Boulos v M.R.V.L Investments Pty Ltd (No 3)
[2022] FCA 307
•29 March 2022
FEDERAL COURT OF AUSTRALIA
Boulos v M.R.V.L. Investments Pty Ltd (No 3) [2022] FCA 307
File number(s): NSD 2168 of 2019 Judgment of: THAWLEY J Date of judgment: 29 March 2022 Catchwords: PRACTICE AND PROCEDURE – Representative proceedings – where orders sought to appoint expert to extract data from electronic systems of the respondent – whether appointment of expert is an appropriate method to quantify potential claims of group members at a preliminary stage of the proceeding – application dismissed Legislation: Federal Court of Australia Act 1976 (Cth) ss 37P, 33ZF
Privacy Act 1988 (Cth)
Cases cited: P Dawson Nominees Pty Ltd v Brookfield Multiplex Limited (No 2) [2010] FCA 176 Division: Fair Work Division Registry: New South Wales National Practice Area: Employment and Industrial Relations Number of paragraphs: 20 Date of hearing: 29 March 2022 Counsel for the Applicant: Ms K Hanscombe QC with Mr M Guo Solicitor for the Applicant: Adero Law Counsel for the Respondent: Mr Y Shariff SC with Ms D Tang Solicitor for the Respondent: Johnson Winter & Slattery ORDERS
NSD 2168 of 2019 BETWEEN: RAYMOND BOULOS
Applicant
AND: M.R.V.L INVESTMENTS PTY LTD
Respondent
ORDER MADE BY:
THAWLEY J
DATE OF ORDER:
29 MARCH 2022
THE COURT ORDERS THAT:
1.The applicant is granted leave to amend the interlocutory application filed on 9 February 2022 in the manner indicated in [4] of the affidavit of Mr Markham sworn 23 March 2022.
2.The interlocutory application filed on 9 February 2022, as amended, be dismissed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(Revised from transcript)THAWLEY J:
By an interlocutory application filed on 9 February 2022, the applicant sought discovery from the respondent of employment information concerning the applicant and each group member, a total of roughly 13,500 individuals over a 6 year period. The discovery it sought was as follows:
1.By 4:00pm on a date 7 days from the making of these orders, the Applicant is to provide the Respondent with a list of 20 group members selected by the Applicant in aid of discovery (the Sample Group Members).
2.By 4:00pm on a date not more than 3 weeks from the making of these orders, the Respondent is to provide the Applicant with discovery in respect of the Applicant, and in respect of the Sample Group Members, in the categories set out below.
3.By 4:00pm on a date not more than 7 weeks from the making of these orders, the Respondent is to provide the Applicant with discovery in respect of each Group Member (save for the Sample Group Members, the Applicant and in respect of any persons who have opted out) of documents in the following categories:
a. the employee details, including but not limited to:
i.their date of birth;
ii.employment start date(s) and end date(s);
iii.whether they were engaged pursuant to a working visa;
iv.their employment type and any changes to the type throughout their employment period;
v.from 24 December 2013 to 3 March 2019, the classification under the Merivale Employee Collective Agreement 2007 as it varied from time to time;
vi.from 4 March 2019 to 24 December 2019, the classification under the Hospitality Industry (General) Award 2010 as it varied from time to time;
vii.each position/job role held by the Group Member throughout their employment period and the corresponding dates they held such a position;
viii.rate of pay as it varied from time to time; and
ix.number of contracted hours as they varied from time to time;
b.the roster data for each day of their employment in the claim period, including but not limited to:
i. the start date and end date for each roster cycle;
ii. the roster start and end date for each shift;
iii. the roster start and end time for each shift; and
iv. hours of work for each shift,
c.the electronic time clocking system data for each day of their employment in the claim period, including but not limited to:
i.actual start and end date for each shift;
ii.actual start and end time for each shift;
iii.start and end time of each break during each shift;
iv.hours of work for each shift;
v.ordinary hours worked each shift;
vi.additional/overtime hours worked each shift; and
vii.for each recorded transaction (including any modification) identify the sources of the transaction (for example, if the times are employee initiated or a modification by the Respondent),
d.detailed earnings/payroll history report for all payroll transactions for each pay period, including but not limited to:
i.the start and end date of each pay period;
ii.date of payment;
iii.itemised payroll remuneration data dissected into the different hours of work paid (such as ordinary hours, overtime hours at time and a half, overtime at double time, etc);
iv.the hourly rates paid for each type of hour or remuneration benefit (including allowances);
v.the total paid for each type of hour or benefit (including allowances);
vi.total superannuation paid;
vii.itemise deductions;
e.absenteeism report outlining for each day where the individual was absent from work, include but not limited to:
i.the start and end date;
ii.hours of leave; and
iii.type of leave for each shift;
f. position descriptions of the roles held by each Group Member; and
g.For each Group Member that remains within the Proceedings following opt out, any agreements between the Respondent and Group Members that purport to vary roster conditions.
After receiving evidence filed by the respondent in respect of the interlocutory application, the applicant indicated, by way of an affidavit of Mr Markham sworn 23 March 2022, that he would seek different orders to those which he had initially sought, namely the following orders:
4.On the basis of those developments, the Applicant seeks the following orders instead of those originally sought.
1.The Applicant shall appoint an independent expert who shall, before commencing work on the material referred to in paragraph 2 below submit a written undertaking to the Court agreeing to be bound by these orders.
2.The Respondent shall, within 4 weeks of the provision of the undertaking referred to in paragraph 1, provide the expert with access to the following electronic systems identified at paragraphs [17], [18] and [21](a) of the affidavit of Jessica Kate Furolo made on 16 March 2022:
(a)Attache;
(b)Kronos;
(c)SAP;
(d)Emplive; and
(e)the ‘shared central drive’.
3.The expert shall extract from the electronic systems referred to in paragraph 2 above information in the categories sought by the Applicant in his discovery application filed on 9 February 2022, so far as is reasonably possible.
4.The expert shall provide a copy of the extracted information to the parties.
5.The Applicant shall not use the extracted information other than for the purposes of this proceeding.
6.The expert shall not use the extracted information other than for the purposes of this proceeding and shall keep the Respondent’s information confidential.
At the hearing of the interlocutory application today, Ms Hanscombe QC for the applicant sought leave to amend the interlocutory application filed 9 February 2022 to reflect the new orders sought and leave was granted unopposed.
It is to be observed that the new orders which are sought are not strictly orders for discovery as such, but for the appointment of an independent expert to extract data from electronic systems held by the respondent. The precise expertise of the expert is not known or foreshadowed by any evidence, but might be assumed to be, for example, a forensic accountant.
There was no evidence before the Court which clearly indicated any request for the underlying data having been made by the applicant to the respondent.
This proceedings is a representative proceeding governed by the procedures in Part IVA of the Federal Court of Australia Act 1976 (Cth) (FCAAct). The quantification of the individual claims of group members, that is the total claim, is not a matter presently before the Court. The issue presently before the Court is the claim of the lead applicant. There is no necessity to quantify the precise loss of every group member at this stage and to do so defeats the purpose of a representative proceeding. That is not to say that some estimation of the likely total loss is not appropriate to obtain at this stage of the proceeding, in particular because that will be of benefit in resolving the dispute via mediation or otherwise. Indeed, at least one of the applicant’s primary purposes in seeking discovery, and then seeking the appointment of an independent expert, was precisely for that purpose, namely in order to assist in resolving the dispute through mediation.
The applicant relied on section 37P of the FCA Act, which provides:
37P Power of the Court to give directions about practice and procedure in a civil proceeding
(1)This section applies in relation to a civil proceeding before the Court.
(2)The Court or a Judge may give directions about the practice and procedure to be followed in relation to the proceeding, or any part of the proceeding.
(3)Without limiting the generality of subsection (2), a direction may:
(a) require things to be done; or …
Section 33ZF of the FCA Act provides:
33ZF General power of Court to make orders
(1)In any proceeding (including an appeal) conducted under this Part, the Court may, of its own motion or on application by a party or a group member, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding.
(2)Subsection (1) does not limit the operation of section 22.
Section 37P(2) provides power to grant the relief which the applicant seeks. So too does s 33ZF(1). In relation to s 33ZF, in P Dawson Nominees Pty Ltd v Brookfield Multiplex Limited (No 2) [2010] FCA 176, Finkelstein J stated (at [32]):
Under s 33ZF, at least, it may be appropriate to make orders in aid of mediation, for example where the parties face asymmetric information which may lead to an unfair settlement. But there must be good reason for doing so, particularly where the discovery is being sought from group members.
In my view, the applicant’s proposal is not an appropriate way of going about determining an estimate of the total group claims at this stage of the proceeding. It is not an order which would do justice between the parties if it were made at this stage of the proceeding:
First, the proposed procedure is an invasive one which requires access being granted to information beyond what would be strictly necessary to undertake the relevant task to an as yet unidentified expert. The proposed access to the respondent’s databases is not limited to review of records relating only to the 13,500 group members. Further, the expert would have access to commercially sensitive information wholly unrelated to the proceeding and to information of group members unrelated to any question in the proceeding.
Secondly, if the applicant’s proposal were permitted, implementation of it would require a number of protocols and procedures to meet a variety of issues including the fact that the expert would have apparently unrestricted access to a number of the respondent’s systems, which include access to commercially sensitive information. The expert would also have access to personal information in respect of which the respondent owes obligations to others, or has statutory duties, including under the Privacy Act 1988 (Cth) not to permit unauthorised disclosure of personal information. No doubt the respondent’s obligations under the Privacy Act 1988 (Cth) could be met through some mechanism, but what that entails would need to be determined. The applicant’s evidence did not analyse what protocols and procedures could be implemented to meet these issues or what delays would result or what cost would be involved.
Thirdly, the discovery which the applicant had originally sought was likely to require 6 to 9 months and considerable expense. It is not clear that the alternative course proposed will be any shorter or less expensive:
(1)The evidence indicated that at least some of the data which was sought is unavailable. That is, some of the categories of discovery in the original interlocutory application of 9 February 2022 are unavailable. These categories are still sought under the amended interlocutory application. The consequence of this is that certain assumptions would need to be made. It is not clear that the expert would be able to make those assumptions at least without assistance from the respondent. It might be anticipated, in addition, that there might be some debate concerning what assumptions are appropriate.
(2)The evidence indicated that two of the systems used by the respondent are dormant and can only be accessed by the respondent in particular ways. There was no evidence to the effect that the data could be accessed in other ways, however it is likely that there are other ways of accessing the data. It is not known what that entails.
(3)Time would be needed to prepare the appropriate protocols before access to the respondent’s systems were granted to the applicant’s proposed expert.
(4)Time would be required to import and prepare the data for extraction from the various systems, develop appropriate assumptions and build a quantification model, and perform a quality assurance process to validate any findings. It could reasonably be anticipated that various steps in the process might need to be repeated depending on the results which are obtained, and that this process might require significant conferral and cooperation between the parties.
(5)Information responding to four of the categories sought by the applicant is contained in individual employment files stored in a shared central drive, not in any database. The evidence was that it would take approximately 30 minutes to obtain that information from the employment file. For approximately 13,500 employees, that would take about 6,750 hours.
(6)Time and cost consequences would flow to the respondent by reason of potential interruptions to the respondent’s existing operations and the need for the respondent to re-allocate its resources so that the proposal can be accommodated having regard to security and IT issues.
(7)The respondent would need to dedicate time and resources to assist the expert to understand how the systems operate and to respond to any queries the expert may have in that respect.
Fourthly, on the evidence presently before the Court, execution of the procedure as presently envisaged is not certain to yield accurate results. In addition to the matter referred to at [13(1)] above, the evidence indicates that: employees did not consistently clock on or off of their shifts; times that have been recorded may not align with the actual periods worked; breaks may not have been recorded or were recorded incorrectly. An independent expert is not likely to be in a better position than the respondent to identify or resolve these issues.
The utility of any quantification of loss model depends on the reliability and completeness of the underlying data and processes to correct for known errors or ascertain unknown errors. If the object of the exercise is to estimate the aggregate claims for the purposes of mediation, which is what the applicant says is a principal object of its proposed procedure, it would be an unfortunate use of time and resources to embark on a procedure which was not shown at the outset to be likely to give a reasonably reliable result. I have no doubt that, working co-operatively, the expert and the respondent could ultimately determine a reasonably reliable aggregate total of claims, but I am not satisfied on the evidence presently before the Court that this could be achieved in a timely or inexpensive way, warranting embarking on the process at this point in the proceeding.
The respondent is able and willing to provide documents recording the information set out at paragraph 29 of the affidavit of Ms Thompson affirmed 15 March 2022 , namely, the amounts paid to group members throughout the Post Award Period, Pre Award Period and the Claims Period, broken down between permanent, part time and causal (subject to an appropriate confidentiality regime). This proposal was designed to facilitate determination of the aggregate size of the claimed underpayments or an approximation of them. The applicant does not need to accept this proposal, but that does not mean that it should therefore be entitled to discovery in relation to the claims of each of the relevant employees or to the appointment of an independent expert in order to extract data from the respondent’s systems in the manner envisaged (which is by reference to each of the relevant employees). If the applicant has a better way of estimating the aggregate claims short of the discovery it has sought, or the appointment of an expert to obtain the discovery it has sought, that can be put forward.
The information which the respondent has offered to provide should be provided. If further information is considered by the applicant to be desirable for the purposes of mediation, then it can request such information or make a further application. It could also seek to resolve the issue of estimation of the aggregate claims with the assistance of the mediator or by way of preliminary mediation or through some other process. As things stand, however, the orders have not been shown to be appropriate under ss 33P(2) or 33ZF(1) of the FCA Act. Plainly enough, a different situation may obtain after the lead applicant’s claim has been determined.
None of this is altered by paragraphs 10D and 10E of the defence. It may well be appropriate for there to be discovery in relation to the issues raised by those paragraphs. It does not seem to me that this application is principally directed at paragraphs 10D and 10E of the defence. If that were the case, the categories of discovery would include categories which are not presently included. I accept that the data which would be extracted by an independent expert if the orders sought in the amended interlocutory application were to be granted would be relevant to paragraphs 10D and 10E of the defence. However, it seems that the principal purpose of the discovery which is now sought is to assist in a mediation by providing to the applicant a reasonably reliable estimate of the aggregate total of the claims of group members.
The parties should do what they can in order to resolve this issue before mediation. After delivery of these reasons, I will discuss with the parties how this might be achieved.
For these reasons, the applicant’s interlocutory application is dismissed.
I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Thawley. Associate:
Dated: 29 March 2022
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