Russel v Macquarie Bank Limited
[2020] FCCA 869
•18 March 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| RUSSEL & ORS v MACQUARIE BANK LIMITED | [2020] FCCA 869 |
| Catchwords: PRACTICE AND PROCEDURE – Discovery. |
| Legislation: Federal Circuit Court of Australia Act 1999, s.45 |
| Cases cited: Linkhill Pty Ltd v Director, Office of the Fair Work Building Industry Inspectorate (2015) 240 FCR 578 Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165 |
| First Applicant: | GARETH RUSSEL |
| Second Applicant: | MARTIN EDDY |
| Third Applicant: | MARK HOLDEN |
| Respondent: | MACQUARIE BANK LIMITED |
| File Number: | SYG 1488 of 2019 |
| Judgment of: | Judge Cameron |
| Hearing date: | 18 March 2020 |
| Date of Last Submission: | 18 March 2020 |
| Delivered at: | Sydney |
| Delivered on: | 18 March 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr P. Harris of Counsel |
| Solicitors for the Applicant: | Opus Legal |
| Counsel for the Respondent: | Mr A. Moses of Senior Counsel and Mr B. Rauf of Counsel |
| Solicitors for the Respondent: | Kingston Reid |
ORDERS
Pursuant to s.45(1) of the Federal Circuit Court of Australia Act 1999 (Cth) and Rule 14.02 of the Federal Circuit Court Rules 2001, the applicants make discovery to the respondent, on a date to be agreed between the parties, of:
(a)In respect of the period 1 July 2012 to 30 June 2019:
(i)copies of all tax returns filed by, or on behalf, of the first and second applicants;
(ii)any document issued by the Australian Taxation Office to the first or second applicant in respect of any assessment of income tax;
(iii)all correspondence between the first or second applicant and their respective tax advisers regarding any assessment of income tax or their tax returns in relation to their employment with the respondent; and
(iv)all correspondence or other documentation that passed between the first or second applicant and any State or Federal government entity which disclosed, or contained any representations in relation to, the income received by them from the respondent.
(b)In respect of the period 1 July 2012 to 30 June 2018:
(i)copies of all tax returns filed by, or on behalf, of the third applicant; and
(ii)any document issued by the Australian Taxation Office to the third applicant in respect of any assessment of income tax; and
(iii)all correspondence between the third applicant and his tax advisers regarding any assessment of income tax or the third applicant’s tax returns in relation to his employment with the respondent; and
(iv)all correspondence or other documentation that passed between the third applicant and any State or Federal government entity which disclosed, or contained any representations in relation to, the income received by the third applicant from the respondent.
The parties have liberty to apply on three days’ notice.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1488 of 2019
| GARETH RUSSEL |
First Applicant
| MARTIN EDDY |
Second Applicant
| MARK HOLDEN |
Third Applicant
And
| MACQUARIE BANK LIMITED |
Respondent
REASONS FOR JUDGMENT
(Revised from Transcript)
INTRODUCTION
This proceeding concerns claims for unpaid salary or entitlements made by certain former employees of the respondent bank. It involves the interaction of commission payments and a thing called a Basic Cost Responsibility (“BCR”). It also involves the nature of the applicants’ employment, and so the basis on which the applicants should properly have been remunerated. I express no view on whether or not they were properly remunerated.
A declaration that there be discovery was made earlier in the proceeding, but the parties now disagree on what the applicants should be required to discover. The matter is presently before the Court on the respondent’s application in a case seeking further and better discovery. The relevant request is set out in the respondent’s application in a case in prayer two subparas.(a) and (b):
2.Pursuant to s.45(1) of the Federal Circuit Court of Australia Act 1999 (Cth) and Rule 14.02 of the Federal Circuit Court Rules 2001, the Applicants make discovery to the Respondent, by no later than 5pm on 3 April 2020, of:
(a)In respect of the period 1 July 2012 to 30 June 2019:
(i) copies of all tax returns filed by, or on behalf, of the First or Second Applicants;
(ii) any document issued by the [Australian Taxation Office] to the First or Second Applicant in respect of any assessment of income tax;
(iii) all correspondence between the First and Second Applicant and their respective tax advisors regarding any assessment of income tax or their tax returns in relation to their employment with the Respondent; and
(iv) all correspondence or other documentation that passed between the First or Second Applicant and any State or Federal government entity which disclosed, or contained any representations in relation to, the income received by them from the Respondent.
(b)In respect of the period 1 July 2012 to 30 June 2018:
(i) copies of all tax returns filed by, or on behalf, of the Third Applicant; and
(ii) any document issued by the [Australian Taxation Office] to the Third Applicant; and
(iii) all correspondence between the Third Applicant and his tax advisors regarding any assessment of income tax or the Third Applicant’s tax returns in relation to his employment with the Respondent; and
(iv) all correspondence or other documentation that passed between the Third Applicant and any State or Federal government entity which disclosed, or contained any representations in relation to, the income received by the Third Applicant from the Respondent.
DISCUSSION
The applicants say that the issue to which the documents of which discovery is contested are relevant is the proper interpretation of the employment agreements and industrial instruments which were or might have been applicable to their engagements. The applicants’ objections are that:
a)the documents go to post-contractual conduct;
b)the evidence of post-contractual conduct is not admissible to prove the meaning of a contract;
c)the documents could only go to that question, and so would be inadmissible;
d)there is therefore no utility in discovery of those documents.
For its part, the respondent bank points to the evidence of the applicants and the affidavit of Mr Russel was identified as an indicative example. The Court was taken in particular to para.10 of Mr Russel’s affidavit, sworn 19 February 2020:
10.At least from 13 June 2003 onwards, my remuneration consisted of commission payments paid through the Respondent's Basic Cost Responsibility (BCR) arrangements. The BCR was not an amount actually paid to me, but was a figure representing the total cost of my employment to Macquarie, and included all charges, benefits and other costs associated with my employment, including superannuation contributions, fringe benefits tax, payroll tax, salary continuation insurance, workers compensation insurance, and GST. My contract of employment - "GR-4" and "GR-5" respectively - stated that “The base BCR will be treated as a recoverable allocation against any commission earned" and "You will be allocated a BCR which is a recoverable allocation against any commission earned.” The actual amounts received by me were commission payments derived from transactional revenue which I achieved for Macquarie.
Particular emphasis was placed on the final sentence of that paragraph.
It was submitted that Mr Russel’s evidence of the proper construction of the employment contract contradicted the evidence relied upon by the respondent, and so addressed a matter in issue, making the documents in question relevant. I am not persuaded of that argument. I read that sentence as being more in the nature of an expression of the witness’s understanding of the contract rather than of evidence relied on.
However, another issue in this case is whether there ought to have been set-offs of certain payments against the BCR. It is apparent from the authorities, in particular Linkhill Pty Ltd v Director, Office of the Fair Work Building Industry Inspectorate (2015) 240 FCR 578, to which I was taken, that the claim of set-offs will require evidence of the parties’ agreement in relation to payments, and offsetting payments in particular.
The bank’s argument is that any such agreement can be evidenced in conduct postdating the commencement of the contract. However, to frame it in that way tends to disguise the real substance of the argument, which is that the intention of the parties at the time of entering into the contract, including conditions on offsetting of any payments, are to be determined by the terms of the agreement, and perhaps facts relating to the making of the agreement. The High Court said, in Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165:
This Court, in Pacific Carriers Ltd v BNP Paribas, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction. (at 179, [40])
(References omitted)
I have concluded that the application for further discovery should be dismissed, as the matters to which the documents sought on my understanding of them would go would be inadmissible to the matter relevantly in issue.
(FURTHER SUBMISSIONS WERE MADE)
I withdraw the comments made dealing with the Linkhill case and replace them with these.
It is the respondent bank’s contention that the conduct of the applicants during the course of their employment and the way they characterised, at that time, the payments that they received, may be evidence relevant to the proper understanding of the parties’ relationships, and whether the applicants’ contentions that their employment engagements operated in the way that they now say they did ought to be accepted by the Court.
Whether that approach is a well-founded one remains to be seen. However, a party is entitled to make their case as they reasonably see fit, and it is not for the Court, at an interlocutory stage, to unduly hamstring them.
That being so, it is important to have regard to the authorities cited by the bank in its written submissions as to the purpose of discovery, the relevant question being whether the documents of which discovery is sought could rationally affect, directly or indirectly, the assessment of the probability of the existence of a fact in issue. It is not unarguable that the documents in question might do so in this proceeding.
Although it seems to me that the bank’s approach is unorthodox, it is too early to draw any conclusions on that, and it should be entitled to make its defence as it reasonably sees fit.
CONCLUSION
For that reason, I withdraw the order that I made earlier, and instead I make the orders sought in prayer two of the application in a case.
I certify that the preceding fourteen (14) paragraphs are a true copy of the reasons for judgment of Judge Cameron
Associate:
Date: 17 April 2020
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