FEDERAL COURT OF AUSTRALIA The University of Western Australia v Gray (No 8) [2007] FCA 286 THE UNIVERSITY OF WESTERN AUSTRALIA v BRUCE NATHANIEL GRAY, SIRTEX MEDICAL LIMITED (FORMERLY KNOWN AS PARAGON MEDICAL PTY LTD) (ACN 078 166 122) & CANCER RESEARCH INSTITUTE INCORPORATED (REGISTERED NUMBER 1001005) WAD 292 OF 2004 GRAHAM J 2 MARCH 2007 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY WAD 292 OF 2004 BETWEEN: THE UNIVERSITY OF WESTERN AUSTRALIA Applicant AND: BRUCE NATHANIEL GRAY First Respondent SIRTEX MEDICAL LIMITED (FORMERLY KNOWN AS PARAGON MEDICAL PTY LTD) (ACN 078 166 122) Second Respondent CANCER RESEARCH INSTITUTE INCORPORATED (REGISTERED NUMBER 1001005) Third Respondent BRUCE NATHANIEL GRAY First Cross-Claimant UNIVERSITY OF WESTERN AUSTRALIA First Cross-Respondent to First Cross-Claim YAN CHEN Second Cross-Respondent to First Cross-Claim SIRTEX MEDICAL LIMITED Second Cross-Claimant UNIVERSITY OF WESTERN AUSTRALIA Cross-Respondent JUDGE: GRAHAM J DATE OF ORDER: 2 MARCH 2007 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Leave be granted to David Sanders and Bethwyn Daebritz ('the Interveners') to intervene in the third respondent's Notice of Motion filed 28 February 2007 on the following terms: (a) The Interveners are to assist the Court by the provision of written submissions directed to the relevant considerations for the Court as to why approval of the Settlement Agreement ought to be refused. (b) The Interveners are only to supplement those written submissions by oral submissions to the extent requested by the Court in the course of the hearing of the third respondent's Notice of Motion dated 28 February 2007. (c) The intervention shall be on the basis that the Interveners be liable for such orders as to costs, if any, as the Court may see fit to make on the third respondent's Motion. 2. On the Application of the Interveners no order as to costs be made. 3. On the Application of the second respondent, the third respondent's Notice of Motion filed 28 February is stood over part-heard to Tuesday 6 March 2007 at 2:15pm WDST. 4. The second respondent file and serve any additional Affidavits on which it wishes to rely on or before 4:15pm EDST on Monday 5 March 2007. 5. The costs of today of the third respondent's Motion be reserved. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY WAD 292 OF 2004 BETWEEN: THE UNIVERSITY OF WESTERN AUSTRALIA Applicant AND: BRUCE NATHANIEL GRAY First Respondent SIRTEX MEDICAL LIMITED (FORMERLY KNOWN AS PARAGON MEDICAL PTY LTD) (ACN 078 166 122) Second Respondent CANCER RESEARCH INSTITUTE INCORPORATED (REGISTERED NUMBER 1001005) Third Respondent BRUCE NATHANIEL GRAY First Cross-Claimant UNIVERSITY OF WESTERN AUSTRALIA First Cross-Respondent to First Cross-Claim YAN CHEN Second Cross-Respondent to First Cross-Claim SIRTEX MEDICAL LIMITED Second Cross-Claimant UNIVERSITY OF WESTERN AUSTRALIA Cross-Respondent JUDGE: GRAHAM J DATE: 2 MARCH 2007 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This is a quite unusual Application. Before turning to the Application I should briefly refer to the Further Substituted Statement of Claim filed 2 November 2006 in the proceedings which were commenced by an Application filed 21 December 2004. 2 The parties to the proceedings as now constituted are the University of Western Australia ('the University') as the applicant, Bruce Nathaniel Gray as the first respondent, Sirtex Medical Limited as the second respondent and Cancer Research Institute Incorporated as the third respondent. There are in addition two cross-claims but it is unnecessary to make any reference to those at the moment. 3 According to the Further Substituted Statement of Claim Dr Gray entered into a contract of employment with the University on or about 26 October 1984. The University contends that in the course of his work at the University and within the scope of his employment by the University Dr Gray developed and/or discovered certain inventions which were patentable and commercially significant. 4 They included an invention disclosed in Patent Application AU54724/94 entitled 'Radioactive Particles for treatment of cancer' and the invention disclosed in Australian Provisional Patent Application Number PR0983 dated 25 October 2000, entitled 'Polymer Based Radionuclide Containing Microspheres' and in Patent Co‑operation Treaty Application PCT AU/01/01370 entitled 'Polymer based radionuclide containing particulate material'. 5 I trust that I do not do a disservice to the pleading by simply saying that in relation to the inventions, the University claims an entitlement to the benefit of them. 6 The second respondent is, as I understand it, a party which presently enjoys the benefit of the inventions. The third respondent is, as I understand it, an association incorporated under the Associations Incorporation Act 1987 (WA) ('the Act') which has a significant shareholding in the second respondent said to be worth something in the order of $11 million. 7 The constitution of the third respondent is contained in a document entitled 'Rules Of Cancer Research Institute Inc' which, in paragraph 3, sets out the Objects of Association. As one might expect, the Objects are consistent with the name of the third respondent, namely Cancer Research Institute Incorporated. 8 On 22 December 2006 the Court made certain orders for the appointment of a receiver of the assets of the third respondent. Those orders were in substitution for earlier orders made by the Court on 5 October 2006 as amended by orders made on 25 October 2006. 9 The orders not only provided for the appointment of a receiver of the assets of the third respondent, they also conferred power on the receiver to: '3. … (a) determine the position that the third respondent should take in these proceedings; (b) have the conduct of these proceedings on behalf of the third respondent; (c) instruct solicitors to appear and to file and serve any documents in the proceedings; and (d) subject to the approval of the Court, enter into and give effect to any agreement for the resolution of all or part of these proceedings so far as they affect the third respondent.' 10 The solicitor for the third respondent filed a Notice of Motion on 28 February 2007 seeking an order that the Court approve an agreement for the resolution of these proceedings between the applicant and the third respondent in the terms of the 'Agreed Settlement Terms' executed by the applicant and the third respondent dated 22 February 2007 ('the Settlement Agreement'). 11 That agreement has itself been the subject of amendment as recently as today and the amendment has been recorded on the document and initialled by the solicitors for the respective parties. The Court's approval is now sought for the Settlement Agreement in its amended form. A copy of the agreement in its amended form has become exhibit NM1 on the third respondent's Motion. 12 Before proceeding to deal with that Motion, it is necessary that an application by Mr Vaughan of Christensen Vaughan Lawyers of Perth on behalf of a Mr David Sanders, Dr Bruce Gray, the first respondent, and Ms Bethwyn Daebritz by Notice of Motion filed in the Court on 1 March 2007 be considered. That Motion seeks an order under Order 6 rule 17 of the Federal Court Rules that leave be given to the persons mentioned to intervene in the proceeding, the object being to enable those persons to assist the Court on the issue as to whether or not the Settlement Agreement should be approved by the Court. 13 The first respondent, Dr Gray, is separately represented by Mr Freeman who has indicated that he wishes to be heard on the approval issue. Senior counsel for the second respondent has indicated that he does not wish to be heard on Mr Vaughan's Application and I have yet to ascertain his position in relation to the third respondent's Motion. 14 It would seem to me entirely inappropriate to allow a person who is already a party to the proceedings to be given leave to intervene. 15 The basis on which intervention is sought is that Mr Sanders, Dr Gray and Ms Daebritz contend – and I emphasise the word contend – that they are the board members of, and also members of, the third respondent. Mr Vaughan has frankly conceded that he is not in a position to embark on the task of establishing the fact for which Mr Sanders, Dr Gray and Ms Daebritz contend. 16 I must say that even if it were established that Mr Sanders, Dr Gray and Ms Daebritz were the board members and members of the third respondent, I do not consider that that would give them standing to be heard in these proceedings. It would seem to me that the rule in Foss v Harbottle (1843) 2 Hare 461 would still apply to persons in their circumstances in relation to an association incorporated under the Act. Order 6 rule 17 provides: '17(1) The Court, at any stage of a proceeding, may give leave to a person (the intervener) to intervene in the proceeding, on the terms and conditions, and with the rights, privileges and liabilities (including liabilities for costs), determined by the Court. (2) In deciding whether to give leave, the Court must have regard to: (a) whether the intervener's contribution will be useful and different from the contribution of the parties to the proceeding; and (b) whether the intervention might unreasonably interfere with the ability of the parties to conduct the proceeding as they wish; and (c) any other matter that the Court considers relevant. (3) The role of the intervener is solely to assist the Court in its task of resolving the issues raised by the parties. (4) For subrule (3), assisting the Court includes suggesting witnesses to be called by the Court, but does not include filing pleadings, leading evidence or examining witnesses. (5) When giving leave, the Court must specify the form of assistance to be given by the intervener and the manner of participation of the intervener, and, in particular, must specify: (a) the matters that the intervener may raise; and (b) whether the intervener's submissions are to be oral, in writing, or both.' 17 Whilst Mr Vaughan indicated that he intended to read parts of five Affidavits in support of his Motion, before doing so he indicated that if it was accepted by the other parties before the Court, as it was, that Mr Sanders, Dr Gray and Ms Daebritz contended that they were the board members and members of the third respondent, he would not wish to read any parts of the Affidavits and he has not done so. 18 Notwithstanding the strong disposition which I have towards refusing Mr Vaughan's Application, I consider that the interests of justice may be advanced by allowing his clients to intervene, with the exclusion of Dr Gray, on the basis that he has proposed in the Notice of Motion, subject to a minor modification that I would wish to make to the terms of the order proposed. 19 I have had regard to the matters referred to in Order 6 rule 17 subrule (2) and consider that it would be appropriate in the unusual circumstances of this case to allow Mr Sanders and Ms Daebritz to become interveners in respect of the third respondent's Motion filed 28 February 2007. 20 It may be appropriate to observe that faced with four possibilities which were raised with Mr Vaughan on 28 February, his clients have elected to seek an order permitting intervention rather than following one of the other three alternatives considered on that day, namely an application for his clients to be added as extra respondents in the proceedings, the institution by his clients of a separate action or an application by his clients that they may seek to assist the Court amicus curiae. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham. Associate: Dated: 9 March 2007 Counsel for the Applicant: Mr M Green Solicitor for the Applicant: Mr D J Pratt of Jackson McDonald Solicitor for the First Respondent: Mr I R Freeman of Lavan Legal Counsel for the Second Respondent: Mr J D Elliot SC and Mr E J C Heerey Solicitor for the Third Respondent: Mr P A Tottle of Tottle Partners Solicitor for Mr Sanders, Dr Gray and Ms Daebritz: Mr J Vaughan of Christensen Vaughan Lawyers Date of Hearing: 2 March 2007 Date of Judgment: 2 March 2007