James v Planpac International Pty Ltd

[2010] FMCA 764

FEDERAL MAGISTRATES COURT OF AUSTRALIA

JAMES v PLANPAC INTERNATIONAL PTY LTD & ORS [2010] FMCA 764

PRACTICE AND PROCEDURE – Review of decision of Registrar upon notice to produce issued by applicant – where certain categories of documents were found not to be required for a penalty hearing.

Workplace Relations Act 1996 (Cth), s.719(1)

Kelly v Fitzpatrick [2007] FCA 1080

Applicant: BRUCE HUME JAMES

First Respondent PLANPAC INTERNATIONAL PTY LTD (ACN 104 332 970)

Second Respondent: DAMIEN JOHN FERGUSON

Third Respondent: GEOFFREY JAMES PLANTE

File Number: SYG 1524 of 2010

Judgment of: Raphael FM

Hearing date: 29 September 2010

Date of Last Submission: 29 September 2010

Delivered at: Sydney

Delivered on: 29 September 2010

REPRESENTATION

Counsel for the Applicant: Mr S Meehan

Solicitors for the Respondents: Boulton Cleary & Kern Lawyers

ORDERS

1. Orders 2, 4, 6, 7, 8 and 9 of the orders of Registrar Morgan will be set aside and the date upon which the documents are to be produced to the Court shall be extended until 7 October 2010.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYG 1524 of 2010

BRUCE HUME JAMES

Applicant

And

PLANPAC INTERNATIONAL PTY LTD (ACN 104 332 970)

First Respondent

DAMIEN JOHN FERGUSON

Second Respondent

GEOFFREY JAMES PLANTE

Third Respondent

REASONS FOR JUDGMENT

1. There comes before me this morning an application for the review of a decision of Registrar Morgan made on 22 September 2010 to order the production of documents under 10 paragraphs in a notice to produce issued by the applicant against the first respondent.  The circumstances in which the notice to produce was served are that Mr James, the applicant, was a former director and employee of the first respondent, whose position was terminated in 2006 but who was not paid, he says, any annual leave entitlements upon his termination.

2. Mr James brought some proceedings against the first respondent in the District Court of Queensland in which he was successful and the judgment which he obtained included an amount of approximately $14,000.00 for annual leave entitlements unpaid. Mr James now seeks orders pursuant to s.719(1) of the Workplace Relations Act 1996 (Cth) (“WRA”), imposing penalties upon the first, second and third respondents for the failure to pay those annual leave entitlements.  Mr Smith, who appears for the respondents, informs the Court that at the hearing, he will present legal arguments as to why this application cannot succeed, but he will not argue that the leave entitlements were not of the sum claimed, nor that they remain unpaid.  He tells me that his clients do not propose to bring any evidence at the hearing. 

3. The categories of documents found in the notice to produce will be dealt with individually in these reasons, but the overarching argument put forward by the respondents is that they are irrelevant and that the request for production is oppressive.  They are said to be irrelevant to the substantive application because the fact of the non-payment and the amount of the non-payment are not disputed.   They are said to be oppressive because of the length of time over which they range and the vagueness of the documentation sought.

4. In regard to the first argument, Mr Meehan, who appears for the applicant, says that these documents are necessary to enable the Court to consider the question of penalty.  In his helpful written submissions at paragraph 18, Mr Meehan sets out five of what has been described in the Federal Court as a “non-exhaustive list” of matters that a Court shall take into account when considering the question of penalties.  He cites:

   a)   The circumstances in which the contravening conduct occurred;

   b)     The nature and extent of the contravening conduct;

   c)   Whether the contraventions were deliberate;

   d)     The extent of involvement of management in the contravention;

   e)   The financial position of the respondents in their capacity to pay and the deterrent effect of the proposed penalty, citing Kelly v Fitzpatrick [2007] FCA 1080.

5. I accept that these are all relevant matters, and I also accept the general argument that when considering this notice to produce I should look at the penalty aspect as much as I would have looked at the substantive aspect if it had not been accepted that the claims in relation thereto were admitted.  In regard to the second overarching ground, I note that the respondents have not put on any evidence which would indicate the nature of the oppressiveness; for example, they have not deposed to the fact that their records contain large numbers of documents that would have to be gone through manually as opposed to being contained on computers where a search might be made very quickly. They have not argued that their documents are no longer readily available, having been sent to storage, nor that there would be expense involved which they are able to define with some reasonable accuracy.  Bearing these matters in mind, I will now look at each of the categories.

6. Category 1:

   “Any document recording or evidencing the decision of the company not to pay to the applicant his annual leave entitlements upon or after termination of his employment.”

   Mr Meehan says that this is important for the purposes of penalty, because if the decision not to pay was deliberate, then the penalty may be higher.  Mr Smith says that this is an oppressive request.  It will require the company to trawl through documents to find out whether or not such a document exists.  To my mind, this is a matter which goes to the heart of the alleged contravention insofar as the Court would need to be informed for the purposes of considering penalty.  The Court has been told that no evidence is to be called but it would be dangerous, I believe, for it to draw inference from that fact of a deliberate action on the part of the company or its directors.  The only manner in which that could be ascertained is through the revelations in any document.  As I have not heard any evidence about the number of documents or the difficulty which the respondents would encounter in complying, I propose to confirm the order made by the registrar in regard to this category, subject to the date upon which the documents are to be produced.

7. Category 2:

   “Any document recording or evidencing any communication on or after 24 March 2010 by the second respondent or the third respondent or between them, in which reference is made to the applicant’s annual leave entitlements or the judgment of Durward DCJ in matter D101 of 2007 concerning the applicant’s annual leave entitlements.”

   Mr Meehan argues that this goes to the question of penalty and the attitude taken by the respondents to the decision of the District Court Judge.  I am not convinced that these documents are of particular relevance for the purposes of penalty.  The fact is that the entitlements that were due in 2006 may have not yet been paid.  What the respondents decided to do after being told they should pay them on 24 March does not greatly assist me.  I am prepared to draw an inference that they remain obdurate.  I would strike out the order in relation to the second category.

8. The third category is:

   “True copies of the company’s profit and loss statements for the following financial years:   [financial year ended 30 June 2006 to financial year ended 2010].”

   Mr Meehan says these documents are needed so that the Court can have some understanding of the financial position of the company, because that is necessary in order for it to decide on the amount of the penalty and whether the penalty will be a sufficient deterrent and whether it will be paid.  Mr Smith says that the Court can assume in the absence of evidence that the company can make any payment.  That is an inference which I would not have drawn from Mr Smith’s submission, but having made it, I am prepared to draw the inference that this company is capable of meeting any penalty imposed within the range. In the course of my giving this judgment, Mr Smith tells me that he did not make such an admission.  In those circumstances, I believe that it is important to obtain this information and I will not disturb the Registrar’s order in regard to that category.

9. Category 4:

   “A true copy of the company’s income tax returns for the following financial years:    [financial year ended 30 June 2006 to 30 June 2010].”

   I am of the view that if the documents required in category 3 are provided there is little point in having the tax returns as they will not reveal anything more than is already revealed in category 3, indeed, probably a lot less.  I would propose to delete this category from the Registrar’s orders.

10. Category 5:

    “A copy of the company’s balance sheet and asset register as at 30 June 2010.”

    Had I felt able to draw the inference that I believe Mr Smith had indicated I could draw, I would not have included this category, but given the withdrawal of the submission, I propose to do so.  I will not disturb the Registrar’s decision in regard to this category.

11. Category 6:

    “A copy of the company’s bank statements for the period after 30 June 2010 showing the company’s cash at bank position.”

    I do not think that this is necessary given the requirement for the production of the profit and loss statements.  If the respondents wished to bring any evidence about their financial position, they could have done so.  They have instructed their solicitor that they do not intend to do so.

12. Category 7:

    “Any document recording or evidencing any communication to the company’s accountants or tax advisors on or after 26 June 2006 in which reference is made to the applicant’s annual leave entitlements.”

    I would have thought that this category of documents would have been included within category 1, but I do not believe otherwise it is something that the Court needs for the purposes of consideration of penalty.

13. Category 8:

    “Any document recording or evidencing any transfer of funds by the company Planpac Group Pty Ltd (ACN 128 953 622) on or after 18 December 2007.”

    Mr Meehan suggests that the assets of the first respondent were transferred to Planpac Group Pty Ltd after 18 December 2007 and he argues that this is relevant for the purposes of consideration of penalty.  It might indicate, he believes, a deliberate intention to avoid payment of the penalties but, in my view, the production of the profit and loss statements and the balance sheet and asset register that have already been ordered would be sufficient to enable the Court to understand what the financial situation of the first respondent is.  I am not really convinced that the Court will be particularly assisted by these documents.  If it transpires that the first respondent has transferred its assets to Planpac Group Pty Limited, then this is a matter which would have to be taken up by a liquidator and not by this Court.  The Registrar’s orders in relation to those documents will not be upheld.

14. Category 9:

    “Any document recording or evidencing any communication on or after 18 December 2007 by the second or third respondents or between them, in which reference is made to the transfer or possible transfer of funds by the company to Planpac Group Pty Ltd (ACN 128 953 622).”

    For the reasons given above, I do not believe that the Court will be assisted by receiving these documents.

15. Category 10:

    “Any document recording or evidencing the payment by the company of accrued annual leave entitlements to employees upon termination of their employment on or after 26 June 2006.”

    The company is defined as Planpac International Pty Ltd, the first respondent.  Mr Meehan argues that this documentation would go to enlighten the Court as to the attitude of the company towards Mr James and I believe that there is some force in that argument.  If a number of other employees were dismissed and were paid their entitlements, then the Court might be entitled to draw an inference, in the absence of any evidence by the respondents, that there was some deliberate intention to avoid payment to Mr James.  I would propose not to interfere with the Registrar’s decision in regard to this category.

16. In short, my orders are that orders 2, 4, 6, 7, 8, and 9 of the orders of Registrar Morgan will be set aside and that the date upon which the documents are to be produced to the Court shall be extended until

    
    

    7 October 2010.

I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of Raphael FM

Date:  5 October 2010