Popescu v Secure2Go Pty Ltd
[2024] FedCFamC2G 271
•22 March 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Popescu v Secure2Go Pty Ltd [2024] FedCFamC2G 271
File number(s): PEG 376 of 2020 Judgment of: JUDGE LUCEV Date of judgment: 22 March 2024 Catchwords: PRACTICE AND PROCEDURE – Discovery of documents – documents concerning alleged debt and unpaid wages, money transfers to superannuation account, superannuation guarantee audit and long service leave payment – whether discovery in the interests of the administration of justice – whether discovery likely to contribute to fair and expeditious conduct of the proceedings – other matters relevant to discovery – where claim made in another Court for long service leave discontinued upon payment – observations on estoppel by deed and abuse of process – where consequential loss claimed not dependent upon existence of documents sought to be discovered – whether documents in possession, power or control of parties – observations on documents in possession of parent company – whether orders sought too broad
INDUSTRIAL LAW – Fair work – general protections application – claims of underpayment and non-payment of wages and superannuation – claims of consequential loss arising from delayed payment of long service leave payment
Legislation: Corporations Act 2001 (Cth) ss 50AA, 471B
Fair Work Act 2009 (Cth) ss 44, 323, 535, 536, 550, 557A, 558B, 570
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 176, 190, 191, 192
Federal Circuit Court of Australia Act 1999 (Cth) s 45
Federal Magistrates Act 1999 (Cth) s 45
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr 14.02, 14.03, 14.09
Federal Circuit Court of Australia Rules 2001 (Cth) r 14.02
Federal Court Rules 2011 (Cth) r 20.14
Federal Magistrates Court Rules 2001 (Cth) r 14.02
Fair Work Regulations 2009 (Cth) regs 3.32, 3.33, 3.36, 3.38, 3.46
Long Service Leave Act 1958 (WA) s 26
Cases cited: Alvarez Nino v Kuksal [2022] FedCFamC2G 401
Australian Competition and Consumer Commission v Black on White Ltd & Ors [2001] FCA 187; (2001) 110 FCR 1
Bognar v Skilled Offshore Pty Ltd [2016] FCCA 2962; (2016) 315 FLR 364
Bonjour v Cachet Holdings Pty Ltd t/as Mulberry Tree Childcare (No 2) [2022] FedCFamC2G 604
Brookfield v Yevad Products Pty Ltd [2002] FCA 1376
Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2011] FCA 1396
Douglas-Hill v Parke Davis Pty Ltd (1990) 54 SASR 36
Fair Work Ombudsman v Anastasio [2023] FedCFamC2G 827
Fair Work Ombudsman v Devine Marine Group [2014] FCA 1365
Gallagherv BHP Billiton Nickel West Pty Ltd [2016] FCCA 3367
Gambro Pty Ltd v Fresenius Medical Care Australia Pty Ltd [2002] FCA 1359
Hartnett Legal Services Pty Ltd v Ballantyne [2016] FCA 1116
Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd (No 2) [2010] WASC 217
Vanden Driesen v Edith Cowan University [2012] FMCA 735; (2012) 226 IR 452; (2012) 269 FLR 422; (2012) 64 AILR 101-754
Vinden v Wrong Fuel Rescue Pty Ltd [2019] FCCA 1091
Division: Division 2 General Federal Law Number of paragraphs: 68 Date of hearing: 22 February 2023 Place: Perth Counsel for the Applicant: The Applicant appeared in person Counsel for the First and Fifth Respondents: Mr T Galic Solicitor for the First and Fifth Respondents: TGC Lawyers Second Respondent: No appearance by or for the Second Respondent Third Respondent: In person by phone via CISCO Webex Fourth Respondent: In person by phone via CISCO Webex ORDERS
PEG 376 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: IONUT BOGDAN POPESCU
Applicant
AND: SECURE2GO PTY LTD
First Respondent
C-TECH GLOBAL MARINE GROUP LIMITED
Second Respondent
PAUL ANDREW HARDIE (and others named in the Schedule)
Third Respondent
ORDER MADE BY:
JUDGE LUCEV
DATE OF ORDER:
22 MARCH 2024
THE COURT:
1.Declares that it is in the interests of the administration of justice that there be discovery by the First Respondent of:
(a)any correspondence, including emails, letters or internal memoranda (including copies thereof) involving any of the parties to these proceedings directly relevant to an alleged debt or unpaid wages owed by the First Respondent to the Applicant in the period from July 2015 to December 2020; and
(b)the superannuation guarantee audit prepared by the Australian Taxation Office in the period from September 2019 to January 2021(including copies thereof).
2.Orders that:
(a)the First Respondent provide discovery on affidavit to the Applicant of the documents referred to in (a) and (b) of the Declaration at 1 above by 22 May 2024;
(b)the matter be listed for further directions at 3.00pm on 28 June 2024;
(c)there be liberty to apply on 3 days notice; and
(d)costs, if any, be reserved,
and otherwise dismisses the Applicant’s Application in a Proceeding filed 1 June 2022.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE LUCEV
APPLICATION IN A PROCEEDING FOR DISCOVERY
Before the Court is an Application in a Proceeding (“Discovery Application”) filed by the applicant, Mr Ionut Bogdan Popescu (“Mr Popescu”), seeking orders for discovery of documents by the first respondent, Secure2Go Pty Ltd (“S2G”), and the fifth respondent, Mr Brenton Andrew Scott (“Mr Scott”).
THE PARTIES
It is necessary to make some observations as to the identity and role of the parties involved in this matter, as follows:
(a)Mr Popescu is the applicant and was an employee of S2G at relevant times;
(b)S2G is the first respondent and was the employer of Mr Popescu at relevant times, and also at relevant times a corporation under the Corporations Act 2001 (Cth) (“Corporations Act”);
(c)C-Tech Global Marine Group Limited (“C-Tech”) is the second respondent and at the relevant times a corporation under the Corporations Act, and the ultimate holding company of S2G, and an entity in control of S2G within the meaning of s 50AA of the Corporations Act, but which is now apparently being wound up or in insolvency or to which a provisional liquidator has been appointed: see the order of the Court made by Judge Kendall on 15 April 2021 staying proceedings against C-Tech pursuant to s 471B of the Corporations Act;
(d)Paul Andrew Hardie (“Mr Hardie”) is the third respondent, and is alleged by Mr Popescu to have been, at relevant times up to 24 November 2020, a director of C-Tech, and a person in control (for the purposes of s 50AA of the Corporations Act) and ultimately responsible for making employment decisions for both C-Tech and S2G;
(e)Paul James Stenton (“Mr Stenton”) is the fourth respondent, and is alleged by Mr Popescu to have been, at relevant times up to 24 November 2020, the Secretary and a director of C-Tech, the Secretary and sole director of S2G, and a person in control (for the purposes of s 50AA of the Corporations Act) and ultimately responsible for making employment related decisions for both C-Tech and S2G; and
(f)Brenton Scott (“Mr Scott”) is the fifth respondent and is alleged by Mr Popescu to have at relevant times been the Chief Executive Officer (“CEO”), and a person in control (for the purposes of the s 50AA of the Corporations Act) and ultimately responsible for making employment related decisions for S2G.
In respect of the hearing of the Discovery Application the Court notes that the third respondent, Mr Hardie, and the fourth respondent, Mr Stenton, appeared at the hearing of the Discovery Application even though orders were not sought against them, but they did not, and were not invited to, make submissions.
MR POPESCU’S CLAIM AND RELIEF SOUGHT
In a Statement of Claim (“SOC”) filed at the same time as the Originating Application Mr Popescu claims that:
(a)from 1 July 2015 to 30 August 2019, he was employed by S2G under an employment contract (“Employment Contract”) which was partly written and partly unwritten, and insofar as it was written was comprised of an employment agreement dated 10 April 2015, as amended by letter dated 1 March 2017, and further amended by a letter dated 1 March 2017 in relation to a deferred payment arrangement in respect of ordinary wages;
(b)to assist with overcoming S2G’s cash flow issues, he agreed to a deferred payment arrangement, initially orally, and then in writing dated 1 March 2017, pursuant to which:
(i)he was, periodically, underpaid wages and some other entitlements, with the underpayment recorded as time in lieu hours to be paid later or on termination of employment; and
(ii)S2G was to pay his reasonable costs incurred such as bank fees and interest on borrowed funds consequent upon the underpayment;
(c)he has suffered losses of:
(i)$81,825.70 in unpaid wages;
(ii)$7,773.44 in unpaid superannuation; and
(iii)$29,792.22 arising from bank fees and interest on borrowed funds,
(d)for periods of about 11 and 14 months respectively following the termination of his employment with S2G his accrued long service and annual leave entitlements were not paid, and he had suffered a consequential loss:
(i)of $21,443 (approximately) because of the failure to pay the long service leave entitlement on time; and
(ii)arising from the withholding of a gross amount of $82,601.36 of accrued annual leave for a period of 14 months;
(e)the failure by S2G to pay:
(i)various amounts of wages, superannuation, bank fees and interest, and leave entitlements was a contravention of s 323(1) of the Fair Work Act 2009 (Cth) (“FW Act”); and
(ii)accrued annual leave was a contravention of s 44(1) of the FW Act;
(f)the failure to provide payslips to Mr Popescu:
(i)from time to time, within one day of payment; or
(ii)at all for dates in August to October 2019,
was a contravention of s 536(1) of the FW Act;
(g)the conduct of S2G in relation to the alleged contraventions was part of a pattern of conduct which was systematic and deliberate;
(h)each of Mr Hardie, Mr Stenton and Mr Scott were knowingly concerned in S2G’s contraventions of ss 44 and 323 of the FW Act;
(i)by reason of the involvement of Mr Hardie and Mr Stenton, C-Tech contravened s 558B(2) of the FW Act arising from S2G’s contraventions of the FW Act; and
(j)S2G’s contraventions of the FW Act were serious contraventions within the meaning of s 557A(1) of the FW Act.
In the Originating Application, Mr Popescu seeks:
(a)various declarations in relation to:
(i)the alleged breach of Mr Popescu’s Employment Contract by S2G;
(ii)S2G’s alleged contravention of ss 44(1), 323(1) and 536(1) of the FW Act;
(iii)the alleged involvement of C-Tech, Mr Hardie, Mr Stenton and Mr Scott in the alleged contravention of ss 44(1) and 323(1) of the FW Act;
(b)orders for:
(i)payment to Mr Popescu of damages in relation to the alleged breaches of the Employment Contract;
(ii)payment of compensation to Mr Popescu of consequential loss arising from the alleged breaches of the Employment Contract;
(iii)S2G and C-Tech to be jointly and severally liable to pay compensation and interest to Mr Popescu in relation to the alleged breaches of the Employment Contract and alleged contraventions of ss 44(1) and 323(1) of the FW Act; and
(iv)orders for the imposition of pecuniary penalties payable to Mr Popescu by each of the respondents.
DEFENCES AND RESPONSES
Mr Hardie’s Defence
Mr Hardie’s’s Defence filed 18 March 2021:
(a)denies liability generally in respect of Mr Popescu’s claims;
(b)says that Mr Scott, through his control of S2G’s bank accounts and the majority shareholding held in C-Tech by entities associated with Mr Scott, controlled both C-Tech and S2G;
(c)says that at all material times all employment related decisions in respect of Mr Popescu were made by S2G, with Mr Scott being ultimately responsible for making employment related decisions on behalf of S2G from about August 2017 to 4 May 2020 in his capacity as CEO of S2G;
(d)Mr Popescu’s alleged accrued annual leave entitlement was not disclosed to C-Tech (or its directors) at any time prior to C-Tech’s acquisition of S2G;
(e)says that consideration paid by C-Tech to a nominee of Mr Popescu (a trust) for the acquisition of shares in S2G, the consideration being by way of a cash payment of $2,500 and the issue of 250,000 shares in C-Tech at a deemed price of twenty cents (a value of $50,000), constituted payment, alternatively part payment, of the amounts claimed by Mr Popescu;
(f)alleges Mr Popescu (and S2G) breached the Share Sale Agreement in relation to C-Tech’s purchase of shares in S2G by:
(i)failing to disclose material information, namely, the alleged accrued annual entitlement and the unwritten deferral of payment agreement;
(ii)giving C-Tech inaccurate, incomplete or misleading information, and accounts which did not show a true and fair view of the financial position and liabilities of S2G as at the date of acquisition of the S2G shares by C-Tech;
(g)says that Mr Popescu was paid approximately 11 months’ worth of long service leave after he resigned from S2G;
(h)says that Mr Popescu was paid an amount of $82,601.36 on 22 November 2020 (presumably by S2G); and
(i)says that Mr Popescu was paid an amount of $6,446.74 on 22 November 2020 (presumably by S2G).
Mr Stenton’s Defence
Mr Stenton’s Defence, also filed on 18 March 2021, is effectively in the same terms as Mr Hardie’s Defence.
Mr Scott’s Defence
Mr Scott’s Defence filed 23 April 2021 says that:
(a)between 30 August 2019 and 24 November 2020, all employment related matters concerning Mr Popescu were handled by Mr Hardie, in his capacity as Chairman of S2G’s parent company, C-Tech, and Mr Stenton as the sole director of S2G at that time;
(b)his employment with C-Tech ceased on 4 May 2020;
(c)he has had no correspondence with Mr Popescu since the termination of Mr Popescu’s employment;
(d)only Mr Hardie and Mr Stenton can comment on why payments were withheld for between 11 and 14 months after Mr Popescu’s employment was terminated by S2G;
(e)he has no records available to him to provide concerning the reasons why there was a delay in payment nor information as to what payments were ultimately paid to Mr Popescu;
(f)he recollects that various offers of settlement were made by Mr Hardie during the period from 1 September 2019 to 31 October 2019, but these offers were all rejected by Mr Popescu; and
(g)payslips were always made available to all employees on request, but Mr Popescu never made any such request.
S2G’s Defences
S2G filed a Defence prepared by Mr Scott on 23 April 2021 (“S2G’s April 2021 Defence”) in which it said that:
(a)between 30 August 2019 and 24 November 2020, all employment related matters concerning Mr Popescu were handled by Mr Hardie, in his capacity as Chairman of S2G's parent company, C-Tech, and Mr Stenton as the sole director of S2G at that time;
(b)between 24 November 2020 and 8 April 2021 Mr Andrew Hill was the sole director of S2G following the acquisition of S2G by C-Tech;
(c)from 8 April 2021 Mr Scott has been the sole director of S2G;
(d)only Mr Hardie and Mr Stenton can comment on why payments were withheld for between 11 and 14 months after Mr Popescu's employment was terminated by S2G; and
(e)there are no records available to S2G to provide concerning the reasons why there was a delay in payment nor information as to what payments were ultimately paid to Mr Popescu, as they were made prior to the sale of S2G and the appointments of Mr Hill and subsequently Mr Scott as directors.
Following the appointment of lawyers to act for S2G and Mr Scott, S2G filed a second Defence (not marked as an Amended Defence) on 19 May 2022 (“S2G’s May 2022 Defence”) in which S2G:
(a)adopted and repeated large parts of the Defence of Mr Hardie;
(b)did not admit significant parts of the SOC;
(c)in relation to claims made in Mr Hardie’s Defence, denied that:
(i)it acted in breach of the Share Sale agreement;
(ii)it provided inaccurate, incomplete or misleading information to C-Tech;
(iii)S2G’s books of account did not disclose to C-Tech a true, fair and accurate position of the liabilities and accruals upon its acquisition by C-Tech;
(iv)it had an unwritten agreement with Mr Popescu to accrue wages, superannuation and expenses entitlements;
(d)admitted that:
(i)S2G made a payment to Mr Popescu of $82,601.36; and
(ii)S2G made a payment to Mr Popescu of $6,446.74; and
(e)denied:
(i)the alleged breaches of the Employment Contract;
(ii)the alleged breach in respect of long service leave;
(iii)the alleged breach in respect of accrued annual leave;
(iv)the alleged breach of contract in respect of reimbursement of expenses;
(v)the alleged contraventions of the FW Act; and
(vi)that Mr Popescu is entitled to any of the civil remedies sought, or any remedies.
ORDERS SOUGHT IN THE DISCOVERY APPLICATION
The Discovery Application sought orders as follows (“Orders Sought”):
1.By no later than 17 June 2022 the First and Fifth Respondent provide disclosure to the Applicant as follows –
a.Copies of any correspondence, including emails, letters or internal memoranda involving any of the parties to these proceedings which touch on the subject of an alleged debt or unpaid wages owed by the First Respondent to the Applicant in the period from July 2015 to December 2020.
b.Copies of any correspondence, including emails, letters or internal memoranda involving any of the parties to these proceedings which touch on the subject of an alleged debt or unpaid wages owed by the First Respondent to any of its current or former employees in the period from July 2015 to December 2020.
c.Copies of any correspondence, including emails, letters or internal memoranda involving any of the parties to these proceedings, which touch on the subject of the below payments transferred by or on behalf of the First Respondent to the applicant’s superannuation account:
(i) Transfer on or about 14-01-2021 in the sum of $3,574.82
(ii) Transfer on or about 14-01-2021 in the sum of $5,245.60
(iii) Transfer on or about 14-01-2021 in the sum of $4,410.39
(iv) Transfer on or about 21-12-2020 in the sum of $4,824.58
(v) Transfer on or about 21-12-2020 in the sum of $4,726.00
(vi) Transfer on or about 21-12-2020 in the sum of $4,526.82
(vii) Transfer on or about 21-12-2020 in the sum of $4,481.74
d.A copy of the Super Guarantee audit performed by the Australian Taxation Office in the period from September 2019 to January 2021.
e.Copies of any correspondence, including emails, letters or internal memoranda involving any of the parties to these proceedings, which touch on the subject of the long service leave payment made to the applicant in July 2020.
MR POPESCU’S AFFIDAVIT
The only affidavit (not including affidavits of service) filed in these proceedings thus far is Mr Popescu’s affidavit affirmed 1 June 2022 (“Mr Popescu’s June 2022 Affidavit”), in support of the Discovery Application in which he says that:
(a)he is still owed approximately $81,825.70 in unpaid wages and a further $29,792.00 in relation to business expenses that he incurred on behalf of S2G Pty Ltd;
(b)he was intentionally denied payment of his accrued long service leave for approximately 11 months and accrued annual leave for approximately 16 months longer following the termination of his employment;
(c)the underpayment of his wages was part of a pattern of behaviour that included the same or similar underpayment of wages to other employees of S2G within the same period;
(d)there had been a breach of contract in relation to payments that were intentionally withheld from his superannuation account;
(e)the current and former directors of S2G, and its CEO, Mr Scott, were knowingly responsible as accessories in relation to the underpayments to which he referred;
(f)based on the pleadings that have been filed in this proceeding, his understanding is that the substance of his claims is denied by each of the respondents;
(g)in about 2020, S2G complied with his request to provide him with his employment documents, including copies of pay slips and his employment contracts, so as to calculate the various amounts that are owed to him arising from his employment;
(h)he did not have copies of other documents such as internal emails and meeting minutes which he anticipates will record discussions between the directors and managers in control of S2G about the financial state of the company and the payment or non-payment of employee wages and benefits;
(i)there may also exist emails and other internal documents which evidence the involvement of Mr Hardie and Mr Stenton in the important spending decisions for S2G, including the steps taken to reduce or control employee wages costs;
(j)in relation to his superannuation payments, he was aware that a number of payments were transferred to his superannuation account in December 2020 and in January 2021, very shortly after he commenced these proceedings and he believes it to be relevant to his application that documents be disclosed in relation to the authorisation and the purpose of those payments;
(k)he is unable to get access to any of the above-mentioned documents belonging to S2G in relation to employee payments and debts owed to employees;
(l)Mr Scott sent him an email informing him that either
(m)Mr Stenton and/or Mr Hardie would have authorised or made the superannuation payments as a result of a Superannuation Guarantee Audit (“SG Audit”) performed by Australian Taxation Office (“ATO”);
(n)in addition to his original request, on 11 May 2022 he replied to Mr Scott’s email asking for a copy of the SG Audit;
(o)he wrote to, Mr Galic, the lawyer for S2G and Mr Scott, and asked that Mr Galic provide him with documents to explain the superannuation payments;
(p)on 18 May 2022 he sent an email to Mr Galic (copied to Mr Stenton and to Mr Hardie), asking that Mr Galic provide him with documents relevant to:
(i)the alleged debt or unpaid wages between July 2015 and December 2020;
(ii)the refusal to pay long service leave for approximately 11 months; and
(iii)the payment of the long service leave in July 2020;
(q)to date, he had not received an adequate response to his requests for disclosure; and
(r)he believes the documents that he has requested are necessary for the fair hearing and determination of his claim.
SUBMISSIONS
On 20 July 2022 Mr Popescu filed an outline of submissions (“Mr Popescu’s Submissions”) pursuant to orders made by the Court on 15 June 2022 (“June 2022 Orders”). No outline of submissions was filed by S2G or Mr Scott pursuant to the June 2022 Orders, but at hearing the lawyer who appeared on their behalf made brief oral submissions.
Mr Popescu’s Submissions
As to the background facts Mr Popescu submitted that:
(a)Mr Popescu’s originating application made on 17 December 2020 (“Originating Application”) is in relation to his period of employment between July 2015 and August 2019 with S2G;
(b)very broadly, the Originating Application alleges that S2G intentionally failed to make payment of entitlements owed to Mr Popescu under the FW Act, the Long Service Leave Act 1958 (WA) (“LSL Act”), and withheld wages, superannuation and other payments owed pursuant to the Employment Contract;
(c)as directors and/or controllers of S2G at the relevant times, Mr Hardie, Mr Stenton and Mr Scott are each alleged by Mr Popescu to be involved as accessories to the various statutory and contractual breaches committed by S2G;
(d)Mr Popescu has now applied for orders under s 176(2) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“FCFCOA Act”) seeking the production of five categories of documents which he reasonably believes to be in the possession or control of S2G and/or Mr Scott.
Mr Popescu submitted that as to the documents sought:
(a)insofar as the documents requested relate to employment records of Mr Popescu and/or the employment records of other persons employed by S2G at the relevant times, then Mr Popescu reasonably believes that these documents exist and are in the possession or control of S2G and/or Mr Scott because:
(i)as an employer, s 535(1) of the FW Act requires S2G to make and keep employee records for each employee for at least 7 years;
(ii)regulations 3.32, 3.33, 3.36 and 3.38 of the Fair Work Regulations 2009 (Cth) (“FW Regulations”) require the employee records to contain information such as the employee’s name and type of employment, the rate and amount of remuneration paid, any leave balance and leave taken, and whether an employee had arranged any individual flexibility arrangement in relation to work;
(iii)section 536 of the FW Act and reg 3.46 of the FW Regulations also require S2G to provide payslips which contain employee information concerning pay, leave balances and the like;
(iv)the FW Act and FW Regulations require S2G to keep records of superannuation contributions and when those contributions are paid; and
(v)section 26 of the LSL Act also requires S2G to make and keep employee records for 7 years;
(b)S2G has the power to request or obtain documents that are required to be held by S2G;
(c)more generally in relation to email correspondence between Mr Hardie, Mr Stenton and Mr Scott, Mr Popescu has possession of some emails to which he was included as a recipient. Mr Popescu however, reasonably expects further email correspondence or minutes of meetings to exist;
(d)if the history of the First and Fifth Respondents is any guide, S2G and Mr Scott will not produce these documents willingly. Mr Popescu’s June 2022 Affidavit refers to his unsuccessful attempts to obtain documents through the cooperation of S2G;
(e)it is also noted that S2G and Mr Scott have repeatedly failed to comply with directions of this Court in relation to filing of documents, including the failure to provide any response to the Discovery Application; and
(f)Mr Popescu reasonably expects that S2G and Mr Scott will not produce documents without an express order by the Court.
Mr Popescu submitted that as to the relevance of the documents sought to the SOC:
(a)the SOC asserts that S2G failed to make various payments owed to Mr Popescu pursuant to various instruments including the FW Act, the LSL Act, and the Employment Contract;
(b)the SOC also asserts that S2G’s practices involved a pattern of underpayment of employees;
(c)the various categories of documents that are sought as part of the Discovery Application are essential evidence to show the payments that were made or not made to employees of S2G and may also show the level of involvement of Mr Hardie, Mr Stenton and Mr Scott;
(d)Mr Popescu believes that the documents sought at proposed order [1(a)] in the Discovery Application relating to the alleged debt and unpaid wages allegedly owed to Mr Popescu are very relevant to show the level of the knowledge that the First and Fifth Respondents had about employment debts owed, and who took or influenced decisions of non-payment;
(e)Mr Popescu also believes that the documents sought at proposed order [1(b)] in the Discovery Application relating to the alleged debt and unpaid wages allegedly owed to current or former employees are relevant to the claim of a pattern of breaches of legislation and contractual obligations for other employees;
(f)at proposed order [1(c)] in the Discovery Application Mr Popescu seeks documentation about payments made to his superannuation fund at the end of 2020 and the beginning of 2021, more than one year after his employment ended with S2G. To date, Mr Popescu has no knowledge about what these amounts represent, and Mr Popescu did not know about these payments until he noticed them in his superannuation account and after the ATO flagged them for additional tax;
(g)when Mr Popescu requested the documents related to the superannuation payments mentioned at proposed order [1(c)] in the Discovery Application, Mr Scott replied to say that Mr Hardie and/or Mr Stenton would have this information as they made the payments based on the SG Audit, which is being sought at proposed order [1(d)] in the Discovery Application as it is relevant to the payments made. It should also show if any other employees were affected by similar non-payments, which would show the systematic pattern of breaches of the FW Act;
(h)when Mr Popescu’s employment with S2G ended, Mr Popescu was also owed approximately 12 years’ worth of long service leave payments. Both S2G and Mr Hardie refused to pay this. Mr Popescu sought help from the Department of Mines, Industry Regulation and Safety (“DMIRS”). DMIRS were given the contact details of Mr Stenton as he was the sole director of S2G however, DMIRS informed Mr Popescu that Mr Stenton had directed them to have all discussions with Mr Hardie instead. Subsequently DMIRS continued all discussions with Mr Hardie. DMIRS forwarded a few offers to Mr Popescu to partially pay the amount owed for the long service leave entitlement. All offers were “extended” by Mr Hardie;
(i)Mr Popescu later made a claim in the Western Australian Industrial Magistrates Court (“IM Court” and “IM Court Claim” respectively ) where he sought the full amount for the long service leave entitlement to be paid, plus interest and court costs;
(j)after the IM Court Claim was submitted, the full amount was paid, plus interest and court costs, and the IM Court Claim was discontinued;
(k)the documents sought at proposed order [1(e)] in the Discovery Application are relevant as they show timelines, unnecessary negotiations, and decisions made to initially not pay and ultimately delay payment of long service leave entitlements;
(l)on 26 June 2020 Mr Stenton contacted Mr Popescu via SMS to ask to discuss Mr Popescu’s claim for his employment entitlements and stated as follows:
From Mr Paul Stenton
Evening Bogdan,
Sorry to Message so late, are you available to talk tomorrow?
Thanks,
Paul
From Mr Popescu
Morning. About what?
From Mr Paul Stenton
Your outstanding claim. Also what is happening at the company so you can be aware.
From Mr Popescu
Sure. We can talk.
From Mr Paul Stenton
Ok. Let me know when works for you.
From Mr Popescu
We can talk now.
(m)a phone conversation took place on 27 June 2020. During that conversation Mr Stenton informed Mr Popescu that himself and Mr Hardie are in control of S2G and wish to discuss the claim further, and that they acknowledge that it was poorly handled in the past, including by them, and they wish to correct the wrongs done;
(n)following the above conversation, further comments indicating the desire to correct the wrongs done were made via SMS by Mr Stenton to Mr Popescu and stated as follows:
From Mr Popescu
Are you using the same e-mail address [Mr Stenton’s work email omitted].
From Mr Stenton
yes, or my private is [Mr Stenton’s private email omitted].
From Mr Popescu
Cheers. I’ll shoot you and Paul H an e-mail either today or early next week. I also talked to Wes. If this will work, I need some transparency. It’s difficult for me to trust…
From Mr Stenton
I agree, and half of my time over the last few months has been about trust, I have committed mine to Paul H and have exactly 0 trust on the other side, so all has to be documented and whatever happens have it all verified for yourself. All I can say is from our end it’s all on the table, no games, no self interest, just getting the wrongs corrected.
(o)as to the documents being required for a fair determination of the SOC:
(i)the documents sought by the Discovery Application are essential evidence to determine the claims that are made by Mr Popescu in relation to his employment, and in relation to the conduct of the various respondents at the relevant times;
(ii)as an employee of S2G Mr Popescu did not and does not have possession and control of the documents that are necessary for the determination of his claim. The documents in question are in the possession or control of S2G and/or in the control of Mr Scott as the controller of S2G;
(iii)the documents sought would help towards a fair determination of the Originating Application as Mr Popescu believes that they will show at various stages each of the respondents had the authority to deny or make payments to Mr Popescu, or took decisions to deny or make payments to Mr Popescu;
(iv)in their Defences Mr Hardie and Mr Stenton indicated that they did not have the authority to make decisions about any employment matters related to Mr Popescu, including making or denying employment entitlements payments to Mr Popescu;
(v)the documents will help in identifying who was making the decisions with respect to the payments which were denied to Mr Popescu for so long;
(vi)when DMIRS assisted Mr Popescu to attempt to recoup the long service leave entitlements, it was Mr Hardie corresponding and making offers, ultimately denying any payments. Any documents, email, memoranda, would help identify who made these decisions on behalf of S2G;
(vii)around November 2020 S2G was sold. It was at that time that some of the payments Mr Popescu was owed were made, more than a year later, and with no interest;
(viii)the confirmation of these payments made to Mr Popescu was relayed by the lawyer representing S2G which Mr Popescu understands was engaged by Mr Hardie or Mr Stenton, or both of them. The documents Mr Popescu seeks in the Discovery Application should help identify the ultimate decision makers as to whether payments were made to Mr Popescu or not; and
(ix)the superannuation payments made to Mr Popescu’s superannuation fund at the end of 2020 and the beginning of 2021 attracted a Division 293 notice from ATO for Mr Popescu’s tax return for the 2020-2021 financial year. This meant that Mr Popescu had to pay extra tax because these payments were made in the wrong year. All the information related to these payments would help in a fair determination of the SOC, and it may lead to the SOC being amended by Mr Popescu to seek further amounts.
In his oral submissions to the Court Mr Popescu relevantly said that: Transcript, pp 2, 3 and 6:
(a)he sought orders for discovery against only S2G and Mr Scott;
(b)he had a proceeding in the IM Court with respect to long service leave but that matter “closed” before it proceeded to any hearing in the IM Court;
(c)the reason he was asking for the documents about long service leave was that it showed Mr Hardie was the one making decisions about any payments that were made to Mr Popescu;
(d)that proceeding in the IM Court was something he had done only after he contacted DMIRS to help. Mr Popescu had discussions with representatives for S2G which, at the time, were Mr Stenton and Mr Hardie;
(e)Mr Popescu thinks those documents are relevant because it shows Mr Stenton and Mr Hardie’s decision-making process;
(f)the legal advice he received is that S2G should hold the documents he seeks; and
(g)he was not aware of any reasons why those documents should not be in the possession of S2G, particularly documents relating to long service leave and superannuation payments and the SG Audit.
Respondents’ submissions
As the Orders Sought are against S2G and Mr Scott, Mr Hardie and Mr Stenton made no submissions: see [3] above.
Mr Galic for S2G and Mr Scott submitted that: Transcript, pp 3-6
(a)it was “common cause” Mr Scott only became a director, took management of and controlled S2G in April 2021 and prior to that was an employee of C-Tech until May 2020;
(b)Mr Scott has said, and continues to say, that he does not have any of the documents;
(c)given most of the dealings appear to have been between Mr Popescu and Mr Hardie and Mr Stenton and going back to 2019 the Discovery Application should have been directed against them;
(d)it remains open to Mr Popescu to include Mr Hardie and Mr Stenton as respondents to the Discovery Application and it was “surprising” they were not included as the respondents to the Discovery Application;
(e)any response from S2G and Mr Scott will simply be that they have no documents;
(f)he did not see how it can be that Mr Scott should be a party to the Discovery Application at all, but that this would be the subject of a separate application that S2G and Mr Scott will make;
(g)the proposed orders in the Discovery Application are quite broad;
(h)Mr Popescu would have to state his belief in the existence of those documents in the possession of S2G and Mr Scott, but that this contention is difficult when S2G and Mr Scott have stated from the outset that they hold no documents;
(i)the reason that the Discovery Application should have been directed at Mr Hardie and Mr Stenton was because they enjoyed management and control of S2G and C-Tech;
(j)Mr Stenton was the sole director of S2G for some time before Mr Stenton ceased acting in this role in November 2020;
(k)he was instructed that S2G does not have those documents “but someone’s got them” and that he could only point to the individuals who are the management that previously controlled S2G;
(l)some of the documents may be in the possession of C-Tech but the action against C-Tech is stayed, and C-Tech is in either administration or liquidation;
(m)his instructions are that the documents are no longer in S2G’s possession and that there may be a good reason why this was, including perhaps that “they weren’t handed over”; and
(n)Mr Scott came to be a director of S2G in April 2021 and that was after these proceedings were commenced in December 2020.
CONSIDERATION
Overarching civil practice and procedure – legislative provisions
In considering whether to grant discovery the Court must have regard to the overarching civil practice and procedure obligations under s 190 of the FCFCOA Act, which provides as follows:
(1)The overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes:
(a) according to law; and
(b) as quickly, inexpensively and efficiently as possible.
(2)Without limiting subsection (1), the overarching purpose includes the following objectives:
(a)the just determination of all proceedings before the Federal Circuit and Family Court of Australia (Division 2);
(b)the efficient use of the judicial and administrative resources available for the purposes of the Court;
(c) the efficient disposal of the Court's overall caseload;
(d) the disposal of all proceedings in a timely manner;
(e)the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.
(3)The civil practice and procedure provisions must be interpreted and applied, and any power conferred or duty imposed by them (including the power to make Rules of Court) must be exercised or carried out, in the way that best promotes the overarching purpose.
(4)The civil practice and procedure provisions are the following, so far as they apply in relation to civil proceedings:
(a) the Rules of Court;
(b)any other provision made by or under this Act or any other Act with respect to the practice and procedure of the Federal Circuit and Family Court of Australia (Division 2).
Section 190 of the FCFCOA Act, read with ss 191 and 192 thereof, sets out the overarching purpose of civil practice and procedure provisions which is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. A number of relevant important objectives are included therein, including:
(a)the efficient use of the judicial and administrative resources of the Court;
(b)efficient disposal of the Court's overall caseload; and
(c)disposal of all proceedings in a timely manner, and the just resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.
Legislative provisions - discovery
The relevant legislative provisions with respect to discovery in this Court are as follows:
(a)s 176 of FCFCOA Act provides as follows:
(1)Interrogatories and discovery are allowed in relation to family law and child support proceedings in the Federal Circuit and Family Court of Australia (Division 2).
(2)However, interrogatories and discovery are not allowed in relation to any other proceedings in the Federal Circuit and Family Court of Australia (Division 2), unless the Court or a Judge declares that it is appropriate, in the interests of the administration of justice, to allow the interrogatories or discovery.
(3)In deciding whether to make a declaration under subsection (2), the Federal Circuit and Family Court of Australia (Division 2) or a Judge must have regard to:
(a)whether allowing the interrogatories or discovery would be likely to contribute to the fair and expeditious conduct of the proceedings; and
(b)such other matters (if any) as the Court or the Judge considers relevant.
(b)rule 14.02 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (“GFL Rules”) which provides as follows:
(1)A declaration may be made under subsection 176(2) of the Act to allow discovery on the application of a party or on the Court’s own initiative.
Note:Discovery is not allowed in relation to a general federal law proceeding unless the Court or a Judge declares that it is appropriate in the interests of the administration of justice (see subsections 176(2) and (3) of the Act).
(2)If a declaration is made, the Court or a Registrar may make an order for disclosure:
(a) generally; or
(b) in relation to particular classes of documents; or
(c) in relation to particular issues; or
(d) by a specified date.
Section 176(2) and (3) of the FCFCOA Act are relevantly in the same terms as the former s 45(2) and (3) of both the Federal Circuit Court of Australia Act 1999 (Cth) and the Federal Magistrates Act 1999 (Cth). Rule 14.02 of the GFL Rules is relevantly in the same terms as the former r 14.02 of both the Federal Circuit Court of Australia Rules 2001 (Cth) and the Federal Magistrates Court Rules 2001 (Cth). It follows that earlier judgments of this Court (as either the Federal Circuit Court or Federal Magistrates Court) in relation to discovery remain relevant.
Discovery in this Court
In Gallagherv BHP Billiton Nickel West Pty Ltd [2016] FCCA 3367 (“Gallagher”) at [31]-[36] per Judge Lucev the then Federal Circuit Court of Australia set out the considerations in relation to an application for discovery, observing as follows:
31.Relevant considerations to be taken into account in determining whether to make a declaration under s 45 of the FCCA Act that it is in the interests of the administration of justice to order discovery were summarised in Abrahams v Qantas Airways Ltd (No. 2) [2007] FMCA 639; (2007) 210 FLR 314 at [25]-[26] per Lucev FM (by reference to what was then the Federal Magistrates Act 1999 (Cth)) as follows:
25.In summary, it appears that in order to obtain an order for discovery in this Court the Court must determine on the available evidence that it is in the interests of the administration of justice to do so, and in making that determination must have regard to whether allowing discovery would be likely to contribute to the fair and expeditious conduct of the proceedings, and such other matters as the Court considers relevant. Those other matters might include:
(a) the relevance of any documents sought to be discovered;
(b) the volume of documents sought to be discovered;
(c)whether there is a court book containing relevant documents, and the extent to which relevant documents are included in the court book;
(d) whether discovery would narrow the issues;
(e) whether both parties seek discovery;
(f) whether there is consent to discovery;
(g) whether discovery is “of benefit” in the litigation; and
(h)the effect of discovery on litigants, especially, vulnerable litigants.
26. The categories of relevant factors for the purposes of s 45(2)(b) of the FM Act are obviously not closed.
32.In Hartnett Legal Services Pty Ltd v Ballantyne [2016] FCA 1116 (“Hartnett Legal Services”) the Federal Court dealt with the issues of relevance and disclosure generally for the purposes of s 45 of the FCCA Act and r 14.02(2) of the FCC Rules, and observed at [33]-[35] per Rangiah J that:
33.Fourthly, it would be quite inconsistent with s 45 of the FCC Act to construe “disclosure generally” as importing a wide test of relevance. The Peruvian Guano test was formulated on the basis of a desire to “make the rule as large as we can with due regard to propriety”: Peruvian Guano at 63. In contrast, s 45 operates to cut down the circumstances in which discovery may be ordered. It would be inconsistent with s 45 to interpret “discovery generally” as referring to the traditional test for discovery when, as Lucev FM observed in Abrahams, traditional discovery is generally prohibited in the Federal Circuit Court.
34.In summary, an order for “disclosure generally” under r 14.02(2)(a) of the FCC Rules is:
“(a)limited to disclosure of documents that are, or have been, in the disclosing party's possession, custody or control; and
(b)limited to documents that are directly relevant to the issues raised by the pleadings or in the affidavits.”
35.That is not to say that it is beyond the power of the Court to make a more expansive order where it is in the interests of the administration of justice to do so, but no such order was made in this case.”
In Vinden v Wrong Fuel Rescue Pty Ltd [2019] FCCA 1091 (“Vinden”) at [10]-[13] per Judge Kendall the then Federal Circuit Court of Australia observed as follows:
10.Overall, there is a reluctance in this Court to grant orders for discovery and interrogatories. Indeed, in Vanden Driesden v Edith Cowan University (2012) 226 IR 452, the Court referred to the power as one that is “rarely used”.
11. Section 45(1) of the FCCA Act is a general statutory prohibition on discovery.
12.Before granting a declaration under s.45 of the FCCA Act, the Court will specifically consider s.45(2). That section provides:
(2)In deciding whether to make a declaration under subsection (1), the Federal Circuit Court of Australia or a Judge must have regard to:
(a)whether allowing the interrogatories or discovery would be likely to contribute to the fair and expeditious conduct of the proceedings; and
(b) such other matters (if any) as the Federal Circuit Court of Australia or the Judge considers relevant.
13.In this Court, there appears to be a presumption that the “fair and expeditious conduct of the proceeding” does not require discovery: Devine Marine Group Pty Ltd v Fair Work Ombudsman [2013] FCA 442 at [54]. That does not mean, however, that it will not ever be given.
The Court notes that the reference in Vinden at [10] to the “power as one that is “rarely used”” referring to Vanden Driesen v Edith Cowan University [2012] FMCA 735; (2012) 226 IR 452; (2012) 269 FLR 422; (2012) 64 AILR 101-754 (“Vanden Driesen”) is not necessarily apt, as what was said in Vanden Driesen was said specifically in relation to the power as it related to ordering interrogatories, not discovery: Vanden Driesen at [64] per Lucev FM.
Discovery nevertheless remains very much the exception and not the rule in the practice and procedure of this Court, and traditional discovery is generally prohibited: Hartnett Legal Services Pty Ltd v Ballantyne [2016] FCA 1116 at [33] per Rangiah J; Gallagher at [32] per Judge Lucev; Vinden at [13] per Judge Kendall.
The Orders Sought
The Orders Sought by Mr Popescu are set out at [11] above. The Court will consider each of the categories of documents sought by reference to the sub-paras (a) to (e) of the Orders Sought.
Sub-para (a) - correspondence re alleged debt or unpaid wages owed to Mr Popescu
Sub-para (a) of the Orders Sought seeks discovery of “[c]opies of any correspondence, including emails, letters or internal memoranda involving any of the parties to these proceedings which touch on the subject of an alleged debt or unpaid wages owed by … [S2G] to … [Mr Popescu] in the period from July 2015 to December 2020.”
In circumstances where the alleged debt or unpaid wages is said to arise from an unwritten agreement made in October 2015 (“Alleged Unwritten October 2015 Agreement”), subsequently referred to in a letter dated 1 March 2017 (“1 March 2017 Letter”), and to be reflected in a “Time in Lieu of Hours” notation on timesheets, it is conceivable that there would be other written records recording or reflecting the alleged agreement. Those written records might include, for example:
(a)consideration of the terms of the Alleged Unwritten October 2015 Agreement, or its approval, by officers of S2G;
(b)instructions to S2G payroll officers in relation to the Alleged Unwritten October 2015 Agreement;
(c)instructions by officers of S2G as to the drafting of drafts of the 1 March 2017 Letter;
(d)consideration by officers of S2G of any drafts of the 1 March 2017 Letter including its approval by those officers; and
(e)various drafts of the 1 March 2017 Letter.
Given that the Alleged Unwritten October 2015 Agreement is said to be unwritten, such records are likely to contribute to the fair and expeditious conduct of the proceedings, and to be of benefit to the litigation, because they appear to be relevant and may assist the Court in:
(g)ascertaining or confirming the existence, or non-existence, or terms, of the Alleged Unwritten October 2015 Agreement;
(h)resolving any conflicts in the oral evidence as to the existence, or terms, of the Alleged Unwritten October 2015 Agreement; and
(i)quantifying any underpayment arising from a breach, if any, of the Alleged Unwritten October 2015 Agreement.
If the Alleged Unwritten October 2015 Agreement was entered into the documents sought may reveal, if payments were or were not made, either at all or on a deferred basis, and if so, why.
The Court has already noted the possible relevance of the documents sought. Given their nature the volume or number of the documents sought is not likely to be significant or high, and (at least at this stage) there is no Court Book containing relevant documents. Furthermore, some of the documents may be documents that S2G was required to keep for a relevant period under the relevant provision of the FW Act and FW Regulations.
Discovery of these documents might narrow the issues. Their content might, following consideration and advice, cause a change in or amendment to the existing position of any of the parties. For example, if it were to become evident through the discovery process that:
(a)there was no Alleged Unwritten October 2015 Agreement, then Mr Popescu might abandon his claim;
(b)the terms of the Alleged Unwritten October 2015 Agreement are different to those presently alleged, Mr Popescu might amend the SOC;
(c)the terms of the Alleged Unwritten October 2015 Agreement are those presently alleged, then the Defences of any, or all, of the Respondents might be either abandoned or amended,
with each of (a)-(c) above having the likely effect of either narrowing the issues in the proceedings or resulting in this aspect of the proceedings ending early, resulting in a significant reduction to the parties, and the Court, in terms of costs and time incurred. Such effects would be consistent with the intent of the overarching civil practice and procedure provisions in s 190 of the FCFCOA Act.
The period over which discovery is sought is not too lengthy or otherwise inappropriate. Although it begins in July 2015, some three months before the Alleged Unwritten October 2015 Agreement, that three-month period is appropriate having regard to the possibility that there might be documents evidencing whether, and what, consideration, if any, was given to the Alleged Unwritten October 2015 Agreement prior to it being agreed, if it was agreed.
As pleaded:
(a)in the SOC each of Messrs Hardie, Stenton and Scott are said to have been knowingly concerned in S2G’s contraventions;
(b)in the Defences of Messrs Hardie and Stenton, Mr Scott is said to have been in ultimate control of S2G, and to have been ultimately responsible for employment related decisions on behalf of S2G from about August 2017 to 4 May 2020, in his capacity as CEO of S2G;
(c)in Mr Scott’s Defence it is said that Messers Hardie and Stenton handled all employment related matters concerning Mr Popescu, Mr Hardie in his capacity as chairman of S2G’s parent company C-Tech, and Mr Stenton in his capacity as sole director of S2G, and the same plea is made in S2G’s April 2021 Defence; and
(d)in S2G’s May 2022 Defence the plea referred to in (c) above is abandoned, and instead the Defence of Mr Hardie in (b) above is adopted (that is that Mr Scott was ultimately responsible for all employment related decisions on behalf of S2G from August 2017 to 4 May 2020).
The Court notes that a person not a party to the proceedings, Mr Lawrence, is alleged by Mr Hardie and Mr Stenton, and now also S2G, to have been ultimately responsible for making employment related decisions on behalf of S2G from 1 July 2015 to about August 2017, that is at or about the time the Alleged Unwritten October 2015 Agreement was allegedly entered into.
Section 550 of the FW Act deals with accessorial liability for contraventions of the penalty provisions of the FW Act. Section 550(2) of the FW Act defines involvement in a contravention as aiding, abetting, counselling or procuring the contravention, inducing the contravention, being knowingly concerned in or party to party to the contravention, or conspiring with others to effect the contravention. Of possible ultimate relevance in this matter is the fact that a person involved in the contravention may be found liable even where the claim against a principal or corporate party is not pursued: Australian Competition and Consumer Commission v Black on White Ltd & Ors [2001] FCA 187; (2001) 110 FCR 1 at [48]-[53] per Spander J; Bognar v Skilled Offshore Pty Ltd [2016] FCCA 2962; (2016) 315 FLR 364 at [42] per Judge Lucev; Alvarez Nino v Kuksal [2022] FedCFamC2G 401 at [88] per Judge Forbes. It is entirely conceivable that the records sought may indicate whether or not, and if so how, each of the individual respondents, Messrs Hardie, Stenton and Scott might have been involved in the alleged contraventions, that is in terms of the elements of accessorial liability under the FW Act (as to which see Fair Work Ombudsman v Devine Marine Group [2014] FCA 1365 at [176] per White J:
(a)their possible knowledge of essential facts constituting any of the alleged contraventions;
(b)whether or not they were knowingly concerned in any of the alleged contraventions; and
(c)whether or not they were an intentional participant in the contravention based on actual not constructive knowledge of the essential facts constituting any of the alleged contraventions.
In the above circumstances the Court considers it is appropriate to make a declaration that discovery of the documents in sub-para (a) is in the interests of the administration of justice, and there will be a declaration accordingly, and an order for discovery of those documents.
Sub-para (b)
Sub-para (b) of the Orders Sought seeks discovery of the same documents as sub-para (a) except that they are sought in relation to “current or former employees” of S2G rather than just Mr Popescu.
The primary task of the Court in these proceedings, at least initially, is to determine liability in respect of the claims made by Mr Popescu in the Originating Application. The almost invariable procedure in federal civil penalty proceedings is to have separate hearings, first to determine liability, and second to determine penalty if liability is established, with the opportunity to file further affidavits and submissions in relation to penalty after the determination of liability. As the Court observed in Bonjour v Cachet Holdings Pty Ltd t/as Mulberry Tree Childcare (No 2) [2022] FedCFamC2G 604 (“Bonjour (No 2)”) at [8] per Judge Lucev:
Given the nature of these proceedings the Court will have to determine liability prior to determining remedy, and the determination of remedy will require a separate and subsequent hearing if liability is established, because in addition to seeking compensation as a remedy in relation to her dismissal from employment Ms Bonjour also seeks a pecuniary penalty to be imposed upon Mulberry Tree. Ordinarily, other than in the simplest of cases (which this is evidently not) the hearing of an application for a pecuniary penalty will only proceed after the determination of liability: Trade Practices Commission v Madad Pty Ltd [1979] FCA 11; (1979) 40 FLR 453 at 455 –456 per Keely J; Forge v Australian Securities & Investment Commission [2004] NSWCA 448; (2004) 213 ALR 574; (2004) 52 ACSR 1; (2004) 23 ACLC 1 at [410] –[427] per McColl JA (with whom Handley and Santow JJA agreed at [1] and [2] respectively); Fair Work Ombudsman v Quincolli Pty Ltd [2011] FMCA 139; (2011) 63 AILR 101–498 at [85] –[86] per Driver FM; Lejmanoski v University of Western Australia (No 4) [2016] FCCA 269 at [4] –[15] per Judge Lucev.
The Court’s observations in Bonjour (No 2) are equally applicable here, and that means first determining liability with respect to Mr Popescu’s claims, and if liability is established, then determining penalty (and compensation). In those circumstances, the documents sought in sub-para (b) of other current or former employees are not relevant to the determination of liability with respect to Mr Popescu’s claims. If liability is established with respect to this aspect of Mr Popescu’s claims, which is essentially an allegation of unpaid, or underpayment of, wages and entitlements, then the documents referred to in sub-para (b) may become relevant to determining penalty, particularly in relation to considering matters such as:
(a)the circumstances in which the conduct occurred;
(b)whether the conduct was deliberate;
(c)the seriousness of the conduct;
(d)the involvement of senior management; and
(e)whether there was knowledge on the part of any liable respondents of the alleged deliberate and systematic pattern of conduct.
Thus, a determination that a declaration that discovery is not in the interests of the administration of justice made now would not necessarily preclude such a declaration at any penalty hearing phase if liability were to be established, in respect of the documents sought in sub-para (b). Discovery of these documents at this stage might also result in unnecessary cross-examination and submissions at a liability hearing if liability is not established. That would not only result in the incurring of unnecessary time and expense to all parties, but also the inappropriate use of the Courts judicial and administrative resources, contrary to the objects of the overarching civil practice and procedure provisions in s 190 of the FCFCOA Act.
It is also possible that if liability were to be established that penalty might be agreed, and at least in significant part, the burden of a penalty hearing might be significantly reduced: Fair Work Ombudsman v Anastasio [2023] FedCFamC2G 827.
The Court is therefore not persuaded that discovery of this broad category of records, irrelevant to the alleged liability of the respondents vis-a-vis Mr Popescu, warrants a finding that it is in the interest of the administration of justice to grant discovery thereof, and there will therefore be no such findings, and consequently, at this stage, no order for the discovery of the records referred to in sub-para (b).
Sub-paras (c) and (d)
It is convenient to deal with sub-paras (c) and (d) together as both deal with allegedly unpaid, or late payment of, superannuation to Mr Popescu.
A copy of the SG Audit (as sought in sub-para (d)) is obviously relevant. It may be conclusive as to quantum of superannuation payable by S2G to Mr Popescu, and the dates on which it was ordinarily payable. If the parties were able to agree on its use for such purposes it may have the effect of enabling the parties to resolve the detail of the dispute as to superannuation quickly, efficiently and at minimal cost, and with less expenditure of the Courts judicial and administrative resources, consistent with the intent of s 190 of the FCFCOA Act. Absent such agreement, it might enable the Court to resolve the detail of the dispute as to superannuation quickly, efficiently and at minimal cost, consistent with the intent of s 190 of the FCFCOA Act.
It follows that there will be a declaration that it is in the interests of the administration of justice that there be discovery of the SG Audit, as sought in sub-para (d), and an order accordingly.
In relation to the documents sought in sub-para (c) there does not appear to be any dispute that there were transfers of money in the amounts claimed transferred to Mr Popescu’s superannuation account by S2G, on or about the dates alleged.
The documents sought in sub-para (c) are therefore unnecessary to establish liability, or the dates upon which the liability of S2G to pay Mr Popescu’s superannuation was eventually met, if that was the effect of the payments. As such these documents are not necessary to establish liability (a liability which may have already been fully or partially met), with that liability being otherwise ascertainable from a combination of those payslips Mr Popescu has, the Employment Contract, the SG Audit, and possibly the amounts already transferred from S2G to Mr Popescu’s superannuation account.
Discovery of the documents sought in sub-para (c) would therefore only possibly assist with the penalty hearing phase, and for the same reasons as set out at [41]-[45] above in relation to the records sought under sub-para (b), together with the fact that it may be that the liability has already been fully or partially met, it is not in the interests of the administration of justice to make a declaration as to discovery of the records sought in sub-para (c).
The Court notes that the fact, if it be so, that the liability has already been met does not preclude a finding that a contravention occurred where, as may be the case here, the liability was not met until after the due date. Payment, albeit late, of the liability might however be a factor raised in mitigation of any penalty to be imposed.
Sub-para (e)
Sub-para (e) of the Orders Sought seeks discovery of “[c]opies of any correspondence, including emails, letters or internal memoranda including any of the parties to these proceedings, which touch on the subject of the long service leave payment made to the applicant in July 2020”.
In the SOC Mr Popescu claims at [19]-[23] that:
(a)S2G did not pay him in respect of his accrued and pro-rata long service leave on termination of his employment at S2G;
(b)on 8 July 2020 he commenced an action in the IM Court seeking payment of his long service leave entitlements;
(c)on 16 July 2020 S2G agreed to pay him in full in respect of his long service leave entitlement (“LSL Agreement”); and
(d)S2G was in breach of its obligation to pay him his long service leave entitlement pursuant to the LSL Act and the LSL Agreement for a period of approximately 11 months following his termination, and he has suffered consequential loss arising therefrom.
In his written submissions in support of the Discovery Application Mr Popescu indicated that after the full amount of the long service leave entitlement was paid, plus interest, plus Court costs, the IM Court Claim was discontinued by the filing of a notice of discontinuance.
Presently there is no evidence before the Court that the notice of discontinuance was filed following entry into a deed of settlement (or if it was, what the terms of any deed were in relation to further proceedings), and it is therefore unnecessary, at this point, to consider whether any issue of estoppel by deed arises in relation to long service leave consequential loss claim. It is also not apparent that the long service leave consequential loss claim is an abuse of process as it is not clear whether the IM Court Claim encompassed, or could have encompassed, the long service leave consequential loss claim now made. The Court will not therefore refuse to make a declaration as to discovery on the basis that there is an estoppel by deed or an abuse of process with respect to the documents sought in sub-para (e).
The Court will, however, refuse to make a declaration as to discovery with respect to the documents sought in sub-para (e) because the long service leave consequential loss claim is not dependent upon the existence of any of the documents sought. Rather, if it is a consequential loss, it ought to be calculable on the basis of the salary payable to Mr Popescu at the relevant time and the entitlement actually paid. In those circumstances, discovery of the documents sought in sub-para (e) is unnecessary, and the Court does not consider it is in the interests of the administration of justice to make a declaration as to discovery of the records sought in sub-para (e).
Conclusion with respect to the Orders Sought
With respect to the Orders Sought the Court has concluded that there ought to be:
(a)a declaration that it is in the interests of the administration of justice that there be discovery of the records referred to in sub-paras (a) and (d); and
(b)orders for discovery of the documents referred to in sub-paras (a) and (d).
Further issues
Three further issues arise, namely:
(a)whether the documents the subject of the proposed declaration and orders are in the possession, power or control of S2G or Mr Scott or someone else;
(b)against whom the proposed declaration and orders ought to be made; and
(c)the terms of Orders Sought.
Possession, power or control and against whom orders to be made
Assertions were made at hearing by the lawyer for S2G and Mr Scott that if an order for discovery were made by the Court against either S2G or Mr Scott it would be met by a response that they did not have the documents. Similar assertions were made in come of the pleaded Defences. Various assertions were made about who might have the documents, and it was suggested, for example, that C-Tech might have the documents. The Court notes that “[i]t cannot be said in Australia that documents in the possession of a parent company can be taken to be within the control of the subsidiary for discovery purposes”: Gambro Pty Ltd v Fresenius Medical Care Australia Pty Ltd [2002] FCA 1359 at [16] per Tamberlin J; see also Douglas-Hill v Parke Davis Pty Ltd (1990) 54 SASR 36 at 350-352 per Duggan J. There is, however, presently no evidence before the Court as to who has possession, power or control of the documents the subject of the proposed declaration and orders. Given the controversy over who might presently have possession, power or control of those documents the Court will not dispense with the requirement in r 14.03 of the GFL Rules for discovery to be on affidavit. Any order for discovery will therefore require that discovery be provided on affidavit.
Ordinarily, the documents the subject of the proposed declaration and orders would be in the possession, power or control of S2G as the employer of Mr Popescu, and, for some of the documents, because they are required to be kept for a relevant period under the relevant provision of the FW Act and FW Regulations. If they are not in the possession, power or control of S2G, then that fact, together with an explanation as to what searches have been conducted as to the whereabouts of the documents, will no doubt be disclosed in any affidavit of discovery by an officer of S2G: Brookfield v Yevad Products Pty Ltd [2002] FCA 1376 at [21] per Mansfield J. As was observed in Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd (No 2) [2010] WASC 217 at [25] per Murphy JA “[t]he responsibility of providing a reliable list of documents is a heavy one”. That heavy responsibility is reflected in the terms of r 14.09(a) of the GFL Rules which preclude a party which has failed in an affidavit of discovery to refer to a document from later putting that document (or a copy of it) into evidence.
In relation to Mr Scott it appears, on the filed pleadings, that he may no longer be an employee of S2G, but may still be a director, but the actual position is far from clear. Assuming Mr Scott is still a director of S2G:
(a)that does not, of itself, mean that Mr Scott would be in possession, power or control of the documents the subject of the proposed declaration and orders, and in the absence of any direct evidence thereof, the Court does not propose to make an order for discovery by Mr Scott personally; and
(b)whether Mr Scott is the appropriate officer of S2G to depose to any affidavit of discovery is a matter for S2G to determine.
In the above circumstances any order for discovery will be directed to S2G only.
Terms of Orders Sought
The terms of the Orders Sought by Mr Popescu in relation to sub-para (a) seeks an order for production of documents which “touch upon” the alleged debt or unpaid wages owed by S2G to Mr Popescu in the period from July 2015 to December 2020.
The making of an order for documents which “touch upon” the subject matter would be inconsistent with the general tenor of s 190 of the FCFCOA Act, and the intention of s 176(2) of the FCFCOA Act to limit the scope of traditional discovery in this Court: see [20]-[27] above. The making of a “touch upon” order would also likely involve a far wider, and therefore more costly and time consuming, search for documents, and result in the discovery of documents likely to be of very limited or marginal relevance, and which would therefore be of very limited, if any, benefit to the litigation, and be unlikely to assist in the fair and expeditious conduct of the proceedings. In the circumstances, it is appropriate to limit the proposed order for discovery of documents in sub-para (a) to those “directly relevant” to the alleged debt or unpaid wages owed by S2G to Mr Popescu in the period from July 2015 to December 2020. Albeit in the immediate context of r 20.14(1)(a) of the Federal Court Rules 2011 (Cth) the meaning of “directly relevant” is helpfully set out in Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2011] FCA 1396 at [33]-[37] per Collier J (and cases there cited).
CONCLUSION AND ORDERS
In the circumstances, and having regard to the conclusions set out above, the Court has concluded that:
(a)there will be declaration that it is in the interests of the administration of justice that there be discovery by S2G of the documents referred to in sub-paras (a) and (d); and
(b)orders for discovery by S2G on affidavit of the documents referred to in sub-paras (a) and (d), but in relation to sub-para (a) only in relation to directly relevant documents.
The Court will allow a period of two months for the discovery ordered on affidavit to be provided, which should be a more than adequate period for any required searches to be made. The matter be listed for further directions at 3.00pm on 28 June 2024, with liberty to apply on three days notice. Otherwise, the Discovery Application will be dismissed.
Costs, if any: FW Act, s 570(2), will be reserved.
I certify that the preceding sixty-eight (68) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Lucev. Associate:
Dated: 22 March 2024
SCHEDULE OF PARTIES
PEG 376 of 2020 Respondents
Fourth Respondent:
PAUL JAMES STENTON
Fifth Respondent:
BRENTON ANDREW SCOTT
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