995, amended and restated, 14 April 1997. I certify that the preceding 3404 numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville.

retail pay television provider (' foxtel ') refuses to take premium sports channels from a channel supplier (' c7 ') incorporating australian football league (' afl ') content a consortium, including foxtel, enters into a ' master agreement ' providing for bids to be made for the afl pay television rights and the national rugby league (' nrl ') pay television rights consortium's bids succeed c7, deprived of ' marquee ' sports content, goes out of business. whether foxtel, by refusing to accept offers by c7 to supply sports channels took advantage of its substantial power in the retail pay television market, in contravention of s 46(1) of the trade practices act 1974 (cth) (' tp act ') whether master agreement contained a provision (' master agreement provision ') having the purpose, effect or likely effect of substantially lessening competition, in contravention of s 45(2)(a)(ii) of the tp act whether giving effect to the master agreement provision contravened s 45(2)(b)(ii) of the tp act . markets ssnip test limits of expert evidence relevance of perceptions of industry participants whether applicants have made out the existence of the pleaded wholesale sports channel, afl pay rights, nrl pay rights or retail pay television markets. whether master agreement provision had the effect of substantially lessening competition in the retail pay television market whether at the time the parties give effect to the master agreement provision, it had or was likely to have the effect of substantially lessening competition in the retail pay television market significance of the weakness of foxtel's only potentially significant competitor in the retail pay television market. purpose whether, if parties to the master agreement had the objective of ' killing' c7 , that was a purpose of substantially lessening competition whether all parties responsible for including an impugned provision in the contract, arrangement or understanding must fear the purpose of substantially lessening competition whether all parties responsible for including the master agreement provision shared the proscribed purpose. purpose whether the parties to the master agreement had the purpose of substantially lessening competition whether conduct crossed the boundary between legitimate, albeit ruthless, competitive conduct and anti-competitive conduct proscribed by s 45(2) of the tp act. taking advantage of substantial market power whether foxtel took advantage of its substantial market power in the retail pay television market by refusing to accept offers from c7 to supply sports channels and by refusing to negotiate with c7 pending the award of the afl pay television rights and the nrl pay television rights whether foxtel ' overbid ' for the afl pay television rights. whether denial of retail access to c7 via the telstra cable, pursuant to exclusivity provisions of a ' broadband cooperation agreement ' between foxtel and telstra, substantially lessened competition in the retail pay television market. whether the provisions of a content sharing agreement between foxtel and optus (another retail pay television provider) had the effect or likely effect of substantially lessening competition in the retail pay television market. misleading or deceptive conduct whether pleaded representations established by the evidence representations with respect to a future matter falsity reliance. confidentiality whether information relating to c7's bid for the nrl pay television rights was confidential whether publication destroys confidentiality. trade practices trade practices trade practices trade practices trade practices trade practices trade practices trade practices trade practices trade practices equity

The appellant was a Pakistani citizen who hailed from the North West Frontier Province. 2 The appellant arrived in Australia in early September 2007 and was detained at the airport because of irregularities perceived with the manner in which he entered. He made an application for a protection visa later in September 2007 and was assisted by the Refugee Advice and Casework Service in doing so. The service continued to represent him up to the time at which the delegate refused his application. He then applied to the tribunal for a review of the delegate's decision with the assistance of a solicitor migration agent. 3 The tribunal held an initial hearing on 6 November 2007 in which a number of concerns with the claims made by the appellant were discussed. At that hearing the tribunal informed the appellant that it would write to him about issues of concern it had raised with him at the hearing and would give him the option either to provide a written submission or to have another hearing at which he could respond or comment on the issues of concern. On 8 November 2007 the tribunal wrote to the appellant confirming those options. The letter outlined detailed issues under six separate headings relating to issues that concerned the tribunal arising from his evidence at the first hearing. The appellant's solicitor migration agent responded advising the tribunal that the appellant wished to attend a further hearing. The tribunal then invited him to do so. 4 The appellant attended at the second hearing and gave further evidence. During the course of the second hearing the appellant handed to the tribunal two untranslated newspaper articles in the Pashto language. These related to a concern that the tribunal had raised orally and in writing with him, arising from the first hearing. The appellant claimed that a group he named as Ansar Islam was a radical Islamist group that had beaten him, burnt his house and told him not to return to his village on pain of death. The tribunal informed the appellant orally and in writing that despite many hours of searching it had been unable to find any information on Ansar Islam on the internet. It said that if that group was involved in beatings and killings then it would have expected that there would be some information about it available on the internet. The Tribunal asked you if you could have been referring to a group called Ansar al-Islam and you claimed that the group that beat you was called Ansar Islam. The Tribunal put to you that it could not be satisfied that such a group existed at all. In its statement of reasons and findings the tribunal set out in detail the appellant's claims and an account of the first hearing in its letter of 8 November. Then it noted that it would deal with his evidence at the second hearing in the findings and reasons section of its decision record. The tribunal said that the appellant had been told that the tribunal would consider all his claims very carefully prior to making its decision. Relevantly the tribunal found that it did not consider the appellant to have been a witness of truth for a considerable number of reasons which it gave. The interpreter confirmed this was the case. The existence of the group does not however satisfy the Tribunal that the applicant was targeted by this group whilst he was in Pakistan. His accounts of the meeting and his beating were vague, lacking in particularised detail and unconvincing and did not satisfy the Tribunal that the incidents he claimed happened, or if they did, that they happened for the reasons claimed. Despite prompting, the applicant was unable to provide additional particularlised details of the incidents to satisfy the Tribunal that the incidents he described actually occurred. He was unable to verify that his house had in fact been burnt down nor did he mention that he fled to Peshawar with his mother in previous written statements either to the department or the Tribunal. The Tribunal finds the applicant's account unpersuasive and is not satisfied that the applicant was beaten or had his house burnt and his life threatened by Ansar Islam or any other radical/extremist Islamist group. He claimed that the tribunal did not have regard to the full newspaper articles since it failed to have them translated. The appellant argued that the tribunal had a duty to have a translation made of the articles because they, in their entirety, were information given by the applicant for review to the tribunal. He argued that s 424(1) of the Act was engaged, in that the tribunal had got information at the hearing in the form of the newspaper articles themselves and the section required that "the Tribunal must have regard to that information in making the decision on the review. Nor did the trial judge or myself. What the tribunal did was to have regard to the interpreter's confirmation of the purpose for which the appellant provided the articles, namely, that they referred in Pashto to Ansar Islam. In my opinion that confirmation was the information which the appellant put to the tribunal, namely, that there were objective sources (the two articles) that identified the existence of the group whose existence the tribunal previously had not been able to ascertain. In the passage quoted above, the tribunal had regard to the fact that the group existed in the very next sentence of its findings and reasons after its reference to the two articles. But the tribunal then said that it still was not satisfied by the appellant's account that he had been targeted by that group. 11 In X v Minister for Immigration and Multicultural Affairs [2002] FCAFC 3 ; (2002) 116 FCR 319 the Full Court considered a situation in which the tribunal had refused to have regard to an applicant for review's diary records of a particular period because they had not been translated. The majority, Gray and Moore JJ, in separate reasons, discussed the obligation of a decision-maker to have regard to untranslated material put before him or her. Gray J referred to the decision of Wilcox, Whitlam and Marshall JJ in Cabal v Minister for Immigration and Multicultural Affairs [2001] FCA 546 at [25] . There the Full Court had noted that the tribunal may be under an obligation to obtain a translation of a particular document which was in a foreign language and whose relevance had been explained to the tribunal. However, in Cabal [2001] FCA 546 at [25] the Full Court held that, in general, the tribunal was not required to translate material in a foreign language or to consider large volumes of material whose relevance was not explained and its failure to do so was not a departure from the process of review mandated by the then provisions of the Act, in particular s 414(1). 12 In X v Minister for Immigration 116 FCR at 328 [30] the relevant passages sought to be relied on by X had been translated subsequently and were before the Full Court. In a later case Moore J summarised the effect of the authorities: S14/2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 1153 (affirmed [2004] FCAFC 171 , although this point was not dealt with by the Full Court). However generally the Tribunal is not obliged to obtain a translation of documents furnished by the applicant in a foreign language at least in circumstances where the Tribunal ascertains the gist of the material if it is significant: see Cabal v Minister for Immigration & Multicultural Affairs [2001] FCA 546. In the present case the Tribunal asked the applicant, through the interpreter, a series of questions both about the newspaper article and the brother's letter. In so doing it ascertained the gist of each document for the purposes of understanding the way in which the applicant relied on them. Its approach was, in my opinion, unexceptionable. The only relevance of the two untranslated articles that the appellant explained to the tribunal was that they referred to Ansar Islam. The interpreter confirmed to the tribunal that was the case. The tribunal accepted that its prima facie view, as communicated in its letter of 8 November that there was no evidence that the group existed, had been shown not to be the case. 14 I am of opinion that the tribunal had regard to the information provided by the appellant, namely that the group existed as evidenced by its mention in the newspaper articles. There was no material before the trial judge, as he found, or before me to suggest that there was relevantly anything more in the newspaper articles than this information. The tribunal obtained and relied on this information in the passage of its findings and reasons which I have quoted above, namely, that the group existed, it was radical or extremist and it engaged in conduct of the kind that the appellant described. 15 The central question for the tribunal was whether or not it accepted the appellant's account of being subjected to persecutory conduct by that group. The tribunal was not satisfied that he had, for the reasons that it gave. The tribunal was obliged to have regard to the information. It could not ignore it and had to consider it in coming to the view that it ultimately did. I am satisfied that the tribunal took the information which the appellant gave it into account. The information was not that the appellant was relying on the newspaper articles for their whole content, or independently of their corroboration that Ansar Islam existed. Rather, the evidence revealed that there was nothing in the newspaper articles on which the appellant relied before the tribunal, beyond the group's existence. And, the tribunal had regard to that information being the only purpose for which the articles were tendered and, indeed, made a finding in favour of the appellant's version of events on that point. 16 The trial judge found that, on the tribunal's description of what happened at the second hearing, (which was the only evidence before him or me) the proposition which the appellant wished to draw from the untranslated newspaper articles had been fully presented to the tribunal with the assistance of the interpreter and that there was no evidence that there was anything else relevant in the articles upon which he relied. The trial judge found that in those circumstances the gist of what the appellant wished to draw from the articles had been put to the tribunal and that there were no obligations of fairness that required it to take the matter any further, in particular to have a translation of the articles. I agree. 17 The trial judge also referred to the fact that the tribunal had on four different occasions in writing stated that any documents which required translation needed to be translated by the appellant. In this case the appellant was represented by an experienced solicitor migration agent who was able to consider an appropriate approach to advise the appellant to take before the tribunal to look after his interests. I am unable to discern any jurisdictional error in the approach the tribunal took on this point. 18 Moreover, in my opinion the absence, even today of any translation of the newspaper articles is significant. There is no evidence to indicate that they had anything in them beyond the point which the tribunal recorded as being made by the appellant, namely that they recorded the existence of Ansar Islam. This provides another reason to refuse relief. The absence of such evidence means that no useful result would ensue from the grant of relief desired by the appellant, since there is no reason to think that a further hearing with translated articles would have provided any further information to which the tribunal could have had regard relevant to its exercise of its functions: see SZBYR v Minister for Immigration and Citizenship [2007] FCA 26 ; (2007) 235 ALR 609 at 618 [29] per Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ. In particular, in its findings and reasons the tribunal reviewed each of the six matters it had raised with the appellant in its letter of 8 November, determining each of them adversely to him. However, in the course of those determinations the tribunal considered the further explanations and statements made by the appellant at the second hearing. And, on a number of occasions, it modified the harsher view it had explained in its letter as the conclusion to which it was tending at that earlier time. For example, at the second hearing the appellant explained that the account he had given in his interview with the delegate of his dealing with police officers in Pakistan was not different to the account that he had given at the first hearing. The tribunal noted that it later had listened to the tape of the interview with the delegate and found that this partly confirmed the appellant's claim of his dealings with police officers. But, the tribunal came to the view that the inherent improbability of that claim meant that it was not satisfied that the appellant had in fact had the experience that he recounted. 20 Likewise, after the second hearing the tribunal modified its earlier view concerning the appellant's claims about Ansar Islam from not being satisfied that the group existed at all, as recorded in its letter of 8 November, to accepting its existence. But it was not satisfied about the appellant's account of his connection with the group. In particular, the tribunal had noted in its letter of 8 November, as I have set out above, that it found it very difficult to accept that the appellant had not fabricated his story about the group to support a refugee claim. 21 In the final section of its findings and reasons under the heading "Credibility" the tribunal stated that it had had regard to the whole of the appellant's account and considered its overall plausibility. It referred to the fact that an applicant was not obliged to provide corroboration of his or her statements but nonetheless a decision-maker was not required to accept those uncritically, when they were unsupported. The Tribunal further finds that the applicant's account of his departure from Pakistan and his arrival in Australia is inherently implausible to the extent that it cannot be believed. He referred to Kopalapillai v Minister for Immigration and Multicultural Affairs [1998] FCA 1126 ; (1998) 86 FCR 547 at 555 F-D where O'Connor, Branson and Marshall JJ noted that under the then provisions of the Act, the tribunal would have been mistaken to adopt a procedure which either placed on an applicant an onus of establishing that he was truthful or was based on the assumption that the purpose of the hearing before it was to discover whether the applicant for review was a truthful person. Undoubtedly, that is still apposite, but the reasons of an administration decision-maker cannot be read in isolation or construed minutely and finely with an eye keenly attuned to the perception of error. Brennan CJ, Toohey, McHugh and Gummow JJ in Minister for Immigration & Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259 at 272, said that such reasons are meant to inform. They are not to be scrutinised in over-zealous judicial review by seeking to discern whether some inadequacy may be gleaned from the way in which the reasons have been expressed. Their Honours emphasised that the Court was not to turn a judicial review of the exercise of jurisdiction by an executive decision-maker into a merits based review. 23 In Re Minister for Immigration & Multicultural Affairs; Ex parte Durairajasingham (2000) 168 ALR 407 at 423-424 [67]-[70]; [2000] HCA 1 ; 74 ALJR 405 at 417, McHugh J pointed out that it was quintessentially the function of the tribunal to come to a decision about the credibility of an applicant for review. If one took out of context the statement concerning fabrication, that I have quoted in the credibility section of the tribunal's findings and reasons, it may well fall within the criticism noted in Kopalapillai 86 FCR 555 F-G. However, in the context of the reasons as a whole, I am not satisfied that that is a fair or appropriate way to read the tribunal's reasoning on the appellant's credibility. 24 First, the tribunal's reference to not being satisfied about a non-fabrication was made in the context of it giving reasons following on from its explanations at the first hearing and in its letter identifying its then state of thinking concerning its satisfaction with the appellant's account. That is, the tribunal had told the appellant, perhaps in an over-fair manner, that it had very serious reservations about his credibility and explained why that was so. In that context, I am of opinion that a fair reading of the criticised passage was that the tribunal, in effect, was saying that nothing at the second hearing had displaced its earlier view of considerable lack of belief of the appellant's claims. 25 It referred to three incidents, namely the appellant's experience with the anti-narcotics force, his experience with Ansar Islam and his travel from Pakistan to Australia. It had discussed those matters at the first hearing and in its letter of 8 November. I have already dealt with the Ansar Islam issue. The reference to the narcotics force related to discussion on the tape of the interview with the delegate and the perceived differences in the appellant's accounts. In effect, the appellant had claimed that he had been approached as a complete stranger very shortly before he left Pakistan by a brigadier in the Pakistan police and army to become involved in drug trafficking when he, the appellant, was asserting that he had become a member, indeed a leader, of an anti-drug trafficking organisation. The tribunal found that the whole account was implausible. In my opinion, no jurisdictional error has been shown in the way in which the tribunal came to that view. One reason why the tribunal was under the impression, at the first hearing, that this was fabricated lay in the difference it then perceived between the original account of the incident as contained in the delegate's written reasons and the story as recounted by the appellant to the tribunal. When it became clear to the tribunal, having listened to the tape of the delegate's interview, that its impression was wrong about that apparent discrepancy, the tribunal accepted that there was some consistency between the two accounts, although there were other significant differences to which it pointed. It came to the overall view that it was not prepared to believe either version. 26 Lastly, the tribunal noted that the appellant had claimed in writing that he departed from Pakistan on 31 August 2007 and had stayed in Bangkok for seven to eight days, leaving there on 8 September 2007 and arriving in Australia the next day. At the first hearing he claimed that he had departed Pakistan on his own passport and arrived in Bangkok about a month before arriving on Australia. The tribunal put to him that that would make his claims about the meeting with the police and brigadier as happening after he claimed he had departed Pakistan. That view was open to the tribunal on the evidence. 27 The tribunal also referred to other evidence showing that the appellant had met his brother in Bangkok in circumstances where they had been observed in Bangkok Airport. The tribunal asserted that the brother was entitled to permanent residence in Australia. The tribunal noted the appellant's claim that he met his brother in Bangkok "accidentally". When the tribunal questioned that claim, he had asserted that his brother had been called home to Pakistan and they had made arrangements to meet. The tribunal said that it had difficulty in believing any part of this story including the whole of the appellant's accounts of his departing from Pakistan and arriving in Australia. It noted that it had difficulty in accepting his claim that he passed immigration officials and airline security with a false passport in someone else's name which was both in French and English. 28 In my opinion, because the tribunal had raised all these matters with the appellant during the course of the first hearing and in its letter of 8 November 2007, when it came to the credibility section of its findings and decision there was already a context for its remark that it was not satisfied that the appellant had not fabricated these matters. That context enables me to be satisfied that reading the tribunal's reasons for its decision as a whole, it did not approach the determination of the proceedings by reversing the onus of proof on the appellant, or imposing one on him. Rather, it was simply expressing the view that, at the end of the day, the initial impression it had communicated to the appellant during the course of and after the first hearing had not been displaced. I therefore reject the second ground of appeal. I note that this ground appears to have been argued differently before his Honour. 29 In my opinion the appeal should be dismissed. Instead, the solicitors for the Minister sent the Minister's submissions to the appellant, who was in migration detention. This is a practice which I have observed develop over recent times when an appellant is represented by counsel (whether or not he or she is in detention). The oversight here is one for which counsel for the Minister in this case apologised. However, it is becoming more and more common for counsel or solicitors acting for the Minister to take the view that it is not a matter of professional courtesy to send directly to opposing counsel copies of their submissions, where applicants or appellants are self-represented because they have no solicitor on the record but have pro bono counsel appearing for them. It is not a practice which should continue. 31 This is not a practice which I regard as appropriate for the proper discharge of the efficient business of the Court. Nor do I regard it as an appropriate way for professional advocates to deal with one another in cases where there is no solicitor or legal practitioner on the record of the Court for a party but where it is known that counsel is acting for that party. In my opinion professional courtesy and the interests of the proper administration of justice should require those acting for the Minister in these cases to send a copy of their written submissions and lists of authorities directly to their known opponents rather than simply sending them to parties who, as in the present case, may not know that their legal representatives have not received these essential materials. No significant time or expense is involved. Unnecessary delay in the efficient conduct of the litigation will be avoided. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.

migration act 1958 (cth) s 424 (1) whether tribunal had regard to additional information requested by it and provided by appellant in making decision on review whether tribunal had duty to translate newspaper articles given to it by appellant in support of his claim articles given to tribunal to prove existence of fact interpreter confirmed that articles substantiated fact that was purpose for which appellant provided articles appellant did not suggest any other purpose that translation of articles could have achieved whether tribunal failed to give weight to matters supportive of appellant's claim whether tribunal imposed onus on appellant to satisfy it that he had not fabricated his account migration

2 The appellants are husband and wife. The chronological history of the matter is important having regard to the complaints raised by the appellants. 3 The appellants are citizens of Sri Lanka. The first appellant entered Australia on 27 July 2004 and the second appellant on 4 December 2004. 4 On 11 August 2004 the first appellant lodged an application for a protection visa with the Department of Immigration and Multicultural and Indigenous Affairs (as it then was). 5 On either 23 December or 30 December 2004 (the exact date unclear but unimportant), the second appellant lodged her own application for a protection visa with the Department. She relied on her husband's claim which she said gave rise to a real chance of her being persecuted if she were to return to Sri Lanka in the reasonably foreseeable future. 6 A delegate of the first respondent considered the appellants' claims separately and on 2 August 2005 decided in separate written decisions to refuse to grant them protection visas. 7 The appellants lodged separate applications with the Refugee Review Tribunal ('the Tribunal') for a review of the delegate's decision. Both applications were lodged by a registered migration agent and both were received by the Department on 8 August 2005. 8 On 15 September 2005 the first appellant was advised that his hearing would take place on Tuesday, 8 November 2005. On the same day, the second appellant was advised that her hearing would take place on Wednesday, 9 November 2005. 9 Both were invited to the hearing and both were invited to send any new documents or written arguments to the Tribunal and answer all other questions by 3 October 2005. Both attended their hearings. 10 The first appellant's migration adviser was advised on 21 November 2005 that the decision in his matter would be handed down on 1 December 2005. The second appellant's migration agent, being the same migration agent as represented the first appellant, was advised on 1 December 2005 that the decision in her application would be handed down on 8 December 2005. 11 In both cases the Tribunal affirmed the decision of the delegate not to grant the appellants protection visas. 12 On 4 December 2005 the applicants jointly applied to the Federal Magistrates Court for a judicial review of those decisions. 13 As already mentioned, the Federal Magistrate dismissed their application on 31 October 2006. 14 On 20 November 2006 the appellants appealed to this Court. 15 The Tribunal found that the first appellant was a 32 year old male of Sinhalese ethnicity and a practising Buddhist and a citizen of Sri Lanka. It found that the first appellant was married to the second appellant and they have one child. 16 The Tribunal found that the first appellant was a supporter of the United National Party ('UNP'). It found that the first appellant was a businessman whose driver had been attacked by people of Tamil origin. It found, however, that the driver was the target of the attacks, not the first appellant because the attacks ceased when the driver was replaced. 17 It found that the appellant was involved in an incident with the Tamil where he and his driver were attacked and gunshots were fired at their vehicle. However, the Tribunal found that the incident appeared to be a criminal attempt to extort money from a businessman who had the capacity to pay extortion money. 18 It found that the first appellant was a subcontractor to a head contractor who supplied goods to the Army. The Tribunal found that the first appellant was subject to threats from the head contractor and senior political figures, including a Minister of the Government. It found, however, that the threats were not motivated by any political reason or any other Convention reason but by a desire on the part of the head contractor and the senior political figures to protect their own business interests from competition in the market. 19 The first appellant claimed that the senior political figure arrived at the first appellant's home in July 2004 and issued threats directed to the first appellant and attacked the first appellant's father-in-law who was in the home at the time. The first appellant claimed that, as a result, he went into hiding. He said that he referred the matter to the police who did nothing about it. The perpetrator was, so the first appellant claimed, a Minister in the Sri Lankan Government. 20 The Tribunal was not satisfied that the Minister ever attended the first appellant's home, made the threats or attacked the first appellant's father-in-law. It further found that the first appellant did not report the incident to the police. 21 The Tribunal found that the first appellant did not suffer any serious harm for any Convention related reason prior to his leaving Sri Lanka. 22 The first appellant also claimed that if he were to return to Sri Lanka in the reasonably foreseeable future he would suffer harm from the Minister, the Chief Minister and people associated with those people 'because they view (the applicant) as a political opponent and because they seem him as a business threat who may tender for work they are currently involved in and force them to reduce their prices or else lose their existing business'. 23 The Tribunal found that if he were to return to Sri Lanka the persons about whom he complained would view him as a threat to their business interests and that he may therefore be subject to threats from those people. 24 However, the Tribunal found that the persons about whom he complained were not motivated to threaten the applicant because of any political opinions that he held or for any Convention related reason. Rather, their threats were motivated by a fear of commercial competition from the first appellant. 25 The Tribunal then considered the first appellant's claim in the light of s 91R of the Act and found that there was no real chance that he would suffer serious harm as contemplated by s 91R for his political activities or for any other Convention related reason. 26 The Tribunal affirmed the decision of the delegate not to grant the first appellant a protection visa. 27 The second appellant consented to the Tribunal using the evidence her husband had provided in his hearing in support of her application for a protection visa. She confirmed to the Tribunal that her claim was because 'she feared harm because of her husband's problems and not because of anything she had done herself. She claimed that she used to indirectly help her husband by looking after the business when he was engaged in political activities and by not objecting to his wishes to be involved in politics. She confirmed that she feared harm from her husband's enemies'. 28 The Tribunal relied on its findings in the first appellant's application and found that any threats or intimidation which might be occasioned to her husband, and therefore to her, was not related to a Convention reason. 29 It rejected her claim that her membership of a particular social group, being her husband's family, entitled her to a protection visa because of the finding that the persecution feared by the second appellant's husband was in relation to business interests and not for any Convention related reason: s 91S. It affirmed the Minister's delegate's decision not to grant the second appellant a protection visa. 30 In the proceeding before the Federal Magistrate, the appellants complained that the Tribunal failed to give the appellants sufficient time 'to obtain further documentation'. They also complained that the Tribunal failed to comply with s 424A of the Act in respect of two pieces of information: (a) two anonymous 'dob in' letters; and (b) country information. They complained that the Tribunal did not consider a claim which had been raised by the first appellant in that he faced a real chance of persecution on account of his membership of a particular social group, namely, businessmen. They complained that the Tribunal failed to consider the availability or effectiveness of State protection. They complained that the Tribunal did not consider the appellants' subjective fear of persecution. Lastly, they complained that the Tribunal failed to afford the appellants procedural fairness. 31 The Federal Magistrate rejected all of those complaints. The Federal Magistrate found that the appellants had been given sufficient time to present their case. He found that there was no breach of s 424A because that section did not apply in respect of the information contained in the two 'dob in' letters and the country information. He found that no claim had been made by the appellants to the Tribunal that the first appellant, and indeed the second appellant derivatively, feared persecution on account of their membership of a particular social group of business people. 32 The Federal Magistrate found that because the appellants had not made out their claim of fear of persecution for a Convention reason, it was unnecessary for the Tribunal to consider the issue of effective State protection. For the same reason, the Federal Magistrate found that the Tribunal was under no obligation to consider their subjective fear of persecution. 33 Lastly, the Federal Magistrate found that, because of the provisions of s 422B of the Act, the appellants' claim of failure to provide procedural fairness had to be rejected. 34 Although this is an appeal from the Federal Magistrates Court, the success or otherwise of the appeal must depend upon whether or not the Tribunal's decisions were affected by jurisdictional error. Therefore, whilst the Federal Magistrate's reasons are helpful, it is still necessary for this Court to determine for itself whether the Tribunal's decision was affected by jurisdictional error. 35 The appellants were unrepresented on this appeal but it is clear that they had received some advice from someone with some knowledge of the Migration Act and decisions made under that Act. 36 They better articulated their grounds of appeal in written submissions which were put in support of their appeal. Accordingly the decision the learned Federal Magistrate made is affected by jurisdictional error. The Appellants should have been afforded the opportunity to provide further evidence and comments regarding the anonymous letters that disparaged their claims for protection in Australia and the report of the United States of America on the conduct of the 2004 general elections in Sri Lanka. 39 The first ground must fail because a reading of the documents shows that at no time did the appellants, and in particular the first appellant, claim to belong to a particular social group comprised of business people. The first appellant's claim was that he feared persecution for his political opinions and his membership of a political party. He addressed that complaint by reference to what he claimed was persecution by senior political figures, including a Minister in the Sri Lankan Government. He did not at any time advance a case that there was a particular social group in Sri Lanka of business people who feared persecution by reason of their membership of that social group. The second appellant did assert that she did belong to a particular social group, but the social group which she said she belonged to was her husband's family. 40 In those circumstances, it cannot be said that the Tribunal failed to respond to that aspect of the appellants' case. It was never part of their case. 41 In any event, the evidence before the Tribunal did not raise for consideration by the Tribunal a claim based on membership of a particular social group, namely business people. There was no evidence led that such a particular social group existed or that the group was persecuted by reason of membership of that social group. In those circumstances, the Tribunal was not obliged to deal with a claim which was neither made nor arose on the materials before it. This does not mean that a party before it can simply present the facts and leave it to the tribunal to search out, and find, any available basis which theoretically the Act provides for relief. This Court has rejected that approach to the tribunal's duties. The function of the Tribunal, as of the delegate, is to respond to the case that the applicant advances. 44 The Tribunal's duty in respect of claims of this kind was further considered by the Full Court of this Court in NABE v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 263 ; (2004) 219 ALR 27 (' NABE '). It is not obliged to deal with claims which are not articulated and which do not clearly arise from the materials before it. Whilst the Tribunal found that a number of threats had been made by particular persons, some of whom were politicians, it found that the motivation for the persecution was a desire to protect 'their own business interests from competition'. There was evidence to support that finding. 47 In any event, the Tribunal found that the threats did not amount to serious harm within the meaning of s 91R of the Act. In view of the fact that the Tribunal rejected the appellants' claim that the senior political figure visited his home and carried out the threats and the attack on his father-in-law, such a finding was open to the Tribunal. 48 The first appellant now claims, in the alternative to the particular social group of business people, that he fears harm as a result of his membership of his own family and, in particular, because his father was a famous businessman who had been involved in business activities and political involvement with the UNP. 49 That case was never advanced before the Tribunal nor was any evidence put to support such a proposition. 50 The appellants have argued that the Tribunal did not 'alert them' or 'canvass fully' the appellants' claimed link between membership of the social group of businessmen and membership of the political entity. However, the Tribunal did not have the responsibility of advancing a case for the appellants: Abebe v The Commonwealth [1999] HCA 14 ; (1999) 197 CLR 510; Re Ruddock; ex parte Applicant S154/2002 (2003) 201 ALR 437. 51 The Tribunal's responsibility in the conduct of the hearing was governed by s 422B of the Act. The common law natural justice hearing rule has been excluded by operation of that section. It did not apply in the hearing by the Tribunal: Minister for Immigration and Multicultural and Indigenous Affairs v Lay Lat [2006] FCAFC 61 ; (2006) 151 FCR 214; SZCIJ v Minister for Immigration and Multicultural Affairs [2006] FCAFC 62. 52 It follows that the appellants, if they are to succeed on any claim that they were not accorded procedural fairness, must identify some contravention by the Tribunal of the provisions in Division 4 of Part 7 of the Act. 53 It is claimed that the Tribunal did not afford the appellants sufficient time in which to make their cases. It is not clear how that claim fits in with the Tribunal's obligation under s 422B of the Act. However, it must fail as a matter of fact. 54 The Tribunal gave both appellants sufficient notice for the appellants to organise their case for presentation at the Tribunal. There is no suggestion that the hearing was truncated in any way. The Tribunal advised the appellants in a timely fashion as to when the decision would be handed down. In fact, the decisions were not handed down until three or four weeks after the Tribunal conducted the hearings on 8 and 9 November 2005. 55 There is no suggestion on the material before the Tribunal or before this Court that the appellants sought to obtain any further information for presentation to the Tribunal. Nor is there any suggestion that they made any attempt to obtain further time to present further information or to extend time after the hearing to provide further information to the Tribunal. 56 Any argument that the Tribunal failed to give them sufficient time in which to get their case ready or present their case must be rejected. 57 The Tribunal was obliged to comply with the obligations in s 424A of the Act. During the hearing, the Tribunal put the substance of two anonymous 'dob in' letters to the appellants and copies were provided to the first appellant. 58 Because the Tribunal expressly eschewed any reliance on the material contained in those 'dob in' letters, the Tribunal did not have an obligation to comply with s 424A in respect of those letters. Section 424A was not engaged because the information contained in the 'dob in' letters was not considered by the Tribunal to be a reason or part of a reason for affirming the decision under the review. 59 Because of the provisions of s 422B of the Act, there was no common law duty of the kind addressed in Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 72 ; (2005) 222 ALR 411. If I am wrong about that and a common law duty arose, notwithstanding the provisions of s 422B, the duty was discharged because the male appellant was given copies of the 'dob in' letters. 60 Section 424A does not apply to country information: QAAC of 2004 v Refugee Review Tribunal [2005] FCAFC 92 ; WAJW v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 330. For those reasons, s 424A was not breached by the Tribunal. None of the grounds identified by the appellants have been made out. 61 However, Mr Knowles, who appeared for the Minister, the first respondent, very properly brought to my attention, as he had the Federal Magistrate, circumstances which might be relied upon by the second appellant in support of an argument that the Tribunal did not comply with s 424A in another respect. 62 As I have already observed, there were two separate hearings in respect of the separate applications by the first appellant and second appellant for protection visas; the first appellant's hearing taking place on 8 November 2005 and the second appellant's hearing taking place on 9 November 2005. It would appear from documents handed up on the appeal that both appellants were represented, or at least assisted, by the same migration agent, Mr Jayakody. 63 The document suggests that the second appellant and her son were present during the first appellant's hearing. However, the first appellant asserted that the second appellant and her son were asked to leave the hearing room very shortly after the hearing began. The Minister was not in a position to deny that assertion. I am not in a position to resolve that issue but I am prepared to assume, as the first appellant asked, that his wife, the second appellant, was not present during his hearing. 64 On the other hand, the documents suggest that the first appellant was not present during the second appellant's hearing. However, in that regard, the first appellant asserted that he was present during the second appellant's hearing. He said the second appellant was pregnant at the time and the first appellant remained for support. Again, the Minister was not in a position to deny that assertion and, again, I am prepared to assume, as the first appellant has asked, that he was present during the second appellant's hearing. The Applicant's adviser also indicated that he had no objection to this course of action. She also consented to the Tribunal using her evidence at the hearing in determining her husband's application. The Applicant's adviser indicated that he did not object to this request. 69 Whilst it appears that the Tribunal also obtained the second appellant's consent to using her evidence in the determination of the first appellant's application, it does not seem to have obtained the first appellant's consent in regard to that matter. 70 The question which is raised thereby is whether the Tribunal has complied with the strict procedures required under s 424A. In relation to the first appellant's application, the Tribunal did not obtain the first appellant's consent to the Tribunal using the second appellant's evidence in determining his application. 71 In those circumstances, it might be that, if the Tribunal considered there was information contained in the second appellant's evidence which was a reason or part of a reason for affirming the decision under review, the Tribunal should have given notice to the first appellant under s 424A of the Act. 72 It seems, however, on a close reading of the Tribunal's reasons in relation to the first appellant that it did not use any of the information or evidence provided by the second appellant to the Tribunal. It is likely that it did not because, as already explained, the second appellant was relying upon the first appellant's fear of persecution for the success of her application. In those circumstances, it is unlikely that the Tribunal would have received information in the second appellant's hearing which would have impacted upon the first appellant's application for a review. 73 The situation, however, with the second appellant is different. It is clear that the Tribunal relied upon the reasons for rejecting the first appellant's application for rejecting the second appellant's application. It was put by Mr Knowles that in doing so the Tribunal was simply relying on its own thought processes for the purpose of affirming the decision in relation to the second appellant. I think, with respect, that is not so. Whilst it did rely on its own thought processes and reasons in relation to the first appellant's application for rejecting the second appellant's application, it also relied upon the information provided by the first appellant in relation to his application for those findings and reasons. 74 In my opinion, the Tribunal, in relation to the second appellant's application, relied upon information provided to the Tribunal by the first appellant in his application. As I have already said, I assume that the second appellant was not present when that information was provided. It is true, of course, that she consented to the Tribunal proceeding on that basis. What she consented to, as the Tribunal said, was for the Tribunal to use the evidence her husband had already provided in respect to his own application for review. 75 It is clear that the information provided the husband in his application for review is information of a kind that the Tribunal considered would be a reason or part of a reason for affirming the decision which was under review in relation to the second appellant's application. Thus, in my opinion, s 424A(1) was on the face of it engaged. 76 Mr Knowles, however, argued that the Tribunal was not under an obligation to provide this information or particulars of the information to the second appellant because the information was given by the second appellant for the purpose of her application. I do not accept that submission. The second appellant did not provide the information to the Tribunal. She did not give it in the sense that that word is used in the past tense in s 424A(3)(b) of the Act. She merely consented to the Tribunal using the information. 77 Section 424A is in mandatory terms. A breach of s 424A will constitute jurisdictional error: SAAP & Another v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 24 ; (2005) 215 ALR 162. 78 Reference was made to a line of cases where the Tribunal had more than one applicant before it and a dependent applicant gave evidence which contradicted or tended to contradict the primary applicant's case. In MZWMQ v Minister for Immigration and Multicultural and Indigenous Affairs [2005] FCA 1263 , the applicant's husband was also an applicant (a dependent applicant) before the Tribunal and gave evidence. Marshall J held that the husband was also an applicant. Section 424A(3)(b) excused the Tribunal from giving the applicant written notice of her husband's evidence. That decision was followed by Young J in Applicant M47/2004 v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 176. The proposition was doubted but not finally decided by Nicholson and Emmett JJ in SZBWJ v Minister for Immigration and Multicultural Affairs [2006] FCAFC 13. 79 In VBAM of 2002 v Minister for Immigration and Multicultural Affairs [2003] FCA 504 which was decided before SAAP , Gray J held that there was no obligation on the Tribunal to give notice under s 424A where the Tribunal intended to rely on contradictory evidence of a witness called by the applicant. He held that their evidence was information that the applicant gave for the purposes of the application. That decision is inconsistent with the remarks of Lee J (agreed to by Tamberlin J; Dowsett J dissenting) in the later decision of the Full Court in Applicant M164/2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCAFC 16. Branson J followed that later decision in SZECG v Minister for Immigration and Multicultural and Indigenous Affairs [2006] FCA 733. In that case, Branson J held that the appellant had not given information to the Tribunal by advising the Tribunal that he wanted the Tribunal to take evidence from his father. A different conclusion in relation to the evidence of a witness was arrived at in SZAQI v Minister for Immigration and Multicultural Affairs [2006] FCA 1653. The applicant's evidence in that case was contradicted by a witness who the applicant asked to be called in a letter written to the Tribunal. Bennett J contrasted that situation where evidence was 'called by the Tribunal as part of its inquisitorial function (cf SAAP)'. That information is evidence given by the applicant to the Tribunal within s 424A(3)(b) of the Act. However, this is not a case where there was one hearing at which there was more than one applicant including a dependent applicant. These were separate hearings with separate applicants. In those circumstances, this case can be distinguished from MZWMQ and M47/2004 . Nor is this a case where the applicant asked for a witness' evidence to be received during the hearing. For that reason, the decisions in VBAM of 2002 , Applicant M164/2002, SZECG and SZAQI are also not directly relevant to the circumstances of this case. 81 The purpose of s 424A is to require the Tribunal to bring to an applicant's attention all of the matters which might be a reason or part of a reason for affirming a decision under review. The purpose of s 424A(3)(b) is to relieve the Tribunal of that obligation where the information has been given to the Tribunal for the purpose of the application. In my opinion, this information was not given to the Tribunal by the applicant for the purpose of the application. It was information which was in the possession of the Tribunal which the second appellant consented to the Tribunal using. 82 In my opinion, s 424A(3)(b) does not apply and thereby the Tribunal has failed to comply with s 424A(1) and (2) of the Act. 83 That result is fair. Whilst the second appellant might have consented to the Tribunal using the information provided by the first appellant because she was not present at the hearing, she could not have known what information she was consenting to the Tribunal using. 84 I would dismiss the first appellant's appeal but allow the second appellant's appeal. The first appellant's appeal be dismissed. 2. The second appellant's appeal be allowed. 3. The orders made by the Federal Magistrate on 31 October 2006 be set aside. 4. 4.4 The second applicant's application for a review of the delegate's decision be remitted to the Tribunal for hearing according to law. The question of costs in the Federal Magistrates Court be reserved. 6. The question of costs on the appeal be reserved. 7. The parties be at liberty to apply.

appeal from decision of federal magistrate to refuse judicial review of refugee review tribunal (rrt) decision where two separate applications for protection visas by husband (first appellant) and wife (second appellant) grounds for protection were fear of persecution for political reasons and membership of a particular social group by the first appellant second appellant's claim is reliant on proof of facts in first appellant's claim applications refused in separate decisions by delegate of first respondent separate applications for review by rrt rrt referred to evidence of first appellant on his own application in second appellant's review and evidence of second appellant on her own application in first appellant's review after obtaining both parties' consent whether notice and opportunity to comment pursuant to s 424a of migration act 1958 (cth) is required. migration

I adjourned further consideration of the present motion to permit the parties to put on evidence and make submissions in relation to penalty. The applicant, Metcash, has filed further affidavit material. That affidavit outlines in some detail correspondence and other communications between Metcash and Mr Bunn which it is said were intended to bring home to Mr Bunn the effect of Lander J's orders; such concerns as Metcash had about Mr Bunn's continuing to publish criticisms of it; and its encouragement for him to obtain legal advice. The affidavit further provided some evidence of Mr Bunn's assets, at least as revealed in a property search in the Australian Capital Territory and from Mr Bunn's Statement of Affairs in his bankruptcy. Mr Bunn is an undischarged bankrupt having lodged a debtor's petition on 26 April 2006. Mr Bunn has filed no affidavit and has not provided any written submissions in this matter. I am not satisfied that Mr Bunn consciously and deliberately breached the order. His conduct nonetheless has been censurable. While he may not have understood the true meaning of Order 3.5(c) and hence that his conduct could constitute a breach of that order: cf Microsoft Corporation, at 143; his ignorance could provide him with no ready vehicle for exculpation. He knew he was bound by Court orders and that they precluded him from publishing or republishing certain allegations. After his exchange with Lander J on 28 February he had reason to know that his understanding of the meaning and effect of Orders 3.2 and 3.5(c) was quite imperfect. If he was to continue to publish matter critical of the Metcash companies without acting in breach of the orders, it was necessary for him to have an informed understanding of what the orders prohibited. Against that background, it was hazardous for him obdurately later to reject without inquiry the assertions about the orders made by the applicants' solicitors. Mr Bunn needed, but on the material before me did not obtain, reasonable and reasoned advice. Put shortly, he had been put on inquiry in circumstances in which it quite properly can be said he assumed the risk that his conduct might be found to be in breach of the orders. His so acting may well be a matter appropriately to be taken into account in relation to any penalty imposed on him. While it is the case that Mr Bunn would appear to be the lease holder of real property in the ACT, it would equally seem to be the case that that property remains subject to a caveat in favour of the official trustee in bankruptcy as at the time of the search on 29 January 2009. That search further indicates the property is subject to several mortgages and has been sub-leased. Mr Bunn has not assisted the Court in any way in illuminating his present financial circumstances. Nonetheless, he is an undischarged bankrupt and I am in the context of this litigation prepared to infer that he is impecunious and that little purpose would be served in imposing upon him a financial penalty of any magnitude. It clearly is the case as Lander J has observed that Mr Bunn has waged a campaign against Metcash which he blames for the collapse of his own business. Even after my decision on 20 January 2009 he again published a further edition of "T.I.G.A.". In this edition he discussed my reasons and order and the terms of Lander J's interim injunction. !, nor is Bunn permitted to republish statements made by other people regarding Metcash's conduct !! This it is contended reveals his culpable frame of mind. For my own part, while the publication again manifests the strength of his hostility to Metcash, it does in my view do no more than, in somewhat inflammatory language, explain the terms of the order and in his view its possible reach. There is, it should be said, a very real question, as Lander J indicated to Mr Bunn over three years ago, as to whether the terms of Order 3.5(c) are probably "too wide". I do accept what Mr Bunn has said that he will respect the penalty imposed by the Court and he reiterated in the penalty hearing before me that he respects the Court and its orders. I do not doubt the genuineness of what he says. Further, I should say I do not regard Mr Bunn's actions as deliberately challenging the legitimacy or justice of decisions and orders made by this Court. A fair understanding of the matter would suggest they had more to do with the lamentable state of the relationship of the parties and their mutual mistrust which clearly are contributing significantly to the glacial progression of the matter towards judicial resolution. I do not consider that Mr Bunn has acted contumaciously. Nonetheless, I consider his conduct censurable. In the circumstances a reasonable person would have been put on inquiry as to the proper meaning of Lander J's orders given what Lander J said to Mr Bunn on 28 February 2006, the communications made to him by Metcash's legal advisers and, at least by his own admission, what he said was the advice of his pro bono lawyers when he discontinued his motion to have Order 3.5(c) varied. It is for this reason, whatever his misapprehension about the meaning of the order, he cannot rely upon that misapprehension to exculpate himself from the imposition of a fine. It equally seems now to be apparent to him why Lander J ventured the view that Order 3.5(c) may be too wide. Be this as it may and in light of Mr Bunn's comments to me during the hearing, I do not apprehend that he will again act in breach of the order notwithstanding the strength of his animus against Metcash as again revealed in his 2009 T.I.G.A. publication. I am equally satisfied he is well aware of the severe consequences that are likely to ensue should he so act again. I have determined that a fine of $2,000 ought be imposed upon him. This, I consider, is both appropriate in the circumstances and reflects my appreciation of the relative gravity of the contempt. Initially I was minded to reserve the question of costs. Notwithstanding that it raises a discrete question in the principal proceedings unrelated to the issue awarding final determination, it appeared to me that it was so enmeshed in the circumstances and manner of conduct of the proceeding itself that a wider view of it should be taken when determining the proper incidence of costs. However, this is not a course that is open to me. Notwithstanding that in form the contempt proceeding is an interlocutory one, there is authority in this Court for the view that an order for costs on a motion charging contempt is a final and not an interlocutory order: see Real Tech Systems Integration Pty Ltd v Meuross (1998) 82 FCR 150 and also Nelmac Pty Ltd v Construction, Forestry, Mining and Energy Union [1999] FCA 929. Metcash, as an abundance of caution, has also asked that I make an order that the costs ordered to be paid be payable forthwith. A like course was taken by Lehane J in the Real Tech case. As is well accepted, the power to award costs in all proceedings is discretionary. Nonetheless, as is occasionally observed, it is "common or usual practice" to order that the contemnor pay costs on an indemnity basis: see eg Concrete Constructions Pty Ltd v Plumbers and Gasfitters Employees' Union (No 2) (1987) 15 FCR 64 at 86-87. However, there is no general principle or rule of law in contempt cases to this effect: see Construction, Forestry, Mining and Energy Union v BHP Steel (AIS) Pty Ltd [2003] FCAFC 13 ; (2003) 196 ALR 350 at [6] ; and see generally Dal Pont, Law of Costs (2 nd ed, 2009) at [16.65]. As was observed by Moore J in the BHP Steel case at [8] "in a significant number of cases where indemnity costs have been awarded in contempt proceedings, there is a link between the award of indemnity costs and the penalty for contempt. Costs can be explicitly awarded in substitution for or in lieu of a monetary or other penalty". In the present matter as I have indicated I intend to impose what I regard as being a reasonable and adequate pecuniary penalty. I take that matter into account in my consideration of an appropriate costs order. While I have indicated that Mr Bunn's conduct is serious, I do not however regard this matter as one involving significant public interests. It is very much a matter inter partes . In saying this I should acknowledge that Metcash ultimately had to resort to contempt proceedings to secure compliance with a Court order. I nonetheless do not consider the present to be an appropriate proceeding in which to make an indemnity order notwithstanding that one justification advanced for such an order is that the bringing of such proceedings should not result in a party being further prejudiced: see eg Concrete Constructions , at 86. The present is a complex litigation in which there is quite obvious antagonism between the parties. I mean no disrespect in saying that Metcash has fought the matter with considerable vigour as is reflected in the volume of material that has been placed before me. I am not satisfied that, in addition to paying a fine, Mr Bunn should properly be called upon to pay the full costs of the considerable forces arrayed, and of the material presented, against him. An appropriate order in the circumstances in my view would be that the usual order be made and that Mr Bunn pay Metcash's costs on a party and party basis and that the costs be taxable forthwith. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn.

civil contempt principles governing imposition of penalty costs discretion to award indemnity costs in contempt proceedings whether immediate taxation appropriate in contempt proceedings contempt

2 Australia Post determined that it was exempt from the operation of the FOI Act in relation to the list pursuant to s 7(2) of the FOI Act on the footing that the list is a document in respect of Australia Post's commercial activities. (2) Whether the Tribunal failed to discharge its review jurisdiction by failing to determine the question posed by s 7(2), Part II of Schedule 2 and s 7(4) of the FOI Act. (3) Whether the Tribunal was bound by reason of the findings made by the Tribunal to determine the question posed by the relevant provisions of the APC Act in such a way that Australia Post was exempt from the FOI Act in relation to the list. (4) Whether the Tribunal denied Australia Post procedural fairness in deciding that Mr Johnston was entitled to access particular information on the list. (5) Whether the Tribunal exceeded its review jurisdiction by deciding that Mr Johnston was entitled to access certain information on the list. 7 Section 3(1) of the FOI Act makes it clear that the object of the legislation is to extend as far as possible the right of the Australian community to access information in the possession of the Government of the Commonwealth by, relevantly, making information available to the public about the operation of public authorities and by creating a general right of access to information in documentary form in the possession of public authorities (s 3(1)(a) and (b)). An exempt document means, among other things, a document exempt by virtue of s 7(s 4(1)). Section 7(2) provides that the bodies, persons and departments specified in Part II of Schedule 2, 'are exempt from the operation of the Act in relation to the documents referred to in that schedule in relation to them'. Part II of Schedule 2 specifies Australia Post, 'in relation to documents in respect of its commercial activities'. 9 It can be seen that the exemption mechanism contained in these provisions utilises a number of connecting phrases. Australia Post asserts an exemption in relation to the list on the footing that the list is a document in respect of its commercial activities fundamentally on the footing that the list was brought into existence for the purposes of carrying on those commercial activities. 10 Section 11 confers, subject to the FOI Act, a legally enforceable right on every person to obtain access to a document of an agency other than an exempt document. At [16], the Tribunal notes that the issue for determination was whether the list is a document in respect of the commercial activities of Australia Post for the purposes of s 7. At [18], the Tribunal notes that this question is concerned wholly with statutory interpretation informed by principles of statutory interpretation derived from the objects of the FOI Act recited in s 3 but also having regard to 'various provisions of the APC Act in relation to the effect of Australia Post's "reserved services" and its "commercial activities"'. At [19], the Tribunal notes that Australia Post took the position before the Tribunal that it did not intend to argue the relevance of any specific exemption under Part IV 'Exempt documents' of the FOI Act in attracting a ground of exemption for the list. 12 The sole question to be determined was whether the document was one in respect of Australia Post's commercial activities. 13 In making the observation at [19], the Tribunal was not recording an election on the part of Australia Post to abandon any contention that the list might be susceptible of exemption pursuant to Part IV of the FOI Act. Rather, the Tribunal was acknowledging the position recorded in the transcript that for the purposes of the application before the Tribunal no question going to Part IV was alive. At AB95, line 25, Mr Batskos for Australia Post described the question for consideration as '... actually quite a narrow one. It has a very narrow compass and it is generally, I think, able to be described as one of strictly being a pure statutory interpretation type question'. 14 At AB96, lines 10 to 16, Mr Batskos said, 'So the question for determination, therefore, is whether the document that is sought by the applicant is a document in respect of the commercial activities of Australia Post. That really is the sole question for determination today'. At AB97, lines 15 to 36, Mr Batskos further identified the narrow focus of the question in issue and the three questions to be answered in the resolution of the narrow question. The questions put to the Tribunal for resolution were, 'Does Australia Post carry on activities on a commercial basis? '; 'Are those activities carried on in competition with persons? '; and 'Was the document received or brought into existence in the course of or for the purposes of the carrying on of those activities? Mr Batskos responded at AB98, line 7, that Australia Post, '... would consider that that would require a further hearing by the Tribunal and evidence being filed and dealing with that ...'. Mr Batskos said at AB98, line 16, 'Strictly speaking it's just the section 7 issue. ... And the idea was to not unnecessarily prepare material if that issue can be resolved by this preliminary question, if you like'. 16 Having framed the question to be resolved in the way described, the Tribunal dealt with the matter in the following way. The Tribunal received evidence from Mr Keen, the National Manager for Australia Post responsible for 'Licensed Post Office Policy and Procedure'. At [7], the Tribunal notes Mr Keen's evidence that LPOs are commercial entities which operate under contractual arrangement with Centrelink for the provision of services and products some of which are mandatory and others are provided at the election of the licensee. 17 Mr Keen gave evidence that there are approximately 3,000 LPOs operating in Australia; mandatory products involve postage stamps, pre-stamped envelopes and aerograms; mandatory services include money orders, reply paid postal services, change of address, registered post, bill payment services, certain banking services and other services; these products and services are provided under licence between Australia Post and the licensee; other products and services can at the election of the licensee be provided and sold to the public; non-Australia Post products and services can be marketed, displayed and stocked on the premises of LPOs unless they compete with particular nominated products and services of Australia Post; Australia Post acts as a wholesaler to LPOs of non-mandatory products; licensees provide additional optional postal services apart from mandatory services [8] --- [12]. 18 At [13], the Tribunal notes that optional services provided by Australia Post are provided either through corporate post offices or LPOs in direct competition with the private sector. These services include bill payment services, banking agency services, post office boxes and private or locked bags in competition with private post box services, document exchange services, parcel post and express post services and recharge credit services for mobile phones in competition with retailers. In terms of the proportion of business contributing to Australia Post's profit, Mr Keen stated that for the financial year ending 30 June 2005, approximately 25% of Australia Post's profit was derived from its core business of postal services as authorised by the Australian Postal Corporations Act 1989 (the 'APC Act') (that is, its reserved services) while 75% of its profit is derived from commercial activities. In relation to the information sought by the applicant, Mr Keen stated that the information kept on its list of LPOs was maintained for a number of purposes and functions. These include the reimbursement of fees and commissions to LPOs; to supply products requested by LPOs; to communicate changes of products and services with current licensees. His evidence was also that this list changes constantly and that 30 to 40 of these licensees change each month. At [32], the Tribunal concluded that, 'The size of the Australia Post operation described by Mr Keen in his evidence and in his affidavit could undeniably be said to fit within the definition of "commercial activity". Therefore, I find that Australia Post does carry on some of its activities on a commercial basis'. The Tribunal observed that the reserved letter service is not a commercial activity of Australia Post. At [33], the Tribunal noted the contention of Australia Post that competition necessarily involved interaction in a market 'where the behaviour of those participating is motivated by maximising exchange of goods and services and differentiating products and sources of supply'. Examples of products and services offered were stationery items, computer consumables, packaging materials, bill paying services, and parcel accepted services. These examples are by no means exhaustive. However, profit making is central to the operation of Australia Post and LPOs in their provision of these goods and services. I accept that the examples given are convincing evidence that Australia Post and LPOs compete with private sector bodies. I therefore find that Australia Post is engaged in activities which are "in competition with" private sector bodies. The conclusion the Tribunal reached concerning the purposes for which the document was brought into existence is described in terms of the functions the document was to serve. In considering the submissions made by the respondent, I accept that the document which contains the information sought was brought into existence and is maintained at least to undertake the four functions mentioned in paragraph 36(a) to (d) above. The reference to maintaining the document or list is a reference to the evidence of Mr Keen that the list is regularly updated with 30 to 40 changes each month. The reference to the term "at least" is a recognition that one of the functions or purposes for bringing the list into existence and bringing a new list into existence each month reflecting the monthly changes is to undertake the four functions of "carrying on" the contestable commercial activities. The reference to the term "at least" must be taken to be a conclusion reached by the Tribunal that there are a number of purposes influencing the bringing into existence of the list. 24 At [39], the Tribunal addresses 'one further matter which needs to be considered' which seems to be a reference to one further purpose or function that needs to be considered. That consideration 'pertains to the fact that the corporate post offices and LPOs carry out a concurrent function of providing a "reserved service" and "commercial activities" as provided by the APC Act'. [39] The question said to emerge from a recognition of concurrent functions was whether the concurrent function 'impinge[s] upon the purpose of the document sought and does it affect any exempt status under the Act'. The Tribunal's reasoning goes along these lines. 26 In construing the FOI Act and its conjunction with the APC Act, a construction that promotes the underlying object of each Act is to be preferred to one that would not promote those objects. The APC Act is the present derived expression of the exercise of Commonwealth exclusive legislative power for 'postal and telecommunications services'. The APC Act confers on Australia Post a 'principal' function, a 'subsidiary' function and an 'incidental business or activity' function. The principal function is 'to supply postal services within Australia and between Australia and places outside Australia' (s 14, APC Act). A subsidiary function is 'to carry on, outside Australia, any business or activity relating to postal services' (s 15, APC Act). 27 Section 16 provides that the functions of Australia Post include the carrying on, within or outside Australia, of any business or activity that is incidental to supplying postal services under s 14 or the carrying on of any business or activity under s 15. Section 16(2) makes it clear that, 'the functions of Australia Post include the carrying on, within or outside Australia, of any business or activity that is capable of being conveniently carried on by the use of resources that are not immediately required in carrying out Australia Post's principal or subsidiary function; or in the course of supplying postal services under s 14 or carrying on any business or activity under s 15. 28 By s 27 of the APC Act, Australia Post has an obligation to perform its functions, as far as practicable, in a manner consistent with sound commercial practice. By s 29 of the APC Act, Australia Post has reserved to it the exclusive right to carry letters within Australia; the collection within Australia of letters for delivery within Australia; the delivery of letters within Australia; and the exclusive right to issue postage stamps within Australia. 29 Section 30 of the APC Act sets out a range of matters which are expressly excluded from the reserved services described in s 29. Because the APC Act reserves certain services to Australia Post exclusively coupled with a community service obligation expounded by s 27 of the APC Act, ss 29 and 30 of the APC Act are said to create a statutory right in members of the public and a corresponding statutory obligation on Australia Post. Although the content of these rights and obligations is not entirely clear, presumably the statutory right is said to be a right of access to the reserved services. 30 The next limb of the argument is that non-reserved services create no statutory rights. Non-reserved services 'are merely the commercial arm of Australia Post', and are 'provided alongside the postal services as specified in Sections 14 to 16'. The field of reserved services is expressed narrowly by s 29 of the APC Act and further narrowed by s 30. Although the Tribunal uses the term 'postal services', it seems to use that term in a definitional sense as meaning the core business of reserved services [14]. 32 If the term is used in any broader sense, it would comprehend both reserved services and some non-reserved commercial services and thus any distinction between such postal services as non-commercial on the one hand and other activities as commercial, would be misplaced. The APC Act describes the principal function of Australia Post as one of supplying postal services. Within those postal services there are reserved services which are to be exclusively supplied by Australia Post and that exclusion is reinforced by the action for infringement contemplated by s 31 of the APC Act. The field of exclusively reserved services within the field of postal services is further limited by s 30 of the APC Act. The Tribunal concludes that the reserved services are delivered as a service to the public as a whole and are not necessarily profit making [52] and thus not within the field of 'commercial activities'. 33 Therefore, it can be seen based upon the Tribunal's analysis of the statutory provisions that the Tribunal has concluded that the list serves two masters and thus has been brought into existence for the purposes of the commercial activities of Australia Post and the further purpose of discharging a statutory obligation in respect of reserved services. Accordingly, the Tribunal has sought to segment information contained within the document and make information serving the reserved services obligation available to Mr Johnston. 34 The difficulty with this approach is that it fails to address the question to be asked by s 7 of the FOI Act and which was the question to be determined before the Tribunal. Even if it be accepted that the proper characterisation of the provisions discussed by the Tribunal results in a statutory right and a corresponding statutory obligation finding its foundation in the Australian Constitution , the conclusion that the Tribunal has inevitably reached is that the document, by force of the two classes of information within it; the finding that 75% of Australia Post's revenues derive from commercial activities; and that the document was brought into existence to undertake the four functions or purposes forming a part of carrying on the commercial activities of Australia Post, was brought into existence for a purpose of carrying on the commercial activities of Australia Post and that such a purpose was a substantial purpose. 35 The notion that the purpose of carrying on the commercial activities of Australia Post was a substantial purpose can be seen from the emphasis in the findings contained at [36], [37] and [38] and the consequential consideration of one further matter derived from the concurrent function. The findings of the Tribunal do not suggest nor can they be consistent with a finding that such a purpose was at the margins or inconsequential. 36 The sole question to be determined by the Tribunal was whether the list is a document in respect of Australia Post's commercial activities by determining whether the document was brought into existence in the course of or for the purposes of the carrying on of those activities. That test required the Tribunal to determine, on the evidence, the purposes for which the list was brought into existence; whether there was one or more purposes and if more than one purpose including a purpose of carrying on Australia Post's commercial activities, whether that purpose was a substantial purpose. 37 The Tribunal inferentially found that such a purpose subsisted and was a substantial purpose although there is no express finding to that effect. 38 Other evidence was before the Tribunal which supported the pervasive nature of the commercial purpose influencing the bringing of the list into existence. Some of that evidence has already been mentioned concerning Australia Post's contractual arrangements with almost 3,000 LPO licensees; the direct contestable nature of some of the services provided by the LPO licensees (evidence, Mr Keen, AB101, lines 1 to 45 and AB102, lines 1 to 22); the keeping and maintaining of the list for the reasons identified in Mr Keen's affidavit, paragraphs 21 to 29. First, to facilitate and maintain a commercial relationship with licensees in a way that is not compromised by releasing the list (which is kept up to date with significant effort) to competitors. That is, commercial viability and success. Secondly, to have an appropriate degree of control over the brand of Australia Post to the extent that it is portrayed through the LPO network. That includes policing the adherence by LPOs to the terms of the licence in relation to what can be included in the space allocated to Australia Post's products and services in each LPO premises. The list of LPOs is created, updated and maintained in the course of Australia Post engaging in and carrying on the commercially competitive activities set out in detail in this affidavit and for the purposes of carrying on those activities. The first list notionally is a list which contains the information which satisfies the contended statutory obligation in respect of reserved services and is thus not influenced by any purpose directed to the commercial activities of Australia Post. The second list notionally is a list comprising information directed to carrying on commercial activities and is thus not influenced by any purpose directed to reserved services. This notional distribution of information into two constructive lists is simply unsustainable. 41 There is one list brought into existence for purposes which include in part a purpose of assembling information which has a connection with the provision of reserved services and a purpose of real substance of carrying on the commercial activities of Australia Post. Although it is not necessary to determine whether such a purpose is the sole purpose or a dominant purpose, the evidence before the Tribunal leads inevitably to the conclusion that such a purpose was of very real substance. 42 By s 44(4) , the Federal Court may make such order as it thinks appropriate by reason of its decision on the appeal and by s 44(5) without limiting by implication the generality of s 44(4) , the orders the Court may make include an order affirming or setting aside the decision of the Tribunal and an order limiting the case to be heard and decided again, either with or without the hearing of further evidence by the Tribunal in accordance with the directions of the Court. By s 44(7) , the Court may make a finding of fact if such a finding is not inconsistent with findings of fact made by the Tribunal and it appears to the Court that it is convenient to make the finding of fact having regard to the factors recited at s 44(7)(b)(i) to (vii). In making any findings of fact under s 44(7) , the Court may have regard to the evidence given in the proceedings before the Tribunal. 43 It seems to me, having regard to the findings of the Tribunal and the evidence of Mr Keen and taking into account the desirability of the expeditious and efficient resolution of the whole of the matter, the relative expense to the parties, questions of any delay and the desirability of resolving the matter, an express finding of fact ought to be made consistent with what I regard as the Tribunal's implicit or inferential finding that the list was brought into existence for purposes including the purpose of Australia Post carrying on its commercial activities and that that purpose is a substantial purpose. 44 A question then arises as to whether a substantial purpose among any other purpose of carrying on the commercial activities of Australia Post satisfies s 7(4) of the FOI Act for the purposes of Part II of Schedule 2 thus rendering Australia Post exempt from the operation of the FOI Act in relation to the list for the purposes of s 7(2) of the FOI Act. In Mikasa (NSW) Pty Limited v Festival Stores [1972] HCA 69 ; (1972) 127 CLR 617, the High Court was called upon to consider the proper construction for the purposes of s 66B(2) of the Trade Practices Act 1965 --- 1971 (Cth) of the phrase 'for the reason that' in the context of a provision of that Act in terms that 'a person (in this section called 'the supplier') engages in the practice of resale price maintenance if ... (d) the supplier withholds the supply of goods to a second person for the reason that the second person [has engaged in a particular conduct --- including withholding supply of goods]'. In my opinion, if the likelihood that the would be purchaser would sell at less than the specific price is an operative reason for withholding that supply, the supplier engages in the practice of resale price maintenance, however many other reasons the supplier may in fact have for not supplying the goods; it is enough if it is an operative reason, that is to say, a substantial reason in the totality of reasons for the withholding of supply. The remarks of the Chief Justice are directed to the general import of the construction to be given to the phrase 'for the reason that'. In Mikasa , Walsh J also took the view that the phrase 'for the reason that' ought to be construed to mean 'a substantial and operative reason' for withholding supplies (page 646). In such a context each substantial and proximate reason will in my view answer the description of "the reason" in this paragraph. The section itself contains no words restricting its operation in that way. If the provisions are literally construed, they apply when the land is used for the purpose of producing some assessable income even though it is used for other purposes as well. In Secretary to The Department of Treasury and Finance v Dalla-Riva [2007] VSCA 11 , Buchanan JA with whom Ashley JA and Smith AJA agreed considered the construction to be given to a provision which said, 'a document is an exempt document if it is (b) a document that has been prepared by a Minister or on his or her behalf or by an agency for the purpose of submission for consideration by the Cabinet; (ba) a document prepared for the purpose of briefing a Minister in relation to issues to be considered by the Cabinet' (s 28(1) Freedom of Information Act 1982 ). Notwithstanding that the objects of the Act set out in s 3 appear to me to warrant construing the rights conferred by the Act liberally and the exceptions narrowly, in my view as long as a purpose meeting the statutory description was causative in the sense that but for its presence, "the power would not have been exercised" it need not have been the sole purpose for the preparation of the document in question. Hon. L.M.D. de Silva and on the question of approaches to the test of the validity of an act 'when the law makes the object, view or purpose of a man or of a body of men', an element of that validity, Mills v Mills [1938] HCA 4 ; (1938) 60 CLR 150 at 185 and 186 per Dixon J. 50 Accordingly, since the list was brought into existence for the substantial and operative purpose of Australia Post carrying on commercial activities, Australia Post is exempt from the operation of the FOI Act in relation to the list by force of s 7(2) of the FOI Act as the list is a document in respect of Australia Post's commercial activities. The proper approach is not one of distributive treatment of the information contained in the list but one of determining whether the list was brought into existence for the purposes of Australia Post's commercial activities. If so, Australia Post is exempt from the operation of the FOI Act in respect of that document. It follows that the appeal ought to be upheld; the decision of the Tribunal set aside and a decision substituted for that decision, affirming the decision under review. Because no submissions have been addressed to me in relation to the question of costs, I propose to make a further order that short supplementary submissions, if any, on costs ought to be submitted to the Court by Monday, 2 April 2007 in the light of these reasons. I will then determine the question of costs. I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.

consideration of whether the australia postal corporation is exempt from the operation of the freedom of information act 1982 (cth) by reason of the operation of s 7 of that act consideration of the construction to be given to the phrase 'documents received or brought into existence in the course of, or for the purposes of, the carrying on of those activities' consideration of the purpose of carrying on 'commercial activities'. administrative law

The Tribunal officer had refused a request to waive a filing fee in respect of an application for review before the Tribunal of a decision by the Department of Immigration and Multicultural and Indigenous Affairs ("the Department") to refuse a Residence Visa (Class BS) to the appellant and her two sons. The appellant arrived in Australia on 13 June 2000, after been evacuated from the Solomon Islands with the assistance of the Australian High Commission. 3 The appellant, as the de-facto partner of Mr Anthony Faddy (an Australian citizen), and the mother of their natural child (Trevor Faddy) and a child she and Mr Anthony Faddy adopted (Noel Faddy), applied for a Partner (Temporary) (Class UK) visa and a Residence Visa (Class BS) on 11 July 2002. Her two children were dependent applicants to the visas. A Partner (Temporary) (Class UK) visa was granted by the Department on 31 October 2003 pending a decision regarding her application for a Residence (Class BS) visa. 4 The appellant was advised by letter dated 19 November 2004 that the application for Residence Visa (Class BS) had been refused. The Department found that the appellant failed to meet the criteria for the grant of the visa as she was not in a genuine and continuing interdependent relationship with Mr Anthony Faddy as defined by the Migration Regulations 1994 (Cth). 5 On or about 15 December 2004, the appellant applied to the Tribunal for a review of this decision of the Department. On or about 15 December 2004, the appellant also applied to the Tribunal for a waiver of the fee for making an application for a review by the Tribunal. 7 First, in a letter dated 28 January 2005, the appellant was advised by the Tribunal that the application fee would not be waived on the basis that the signatory to the letter, Mr Manal Hajaj, was of the opinion that payment of the fee had not caused, nor was it likely to cause severe financial hardship. 8 Second, on 4 March 2005 the appellant was advised by letter from the Tribunal that her application for review of the Department's decision to refuse a Partner (Residence) (Class BS) visa was ineligible because the prescribed fee was not paid within the prescribed time frame. 9 The appellant's son, Trevor Faddy, has since been granted Australian citizenship. The appellant and her son Noel Faddy have not. By way of amended application filed 23 December 2005 the appellant also sought an order setting aside the decision of the Tribunal to refuse to waive the filing fee and remitting the matter to a differently constituted Tribunal for further consideration. 11 At the hearing before Jarrett FM the only issue that was raised for consideration was that of the fee waiver. It was common ground before his Honour that the substantive application to challenge the visa application could not be dealt with in the Court because there was no decision by the Tribunal in respect of that matter (at [2]). 12 His Honour considered that the decision of the Tribunal officer was a privative clause decision pursuant to s 474(2) Migration Act 1958 (Cth). First, that the decision of the Tribunal officer was against the evidence in the sense that no findings of credit were made by the Tribunal officer, and therefore all the appellant's evidence placed before the Tribunal officer should be taken into account. If one takes all the evidence into account, it was clear that the decision was unreasonable and plainly wrong. Accordingly, the decision was in excess of jurisdiction. 2. Second, irrelevant considerations were taken into account, namely that the appellant did not provide any evidence of her partner's financial situation. Further, the Tribunal took into account an irrelevant consideration, namely that the appellant had indicated that she intended to start working on 18 December 2004. The conclusion that the Tribunal officer came to in his reasons for decision was that he was not satisfied that the onus upon the appellant had been discharged by her, which was a view that the Tribunal officer was entitled to take. Further, even if it were the case that the Tribunal officer's finding was against the weight of the evidence before him or her, and might be said to be a perverse finding of fact, it did not amount to an error of law, let alone jurisdictional error [25]-[26]. His Honour referred to comments of Kirby J in Roncevich v Repatriation Commission [2005] HCA 40 ; (2005) 218 ALR 733 at [67] in relation to this proposition. 2. 15 Accordingly, his Honour dismissed the application. 17 First, in her notice of appeal filed 29 August 2006 in this Court, the appellant claimed that "the Federal Magistrate failed to find a jurisdictional error when the initial decision by the Tribunal was made with jurisdictional error". As of 29 August 2006 the reasons for decision of Jarrett FM had not been made available, and the solicitors for the appellant indicated that particulars of the error of jurisdiction would be provided at a later date. • All the evidence before the Tribunal was that the appellant was penniless. • The Tribunal found that because the appellant had not complied with a non-regulatory policy through not producing a specific set of documents (not required by regulation) that she was therefore not going to suffer severe financial hardship as a result of paying the filing fee (of $1,400). (The list of documents in the policy does not even purport to be an exhaustive list). • In the circumstances, the decision of the Tribunal was unreasonable. • In this regard, the Federal Magistrate, in paragraph 25 of the reasons, justified the decision of the Tribunal by simply stating that the Tribunal has determined that the review applicant (the appellant) had not discharged her onus of proof. • But the Tribunal did not dismiss the appellant's application for a fee waiver because she failed to discharge any onus of proof, the Tribunal went impermissibly further by stating that the absence of certain documents meant that the Tribunal could make an actual finding that the review applicant would not suffer severe financial hardship. • Further the Tribunal took into account an irrelevant consideration, namely the absence of evidence of the estranged spouse's financial circumstances yet there was no finding either at the primary (Department) level or at the Tribunal stage that there was any financial support from the estranged spouse and no evidence that the appellant was in a position to provide evidence of the financial circumstances of the estranged spouse. • The Tribunal failed to perform its statutory function under reg 4.13(4) Migration Regulations and as a result its decision was in excess of jurisdiction. This ground of appeal is that the appellant has not been given proper notice of a decision, and is entitled to a reasonable period after proper notice has been given (which has not yet occurred) to have an opportunity to pay the prescribed fee. 19 The first respondent did not object to the addition of this further ground of appeal, and I gave leave for it to be added. There is no evidence that the Tribunal member was duly authorised. In any event, the Federal Magistrate was satisfied that the conclusion reached by the Tribunal officer was a view which was reasonably open. There is no error of law, let alone a jurisdictional error, in making a wrong finding of fact. The findings made by the Tribunal's delegate were not only reasonably open on the evidence presented to him but were findings which he was required to make. Although Mr Donohue may have been the "authorised officer" in relation to making the decision within the Regulations, Mr Hajaj was authorised to send the letter containing the decision. In that case, although the applicant had previously been represented by solicitors, the hearing was conducted in the presence of the applicant, her brother and an interpreter. The Tribunal attempted to contact the applicant several days after the hearing to inform her of the decision, but was advised by the solicitors that they no longer acted for the applicant, and gave the Tribunal the last known telephone number and address of the applicant. It appears that the Tribunal contacted the applicant's brother by telephone and advised him orally of the decision on 21 August 2001. The applicant claimed that she was not notified of the decision until almost four months later. Kiefel J held that the applicant's brother was not her representative, and that advice to the applicant's brother was not notification to the applicant within the meaning of s 368D of the Migration Act . The applicant was first notified of the decision four months later, when she herself received a copy of the decision of the Tribunal, and that time began to run for an appeal from that point. 26 First, in my view Mr Bickford correctly stated the process by which the Tribunal was required to reach its decision: namely to achieve, on the evidence presented by the appellant, a state of satisfaction as to whether the payment of the fee required by the regulations had caused, or was likely to cause, severe financial hardship to the appellant. This approach is consistent with the approach required of the Tribunal in reaching other decisions under the Migration Act : cf, for example, Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21 ; (1999) 197 CLR 611 and Abebe v Commonwealth [1999] HCA 14 ; (1999) 197 CLR 510. The appellant does not bear an onus to satisfy the Tribunal that the fee should be waived (cf Minister for Immigration and Multicultural and Indigenous Affairs v QAAH [2006] HCA 53 ; (2007) 231 ALR 340 at 351) however it is clear that it is for the appellant to advance whatever evidence or argument she wishes to advance in support of her claim: cf Abebe 197 CLR at 576, cf re Minister for Immigration and Multicultural Affairs, ex parte Cassim [2000] HCA 50 at [9] . 27 Second, principles with respect to relevant considerations are well-known, and include that the ground of failure to take into account a relevant consideration can only be made out if a decision-maker fails to take into account a consideration which he or she is bound to take into account in making that decision; that the factors a decision-maker is bound to consider in making a decision is determined by construction of the statute conferring a power or discretion; that not every consideration that a decision-maker is bound to take into account but fails to take into account will justify the court setting aside the impugned decision and ordering that the discretion be re-exercised according to law; and that the limited role of the court reviewing the exercise of an administrative discretion must constantly be borne in mind, so that generally it is for the decision-maker and not the court to determine the appropriate weight to be given to matters which are required to be taken into account in exercising the statutory power (Mason J in Peko-Wallsend 162 CLR at 39-41). 28 In my view these considerations are relevant to the decision of the Tribunal for the reasons explained by Jarrett FM in his Honour's decision. 29 Third in my view there is no basis for the appellant's claim that the Tribunal failed to perform its statutory function under reg 4.13(4). The Tribunal made a decision for reasons which are on the record, and communicated that decision with those reasons to the appellant. 30 Fourth, I agree with the submission of Mr Bickford that it is yet to be established whether a decision which is unreasonable, in the sense explained in the Wednesbury case, is amenable to review for jurisdictional error in Australia: Andary v Minister for Immigration & Multicultural Affairs [2003] FCAFC 211 at [28] . (I note further with respect to this point that the High Court refused leave to appeal from the decision in Andary [2003] FCAFC 211: Andary v Minister for Immigration and Multicultural Affairs [2004] HCA Trans 242). In any event, the finding of the Federal Magistrate that the decision of the Tribunal delegate was one open to him in the circumstances (at [25]) demonstrates that, in the view of Jarrett FM, the decision was not "unreasonable". Given that in my view the Tribunal has taken into account relevant considerations in reaching its decision, and has made its decision based on findings supported by probative material, I am not persuaded that his Honour was incorrect. 31 Finally, I note again that it is for the appellant to make her case for waiver of the prescribed fee. While it is necessary that the Tribunal's decision be based on findings supported by probative material, or inferences of fact which can reasonably be drawn from such findings of fact (cf Deane J in Australian Broadcasting Tribunal v Bond [1990] HCA 33 ; (1990) 170 CLR 321 at 367), as correctly observed by Jarrett FM a finding of fact by the Tribunal against the weight of the evidence (as submitted by the appellant) does not constitute an error of law, let alone jurisdictional error. The material sought by the Tribunal was probative material upon which it would make decisions, and the appellant was on notice from the contents of the application form that the Tribunal placed importance upon receiving that documentary evidence. It is perhaps not surprising therefore that failure to provide relevant material as sought by the Tribunal - even if in the view of the appellant the material would not have added anything to what she had already said in the application form - contributed to a factual scenario where the Tribunal did not achieve a state of satisfaction which favoured the claim of the appellant. Irrespective whether the appellant can substantiate her contention that the facts of this case clearly indicate suggest that financial hardship would be occasioned to the appellant by payment of the fee - and indeed in my view it appears that the appellant was in fact in such financial circumstances that the payment of the fee would cause her severe financial hardship - the fact remains that review of decisions of the Tribunal is limited to questions of jurisdictional error, and not review of the merits of the decision. The appellant tendered material from which it was clear, and does not appear now to be in contention, that Mr AV Donohoe is such an authorised officer for the purposes of reg 4.13(4). The letter to the appellant was signed by Mr Manal Hajaj, who is not so authorised under reg 4.13(4). 33 It is clear in these circumstances that a decision was made by an officer authorised within the meaning of reg 4.13(4) - namely Mr Donohoe - that the prescribed fee not be waived in favour of the appellant. 34 The key complaint of the appellant in this respect is that the communication of the decision was not by Mr Donohoe, but by Mr Hajaj, who may be an "authorised officer" in respect of other aspects of Tribunal business, but was not an "authorised officer" within the meaning of reg 4.13(4). However the letter of 28 January 2005 to the appellant's authorised recipient was from Mr Manal Hajaj, identified below his signature on the letter as "AUTHORISED OFFICER", and referring to the reasons for his decision that the prescribed fee not be waived because, in his opinion, payment of the fee would not cause, nor would it be likely to cause, the appellant severe financial hardship. 37 The manner in which this letter was framed was clearly irregular. If the letter purported to be from the actual decision-maker, who was an authorised officer within the meaning of Migration reg 4.13, it should have been drafted in such terms that it be from Mr Donohue himself. However, notwithstanding this irregularity with respect to the manner in which the decision was communicated to the appellant, in my view the validity of the decision itself is not compromised. A decision that the prescribed fee not be waived was made by a person authorised to do so in the Tribunal. The Tribunal communicated that decision to the appellant. My attention has been directed to no provisions in the Migration Act which require the decision of an authorised person to be communicated to the appellant by that authorised person. I agree with the submission of Mr Bickford that an analogy may be drawn with the decision of Kiefel J in Sochorova [2002] FCA 817 to the effect that that such a consequence does not follow either expressly or impliedly from construction of the Migration Act . However whether payment of the fee would cause the appellant severe financial hardship was a decision for the Tribunal on the facts and material before it. In the absence of jurisdictional error, the decision cannot be disturbed by this Court. Accordingly, the appeal must be dismissed. The appeal be dismissed.

appeal from a decision of a federal magistrate reviewing a decision of the migration review tribunal application for a fee waiver before tribunal whether jurisdictional error whether severe financial hardship whether evidence of appellant's estranged defacto partner's financial situation a relevant consideration failure to provide sufficient evidence in support of application for a fee waiver whether the fact that the appellant was due to commence work a relevant factor whether decision made by an authorised officer under migration regulations whether proper notice given of the decision of the authorised officer migration

223 ('the investigative referral') to the second respondent, in his capacity as the Director of Professional Services Review ('the Director'). 3 Pursuant to subs 89(1) of the Act, the Director conducted an investigation into the referred services. He did not dismiss the referral under s 91 of the Act as he was not satisfied that there were insufficient grounds on which a Committee established under s 93 of the Act could reasonably find that Dr Mathews had engaged in inappropriate practice in connection with rendering and initiating the referred services. 4 Pursuant to subs 93(1) and in accordance with Division 4 of the Act, on 14 September 2001 the Director set up the Professional Services Review Committee No. 223 ('the Committee') to consider whether Dr Mathews' conduct in connection with rendering and initiating the services listed below constituted engaging in inappropriate practice as defined in the Act and made an adjudicative referral to the Committee for that purpose. 6 Dr Mathews was given notice of proposed hearings of the Committee in November and December 2001 but these were subsequently postponed owing to pending litigation in this Court concerning the validity of such referrals. Indeed, the hearings of the Committee were not held until 30 and 31 October and 8 December 2003. 7 On 23 June 2004 the Secretary of the Committee wrote to Dr Mathews attaching a draft report prepared by the Committee ('the Draft Report') and inviting him to make 'written submissions suggesting changes'. The application has been amended on at least two occasions and on the first day of the hearing I gave leave to Dr Mathews' counsel to file a second further amended application for an order of review ('the Application'). (ii) The decision, conduct or action of the Director on or about 14 September 2001 to set up a Committee comprising the third respondents to make an adjudicative referral to them under s 93 of the Act in respect of the conduct of Dr Mathews. (iii) The decision, conduct or action of the Committee in preparing and delivering to Dr Mathews for his submissions a draft report on or about 23 June 2004 regarding the Committee's preliminary findings as to the conduct of Dr Mathews. (iv) The decision, conduct or action of the Committee in preparing and giving to the Determining Authority a Final Report dated 30 September 2004 regarding the conduct of Dr Mathews. Grounds 1A, 1B and 1C raise constitutional grounds which, apparently, by order of a judge of this Court, are to be heard separately by another judge of this Court, leaving grounds 1, 2, 3, 4, 4A, 5, 6, 7, 8, 9, 10 and 11. Grounds 1, 2 and 6 have been abandoned. Ground 7 is not a separate ground; it appears to be conclusive of something that has preceded it, however, it is not clear whether this is abandoned ground 6 or some earlier ground. Similarly, grounds 9 and 11 are conclusive and do not raise separate grounds. This leaves grounds 3, 4, 4A, 5, 8 and 10. First, while the Application seeks to review the decision, conduct or action of the Committee in preparing the Draft Report, it does not state that Dr Mathews is aggrieved by the Draft Report. It asserts that he is aggrieved by the Final Report because it exposes him to sanction by the Determining Authority under Part VAA of the Act, however, it could not be suggested that he is aggrieved by the Draft Report on that basis: See s 106KD of the Act; cf., s 106KL. Moreover, the Application does not contain any prayer for relief in respect of the Draft Report. 14 Second, the Draft Report has no impact on rights and is not a reviewable decision because it is neither final nor operative, nor is it substantive in character: Australian Broadcasting Tribunal v Bond [1990] HCA 33 ; (1990) 170 CLR 321. The preparation of the Draft Report is not reviewable as 'conduct' engaged in for the purposes of making a decision in circumstances where it is superseded by a final and operative decision that is reviewable, that is, the Committee's Final Report: Minister for Immigration & Multicultural Affairs v Ozmanian (1996) 71 FCR 1. 15 Third, at the time when the Draft Report was prepared, the Act contained no statutory requirement that it contain reasons. Subsection 106KD(1A), which provides that 'a draft report must set out the reasons for the preliminary findings' did not come into force until 1 January 2003. It does not apply to the present case --- see Item 118(1) Schedule 1, Health Insurance Amended (Professional Services Review and Other Matters) Act 2002 (Cth). Section 25D of the Acts Interpretation Act 1901 (Cth), which operates only where there is such a statutory requirement, did not apply to the Draft Report. Dr Mathews' contention to the contrary was rejected in Dimian v Health Insurance Commission [2004] FCA 1615 at [78] --- [80] per Jacobson J. I agree with his Honour's view. 16 In any event, this ground cannot be sustained because the Draft Report does contain reasons --- see ground 4 below. First, while subs 106L(1) of the Act contains requirements that the Committee must set out its 'findings' or the 'findings' of the Committee members, judicial observations on s 106L indicate that Dr Mathews' criticisms of various deficiencies in the Draft Report and Final Report are unwarranted. In particular, in my respectful opinion, the Committee was not bound to make findings in respect of individual patients in its Report. Its duty was to report on Dr Yung's conduct in relation to all of his Kirrawee patients over the year in question. As Dr Mathews' counsel acknowledged, the Draft and Final Reports are similar. • The Committee explained its findings regarding Item 24 services in general terms at [69] --- [76], and addressed each of the thirty services in the 'exploratory sample' individually in Appendix 2. • The Committee explained its findings regarding Item 193 services in general terms at [84] --- [88], and addressed each of the thirty services in the 'exploratory sample' individually in Appendix 3. [Dr Mathews] was thereby denied the ability to understand the reasoning process of [the Committee] in the making of the Report and to identify errors, if any. Indeed, counsel for Dr Mathews accepted that there is no 'general law' requirement that administrative decision-makers must give reasons: Public Service Board v Osmond [1986] HCA 7 ; (1985) 159 CLR 656. In that case, it was acknowledged by Gibbs CJ (at 670) and by Deane J (at 676) that there may be 'special circumstances' where natural justice requires reasons to be given, however, only one instance was cited in which 'special circumstances' have been found in the intervening period. This suggests that 'special circumstances' are particularly rare. 24 On behalf of Dr Mathews, it was submitted that the legislative context in the present case gives rise to such 'special circumstances'; the statutory provision regarding the drawing and provision of a draft report and permitting further submissions on it from an applicant would be meaningless unless the reasoning were to be exposed both as a necessary matter of statutory construction and as a matter of procedural fairness to Dr Mathews. Whether or not this is so, it was submitted on behalf of the respondents that the Committee did give reasons in its Draft Report --- see ground 4 above --- and it is idle to suggest that an applicant who is able to produce submissions responding to virtually every sentence in the Draft Report was not informed about the reasoning process which the Committee had adopted. I agree with this submission. The pool was accordingly, no longer a random sample by any definition of that expression. 28 In relation to this ground, I was referred to what was said by Gleeson CJ, Gaudron and Gummow JJ in Re Refugee Review Tribunal; Ex parte H [2001] HCA 28 ; (2001) 179 ALR 425 at [28] as to the proper test to be applied for apprehended bias in the case of administrative proceedings held in private. That formulation owes much to the fact that court proceedings are held in public. There is some incongruity in formulating a test in terms of "a fair-minded lay observer" when, as is the case with the tribunal, proceedings are held in private. Whether or not that be the appropriate formulation, there is, in our view, no reason to depart from the objective test of possibility, as distinct from probability, as to what will be done or what might have been done. To do otherwise, would be to risk confusion of apprehended bias with actual bias by requiring substantially the same proof. In the present case, a significant difference between curial proceedings and the proceedings of the tribunal is that the former are adversarial and the parties are usually legally represented, whereas the latter are inquisitorial in nature and the parties are not represented. Moreover, the need to ensure that the person who will be affected by the decision is accorded procedural fairness will often require that he or she be plainly confronted with matters which bear adversely on his or her credit or which bring his or her account into question. Similar questions by a judge in curial proceedings in which the parties are legally represented may more readily give rise to an apprehension of bias than in the case of inquisitorial proceedings. If that should happen, a fair-minded lay observer or a properly informed lay person might readily infer that there is no evidence that the witness can give which can change the decision-maker's view. The only basis of this ground is put in terms of [27] supra. 30 It was submitted on behalf of the respondents that Dr Mathews' contention that the Committee ought to have had regard to unspecified 'further evidence' allegedly incorporated in his submissions on the Draft Report should be rejected. It was submitted that while Dr Mathews was entitled to make '... written submissions suggesting changes to the Draft Report ...', he was not entitled to give evidence --- see subs 106KD(3) of the Act. 31 The Committee was required to prepare a Draft Report setting out its preliminary findings --- subs 106KD(1) of the Act. It was submitted that the fact that those views were unfavourable to Dr Mathews is not, of itself, evidence of bias or pre-judgment: see Minister for Immigration & Multicultural & Indigenous Affairs v SBAN [2002] FCAFC 431 at [11] . That is undoubtedly correct. 32 The Committee discussed Dr Mathews' submissions on the Draft Report in the Final Report at [95] --- [100]. It declared at [96] that after careful consideration of the submissions, it was not persuaded to change its finding that Dr Mathews engaged in inappropriate practice in relation to the referred services. Dr Mathews characterises his submissions as 'careful, detailed and reasoned' and the amendments which the Committee made in its Final Report as 'grudging and minor', but it was submitted that the use of emphatic language, without more, is unhelpful. It was further submitted that, in essence, Dr Mathews' contention is that a finding of apprehended bias should be made merely because the Committee did not accept the changes to the Draft Report which he proposed. In my view, there is substance in that submission. 33 Dr Mathews selected four examples to demonstrate the alleged pre-judgment. I referred the patient to an allergy specialist; ordered an IGE pathology test and performed a spirometry test. I had also been prescribing her Ventolin. In my submission that must fall within the range of what is an acceptable management plan. In its Final Report, the Committee repeated the finding that it had made in the Draft Report. At the Committee's request, he read out his clinical note: "Vomiting, Promethazine, 4 u.e., urea, electrolytes and creatinine which is --- in those days --- I think they were bundled in together with a liver function test in those days I think. I knew from the visit the previous day that the patient was suffering from migraine. There was a management plan recorded which was to give the patient an injection of Promethazine and I advised her to undergo further tests to check her liver function, kidney function and the state of her hydration. He read out his clinical note: "FOC, Ceclor CD, Ventolin and Becloforte. In answer to a question about whether he performed a peak-flow reading, he said: "I did not perform a peak flow reading, it is not written down. I do not know whether I did. Sometimes --- yes I did but it is not written down there so I do not recall. In its Draft Report, the Committee said inter alia that "At this home visit there was no selective history or ongoing management plan recorded in response to this 15 year old patient who had a flare up in his chest. No peak flow reading was performed on this young patient who had a history of asthma. The patient's history of asthma and smoking was known to me. I did record my management plan which was to prescribe Ceclor for his chest infection; Ventolin and Becloforte for the patient's asthma. The evidence does not indicate that a peak flow reading was not performed and in my submission the Committee cannot make such a finding (see T p 26 line 31 ff). So in a fashion he was a carer, and as I said, his legs --- he had been my patient for probably 15 years. He has never had it x-rayed. He is non-compliant. In its Draft Report, the Committee said inter alia: "No evidence that this service was other than a simple problem requiring minimal input, limited examination and management. In Dr Mathew's oral evidence he stated that he wrote a prescription for Ducene for the pain to damaged knees. At T p 49 line 32, I said that I gave Ducene in an attempt to reduce the patient's alcohol consumption, not for pain. My oral evidence indicates that this was not a straightforward consultation having regard to the underlying social problems within the patient's household. The patient's knees have been a matter of ongoing concern for some time. These are matters upon which reasonable minds may differ. The third and fourth examples also involved alleged errors of fact. Further, Dr Mathews has not explained how being unpersuaded by his submissions, or making a factual error about the reason why a drug was prescribed, would lead to the conclusion that the Committee did not bring an open mind to its task. It was submitted that the onus lies on Dr Mathews to prove his claim of apprehended bias and the examples he has given fall well short of demonstrating that a disinterested informed observer would form the necessary conclusions about the Committee. 35 I am not persuaded, on the evidence to which I was taken, that this ground is made out. Even accepting that the test is one of objective possibility, I am not persuaded that a fair-minded lay observer might reasonably apprehend that the Committee might not bring an impartial mind to the resolution of the question to be decided --- whether Dr Mathews engaged in inappropriate practice in relation to the selected services. [The Committee] then purportedly applied section 106K(2) of the Act to assist it in making its decision adverse to [Dr Mathews] . [The Committee] must have, by section 6, itself undertaken the preliminary random sample, which it failed to do so. [The Committee] merely relied on its own understanding as to purported sampling earlier undertaken by [HIC] (the Report para 100). [The Committee] merely relied on its own understanding as to purported sampling earlier undertaken by [HIC] at the request of the [Director] (the Report para 100). This impermissibly skewed the preliminary random sample results. [The Committee] merely examined the first 30 services from a list of services earlier generated by [HIC] at the request of the [Director] . This was not therefore "randomly drawn from the preliminary random sample". This impermissibly skewed the exploratory sample results. Those services had, as at that time, already been examined by the [Director] and/or they had been examined on his behalf by his servants, officers or agents, and they were found to be deficient or sufficiently deficient in relevant respects and adverse to [Dr Mathews] such as to cause the [Director] to set up a Committee and refer the matter to it by way of an Adjudicative Referral pursuant to section 93 of the Act. Accordingly, the purported "exploratory sample" in the hands of [the Committee] could no longer be considered (if it ever was) a sample "randomly drawn from the preliminary random sample" within the meaning of section 8(a) of the Sampling Determination or a "random sample" at all on any meaning of that expression. (the fifth error) . Paragraph (d) contains the first allegation of error. Dr Mathews contends that the terms of s 6 of the Sampling Determination, in particular the words 'must ensure', when used in relation to the words 'that the sample (the preliminary random sample) is a random sample', effectively requires the Committee to undertake the sampling itself. Alternatively, it is said that if s 6 does not require the Committee to do the sampling itself, it requires the Committee to ensure for itself that a sample of the services, included in a particular class of selected services, is a random sample and that this cannot be satisfied where the Committee merely relies on a list of services of a particular class, derived from a larger list of services of that particular class, 'fed' to them by the Director, even if the Committee has no reason to think that the larger list of services of that particular class is not a random sample. 40 The primary submission can be rejected out of hand. On no construction of s 6 of the Sampling Determination can it be said that it requires the sampling to be carried out by the Committee itself. 41 It is not advanced on behalf of Dr Mathews, nor could it be, that the samples provided to the Director by HIC (see [44] infra) are not random samples. The alternative submission is that, in terms of s 6 of the Sampling Determination, the Committee must ensure that the samples are random samples and that requirement is not satisfied where the Committee proceeds on an understanding that certain services were randomly sampled by HIC at the request of the Director. There is no doubt that the Committee proceeded on that understanding. 99 randomly selected services rendered to patients of Dr John William Mathews P/N 009043 during 01 Jan 1999 to 31 Dec 1999 having item 23 (list 1) report in random selection order. 97 randomly selected services rendered to patients of Dr John William Mathews P/N 009043 during 01 Jan 1999 to 31 Dec 1999 having item 24 (list 2) report in random selection order. 94 randomly selected services rendered to patients of Dr John William Mathews P/N 009043 during 01 Jan 1999 to 31 Dec 1999 having item 193 (list 3) report in random selection order. 45 By letter dated 23 January 2001 the Director forwarded to Dr Mathews a notice to produce documents or give information pursuant to s 89B of the Act in relation to three lists which accompanied that notice. List 1 contained the first 40 services on list 1 of the HIC lists, list 2 contained the first 40 services on list 2 of the HIC lists and list 3 contained the first 40 services on list 3 of the HIC lists. 46 On 14 September 2001 the Director made the Adjudicative Referral and it is clear from the description of Attachment C thereto and the extracted index material at [42] supra, that the Attachment C lists correspond with the first 40 services on lists 1, 2 and 3 comprising the HIC lists. The same comment applies to the lists which the Committee sent to Dr Mathews with the Notice Pursuant to Section 105A of the Act to Produce Documents, dated 18 October 2001. Pursuant to subsection 106K(1) of the Act, in respect of Dr Mathews' conduct in connection with the rendering of the referred services, the Committee had regard to samples of services in three classes, namely MBS Item 23, 24 and 193 services. The services were examined in accordance with the Health Insurance (Professional Services Review --- Sampling Methodology) Determination 2000 (No. 1) (the sampling methodology). The sampling methodology allows the Committee, in respect of conduct in connection with rendering the services included in a class of the services, to have regard only to a sample of the services included in that class. 6, 8 and 9 were excluded from consideration because the medical record was not available to Dr Mathews and record No's. 31, 32 and 33 respectively, replaced these records. 18 and 24 were excluded from consideration because the medical record was not available to Dr Mathews and record No's. 31 and 32 respectively, replaced these records. 5 and 9 were excluded from consideration because the medical record was not available to Dr Mathews and record No's. 31 and 32 respectively, replaced these records. Pursuant to subsection 106K(1) of the Act, in respect of Dr Mathews' conduct in connection with the rendering of the referred services, the Committee had regard to a sample of services in three classes, namely MBS Item 23, 24 and 193 services (the Class). An exploratory random sample of 30 MBS Items 23, 124 and 103 services were examined in accordance with the Health Insurance (Professional Services Review --- Sampling Methodology) Determination 2000 (No. 1) (the sampling methodology). The services were drawn from a preliminary random sample of services and indicated in the table below which were rendered by Dr Mathews to patients during the referral period. The sampling methodology allows the Committee, in respect of conduct in connection with rendering or initiating the services included in a class of services, to have regard only to a sample of the services included in that class. 51 However, challenge is made to the 'preliminary random sample' size of 90 for each relevant MBS Item in the Final Report. 53 In short, in the absence of any challenge that the HIC lists are not random samples, the Committee was entitled to proceed on the understanding that it did, and the obligation of the Committee under s 6 of the Sampling Determination that it ensure the samples are random samples is satisfied. I therefore reject the first alleged error. 54 Paragraph (e) contains the second allegation of error. It is said that the Committee failed to ensure itself that each 'preliminary random sample' as defined by s 6 of the Sampling Determination was, in fact, of an 'appropriate sample size' within the meaning of s 7 of the Sampling Determination. The Committee, so it is said, merely relied on its own understanding as to purported sampling earlier undertaken by HIC at the request of the Director. 55 I am unable to agree with this allegation of error. I am unable to identify any obligation of the Committee, under the Sampling Determination, to ensure itself that each 'preliminary random sample' was in fact of an 'appropriate sample size' within the meaning of s 7. Section 7 undoubtedly requires the 'preliminary random sample' to be of an 'appropriate sample size'. However, provided the number of services in a relevant class of service specified in a referral satisfies the formula in subs 7(2) of the Sampling Determination, the 'preliminary random sample' will be of an 'appropriate sample size'. In the present case, HIC lists did satisfy, in terms of the number of services in each relevant class of service specified in the referral, the formula in subs 7(2). The fact that the Committee, in its Final Report, incorrectly stated what that number of services was for each relevant class of service, does not, in my view, detract from that conclusion. It follows, in my view, that this second allegation of error must be rejected. 56 Paragraphs (f) and (g) together contain the third allegation of error. 57 This allegation of error overlaps with the second allegation, although, to be fair, it is articulated in different terms. However, the fact remains that the Committee did not have regard to a sample size of 90 services in each relevant class of service provided by Dr Mathews in the referral period. Nor did the Committee have an obligation under the Sampling Determination to have regard to the numbers of services referred to in [56] supra. The only obligation of the Committee to have regard to a number of services in each relevant class of service is the obligation to be found in s 8 of the Sampling Determination, and that obligation is that the Committee must examine a sample, preferably of 30 or more services (but not less than 25 services), randomly drawn from the preliminary random sample and determine whether or not each of those services constitutes inappropriate practice. The provisions of s 8 of the Sampling Determination form the basis of the fourth allegation of error (see [58] infra), however, I can find no foundation in the Sampling Determination for this third allegation of error. For the sake of completeness, I would merely add that the fact that the Committee incorrectly stated the number of services in the 'preliminary random sample' for each relevant class of service in its Final Report, provides no basis for error of the kind alleged. 58 Paragraphs (h) and (i) contain the fourth allegation of error. It is said that the Committee had regard to 30 services of Dr Mathews in each relevant MBS Item class of service purportedly as an 'exploratory sample' within the meaning of that expression in s 8(a) of the Sampling Determination. It is further said that the Committee failed to examine samples 'randomly drawn from the preliminary random sample' within the meaning of that expression in s 8(a) of the Sampling Determination. The Committee, it is said, merely examined the first 30 services on lists of the first 40 services taken from the HIC lists. They were not, therefore, 'randomly drawn from the preliminary random sample[s]'. 59 There is no doubt that the Committee examined the first 30 services on lists of the first 40 services taken from the HIC lists. To be completely accurate, the Committee did not examine service nos. 6, 8 and 9 for MBS item 23 owing to lack of records maintained by Dr Mathews but it examined the remainder of the first 30 services as well as nos. 31, 32 and 33; it did not examine service nos. 18 and 24 for MBS item 24 owing to lack of records maintained by Dr Mathews but it examined the remainder of the first 30 services as well as nos. 31 and 32; and it did not examine service nos. 5 and 9 for MBS item 193 owing to lack of records maintained by Dr Mathews but it examined the remainder of the first 30 services as well as nos. 31 and 32. 60 Professor D F Nicholls from the School of Finance and Applied Statistics at the Australian National University, Australian Capital Territory, gave evidence on behalf of the respondents. The preliminary random sample is a sample randomly drawn from the total number of services rendered for each class of services. Consequently any sample chosen from the preliminary random sample will itself be a random sample (of the total number of services of the item class under review) . The exploratory sample of 30 services, for each of items 23, 24 and 193 will themselves be random samples from each of their respective items. Any subset of services chosen from a preliminary random sample will itself be a sample of random services from the total number of services of each item under investigation . In this case, the exploratory sample of 30 would be random irrespective of how the smaller sample of 30 records comprising the exploratory sample were selected from the preliminary random sample of 99. One has only to put the issue in those terms to realise that what the Committee examined as 'exploratory samples' is infected with error. 63 The fact that the first 30 (record available) services of each relevant item of service is a random sample of the total number of services of each relevant item of service specified in the referral by reason that it is a sub-set of services chosen from a preliminary random sample which, by definition, is a random sample, is not to the point. Unless those first 30 (record available) services of each relevant item of service is randomly drawn from the preliminary random sample, it is not an 'exploratory sample' for the purposes of the Sampling Determination: s 8(a). Statistics . However, that selection was not itself 'randomly drawn from the preliminary random sample'. To say otherwise is to fly in the face of the dictionary meaning of the word 'random' referred to at [64], supra, and to read the phrase 'randomly drawn from the preliminary random sample' as if the word 'randomly' had no work to do; or to read the phrase as if the word 'randomly' was not there. 66 The same observations can be made of the examination by the Committee of the first 30 (record available) services of each list of the first 40 services from each of the HIC lists. They may also be random samples as sub-sets of sub-sets of random samples (the preliminary random samples) but they do not qualify as being 'randomly drawn from the preliminary random sample[s]'. Indeed, on the evidence, the Committee never had before it the preliminary random sample of each item of service under review, that is, the HIC lists, from which to randomly draw the exploratory samples; it only ever had before it the first 40 services in those lists. 67 The question which arises is whether this error invalidates the Committee's finding at [2] of its Final Report, namely, that the conduct of Dr Mathews in connection with rendering MBS Item 23, 24 and 193 services that were the subject of Adjudicative Referral 223 was, in the Committee's opinion, unacceptable to the general body of general practitioners and constituted inappropriate practice as defined in s 82 of the Act. The importance of complying with the sampling methodology in the Sampling Determination is borne out by all the provisions of s 106K of the Act, but in particular the deeming operation of subs 106K(2) and the fact that the Committee is, by subs 106K(4), prohibited from using a sampling methodology that is not specified in a determination made under subs 106K(3), unless it is ordered by a statistician accredited by the Statistical Society of Australia that the sampling methodology is statistically valid. 2. The opening words of s 8 of the Sampling Determination make it clear that its requirements are mandatory: 'In making a finding based on statistical sampling, the Committee must ...'. 3. In Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28 ; (1998) 194 CLR 355, the majority rejected (at 389 --- 391, [92] --- [93]) the traditional distinction between 'mandatory' and 'directory' requirements, saying that: '[a] better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid'. In determining the purpose of the legislation, regard has to be had to 'the language of the relevant provision and the scope and object of the whole statute'. 4. Nevertheless, having regard to the mandatory terms of s 8 of the Sampling Determination and its importance in the process of statistical sampling upon which the Committee's finding is ultimately made, I am of the view that it is a purpose of the Sampling Determination that a finding made in reliance on an act done in breach of s 8 of the Sampling Determination is an invalid finding: See SAAP v Minister for Immigration & Multicultural & Indigenous Affairs [2005] HCA 24 ; (2005) 215 ALR 162 per McHugh J at [72] --- [73]; per Hayne J at [205]. It is said that the Committee examined 30 services in each MBS item of service under review from a list of 40 services provided to the Committee by the Director and that the examined services had already been examined by the Director or by servants, officers or agents on his behalf and had been found to be deficient or sufficiently deficient in relevant respects and adverse to Dr Mathews such as to cause the Director to set up a Committee and refer the matter to it by way of Adjudicative Referral pursuant to s 93 of the Act. It follows, it is said, that the purported 'exploratory sample' in the hands of the Committee could no longer be considered (if it ever was) a sample 'randomly drawn from the preliminary random sample' within the meaning of s 8 of the Sampling Determination. 69 In view of my finding in relation to the fourth allegation of error, it is unnecessary to reach a concluded view on this allegation. Counsel for Dr Mathews put his case on this fifth allegation of error as being 'where fairness meets statistics'. Whether or not the Director's prior examination of the first 30 (record available) services on the list of 40 services provided by the Director to the Committee does lead to the result contended for, namely, non-compliance with the requirements of s 8(a) of the Sampling Determination, it is clear, in my view, that had the Committee undertaken its task according to the terms of s 8(a) of the Sampling Determination and randomly drawn, from the preliminary random sample, 30 services of each item of service under review, the likelihood of all 30 services of each item of service under review being a service which the Director had already examined is negligible. That, of itself, might suggest that this fifth allegation of error in the sampling process should be upheld. The Regulations were, in turn, supported by subs 82(3) and the definition of the expression 'adequate and contemporaneous records' contained in subs 81(1) of the Act, each of which did not commence operation until 1 November 1999 (by subs 2(2) of the Health Insurance Amendment (Professional Services Review) Act 1999 (Cth) (Act No. 95 of 1999). As the application of this statutory test pervaded and infected the entire Final Report, the Final Report is accordingly invalid. 74 For the respondents it is submitted that 'inappropriate practice' is defined in s 82(1) of the Act relevantly as 'conduct ... such that a Committee could reasonably conclude that ... the conduct would be unacceptable to the general body of general practitioners'. The Committee addressed itself to the correct test --- [36] of the Final Report. It 'applied its combined professional expertise' --- [37] of the Final Report. As an expert body, it was entitled and expected to do so: Tankey v Adams [2000] FCA 1089 ; (2000) 104 FCR 152 at [107] ; Minister for Health v Thomson (1985) 8 FCR 213 at 217 and 224. 75 It is further submitted that at the time when Dr Mathews rendered all of the referred services, the keeping of records is recognised as an activity which properly forms part of a professional attendance. All three of the MBS item services examined by the Committee were 'professional attendance' items. She also acknowledged that subs 82(3) relevantly required the Committee to have regard to '... whether or not the practitioner kept adequate and contemporaneous records of the rendering ... of services'. She further acknowledged that the new provision applied to the services rendered by Dr Mathews during the last two months of the referral period and that a definition of 'adequate and contemporaneous records' was also inserted with the same commencement date --- s 81. 77 On the other hand, counsel for the respondents submitted that, while the Committee acknowledged that 'record keeping is not an explicit requirement for payment of Medicare benefits', it expressed an opinion that the general body of general practitioners would have certain expectations --- which it particularlised, about medical records. As an expert body, the Committee was entitled to form the opinion it expressed in [38] of the Final Report extracted in [71], supra, and to give effect to it. 78 I agree with the submissions of counsel for the respondents that the Committee treated the deficiencies which it found in Dr Mathews' records as one only of the relevant factors which it took into account when making findings of inappropriate practice in respect of each of the three MBS item services. Rather, the Committee took this into account as a relevant factor and in my opinion, it was entitled to adopt this approach and to enquire into this matter. 79 For the foregoing reasons, this ground of appeal cannot be sustained. The Committee's Final Report be declared invalid. 2. Adjudicative Referral No. 223 be set aside. 3. The matter be remitted to the Director with a direction that he establish a differently constituted committee to determine the reference to Adjudicative Referral No. 223 according to law. 4. The first, second and third respondents pay the applicant's costs.

health insurance professional services review statutory scheme for examination of conduct to ascertain whether inappropriate practice involved where committee considered services rendered or initiated by person where samples of services may be considered in accordance with determination or approved method whether committee complied with determination whether failure to comply rendered decision invalid. administrative law

On 29 November 2006 he applied for a Protection (Class XA) Visa. 2 A delegate of the Minister refused the application and the now Appellant sought review by the Refugee Review Tribunal. That Tribunal affirmed the delegate's decision by its decision signed on 26 March 2007. 3 The Federal Magistrates Court has, in turn, dismissed an application seeking review of the Tribunal's decision: SZKPH v Minister for Immigration & Citizenship [2007] FMCA 1962. The Appellant now appeals to this Court. He appeared before the Court yesterday unrepresented, albeit with the assistance of an interpreter. Previously filed with the Court were written submissions by both the Appellant and the Respondent Minister. 4 The Notice of Appeal sets forth ten purported Grounds of Appeal , although a number of those grounds raise substantially the same issues. None of the grounds has been made out and the appeal is dismissed. LEGAL AND FACTUAL ERROR? 6 The nature of those errors is not further developed. A review of the decision of the Tribunal does not expose any error. In the absence of any alleged error being more specifically identified in the Notice of Appeal , these grounds must be dismissed. 7 One ground, however, asserts that the Federal Magistrate failed to apply " the principles laid down by the full court of Federal Court in Randhawa v The Minister for Immigration Local Government and Ethnic Affairs (1994) 52 FCR 437 ". 8 Randhawa v Minister for Immigration, Local Government & Ethnic Affairs (1994) 52 FCR 437 was a decision of the Full Court which concerned whether a person was a refugee who could reasonably relocate within his own country. Although it is true that the Convention definition of refugee does not refer to parts or regions of a country, that provides no warrant for construing the definition so that it would give refugee status to those who, although having a well-founded fear of persecution in their home region, could nevertheless avail themselves of the real protection of their country of nationality elsewhere within that country. The focus of the Convention definition is not upon the protection that the country of nationality might be able to provide in some particular region, but upon a more general notion of protection by that country. If it were otherwise, the anomalous situation would exist that the international community would be under an obligation to provide protection outside the borders of the country of nationality even though real protection could be found within those borders. Whitlam J agreed. The conclusions of the Chief Justice were further considered by the High Court in SZATV v Minister for Immigration & Citizenship [2007] HCA 40 at [10] , [2007] HCA 40 ; 237 ALR 634 at 636 per Gummow, Hayne and Crennan JJ. Their Honours there accepted that the basic test is whether it is reasonable, in the sense of being practicable, for a claimant to relocate to a region where objectively there is no appreciable risk of the occurrence of the feared persecution. 9 In the circumstances of the present proceedings, the Tribunal referred to the business of the father of the Appellant, a sweet making business, and the desire of the Appellant to revive and expand that business. The Tribunal went on to conclude that the business could be relocated to another part of India. Presumably these lollies could be made in anywhere, which the applicant acknowledged during the hearing. The Tribunal considers it implausible that the CPM would seek to locate him and destroy his business if he moved it to another state. The Tribunal suggested to the applicant that he could return to Gujarat, where he had lived for nearly 10 years, and start a business there. The Tribunal pointed out to the applicant that the CPM had not polled well in the recent elections in Gujarat, while the BJP had done well. The Tribunal told the applicant that it would therefore appear that he could expect to be supported well in Gujarat. The applicant said that the different language would be an issue and also that it would be too expensive to relocate because of different marketing and distribution practices. However, the Tribunal considers that language a fairly limited problem given that the applicant told the Tribunal that he lived there for nearly 10 years. Also, the lolly business closed when his father passed away in 2003. The applicant would have significant costs in re-establishing the business in Kerala as well. The Tribunal considers that it could reasonably be expected that the applicant could relocate to another part of India, for example Gujurat. From the independent information already referred to above, it appears that Indian citizens have the freedom to relocate from one area of India to another. The Tribunal does not accept the applicant's claim that the CPM would prevent him moving the lolly business from Kerala. The Tribunal considers that, even if it were satisfied that the applicant was in fear of persecution, the applicant does not have a well founded fear of persecution in relation to that country as a whole. The Tribunal cannot be satisfied that the applicant's fear of persecution is well-founded. 10 The test as to whether it is " reasonable " for an applicant to relocate requires that " the evaluation be proper, realistic and fair and all the circumstances be taken into account ": SZIED v Minister for Immigration & Citizenship [2007] FCA 1347 at [52] . 11 It is considered that there is no basis in the present proceedings to reach any conclusion other than that the evaluation of the now Appellant's claim by the Tribunal was " proper, realistic and fair ". The alleged error on the part of the Tribunal in making the findings it made was not further identified other than a submission made orally by the Appellant yesterday that he could not relocate within India because of language limitations. But that was a matter addressed by the Tribunal and resolved against the Appellant. Any further complaint as to the decision in fact reached by the Tribunal, it is considered, is a complaint as to the merits of the decision reached. Compare: SZKDY v Minister for Immigration & Citizenship [2007] FCA 1667 at [8] per Gyles J. 12 It should further be noted that this ground was not a ground raised for resolution before the Federal Magistrate. No satisfactory explanation has been provided for not previously raising it. Although this Court has a discretion to permit a new ground to be raised on appeal, there should generally be an adequate explanation for not raising the ground before the Federal Magistrate ( SZIBR v Minister for Immigration & Citizenship [2008] FCA 502 at [38] ---[41]) and leave should only be granted if it is expedient in the interests of justice to do so ( VUAX v Minister for Immigration & Multicultural & Indigenous Affairs [2004] FCAFC 158 at [46] ---[48]). In the present proceedings, the only explanation provided yesterday was that this particular ground was inserted consequent upon a meeting between the Appellant and a migration agent. 13 Leave to raise reliance upon Randhawa is refused. It is a ground which has no substance. FAILURE TO CONSIDER THE CLAIMS BEING ADVANCED? One ground thus asserts that the Tribunal's decision failed to take " into account the full gravity of my circumstances and consequences of the claim . " Another ground separately asserts that the " Tribunal did not take in to account certain relevant consideration or 'integers' central to the applicant's claim ". Other grounds refer to the " immense and intimidating pressure " to which the now Appellant was exposed and assert a failure on the part of the Tribunal to consider those matters. 15 A number of answers may be given for rejecting these grounds. 16 First, to the extent that the grounds assert a failure to take into account considerations which are said to be relevant to the decision that was made, they are not considerations which the Tribunal was bound to take into account: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40 ; (1986) 162 CLR 24 at 39 per Mason J. 17 Second, the grounds are in substance an impermissible attempt to propel both the Federal Magistrate and this Court into a review of the factual merits of the decision of the Tribunal. It is the Tribunal which has been entrusted by the legislature with the task of resolving factual matters: Kopalapillai v Minister for Immigration & Multicultural Affairs [1998] FCA 1126 ; (1986) 86 FCR 547 at 558. The task of the Federal Magistrates Court is that conferred by s 476 of the Migration Act 1958 (Cth). The weight to be given to particular aspects of the claim being advanced is generally a matter for the Tribunal alone: Peko-Wallsend Ltd [1986] HCA 40 ; (1986) 162 CLR 24 at 41 per Mason J. 18 Third, there is no obligation imposed upon the Refugee Review Tribunal to refer in its reasons to every piece of evidence that was before it: SZEHN v Minister for Immigration & Multicultural and Indigenous Affairs [2005] FCA 1389 at [58] per Lindgren J. A failure on the part of the Tribunal to refer to each individual claim or to a particular aspect of the evidence in support of a claim being advanced does not necessarily lead to a conclusion that the claim or that piece of evidence has not been considered. 19 Finally, and even if the Appellant could overcome the former obstacles to his success, the present Grounds of Appeal should be dismissed upon the basis that the Tribunal did in fact consider the claims being advanced by the now Appellant. There simply has been no failure on the part of the Tribunal to consider either the entirety of the claims being advanced by the now Appellant or, more specifically, the matters now relied upon in his Grounds of Appeal . DENIAL OF PROCEDURAL FAIRNESS? Reliance is placed upon Muin v Refugee Review Tribunal [2002] HCA 30 , 76 ALJR 966 , a decision which the Appellant maintains is " identical " to his own. Muin had been misled into believing that the Tribunal had read some information, which had been in part B documents; and the Tribunal had not drawn to his attention some material adverse to his claims so as to enable him to comment upon them. It is the first of those contentions, which is relevant here. 22 In Muin the applicants had been led to believe that the Tribunal had certain documents -- called the Part B documents -- which had been before the delegate. Those documents were not before the Tribunal. A majority of the High Court concluded that there had been a denial of procedural fairness. The consequence of what has been agreed between the parties to each of the present actions is that each plaintiff was led to believe, by what the Tribunal said, that it had material relevant to that plaintiff's claim which it did not. [257] The agreed facts are silent about whether the Tribunal was aware of the information and opinions contained in the PtB documents. It may have been, but more importantly, it may not. It follows, therefore, that in each case, the plaintiff was denied procedural fairness. Neither plaintiff was given an opportunity to place before the Tribunal the material and submissions which, on the agreed facts, it is accepted that he or she would have submitted if not mistaken about what was before the Tribunal. Moreover, it also follows from the parties' agreement that each plaintiff would have made further submissions and sought to adduce further evidence that the Tribunal did not comply with the statutory provisions governing its conduct of the reviews of the plaintiffs' cases. It did not give each plaintiff the opportunity to make the submissions or give the evidence which the plaintiff wished to make and give. For these reasons, Question 1 of the questions reserved should, in each case, be answered "yes". Gummow J (at [171]) and Kirby J (at [194]) agreed with Hayne J. Gaudron J also agreed that there had been a denial of procedural fairness. 23 One difficulty confronting the Appellant in the present proceedings is not the principle for which Muin is authority; the Appellant's difficulty is the application of Muin to the circumstances of the present appeal. 24 The material before the delegate is set forth in his decision dated 11 December 2006. The material that was before the Tribunal is also set forth in its reasons for decision. There was no identification by the Appellant of those documents which he contended should have been before the Tribunal but were not. Generalised assertions as to a denial of procedural fairness and a citation of the decision in Muin does nothing to assist this Court in the resolution of a challenge to a decision of the Tribunal: SZJMU v Minister for Immigration & Citizenship [2007] FCA 1344 at [16] per Mansfield J. 25 A further difficulty confronting the Appellant in his reliance upon Muin is the fact that this ground was also not raised before the Federal Magistrate for resolution. Again, it is a ground apparently inserted consequent upon the meeting with the migration agent. Again, leave to raise this as a Ground of Appeal is refused. 26 A further aspect of procedural fairness potentially arises by reason of an alleged failure to comply with s 424A(1) of the Migration Act 1958 (Cth). No Ground of Appeal seems to raise any such alleged non-compliance. But that was a ground raised before the Federal Magistrate and rejected. Although not raised in the Notice of Appeal , the contention emerged in the written Outline of Submissions as filed in this Court by the Appellant. Those submissions contended that there had been a breach of s 424A(1) by the non-provision to the now Appellant of " the country information it had about Kerala and India ". As explained by the Federal Magistrate, s 424A(3) provides that such information does not fall within s 424A(1). That " information ", as is apparent from the reasons of the Tribunal, was not " about " the now Appellant: SZICU v Minister for Immigration & Citizenship [2008] FCAFC 1 at [23] ---[26] per Tamberlin, Finn and Besanko JJ; Minister for Immigration & Citizenship v SZHXF [2008] FCAFC 36 at [18] ---[22] per Tamberlin, Gyles and Stone JJ. 27 Similarly, the written submissions also assert that there has been non-compliance with s 430 of the 1958 Act. An instance provided by those submissions is the alleged failure on the part of the Tribunal to make a " finding as to the extent or nature of persecution suffered " by the Appellant. But there was such a finding, albeit one adverse to the Appellant. The Tribunal concluded that it was " not satisfied that, if the applicant returns to India now or in the reasonably foreseeable future, there is a real chance that he will be persecuted for reasons of his real or imputed political beliefs ". That finding follows from the assessment of the Appellant's claims as made by the Tribunal. There has been no failure to comply with s 430. 28 There has been no denial of procedural fairness. It is alleged that the Tribunal placed a " high ... onus of proof [upon] the applicant " and " fail [ed] to give the applicant the benefit of the doubt ". 30 The difficulty confronting the Appellant in respect to this ground is the simple fact that the Tribunal just did not believe the evidence he was giving. The applicant changed his claims in giving evidence during the hearing. For example, when the Tribunal was asking him about the bribes that his father had to pay the local officials, first he claimed that they came to his father's business to collect them. Later he said that his father took the money to the party office where it was shared by everyone present. The Tribunal does not accept that the applicant's father had to bribe authorities to allow his business to run smoothly. At times, the applicant appeared to be making up his story as he told it to the Tribunal. For example, when the Tribunal asked the applicant about interviewing and choosing prospective employees for the lolly business, he hesitated before stating that 10 employees were chosen; five were ex-employees from his father's business and five were new employees. When asked about how the ex-employees were contacted some three years after his father's business had closed down, the applicant said that they all lived close to the factory. The Tribunal does not accept that any employees were interviewed by the applicant or his sister with the prospect of reviving the lolly business. It is considered that the Tribunal's reasons and findings disclose nothing other than an assessment of the evidence being advanced by the now Appellant. No instance can be found where the Tribunal imposed any " high " onus of proof upon the now Appellant. 31 The final ground is also rejected. 33 Previous appeals coming before this Court have raised Grounds of Appeal in precisely the same terms as have been employed in other proceedings. 34 In the present proceedings, a number of the Grounds of Appeal are in substantially the same terms as were before Justice Collier in SZINP v Minister for Immigration & Citizenship [2007] FCA 1747. The learned Federal Magistrate has dismissed the case without considering the legal and factual errors contained in the decision of the Refugee Review Tribunal. 4. The Federal Magistrate made a legal, factual and jurisdictional error in not applying the principles laid down by the full court of Federal Court in Randhawa v The Minister for Immigration Local Government and Ethnic Afairs (1994) 52 FCR 437. 5. The Federal Magistrate failed to take consideration that the Tribunal decision was unjust and was made without taking into account the full gravity of my circumstances and consequences of the claim. ... 11. The Tribunal applied the wrong test: Particulars: a) The Tribunal applied the wrong test, by requiring independent evidence of the fact before the Tribunal would accept a claim being made by the applicant the Tribunal was , in fact , placing high an onus of proof an the applicant and failing to give the applicant the benefit of the doubt. b) The Tribunal left out individual elements of the applicant's claims and tested whether they individually amounted to persecution rather than look at the claim as a whole to determine whether the claim so considered amount to persecution. The grounds as they were expressed in the proceedings before Collier J differed to the extent that those grounds did not refer to the Magistrate as being " learned " and did not refer to the decision in Randhawa as being a decision of the Full Court or the citation to that decision. There is not much other difference between these grounds in the present proceedings and those before Collier J. 35 It is stating the obvious to acknowledge that Grounds of Appeal must be drafted by reference to the individual decision the subject of appeal and with specific reference to the arguments and issues resolved by the Federal Magistrates Court. The indiscriminate duplication of grounds imported from other proceedings, without consideration to the particular decision being appealed from, is only productive of grounds coming before this Court without any apparent relevance to the issues to be ventilated and of unrepresented litigants not being able to provide any further explanation as to the legal or factual issues to which the ground is said to be relevant. 36 An instance of such indiscriminate repetition of grounds advanced in other proceedings into the circumstances of the present appeal is, it is considered, exposed by the Appellant's reliance upon the decision in Muin. The documents which were not before the Tribunal in that case and which occasioned the denial of procedural fairness had been there identified as " the PtB documents ". But there were no comparable documents identified in the present appeal which were said to have been not before the Tribunal and thereby denying the now Appellant of procedural fairness. 37 Reliance upon Randhawa may provide a further instance. The ground now relied upon in this Court did not find its counterpart in any of the grounds relied upon before the Federal Magistrate and was not mentioned in the applicant's written submissions as filed with that Court. 38 Other parallels may also be discerned from a comparison between the grounds raised in the present proceedings and those before Collier J. The appeal be dismissed. 2. The Appellant to pay the costs of the First Respondent of and incidental to the appeal. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick.

leave to raise new ground of appeal refused relocation within country no failure to consider claims no denial of procedural fairness country information not " about " the appellant pro forma grounds of appeal migration

The plaintiffs are shareholders in Silverglow. Between them they hold 40% of Silverglow's shares. Norman Deng is a director of Silverglow and represents the plaintiffs. Godini Accommodation Services Pty Ltd (GAS) holds 30% of Silverglow's shares. Richard Ah Boey Tay is a director of Silverglow and represents GAS. 77 th Holdings Pty Ltd (77 th ) holds 20% of Silverglow's shares. Patrick Sng is a director of Silverglow and represents 77 th and the Sng Interests. Bogdanis Nominees Pty Ltd (Bogdanis) holds 10% of Silverglow's shares. Norman Bogdanov is a director of Silverglow and represents Bogdanis. Apart from Bogdanis and Mr Bogdanov, the other shareholders or their members belong to or are related to the same family. In the course of the company carrying out the Sunset Beach development, differences arose between the shareholder groups and their representatives as a result of which the plaintiffs irretrievably fell out with the other groups of shareholders. On 26 August 2008, the plaintiffs applied to this Court to wind up Silverglow, pursuant to s 461(1)(k) of the Corporations Act 2001 (Cth), on the ground that winding up was just and equitable, and also pursuant to s 232 and s 233 of the Corporations Act 2001 on the ground that the conduct of Silverglow's affairs had been oppressive to the plaintiffs. The plaintiffs alleged, principally through the affidavit of Mr Deng sworn on 5 August 2008 and filed 26 August 2008 that Mr Tay and Mr Bogdanov had caused the company's affairs to be conducted to the benefit of Mr Tay, Mr Bogdanov, Godini Consulting Pty Ltd and Nautilus Homes (WA) Pty Ltd and in a manner that was contrary to the interests of members of the company as a whole or oppressive to, and unfairly prejudicial to, and unfairly discriminatory against, the plaintiffs in their capacity as members of the defendant. Numerous allegations were made about the conduct of the affairs of Silverglow effectively by Mr Tay without proper consultation with other directors representing the various shareholders. A number of these allegations were serious and related to the incurring of fees and charges by entities related to Mr Tay. In his principal affidavit opposing the winding up application on behalf GAS, Mr Tay explained that he had 20 years of experience in the property development industry. He explained the business structure that he uses in relation to land development, namely, the establishment of a special purchase vehicle (such as the defendant company) and the establishment of related companies that are designed to assist in the carrying out of a property development. Mr Tay explained that Princeview Investments Pty Ltd (Princeview) was incorporated on 18 October 2005 and was a wholly owned subsidiary of the respondent company. It was incorporated, it seems, to acquire other land adjacent to the Sunset Beach development. In his affidavit Mr Tay responded to the many allegations made against him in the affidavits of Mr Deng and other members of the plaintiffs. It is clear, without having to make findings about such matters, from both the affidavit of Mr Deng and the affidavit of Mr Tay that there was a point in December 2007 when a meeting was held between the directors of Silverglow and representatives of the St George Bank Ltd concerning an extension of a facility to cover the costs of stage 2 of the development. Guarantees were called for. It is common ground that as of 29 January 2008, Mr Deng advised Mr Tay that the plaintiffs were not prepared to provide interim funding and would not provide guarantees for the proposed St George Bank Ltd loan. On 31 January 2008, it appears the board of the company resolved that Mr Tay and the companies he controlled would provide guarantees to the value of 70% of the loan, with Mr Sng to provide guarantees to the value of 20% of the land and Mr Bogdanov to provide guarantees to the extent of 10% of the loan. While suggestions were made that Mr Deng should resign as a director of the company he did not do so. Instead Mr Deng suggested that the plaintiffs would seek the winding up of the company. Mr Tay says that he said the company would defend any such action. Mr Bogdanov apparently supported him at that point. When the winding up application was lodged in August 2008, GAS and Mr Tay opposed the winding up. Mr Bogdanov on behalf of Bogdanis swore an affidavit relating to the choice of liquidator and counsel for Mr Bogdanov sought to appear at various hearings. However, Mr Bogdanov did not file an appearance or any affidavit on behalf of Bogdanis substantively opposing the application for winding up. 77 th and Mr Sng took no part in the proceedings. By the time the differences between the various shareholder interests arose, part of the land had been developed by subdivision and sale. However, in August 2008, Silverglow sold the balance of the land and did not complete the Sunset Beach development. It appears that in about March 2008, the balance of the Sunset Beach development land --- the en globo land --- was put up for sale. By June 2008 a contract for the sale of land was produced to the director's meeting held on 6 June. On 18 July 2008, the plaintiffs' solicitors wrote to the solicitors for GAS and Mr Tay requesting that they advise what steps had been taken to effect the sale of the land owned by Princeview and to advise of the company's intentions regarding the application of the proceeds of sale of the en globo land and whether, after settlement, Mr Tay and Mr Sng would agree to the appropriate resolutions to be passed to allow for the voluntary winding up of the defendant. Then following an exchange of correspondences that follows: At this point the plaintiffs it seems lost patience and soon after commenced the application for winding up of the company. Affidavits were then exchanged in support of the grounds for winding up and in opposition to them. In December 2008, Mr Tay and GAS withdrew opposition to the voluntary winding up of the company and a meeting of shareholders was held in January 2009 to approve a resolution for the winding up of the company. The shareholders then agreed that Silverglow should voluntarily be wound up. As a result, by orders made by me on 12 March 2009, the winding up application was discontinued with the consent of the parties. However, the issue of costs of the proceedings remained in dispute. The plaintiffs seek an order that GAS and Mr Tay pay their costs. Alternatively, the plaintiffs seek an order that their costs be paid out of the assets of Silverglow. The plaintiffs say GAS/Mr Tay effectively surrendered to them and otherwise acted unreasonably in defending the proceedings. GAS and Mr Tay oppose any such orders, deny they acted unreasonably and say that the parties to the proceedings should bear their own costs following the making of the consent order for discontinuance of the winding up application. While Silverglow was not separately represented in the proceedings, and never entered an appearance in the proceedings, the liquidator on the voluntary liquidation, through his lawyers, indicated to the parties --- and through them to the Court - that he believed no order for costs against or affecting the company could be made without Silverglow being made a party to the proceedings with the leave of the Court, but that he would not oppose the grant of what he referred to as 'retrospective' leave to this end. However, the liquidator indicated he opposed the making of any order for costs against the company if such leave were granted. In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs [see Latoudis v Casey [1990] HCA 59 ; (1990) 170 CLR 534]. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order [ Latoudis at 543, 566-568]. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order. Nonetheless, in an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The Court cannot try a hypothetical action between the parties: see Australian Securities Commission v Aust-Home Investments Ltd [1993] FCA 585 ; (1993) 44 FCR 194 at 201. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action [see Australian Securities Commission [1993] FCA 585 ; 44 FCR 194 at 201]. In some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. But such cases are likely to be rare. Finally, if it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the costs discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases. In essence the plaintiffs say the only reason the winding up action was delayed was because of Mr Tay's intransigence which lead to the refusal of GAS to agree to the process of voluntary winding up. From the plaintiffs' point of view there was no reason why the winding up should have been delayed until late 2008. They were earlier amenable to the winding up not being carried out until certain transactions to do with the uncompleted sale of the en globo land had been completed. The plaintiffs say that nothing ever changed in that regard right up until the time that Mr Tay and GAS withdrew their opposition, in effect, to the winding up application. The plaintiffs say that Mr Tay in effect did a complete about face in December 2008 in this regard. In his affidavit sworn 7 April 2009 in relation to the issue of costs only (costs affidavit), Mr Tay for GAS has explained his change of position in the following way. In July 2008, the solicitors for the plaintiffs wrote to the solicitors for Mr Tay and GAS. The plaintiffs' solicitors raised questions concerning a settlement statement following the sale of the undeveloped land and the unwillingness of the plaintiffs to continue to defer a winding up application "based on vague assertions that there will be a directors' meeting following settlement". Mr Tay states (in para 14) that when he received copies of these letters (attached to his affidavit as RT5 and RT8) he told his solicitors that he did not believe it was necessary nor in the best interests of the shareholders of the company for the company to be wound up at that stage. He says (in para 14) that the reasons for his belief were that: The company was solvent. The directors were cooperating with each other in selling the undeveloped land, which sale was in the process of being settled. There was in existence a resolution to sell other land --- the Princeview land. A proposed directors' meeting was to be held after the settlement of the undeveloped land to discuss distribution to shareholders and ongoing commitments of the company. There was no need to appoint a liquidator to the company given that the directors were cooperating to finalise the undertaking of the company, especially in view of the costs to the company in appointing and remunerating a liquidator. In July 2008, aside from the Princeview land, the company also owned 11 unsold subdivided lots in the Sunset Beach development and he feared a liquidator might not be able to obtain the best prices in relation to the Princeview land and the subdivided lots as a result of the negative impression given by a liquidator's sale. There was still uncompleted landscaping and council obligations associated with stages 1 and 2 of the Sunset Beach development. The personal guarantee he had given to St George Bank Ltd was yet undischarged. Mr Tay then says (in his costs affidavit at paras 18 to 20) that in December 2008 he altered his position, for the following reasons. In or around late November/early December 2008, he was advised by his solicitors and believed it to be true that the hearing of the winding up application might take as long as two weeks because of the number of witnesses and the length of affidavits filed. (2) The subdivided lots were scheduled for auction in January 2009. (3) Landscaping to stages 1 and 2 of the Sunset Beach development was near completion. (4) Negotiations were being conducted with the Geraldton local government regarding whether the obligation for the two year maintenance bond could be paid out. (5) The St George Bank Ltd finance had been repaid. Mr Tay says that as a result of these factors, he considered that if a liquidator was appointed, the company should not suffer much damage, other than the costs of remunerating a liquidator, because the company's obligations were near completion. He then came to the conclusion that it would be simpler and more cost effective to place the company into voluntary winding up rather than go through a two week hearing. As a consequence, on or about 16 December 2008 he arranged and sent all shareholders a notice of general meeting for the purpose of passing a resolution to voluntarily wind up the company. First, counsel draws attention to the two affidavits Mr Tay previously swore on 15 October 2008 and 8 December 2008 in opposition to the winding up application. Counsel says that nowhere in those affidavits or in the annexed documents does Mr Tay make any reference now set out in para 14 of his costs affidavit. Further counsel says that the matters set out in para 14 of Mr Tay's costs affidavit are not mentioned in any of Mr Tay's solicitors' letters (other than a reference to the sale of the Princeview land). Similarly, none of the matters set out in para 14 of Mr Tay's costs affidavit mentioned Mr Tay's and GAS' written outline of submissions in opposition to the winding up application. Additionally, counsel for the plaintiffs says that there are compelling reasons why Mr Tay could not have reasonably or genuinely formed the opinions that in June 2008 Silverglow should not be wound up for the reasons set out in para 14 and, then in December 2008, Silverglow should be wound up for the reasons set out in paras 18 to 20. Thus solvency did not constitute changed circumstances. (2) As to para 14(2), whilst there was a contract for sale of the en globo balance of land which was in the process of being settled, what had been proposed by the plaintiffs was a voluntary winding up after settlement. Consequently, a settlement that did not constitute changed circumstances. (3) As to paras 14(3) and 19(1) of the costs affidavit, whilst Princeview has at all times been a wholly owned subsidiary of Silverglow, it is a separate legal entity and has a differently constituted board of directors. Even if Silverglow was wound up, the sale of Princeview's land would not have needed to be a liquidator's sale. Therefore, even though a contract was entered into by Princeview for the sale of its land in December 2008, this does not constitute a material change in circumstances. (4) As to paras 14(4), 14(5), 14(7), 19(3) and 19(4), no material change in circumstances between July and December 2008 can be demonstrated. (5) As to paras 14(8) and 19(5), all of Silverglow's indebtedness to St George Bank Ltd, the subject of the guarantees provided by Mr Tay (and other parties) was repaid at settlement of the sale of the en globo balance of the land. Given that Mr Tay was well aware of the sale price of the en globo balance of the land and the extent of Silverglow's indebtedness which he had guaranteed, Mr Tay must necessarily have been well aware that the indebtedness to St George Bank Ltd and therefore his guarantee was going to be discharged at settlement. The plaintiffs were proposing that Silverglow be voluntarily wound up after settlement --- therefore at a time when Mr Tay's liability had been discharged. Consequently, no material change can be demonstrated between July and December 2008. (6) As to paras 14(6) and 19(2), on 16 December 2008, Mr Tay and Mr Bogdanov called a general meeting for 12 January 2009 for the passing of resolutions providing for voluntary winding up. The auction of the remaining subdivided lots occurred on 31 January 2009. Consequently, had resolutions for voluntary winding up been passed at the meeting anticipated by that notice, Silverglow would have been in liquidation at the time the subdivided lots were auctioned. Consequently, no material change in circumstance can be demonstrated. Mr Tay and GAS deny that they effectively surrendered to the plaintiffs on the application and insist that the consent order in these proceedings was as a result of the change of circumstances mentioned in para 19 of Mr Tay's costs affidavit. Counsel for GAS and Mr Tay say that once the change in circumstances occurred, a major fear (that a liquidator may not be able to obtain the best price for the remaining properties held by the company) that Mr Tay had in opposing a voluntary winding up no longer existed. Therefore it was then reasonable and prudent for him and GAS to consent to a voluntary winding up of the company. Counsel further points out that the plaintiffs first demanded the winding up of the company in January 2008 in circumstances where they had refused to provide guarantees for the St George Bank Ltd facility as agreed to by the directors at a meeting of directors on 25 January 2008. As a result of the plaintiffs' refusal and in order for the company to have sufficient funds to continue the project, Mr Tay had to provide personal guarantees for 70% of the facility, which included the plaintiffs' 40%. Counsel also says that the plaintiffs then demanded the winding up of the company in July 2008 when the company sold the undeveloped land. They did not take into consideration that the Princeview land and the subdivided land were then as yet unsold and there were obligations in relation to the Sunset Beach Development which was still incomplete. Mr Tay at that point advised the plaintiffs that a winding up was inappropriate and should not be entertained until the Princeview land had first been sold. Counsel says that as soon as these circumstances changed, Mr Tay and GAS accepted that winding up of the company on a voluntary basis was appropriate. Counsel says that in these circumstances Mr Tay and GAS acted reasonably at all times. It follows that the company was bound to be wound up at some point. Initially the parties would have expected the company to have been wound up following the successful completion of the Sunset Beach development (unless they then agreed to use the vehicle for some other purpose). In any event, once the parties fell into disputation, it must have been apparent to all concerned that the company would need to be wound up at some point sooner or later. It was simply a question of timing. It is not appropriate, nor is it possible, for the Court to make some assessment about whether or not the plaintiffs would have succeeded in their winding up application on the grounds specified above. As the authorities note, this makes harder the Court's task in deciding whether, contrary to the usual expectation that the parties will each bear their own costs in such circumstances, one party or another should bear the costs of the proceedings. In determining this it can be useful to ask if one party effectively "surrendered" to the other and so can be treated as the "loser" for costs purposes, or whether one party or another acted unreasonably such that they should bear the costs. In my view, while I have sympathy with the plaintiffs' position, especially as they have eventually achieved by compromise or perhaps attrition what they set out to achieve, I am not satisfied that the GAS/Tay interests can be said to have surrendered or acted so unreasonably so as to incur a costs order. Whilst in a conventional action where one party seeks judgment against another, and one party concedes the relief sought against it without a trial, and can be said on the face of the court materials to have surrendered to the claimant, a winding up action is notionally different, and this particular winding up proceeding is different because the company was always going to have a limited life. Whilst I am not entirely convinced that the circumstances had so radically changed as to make the winding up proposal seem more obvious to Mr Tay in December 2008 than it had in July 2008 when the winding up proceedings were commenced, I do not think that the commercial concerns expressed by Mr Tay concerning the saleability of the land and the price that might then be obtained for it can so easily be dismissed as the plaintiffs suggest. While the Court can understand that the plaintiffs consider that GAS and Mr Tay were somewhat intransigent in maintaining their opposition to their winding up proposal and could themselves see no good reason to delay the winding up of the company, I consider the materials before me disclose there was more than mere intransigence in the GAS/Tay position. Mr Tay now says that, from a commercial point of view, he was reluctant to allow winding up for the reasons he has set out in his costs affidavit. Despite the invitation of counsel for the plaintiffs to do so, I do not consider that these reasons can simply be ignored, even though it is correct to say that they had not separately been raised earlier as grounds for opposition to the winding up application. That they had not been is probably to be explained by their lack of immediate relevance to the oppression grounds alleged by the plaintiffs and elaborated in their affidavits and responded to by Mr Tay. In the result, it is not easy to arrive at the conclusion that GAS and Mr Tay either surrendered or acted unreasonably in maintaining their opposition to the proceedings that they should be obliged to pay the plaintiffs' costs of the proceedings. I should add I do not consider it appropriate to add the company as a party to the costs proceedings and I refuse leave in that regard. In any event, I do not believe it is appropriate for the Court to order that the company itself pay the costs of its winding up, so that the costs come out of the assets of the company. Commercial considerations must necessarily have affected the timing of a voluntary winding up in a case such as this. I am not persuaded that I should discount Mr Tay's reasoning for withdrawing his opposition to the winding up when he did. It follows that each party should bear its own costs of the proceedings. For these reasons, I would dismiss the plaintiffs' application for an order that GAS/Mr Tay pay their costs of the application. Each party should pay its own costs including of this application for costs. The Court orders: The parties bear their own costs of the proceedings, including this application. I certify that the preceding sixty-seven (67) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker.

application for winding up discontinued defendant agreed to voluntary winding up costs order sought by plaintiff commercial considerations relevant conduct not unreasonable conduct did not constitute surrendering costs application dismissed costs

On 4 May 1989 he appears to have been granted a permanent entry permit under the then provisions of the Migration Act 1958 (Cth). There was a reference in some material before the Administrative Appeals Tribunal to another potential source of visa held by him. However, it is common ground that Mr Toro Martinez held a transitional (permanent) (Class BF) visa from the time of commencement of the Migration Reform Act 1992 (Cth) on 1 September 1994 and the tribunal so found. A delegate of the Minister cancelled that visa under s 501 of the Act on 10 March 2008, because Mr Toro Martinez did not pass the character test in s 501(6)(a). That was because of his substantial criminal record in respect of his convictions for being knowingly concerned in the importation into Australia of a substantial trafficable quantity of cocaine on two different occasions in December 1996. Mr Toro Martinez applied to the Administrative Appeals Tribunal for a review of the delegate's decision pursuant to s 500(1)(b) of the Act on 20 March 2008. After a hearing at which it took oral evidence from Mr Toro Martinez and his fiancée, the tribunal affirmed the decision under review and gave its reasons on 19 June 2008. This was because the visa did not meet the description in s 501(2) of a visa "... that has been granted to a person". The Full Court held that the legislative scheme providing for the conversion of Mr Toro Martinez's permanent entry permit into a transitional (permanent) visa did not involve any grant of that visa to him. If a person was the holder of a permanent entry permit immediately before 1 September 1994 then reg (4)(1) of the Migration Reform (Transitional Provisions) Regulations 1994 provided that "... that entry permit continues in effect on and after 1 September 1994 as a transitional (permanent) visa that permits the holder to remain indefinitely in Australia". The source of Mr Toro Martinez's visa was his permanent entry permit which was continued in effect as a visa by force of reg 4. Accordingly, it is common ground that the decision of the delegate of the Minister made on 10 March 2008 to cancel Mr Toro Martinez's visa under s 501(2) was invalid since the Minister had no power to cancel a visa that had not, in fact, been granted. The consequence of the decision in Sales [2008] FCAFC 132 ; 171 FCR 56 was that the only correct and preferable decision which the tribunal could have made at the time it acted was to set aside the decision under review, because there was no power to make it in the first place. Mr Toro Martinez applied promptly to this Court to review the decision of the tribunal. Before any hearing of the application to the Court, the Minister accepted that the decision in Sales [2008] FCAFC 132 ; 171 FCR 56 applied equally to Mr Toro Martinez, because the original decision to cancel his visa had no force or effect. The Department of Immigration and Citizenship wrote to Mr Toro Martinez and informed him of this outcome. The letter warned him that the legislative position may change. He was released from immigration detention. Consequently, on 26 August 2008 Mr Toro Martinez filed a notice of discontinuance of his application in the Court. The purpose of that provision was to reverse Sales [2008] FCAFC 132 ; 171 FCR 56 as it applied to decisions taken after the day on which the amendment commenced, being 19 September 2008 (see Schedule 4, items 5 and 6(iii)). In item 7 of Schedule 4 of the 2008 amendment the Parliament provided that any decision to cancel a transitional permanent visa made or purporting to have been made by the Minister or a delegate before 19 September 2008 was deemed to be valid. Mr Toro Martinez was then returned to immigration detention and filed a fresh application challenging the tribunal's decision. On 5 December 2008 Emmett J dismissed that application as incompetent ( Martinez v Minister for Immigration and Citizenship (No 2) [2008] FCA 1995) but his Honour granted leave to Mr Toro Martinez to withdraw his notice of discontinuance in these proceedings since the Minister did not oppose this course. His Honour also made directions in these proceedings: Martinez v Minister for Immigration and Citizenship [2008] FCA 1994. (3) The tribunal reached a conclusion not open on the evidence before it, namely that Mr Toro Martinez would face no serious danger of personal harm by returning to Columbia because, first, the International Obligations and Humanitarian Concerns Assessment had identified that other States were choosing not to return persons involuntarily to Columbia and, secondly, there were multiple human rights violations there. (4) Direction No 21 made by the Minister under s 499 of the Act was invalid because it went beyond the giving of directions or interfered with the unfettered discretion of a decision-maker under s 501(2). (5) The tribunal applied Direction No 21 by obeying its requirements to give prominence or weight to matters as primary considerations and thus failed to have regard to all of the relevant circumstances, according them appropriate weight as it saw fit. (6) The tribunal failed to accord procedural fairness because it did not give Mr Toro Martinez any opportunity, let alone a reasonable opportunity, to inspect documents to which it proposed to have regard in reaching its decision in contravention of s 39(1) of the Administrative Appeals Tribunal Act 1975 (Cth) or alternatively its common law obligation to accord him procedural fairness. He contended that despite the introductory words of item 7(1), there was no doubt to avoid. The regime introduced by s 501HA took effect with respect to decisions made after the commencement of item 7. Thus, s 501HA had no application to any decision that had already been made and could not affect the status of the decision made on 10 March 2003. On the other hand, item 7(1)(b) operated on the decision affecting Mr Toro Martinez which had been made by the delegate on 10 March 2008. However, he argued that the tribunal committed a jurisdictional error because in deciding his matter on 19 June 2008 the tribunal did not do the only thing then open to it to do, namely to set the delegate's decision aside as being made without any power to do so. Mr Toro Martinez argued that the construction of item 7 ought to be governed by the principle that where a choice of constructions is open, an Act should be construed so as not to encroach upon common law rights and freedoms. I note that Mr Toro Martinez foreshadowed an argument that he is not affected by the amendments at all, and that the process of cancellation of his visa should start afresh. However, that question was not argued before me and I express no view on it. The Minister, on the other hand, relied upon the words in item 7(1) "... is as valid, and is taken always to have been as valid, as it would have been if the transitional (permanent) visa ... were a visa that had been granted". He contended that this retrospectively deemed the delegate's decision always to have been valid and that, as a result, the tribunal's decision affirming that decision was unimpeachable. The Minister argued that to affirm the decision under review had the effect of leaving the delegate's decision as the only operative decision. He contended that an affirmation by the tribunal of a decision of a delegate has the effect that the original decision of the delegate continues to operate and the later decision of the tribunal does not operate in substitution: Kim v Minister for Immigration and Citizenship [2008] FCAFC 73 ; (2008) 167 FCR 578 at 583 [23] per Tamberlin J, with whom Besanko J agreed at 586 [42]; see also Daher v Minister for Immigration and Ethnic Affairs (1996) 70 FCR 585 at 587F-588B per North J. Do the words in item 7 "... is taken always to have been as valid" have a retrospective operation so as to deny that the tribunal made any jurisdictional error? Mr Toro Martinez filed his notice of discontinuance in this Court on 26 August 2008, more than three weeks before item 7 came into operation as a law of the Commonwealth. Thus, it could not be said that the enactment of item 7 affected these proceedings at the time as pending or current litigation. The evident intention of the 2008 amendment was to validate earlier decisions to cancel visas that had not been "granted" but were nonetheless operative. Those visas were in the category that the judgment in Sales [2008] FCAFC 132 ; 171 FCR 56 had revealed could not fall within the then statutory powers of cancellation. A court will assume that the legislature intended to act fairly when it construes retrospective legislation to ascertain the extent that the law was intended to operate retrospectively: Attorney-General (NSW) v World Best Holdings Ltd [2005] NSWCA 261 ; (2005) 63 NSWLR 557 at 571 [54] per Spigelman CJ. And, there is a general rule that where the legislature alters the rights of persons retrospectively unless the Act clearly so operates, the Court will not construe it to affect rights: cf: Bawn Pty Ltd v Metropolitan Meat Industries Board (1970) 72 SR (NSW) 466 at 486C-D per Mason JA: see too NSW Food Authority v Nutricia Australia Pty Ltd (2008) 253 ALR 133 at 161-162 [130]-[132] per Spigelman CJ, with whom Hidden and Latham JJ agreed. The Minister also argued that retrospective legislation may affect existing proceedings. That, of course, is correct. But the result is affected by the principle that the legislation will be read down so as not to have such an operation in the absence of clear words of a contrary statutory intention: see Nutricia 253 ALR at 162 [132] per Spigelman CJ. In Minister for Immigration and Citizenship v Haneef [2007] FCAFC 203 ; (2007) 163 FCR 414 at 442-444 [105] - [113] , Black CJ, French and Weinberg JJ discussed the construction of s 501 and applied the principles identified in the following passage in Coco v The Queen (1994) 179 CLR 427 at 437. The courts should not impute to the legislature an intention to interfere with fundamental rights. Such an intention must be clearly manifested by unmistakable and unambiguous language. General words will rarely be sufficient for that purpose if they do not specifically deal with the question because, in the context in which they appear, they will often be ambiguous on the aspect of interference with fundamental rights (see Chu Kheng Lim v Minister for Immigration, Local Government and Ethnic Affairs [1992] HCA 64 ; (1992) 176 CLR 1 at p 12, per Mason CJ). In Minister for Immigration and Ethnic Affairs v Sciascia (1991) 31 FCR 364 at 370-372 Burchett and Lee JJ discussed (in passages approved in Haneef 163 FCR at 443 [108] and [111]) a statutory predecessor of s 501 that provided that an illegal immigrant was liable to deportation if that person had been convicted of offences and been sentenced to imprisonment for at least one year. They said that the section deprived the persons "caught by it of one of their most precious rights, their right of community". Burchett and Lee JJ said that the making of a deportation order was a plain infringement of liberty and was more so if the law authorising it was retroactive. He or she will lose the freedom which the visa confers to remain in Australia and to exercise and enjoy the benefit of the liberties, freedoms and rights which persons present in this country ordinarily enjoy. Moreover, s 501 can apply to persons who have served sentences of imprisonment eligible to be released unconditionally or on parole. One immediate consequence of the decision to cancel the visa was that Mr Toro Martinez remained in immigration detention when he would otherwise have been entitled to be at liberty (albeit in respect of the unserved portion of his sentences of imprisonment) on parole. Item 7 in the 2008 amendment is capable of operating in a manner that infringes the liberty of persons whose visas had been purportedly cancelled under decisions of the Minister or a delegate that were invalid for reasons given in Sales [2008] FCAFC 132 ; 171 FCR 56. The item is intended to restore the legal force of those decisions. The Minister argued that because item 7 has the effect of validating the delegate's decision retrospectively, the necessary consequence is that the tribunal's decision is also validated. That followed, he contended, because the tribunal's affirmation of the delegate's decision never operated (unlike the case prior to the 2008 amendment) on a valid decision of the delegate to cancel Mr Toro Martinez's visa even though it was not a visa that had been granted. In effect, the Minister argued that the words in item 7 "... is as valid, and is taken always to have been as valid, as it would have been" not only validated the delegate's decision that had previously been invalid, but changed the status in law of the tribunal's decision. Mr Toro Martinez argued that item 7 expressly referred to two classes of decision, first, those by the Minster made under identified sections of the Act (item 7(1)(a)) and secondly, by a delegate of the Minister made under only s 501 (item 7(1)(b)). He pointed out that in the 2008 amendment there was no reference to decisions made by the tribunal. He argued that if the Minister wished now to cancel a visa that previously had not been cancelled validly, he could do so under the new s 501HA. But, the Minister wished to have the legislation construed so as to make valid a decision of the tribunal which, at the time it was given, was not a decision at all because of its jurisdictional error in affirming a decision that could not have been made under s 501 ( Plaintiff S157 211 CLR at 506 [76]). Mr Toro Martinez argued that for this result to ensue clear words of necessary intendment were required, and the Parliament had not used them. He argued that all item 7(1) did was to restore validity to the delegate's decision. But, he contended, this did not affect the legal status of the tribunal's invalid decision. He argued that regardless of whether the decision of the delegate was valid or invalid, in reviewing that decision the tribunal was exercising an independent function under s 43 of the Administrative Appeals Tribunal Act . A long line of authority in this Court has held that the tribunal has jurisdiction to review a purported decision, even where it is clear that the decision of the original decision-maker was affected by a jurisdictional error: Collector of Customs (NSW) v Brian Lawlor Automotive Pty Limited [1979] FCA 21 ; (1979) 41 FLR 338 at 342---344 per Bowen CJ, 370 per Smithers J; Zubair v Minister for Immigration [2004] FCAFC 248 ; (2004) 139 FCR 344 at 352-354 [28] - [32] per Finn, Mansfield and Gyles JJ. The tribunal has power to cure a defect in the delegate's decision once the tribunal's jurisdiction has been invoked by an application for review: Zubair 139 FCR at 354. A party affected will elect to treat an administrative decision as valid, though erroneous, by exercising the right to have it reviewed by a second administrative body, in preference to exercising a right to have a court compel proper performance by the original authority of its duty. Such an outcome promotes administrative efficiency, provided that the party applying for the review subsequently receives a fair hearing by the second body. In that way, any defects in the process by which the original decision was reached are cured by the later determination on the administrative review or administrative appeal: Twist v Randwick Municipal Council [1976] HCA 58 ; (1976) 136 CLR 106 at 116 per Mason J. In reviewing an administrative decision the tribunal has to give the decision it considers to be the correct or preferable decision. That function must be performed independently of any instruction, advice or wish of the executive government, including in cases where government policy is a relevant factor for consideration and the powers of the tribunal are limited to affirming or recommending the reconsideration of the decisions of a Minister: Wilson v Minister for Aboriginal and Torres Strait Islander Affairs [1996] HCA 18 ; (1996) 189 CLR 1 at 17-18 per Brennan CJ, Dawson, Toohey, McHugh and Gummow JJ, approving Re Becker and Minister for Immigration and Ethnic Affairs (1977) 1 ALD 58 at 163 per Brennan J as President of the Tribunal. The decision of the tribunal in the particular circumstances of each case must be arrived at according to its opinion as to the merits of that case. However, as French, O'Loughlin and Whitlam JJ pointed out in Madafferi v Minister for Immigration and Multicultural Affairs [2002] FCAFC 220 ; (2002) 118 FCR 326 at 346 [68] the source of the tribunal's power to give the correct or preferable decision on a review is s 43 of the Administrative Appeals Tribunal Act . A fortiori, when it affirms a decision or sets it aside and remits it for reconsideration, it does not exercise a power conferred by the enactment under which the primary decision-maker has made his or her decision ... Analogous reasoning in Daher v Minister for Immigration and Ethnic Affairs (1996) 70 FCR 585 at 587 led North J to conclude that a decision of the Refugee Review Tribunal affirming a decision of the Minister to refuse a visa was not itself a decision to refuse the grant of the visa. In my opinion the decision of the tribunal was no decision at all. The Tribunal had not made a decision in accordance with s 43 of the Administrative Appeals Tribunal Act , because the only correct and preferable decision to which it could have arrived on 19 June 2008 was to set aside the decision to cancel the visa as not having been a decision made in accordance with s 501. The visa had never been grated to Mr Toro Martinez and was therefore outside the reach of s 501(2): Sales [2008] FCAFC 132 ; 171 FCR 56. The 2008 amendment did not deal in item 7 with a purported decision of the tribunal. The language of item 7 addressed two of the three possible categories of decision to which Sales [2008] FCAFC 132 ; 171 FCR 56 applied, namely a decision by, first, the minister under identified sections of the Act and, secondly, the delegate under s 501 alone. That raises the question whether the words "... is as valid, as it would have been if the transitional (permenant) visa ... were a visa that had been granted" operate to change the nature of the tribunal's decision because they transformed the earlier invalid decision of the delegate into a valid decision. Although there is no evidence as to the number of potentially affected decisions, it is safe to infer that a considerable number of visas in the affected category had been cancelled over the previous years. Challenges to the cancellation of those visas, like Mr Toro Martinez's, would have been made to, first, the tribunal and then to this Court and the High Court. The consequence of giving item 7 a narrow construction is that persons who left Australia either voluntarily or involuntarily, based on failed challenges to the purported cancellation of their visas could now assert rights of re-entry and residence on the ground that the tribunal's decisions to affirm the cancellations were affected by the above jurisdictional error. It is unlikely that the Parliament intended that consequence. The language of the Parliament does not suggest that it sought to create a distinction between those who had accepted a decision by the Minister or a delegate to cancel their visas without challenge and those who had applied unsuccessfully to the tribunal or the Courts to set aside the decision to cancel. Such a distinction would create, not avoid, doubt. The anomalous result would ensure that a person who had taken proceedings to reverse the cancellation but failed would be in a better position than someone who had accepted the decision in the first place. It would certainly give a new and unattractive twist to the aphorism that "it is better to have tried and failed than never to have tried at all". The Parliament evidenced an intention that any decision within items 7(1)(a) or (b) would provide lawful authority for acts done on the faith of it, including keeping a person in immigration detention or removing him or her from Australia. It did this by using the legislative device of taking the original decision of the Minister or delegate (as referred to in item 7(1)(a) or (b)) as always to have been as valid as it would have been had the relevant visa in fact been granted, as item 7(1) provides. McHugh J observed in Re Macks; Ex parte Saint [2000] HCA 62 ; (2000) 204 CLR 158 at 203 [115] that the use of the phrase "as if" always introduces a fiction or a hypothetical contrast, deeming something to be what it is not. The use of phrases such as "is taken to be" and "as if" in legislative provisions like item 7 is "...a convenient device for reducing the verbiage of an enactment": R v Hughes (2000) 202 CLR 535 at 551 [24]. The purpose for which the legislature introduced the fiction must be identified by the Court: Muller v Dalgety & Co Ltd [1909] HCA 67 ; (1909) 9 CLR 693 at 696 per Griffith CJ; Hunter Douglas Australia Pty Ltd v Perma Blinds (1970) 122 CLR 49 at 65 per Windeyer J; see too Redland Shire Council v Stradbroke Rutile Pty Ltd [1974] HCA 4 ; (1974) 133 CLR 641 at 655 per Gibbs J. The curative effect of legislative provisions using the statutory fictions created by phrases such as those used in item 7 will usually operate only on the source of invalidity identified in the enactment: cf: Yougarla v Western Australia [2001] HCA 47 ; (2001) 207 CLR 344 at 368 [60] per Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ. If the tribunal had arrived at the conclusion, subsequently established by the decision in Sales [2008] FCAFC 132 ; 171 FCR 56 , that it had no power to cancel the visa under s 501, it would have set aside the decision of the delegate (see: s 43 (1)(c) of the Administrative Appeals Tribunal Act ). Had the tribunal done that, item 7 would not have had any effect on the tribunal's decision because the delegate's decision would no longer be operative. As Hayne and Heydon JJ identified in Shi v Migration Agents Registration Authority [2008] HCA 31 ; (2008) 235 CLR 286 at 314---315 [96]-[98], the tribunal's task here was to decide on the material before it whether to exercise the Minister's power under s 501(2) (if it existed). In the contrasting position, that has actually occurred, the tribunal decided that the correct and preferable decision was the one arrived at by the delegate. It would be an odd result if item 7 operated to validate the latter decision but had no effect on the former. The natural and ordinary meaning of item 7 is that it validates certain decisions of the Minister and his delegates. If it cannot, and in its terms does not, undo other decisions, such as those of the tribunal, I am of opinion that item 7 should not be read to validate other decisions to which it is not expressly directed. However as Brennan J said in Re Brian Lawlor Automotive Pty Ltd and Collector of Customs (NSW) (1978) 1 ALD 167 at 175-176 in a passage approved by Hayne and Heydon JJ in Shi 235 CLR 315 [100]. Equally, a decision to set aside the decision under review and remit the matter for reconsideration pursuant to s 43(1)(c)(ii) requires the original repository of the powers and discretions to exercise them afresh: they are not exercised by the Tribunal. Section 43(1) grants the original powers and discretions to the Tribunal, but it does not require the Tribunal to exercise them unless the Tribunal is making a fresh order the effectiveness of which depends upon their exercise. By applying to the tribunal before the 2008 amendment came into force, a person who then invoked a challenge to the Minister's or delegate's decision under s 501(2) elected to treat that decision as valid, though erroneous, and to have the tribunal exercise the power, in preference to challenging the decision in judicial review proceedings: Twist 136 CLR at 116 per Mason J. And the tribunal could have "cured" the defect in the delegate's decision by setting it aside: cf Zubair 139 FCR at 354. But the decision of the tribunal in respect of Mr Toro Martinez was given in respect of a different legal and factual scenario from that considered by the delegate and, because of Sales [2008] FCAFC 132 ; 171 FCR 56 , was no decision at all, being infected by jurisdictional error. The Minister argued that item 7 requires the Court to treat the delegate's decision as having always been valid so that, he contended, it is not possible now to hold that the tribunal committed a jurisdictional error. I do not consider that this is a correct process of construction of item 7. The 2008 amendment did not affect the tribunal's decision or give it any validity. Even though the delegate's original decision to cancel Mr Toro Martinez's visa was left intact, the tribunal decided that this was the correct and preferable decision on the material before it. That is, the function which the tribunal performed was a review on the merits of the delegate's decision using all of the material available up to the time that the tribunal made its decision: Shi 235 CLR at 298-299 [34]-[38] per Kirby J, 314-316 [96]-[101] per Hayne and Heydon JJ, 324-325 [134], 326 [137], 327-328 [140]-[144] per Kiefel J, with whom Crennan J agreed on this issue at 319 [117]. As Kiefel J observed, s 43(1) of the Administrative Appeals Tribunal Act gives the tribunal powers in s 43(1)(a) to (c) for the purpose of reviewing a decision. She said that the purpose of the powers was "... to permit the Tribunal to consider for itself what the decision should be": Shi 235 CLR at 326 [137]. It is in that task that the tribunal committed a jurisdictional error and thus failed to complete its review in accordance with law. The Minister also sought to draw an analogy with stamp duty legislation that prohibited the admission into evidence of an unstamped instrument but gave the instrument, once duly stamped, its full force and effect, relying on Shepherd v Felt & Textiles of Australia Ltd [1931] HCA 21 ; (1931) 45 CLR 359 at 383 per Dixon J. I reject this argument. First, stamp duty legislation, ordinarily, does not affect liberty of individuals or fundamental human rights. Secondly, that legislation suspends, conditionally, the operation of an existing instrument only when it is sought to be put into evidence. I do not consider that generalised references to stamp duty legislation assist in construing item 7. The Parliament enacted the 2008 amendments knowing that both the tribunal and the Courts would have made decisions affecting visas purportedly cancelled by one of the two classes of decision for which item 7 provided. Yet, the 2008 amendments did not address curing any error made by the tribunal in arriving at its decision. Nor did the 2008 amendments validate any decision of the tribunal. The liberty of an individual is at stake. The Parliament did not express, in unambiguous and clear language, its intention to remove the accrued right of persons in the position of Mr Toro Martinez to treat the decision of the tribunal as no decision at all. I am of opinion that the tribunal's decision should be quashed and a writ of mandamus issued to command it to perform its function of review according to law. The tribunal did not make any reference in its reasons to an interview given by the daughter to the Department in June 2001 or to her letter of July 2007. The only evidence of the daughter to which the tribunal referred was her letter of 15 April 2008. The tribunal used the latter letter and her failure to refer to significant matters in it (which the daughter however had said in the 2001 interview and 2007 letter) in arriving at two important findings. Nor did the tribunal refer in its decision to the international obligations and humanitarian concerns assessment that it would be unreasonable to expect the daughter to depart the relative safety of Australian society and accompany her father to Columbia. That contact could continue if he is in Columbia. He had asserted to the tribunal that his daughter had some knowledge of the facts but he failed to elaborate on what that was. The tribunal said that it might be significant that nowhere in the daughter's lengthy letter of support dated 15 April 2008 was there the slightest hint that her father might not have been fully culpable for that second offence. The tribunal observed that the tenor of the letter might be to the opposite effect. The notes of the interview recorded the daughter as having said that she suffered from depression and had attempted suicide due to her father's imprisonment and that "... I would lose it completely if he was to go". She said that it would be very difficult for her to visit him and that her mother, grandmother and cousins in Australia would be distraught if she went with her father to Columbia. The notes recorded that her mother had confirmed that she was then undergoing psychiatric care to help with her depression. Next, in July 2007, the daughter had written a letter to the Department arguing against her father's visa being cancelled. She expressly requested the Department to consider her earlier submission. (This a reference to what she had said in the 2001 interview. She referred to her need for her father to be near her and that he was, other than her mother, her only family in Australia. She said that she had suffered greatly from not being with her father for the last nine years. The tribunal's initial reference to the letter of 15 April 2008 was made in connection with its consideration of Mr Toro Martinez's failure to explain how he was not culpable for, or guilty of the, second offence. He gave no reasonable basis for that stance. But, in rejecting his account, the tribunal's reasons referred only to the absence of any reference in the daughter's letter of 15 April 2008 to "the alleged wrist slashing in 1996" or what might have motivated it. The tribunal did not explain why it rejected the daughter's powerful corroboration in her statement to the Department in 2001 that she had attempted suicide due to her father's imprisonment. Rather, the tribunal treated his evidence as mere "allegations" that the daughter had not corroborated in her April 2008 letter. The Minister argued that this was not in the class of strongly corroborative evidence. He contended that the evidence did not undermine the ultimate finding that while the daughter would suffer some emotional hardship on his removal, the relationship would be maintained as indicated in her letter of 15 April 2008. It is a jurisdictional error for an administrative tribunal to ignore relevant material: Craig v South Australia [1995] HCA 58 ; (1995) 184 CLR 163 at 179 per Brennan, Deane, Toohey, Gaudron and McHugh JJ. The tribunal must give its reasons for its decision pursuant to s 43(2) of the Administrative Appeals Tribunal Act . The reasons must include the tribunal's findings on material questions of fact together with a reference to the evidence or other material on which those findings were based: s 43(2B). As McHugh, Gummow and Hayne JJ observed in Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30 ; (2001) 206 CLR 323 at 346 [68] , in respect of the analogous provision in s 430 of the Migration Act , the tribunal need not make findings on any and every matter of fact objectively material to its decision. Neither expressly nor impliedly does this section require the tribunal to make , and then set out, some findings additional to those which it actually made. In SZANI v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 1298 at [25] Tamberlin J said that a failure by the Refugee Review Tribunal in its reasons to refer to, consider, or give reasons for rejection of documents which were strongly corroborative of an applicant's claim constituted a jurisdictional error. In WAIJ v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 74 ; (2004) 80 ALD 568 at 573-574 [22] Lee and Moore JJ noted the principle that observance of the requirement that the review procedure be carried out according to law was an irreducible duty. They said that the tribunal only obtained power to make a determination under the Act where its decision was based on findings or inferences of the facts grounded on probative material and logical grounds. It followed that a decision based on illogical or irrational findings or inferences of fact is a decision not supported by reason and is therefore invalid. The tribunal is not required to address every piece of evidence before it, provided that it considers the intergers of the claim: Paul v Minister for Immigration and Multicultural Affairs [2001] FCA 1196 ; (2001) 113 FCR 396 at 342 [79] per Allsop J with whom Heerey J agreed. But as French, Sackville and Hely JJ observed in Applicant WAEE v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 184 ; (2003) 75 ALD 630 at 641 [47] "the inference that the tribunal had failed to consider an issue may be drawn from its failure expressly to deal with that issue in its reasons. Where, however, there is an issue raised by the evidence advanced on behalf of an applicant and contentions made by the applicant and that issue, if resolved one way, would be dispositive of the tribunal's review of the delegate's decision, a failure to deal with it in the published reasons may raise a strong inference that it has been overlooked. He argued that the tribunal's finding was open to it and that it was entitled to rely on the daughter's evidence in her letter of 15 April 2008 without needing to refer to her earlier material. I reject that argument. I have set out above the tribunal's critical finding concerning its assessment of the impact on his daughter of Mr Toro Martinez's removal from Australia. That expressly referred only to her letter of 15 April 2008. Earlier, the tribunal had used that letter to reject his evidence about her "alleged" suicide attempt and its connection to him. While the tribunal could have selected the letter of 15 April 2008 as a means of ascertaining their relationship, its earlier cynicism about Mr Toro Martinez's evidence concerning her "alleged" suicide attempt could not have been arrived at without rejecting or ignoring the material before the tribunal from the daughter herself in 2001 that such an event took place. Although she did not refer there to slashing her wrists, she did refer to an attempted suicide, and so did he in Mr Toro Martinez's evidence. There was no suggestion that the daughter had attempted suicide more than once. But the tribunal seems both to have been cynical of Mr Toro Martinez's assertion that such an incident took place, and to have regarded the suffering of the daughter merely as " some emotional hardship". It did not give any consideration to the evidence that she had had a history of a long depressive illness from which she was still recovering, albeit she said that she had overcome it to a great degree. I am satisfied that the tribunal's reasons demonstrate that it did not have any regard to the two earlier communications in evidence before it which the daughter had made of her position. This is evident from the way in which the tribunal treated Mr Toro Martinez's assertion that his daughter had attempted suicide. Her 2001 interview showed that his evidence had a credible and substantial basis. Had the tribunal had regard to that communication, it would not have treated with cynicism Mr Toro Martinez's reference to the suicide attempt. The daughter's 2001 and 2007 evidence was fundamental to making an assessment of the impact on her of a decision to cancel his visa. The daughter's evidence predating her latest letter was overlooked by the tribunal. It was important material for the tribunal to consider in assessing the impact of the cancellation of Mr Toro Martinez's visa upon her and his credibility. The tribunal's finding that her 2008 letter did not corroborate Mr Toro Martinez's evidence or mention her attempted suicide and its motivation was illogical and irrational given the contents of the 2001 and 2007 material in evidence. The tribunal failed to have regard to relevant evidence and material strongly corroborative of Mr Toro Martinez's claim that cancellation of his visa would have an adverse impact on his daughter. The assessment was considered by the tribunal in relation to Mr Toro Martinez's return to Columbia and the position of his fiancée. But, the tribunal assessed his relationship with his daughter only on the basis of the 15 April 2008 letter. The tribunal did not expressly consider the assessment's conclusion that it would be unreasonable to expect the daughter to travel to Columbia, no doubt, because of its finding as to the nature of the relationship between her and her father. Since I have found that the tribunal ignored and thus, failed to have regard to the strongly corroborative and relevant material in the daughter's 2001 interview and 2007 letter, I am satisfied that it committed a jurisdictional error: Craig 184 CLR at 179. The tribunal noted that he had claimed that he might face personal danger in "certain regions" but that he had not asserted that Cordoba was one of them. It said he had no knowledge of any particular problems, of the nature he feared, in the town in which his sole surviving uncle lived. The tribunal had relied upon the conclusion of the departmental officer who had compiled the international obligations and humanitarian concerns assessment that there was a mere possibility that Mr Toro Martinez might suffer serious harm as a result of indiscriminate generalised or random violence were he to return to Columbia. He complained that the tenor of the assessment was replete with references to instability, human rights abuses at every level of government and society in Columbia, and the insurgency of guerilla groups who also indulged in substantial and repeated violations of human rights. He claimed that country information also supported a very pessimistic assessment of the state of civil society in Columbia. Fact finding is the province of the tribunal. Ordinarily, an error of fact by the tribunal will not constitute a jurisdictional error, let alone an error of law. There is no error of law in simply making a wrong finding of fact: Enfield City v Development Assessment Commission [2000] HCA 5 ; (2000) 199 CLR 135 at 154 [44] per Gleeson CJ, Gummow, Kirby and Hayne JJ. Mr Toro Martinez accepted that position. However, he argued that the tribunal's conclusion that he would face no serious danger of personal harm by returning to Columbia was not a finding that the tribunal could make on any fair reading of the totality of the material on which it was based. He relied on the principle that if a decision-maker made a finding that was a critical step in arriving at its ultimate conclusion, but had no evidence to support it, the finding may well constitute a jurisdictional error: SFGB v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 231 ; (2003) 77 ALD 402 at 407 [19] per Mansfield, Selway and Bennett JJ; SZDTZ v Minister for Immigration and Citizenship [2007] FCA 1824 at [32] per Greenwood J; SZDFZ v Minister for Immigration and Citizenship [2008] FCA 390 ; (2008) 168 FCR 1 at 12 [42] per Flick J. I reject that argument. In my opinion the criticised finding was open to the tribunal. The tribunal considered the risk of harm to Mr Toro Martinez were he to be returned. The assessment had considered Mr Toro Martinez's claim that he would be specifically targeted by anti-government paramilitaries, primarily the guerrilla group FARC, as a person who might be kidnapped and held for ransom because he had close relatives living in the United States of America. However, the assessment pointed out that while there was country information supporting the claim that paramilitaries engaged in these activities as part of their broader struggle against the Columbian government, there was no evidence that supported Mr Toro Martinez's assertion that he would become such a target. The assessment noted that there clearly was a substantial absence of many aspects of a civilised state governed under the rule of law in Columbia. It cited an extract from a report by the United Nations High Commissioner for Refugees made in February 2007, which noted that these circumstances "... often create grave threats to the life, liberty or security of civilian populations in given zones or territories " (emphasis added). Thus, there was some material, albeit slender, before the tribunal on which it could base its finding that Mr Toro Martinez would face no serious danger of personal harm in the areas around Cordoba where it was likely he would return, close to where he had lived and his main family were located. The tribunal was entitled to find that in the regions in which Mr Toro Martinez was likely to live, there was no serious danger that he would come to personal harm. While life might not be very pleasant in Columbia generally, the tribunal addressed his claim that he would suffer serious harm as a result of indiscriminate generalised or random violence were he returned and concluded that in his circumstances, there was no serious danger that that would occur. Although other minds may have taken a different view, this was a matter of fact for the tribunal. I reject the claim that it made a jurisdictional error in this regard. (3) The Minister shall cause a copy of any direction given under subsection (1) to be laid before each House of the Parliament within 15 sitting days of that House after that direction was given. I reject that submission. First, s 15AD(a) of the Acts Interpretation Act 1901 (Cth) provides that where an Act includes an example of the operation of a provision, the example is not to be taken to be exhaustive and, if it is inconsistent with the provision, the provision prevails. The evident purpose of s 499 is to enable the Minister to give directions so as to ensure consistency in administrative decision-making and to draw to the decision-maker's attention aspects of the policy of the government for which the Minister is responsible to the Parliament. Moreover, s 499(3) requires the Minister to lay a direction made under s 499(1) before each House of the Parliament. Thus, the way in which the Minister proposes that delegates and others will be directed under s 499(1) to administer functions or powers under the Act will be subject to Parliamentary scrutiny. A vast variety of powers and functions are conferred on the Minister by the Migration Act . It would be undesirable, and would lead to inconsistent, and perhaps, arbitrary decision-making, for decision-makers to have no regard to the current policies of the government as to how various aspects of the migration laws should be administered. A Minister may give a direction under s 499(1) that identifies principles and considerations upon which the exercise of broad statutory discretions should be made. The Courts have developed guidelines or principles from time to time that are used in the exercise of discretions in judicial decision-making. As Mason and Deane JJ pointed out in Norbis v Norbis [1986] HCA 17 ; (1986) 161 CLR 513 at 519 it does not follow that, because a discretion is expressed in legislation in general terms, the legislature intends that the Court should refrain from developing rules or guidelines affecting its exercise. They said that such rules can promote consistency in decision-making and diminish the risks of arbitrary and capricious adjudication. I am of opinion that similar considerations inform the giving and content of directions under powers such as s 499(1). It is a feature of parliamentary democracy that government policy should be carried out through the exercise of the executive power which, in turn, is subject to parliamentary scrutiny. The structure of our system of government is that the executive power of the Commonwealth is vested in the Governor-General by s 61 of the Constitution . However, in practice and as a matter of convention that power is exercised by the Queen's Ministers of State for the Commonwealth who administer departments of State pursuant to s 64 of the Constitution . And, s 64 also requires that a Minister may not hold office for longer than three months unless he or she becomes a senator or a member of the House of Representatives. Thus, the exercise of the executive power under Ch II of the Constitution is confided to Ministers who are answerable for their conduct of the executive power in the Parliament. One purpose of the Parliament enacting legislation with broad discretions, such as are found in s 501(2) of the Migration Act , is to accommodate changing government policies over the years. The constitutional scheme of responsible government would be defeated if departmental decision-makers were entirely free to arrive at their own idiosyncratic views, unfettered by the control of the Minister who, by s 64 of the Constitution , is the person who administers a department of State and answers for that administration in the Parliament. Hence, the power to give a written direction under s 499 is a valuable means of the Minister ensuring that officers of his or her department will have appropriate regard to the objectives or policies of the government of the day in the exercise of their powers and functions. I am of opinion that the power in s 501(2) to cancel a visa is capable of being made the subject of a direction made under s 499(1). Mr Toro Martinez argued that the terms of Direction No 21 were so prescriptive that it was not supported by the power to give it under s 499(1) and was an interference with the unfettered discretion conferred on a decision-maker exercising the power of s 501(2). In relation to the consideration as to the protection of the Australian community, the direction identified factors that the decision-maker was to take into account as including, first, the seriousness and nature of the conduct, secondly, the likelihood that the conduct may be repeated, and, thirdly, whether visa refusal or cancellation may prevent or discourage similar conduct or general deterrence. Direction No 21 listed 11 other factors that the decision-maker could take into account. In making such a decision, a decision-maker should have regard to three primary considerations and a number of other considerations. The primary considerations are set out at paragraphs 2.3 - 2.16 and other considerations are set out at paragraphs 2.17 - 2.24. Decision-makers must have due regard to the importance placed by the Government on the three primary considerations, but should also adopt a balancing process which takes into account all relevant considerations. Mr Toro Martinez argued that Direction No 21 had not overcome the criticism of its predecessor, Direction No 17, made by Dowsett J in Aksu v Minister for Immigration and Multicultural and Indigenous Affairs [2001] FCA 514 ; (2001) 65 ALD 667 at 674-675 [21] - [24] . There, his Honour said that while the direction invited a balancing exercise which would normally involve an assessment of all the relevant factors having regard to their significance in the case in question, in fact that direction fettered that process. This was because it prescribed that some factors could never have more weight than others. That is inconsistent with the unfettered discretion conferred by s 501. The Minister asserted that it created a rebuttable presumption about the weight to be given to primary considerations that should guide the exercise of decision-makers' discretions in a uniform manner. I agree with Emmett J who said that the terms of Direction No 21 do not contain a requirement that any decision-maker, whether the Minister, a delegate or the tribunal, reach a conclusion that particular conduct of the visa holder is abhorrent: Lesuma v Minister for Immigration and Citizenship (No 2) [2007] FCA 2106 ; (2007) 99 ALD 514 at 517 [11] . I am not satisfied that Direction No 21 exceeded the ambit of the Minister's power to give it under s 499(1). Often decision-makers will be required to take into account or to have regard to, or to give weight to, numerous, sometimes conflicting factors in arriving at decisions by force of legislation. Similarly, in general, the description of a factor as a "primary consideration" or the attribution of weight to be given to a factor will provide an effective guide to decision-makers but will not require them to arrive at a predetermined conclusion. Because par 2.2 requires an overall balancing process to be undertaken by the decision-maker, he or she will be able to address the necessities and circumstances of the individual case. In Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40 ; (1986) 162 CLR 24 at 41, Mason J explained that in the absence of any statutory indication of the weight to be given to various considerations, it was generally for the decision-maker and not the Court to determine the appropriate weight to be given to the matters that are required to be taken into account in exercising a statutory power. But he said that the Court could set aside an administrative decision which had failed to give adequate weight to a relevant factor of great importance, or had given excessive weight to a relevant factor of no importance. Mason J cautioned that the preferred ground on which that judicial power was to be exercised was that the decision was "manifestly unreasonable". I discussed the principles applicable to a statutory duty of, or requirement for, a decision-maker to take into account or to have regard to factors in Telstra Corporation Ltd v Australian Competition and Consumer Commission [2008] FCA 1758 at [103] - [112] . When the expression "regard must be had to" or like expressions are used in a statute in respect of a particular criterion or factor to be considered by a decision-maker, he or she is bound to treat such a factor as a central or fundamental element in the making of the relevant decision: Telstra Corporation Ltd v Australian Competition Tribunal [2009] FCAFC 23 at [267] per Jacobson, Lander and Foster JJ applying Telstra [2008] FCA 1758 at [103] - [112] . Often the three primary considerations in Direction No 21 will tend in different directions. The best interests of a visa holder's child may often be to remain with his or her parent, while the protection of the Australian community or its expectations may tend in the other direction. As I said in Telstra [2008] FCA 1758 at [110] , in the context of ordinary principles of administrative decision-making, where fundamental weight must be given to a particular factor or factors, the requirement is that the decision-maker treat consideration of the factors, as opposed to the factors themselves, is a central element in the deliberative process. It will be in this manner that he or she will give appropriate weight to those factors. I am of opinion that par 2.17 permits the decision-maker to accommodate such an interpretation. Rather, they reflect factors which must be considered by a decision-maker together with others which may be considered. Merely because two of the factors require that the protection of the Australian community and its expectations are to be given weight as primary considerations, does not mean that they necessarily and in every case will outweigh one or more other considerations, even if they are not primary considerations. However, by identifying some primary considerations and requiring the decision-maker to give weight to them, the direction emphasises that the decision-maker must have regard to those matters as a fundamental part of his or her deliberation. That does not preclude the decision-maker determining that some other factor is more important in particular circumstances. Mr Toro Martinez had been convicted of two offences committed in November 1996. He had pleaded guilty to the first, under s 233B(1)(d) of the Customs Act 1901 (Cth) of being knowingly concerned in the importation of 655 grams of pure cocaine, which exceeded the trafficable quantity. The maximum penalty for that offence was 25 years imprisonment or a fine of $100,000. Following a Crown appeal, he was sentenced to six years imprisonment with a three year non-parole period. He was also convicted in February 2002 of a second offence after a jury trial in respect of being the principal behind an importation of 4.492 kilograms of cocaine into Australia in December 1996. He was sentenced to 12 years and six months imprisonment with a non-parole period that expired on 8 June 2008. In that context, the tribunal was entitled to have regard to the very serious conduct involved in Mr Toro Martinez's offending. The tribunal gave detailed consideration to Mr Toro Martinez's present situation. It concluded that although the evidence of his rehabilitation suggested that the risk of recidivism might be low, it was nevertheless real and, if it occurred, could have serious consequences for the community. The tribunal had regard to these factors and the expectations of the Australian community. It concluded that the seriousness of the offences and their planned and calculated nature would ultimately lead most community members to the conclusion that the appropriate course was to cancel the visa. The tribunal then turned to considering other matters in accordance with par 2.17 of Direction No 21. It found that, as I have discussed above, the daughter would suffer some emotional hardship from his removal. It also found that there was a genuine relationship between Mr Toro Martinez and his fiancée and that she would suffer hardship both emotionally and in terms of her business, were he to have his visa cancelled. The tribunal was evidently sympathetic towards the fiancée. It found her to be an honest and deserving woman, making the observation that "any decision-maker would wish to avoid occasioning her any hardship, but she knew the facts and must have realised there were risks involved in continuing with the relationship". Although the tribunal used the language of stipulation and compulsion in coming to its decision, I think a fair reading of its reasons demonstrated that it gave due and proper consideration to the circumstances of the case (leaving aside the errors that I have found) and that it used these terms in the context that, in light of all of the considerations this was the correct and preferable decision. One can easily understand why a decision-maker not bound by Direction 21 would conclude that the primary considerations of community protection and expectations would outweigh other considerations in this case. The individual hardships falling upon Mr Toro Martinez's daughter and fiancée are one thing. But the level of criminality for which he was convicted, and for which he had served 10 years in prison, were open to be considered in the way that the tribunal did as demanding a conclusion that they outweighed other considerations. I am not satisfied that the tribunal committed any error in the way in which it expressed itself. Decision-makers are allowed considerable latitude in their choice of expression of the reasons they had for determining the matter as they did: Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6 ; (1996) 185 CLR 259 at 272 per Brennan CJ, Toohey, McHugh and Gummow JJ. I reject this ground. It is common ground that those documents were not drawn to Mr Toro Martinez's attention before the tribunal made its decision and he had no opportunity to inspect them, or to make submissions in relation to them. It considered that the two documents provided it with information as to the state of the health system in Columbia in order to come to its finding that that country was "... not totally devoid of medical services". Mr Toro Martinez had argued that the health system in Columbia was inadequate and that he had two medical conditions. He asserted that he would need medical help and could expect no support in his uncle's small town. A little earlier in its reasons the tribunal had summarised that contention. The minister argued that the tribunal's real decision on the point was that the evidence did not suggest that Mr Toro Martinez's health condition was acute or life threatening and that such medical facilities as were available in Columbia would be adequate to deal with it. I reject that argument. Secondly, [the tribunal] must be proposing to have regard to the documents for the purpose of reaching a decision in the proceedings. Marshall and Lander JJ said there was nothing to suggest that the tribunal failed to comply with s 39(1) merely by referring to a previous (tribunal) decision. They concluded that the previous decisions did not play any part in the tribunal reaching its decision in the matter: Scorgie [2008] FCAFC 101 at [41] . The Full Court approved ( Scorgie [2008] FCAFC 101 at [42] , [67] and [71]) of what the trial judge, Flick J, had said as to the position at common law ( Scorgie v Minister for Immigration and Citizenship [2007] 47 AAR 314 at [7]), namely that a denial of procedural fairness would not be established simply because a decision-maker had referred to evidence given in other proceedings in which he or she had been involved. He said that denial of procedural fairness may be made out if the decision-maker went beyond simply referring to evidence in other proceedings and sought to rely upon that evidence or conclusions previously reached without affording an affected party an opportunity to make submissions. Flick J referred to the principle, also relied on by Mr Toro Martinez here, that in the ordinary case, where no problem of confidentiality arises, an opportunity should be given to a person affected to deal with adverse information that is credible, relevant and significant to a decision to be made. The decision-maker must determine what such information is before arriving at the final decision and give an opportunity to the person affected to deal with it: Applicant VEAL of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2005] HCA 72 ; (2005) 225 CLR 88 at 95 [15] and 96 [17] per Gleeson CJ, Gummow, Kirby, Hayne and Heydon JJ. Information that could not be dismissed from further consideration by the decision-maker before making the decision was "credible, relevant and significant". In my opinion, the tribunal used the two documents containing information adversely for Mr Toro Martinez, contrary to its obligations under s 39(1) and at common law. However, I am satisfied that no useful result would ensue from the grant of relief on this ground since Mr Toro Martinez cannot complain of the tribunal's ultimate finding that the evidence did not suggest that his condition was acute or life threatening and did not show that appropriate drugs for one of his problems and treatment for the other were unobtainable in Columbia: SZBYR v Minister for Immigration and Citizenship [2007] HCA 26 ; (2007) 235 ALR 609 at 618-619 [29] per Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ. I am grateful for the assistance I received from counsel for the parties and, in particular, for the willingness of counsel to act for Mr Toro Martinez pursuant to Order 80 of the Federal Court Rules . I certify that the preceding eighty-nine (89) numbered paragraphs are a true copy of the Reasons for Judgment herein of The Honourable Justice Rares.

administrative law retrospective legislation deeming provision intended to reverse effect of judicial decision that statutory power to cancel a visa could not be exercised in respect of particular class of visa deeming provision validated decisions by the minister and a delegate of the minister deeming provision silent about validity of decision made before retrospective legislation enacted by administrative appeals tribunal to affirm decision of delegate to cancel visa whether tribunal's decision continued to be invalid after retrospective legislation commenced because of its earlier jurisdictional error whether validation of delegate's previously invalid decision also validated previously invalid decision of tribunal principles of construction retrospective legislation deeming provisions principle that legislature is taken not to intend to interfere with fundamental or accrued rights unless express language is used principle of interpretation when construing retrospective legislation that the parliament intended to act fairly deeming provision designed to overcome the effect of a superior court decision deeming provision created a statutory fiction importance of identifying the legislative purpose of the deeming provision whether deeming provision is capable of removing jurisdictional error where no express words used decision-maker ignoring relevant material jurisdictional error statutory interpretation statutes administrative law

The first is ACD 21 of 2007, which is convenient to see as an appeal against a judgment of the Federal Magistrates Court given by Federal Magistrate Mowbray in proceedings in that Court numbered CAG 17 of 2007 on 21 May 2007. His Honour dismissed an application by the appellant, Mr Fitzpatrick, to have a bankruptcy notice issued against him set aside. 2 Another proceeding is ACD 23 of 2007, which is convenient to see as an appeal against the judgment of Mowbray FM in proceedings numbered CAG 11 of 2007 in the Federal Magistrates Court by which his Honour made a sequestration order against Mr Fitzpatrick's estate on 22 May 2007. 3 The third proceeding before this Court is ACD 22 of 2007, and it appears to be some generalised application for, among other things, the setting aside of the orders appealed against. As far as I can see, the only matter the application raises that the appeals do not is whether there should be some stay of the operation of the orders made by Mowbray FM which have been variously appealed against. 4 In relation to ACD 22 of 2007 the respondent sought that it be struck out after another judge, who looked at the matter for the purpose of giving directions, expressed a preliminary view that it might be incompetent. I have refrained from striking it out because it does raise the question of a stay. For reasons that will emerge, there is no basis for or sense in granting any stay. 5 In relation to the question of setting aside the bankruptcy notice, his Honour's reasons appear to be correct for the reasons that he gave. The bankruptcy notice was indeed, as his Honour explained, founded on a final judgment or final order for the requisite amount within the meaning of s 41(1) of the Bankruptcy Act 1966 (Cth) ('the Act'), and it was not shown that Mr Fitzpatrick had such a counter-claim, set-off or cross demand, as would warrant the setting aside of the bankruptcy notice. Again his Honour, it seems to me, unexceptionably, explained why that is so. Thus he says there has been no final judgment. There was evidence that he had made an offer to pay the creditor $100 a fortnight, which had been rejected. The only other material before the Court was that Mr Fitzpatrick had received a payout of an unspecified sum from his erstwhile employer. As the learned Federal Magistrate said, in the context, the offer of $100 per fortnight was 'hardly an indicator that the respondent has the capacity or ability "to pay his or her debts" ' ([2007] FMCA 943 at [18]). 8 Otherwise Mr Fitzpatrick's argument had been that there was, within the meaning of s 52(2)(b) of the Act, 'other sufficient cause' to justify the Court in its discretion dismissing the petition. His Honour firstly noted that litigation on the judgment debt which arose from orders for payment of costs in unsuccessful proceedings in the ACT Supreme Court was finalised, the litigation having gone as far as the High Court. This appears to me to be undoubtedly correct. 9 There is currently before the ACT Court of Appeal an appeal against a decision of the Registrar taxing costs ordered by Crispin P on 1 February 2006 in yet other proceedings between the parties. Mr Fitzpatrick seeks to raise issues there which would re-litigate issues raised in the proceedings that terminated in the High Court and that involved the judgment debt, as well as other issues. He also suggested that he had some counter-claim, although I have heard little in this regard. In any event it was vague and uncertain and his Honour felt unable to give any great weight to a mere possibility of such a claim. 10 Much of the argument before his Honour concerned the proposition that the Court should 'go behind' decisions of the ACT Supreme Court culminating in the costs orders that founded the judgment debt and decisions of Special Magistrate Symons in the ACT Small Claims Court. Something has to be put before the Court to outweigh [such] considerations before it can be said that sufficient cause is shown against the making of a sequestration order. Judging by what has been filed and said before me, this is an understatement. This is not to denigrate Mr Fitzpatrick, who I accept has been doing his best to explain strongly felt matters as best he can. But nevertheless it has been no easy task to try to separate out such light as there might be from the undoubted heat that is present and to consider how far the former might truly shine and what it might or might not illuminate. 13 In a sense it is true to say that the judgment debts had their genesis in a question about a mere ten dollars. Mr Fitzpatrick was being sued in the Small Claims Court by a former solicitor for costs. Mr Kidney, the respondent to the appeal of the petitioning creditor, was a senior employee of the ACT Law Society. 14 Mr Fitzpatrick had the idea that Mr Kidney, by virtue of such office, would be able to produce documents that he thought would help his case and that he ought to be able to give some evidence that would assist his, Mr Fitzpatrick's, case. He thought the same apparently of some other lawyers, including Mr Doig, a barrister. He caused the Small Claims Court registry to issue subpoenas to have those people attend both to produce documents and to give evidence. The case was listed for 22 September 2003 and Mr Fitzpatrick wanted the documents produced and the people to attend on that day. 15 Registry officers took it on themselves to alter the dates proffered by Mr Fitzpatrick in the forms that he presented to the registry to have the people attend on 18 September. It seems likely that they had in mind that they would have a day for the return of documents in relation to the subpoenas and did not sufficiently appreciate that Mr Fitzpatrick intended that the people should attend personally and be ready to give evidence themselves. Mr Fitzpatrick objected to registry officers about this, explaining the position. They told him to proceed with the documents as they had amended them and that they would cause fresh documents to be issued to require the intended recipients to be present on the day of the hearing, set for 22 September. 16 Mr Fitzpatrick served subpoenas requiring attendance and production on the 18th. He did not tender conduct money or witnesses' expenses. Nevertheless the Law Society advised Mr Kidney that he should attend on the 18th, regardless of that later formality and the absence of payments of a pittance, and he did attend and produced some documents. By this time it was in the offing that the case would not proceed on 22 September but would then be transferred to the ACT Magistrates Court. Mr Kidney did not re-attend on the 22nd. Mr Doig, by contrast, did attend on the 18th and again on the 22nd. 17 The presiding magistrate, Special Magistrate Symons, was informed of the wish of the parties that the matter be transferred to the Magistrates Court and was clearly acquiescing in that. Mr Doig was present in the Court and known to her Honour. She deduced that he was present in relation to the proceedings between the parties and asked Mr Doig what he wanted. There was some discussion, in the course of which Mr Doig asked for some allowance for witness' expenses in connection with his half-hour attendance there. The learned Special Magistrate indicated that she would order that he be paid $135. 18 The text of the transcript does not itself bear the definite conclusion that Mr Fitzpatrick consented to this course, but given Mr Fitzpatrick's forensic pugnacity and his willingness to debate matters with the presiding judicial officer, as evidenced before me and in transcript before Master Harper in the Supreme Court, and to question the Court and so on, it seems very likely that the Magistrate would have understood, from things Mr Fitzpatrick said, that he had no objection to such a course. The learned Special Magistrate seems to have thought that it was appropriate to make tidying up orders whereby the sum of $10 would be ordered to be paid to Mr Kidney on account of conduct money and for similar sums to be paid to some of the other people who had been summoned and who in one way or the other had complied with the subpoenas. Again knowing something of the way in which Mr Fitzpatrick tends to conduct himself in court, it is very likely that the Special Magistrate again had the impression that he had no objection to the fact of the orders being made, or to the quantum. 19 The learned Special Magistrate seems to have been acting under s 447 of the (now repealed) Magistrates Court Civil Jurisdiction Act 1982 (ACT), which provided that a person who attended for the purpose of giving evidence before the Small Claims Court under a summons was entitled to receive such fees and travelling expenses as the Court directed in accordance with the scale and conditions applicable in the Supreme Court, and provided also that such fees and travelling expenses were payable if the summons was issued at the request of a party in accordance with a direction of the Small Claims Court. 20 There was no actual application by Mr Kidney for such an order, but, in reality, in the context of Mr Fitzpatrick's forthright ways with the Court, there is no reason to think that the latter was not heard in relation to the matter. If the Special Magistrate erred, it can, as Master Harper subsequently found when Mr Fitzpatrick sought leave to appeal from those orders of the Small Claims Court, hardly have been a result of an error of law but rather one, if at all, of some misapprehension of the facts or in the exercise of a discretion. 21 Master Harper thought there was no error of law that might justify an appeal, that the decision was interlocutory, that the amounts were small and that leave should be refused. Very belatedly, although for reasons that had some explanation from his own point of view, Mr Fitzpatrick sought leave to extend time in which to appeal against Master Harper's order. The matter came before Crispin P, who held that there was no viable basis for an appeal from what Master Harper had done. 22 Crispin P relied on what he thought was a legislative policy fairly strictly to limit appeals from the Small Claims Court, especially in interlocutory matters. The certification became the final judgments or orders upon which the bankruptcy notice, and, in due course, the act of bankruptcy relied on to found the sequestration order, were based. 24 There were other proceedings taken by Mr Fitzpatrick, in particular before Crispin P, and in relation to which there was, at the time of the hearing before Mowbray FM, an appeal pending in the ACT Court of Appeal. Those proceedings could not have resulted in orders which would have set aside the costs orders of the Court which led to the judgment debt which led to the bankruptcy. 25 Over the years Mr Fitzpatrick has developed an enlarging sense of grievance. He asserts that, contrary to my impressions of the matter, he was not content to let Special Magistrate Symons make the original orders that she did. He says that he always considered that they were unjust and as a matter of principle, even though no great sum was involved, wished to challenge them as unlawfully made, particularly in a jurisdiction where the rule was that there were no costs as between the parties. He says that there have been mistakes made, and coincidences and things said to him off and on the record which have led him to believe ultimately that there is widespread corruption in the judicial system in the ACT, extending even up to the High Court, and involving many people. At the same time he says that, as a former long-serving police officer with much experience of the courts, he retains great respect for the judicial system as a whole and claims that it pains him to say the things that he does. It does not have much to do with the case, but these things do not sit very happily together. 26 From the great mass of the materials, confused and confusing, which he has put forward in writing and sought to admit orally, it seems to me that six possibly relevant matters can be distilled. Not all of them appear to have been debated before Mowbray FM, but in the interests, almost certainly futile, of trying to satisfy Mr Fitzpatrick that the Court is genuinely interested in trying to understand what his complaints are and whether they have any justification in law, I will deal with them. 27 The first involves the supposed injustice of the orders originally made in the Small Claims Court. Quite apart from the apparently cogent reasons for refusing leave to appeal identified by Master Harper and Crispin P and endorsed by the High Court, on my own examination of the source material I am far from satisfied that there was any illegality or substantial injustice involved. It is of course unfortunate that the registry altered the dates, but there must have been some small expense for Mr Kidney, even if subsidised by his employer, in attending at the Court and there was no injustice in the Court ordering that there be paid the conduct money which ordinarily ought to have been paid anyway. 28 The second matter is that an effect of the sequestration order would be to activate s 60 of the Act whereby, under subs (2), '[a]n action commenced by a person who subsequently becomes a bankrupt is, upon his or her becoming a bankrupt, stayed until the trustee makes an election, in writing, to prosecute or discontinue the action'; and under subs (3) if the trustee does not make such an election within 28 days, after notice of the action is served upon him or her by the other party to the action, he or she is deemed to have abandoned the action. Mr Fitzpatrick apprehends that a reason for Mr Kidney wanting him to be made bankrupt was to be able to take advantage of the operation of those provisions of s 60 and conceives that this is improper. Where other elements warranting the making of a sequestration order are present, I do not consider that such a collateral purpose, which merely seeks to invoke the processes of the Act consequent upon the making of a sequestration order, involves impropriety at all. Secondly, Mr Fitzpatrick says the effect of this will be unfairly, and as a matter of practical hardship, to cause him to lose what might be the fruits of this appeal, including investigation of a great deal of what he says has been wrongful conduct by various people in authority and by his opponent and his legal advisers over the years. There has been, apart from the appeal and the proceeding which provoked it, a good deal of litigation between the parties and a good deal of time and expense spent on investigating Mr Fitzpatrick's complaints. I do not in the circumstances feel that there is any injustice or hardship to him if the results should be as he apprehends they will be. 29 Mr Fitzpatrick further points to a delay of the hearing of his appeal in the Court of Appeal and suggests that that delay has been orchestrated, with the probable connivance of officers of the Supreme Court, with a view to facilitating the bankruptcy proceedings rendering his appeal, as a practical matter, nugatory. Nothing has been put before me which would satisfy me of any impropriety on the part of anybody in relation to the listing of the hearing, and I am unpersuaded that matters have proceeded other than in a regular way. 30 Next, Mr Fitzpatrick says that he had no prior notice of the taxation of the bills of costs which gave rise to the judgment debt on which his bankruptcy was ultimately founded. He says the first he knew of this was when, in 2005, efforts were made to garnishee his wages to satisfy the costs orders as quantified by the taxation. Very belatedly, Mr Fitzpatrick changed tack and says that it is not that he was not notified of the taxation but that he was not there, that the taxation proceeded in his absence, and he does not know why. The plain fact is that nothing has been put before me to suggest why that non-notification or lack of knowledge of the taxation or unexplained non-attendance was not raised in any proceeding before Mowbray FM dealt with the matter in May of this year. Apparently it was not raised at all until today before me. Had there been no notice to Mr Fitzpatrick of the taxation, that might have been a matter that could go to a reason for not making the sequestration order, although one would expect some evidence that it was likely that the amount of the taxed costs could be reduced to a level sufficient to reduce the debt below that which could found a valid bankruptcy notice, and there was no such evidence. 31 Next, Mr Fitzpatrick made much of a claim that at one point Mr Kidney's solicitor, also the solicitor for the Law Society, had requested that Mr Fitzpatrick pay amounts on account of the judgment debt direct to the Law Society rather than to Mr Kidney. He says that this may indicate that the true creditor is the Law Society, in which case a supposed judgment debt to Mr Kidney is not something which the Court should countenance as the foundation of his bankruptcy. 32 This is entirely misconceived. It is certainly a matter of inference that the Law Society would at points have paid Mr Kidney's costs and with his assent controlled the litigation. It remains the fact that Mr Kidney was the party. It remains the fact that Special Magistrate Symons had ordered the payment of the $10 to Mr Kidney personally, and that if that order were to be challenged, Mr Kidney personally was a necessary party to the challenge. The fact that in some senses the entity really out of pocket is the Law Society rather than Mr Kidney personally is of no significance and does not amount to any reason why, alone or in combination with other factors, the sequestration order should not have been made. 33 Finally, there was a curious set of orders made on 3 August 2007 by Neville FM in proceedings to annul the sequestration order that Mr Fitzpatrick brought. As has apparently been noticed by Gyles J on another occasion, normally an annulment application would await the outcome of the hearing of an appeal against the sequestration order. On 3 August it appears that Neville FM was seeking to engineer an arrangement whereby if Mr Fitzpatrick could and would, directly or indirectly, promptly satisfy his debts to Mr Kidney, and by that time also to the trustee, the bankruptcy would be annulled. There was no appeal before me against the ultimate order of Neville FM made on 7 September dismissing the application for annulment and dismissing a further application which had sought to challenge the orders of 3 August 2007. 34 It seems tolerably clear that, with respect, Neville FM rather misunderstood the nature of the jurisdiction to annul a bankruptcy. As a general rule, either there is a basis for concluding that the sequestration order ought not to have been made when it was or there is not. A mere subsequent preparedness to pay, allied with a capacity to do so, is in general not a reason for annulment, though if consummated it may of course require the discharge of the bankrupt from bankruptcy. 35 I mention the matter, however, because it might be thought that, if there had been grounds, in the opinion of a judicial officer expressed on a final basis, for the view that the sequestration order ought not have been made, it would appear inconsistent for the sequestration order to have been made. This might be a matter that could be considered on appeal against the making of the sequestration order, if, for some reason, that view of the Federal Magistrate considering annulment had been unable to be carried into effect. That however is not the position here as I apprehend it and the proceedings before Neville FM do not provide any basis for considering that the making of a sequestration order should be undone on appeal. 36 I have otherwise read all the material that has been filed and considered it as best I can and I have also sought to consider the rest of the extensive material orally canvassed by Mr Fitzpatrick. It is not practicable to deal with it in detail. I simply say that none of it to me indicates a reason for disturbing on appeal the decision come to by Mowbray FM. 37 Returning now to proceeding ACD 22 of 2007. I have considered all the reasons discussed in relation to the appeal against the sequestration order in the context of ACD 22 and whether there is any reasonable basis for me to intervene to stay the operation of the sequestration order so that Mr Fitzpatrick would be guaranteed the continuation of his appeal proceeding in the Supreme Court. The continuation of that proceeding would involve further expense for the petitioning creditor. It is Mr Fitzpatrick's appeal, not the petitioning creditor's. The petitioning creditor has already been put to a substantial amount of expense which has otherwise resulted in the just position being, in the view of Mowbray FM and myself, that by reason of non-payment of debts incurred by Mr Fitzpatrick as a result of proceedings begun by Mr Fitzpatrick, there would need to be shown, first, some high probability of success in the appeal, and second, some reason for thinking that the trustee might not approach the matter in a proper and dispassionate manner. 38 Nothing has been put to me to show that either of those two matters is made out. I expect that the trustee has considered the matter properly, taking into account the due interests of Mr Fitzpatrick, as well as of his creditors, including the petitioning creditor, and I do not propose to order a stay or injunction or do anything else of the kind that would prevent the ordinary operation of s 60 of the Act. 39 Insofar as proceeding ACD 22 of 2007 otherwise seeks that somehow or other this Court will put at an end the sequestration order, the appropriate method of challenging a sequestration order is by an appeal, as has been made, and ACD 22 is otherwise incompetent. ACD 22 will be entirely dismissed, as will each of the appeals. 40 Mr Fitzpatrick is to pay the costs of the three proceedings. There is no basis on which he should not. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick.

control of persons and property of bankrupt stay of actions already commenced until trustee elects to prosecute or discontinue discharge of bankrupt and annulment of sequestration order annulment of bankruptcy where bankrupt is able to pay outstanding debt but has not yet done so bankruptcy bankruptcy

Section 131B(2) provides that an appeal lies from a decision of a court of a State or Territory to this Court. In this case, the relevant court was the Newcastle Local Court. According to s 25(5) of the Federal Court of Australia Act 1976 (Cth), that appeal may be exercised by a single Judge of this Court. 2 The decision which is the subject of the appeal is the sentence imposed by Magistrate Swanson in the Newcastle Local Court on 29 January 2008 in respect of Mr Plunkett's conviction under the Act of 11 offences of breach of copyright. Mr Plunkett's actions, in broad terms, comprised the copying and distributing of DVDs. The convictions were in relation to 11 DVDs, but the Magistrate observed that, over the whole of the period of Mr Plunkett's alleged conduct, there may have been several hundred DVDs copied and sold for profit by Mr Plunkett. In respect of each of the 11 offences of which he was convicted, Mr Plunkett was fined $2,000, with Court costs of an additional $70.00 also imposed. The total penalty was therefore $22,070.00. 3 In his Honour's judgment, the Magistrate stated that the maximum penalty for each of the 11 breaches of the Act is a period of five years' imprisonment and/or a fine of $60,000. His Honour described the activities of Mr Plunkett as "a modest endeavour to try and raise some money for his daughter to go to America". His Honour took into account the loss which might have been sustained by the motion picture industry as a whole, and observed that Mr Plunkett had not made a large profit from his activities. His Honour noted that Mr Plunkett did not plead guilty to the offences and that this reflected upon his character. Another important consideration taken into account by his Honour was that Mr Plunkett engaged in the relevant conduct whilst he was a member of the New South Wales Police Force. 4 The Magistrate noted that another person, Mr Ruxton, who was involved in the same activities with Mr Plunkett, was fined $1,000, placed on a bond in respect of some matters and was sentenced to a "very heavy penalty" of community service. The Magistrate did not impose a similar penalty on Mr Plunkett, in part because of the fact that he was at the time of the offences a serving member of the New South Wales Police Force and engaged in activities at the Lake Macquarie Police Citizens Youth Club. 5 On the hearing before me, Mr Plunkett read and relied on a number of affidavits. In his own affidavit, he states that his motive in committing the offences was to obtain funds to send his daughter, who had been identified as a talented basketball player, to play in the United States of America. He expresses remorse and sorrow for his actions. He points out that as a result of the convictions he was suspended without pay and was subsequently dismissed. He states that he has not been able to obtain any significant employment. He was unable to return to his former trade as a result of a knee injury whilst on duty as a policeman. Mr Plunkett also says that he has been unable to meet the mortgage repayments for his house and cannot afford to pay a sum in the order of $22,000 without losing the family home. He says that as a direct result of these events he has lost superannuation to the value of $250,000. He also states that he has lost many close friends, both within and outside the Police Force. He refers to the emotional and financial devastation the last years have brought to himself and his family. Mr Plunkett says that he is currently medicated for depression. On this last point, I note that there is a letter which was tendered as evidence before me at the hearing, confirming his attendance for appointments with a psychologist. This letter, in my view, provides some support for Mr Plunkett's statement that he is contrite and prepared to take steps not to engage "in similar activities". 6 A number of benevolent works undertaken by Mr Plunkett and career commendations awarded to him have been brought to my attention on the appeal. This evidence was adduced from a range of persons acquainted with Mr Plunkett, including his parents and persons associated with the New South Wales Police Force. His wife, Adrienne Plunkett, has provided a detailed affidavit setting out the dramatic impact on the family of Mr Plunkett's conviction and the investigation leading up to it. She testifies to a long period of effective and commendable service by her husband. She refers to his present suffering from depression due to the ongoing stress, and says he is a "shattered man" with a lack of self-worth and sleeping difficulties. In addition, she confirms that they are unable to regularly meet the mortgage repayments due to the family's lack of income. She states that there has been a virtual break-down of the relationships been herself and Mr Plunkett, and between others and Mr Plunkett. She also notes that she fears that Mr Plunkett has contemplated self harm as a result of the investigations and convictions. 7 Considering the above matters and those set out in the sentencing comments of the Magistrate, together with the matters raised by the Crown and Mr Plunkett in their respective submissions, and particularly taking into account the devastating consequences which Mr Plunkett has suffered and will continue to suffer as a consequence of his offences, I am of the opinion that the penalty in the present case should be reduced to $200 in respect of each of the 11 breaches, together with Court costs of $70.00. 8 I make no order as to the costs of the present appeal. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.

appeal from sentence imposed by magistrate breaches of copyright act 1968 (cth) quantum of penalty. copyright