(f) The undertaking by Claude Cassegrain not to work in the area of any of the Technologies (the restraint):
Lost income - $1,464,000 (Exhibit A14, Attachment "A", but only for the first five years - see also the table accompanying the Commissioner's document "Calculation of after tax income on Costello's income projections at 1993 dollar values"). Although that latter document is a convenient place to find Mr Costello's revised figures, we reject the Commissioner's contention that the quantification should be done on a post-tax, rather than pre-tax, basis. All other figures feeding into the mathematical calculation are provided before tax, and this component should be quantified in the same way.
14 Our first impression was that the Tribunal carried out a well thought out and satisfactory process to arrive at their result in difficult circumstances, where precision is not possible and minds may differ. It was not apparent to us that their approach might be affected with error of law. Whether their opinion of the preferable method or their assessment of the facts would accord entirely with ours is not to the point. The Tribunal was exercising the administrative power of the Commonwealth in an area of discretionary decision-making and it is not relevant that others might have acted differently. That is not to say that we disagreed with the Tribunal on any matter. It is simply that our opinion is not relevant other than on a question of law.
15 This matter is not, however, to be determined by first impressions, but by reference to the issues raised by the parties and we turn to those matters.
16 The taxpayers' first argument is that the Tribunal misconstrued cl. 2.2(a) of the Deed. It should have proceeded on the basis that the items in cl. 2.2(b) specifically identified all that might have been covered by the references to damages in cl. 2.2(a) so that there was little left for cl. 2.2(a). They relied upon the very wide definitions in the deed of the items specified in cl. 2.2(b) to seek to make this point good. They also pointed to the claims made in legal proceedings which were settled by the Deed. The argument was put as a question of law because it involved the construction of cl. 2.2 and, particularly, the relationship between sub-clauses (a) and (b).
17 We did not understand the taxpayers to be saying that, as a matter of construction, nothing could answer the description of liability for damages to GCC, but, rather, that after cl. 2.2(b) had done its work, nothing was left. Stated this way, we doubt that any question of law is involved. However, we prefer not to dispose of this aspect of the matter on that basis. We accept that items specifically identified in cl. 2.2(b) should be assigned exclusively to that provision. However, we see nothing in the Tribunal's decision which offends against this. Clause 2.2(a) specifically identifies "… liabilities… to pay… damages… to any… party." That specifically includes GCC as a beneficiary. It is not surprising, contrary to the submission of the taxpayers, that there should be substantial damages in this category. Specifically, cl. 2.2(a)(i) relates to liability to pay damages whereas cl. 2.2(b) relates to transfers of technology. Notwithstanding the width of the definitions in the Deed of the technologies identified in cl. 2.2(b), an action for damages will be likely to cover a greater subject matter. The error of law relied upon cannot be found in the Tribunal's analysis of the deed. It has to be inferred from the way they went about their task. We do not find any evidence of error of law from that source. We accordingly find no error of law in the Tribunal's construction of cl. 2.2(a).
18 We do not think that the argument that the Tribunal did make an error of law is assisted by its finding that it was "fanciful to suggest that the legal proceedings between GCC and CSIRO, which had been going on for so long at considerable expense… might be resolved without the payment of any consideration by CSIRO to GCC except for a portion of the $503,667 dealt with in clause 2.2(b) of the Deed." On the material before us, we are inclined to agree with the Tribunal. We see no error of law in the Tribunal so concluding. It was urged upon us that the Tribunal must have wrongly understood that the taxpayers were arguing that costs were included in cl. 2.2(b) because of the reference to "considerable expense". We do not accept that. The Tribunal was, no doubt, merely measuring the significance of the damages claim by the time and expense which had gone into prosecuting it. So understood, the sentence supports the Tribunal's assessment.
19 The taxpayers asserted that the Tribunal also erred in law by assigning the whole of the $8.8 million to cl. 2.2(a)(i) and assigning nothing to cl. 2.2(a)(ii). They asserted that in so doing they ignored Lindgren J's direction to "acknowledge the distinction between… releases and surrenders… and… contractual undertakings". However, the Tribunal carefully carried out its task in accordance with Lindgren J's direction, even asking for specific submissions from the parties as to what fell into its components. We have set out above their careful analysis of the issue and the conclusions they drew. Further, the assets they identified for apportionment included assets in both categories. Whether all the assets should be included was a matter of assessment for the Tribunal. They paid careful attention to Lindgren J's direction, while also recognising and addressing the fact that Lindgren J's direction used expressions somewhat different to those used in the Deed (see [24] and [39] of the Tribunal's Reasons). It is worth observing that the Tribunal and the parties, in the absence of any appeal from Lindgren J's decision, were bound by the decision and the directions it contained. This ground must fail.
20 The next major criticism of the Tribunal's reasons in the taxpayers' appeal contains two elements. First, it is said that the Tribunal left a group of undertakings out of account when it undertook its task under s 160ZD(4). Secondly, it erred in the way it approached the valuation of undertakings - in particular it did not address the importance of the central position of Mr Cassegrain in attributing undertakings between Mr Cassegrain and the company. Again, we think these matters really go to questions of fact, not law. However, we also find no error in the Tribunal's treatment of the matters. The Tribunal's findings were well within the discretion available to it. The taxpayers, in their written submissions, undertook an extensive analysis of the provisions of Part IIIA of the 1936 Act, particularly with reference to the distinction between "the disposal of existing assets" and "the assumption of liabilities [which] gave rise to only notional disposals of assets 'created' by the Act…". The taxpayers assert that the Tribunal failed to understand this distinction and consequently were led into error when they came to the valuation exercise. Again, the taxpayers must rely on inference from what the Tribunal did to find an error of law. Nothing the Tribunal said disclosed this supposed error in terms.
21 The Tribunal did address the issue of undertakings. The undertakings left out were basically valued by the Tribunal at nil. We see nothing untoward in the process of selection adopted by the Tribunal. The Tribunal, as it was bound to do, followed the directions of Lindgren J in the way it went about its task. Again, it cannot be criticised for this. Nor can it be criticised for its process of valuing undertakings. The Tribunal was well aware of the position of Mr Cassegrain. The fact that the Tribunal may not have assessed his position as the taxpayers contended for was not a matter of error.
22 When one analyses what the Tribunal did it appears that the Tribunal simply followed the directions of Lindgren J. There is no doubt that the Tribunal's task involved separately addressing the releases and surrenders and the undertakings; the existing assets and the deemed assets. Lindgren J said it. The Tribunal said it. The Tribunal acted on it. Lindgren J was well aware of the different nature of the treatment of the "assets" because he said at [83]:
These contractual undertakings by GCC on the one hand and by Claude Cassegrain on the other, as distinct from the releases, and, unlike the potential claims the subject of the releases, did not exist before the provisions of the Deed became binding on the parties (upon CSIRO's payment of the Settlement Sum of $9.5 million). Once the Deed's provisions became binding on them, each of GCC and Claude Cassegrain was deemed to have disposed of the choses in action from its or his said contractual undertakings, and the CSIRO Parties to have acquired them, at that time: see ss 160M(6), (6A).
The Tribunal would have been aware of this, if only because they clearly read Lindgren J's reasons carefully. Lindgren J concluded at [134]:
The Tribunal was required to identify all of the disposals of assets provided for in the Deed, and to determine how much the sum of $8,835,083 might be reasonably attributed to them by GCC (and, it would follow, by the process of arithmetical subtraction, those disposed of by Claude Cassegrain).
Lindgren J did not suggest any special method of valuation was required for the notional assets. The actual error asserted appears to be that the assets represented by contractual undertakings needed to be valued differently, taking into account the extent to which they might be enforceable. The Tribunal did address the assets and did so, in part, by addressing whether they were of value. This consideration must have addressed enforceability and the special position of Mr Cassegrain. We are not prepared, in any event, to infer that there was such an error to lead to the inference that there was an error of law. We accordingly do not consider that the analysis of the difference between existing and created assets shows any error of law. In any event we consider that the appropriate course for the Tribunal was to adopt the course it did in carrying out Lindgren J's directions in a careful manner which nevertheless involved an examination of principle to ensure that blindly following the directions did not itself lead to error.
23 Finally, it is said that the Tribunal adopted a valuation of the right to claim damages of $7.27 million based on evidence of an expert witness whose methodology had been rejected by the Tribunal. The Tribunal had evidence from three experts none of which was completely satisfactory. Yet it was burdened with the task of undertaking the identification, valuation and attribution of the relevant assets with the material it had. It is not surprising that it had to draw on evidence assessed pursuant to a method it did not find satisfactory. If the valuation depended on material which was less than perfect for the task, then it only reflected problems with the material before it. It is important not to lose sight of the fact that the exercise required by s 160ZD(4) will involve a degree of estimation and inference at the best of times. This case is at the higher end of that scale. We note that Lindgren J made the following observation at [83]:
What I have just said does not signify that a result that attributed the greater, perhaps by far the greater, part of the sum of $8,835,083 to the particular assets disposed of by GCC could not be supported as reasonable.
24 The cross appeal by the Commissioner suffers from similar problems to the appeal in that it seeks to elevate errors mostly rooted in facts to errors of law in a context in which the task at hand is simply not capable of being carried out with exactitude.
25 The Commissioner criticises the Tribunal's valuation of the defamation claim of Mr Cassegrain. The criticism appears mainly to be a criticism of the Tribunal's reasons. They are said to be inadequate. In a jurisdiction where appellable error is confined to error of law, resort to an assertion that the reasons given are inadequate is sometimes a refuge to enable error of law to be asserted. The task assigned by s 160ZD(4) inevitably involves judgment in circumstances where precision is impossible. There must be few areas of valuation of rights that are more attended by uncertainty than the valuation of a claim for defamation. Detailed reasons leading to a certain figure are more likely to be unconvincing than a broad assessment such as the Tribunal made here. We do not think it is necessary to refer to the written and oral evidence which formed the basis of the Tribunal's finding. We do think it amply justified the Tribunal's finding and we do think the Tribunal gave adequate reasons in the context of the matters it was addressing. We will observe that the Tribunal's finding does not appear out of step with Lindgren J's decision in the matter. We also note that the evidence shows that a second jury returned a verdict of $1.3 million for the plaintiff Carson (see Carson v John Fairfax and Sons Ltd (1993) 178 CLR 45) who was the subject of consideration in the expert evidence.
26 Next, the Tribunal is criticised for not expressly addressing and rejecting an argument that Mr Cassegrain's undertaking should not be valued on the basis that Mr Cassegrain might have had a lucrative career in the absence of the undertaking. A sub-part of the argument relied upon the asserted failure of the Tribunal to address limitations on Mr Cassegrain's right to compete in the absence of the undertakings. In the context of the issues in this case, as we have described them, we see no error or inadequacy in the Tribunal's reasoning. The Tribunal is required to give its reasons, not to negative every proposition put to it, whether accepted or rejected. We think the Tribunal adequately carried out its task.
27 The final error asserted by the Commissioner is the Tribunal's omission, when quantifying the value of restraint imposed upon Mr Cassegrain not to work in the area of the various technologies included in the joint venture, to deduct the amount Mr Cassegrain would earn. The Tribunal was quite at liberty to give this no value, which is how it must have approached the matter. Mr Cassegrain may not have undertaken other or alternative work or he might have done it in a way which had no effect on employment he might have undertaken which was in addition to employment covered by the restraint.
28 The appeal and cross-appeal must both be dismissed. Rather than dismissing the appeal and cross-appeal with costs we think that the appropriate course is to make no order as to costs.
I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Downes, Edmonds, Greenwood.