Federal Circuit and Family Court of Australia
(DIVISION 2)
Jay v Australian Settlements Limited [2022] FedCFamC2G 872
File number(s): SYG 1847 of 2020 Judgment of: JUDGE GIVEN Date of judgment: 21 October 2022 Catchwords: PRACTICE AND PROCEDURE – application to file defence late in proceedings on basis of privileges previously claimed – whether party obliged to alert opponent to strategic errors – estoppel by silence
EVIDENCE – privilege against exposure to penalty and self-incrimination – assertion that individual’s claimed privileges waived by admissions and positive allegations in defence filed by corporate respondent
Legislation: Civil Procedure Act 2005 (NSW) s 56
Fair Work Act 2009 (Cth) s 70
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 190, 191
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law)Rules 2021 (Cth) rr, 1.04, 1.07, 4.04, 7.01
Federal Circuit Court Rules 2001 (Cth)
Federal Court Rules 2011 (Cth) rr 1.06, 16.08, 16.12, 16.32,
Uniform Civil Procedure Rules 2005 (NSW
Cases cited: AON Risk Services Australia Limited v Australian National University (2009) 239 CLR 175
Australian Securities and Investments Commission v Mining Projects Group Limited (2007) 164 FCR 32
Bridal Fashions Pty Ltd v Comptroller-General of Customs (1996) 17 WAR 499
Cai v Tiy Loy & Co Ltd (No 2) [2015] FCCA 2924
Commonwealth v Verwayen (1990) 170 CLR 394
Construction, Forestry, Mining and Energy Union v Clark (2008) 170 FCR 574
Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543
Fair Work Ombudsman v Hu [2017] FCA 1081
Grochowski v Kearney [2020] FCA 1248
Hadgkiss v Construction, Forestry, Mining and Energy Union (2005) 146 IR 106
KMA Corp Pty Ltd v G & F Productions Pty Ltd (1997) 38 IPR 243
Maersk A/S v Patti [2022] FCA 663
Migration Agents Registration Authority v Frugtniet (2018) 259 FCR 219
National Union of Workers v Davids Distribution Pty Ltd (1999) 91 FCR 513
Rahman v Commonwealth of Australia as represented by the Australian Taxation Office [2013] FCCA 388
Reid v Howard (1995) 184 CLR 1
Rich v Australian Securities and Investments Commission (2004) 220 CLR 129
Spencer v Commonwealth of Australia (2010) 241 CLR 118
Trade Practices Commission v Abbco Iceworks Pty Ltd (1994) 52 FCR 96
Williams v Frayne (1937) 58 CLR 710
Zetta Jet Proprietary Ltd v Ship “Dragon Pearl” [2018] FCA 878
Division: Fair Work Division Number of paragraphs: 102 Date of hearing: 27 June 2022 Place: Sydney Counsel for the Applicant: Ms K Nomchong SC with Ms S McCarthy Solicitor for the Applicant: Kennedys (Australasia) Counsel for the Respondents: Mr R Jedrzejczyk Solicitor for the Respondents: Mills Oakley ORDERS
SYG 1847 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: DAVID CRAIG JAY
Applicant
AND: AUSTRALIAN SETTLEMENTS LIMITED (ACN 087 822 491)
First Respondent
GRAEME DOUGLAS WILLIS
Second Respondent
order made by:
JUDGE GIVEN
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- AGLC
- Jay v Australian Settlements Limited [2022] FedCFamC2G 872
- Case
- [2022] FedCFamC2G 872
- Decision Date
CaseChat Overview and Summary
The case of Jay v Australian Settlements Limited involves an adverse action claim brought by the applicant, who is the former Chief Executive Officer of Australian Settlements Limited (the Company), a public company owned and controlled by a collective of Australia’s non-bank financial institutions. The claim is against the Company, as the first respondent, and the chairman of the Company at the time of the applicant's termination, who acts as the second respondent. The applicant seeks relief for the termination of his employment, alleging various breaches of contract and other wrongdoing. The legal issues in this case revolve around the application of the privileges against self-incrimination and exposure to penalty by the second respondent, particularly regarding the timing of filing a defence and the impact of these privileges on the procedural requirements of the Federal Court.
The court examined whether the second respondent, by invoking these privileges, could avoid the need to formally plead to the applicant’s Statement of Claim. The court noted that while the second respondent has the right to assert these privileges, this does not necessarily exempt him from the procedural requirement to file a defence. The court also considered whether the second respondent could defer filing a defence until the close of the applicant’s case, which might be permissible if it does not prejudice the applicant's ability to present their case effectively. The court's reasoning focused on the balance between the respondent's rights to invoke these privileges and the procedural fairness required in litigation. Ultimately, the court determined that the second respondent should have filed a defence by a specified date, as failure to do so could unfairly prejudice the applicant. This decision underscores the need for adherence to procedural rules while respecting the respondent's legal rights.
In light of the findings, the court ordered that the second respondent must file a defence by a specified date, failing which certain consequences would follow, including potential sanctions against the second respondent for non-compliance. The court also made clear that the second respondent could still invoke the privileges against self-incrimination and exposure to penalty in relation to specific allegations in the Statement of Claim, but this did not excuse the obligation to formally plead to the claim. This decision aims to ensure that the proceedings are conducted fairly and efficiently while safeguarding the respondent’s rights.
The court examined whether the second respondent, by invoking these privileges, could avoid the need to formally plead to the applicant’s Statement of Claim. The court noted that while the second respondent has the right to assert these privileges, this does not necessarily exempt him from the procedural requirement to file a defence. The court also considered whether the second respondent could defer filing a defence until the close of the applicant’s case, which might be permissible if it does not prejudice the applicant's ability to present their case effectively. The court's reasoning focused on the balance between the respondent's rights to invoke these privileges and the procedural fairness required in litigation. Ultimately, the court determined that the second respondent should have filed a defence by a specified date, as failure to do so could unfairly prejudice the applicant. This decision underscores the need for adherence to procedural rules while respecting the respondent's legal rights.
In light of the findings, the court ordered that the second respondent must file a defence by a specified date, failing which certain consequences would follow, including potential sanctions against the second respondent for non-compliance. The court also made clear that the second respondent could still invoke the privileges against self-incrimination and exposure to penalty in relation to specific allegations in the Statement of Claim, but this did not excuse the obligation to formally plead to the claim. This decision aims to ensure that the proceedings are conducted fairly and efficiently while safeguarding the respondent’s rights.
Orders
Orders of the court
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Background
Background to the litigation
In advance of the hearing of the leave application, written submissions were filed for each of the second respondent and the applicant, each of whom was represented by Counsel and Senior Counsel (respectively). I have been assisted by all the submissions made for the parties. The following background has been derived from those submissions, the Affidavits set out at [3] above, transcripts of interlocutory hearings in these proceedings and documents on the Court file. Where aspects of the background are in dispute, they will be identified. Background These proceedings were commenced by the applicant in 2020 and docketed to another Judge of this Court (first primary Judge). The applicant pursues an adverse action claim against the first respondent, Australian Settlements Limited (Company) which is a public company which is owned and controlled by a collective of Australia’s non-bank financial institutions. The applicant is the Company’s former Chief Executive Officer. The second respondent is the chairman of the Company, a role he held at the time that the applicant’s services were terminated. Since the inception of the proceedings a number of case management events have occurred, some of which are of relevance to the leave application. In March 2022, due to the unavailability of the first primary Judge for the final hearing of the matter, the proceedings (which seemed predominantly on track for that hearing) were docketed to me. From the commencement of the proceedings, the first and second respondents have been jointly represented by the same solicitors and Counsel. The salient events from the various directions hearings relevant to the present application are as follows. On 20 October 2020, being three days prior to the first directions hearing, the respondents filed an Application in a Case (as that process was then known pursuant to the Federal Circuit Court Rules 2001 (Cth) (Former Rules)), seeking an order that paragraphs [122] to [127] of the applicant’s Statement of Claim (SOC), be struck out (strikeout application). Those paragraphs related to the second respondent, and the question of his accessorial liability in relation to various actions alleged to have been taken by the Company. The matter came before the first primary Judge for a directions hearing on 23 October 2020 on which occasion various timetabling orders were sought. One of the matters raised before the first primary Judge was how defences could be filed in light of the pending strikeout application. The exchange between Counsel and the Court on this topic seemed to reach a consensus, namely that the second respondent ought not imminently be required to file a defence because he had the right to invoke the privileges against self-incrimination and exposure to penalty. It was submitted by Counsel for the respondents that if the second respondent were to claim the privileges (something in respect of which Counsel for the respondents was yet to receive final instructions), this may preclude him from advancing positive defences. The resolution reached that day was that the second respondent would be absolved at that juncture from having to formally plead to the SOC. Senior Counsel for the applicant added that, given that the second respondent may well change that position and later seek to file a defence, there would be no opposition to that course “if it were done in a timely way” and after any pleading issues had resolved, by reference to the strikeout application.
Evidence
Evidence Before The Court
The second respondent maintains that his entitlement to wait until the close of the applicant’s case to elect whether or not to go into evidence is what the law says a party claiming the privilege against self-incrimination or exposure to penalty is entitled to do. He therefore says that, so understood, the question of any misunderstanding (which does not appear to be conceded) about the effect of the November letter and the withdrawal of the strikeout application is moot. There is some force to that submission in respect of preserving his position regarding evidence. However, and as the applicant notes, while the question of evidence is one matter, the question of whether the second respondent ought (by now) to have filed a defence, is quite another. The parties agree that a person who is the subject of a claim which may result in the imposition of a penalty has an entitlement to claim privilege against self-incrimination or exposure to penalty: see Rich v Australian Securities and Investments Commission (2004) 220 CLR 129 at [25] to [37]. The applicant relies upon Australian Securities and Investments Commission v Mining Projects Group Limited (2007) 164 FCR 32 at 36, [7] which was recently cited with approval in Migration Agents Registration Authority v Frugtniet (2018) 259 FCR 219 at [80] per Siopis, Robertson, and Bromwich JJ as combining to mean that the privileges operate to relieve a respondent from the need to deliver a defence which complies with the rules of pleading, if the rules would override those privileges. The principle which underpins each of the privileges against self-incrimination and penalty is a substantive common law right which “serves the purpose of ensuring that those who allege criminality or other illegal conduct should prove it”: see Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543 per Gleeson CJ, Gaudron, Gummow and Hayne JJ at 559 (citing in turn Trade Practices Commission v Abbco Iceworks Pty Ltd (1994) 52 FCR 96 per Burchett J at 129). Those privileges cannot be can be abrogated by any order or rules of the court: Reid v Howard (1995) 184 CLR 1 at 16 to 17 per Toohey, Gaudron, McHugh and Gummow JJ. A personal respondent to a penalty proceeding is entitled to put the applicant to proof of their case: see Grochowski v Kearney [2020] FCA 1248 per O’Callaghan J at [3]. Accordingly, the second respondent could decline to admit matters which are alleged against him by the applicant in the SOC. However, the entitlement of the second respondent to decline to go into evidence (or to participate in related interlocutory processes such as responding to interrogatories, provided discovery or answering Notices to Produce) in order to preserve his privilege is separate. It is also largely dependent on, and consequential to, his having actually participated in the proceedings by formally defending them by the filing of a defence. In Maersk A/S v Patti [2022] FCA 663, Rares J acknowledged that that the respondent’s right to invoke the privileges against self-incrimination and exposure to penalty reflects an important common law right, but said that this could not be “overstretched”, before finding as follows at [27] to [28]: I am of opinion that [the respondent’s] assertion that he would be exposed to such a risk if he had to plead to virtually each and every paragraph of the statement of claim goes beyond any legitimate invocation of the penalty and self-incrimination privileges. It is likely that he will be entitled, if so advised, to invoke one or both of those privileges in respect of particular allegations in the statement of claim that he was party to the bringing into existence of the contracts of carriage, registrations of customers and the booking of cargoes in Maersk’s booking system. However, I am of opinion that there is no reason why he cannot plead to anodyne allegations by admitting, denying or stating that he does not know and cannot admit them. That is because, ordinarily, such a plea under the Federal Court Rules does not have the character of an admission but is merely a statement of what is in issue: Laws 170 CLR at 86, 98, Buckmaster 8 Exch at 637; 155 ER at 1507In other instances, [the respondent] may be able to plead, by invoking one or both of the self-incrimination or penalty privileges but, stating that there is or is not is an issue about whether a fact exists independent of any admission that could be used to involve him in it. For example, it is difficult to see why [the respondent] could not plead to whether Maersk carried some or all of the containers to their ports of discharge, issued bills of lading that incorporated Maersk’s standard terms, provided containers for collection or that were carried but not collected and received payment of freight or not. It is difficult to understand how the pleading of an admission or denial of those matters would have any capacity to be used in a criminal or penalty proceeding against [the respondent], in the absence of any evidence or explanation giving rise to that possibility.
Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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