Tucker v State of Victoria

[2021] VSCA 120

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2019 0091
S EAPCI 2020 0031
S EAPCI 2020 0041

TOBIAS JOHN TUCKER	Applicant
v
THE STATE OF VICTORIA	First Respondent
PAUL BRODERICK (sued in his capacity as Commissioner of State Revenue)	Second Respondent

---

JUDGES:	KYROU, McLEISH and SIFRIS JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	10 March 2021
DATE OF JUDGMENT:	12 May 2021
MEDIUM NEUTRAL CITATION:	[2021] VSCA 120
JUDGMENT APPEALED FROM:	[2019] VSC 420; [2019] VSC 481 [Costs Ruling]; [2020] VSC 121 [Undertaking as to Damages]; [2020] VSC 192 [Costs Ruling No 2] (Ierodiaconou AsJ)

---

EMPLOYMENT – Construction of employment contract – Whether associate judge erred in finding that termination provisions in enterprise agreement approved under Fair Work Act 2009 (Cth) were not incorporated into applicant’s employment contract – Whether associate judge erred in finding that those termination provisions did not have statutory force by virtue of ss 8 and 20(3) of Public Administration Act 2004 – Appeal allowed regarding construction of contract.

PROCEDURAL FAIRNESS – Whether associate judge erred in finding that respondents did not breach any procedural fairness obligations in investigating and finding proven workplace allegations against applicant – Whether employer bound by findings of investigation into alleged workplace misconduct – Appeal allowed in respect of one aspect of disciplinary procedures adopted by respondents.

DECLARATION – Jurisdiction of Supreme Court to make declaration – Declaration that respondents failed to accord applicant procedural fairness not futile – Declaration made. 

FEDERAL JURISDICTION – Fair Work Act 2009 (Cth) – Whether Supreme Court has jurisdiction to make declaration as to breach of enterprise agreement – Whether matter arising under Fair Work Act 2009 (Cth) – Judiciary Act 1903 (Cth) s 39(2) – Fair Work Act 2009 (Cth) s 539(2).

PRIVACY – Definition of ‘personal information’ in Privacy and Data Protection Act 2014 s 3 – Whether witness’ evidence of what he or she heard or observed is ‘about’ the witness – Inappropriate reliance on privacy grounds to withhold relevant information from employee subject to serious allegations may result in denial of procedural fairness.

COSTS – Special costs regime – Fair Work Act 2009 (Cth) s 570 – Whether associate judge erred in finding applicant’s pleaded reliance on enterprise agreement having force under Fair Work Act 2009 (Cth) insufficient for the proceeding to be ‘in relation to a matter arising under’ that Act – Stanley v Service to Youth Council Inc [No 3] (2014) 225 FCR 357, considered – Melbourne Stadiums Ltd v Sautner (2015) 229 FCR 221, Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v ALS Industrial Australia Pty Ltd [No 2] (2015) 235 FCR 366, Energy Australia Yallourn Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2018) 264 FCR 342, applied – Appeal allowed.

DAMAGES – Undertaking as to damages given by applicant – Whether associate judge erred in rejecting applicant’s contentions that respondents had failed to mitigate loss and did not have ‘clean hands’ – European Bank Ltd v Evans (2010) 240 CLR 432, applied – Leave to appeal refused.

COSTS – Offer of compromise – Whether ordinary cost rule applies in federal jurisdiction – Fair Work Act 2009 (Cth) s 570 – Judiciary Act 1903 (Cth) s 79 – Supreme Court (General Civil Procedure) Rules 2015 r 26.08 not applicable – Whether failure to accept offer ‘unreasonable’ for purposes of Fair Work Act 2009 (Cth) s 570(2)(b) – Offer included unspecified costs irrecoverable by virtue of FWA – Appeal allowed.

PRACTICE AND PROCEDURE – Extension of time – Applicant sought leave to file application for leave to appeal 262 days after publication of Trial Division judgment – Unsatisfactory explanation for delay – Readily apparent that one aspect of a proposed ground of appeal bound to succeed – No prejudice to respondents if that aspect of ground upheld – Proposed appeal relates to primary judgment already subject of extant application for leave to appeal – Extension of time granted. 

PRACTICE AND PROCEDURE – Stay – Whether appeal proceedings in Court of Appeal should be stayed pending determination of defamation proceeding in Federal Court – Application for stay refused.

PRACTICE AND PROCEDURE – Fresh evidence – Whether leave should be granted to applicant to rely on evidence that was not relied upon at trial – Application for leave refused.

---

APPEARANCES:	Counsel	Solicitors
For the Applicant	In person	--
For the First and Second Respondents	Mr JL Bourke QC with Ms R Preston	Maddocks

TABLE OF CONTENTS

Introduction and summary	1
Applicant’s employment with SRO — Contractual and statutory provisions	5
Harassment Investigation	12
Customer Search Investigation	17
Broad overview of the proceeding and the associate judge’s decisions	24
Injunction judgment	27
Injunction costs judgment	28
Termination of applicant’s employment	29
Damages judgment	29
Damages costs judgment	30
Structure of balance of judgment	31
PART A: STAY APPLICATION	31
Nature and scope of stay application	31
Summary of issues in defamation proceeding	32
Principles regarding the granting of a stay	33
Parties’ submissions on stay application	34
Decision on stay application	35
PART B: FRESH EVIDENCE APPLICATION	37
Nature and scope of fresh evidence application	37
Principles regarding admission of fresh evidence	41
Parties’ submissions regarding fresh evidence application	41
Decision on fresh evidence application	48
PART C: INJUNCTION LEAVE APPLICATION; EXTENSION OF TIME	52
Application for extension of time	52
Principles regarding extension of time	54
Parties’ submissions on extension of time	54
Decision on issues of applicant’s delay and prejudice to respondents	57
Issues in proceeding and associate judge’s decision regarding injunction claim	59
Grounds of appeal	68
Ground 1: Construction of the employment contract	71
Ground 2: Statutory interpretation	74
Ground 3: Breaches of employment obligations	77
(a) Parties’ submissions on ground 3	77
(b) Decision on ground 3 — Customer Search Investigation	82
(c) Decision on ground 3 — Harassment Investigation	84
Ground 4: Jurisdiction of the Supreme Court	97
Overall decision on Injunction Leave Application; extension of time	106
PART D: INJUNCTION COSTS LEAVE APPLICATION	108
Associate judge’s decision and parties’ submissions	108
Decision	112
PART E: DAMAGES LEAVE APPLICATION	124
Associate judge’s decision on damages and costs	124
Grounds of appeal and notice of contention	128
Ground 1: Mitigation	129
Ground 2: ‘Clean hands’	133
Ground 3 and notice of contention: Costs	134
PART F: CONCLUSION	137

KYROU JA
McLEISH JA
SIFRIS JA:

Introduction and summary

1. The applicant was employed by the first respondent, the State of Victoria, and worked as a senior solicitor at the State Revenue Office (‘SRO’).  The second respondent is the Commissioner of State Revenue and exercises delegated powers with respect to SRO employees.  For convenience, we will treat the SRO as the applicant’s employer and refer to the SRO and the State interchangeably.

1. The applicant’s conduct as an employee of the SRO was subject to an investigation into allegations of harassment (‘Harassment Investigation’) and a separate investigation into allegations of improper searches of customer records (‘Customer Search Investigation’).  His employment was suspended with pay during the course of the investigations.  After the allegations against the applicant were found to be largely substantiated, the SRO proposed to give him a warning in respect of the harassment allegations and to terminate his employment in respect of the customer search allegations.

1. The applicant commenced a proceeding in the Trial Division, seeking interlocutory and permanent injunctions prohibiting the respondents from making a final decision regarding the proposed disciplinary action against him.[1]  The applicant also sought declarations that the respondents failed to comply with the procedural fairness and information provision requirements of cl 21 of the Victorian Public Service Enterprise Agreement 2016 (‘VPSEA’) in relation to the investigations.  We will refer to the applicant’s claims in the proceeding as ‘the applicant’s injunction claim’.

   [1]The initial defendants to the proceeding were the State and Darren Joyce, Executive Director, Corporate Services of the SRO.  Mr Joyce was removed as a party on 13 April 2018.  In July 2018, the Commissioner was added as a new second defendant.

1. The State gave an undertaking to the Court that, until the determination of the proceeding or as otherwise agreed between the parties or by further order of the Court, it would not finalise proposed discipline outcomes relating to the two investigations (‘SRO Undertaking’).  The applicant gave an undertaking to the Court to pay any damages that the State may suffer by reason of giving its undertaking (‘Undertaking as to Damages’).[2]

   [2]At the time the undertakings were given, Mr Joyce was the second defendant in the proceeding.  He gave the SRO Undertaking alongside the State and was also a beneficiary of the Undertaking as to Damages.  As nothing turns on Mr Joyce having been a party to the undertakings, for convenience, we will refer only to the applicant and the State as parties to the undertakings.

1. An associate judge relevantly made four decisions in the proceeding:

(a)She refused leave for the applicant to file a third further amended statement of claim and dismissed the proceeding (‘injunction judgment’).[3] The third further amended statement of claim proposed to add an allegation that, by reason of the alleged breaches of the VPSEA, the respondents had contravened s 50 of the Fair Work Act 2009 (Cth) (‘FWA’).

(b)She decided that the proceeding was not ‘a matter arising under [the FWA]’ and that the costs provisions in s 570 of the FWA were not engaged. She ordered the applicant to pay the respondents’ costs (‘injunction costs judgment’).[4]

(c)Following a separate hearing, she ordered the applicant to pay to the State the amount of $199,681.46 pursuant to his Undertaking as to Damages (‘damages judgment’).[5]

(d)She ordered the applicant to pay the respondents’ costs of the separate hearing as to damages (‘damages costs judgment’).[6]

[3]Tucker v Victoria [2019] VSC 420.

[4]Tucker v Victoria [Costs Ruling] [2019] VSC 481.

[5]Tucker v Victoria [Undertaking as to Damages] [2020] VSC 121.

[6]Tucker v Victoria [Costs Ruling No 2] [2020] VSC 192.

1. On 19 July 2019, three days after publication of the injunction judgment and the injunction costs judgment, the SRO terminated the applicant’s employment with immediate effect on the basis of six of the allegations which the Customer Search Investigation found to be substantiated.  It appears that no disciplinary action was taken against the applicant in respect of the substantiated harassment allegations.

1. The applicant filed three applications for leave to appeal to this Court in respect of the associate judge’s four decisions.

1. The first application for leave to appeal (S APCI 2019 0091) concerns the injunction costs judgment (‘Injunction Costs Leave Application’).  It was prepared by the applicant’s legal representatives and was filed on 27 August 2019.  The sole ground of appeal[7] in that application is that the associate judge erred in not concluding that the proceeding was ‘in relation to a matter arising under [the FWA]’.[8]

   [7]All references in these reasons to grounds of appeal are to proposed grounds of appeal.

   [8]The ground is set out at [370] below.

1. The second application for leave to appeal (S EAPCI 2020 0031) concerns the injunction judgment (‘Injunction Leave Application’).  The applicant seeks leave to appeal on the grounds that the associate judge:

(1)erred in concluding that cl 21 of the VPSEA was not incorporated into the applicant’s employment contract;

(2)erred in concluding that the combined effect of ss 8 and 20(3) of the Public Administration Act 2004 (‘PAA’) did not require the respondents to comply with the processes prescribed by cl 21 of the VPSEA;

(3)should have concluded that, with respect to the two investigations, the respondents breached certain obligations arising under cl 21 of the VPSEA and s 20(3) of the PAA; and

(4)should have determined that the Supreme Court had jurisdiction to make the declarations and grant the interlocutory relief sought by the applicant with respect to the claimed breaches of the VPSEA, which also constituted breaches of the FWA.[9]

[9]The grounds are set out in full at [236] below.

1. The Injunction Leave Application was prepared by the applicant personally and was submitted for filing on 3 April 2020, 262 days after the injunction judgment was published.  The applicant has sought an extension of time within which to file the Injunction Leave Application.

1. The third application for leave to appeal (S EAPCI 2020 0041) concerns the damages judgment and the damages costs judgment (‘Damages Leave Application’).  The applicant seeks leave to appeal on the grounds that the associate judge erred by:

(1)failing to properly engage with his claim that the State had failed to mitigate its loss;

(2)failing to properly engage with his claim that the State was not entitled to damages because it lacked ‘clean hands’; and

(3)not concluding that the proceeding was a matter arising under the FWA.[10]

[10]The grounds are set out in full at [432] below.

1. The respondents have filed a notice of contention in each of the Injunction Costs Leave Application and Damages Leave Application seeking to uphold the associate judge’s costs orders.

1. The respondents have given undertakings to the applicant that they will not seek to enforce the order for damages or the two costs orders, pending the outcome of the three applications for leave to appeal (collectively, ‘appeal proceedings’).

1. On 24 April 2020, the applicant instituted a defamation proceeding against the SRO and one of its officers, Paul McKee (‘defamation proceeding defendants’), alleging that an email that Mr McKee sent to another SRO officer on 9 June 2017 — with a copy to a further officer — defamed him.  That email set out allegations against the applicant, some of which became the subject of the two investigations.  The applicant has applied to this Court for a stay of the appeal proceedings pending the determination of the defamation proceeding.

1. The applicant has also applied to this Court for leave to rely on fresh evidence in support of the appeal proceedings.

1. For the reasons that follow:

(a)The applications for a stay and for leave to rely on fresh evidence will be refused.

(b)The application for an extension of time in relation to the Injunction Leave Application will be granted.

(c)The Injunction Leave Application will be granted. The appeal against the injunction judgment will be allowed in respect of grounds 1, 3 and 4 and the judge’s order dismissing the proceeding will be set aside. A declaration will be made that the respondents have failed to conduct the Harassment Investigation in accordance with the procedural fairness requirements of cl 21.11(a) of the VPSEA and s 20(3)(c) of the PAA, read together with s 8(b).

(d)The Injunction Costs Leave Application will be granted.  The respondents’ contentions in the notice of contention are not made out.  The appeal against the injunction costs judgment will be allowed.  The associate judge’s costs order will be set aside. 

(e)The Damages Leave Application will be granted in respect of ground 3 but will otherwise be refused.  The respondents’ contentions in their notice of contention are made out only in relation to a notice to produce.  The associate judge’s damages award will not be disturbed but her order for costs in respect of the Undertaking as to Damages will be set aside except in relation to the notice to produce.

(f)The parties will be given an opportunity to make submissions on the costs orders to be made in respect of the proceeding in the Trial Division and the appeal proceedings.

Applicant’s employment with SRO — Contractual and statutory provisions

1. The applicant commenced employment with the SRO on 28 November 2011 as a legal officer in its Customer Services and Debt Management Branch.  By letter dated 4 October 2013, the SRO offered the applicant employment as a senior solicitor in that branch (‘covering letter’).  The covering letter was accompanied by a document styled ‘Acceptance of Employment Terms’ (‘acceptance document’).  The applicant signed the acceptance document on the same day.

1. The covering letter was headed ‘Offer of Employment — Ongoing Contract’ and relevantly stated as follows:

Your conditions of employment will be in accordance with the Victorian Public Service Workplace Determination 2012 (‘The Determination’) or any subsequent determination (which applies of its own force and is not incorporated into this contract).  This contract of employment may be terminated by either party in line with the Determination.

Please signify your acceptance of this offer by signing the enclosed Acceptance of Employment Terms form and returning it to Human Resources.  …

1. Clauses 8 and 10 of the acceptance document stated as follows:

8        Termination Clause

This contract of employment may be terminated at any time by either party in line with the Victorian Public Service Workplace Determination 2012 (‘The Determination’).

…

10       Duty to comply with all SRO policies and lawful directions

As an employee of the SRO you must comply with all SRO policies and procedures (which are not incorporated as terms of this contract but you must nonetheless abide by them because they are lawful and reasonable directions) including but not limited to:

•    Electronic Communications Policy

•    Equal Opportunity Policy

•    Health, Safety and Wellbeing Policy and Procedures

•    Information Privacy Policy

•    SRO Code of Ethics

•    VPS Code of Conduct; and

•    Any lawful directions given

1. The Victorian Public Service Workplace Determination 2012 (‘VPSWD’) expired on 31 December 2015 and, from 18 May 2016, was replaced by the VPSEA. The VPSEA was approved by the Fair Work Commission under pt 2-4 of the FWA (ss 169–257) and had statutory force under that Act.

1. Clause 16 of the VPSEA deals with ‘Termination of Employment’.  It covers matters such as the grounds upon which an employer may terminate the employment of an employee and the period of notice that must be provided to the employee.

1. Clause 21 of the VPSEA deals with ‘Management of Misconduct’.

1. Clause 21.3 of the VPSEA defines misconduct for the purpose of cl 21 to include:

(a)a contravention of a provision of the [PAA], the regulations to that Act, a binding code of conduct or a provision of any statute or regulation that applies to the Employee in the Employee’s employment;

(b)improper conduct in an official capacity;

(c)a contravention, without reasonable excuse, of a lawful direction given to the Employee as an Employee by a person authorised to give that direction;

(d)an Employee making improper use of his or her position for personal gain; or

(e)an Employee making improper use of information acquired by him or her by virtue of his or her position to gain personally, or for anyone else, financial or other benefits or to cause detriment to the VPS or the public sector.[11]

[11]‘VPS’ means Victorian Public Service.

1. Clause 21.5 of the VPSEA provides that an employee ‘is entitled to be represented by a person of their choice … at any stage of the misconduct process’.

1. Clause 21.6 of the VPSEA deals with procedural fairness and relevantly states as follows:

21.6Procedural fairness to apply

(a)The process for managing Employee misconduct will be consistent with the principles of procedural fairness.

…

(c)       The Employer will:

(i)        advise the Employee of the purpose of any meetings;

(ii)provide the Employee with a copy of the formal process to be followed;

(iii)provide a reasonable opportunity for the Employee to seek advice from the Union or a representative of their choice at any stage of the misconduct process; and

(iv)allow the Employee the opportunity to provide details of any mitigating circumstances.

(d)The Employer must take into account any reasonable explanation of any failure by the Employee to participate before making a decision under this clause 21.

1. Clause 21.7 of the VPSEA specifies steps that an employer may take where employee misconduct is alleged.  Clause 21.7 relevantly states as follows:

21.7Directions

(a)Where Employee misconduct is alleged, the Employer may do any of the following:

(i)make an initial assessment of the alleged misconduct before commencing the formal process to determine if an investigation is required in accordance with clause 21.10;

(ii)determine that it is appropriate to immediately commence an investigation of the alleged misconduct in accordance with clause 21.10;

…

(v)suspend the Employee with pay.

…

(c)The Employer will … review any decision regarding an Employee’s suspension every four weeks … until the end of the misconduct process in accordance with this clause 21.

1. Clause 21.8 of the VPSEA requires an employer to advise an employee as to an investigation into employee misconduct in the following terms:

21.8Advising the employee

(a)As soon as practicable after an allegation of misconduct has been made and the Employer has determined in accordance with clause 21.7(a)(i) or clause 21.7(a)(ii) that an investigation is required, the Employer will advise the Employee of the alleged misconduct in writing.

(b)The written advice will contain the allegation/s of misconduct made about the Employee.  Relevant information will only be withheld where it is necessary to withhold that information in order to protect the personal privacy of any other person consistent with Federal or State legislation.

1. Clause 21.10 of the VPSEA deals with the conduct of an investigation into alleged misconduct.  It relevantly provides as follows:

21.10   Investigation of alleged misconduct

(a)Where an investigation is required, the Employer will appoint a person to conduct an investigation into the alleged misconduct. …

(b)The Employer will provide the Employee with an opportunity to speak to the investigator if the Employee wishes to do so.

(c)The investigation may include:

(i)collecting any relevant materials;

(ii)speaking with the Employee;

(iii)speaking with any relevant witnesses;

(iv)providing the Employee with specific particulars to allow the Employee to properly respond to the alleged misconduct;

(v)seeking an explanation from the Employee; and

(vi)investigating any explanation made by the Employee for the purposes of verifying the explanation so far as possible.

(d)In relation to each allegation of misconduct, the investigator will make findings as to whether:

(i)the allegation is substantiated; or

(ii)the allegation is not substantiated.

(e)Where the investigator makes a finding that an allegation is not substantiated, which is accepted by the Employer, the misconduct process will conclude in relation to any such allegation and the Employee will be informed accordingly.

(f)Where the investigator makes a finding that the allegation is substantiated, the Employer will consider this information and propose a discipline outcome.

1. Clause 21.11 of the VPSEA requires that an employee have an opportunity to respond and states as follows:

21.11   Opportunity for response by Employee

(a)As soon as practicable after the investigator has made a finding that any allegation of misconduct is substantiated, the Employee will be provided with the findings of the investigator and the proposed discipline outcome.  The Employee will be provided with sufficient information to allow them a reasonable basis to respond.

(b)The Employee will be given a reasonable time to respond to the findings or the material and the recommended discipline outcome.  Any response must be provided within the above reasonable time.

1. Clause 21.12 of the VPSEA deals with the determination by an employer of possible discipline outcomes.  It relevantly provides as follows:

21.12   Determination of discipline outcome

(a)       The Employer will consider:

(i)the findings of the investigator; and

(ii)any recommendations as to the appropriate disciplinary outcome; and

(iii)any response of the Employee (including any admission of misconduct …); and

(iv)any prior disciplinary outcomes,

and then determine the discipline outcome that is to apply to the Employee.  The discipline outcome must not be disproportionate to the seriousness of the matter.

(b)       The possible discipline outcomes are:

(i)        no action;

…

(viii)    termination of employment.

1. Section 4(1) of the PAA defines ‘public sector employment principles’ as those ‘set out in section 8’ and ‘public sector values’ as those ‘set out in section 7’.

1. Paragraphs (a)–(g) of s 7(1) of the PAA set out ‘public sector values’ that public officials, including public sector employees, should demonstrate. Paragraph (b) refers to ‘integrity’ and para (e) refers to ‘respect’.

1. Section 8 of the PAA states as follows:

8        Public sector employment principles

Public sector body Heads must establish employment processes that will ensure that—

(a)employment decisions are based on merit; and

(b)public sector employees are treated fairly and reasonably; and

(c)equal employment opportunity is provided; and

(ca)human rights as set out in the Charter of Human Rights and Responsibilities are upheld; and

(d)public sector employees have a reasonable avenue of redress against unfair or unreasonable treatment; and

(e)in the case of public service bodies, the development of a career public service is fostered.

1. Section 20 of the PAA relevantly states as follows:

20       Employment and retirement

(1)A public service body Head, on behalf of the Crown, has all the rights, powers, authorities and duties of an employer in respect of the public service body and employees in it.

**     *     *     *

(3)A public service body Head, in exercising a right, power, authority or duty referred to in this section, must do so in conformity with—

(a)       the public sector values; and

(b)       any binding code of conduct; and

(c)       the public sector employment principles; …

1. Section 4(1) of the PAA defines ‘public sector body Head’ to include, in relation to a public service body, a ‘public service body Head’. The distinction between the public sector body Head and the public service body Head was not in issue at trial because the respondents conceded that, if the Commissioner did not hold either position in respect of SRO employees, the State was required to comply with ss 8 and 20.

1. Pursuant to s 8(b) of the PAA, the SRO adopted a ‘Managing Misconduct Policy’ (‘Misconduct Policy’). The stated purpose of the Misconduct Policy is to set out the SRO’s ‘processes which ensure that the investigation and management of allegations of misconduct are conducted in a fair and reasonable manner’. The Misconduct Policy adopts the definition of ‘misconduct’ in cl 21.3 of the VPSEA. Clause 4 of the Misconduct Policy notes that the procedures for managing alleged misconduct are set out in cl 21 of the VPSEA. Subsequent provisions of the Misconduct Policy describe some of those procedures. It follows that the processes in cl 21 of the VPSEA are incorporated into the Misconduct Policy.

Harassment Investigation

1. As at 9 June 2017, Mr McKee was the Branch Manager, Customer Services and Debt Management of the SRO.  On that day, he sent an email to Darren Joyce, Executive Director, Corporate Services of the SRO, with a copy to David Heywood, Branch Manager, Human Resources of the SRO.  The email set out allegations concerning harassing conduct by the applicant towards a female work colleague (‘AB’) and allegations concerning searches by the applicant of customer records without any work purpose.  Mr Joyce was asked to ‘consider the [allegations] for appropriate action’.

1. On 9 June 2017, Mr Joyce sent a letter to the applicant, which was headed ‘Misconduct allegations — Clause 21 [VPSEA]’.  The letter set out allegations that the applicant had engaged in harassing conduct (‘Harassment Allegations’) and had searched customer records with no known SRO business purpose (‘Customer Search Allegations’).  The Harassment Allegations and the Customer Search Allegations were based on the allegations in Mr McKee’s 9 June 2017 email.  Mr Joyce’s letter did not refer to that email and it was not provided to the applicant.

1. Mr Joyce’s letter stated that the SRO regarded the Harassment Allegations and the Customer Search Allegations ‘very seriously’.  Accordingly, he said he had determined under cl 21.7(a)(ii) of the VPSEA that it was appropriate in the circumstances to immediately commence an investigation by an external investigator of the alleged misconduct and suspend the applicant with pay effective immediately.  Mr Joyce’s letter further stated as follows:

Following the completion of the investigation, I will consider the investigation findings and determine whether any action, such as disciplinary outcomes, are appropriate.  You should be aware that, given the seriousness of the allegations, if they are proven the disciplinary outcome may include the termination of your employment.

1. Mr Joyce summarised the Harassment Allegations as follows:

·On or about 22 May 2017, you made inappropriate, harassing and offensive comments in the workplace to [AB], including by suggesting you were ‘stalking’ her via Facebook and by other unspecified means.

·In the period between 27 April 2017 and 20 May 2017, you made inappropriate and offensive comments in the workplace to [AB], in relation to an advertised selection process for Customer Service Officer roles, including by making inappropriate and offensive comments about [two other work colleagues].

·In the period between 24 October 2016 and 24 May 2017, you have engaged in inappropriate and harassing conduct in the workplace, by repeatedly requesting that [AB] accept your friendship request on Facebook, despite her initially declining and that you have regularly discussed this in the workplace in front of colleagues.

·On or about 2 June 2017, you told [AB] in a threatening manner that she needs to be ‘careful’ of [another colleague], that [the other colleague] has been ‘causing him stress’ and you invited [AB] for drinks to ‘tell [AB] all about [the other colleague]’.

1. Mr Joyce stated that, if proven, the Harassment Allegations may constitute:

(a)       a contravention of [s 7(1)(e)] (respect) of the [PAA];

(b)       misconduct as defined in clause 21.3(a) of the [VPSEA];

(c)a contravention of the VPS Code of Conduct, including, but not limited to clauses 6.1 and 6.4 of the VPS Code of Conduct; and/or

(d)a contravention of the SRO Values and Behaviours, specifically by breaching and/or being inconsistent with the value of Respect.

1. On 14 June 2017, the applicant’s solicitors wrote to Mr Joyce seeking the following particulars in respect of the Harassment Allegations:

the names of the person(s) who have lodged a complaint about the alleged comments;

a copy of all the complaint(s);

the dates and circumstances of each of the complaint(s);

a copy of all correspondence between the SRO and the complainants regarding the alleged comments;

details of all circumstances in which the alleged comments were made including dates and times;

the names of the persons present when those alleged comments were made;

the exact wording used in respect of each of the alleged comments made;

what are the ‘other unspecified means’ referred to in [Mr Joyce’s] first bullet point; and

particulars of the alleged course of conduct constituting stalking.

1. On 21 June 2017, Mr Heywood wrote to the applicant to advise that Lisa Klug, Associate Director of Worklogic Pty Ltd, had been appointed to investigate the Harassment Allegations and the Customer Search Allegations.

1. On 29 June 2017, Ms Klug provided the applicant’s solicitors with a document titled ‘Investigations — A Guide for Participants’.

1. On 4 July 2017, Mr Joyce wrote to the applicant to advise him that, if proven, the Harassment Allegations may also constitute a contravention of the harassment provisions of the SRO’s Equal Opportunity Policy.  Whilst that policy makes reference to the complainant making a ‘formal written complaint’, it does not state that the SRO cannot investigate allegations of breaches of the policy in the absence of a formal written complaint by the complainant.

1. On 7 July 2017, Mr Heywood provided to the applicant particulars of the Harassment Allegations, which extended beyond the original allegations in Mr Joyce’s 9 June 2017 letter.  The allegations were numbered 1 to 10.  The applicant’s solicitors requested further particulars of the Harassment Allegations from Ms Klug on 12 July 2017.  Ms Klug responded to that request on 19 July 2017 by refusing to provide the particulars sought.

1. On 1 August 2017, the applicant attended an interview with his solicitor and Ms Klug.  He also provided her with a written statement in which he denied all of the Harassment Allegations.  He attended a second interview with his solicitor and Ms Klug on 10 August 2017.

1. From 21 August 2017, Ms Klug was retained to investigate only the Harassment Allegations.  Ms Klug ceased to be responsible for the Customer Search Investigation because the applicant raised concerns that, as a person who was not employed by the SRO, she would be exposed to confidential information in breach of the Taxation Administration Act 1997 in the course of that investigation.

1. On 25 and 29 August 2017, Ms Klug advised the applicant and his solicitors in writing of evidence collected in the Harassment Investigation which she alleged contradicted the applicant’s evidence.  Ms Klug did not refer to evidence which supported the applicant’s evidence.  The applicant provided a further written statement to Ms Klug on 4 September 2017 in which he responded to the contradictory evidence.

1. Ms Klug produced a 68-page report on the Harassment Investigation dated 12 September 2017 (‘Harassment Report’).  The Harassment Report contained 38 attachments, including transcripts and notes of interviews with witnesses.  Ms Klug found that allegations numbered 4, 5, 6, 7 and 9 were proven or partly proven and amounted to misconduct as defined in cl 21.3(a) of the VPSEA.  She found that allegations numbered 1, 8 and 10 were partly proven, but did not amount to misconduct as defined in cl 21.3(a).[12] She found that allegation numbered 3 was not proven and made no finding in respect of allegation numbered 2. One of the proven allegations — number 7 — is discussed in detail at [306]–[307] below.

   [12]Clause 21.3 is set out at [23] above.

1. On 25 October 2017, Mr Joyce sent a letter by email to the applicant and attached a six-page summary of Ms Klug’s findings in relation to the Harassment Allegations. In his letter, Mr Joyce stated that he ‘consider[ed] Ms Klug’s reasoning to be sound and the investigative process undertaken to be thorough’ and that he ‘therefore determined to accept Ms Klug’s findings, on behalf of the SRO’. He stated that the SRO had found that the substantiated misconduct amounted to a contravention of the VPS Code of Conduct, the SRO Values and Behaviours and the harassment provisions of the SRO Equal Opportunity Policy. Mr Joyce proposed a discipline outcome consisting of a formal warning and a direction that the applicant ‘undertake appropriate training in relation to [his] obligations under the VPS Code of Conduct, SRO Values and Behaviours and the SRO Equal Opportunity Policy’. Mr Joyce stated that, before he finalised his decision with respect to the proposed discipline outcome, in accordance with cl 21.11 of the VPSEA, he was providing the applicant with ‘an opportunity to respond to the findings and proposed discipline outcome’ by 3 November 2017. Mr Joyce’s letter is discussed in detail at [298]–[299] below.

1. On 27 October 2017, the applicant’s solicitors requested that he be provided with a copy of the Harassment Report.  On 13 November 2017, his solicitors received a redacted copy of the Harassment Report.  The SRO also extended the timeframe for the applicant’s response to 27 November 2017.  On that day, the applicant’s solicitors requested an unredacted copy of the Harassment Report.  On 30 November 2017, Mr Joyce refused this request.

1. The Harassment Investigation and the applicant’s contentions in relation to it are discussed in detail below under the heading ‘Part C: Injunction Leave Application; extension of time’.

Customer Search Investigation

1. In his 9 June 2017 letter to the applicant,[13] Mr Joyce advised of the Customer Search Allegations.  Specifically, he alleged that, in the period 24 November 2016 to 23 May 2017, the applicant ‘made numerous searches of customer records on the SRO eSys database, which are not related to any known SRO business purpose’.  He provided the details of 17 searches within that period.  Mr Joyce stated that, if proven, the Customer Search Allegations may constitute:

   [13]See [38] above.

(a)a contravention of [s 7(1)(b)] of the [PAA];

(b)misconduct as defined in clause 21.3(b) of the [VPSEA];

(c)a contravention of the VPS Code of Conduct, including, but not limited to clause 5.3 of the VPS Code of Conduct;

(d)a contravention of the SRO Values and Behaviours, specifically by breaching and/or being inconsistent with the value of Integrity;

(e)a breach of the SRO’s Electronic Communications Policy, namely that [the applicant] obtained unauthorised access to information or data on SRO’s computers, specifically eSys;

(f)a breach of the Privacy and Data Protection Act 2014; and/or

(g)a breach of the SRO’s Information Privacy Policy, namely that [the applicant] used personal information collected by the SRO other than in accordance with the law and for the purpose for which it was collected, or for a purpose [the applicant] would reasonably expect associated with its revenue collection or revenue protection functions.

1. In their letter of 14 June 2017 to Mr Joyce,[14] the applicant’s solicitors stated that the applicant’s ‘work includes conducting searches for customers to the SRO, which is performed on a daily basis and would be constituted by potentially hundreds of searches on a daily basis’.  They requested the following particulars:

   [14]See [42] above.

the date and time of the alleged unauthorised accesses;

all evidence of [the applicant] personally undertaking the alleged searches;

a record of all other searches undertaken by [the applicant’s] PC between 24 November 2016 and 23 May 2017;

the evidence that [Mr Joyce relies] upon to allege misconduct;

an explanation of the time period and date range selected for the alleged unauthorised searches;

an explanation regarding the delay in bringing any such misconduct allegations considering the timeframe selected; and

an explanation as to what gave rise to the SRO initiating enquiries into [the applicant’s] use of customer [searches].

1. On 19 June 2017, Mr Joyce wrote to the applicant’s solicitors.  He stated that they would be advised once an investigator was appointed and that, given that cl 21.6 of the VPSEA would apply to the investigation, it was not necessary to provide the applicant with the particulars sought at that time.  The letter attached the Code of Conduct and SRO Values and Behaviours document and noted that the other policy documents had already been provided to the applicant.

1. In his letter of 4 July 2017 to the applicant,[15] Mr Joyce advised of further Customer Search Allegations relating to five customers whose records the applicant allegedly searched between 6 January 2015 and 24 November 2016.  Mr Heywood provided the applicant with further particulars of the Customer Search Allegations on 18 July 2017.

   [15]See [45] above.

1. In his statement dated 1 August 2017,[16] the applicant denied the Customer Search Allegations.

   [16]See [47] above.

1. On 21 August 2017, Mr Joyce wrote to the applicant advising that Don Di Federico, Branch Manager, Investigations in the Compliance Division of the SRO, had been appointed to undertake the Customer Search Investigation.

1. By email dated 15 September 2017, Mr Di Federico provided the applicant with an outline and proposed timeline of the Customer Search Investigation.  He invited the applicant to attend a meeting to give oral evidence or, alternatively, provide his evidence in writing.

1. On 19 September 2017, Mr Joyce wrote to the applicant advising of further Customer Search Allegations relating to five customers whose records the applicant allegedly searched between 5 January 2015 and 25 May 2015.

1. Mr Di Federico emailed the applicant on 22, 26 and 28 September 2017, noting that he had not received a response to his email of 15 September 2017.

1. On 2 October 2017, Mr Di Federico again emailed the applicant, stating that he had still not received a response and would progress the Customer Search Investigation.  He attached a list of questions and a spreadsheet containing a detailed list of searches relating to the Customer Search Allegations.  The spreadsheet contained an alphabetical identifier (A to Z) for each customer together with information such as the date and time of the search, the module description searched and the length of the search.  The taxpayers’ names corresponding with the identifiers were provided to the applicant in a separate document.

1. The questions posed by Mr Di Federico were as follows:

To be answered in respect of each search (including multiple searches of the same person/entity):

Did you undertake this e-Sys search on the date/time stated in the spreadsheet?

Was this search undertaken for a work purpose?

If this search was undertaken for a work purpose, what was the work purpose?

If this search was not undertaken for a work purpose, what was the purpose of the search?

To be answered in respect of each person searched:

Have you dealt with this person at any time during the course of your employment with the SRO?

If you have dealt with this person, what was the nature of your dealings with them?

Do you know this person personally?

If you do not know this [person] personally, what is your relationship to this person?

If you have not dealt with this person during the course of your employment with the SRO, and you do not know them personally, do you know of this person?

If you know of this person, how do you know of them?

1. On 6 October 2017, the applicant provided a written statement responding to the Customer Search Allegations and the questions asked by Mr Di Federico.  The applicant stated that ‘each and every search [he] performed on eSys during [his] time at the SRO has been for a legitimate work-related purpose’.  He stated the following with respect to six customers:

[Customer] B.     This may be my former manager at the SRO.  This may have been an example search for me or one of my colleagues.  Without access to my work records, I cannot say anything further.

…

[Customer] E.     I do not know this person.  Without access to my work records, I cannot say anything further.

…

[Customer] G.     I am fairly confident that this is a legal advisor to a person I was bankrupting on behalf of the SRO.  I vaguely recall an enquiry being made by this person whilst we were discussing that matter.  Without access to my work records, I cannot say anything further.

…

[Customer] Q.     I believe that this may be someone I went to law school with.  I recall sending emails regarding this person using my work email address in relation to a sponsorship for my volunteer work on [a] Society.  There may have been an enquiry made by this person.  Without access to my work records, I cannot say anything further.

…

[Customer] V.     I am fairly confident that this is a legal advisor to various liquidators who had commenced legal proceedings against the SRO.  I vaguely recall an enquiry being made by this person whilst we were discussing that matter.  Without access to my work records, I cannot say anything further.

[Customer] W.    I believe I recognise this name, and if it is the person I believe, I do not know them well.  I vaguely recall her making an enquiry about her property.  Without access to my work records, I cannot say anything further.

…

1. On 13 November 2017, Mr Di Federico wrote to the applicant to invite him to attend the SRO on an agreed day to access work records relating to the Customer Search Allegations.

1. On 28 November 2017, the applicant’s solicitors wrote to Mr Di Federico.  They stated that the applicant was ‘unaware of the basis upon which the SRO alleges he has committed “misconduct”’ and asked for the following particulars of the Customer Search Allegations:

(a)all evidence of [the applicant] personally undertaking the alleged searches;

(b)a record of all searches undertaken by [the applicant’s] PC from 5 January 2015 to 9 June 2017;

(c)the evidence the SRO relies upon to allege misconduct;

(d)an explanation of the time period and date range selected for the alleged ‘unauthorised’ searches;

(e)an explanation as to what gave rise to the SRO initiating enquiries into [the applicant’s] use [of the] eSys database;

(f)providing the detailed explanation of which law, regulation, policy or term of [the applicant’s] employment within the VPS, governed [his] use of the ‘eSys database’ for each of the alleged searches which spanned multiple years, including providing the specific clause, provision and text that:

(i)details what the SRO considers to be ‘appropriate’/ ‘inappropriate’ and ‘authorised’/‘unauthorised’ use of the eSys database, particularly noting [the applicant’s] instructions that there are no security protocols associated with the eSys database; and

(ii)details of what the SRO considers is and is not a ‘business purpose’ for searches made by SRO staff using the eSys database.

1. In a letter to the applicant’s solicitors dated 7 December 2017, Mr Di Federico stated that ‘[t]he SRO’s position is that [the applicant] has been provided with sufficient particulars to properly respond to the [Customer Search] Allegations’.

1. In a separate letter to the applicant dated 7 December 2017, Mr Di Federico provided independent evidence which contradicted evidence given by the applicant in his statement dated 6 October 2017.  Mr Di Federico invited the applicant’s response to the contradictory evidence.

1. On 18 December 2017, the applicant and his solicitor attended the SRO’s premises to inspect his work records to respond to the Customer Search Allegations.

1. On 22 December 2017 and 5 January 2018, Mr Di Federico offered the applicant a further opportunity to attend the SRO to search its systems.  The applicant did not take up this offer.

1. On 6 February 2018, Mr Di Federico produced an 83-page report on the Customer Search Investigation (‘Customer Search Report’).  He found that 24 customer records were accessed by the applicant ‘without a known SRO business purpose relevant to [his] employment’ and therefore 24 of the 26 Customer Search Allegations against the applicant were substantiated.  He determined that the substantiated allegations constituted misconduct as defined in cl 21.3(b) of the VPSEA.[17]

   [17]Clause 21.3 is set out at [23] above.

1. On 7 February 2018, Mr Joyce sent a letter by email to the applicant and attached a complete copy of the Customer Search Report.  Mr Joyce stated that he had ‘received and considered’ the report and considered ‘the investigative process undertaken to be thorough and Mr Di Federico’s reasoning … to be sound’.  Accordingly, he had ‘determined to accept Mr Di Federico’s findings … on behalf of the SRO’. 

1. In his letter, Mr Joyce stated that the SRO had found that the 24 substantiated allegations of misconduct amounted to a contravention of: s 7(1)(b) of the PAA; the VPS Code of Conduct; the SRO Code of Ethics; the SRO Values and Behaviours; the SRO’s Electronic Communications Policy; and the SRO’s Information Privacy Policy. Mr Joyce stated that he had formed the view that the substantiated misconduct constituted ‘serious misconduct’ because, in the absence of any explanation to the contrary, the applicant had ‘misused [his] access to taxpayers’ private information for non-work related purposes, on a repeated basis’.

1. In his letter, Mr Joyce singled out six of the substantiated Customer Search Allegations which related to customers B, E, G, Q, V and W (‘BEGQVW allegations’).  Mr Joyce stated that, in relation to the BEGQVW allegations, evidence was obtained during the Customer Search Investigation which either contradicted the information the applicant had provided to Mr Di Federico or ‘positively indicated that there was no SRO business purpose for [the applicant’s] searches of those customers’ records’.  Mr Joyce stated that he considered that, in relation to the BEGQVW allegations, the applicant had ‘provided misleading or untruthful responses’.[18]

   [18]Those responses are set out at [65] above.

1. In his letter, Mr Joyce stated that, in proposing a discipline outcome, he had only relied on the findings relating to customers B, E, G, Q, V and W, which he described as ‘Key Misconduct’.  He stated that ‘[t]he findings for the Key Misconduct were supported by the clearest evidence that [the applicant] did not have a business purpose for undertaking the relevant … searches’ and that ‘it [was] not necessary to rely … upon all of the other Substantiated Misconduct in proposing the discipline outcome, given the seriousness of the Key Misconduct alone’.  Mr Joyce stated that, on the basis of the Key Misconduct, he proposed to recommend to the Commissioner that the applicant’s employment be terminated with immediate effect.  He stated that, before the proposed discipline outcome was finalised, in accordance with cl 21.11 of the VPSEA, he was providing the applicant with ‘an opportunity to respond to the findings and proposed discipline outcome’ by 16 February 2018.

1. In his letter, Mr Joyce stated that the proposed discipline outcome was unrelated to the proposed discipline outcome in the Harassment Investigation, in respect of which no final outcome had been reached.

1. Following further correspondence between Mr Joyce and the applicant’s solicitors, the deadline for the applicant to respond to the Customer Search Report and the proposed discipline outcome was extended to 23 February 2018.

1. The applicant’s solicitors requested the SRO to provide a redacted version of the Customer Search Report, which deleted confidential taxpayer information, so that they could review that version and advise the applicant on it.  The SRO refused to provide a redacted version, stating that the applicant could prepare such a version himself.

1. No substantive response by the applicant to Mr Di Federico’s findings in the Customer Search Report or to the proposed discipline outcome was in evidence at the trial, although the applicant stated during cross-examination that he conveyed to Mr Joyce his concerns regarding Mr Di Federico’s findings and the proposed discipline outcome.

1. The Customer Search Investigation and the applicant’s contentions in relation to it are discussed further below under the heading ‘Part C: Injunction Leave Application; extension of time’.

Broad overview of the proceeding and the associate judge’s decisions

1. On 12 December 2017, the applicant commenced the Trial Division proceeding, seeking interlocutory and permanent injunctions prohibiting the respondents[19] from proposing a discipline outcome under cl 21 of the VPSEA in respect of the Harassment Investigation.  Alternatively, he sought declarations that the respondents failed to afford him procedural fairness and/or failed to provide him with all relevant material that was before the decision-maker.  He also sought an unredacted copy of the Harassment Report and its 38 attachments.  On 21 December 2017, he amended his originating motion so that the injunctions he sought would instead prohibit the respondents from reaching a final decision with respect to a discipline outcome.

   [19]See n 1 above.

1. On 13 March 2018, the applicant further amended his originating motion to seek analogous injunctive and declaratory relief in respect of the Customer Search Investigation. He did so pursuant to leave granted by the associate judge on 2 March 2018. The associate judge’s order dated 2 March 2018 recorded the Undertaking as to Damages and the SRO Undertaking. Those undertakings are set out at [417] below.

1. On 15 March 2018, the applicant filed a statement of claim in the proceeding.  On 10 April 2018, he amended his statement of claim by leave of the Court.

1. On 28 May 2018, the applicant made an interlocutory application in the proceeding seeking leave to file a further amended statement of claim (‘Proposed FASOC’). Among other things, the Proposed FASOC pleaded that, by reason of the respondents’ alleged breaches of the VPSEA, the respondents had contravened s 50 of the FWA. The applicant also sought to amend his prayer for relief to seek an order pursuant to the FWA that a pecuniary penalty be imposed on the respondents for their alleged contraventions of s 50 of the FWA.

1. Section 50 of the FWA provides as follows:

50       Contravening an enterprise agreement

A person must not contravene a term of an enterprise agreement.

Note 1:This section is a civil remedy provision (see Part 4-1).

…

1. On 18 July 2018, McDonald J granted the applicant leave to further amend his statement of claim, save for the amendments relating to the FWA.[20] McDonald J held that, pursuant to s 539(2) of the FWA, the Supreme Court did not have jurisdiction to hear and determine the applicant’s claims alleging contraventions of s 50 of the FWA.[21]  He further held that it would not be an appropriate exercise of the Court’s power to permit a party to amend a pleading if the amendment seeks to plead a cause of action which the Court has no power to hear and determine.[22]

   [20]Tucker v Victoria [2018] VSC 389 (‘McDonald J’s judgment’).

   [21]McDonald J’s judgment [16]–[17].

   [22]McDonald J’s judgment [20].

1. Section 539 of the FWA is set out at [342] below. Columns 2 and 3 in respect of items 4 and 5 of the table in s 539(2) of the FWA relevantly provide that an application in relation to an alleged contravention of s 50, which is described in column 1 as a ‘civil remedy provision’, may be filed by an employee or an employer in the Federal Court, the Federal Circuit Court or ‘an eligible State or Territory court’. Section 12 defines ‘eligible State or Territory court’ as including the Magistrates’ Court and the County Court. The Supreme Court is not ‘an eligible State or Territory court’.

1. On 20 July 2018, the applicant filed a further amended statement of claim pursuant to the leave granted by McDonald J on 18 July 2018.

1. On 31 January 2019, the applicant filed a second further amended statement of claim by leave of the Court (‘2^nd FASOC’).  As discussed in detail at [214] below, by the 2^nd FASOC, the applicant relied on three legal bases upon which the two investigations had to be conducted in accordance with the VPSEA. They were: his employment contract, the PAA and approval of the VPSEA by the Fair Work Commission pursuant to s 185 of the FWA. The applicant pleaded that the respondents had breached cl 21 of the VPSEA in their conduct of the two investigations and, as a result, they had breached the Misconduct Policy (which incorporated the processes in cl 21), his employment contract and ss 8 and 20(3) of the PAA.

1. The respondents filed a defence to the 2^nd FASOC on 1 February 2019, in which they denied that the VPSEA had legal force either as an express term of the employment contract or under the PAA. However, as discussed at [217]–[218] below, they admitted that the VPSEA ‘covered and applied’ to the applicant and the SRO in their employment relationship by virtue of its approval under s 185 of the FWA. The respondents denied the breaches alleged by the applicant.

1. The proceeding was heard by the associate judge on 4–6 February and 7 May 2019.  The applicant was represented by a solicitor and senior and junior counsel.  On the last day of the trial, the applicant sought leave to file a third further amended statement of claim (‘Proposed 3^rd FASOC’) pursuant to which he alleged that, by contravening the VPSEA, the respondents contravened s 50 of the FWA. No specific relief was sought in respect of the alleged breaches of s 50.

Injunction judgment

1. The associate judge refused leave for the applicant to file the Proposed 3^rd FASOC.[23] She found that the application for leave to amend was an abuse of process because the application was made during the applicant’s reply submissions at trial and McDonald J had already ruled that the applicant could not amend his pleading to include a claim for contravention of s 50 of the FWA.[24]

   [23]Injunction judgment [326].

   [24]Injunction judgment [313]–[326].

1. The associate judge held that neither the applicant’s employment contract nor ss 8 and 20(3) of the PAA (via the Misconduct Policy) mandated that cl 21 of the VPSEA be followed.[25]  In any event, she found that the respondents had not breached cl 21.[26] 

   [25]Injunction judgment [74], [94].

   [26]Injunction judgment [144]–[174], [231]–[248], [261]–[271].

1. The associate judge stated that it was common ground between the parties that s 20(3)(c) of the PAA imposed an obligation on the respondents to comply with the employment principles in s 8.[27] She found that the respondents had not breached the principle in s 8(b) that the applicant be treated fairly and reasonably and therefore they had not breached s 20(3).[28]

   [27]Injunction judgment [120].

   [28]Injunction judgment [160]–[166], [231]–[244], [261]–[271].

1. The associate judge made an order on 16 July 2019 dismissing the proceeding against the respondents.

1. The associate judge’s reasons in the injunction judgment are discussed in more detail at [222]–[235] below.

Injunction costs judgment

1. Relying on the finding of abuse of process in the injunction judgment, the respondents sought the following indemnity costs order:

The [applicant] pay the [respondents’] costs of and incidental to his application for leave to amend his claim (including [his] attempt to rely on the Judiciary Act 1903 (Cth)), such costs to be taxed on an indemnity basis in default of agreement.

1. The applicant submitted that he should not be ordered to pay any of the respondents’ costs by reason of s 570 of the FWA. Section 570 is set out at [365] below. In broad terms, s 570(1) provides that a party to proceedings ‘in relation to a matter arising under [the FWA]’ may be ordered to pay another party’s costs only in the limited circumstances set out in s 570(2).

1. The associate judge found that the proceeding was not ‘in relation to a matter arising under [the FWA]’ and, accordingly, held that s 570(1) was not applicable.[29]  She held that, because she made a finding that there was an abuse of process by the amendment application being made on the fourth day of the trial, it was appropriate that indemnity costs be limited to that issue.  She ordered the applicant to pay the respondents’ costs of and incidental to the written submissions on the application for amendment on an indemnity basis.[30]  She otherwise ordered the applicant to pay the respondents’ costs on the standard basis.

   [29]Injunction costs judgment [17].

   [30]Injunction costs judgment [24].

1. The associate judge’s reasons in the injunction costs judgment are discussed in more detail at [366]–[369] below.

Termination of applicant’s employment

1. As we have already stated, the SRO terminated the applicant’s employment on 19 July 2019, three days after the publication of the injunction judgment and the injunction costs judgment.  The SRO’s letter of termination dated 19 July 2019 stated that the reasons for the termination were those set out in Mr Joyce’s 7 February 2018 letter.[31]  Those reasons relate exclusively to the Customer Search Report.  The SRO’s termination letter also stated that no final outcome had been reached in relation to the proposed discipline outcome arising from the Harassment Report.

   [31]See [73]–[77] above.

1. On 30 July 2019, the applicant lodged an unfair dismissal claim with the Fair Work Commission (‘unfair dismissal proceeding’). 

Damages judgment

1. Following the publication of the injunction judgment and the injunction costs judgment — and the termination of the applicant’s employment — the State sought to enforce the applicant’s Undertaking as to Damages.  The State claimed that, by reason of the SRO Undertaking, it had incurred a loss of $199,681.46 between the date the SRO Undertaking was given (namely, 2 March 2018) and the date the applicant’s employment was terminated (namely, 19 July 2019) (‘SRO Undertaking Period’).  This loss was said to comprise salary and accrued annual and long service leave paid to the applicant, as well as amounts of taxation remitted to the Australian Taxation Office (‘ATO’) and superannuation remitted to the applicant’s superannuation fund during the SRO Undertaking Period.

1. The State’s damages claim was heard on 24–25 September and 16 October 2019.  The applicant represented himself at the hearing.

1. The associate judge rejected the various submissions the applicant made in seeking to resist the State’s damages claim, including that the State had, by continuing his suspension and paying his salary rather than arranging work for him, failed to mitigate its loss, and that the State lacked ‘clean hands’.  She ordered the applicant to pay damages to the State in the gross amount of $199,681.46 that was claimed by the State.[32]

   [32]Damages judgment [135].

1. The associate judge’s reasons in the damages judgment are discussed in more detail at [419]–[428] below.

Damages costs judgment

1. The State sought an order that the applicant pay its costs of its damages claim on the indemnity basis from the date of an offer of compromise and on the standard basis for the preceding period.  Both respondents also sought their costs on an indemnity basis in respect of a notice to produce served by the applicant on 10 October 2019, which the associate judge had set aside on 16 October 2019.[33] 

   [33]Tucker v Victoria [Notice to Produce] [2019] VSC 689.

1. The applicant again submitted that s 570 of the FWA was applicable to the proceeding. He contended that it was not unreasonable for him not to accept the offer of compromise.

1. The associate judge stated that, as she had already held that s 570 of the FWA was not applicable to the proceeding, a separate analysis of whether it was applicable was unnecessary.[34]

   [34]Damages costs judgment [9].

1. The associate judge held that the applicant’s refusal to accept the respondents’ offer of compromise engaged r 26.08 of the Supreme Court (General Civil Procedure) Rules 2015 (‘Rules’) in relation to the State’s costs of its damages claim. She found that the State was entitled to indemnity costs for costs incurred after 11:00 am two business days after the offer was made and costs on the standard basis for costs incurred prior to that time.[35]  She also found that the applicant should pay the respondents’ costs of the applicant’s notice to produce for various reasons, including that it was served late and had no forensic purpose.[36]

   [35]Damages costs judgment [32], [37].

   [36]Damages costs judgment [55]–[56].

1. The associate judge’s reasons in the damages costs judgment are discussed at [429]–[431] below.

Structure of balance of judgment

1. The balance of this judgment is divided into the following parts:

·Part A: Stay application

·Part B: Fresh evidence application

·Part C: Injunction Leave Application; extension of time

·Part D: Injunction Costs Leave Application

·Part E: Damages Leave Application

·Part F: Conclusion

PART A: STAY APPLICATION

Nature and scope of stay application

1. The applicant seeks an order that the appeal proceedings be stayed until the defamation proceeding he commenced in the Federal Court on 24 April 2020 is determined.[37] 

   [37]See [14] above.

1. The applicant relied on the following grounds:

[a]       [a stay] is required to ensure the:

i         just and efficient determination of the proceedings; and

ii        efficient use of judicial and administrative resources;

[b]the issues, evidence and facts in dispute in the defamation proceeding are materially relevant to the issues in [the appeal] proceedings;

[c]to the extent that they are relevant, the applicant seeks to use documents, facts and evidence adduced in the defamation proceeding in support of his ‘Further Evidence’ and ‘Extension Applications’ filed on 3 April 2020 and 28 April 2020, respectively, in [the appeal] proceedings;

[d]there is an overlap of fact and issues with respect to the defamation proceeding; and

[e]there are risks of inconsistent rulings and findings in relation to the same facts.

1. The applicant also seeks orders pursuant to ss 26 and 65A of the Civil Procedure Act 2010 (‘CPA’). As such orders would not provide any assistance to the applicant or to the Court in relation to the issues in the appeal proceedings, we will not discuss them.

Summary of issues in defamation proceeding

1. By an amended statement of claim filed on 21 June 2020, the applicant claims that Mr McKee’s 9 June 2017 email to Mr Joyce[38] carried various defamatory meanings, including the following:

   [38]See [37] above.

(a)       he had stalked AB;

(b)he had been a physical threat to AB and her children;

(c)he had scandalously stared at AB in a leering fashion in the SRO’s offices;

(d)he had bullied AB;

(e)he had been a threat to the health and safety of AB and other SRO staff members;

(f)he had breached taxpayer privacy;

(g)he had misused private taxpayer information;

(h)he had improperly used information acquired by virtue of his employment.

1. The applicant seeks aggravated damages and special damages from the defamation proceeding defendants (the SRO and Mr McKee).  The particulars of aggravated damages upon which the applicant relies include: allegations that the defamation proceeding defendants failed to contact taxpayers whose privacy he was said to have breached; the absence of a complaint by any such taxpayer; and the absence of a ‘filed’ complaint by AB.

1. In their defence to the applicant’s original statement of claim, the defamation proceeding defendants plead that the defamation proceeding is barred pursuant to s 5(1AAA) of the Limitation of Actions Act 1958 because it was not commenced within one year of the publication of Mr McKee’s 9 June 2017 email.  They also plead that the email was published in Victoria and that such publication is insufficient to invoke the jurisdiction of the Federal Court.  They deny that Mr McKee’s 9 June 2017 email was capable of carrying the defamatory meanings alleged by the applicant.  Further or alternatively, they plead that, if Mr McKee’s 9 June 2017 email carried any of the alleged defamatory meanings, then they rely upon the common law defence of qualified privilege.  They do not plead the defence of justification.

1. We have not been provided with any amended defence that may have been filed in response to the amended statement of claim. 

Principles regarding the granting of a stay

1. This Court has power to stay a proceeding.[39]  In Sterling Pharmaceuticals Pty Ltd v The Boots Co (Australia) Pty Ltd,[40] Lockhart J summarised the considerations to be taken into account in deciding whether to grant a temporary stay of a proceeding pending the determination of a proceeding in another court in the following terms:

   [39]Supreme Court Act 1986 s 30 (‘SC Act’).

   [40](1992) 34 FCR 287; [1992] FCA 72 (‘Sterling Pharmaceuticals’).

•Which proceeding was commenced first.

•Whether the termination of one proceeding is likely to have a material effect on the other.

•The public interest.

•The undesirability of two courts competing to see which of them determines common facts first.

•Consideration of circumstances relating to witnesses.

•Whether work done on pleadings, particulars, discovery, interrogatories and preparation might be wasted.

•The undesirability of substantial waste of time and effort if it becomes a common practice to bring actions in two courts involving substantially the same issues.

•How far advanced the proceedings are in each court.

•The law should strive against permitting multiplicity of proceedings in relation to similar issues.

•Generally balancing the advantages and disadvantages to each party.[41]

[41]Sterling Pharmaceuticals (1992) 34 FCR 287, 291; [1992] FCA 72, approved in Lawrence & Hanson Group Pty Ltd v Young [2016] VSCA 69, [22] (‘Lawrence & Hanson’).

1. In Bella Products Pty Ltd v Creative Designs International Ltd, Finkelstein J stated that the following propositions may be drawn from the factors in Sterling Pharmaceuticals:

(a)it is undesirable that two courts should determine the same dispute; and

(b)practical considerations based on common sense and fairness should dictate which action should proceed first.[42]

[42](2009) 258 ALR 538, 543 [23]; [2009] FCA 868, approved in Lawrence & Hanson [2016] VSCA 69, [23].

Parties’ submissions on stay application

1. The applicant submitted that the stay was required to ensure the just and efficient determination of the defamation proceeding and the appeal proceedings, as well as the efficient use of judicial and administrative resources.

1. The applicant contended that there was an overlap of facts, evidence and issues between the two sets of proceedings.  He stated that documents he has obtained — and further documents he has sought — in the defamation proceeding are ‘materially relevant’ in the appeal proceedings to the extent that they demonstrate two matters.  Those matters are that the respondents concealed information from him during the two investigations and gave false and misleading evidence in the Trial Division proceeding.  Accordingly, so he argued, the documents support his fresh evidence application and his extension of time application in the appeal proceedings.  

1. The applicant also submitted that a stay was warranted because there was a risk of inconsistent rulings and findings being made in the two sets of proceedings in relation to the same facts.

1. The respondents submitted that there was no relevant overlap between the appeal proceedings and the defamation proceeding because the issues to be determined in the two sets of proceedings are not the same or substantially the same.

1. The respondents contended that a stay in the appeal proceedings to enable the applicant to use documents he might receive in the defamation proceeding was not the appropriate way for the applicant to obtain documents for use in the appeal proceedings.

1. The respondents argued that staying the appeal proceedings would be prejudicial to the respondents because they have given undertakings to not enforce the orders for damages and costs against the applicant until the determination of the appeal proceedings.  According to the respondents, the defamation proceeding may not be determined for a significant period of time, therefore the prejudice caused by the delay in enforcing the orders in their favour could be significant.

Decision on stay application 

1. In our opinion, the principles in Sterling Pharmaceuticals require that the application for a stay of the appeal proceedings be refused. 

1. The Injunction Costs Leave Application and Injunction Leave Application were commenced before the defamation proceeding and the entirety of the appeal proceedings have reached the stage where they can be heard and determined, whereas the defamation proceeding is still in the interlocutory stages.  Further, the defamation proceeding defendants have pleaded threshold issues which, if determined in their favour, may result in the proceeding being dismissed without any adjudication on the merits.

1. The issues in the appeal proceedings are different from those in the defamation proceeding.  As such, there is no real risk that the determination of the appeal proceedings will have a material impact on the defamation proceeding or that there might be inconsistent judicial rulings and findings on the same subject matter.  The appeal proceedings do not involve the giving of oral evidence by any witness and there will be no impact on any witnesses who might be called to give evidence in the defamation proceeding. 

1. It is in the interests of the administration of justice that the appeal proceedings be resolved as soon as possible rather than being delayed for a substantial period pending the outcome of the defamation proceeding. A stay of the appeal proceedings would be inconsistent with the overarching purpose in s 7(1) of the CPA, which is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute in the proceeding.

1. The appeal proceedings can be determined on the basis of the materials before this Court.  No work that has already been undertaken in either the appeal proceedings or the defamation proceeding would be wasted if the appeal proceedings are not stayed.  Further, the applicant would not suffer any real prejudice if the stay is not granted whereas the respondents would suffer some prejudice if a stay is granted. 

1. We reject the applicant’s submission that the prospect of him obtaining additional evidence in the defamation proceeding which he could seek to use in the appeal proceedings is a proper basis for staying the appeal proceedings.  The applicant has already obtained information in the defamation proceeding which he has sought to use in the appeal proceedings as part of his fresh evidence application.

1. The events that are the subject of the appeal proceedings occurred in 2017.  It is in the public interest that the litigation arising from those events be finalised as soon as possible. 

1. For the above reasons, practical considerations based on common sense and fairness require that a stay is refused and that this Court determine the appeal proceedings without any delay. 

PART B: FRESH EVIDENCE APPLICATION

Nature and scope of fresh evidence application

1. The applicant has applied for this Court to receive the following fresh evidence in the appeal proceedings pursuant to r 64.13 of the Rules:

(a)Mr McKee’s 9 June 2017 email;[43]

[43]See [37] above.

(b)the questions that Ms Klug asked one of the applicant’s colleagues at the SRO, Jonathan Kerr, during the Harassment Investigation;

(c)Mr Kerr’s written responses to Ms Klug’s questions;

(d)a letter from the respondents’ solicitors to the applicant dated 14 January 2020 (‘SRO’s 14 January 2020 letter’), an affidavit sworn by Mr Joyce on 19 August 2019 in the State’s damages claim and the transcript of the oral evidence of Mr Joyce and the Commissioner in the hearing of the State’s damages claim;

(e)the defence of the defamation proceeding defendants dated 27 May 2020;[44]

(f)the unredacted Customer Search Report;

(g)to the extent necessary, the applicant’s affidavits affirmed on 11 December 2017 and 23 February 2018 filed in the Trial Division proceeding;

(h)witness statements of Mr Kerr and three other individuals filed in the unfair dismissal proceeding;

(i)a witness statement of the applicant’s father filed in a VCAT proceeding the applicant brought against the SRO concerning privacy issues;

(j)documents released to the applicant by the SRO under the Freedom of Information Act 1982 (‘FOI Act’);

(k)a complaint made by the applicant against Mr McKee dated 31 May 2017 addressed to Mr Heywood and Tracey Gittins, Principal HR Consultant, Human Resources of the SRO;

(l)a complaint filed by a Victorian taxpayer against Mr McKee dated 23 October 2017; and

(m)a letter from the applicant to the Commissioner and the Attorney-General of Victoria dated 10 April 2020.

[44]See [119] above.

1. Set out below are brief comments on each of the above items of evidence:

(a)We have already referred to Mr McKee’s 9 June 2017 email at [14] and [37]–[38] above.  The applicant received it on 25 September 2019 during the hearing of the State’s damages claim.

(b)The applicant received Ms Klug’s questions to Mr Kerr and his responses on 31 August 2019, after the publication of the injunction judgment but before the hearing of the State’s damages claim.

(c)Mr Kerr’s responses to Ms Klug’s questions were exculpatory of the applicant.

(d)The SRO’s 14 January 2020 letter, which was sent to the applicant in response to his correspondence alleging privacy breaches by the SRO, relevantly stated as follows:

It is correct that the SRO has not notified the 26 taxpayers who were the subject of your searches, of the [Customer Search Investigation] or its findings.  It is the State’s firm position that it was not, and is not, required to do so.

Most importantly, there is no legal obligation to this effect.  Even if your conduct as found to have occurred constituted a breach of the Privacy and Data Protection Act 2014 (Vic) … or the Taxation Administration Act 1997 (Vic) … neither act requires that affected individuals be notified of a breach.

Of course, if the SRO considered there to be any risk to taxpayers arising from your misconduct, it would have notified them immediately regardless of the absence of any legal obligation to do so.  In that regard, it is relevant that you were alleged, and ultimately found, to have accessed the records without a known business purpose.  It was not alleged that you used or disclosed this information.  The SRO did not consider there to be any suggestion that taxpayers were at risk, and accordingly, investigated and addressed your misconduct as an internal matter.  This was a decision open to the SRO under the relevant legal framework.[45]

[45]Emphasis in original.

In their oral evidence in the hearing of the State’s damages claim, Mr Joyce and the Commissioner stated that the SRO maintained the applicant’s suspension during the SRO Undertaking Period because of concerns that he might access customer information for non-SRO purposes.  Mr Joyce made the same statement in his affidavit of 19 August 2019.

(e)In their defence in the defamation proceeding, the defamation proceeding defendants did not plead the defence of justification.

(f)The unredacted Customer Search Report cannot constitute fresh evidence because it was provided to the applicant on 7 February 2018 and was available to him prior to the hearing of his injunction claim.

(g)The applicant’s affidavits were filed in the Trial Division proceeding by him and therefore cannot constitute fresh evidence.

(h)The witness statements filed in the unfair dismissal proceeding comprise a statement from Mr Kerr, a statement from another work colleague and statements from two taxpayers.  The statement of one taxpayer was to the effect that she had authorised the applicant to access her records to assist her with a query, she had not complained about the applicant accessing her records, she was not informed of the Customer Search Investigation and she did not authorise the SRO to use her records for the purposes of the investigation.  The statement of the other taxpayer was to the effect that he was aware that the applicant was alleged to have accessed his records, he had provided the SRO’s investigator with two reasons why the applicant may have accessed his records and he would not object to the applicant accessing his records for those reasons.  The two reasons suggested by that taxpayer do not have an SRO-business purpose.

1. The associate judge then turned to other factors relevant to the assessment of compensation.  She noted submissions by the applicant to the effect that the loss could have been avoided.  He submitted that he had been ready, willing and able to work during the SRO Undertaking Period and that, by choosing to pay him for services not rendered, the State failed to mitigate its loss.  He submitted that it was the preferred approach under Victorian public sector policy for an employee to remain in a workplace during an investigation.  He contended that he could have been deployed into another role or elsewhere within the public sector.  He argued that he could also have worked from home, and had been willing to do so.  The applicant said that he could have performed SRO work which did not require him to access taxpayer information, or could have been provided with specific taxpayer information in order to perform his normal duties.

1. The applicant also submitted that, if the allegations against him had substance, his position should have been terminated much earlier.  He argued that the State had also failed to mitigate its loss by expending a disproportionate and unreasonable amount of legal fees in the litigation. 

1. The associate judge accepted that the applicant was ready, willing and able to work.[188]  However, he had been suspended with pay under cl 21.7(a)(v) of the VPSEA.  The associate judge found that this arrangement did not contemplate working from home; it was a ‘suspension from duties’.[189] 

   [188]Damages judgment [108].

   [189]Damages judgment [110].

1. The associate judge said that the question was whether or not the State had mitigated its loss for the SRO Undertaking Period.  She accepted evidence given by Mr Joyce that allowing the applicant to return to the workplace in any capacity would have posed an unacceptable risk to the security of taxpayer information held by the SRO and to the integrity of the SRO as the public service body entrusted to protect that information.[190]

   [190]Damages judgment [111].

1. The associate judge also accepted that, given the investigators’ findings, it was inappropriate to redeploy the applicant elsewhere within the Victorian Public Service.  She held that it was reasonable and appropriate not to redeploy him in circumstances where the findings were accepted and the proposed discipline outcome in respect of the Customer Search Investigation was immediate termination of employment.[191]

   [191]Damages judgment [111].

1. The associate judge found that there was no evidence that the State did not have ‘clean hands’ in respect of the proceeding.[192] 

   [192]Damages judgment [121].

1. The associate judge rejected a submission made by the applicant to the effect that there had been delay on the part of the State in seeking to enforce the Undertaking as to Damages.[193]  She also rejected a number of other contentions advanced by the applicant to which it is not necessary to refer.

   [193]Damages judgment [112].

1. In the result, the applicant was ordered to pay damages to the State in the sum of $199,681.46.

1. The associate judge made orders as to costs, having found that the case was not one within the scope of s 570 of the FWA.[194]  She ordered that the applicant pay the respondents’ costs of and incidental to the applicant’s notice to produce dated 10 October 2019, including costs of an application to set aside that notice, on an indemnity basis.  She also ordered the applicant to pay the State’s costs of its damages claim on the indemnity basis from 11:00 am on 24 August 2019 and on the standard basis for costs incurred prior to that time.

   [194]Damages costs judgment [9], [44].

1. In respect of the notice to produce, the associate judge found that the applicant’s conduct in serving it and persisting in agitating it was unmeritorious and inconsistent with the overarching purpose in s 7 of the CPA. The notice was served after the closing of the respondents’ case at the hearing of the State’s damages claim. The associate judge held that there was no forensic purpose for the notice.[195]

   [195]Damages costs judgment [56].

1. The broader order for indemnity costs was based on the fact that the applicant had not accepted an offer of compromise served by the respondents on 22 August 2019, by which they offered to compromise the State’s damages claim by the applicant paying $150,000 together with costs on the standard basis. The offer was served under O 26 of the Rules. The associate judge found that the applicant had not displaced the prima facie rule in r 26.08 as to the costs consequences of his failure to accept the offer.[196]  She found that the offer was a genuine compromise of almost 25 per cent of the damages ultimately awarded.  The offer was in an amount slightly less than the gross salary amount of the applicant for the relevant period.  At the time the offer was served, the respondents had already filed substantial materials including affidavits and their outline of argument.  The associate judge held that the applicant was in a position to assess the likelihood of him successfully defending the State’s damages claim, despite not yet knowing the evidence that the Commissioner would give.  She held that it was evident on the correspondence that, by 23 February 2018, all parties proceeded on the basis that termination of employment was imminent.[197]  The associate judge also addressed submissions made by the applicant regarding the reasonableness of the respondents’ expenditure on legal costs.  It is not necessary to address that matter, which is properly the subject of taxation.

   [196]Damages costs judgment [37].

   [197]Damages costs judgment [43].

Grounds of appeal and notice of contention

1. The applicant relies on three grounds of appeal as part of the Damages Leave Application.  Omitting particulars given by way of elaboration, they are:

Ground 1 — mitigation

1The learned primary judge erred in failing to properly engage with the issue of mitigation.

Ground 2 — ‘clean hands’

2The learned primary judge erred in failing to properly engage with the issue of ‘clean hands’.

Ground 3 — matter arising under federal law

3The learned primary judge erred in not concluding that the matter was a matter arising under the [FWA]. 

1. The respondents filed a notice of contention which relied upon the following ground:

Should the Court of Appeal determine that s 570 of the [FWA] did apply to the proceeding, the Court should nevertheless affirm [the associate judge’s costs orders in relation to the Undertaking as to Damages] by reason of the Applicant having engaged in ‘unreasonable act[s] … that caused [the State] to incur’ costs (s 570(2)(b)), namely, by the Applicant:

(a)seeking, and continuing to press for, the production of documents by a notice to produce served 10 October 2019; and

(b)not accepting the Respondents’ offer of compromise dated 22 August 2019.

1. It is not necessary, in this already lengthy set of reasons, to articulate at any length the submissions of the respondents in respect of the Damages Leave Application.  For the reasons shortly to be set out, grounds 1 and 2 are entirely without merit and leave to appeal will be refused in relation to them.  Ground 3, however, will be upheld for the reasons given in respect of the Injunction Costs Leave Application.  The respondents’ notice of contention will be discussed in that context.

Ground 1: Mitigation

1. The applicant submitted that he was ready, willing and able to work for the period of the SRO Undertaking and that the failure of the respondents to put him to work amounted to a failure to mitigate the State’s loss arising from that undertaking.  Reliance was placed on Love v Thwaites.[198]  It was submitted that the reasons given for excluding the applicant from the workplace were baseless.

   [198][2014] VSCA 56, [46], [47] (‘Love’); see also Sanofi-Aventis Deutschland GmbH v Alphapharm Pty Ltd [2019] FCAFC 28, [44].

1. The applicant contended that the associate judge did not answer the question whether or not the State had mitigated its losses for the SRO Undertaking Period, or apply any principle of law with respect to her reasoning at para 111 of the damages judgment.[199]  It was said that the associate judge did not provide reasons as to why she accepted or even preferred the evidence cited at the same paragraph, especially in the light of what was said to be a significant body of contradictory evidence.  This was said to amount to a failure to provide adequate reasons.

   [199]See [424]–[425] above.

1. The applicant argued that he had been denied procedural fairness by being prevented from testing the merits of allegations made against him.  By way of example, he had sought to examine the Commissioner about statements filed on behalf of taxpayers in the Fair Work Commission relating to the Customer Search Allegations.[200]  According to the applicant, the merits of the investigations and findings made against him were relevant to the issues before the Court.  He submitted that the respondents themselves had relied upon those investigations and findings in response to the applicant’s mitigation submissions.  It was said to therefore be an error of law for the associate judge to set aside the notice to produce dated 10 October 2019 seeking production of evidence which substantiated the allegations and findings made against the applicant, and a further error to have ruled as to what issues were relevant to the hearing of the State’s damages claim in that regard, in advance of evidence being given.

   [200]See [138(h)] above.

1. The applicant contended that the respondents had conceded in the SRO’s 14 January 2020 letter[201] that the applicant was not a threat to taxpayer information.  That suggested concession was said to be directly inconsistent with evidence given by the Commissioner and by Mr Joyce. 

   [201]See [138(d)] above.

1. The applicant further submitted that the associate judge should have concluded that the allegations and findings made against him lacked merit based on evidence that was before the Court. 

1. In our opinion ground 1 is not made out. 

1. As the associate judge pointed out,[202] the principles of mitigation of damage do not apply directly in this context.  At best, they apply by analogy.[203]  The High Court explained the proper approach to an undertaking as to damages in European Bank Ltd v Evans, in the following terms:

[T]he undertaking as to damages is given to the court, for enforcement by the court; it is not a contract between parties or some other cause of action upon which one party can sue the other.  …

The undertaking as to damages and its origins in equity practice of the nineteenth century, if not earlier, were explained by Aickin J in Air Express [Ltd v Ansett Transport Industries (Operations) Pty Ltd] and by Gleeson CJ, Gummow, Kirby, Hayne and Crennan JJ in Mansfield v Director of Public Prosecutions (WA).  The authorities discussed in Mansfield included Russell v Farley, where Bradley J had explained the requirement of the undertaking as a response to the anxiety entertained by the court that otherwise its interlocutory order might lead to damage for which there could be no redress except by an order for costs.

In Air Express, Mason J said that there was little to be gained from an examination of the authorities dealing with causation of damage in contract, tort and other situations; the Court was better advised to look to the purpose which the undertaking as to damages is to serve and to identify the causal connection or standard of causal connection which is most appropriate to that purpose.

A party seeking an equitable remedy is required to ‘do equity’ and this is the origin of the requirement that the party giving an undertaking as to damages submit to such order for payment of compensation as the court may consider to be just.  Given its origin and application to varied circumstances in particular cases, the process of assessment of compensation cannot be constrained by a rigid formulation.[204]

[202]Damages judgment [17]–[18].

[203]Love [2014] VSCA 56, [44], [47].

[204](2010) 240 CLR 432, 438–9 [14]–[17]; [2010] HCA 6 (citations omitted) (‘European Bank’).

1. Once it is appreciated that the purpose of enforcing an undertaking as to damages is to compensate the party who has suffered loss by reason of the interlocutory order of the Court (or here, the giving of an undertaking in place of such an order), the question becomes, not whether the State ought to have mitigated its loss, but whether the respondents established that the State suffered loss as a result of giving the SRO Undertaking not to terminate the applicant’s employment pending the determination of the proceeding.

1. The plain answer is that the loss was established.  By virtue of the SRO Undertaking, the State had to continue paying the applicant entitlements he would not have received if not for the undertaking.  He had been suspended from his position pending the outcome of the investigations.  There was no obligation on the respondents to reverse that suspension during the pendency of the undertakings.  To have done so would have fundamentally altered the status quo which it was the obvious purpose of the undertakings to preserve.  Equally, to suppose that the respondents should have lifted the suspension or, failing doing so, should suffer a reduction in damages recoverable under the applicant’s Undertaking as to Damages would deprive that undertaking of all content.  The applicant’s contention that he should have been given gainful work to do during the SRO Undertaking Period invited the Court, in effect, to negate his undertaking to pay damages.  Whilst that might, strictly speaking, be open as a matter of discretion, we see no error in the associate judge’s conclusion in this regard and we would in any event decline to

   
   

   re-exercise the discretion in the manner for which the applicant contends.

1. We add that we reject the contention that the associate judge failed to provide adequate reasons.  The applicant’s submissions were fundamentally at odds with the whole purpose of the undertakings and their rejection did not call for elaborate reasoning.  The same may be said for the applicant’s ancillary arguments concerning procedural fairness and the merits of the respondents’ position that it was not appropriate to lift the suspension of the applicant’s employment.  In that context, we consider that the associate judge was plainly correct not to permit the applicant to venture into that issue by means of the notice to produce.  The question before her was one of causation of loss to the State as a result of not having terminated the applicant’s employment, in circumstances where he was suspended from employment.  This was not the occasion for revisiting the merits of that suspension.

Ground 2: ‘Clean hands’

1. The applicant submitted that the SRO was responsible for ‘the worst episode of mass taxpayer privacy breaches in this State’s history’, that it had spent, as at 30 August 2019, $1.8 million in legal fees litigating the employment dispute against him and that, as a result of political pressure and despite legal advice of senior counsel, it had declined to recoup $50 million of taxpayer funds that had previously been paid in error.  The applicant submitted that the associate judge failed to address this evidence and had irrationally found that there was no evidence before the Court establishing that the respondents did not have ‘clean hands’ in respect of the present proceeding.

1. Ground 2 may be dealt with shortly.  The equitable doctrine of ‘clean hands’ applies by virtue of the respondents’ obligation to ‘do equity’.[205]  However, the matters invoked by the applicant under this head have nothing to do with the conduct of the respondents toward him, except for the allegation that undue legal fees had been spent litigating the dispute.  That issue, if it is to be pursued, is one for taxation of costs rather than assessment of damages.  The associate judge was correct to find that there was no relevant evidence that the respondents lacked ‘clean hands’ in their dealings with the applicant.

   [205]European Bank (2010) 240 CLR 432, 439 [17]; [2010] HCA 6, quoted at [441] above.

1. We therefore reject ground 2.

1. It follows that the challenge to the associate judge’s order that the applicant pay damages of $199,681.46 to the State fails.[206]

   [206]Paragraph 1 of the associate judge’s order dated 21 April 2020.

Ground 3 and notice of contention: Costs

1. The applicant referred to and repeated his previous written case in respect of the Injunction Costs Leave Application.

1. We accept, for the reasons given in respect of the Injunction Costs Leave Application, that the State’s damages claim formed part of a proceeding ‘in relation to a matter arising under [the FWA]’, such that s 570 of the FWA applies to the costs of the State’s damages claim. Subject to the notice of contention, therefore, ground 3 is upheld.

1. The question under the notice of contention involves the application of s 570(2)(b) of the FWA and, in particular, whether costs were incurred by the respondents as a result of an ‘unreasonable act’ of the applicant. In this context, ‘unreasonable’ must be read in the context of the fact that s 570 is intended to promote access to justice by making the FWA, generally, a ‘no costs’ jurisdiction.[207]  The fact that a party has conducted litigation inefficiently or adopted a misguided approach will be relevant, but not determinative.[208]

   [207]MTGI Trust [2016] FCAFC 190, [8].

   [208]Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574, 582 [29]; [2008] FCAFC 143.

1. The notice of contention involves two issues. The first is the indemnity costs order made in connection with the notice to produce. We have referred to the notice to produce above. It was wholly misconceived, bordering on vexatious, for the applicant to seek to ventilate the merits of the respondents’ decision to suspend him from employment, in the context of assessing the damages caused by virtue of the undertaking not to terminate his employment. In our view, to serve the notice, persist in seeking to sustain it and cause costs to be incurred in doing so amounted to an ‘unreasonable act’ within the meaning of s 570(2)(b) of the FWA. That is especially so when it is recalled that the notice was served two weeks after the closing of the respondents’ case at the hearing of the State’s damages claim, and six days before the hearing was due to finish.[209]

   [209]Damages costs judgment [56].

1. The power under s 570(2)(b) of the FWA being enlivened, the matter becomes an ordinary exercise of the costs discretion, bearing in mind of course that the question arises in a ‘no costs’ jurisdiction. We agree with the associate judge that the case warranted a costs order on the indemnity basis.

1. The second aspect of the notice of contention concerns the offer of compromise. The offer was made under O 26 of the Rules. Since the matter is in federal jurisdiction, that order applies, if at all, by virtue of s 79 of the Judiciary Act, which relevantly provides that the laws of a State, including as to procedure, bind courts exercising federal jurisdiction in that State, except as otherwise provided by the Constitution or the laws of the Commonwealth.

1. Here, s 570 of the FWA ‘otherwise provides’. It provides for a ‘no costs’ presumption with limited exceptions whereas r 26.08 of the Rules attaches costs consequences to an unreasonable failure to accept an offer of compromise unless the court otherwise orders. Although the provisions both require an evaluation of the reasonableness of the conduct of the relevant party, they proceed on very different bases. So, r 26.08 requires the party to pay costs on the standard basis up to 11:00 am on the second business day after the offer was made, with indemnity costs after that time (unless the court otherwise orders), whereas s 570(2)(b) permits costs to be awarded where those costs have been incurred as a result of the unreasonable act (here, the failure to accept the offer). In that way, s 570(2)(b) operates prospectively, and subject to a requirement to establish causation. It ‘otherwise provides’ because r 26.08 applies to all costs, past and future, without imposing a causation test.

1. It follows that, to the extent that the notice of contention seeks to sustain the order that the applicant pay the respondents’ costs incurred before 11:00 am on the second business day after the offer of compromise was served, it cannot succeed.  Those costs, by definition, cannot have been caused to be incurred by the failure of the applicant to accept the offer.

1. We therefore turn to consider whether the order for indemnity costs to be paid in respect of costs incurred after that day can be upheld under s 570(2)(b) of the FWA.

1. The question is then whether the applicant’s failure to accept the offer of compromise was an ‘unreasonable act or omission’ that caused the respondents to incur those subsequent costs. The word ‘unreasonable’ in this context imports a higher standard than it does in the usual context of considering offers of compromise, including under r 26.08 of the Rules. That is because the treatment of offers of compromise takes into account the desirability of such offers acting as effective incentives to settlement. In contrast, the question of reasonableness under s 570(2)(b) of the FWA arises in the context of an exception to a ‘no costs’ rule which is intended to encourage parties to pursue their claims under the FWA.[210] Again, s 570 ‘otherwise provides’. Accordingly, r 26.08 had no application in this case.

   [210]Melbourne Stadiums (2015) 229 FCR 221, 255 [168]; [2015] FCAFC 20, citing Stratton Finance Pty Ltd v Webb (2014) 314 ALR 166, 180 [80]; [2014] FCAFC 110; Celand v Skycity Adelaide Pty Ltd (2017) 256 FCR 306, 342–3 [164]–[165], and the cases there cited; see also 325 [74], 344 [171]–[175]; [2017] FCAFC 222.

1. Be that as it may, in our opinion, it was not unreasonable, either according to the higher standard applicable under s 570(2)(b) of the FWA or as the term is used in r 26.08 of the Rules, for the applicant not to accept the offer.

1. More specifically, applying s 570(2)(b), it will be recalled that the offer was in the sum of $150,000 plus costs taxed on the standard basis. The offer therefore required the applicant to pay the respondents’ costs incurred to date. But, for the reasons set out above, s 570 of the FWA did not require him to pay those costs. No prior unreasonable act or omission was suggested that could have altered that position. The offer was made at a time when the respondents had incurred substantial legal expense, including in preparing affidavits and their outline of submissions for the hearing of the State’s damages claim. No figure was provided to the applicant to quantify the amount of those costs, which were plainly not negligible. Nor do we have any basis for doing so. In that context, we are not satisfied that it was unreasonable for the applicant not to have accepted an offer of $150,000 plus costs. He was not in a position to quantify that offer so as to compare it with the amount of $199,681.46 which, in the absence of some future unreasonable act or omission on his part, would be the total amount the State could recover if entirely successful in its damages claim. An educated guess might, rather, have suggested that the two figures would not have been far apart. But, in either case, the respondents have not discharged the onus of showing that s 570(2)(b) applied in this context.

1. The respondents’ notice of contention therefore succeeds only insofar as it seeks to sustain the costs order made with respect to the notice to produce.  Ground 3 is otherwise upheld.  Paragraph 2 of the associate judge’s order made on 21 April 2020 (which deals with the notice to produce) should not be disturbed but para 3 (which deals with the offer of compromise) should be set aside.

PART F: CONCLUSION

1. For the above reasons, we have reached the conclusions set out at [16] above.