FEDERAL COURT OF AUSTRALIA
GDP Group Pty Ltd v Saye [2022] FCA 688
File number(s): QUD 360 of 2021 Judgment of: DOWNES J Date of judgment: 15 June 2022 Catchwords: PRACTICE AND PROCEDURE – application for review of decision of registrar granting preliminary discovery pursuant to r 7.23 Federal Court Rules 2011 (Cth) – evidence did not demonstrate reasonable belief that prospective applicants may have a right to obtain relief – whether prospective applicants made reasonable inquiries with a view to obtaining sufficient information to decide whether to start proceeding – prospective applicants did not undertake obvious inquiries including of own records – evidence did not demonstrate reasonable belief that inspection of documents would assist in making decision whether to commence proceeding – order of registrar set aside and application for preliminary discovery dismissed Legislation: Corporations Act 2001 (Cth) ss 182, 183
Federal Court Rules 2011 (Cth) rr 7.21, 7.23
Cases cited: Allphones Retail Pty Ltd v Optus Networks Pty Limited [2016] FCA 1233
Apache Northwest Pty Ltd v Newcrest Mining Ltd (2009) 182 FCR 124; [2009] FCAFC 39
BCI Media Group Pty Ltd v Corelogic Australia Pty Ltd [2020] FCA 1556
EBOS Group Pty Ltd v Team Medical Supplies Pty Ltd (No 3) (2012) 199 FCR 533; [2012] FCA 48
Forkserve Pty Ltd v Pacchiarotta (2000) 50 IPR 74; [2000] NSWSC 979
Futuretronics.com.au Pty Ltd v Graphix Labels Pty Ltd (2009) 81 IPR 1; [2009] FCAFC 2
HQ Insurance Pty Ltd v Stonehatch Risk Solutions Ltd (No 2) (2020) 146 ACSR 159; [2020] FCA 1010
Pfizer Ireland Pharmaceuticals v Samsung Bioepis AU Pty Ltd (2017) 257 FCR 62; [2017] FCAFC 193
Poole v Australian Pacific Touring Pty Ltd [2017] FCA 424
Sandhurst Trustees Ltd v Clarke (2015) 321 ALR 1; [2015] FCAFC 21
Telstra Corporation Ltd v Minister for Broadband, Communications and Digital Economy (2008) 166 FCR 64; [2008] FCAFC 7
Division: General Division Registry: Queensland National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 107 Date of hearing: 29 April 2022 Counsel for the Prospective Applicants: Mr P Travis Solicitor for the Prospective Applicants: BlueRock Law Counsel for the Prospective Respondents: Mr PD Tucker Solicitor for the Prospective Respondents: HopgoodGanim Lawyers ORDERS
QUD 360 of 2021 BETWEEN: GDP GROUP PTY LTD ACN 090 688 878
First Prospective Applicant
GDP GROUP (QLD) PTY LTD ACN 625 017 156
Second Prospective Applicant
AND: JULIAN SAYE
First Prospective Respondent
ALLIED COMMERCIAL PTY LTD ACN 644 636 457
Second Prospective Respondent
ORDER MADE BY:
DOWNES J
DATE OF ORDER:
15 JUNE 2022
THE COURT ORDERS THAT:
1.The Orders dated 24 February 2022 are set aside.
2.The originating application filed 4 November 2021 is dismissed.
3.By 4.00pm on 17 June 2022, the parties file and serve any submissions as to the appropriate costs order which should be made (limited to 3 pages) accompanied by any affidavit which is relevant to the issue of costs only.
Note: Entry of…
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- GDP Group Pty Ltd v Saye [2022] FCA 688
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- [2022] FCA 688
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CaseChat Overview and Summary
In the matter of GDP Group Pty Ltd and GDP Qld Pty Ltd v Julian Saye and Allied Commercial Pty Ltd, the applicants sought a review of a decision made by the registrar of the Federal Court. The registrar had granted a preliminary discovery order under rule 7.23 of the Federal Court Rules 2011 (Cth), allowing the applicants to inspect certain documents held by the respondents. The applicants aimed to inspect the documents to determine whether they had a viable claim against the respondents. The legal issues before the court were whether the applicants had satisfied the criteria set out in rule 7.23 of the Federal Court Rules 2011 (Cth) for granting a preliminary discovery order, and whether the applicants had made reasonable inquiries to obtain sufficient information to decide whether to start proceedings.
The court found that the applicants had not satisfied the criteria for a preliminary discovery order as they did not have a reasonable belief that they may have a right to obtain relief, nor did they demonstrate that the inspection of documents would assist in making a decision whether to commence proceedings. The court held that the applicants had not undertaken obvious inquiries, including examining their own records, to obtain sufficient information to decide whether to start proceedings. Additionally, the evidence did not demonstrate that the inspection of documents would assist in making a decision whether to commence proceedings. As a result, the court set aside the order of the registrar and dismissed the application for preliminary discovery.
The court ordered that the orders dated 24 February 2022 be set aside, and that the originating application filed on 4 November 2021 be dismissed. The parties were directed to make brief submissions as to costs, and the issue of costs would be determined on the papers. The court also noted that entry of orders was dealt with in Rule 39.32 of the Federal Court Rules 2011.
The court found that the applicants had not satisfied the criteria for a preliminary discovery order as they did not have a reasonable belief that they may have a right to obtain relief, nor did they demonstrate that the inspection of documents would assist in making a decision whether to commence proceedings. The court held that the applicants had not undertaken obvious inquiries, including examining their own records, to obtain sufficient information to decide whether to start proceedings. Additionally, the evidence did not demonstrate that the inspection of documents would assist in making a decision whether to commence proceedings. As a result, the court set aside the order of the registrar and dismissed the application for preliminary discovery.
The court ordered that the orders dated 24 February 2022 be set aside, and that the originating application filed on 4 November 2021 be dismissed. The parties were directed to make brief submissions as to costs, and the issue of costs would be determined on the papers. The court also noted that entry of orders was dealt with in Rule 39.32 of the Federal Court Rules 2011.
Orders
Orders of the court
1. The Orders dated 24 February 2022 are set aside.
2. The originating application filed 4 November 2021 is dismissed.
3. By 4.00pm on 17 June 2022, the parties file and serve any submissions as to the appropriate costs order which should be made (limited to 3 pages) accompanied by any affidavit which is relevant to the issue of costs only.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
The parties will be directed to make brief submissions as to costs, and the issue of costs will be determined on the papers.BACKGROUNDFacts which are common ground The following matters were common ground for the purposes of the application:(1)since 2000, the first applicant, GDP Group, has carried on the business of providing BMU maintenance, window cleaning, construction work, and project and height safety management. [BMU means “building maintenance unit” which is consistent with the other work performed in the business];(2)in February 2016, GDP Group employed the first respondent, Mr Julian Saye, as a casual labourer in the Victorian construction division of the business;(3)in April 2016, GDP Group employed Mr Saye as a labourer on a full-time basis in the Victorian construction division of the business;(4)in October 2016, Mr Saye was promoted to Height Safety Manager and entered into a written employment contract dated 5 October 2016 (2016 Employment Agreement). This agreement was signed by both parties. The location of employment was stated in the agreement to be North Melbourne “and at such other locations as directed” from time to time. The agreement contained a restraint of trade clause as well as a clause which prevented Mr Saye from ever using or divulging any confidential information;(5)in his role as Height Safety Manager, Mr Saye “showed great business development skills and successfully grew the height safety business”;(6)in late 2017, Mr Saye advised Mr Tisdall that he wanted to move to Queensland and proposed the expansion of the business into Queensland;(7)in the course of their discussions, Mr Saye sent an email to Mr Tisdall dated 3 November 2017 which stated, “I have a huge support network from Melbourne and Sydney that will be pivotal to the success of the QLD office”;(8)Mr Saye moved to Queensland in December 2017 and commenced in the role of Queensland Manager of the business in or about January 2018;(9)on 15 March 2018, Mr Tisdall caused the second applicant, GDP Qld, to be incorporated and the business was conducted in Queensland by that company;(10)on 13 February 2019, after Mr Saye had been working in Queensland for about a year, GDP Group sent a written employment contract which designated it (GDP Group) as Mr Saye’s employer (2019 Employment Agreement). Mr Saye did not sign or return the 2019 Employment Agreement to GDP Group;(11)according to income statements issued by the Australian Taxation Office, GDP Qld was identified to it as Mr Saye’s employer for the 2019, 2020 and 2021 financial years;(12)GDP Qld issued payslips to Mr Saye from as early as July 2019 which recorded, amongst other things, that it was withholding PAYG tax and making compulsory superannuation payments. The payslips also identified annual leave accrual amounts;(13)between September 2018 and July 2019, Mr Saye made several approaches to Mr Tisdall for increased remuneration, but not all of these approaches resulted in a salary increase;(14)in 2019, Mr Saye made contact with ABS Façade and “formed a relationship with a person” at that business which Mr Tisdall believes was through Mr Saye’s “own contact network”. GDP Qld commenced to perform work for ABS Façade in October 2019. The value of the work performed between November 2019 and December 2020 was $102,745.50;(15)since the 2019 financial year, GDP Group has had a “working relationship” with Glaziers.com Pty Ltd (Glaziers), pursuant to which GDP Group and Glaziers performed contract work for each other and Glaziers also referred work to GDP Group or GDP Qld. Mr Patrick Naughton was Mr Saye’s main point of contact at Glaziers. Through Mr Saye’s relationship with Glaziers, GDP Qld obtained contracts at several sites in Brisbane and at the Q1 building on the Gold Coast;(16)in about September 2020, Mr Saye approached Mr Tisdall to discuss Mr Naughton being employed in the business; (17)on 25 September 2020, the second respondent, Allied Commercial Pty Ltd, was incorporated with Mr Saye and Mr Naughton as its directors. The shares of Allied were held equally by Julian Saye Allied Pty Ltd and Patrick Naughton Allied Pty Ltd;(18)on 27 September 2020, Mr Tisdall emailed Mr Naughton an employment proposal which, for various reasons including the pending birth of a child, Mr Naughton did not accept. Since September 2020, Mr Tisdall has had no further discussions with Mr Naughton;(19)on 3 November 2020, Mr Saye emailed Mr Tisdall requesting a review of his salary. On 4 November 2020, Mr Tisdall replied advising that no salary increases would take place within the financial year ending 2021;(20)on 12 November 2020, Mr Saye emailed Mr Tisdall advising that, as there would be no salary increase, he would be leaving GDP once COVID-19 restrictions ease;(21)on 23 December 2020, Mr Naughton resigned as a director of Allied and his company ceased to be a shareholder, and he continued in his role at Glaziers. This left Mr Saye as the sole director of Allied with Julian Saye Allied Pty Ltd as its sole shareholder;(22)on 30 December 2020, Mr Saye sent an email to Mr Tisdall, copied to two other employees, advising that he would be finishing his employment at the end of January. The email provided ideas and strategies around finding his replacement and offered to work Saturdays in the office for a few weeks if it helps in the short term. The email referred to Mr Saye as managing the business in Queensland but that “Khan” [being a reference to Mr Khan Woollen, who was copied to the email] runs the “operational/ day to day” for the majority of the business. It also identified that various people, including Mr Saye, were identified as being responsible for overseeing and managing different types of projects;(23)Glaziers’ referrals provided about 25% of the revenue in Queensland. Since about December 2020, the business has not received any further referrals from Glaziers;(24)on 29 January 2021, Mr Saye ceased to be employed in the business. GDP Qld issued a payslip for the pay period 25/1/2021 to 31/1/2021;(25)since Mr Saye left, GDP Qld has only undertaken one job for ABS Façade arranged in February 2021 with a value of $4,445.00, and is now no longer a client of the applicants.Events post-employment
Evidence
Evidence Before The Court
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Decision
Reasons for decision
Accordingly, because of the failure to satisfy r 7.23(1)(c), the application for the orders sought in paragraphs 1(a)(i), 1(a)(iv), 1(b), 1(c), 1(d), 1(e) and 1(f) of the draft order must fail. This provides an additional reason to dismiss the application in relation to all categories other than those in 1(a)(ii) and 1(a)(iii) of the draft order.CONCLUSION The prospective applicants have failed to satisfy rr 7.23(1)(a) and 7.23(1)(b) Federal Court Rules. In addition, the prospective applicants have failed to satisfy r 7.23(1)(c) in relation almost all of the categories of documents sought by them. It is therefore unnecessary to address the other issues which arise on this application. The orders of the registrar must be set aside and the application brought pursuant to r 7.23 must be dismissed.
Ratio Decidendi
Legal Principle Established
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