University of Western Australia v Gray

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

WESTERN AUSTRALIA DISTRICT REGISTRY WAD 292 OF 2004

REASONS FOR JUDGMENT ON SPECIFICATION OF HEADS OF DAMAGES FOR SIRTEX MEDICAL LIMITED'S CROSS-CLAM 1 On 17 April 2008 I made orders dismissing an application by the University of Western Australia (UWA) against Dr Bruce Gray and Sirtex Medical Limited (Sirtex), the public company which held intellectual property developed by Dr Gray and others. UWA claimed, inter alia, that the intellectual property rightly belonged to it. Sirtex cross-claimed against Dr Gray for breach of his duty as one of its directors and for misleading or deceptive conduct in contravention of the Fair Trading Act 1987 (WA) in failing to disclose to Sirtex, prior to its public float, that UWA was likely to assert an interest in the relevant intellectual property. The trial of the cross-claim was limited to liability only. I found for Sirtex on the cross-claim and made the following orders: 9. The second respondent's cross-claim against the first respondent stand over for a directions hearing for directions as to an assessment of damages based upon the first respondent's breach of his duty as a director of the second respondent and for misleading or deceptive conduct in contravention of the Fair Trading Act 1987 (WA) arising out of his non-disclosure to the second respondent of correspondence between himself and the Vice-Chancellor of the applicant in 1999. 10. The first respondent pay the second respondent's costs of its cross-claim against him. 11. The directions hearing be fixed for 23 June 2008 at 9.00am or such other date as may be directed. 2 Programming orders for the assessment of damages were made. On 30 July 2008 the announcement was made of my appointment to the High Court commencing on 1 September 2008. The assessment of damages could not be carried out before my resignation from this Court. It was therefore necessary that the assessment be done by another judge. Nevertheless, Sirtex requested, by way of declaration or ruling, I specify the heads of damage it was entitled to recover. Various categories of loss were proposed subject to a carve-out for any expense "caused by the grossly unreasonable conduct of Sirtex itself". After a hearing on 15 August 2008 I declined to make the declarations or rulings sought and gave ex tempore reasons for that decision. Those reasons (edited for style and grammar but not as to substance) follow. 3 Having heard all the argument and read the submissions, I have come to the view that it is not useful to go down the pathway that has been proposed. The assessment of loss and the identification of heads of loss in connection with Sirtex successful cross-claim against Dr Gray are clearly closely related and there is a risk that by formulating heads of damage with any useful precision, whether by way of ruling or in a declaration, I would do so in a way that could unnecessarily confine the assessment process. 4 The test, as I think counsel for Sirtex Mr Elliott accepted, must always remain one of causal connection in terms of s 79 of the Fair Trading Act. That test is expressed in the word "by". It is not to be elaborated by any formulation that I could offer, particularly one involving words such as "reasonable" or "grossly reasonable" as proposed at one point in argument. There is the possibility, although it hasn't been formulated with any concreteness, of prejudice to Dr Gray in that the trial was conducted on the basis that damages, including identification of heads of loss, would be separately assessed. 5 The utility of a declaration or, in the alternative, rulings which are sought for the same purpose is questionable. All of the heads of damage proposed are arguable. The qualifications that would have to imported into any declaration might well leave it saying little more than that. The relevant factual findings are for the most part in the judgment and I think those which are relevant to the determination of the heads of loss can be extracted from the judgment and confined within a reasonable compass. 6 I appreciate, as Mr Elliott says, that the unusual proposal which has been made by Sirtex arises out of the circumstance which is not the fault of any party except me; that I have accepted appointment to the High Court and will have resigned my commission on this Court within a time which does not allow me to do the assessment of damages that I would otherwise have carried out. That means that the task will fall to another judge. That judge will have to familiarise himself or herself with the factual issues relating to the cross-claim. Given the comprehensiveness of the grounds of appeal which have been raised there will be three judges who will be thoroughly familiar with the matter some time after November. The question whether one of those judges may be allocated to the assessment issue will, of course, be a matter for the Chief Justice and for those judges. However there may be an opportunity to have the assessment done without necessary duplication of work by another judge. 7 I do not think that the task of assessment of the quantum of damages is able to be detached in the way proposed from the identification of the heads of damage. I am prepared to accept that all of them are arguable although I suppose I have the greatest reservation about the category of loss based on the challenge to the CRI settlement. I do not exclude that head from the possibility of argument on assessment. For those reasons I am not prepared to either make the declarations which are sought or to make rulings as to heads of loss and will adjourn the matter or assessment of damages by another judge in due course. 8 The orders I will make are: 1. The assessment of damages is adjourned to another judge at a date to be fixed. 2. There be no order as to the costs of today. 3. There be liberty to the parties to apply for further directions. 4. The matter be adjourned for further directions before the District Registrar or a Judge of the Court on 28 October 2008 at 9.30 am or such other date as may be directed. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French.

Associate: Dated: 25 August 2008 Counsel for the Applicant: Mr ML Bennett with Mr IR Freeman Solicitor for the Applicant: Lavan Legal

Counsel for the Respondent: Mr JD Elliott SC with Mr J Emmett Solicitor for the Respondent:

Date of Hearing: 15 August 2008 Date of Judgment: 15 August 2008