Vinden v Wrong Fuel Rescue Pty Ltd
[2019] FCCA 1091
•1 May 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| VINDEN v WRONG FUEL RESCUE PTY LTD & ANOR | [2019] FCCA 1091 |
| Catchwords: PRACTICE AND PROCEDURE – Application for discovery – whether discovery in the interests of the administration of justice in a situation where pleadings may be re-opened and where scope of the documents is wide – application dismissed. |
| Legislation: Fair Work Act 2009 (Cth), ss.357, 550 Federal Circuit Court of Australia Act 1999 (Cth), s.45 Federal Circuit Court Rules 2001 (Cth), rr.1.05, 14.02, sch.3, pt.2 |
| Cases cited: Abrahams v Qantas Airways Limited (No 2) (2007) 210 FLR 314 |
| Applicant: | DAVID VINDEN |
| First Respondent: | WRONG FUEL RESCUE PTY LTD |
| Second Respondent: | YAN VAN DE VELDE |
| File Number: | PEG 461 of 2018 |
| Judgment of: | Judge Kendall |
| Hearing date: | 4 April 2019 |
| Date of Last Submission: | 4 April 2019 |
| Delivered at: | Perth |
| Delivered on: | 1 May 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr J Nicholas |
| Solicitors for the Applicant: | Nicholas Legal |
| Counsel for the Respondents: | Mr B Baker |
| Solicitors for the Respondents: | Gilchrist Connell |
ORDERS
The respondents’ application in a case dated 15 March 2019 be dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 461 of 2018
| DAVID VINDEN |
Applicant
And
| WRONG FUEL RESCUE PTY LTD |
First Respondent
| YAN VAN DE VELDE |
Second Respondent
REASONS FOR JUDGMENT
(As Corrected)
Before the Court is an application in a case filed by the respondents on 15 March 2019 that seeks the following declaration and order:
1. Pursuant to section 45(1) of the Federal Circuit Court Act 1999 (Cth), the Court declares discovery is appropriate in the interests of the administration of justice in this proceeding.
2.Pursuant to r 14.02(2)(b) of the Federal Circuit Court Rules 2001, by 2 May 2019 the applicant give disclosure in relation to the following classes of documents:
a. All tax returns filed by or on behalf of the applicant for financial years 2015/2016, 2016/2017 and 2017/2018.
b. All tax returns filed by or on behalf of David Christopher Sidney Vinden ABN 19 407 679 309 for financial years 2015/2016, 2016/2017 and 2017/2018.
c. Documents recording or evidencing or relating to the business and accounting records of David Christopher Sidney Vinden ABN 19 407 679 309 for financial years 2015/2016, 2016/2017 and 2017/2018.
d. Documents recording or evidencing or relating to services the applicant and/or David Christopher Sidney Vinden ABN 19 407 679 309 provided to or for any person or entity other than the first respondent in the period 1 January 2017 to 31 December 2018.
e. …
f. All tax invoices issued by the applicant and/or David Christopher Sidney Vinden ABN 19 407 679 309 in financial years 2015/2016, 2016/2017 and 2017/2018.
At the hearing of this application, the respondents advised that sub-paragraph (e) in the application was not pressed.
For the reasons which follow, the Court is not satisfied that it is in the interests of the administration of justice for a declaration for discovery and subsequent orders to be made. The respondents’ interlocutory application is, accordingly, dismissed.
Background
It is not necessary to outline in detail the background to this proceeding, save as follows:
a)the applicant, David Vinden, alleges that the first respondent, Wrong Fuel Rescue Pty Ltd, contravened a number of provisions of the Fair Work Act 2009 (Cth) (the “FW Act”) including, but not limited to, those relating to the National Employment Standards, general protections and record-keeping;
b)the applicant further alleges that the second respondent, Yan Van De Velde, is accessorily liable pursuant to s.550 of the FW Act;
c)by letter of engagement dated 15 May 2017, signed by the second respondent on behalf of the first respondent, the applicant was engaged as a roadside assistance mechanic; and
d)on around 2 June 2018, the applicant was “dismissed” from his employment. Broadly, the applicant claims that he was dismissed because he made a number of complaints about the conduct of his employer.
The Court has taken care not to use specific terms in describing the relationship between the applicant and the respondents as the respondents contend that the core issue in these proceedings is the precise nature of the working relationship (ie, whether it was that of employer-employee or independent contractor).
The applicant and the respondents have both filed an amended statement of claim and amended defence respectively. The matter proceeded to mediation before a Registrar of this Court and was unsuccessful. The respondents have now filed this application in a case seeking discovery of documents.
Categories
The respondents seek discovery of multiple categories of documents. At the hearing of this application in a case the respondents advised that they would be satisfied to limit those categories as follows:
a)Category 1 – all tax returns filed by or on behalf of the applicant for financial years 2015/2016, 2016/2017 and 2017/2018;
b)Category 2 – all tax returns filed by or on behalf of David Christopher Sidney Vinden ABN 19 407 679 309 for financial years 2015/2016, 2016/2017 and 2017/2018;
c)Category 3 – documents recording or evidencing to the business and accounting records of David Christopher Sidney Vinden ABN 19 407 679 309 for financial years 2015/2016, 2016/2017 and 2017/2018;
d)Category 4 – documents recording or evidencing services the applicant and/or David Christopher Sidney Vinden ABN 19 407 679 309 provided to or for any person or entity other than the first respondent in the period 1 January 2017 to 31 December 2018; and
e)Category 5 – all tax invoices issued by the applicant and/or David Christopher Sidney Vinden ABN 19 407 679 309 in financial years 2015/2016, 2016/2017 and 2017/2018.
Discovery
Section 45(1) of the Federal Circuit Court of Australia Act 1999 (Cth) (the “FCCA Act”) provides:
Interrogatories and discovery
(1) Interrogatories and discovery are not allowed in relation to proceedings in the Federal Circuit Court of Australia unless the Federal Circuit Court of Australia or a Judge declares that it is appropriate, in the interests of the administration of justice, to allow the interrogatories or discovery.
Rule 14.02 of the Federal Circuit Court Rules 2001 (Cth) (the “FCC Rules”) states that if a declaration is made pursuant to s.45 of the FCCA Act, the Court may make an order for discovery.
Overall, there is a reluctance in this Court to grant orders for discovery and interrogatories. Indeed, in Vanden Driesden v Edith Cowan University (2012) 226 IR 452, the Court referred to the power as one that is “rarely used”.
Section 45(1) of the FCCA Act is a general statutory prohibition on discovery.
Before granting a declaration under s.45 of the FCCA Act, the Court will specifically consider s.45(2). That section provides:
(2) In deciding whether to make a declaration under subsection (1), the Federal Circuit Court of Australia or a Judge must have regard to:
(a) whether allowing the interrogatories or discovery would be likely to contribute to the fair and expeditious conduct of the proceedings; and
(b) such other matters (if any) as the Federal Circuit Court of Australia or the Judge considers relevant.
In this Court, there appears to be a presumption that the “fair and expeditious conduct of the proceeding” does not require discovery: Devine Marine Group Pty ltd v Fair Work Ombudsman [2013] FCA 442 at [54]. That does not mean, however, that it will not ever be given.
To determine whether discovery will contribute to the “fair and expeditious conduct of the proceedings”, the Court will first consider the Court’s objects. These can be summarised as follows:
a)the Court should act as informally as possible in the exercise of judicial power;
b)proceedings should not be protracted;
c)the resolution of the proceedings should be achieved justly, efficiently and economically;
d)streamlined procedures should be used; and
e)the Court should seek to avoid undue delay, expense and technicality.
In relation to s.45(2)(b) of the FCCA Act, the Court notes that in Abrahams v Qantas Airways Limited (No 2) (2007) 210 FLR 314 at [25] (“Abrahams”) Federal Magistrate Lucev (as he then was) identified a non-exhaustive list of matters that may be considered “relevant” for the purposes of s.45(2)(b). His Honour highlighted the following matters:
(a) the relevance of any documents sought to be discovered;
(b) the volume of documents sought to be discovered;
(c) whether there is a court book containing relevant documents, and the extent to which relevant documents are included in the court book;
(d) whether discovery would narrow the issues;
(e) whether both parties seek discovery;
(f) whether there is consent to discovery;
(g) whether discovery is “of benefit” to the litigation; and
(h) the effect of discovery on litigants; especially vulnerable litigants.
Applicant’s submissions
The Court acknowledges that this is the respondents’ application for discovery. However, the submissions filed by the respondents on 25 March 2019 were lacking in detail. The applicant’s submissions, on the other hand, were informative and jurisprudentially sound.
It is thus useful for the Court to first refer to the applicant’s submissions opposing the orders for discovery.
The respondents filed submissions in response on 1 April 2019. These submissions were well written and clearly addressed the applicant’s core submissions. For ease of reference, this second set of responsive submissions are highlighted below after the Court’s summary of the applicant’s primary submissions.
The applicant’s submissions were as follows:
a)the respondents’ submissions in relation to relevance are misconstrued because the defence effectively admits that the applicant was an employee of the first respondent;
b)the respondents have pleaded a bare non-admission to paragraph 1 of the applicant’s statement of claim, without stating they do not know and therefore cannot admit the relevant facts. Consequently, there is a deemed admission by operation of r.16.07 of the Federal Court Rules 2011 (Cth) (“FC Rules”);
c)in relation to the second respondent, any privilege against exposure to a penalty has been waived by filing his defence (without asserting the privilege and making positive assertions of fact). Further, there is no issue as to r.16.07 of the FC Rules abrogating the privilege that he may have had if it was not waived;
d)the respondents have not otherwise directly pleaded in their defence that the applicant was an independent contractor. Rather, the only references in the defence to that status is in response to the sham contracting allegations made by the applicant in his claim. Even then, the allegations in the defence are only in relation to the parties intention and how they proceeded -- rather than legal status;
e)the respondents do not provide any particular justification for the categories they seek, other than the broad assertions in their submissions. Given the way the respondents have chosen to plead their defence, those assertions provide no basis for the Court to make the necessary declaration;
f)consequently, it is not in the interests of justice to order discovery in relation to an issue that is admitted by the respondents for the purposes of the proceedings;
g)any such discovery would be onerous for the applicant;
h)even if the Court considered that the documents relevant to the employment status of the applicant might be discovered:
i)none of the categories sought by the respondents are limited by reference to the applicant’s status as employee or independent contractor. Hence, under the proposed categories, documents would need to be discovered even where they had no relevance to that matter;
ii)the categories relate to periods of time outside of the employment alleged by the applicant; and
iii)as to the scope of each categories, all documents in the category would need to be discovered whether or not they were relevant to the status of the applicant as an employee as there is no submission to the effect that the documents in each category would be limited to employment status; and
i)ordering discovery in relation to the categories sought would not contribute to the fair and expeditious conduct of the proceeding.
At the hearing of this application, Mr Nicholas for the applicant emphasised that the respondents had admitted in their defence the very position they were now seeking the discovery documents for the purpose of establishing the contrary of – that is, the respondents were seeking discovery of documents that went to the applicant being an independent contractor, when the defence admitted he was an employee.
Mr Nicholas submitted that, even if the respondents made an application for leave to amend the defence, and even if that leave were granted, the Court can only base its decision on what is before it. What is before it is an admission that the applicant was an employee.
Respondents’ submissions
In relation to the issue of whether the documents sought are relevant, the respondents submitted as follows:
a)a discovery application is not an appropriate forum for the applicant to raise pleading points or the question of penalty privilege and the respondents object to making any further submissions on these matters unless otherwise ordered by the Court;
b)the respondents deny the suggestion that the defence effectively (or otherwise) admits that the applicant was an employee of the first respondent and or that the second respondent has waived penalty privilege;
c)the Court must first make findings about whether the applicant was an employee employed or an independent contractor engaged by the first respondent, which is a question of law;
d)paragraphs [12] and [13] of the defence clearly discuss the legal status of the applicant which the respondents dispute. Hence, this must be resolved by the Court;
e)with regard to resolving the issue of the relationship between the applicant and respondents:
i)the matters discussed in Tattsbet Ltd v Morrow [2015] FCAFC 62 at 70 (“Tattsbet”) justify Categories 1, 2 and 5;
ii)Categories 3 and 4 are justified when regard is had to the relevance of whether a person is running a business: On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3) [2011] FCA 366 at [207]-[216] (“On Call”); and
iii)in determining whether the applicant is an independent contractor or employee the following is relevant:
·does the applicant employ or engage persons other than the owner/operator to carry out its economic activities;
·is goodwill (name, brand and reputation) being created by the economic activities of the applicant;
·is the applicant promoted as a business to the public through advertising or other promotional means; and
·does the applicant have tangible assets such as buildings and equipment which are utilised to support its economic activities; and
f)discovery of the categories of documents sought by the respondents is appropriate as without such the Court will not have before it all material relevant to the Court’s considerations.
The respondents’ submissions concerning the scope of the documents and the justification for the documents can be summarised follows:
a)the documents in the categories go to the heart of the central question before the Court and do not need to be artificially limited;
b)to limit the categories would effectively allow the applicant to determine whether he was an employee or an independent contractor;
c)it would, at best, be artificial and, at worst, grossly unfair to the respondents to enable the applicant to self-determine what documents were relevant;
d)the applicant pleads he was an employee of the first respondent between 15 May 2017 and 2 June 2018 and the discovery categories encompass documents during those time periods;
e)those documents sought for the period preceding the periods of the time of the alleged employment will tend to evidence whether the applicant was running his own business before his engagement with the first respondent and inform the Court as to whether he was an independent contractor of the first respondent during the period of alleged employment; and
f)whether the applicant was, during his period of alleged employment, also offering and or providing services to, and or invoicing, others is relevant to whether he was running a business – thus justifying Category 5.
In arguing that discovery would not be onerous or prevent the expeditious conduct of the proceeding, the respondents further contended:
a)the applicant has not provided any evidence to support the assertion that discovery would be onerous. As such, there is no basis for the Court to make that finding. In any event, the provision of these documents would not be onerous for the applicant given the limited scope of the request;
b)the applicant has not provided any evidence to support the assertion that discovery would not contribute to the fair and expeditious conduct of the proceeding;
c)discovery of the documents sought is likely to contribute to the expeditious conduct of the proceeding because it may narrow the issues in dispute and will reduce the prospect of the respondents making an application for specific discovery and/or subpoenas; and
d)critically, if the respondents are found to have contravened s.357(1) of the FW Act, the documents would also be relevant to the question of quantum of any penalties to be imposed. To then require the applicant to give discovery of the documents would cause delay to the proceedings, increasing legal costs for the parties and hampering the ability of the Court to produce judgments in a timely manner.
The Court was greatly assisted by Mr Baker for the respondents and Mr Nicholas for the applicant. Both lawyers are able advocates with a solid understanding of the law relevant to matters of this sort. The Court thanks them for the clarity of their oral advocacy and the assistance they provided the Court.
The Court initially expressed some concerns in relation to the scope of the documents sought and the relevance of some of these documents.
Mr Baker referred to the categories as “tangentially relevant” to the proceedings. Mr Nicholas then argued that this was “a concession”. The Court does not see it this way. The reference may have been made, but the Court does not believe Mr Baker’s intention was to submit or concede that the documents were of minimal or no relevance; rather, his statement was more akin to poor linguistics or a slip of the tongue.
Mr Baker also noted that the respondents anticipate they will be seeking to amend the defence.
Mr Baker acknowledged that the proposed amendment was – in some respects – a matter that was of some significance against the Court granting the declaration and order sought. Nonetheless, he pressed that discovery was still in the interests of the administration of justice and argued that the Court ought to keep in mind that a further amended defence, if given leave, will dissipate what (although not conceded) might be seen as an admission.
Consideration
The “fair and expeditious conduct of the proceedings”
In orders made by the Court on 5 March 2019, the Court programmed the matter for final hearing on the issue of liability. Order 5 provided that the matter was not to be listed for hearing on a date before 23 September 2019. The applicant is required to file and serve his evidence by 19 June 2019; the respondents by 29 July 2019.
This Court is now listing well into late 2020. Unless something fairly significant occurs to alter the composition of the Court in Perth, it is possible this matter will not be heard until late 2020 or early 2021. This is, of course, unacceptable and arguably undermines the Court’s very reason for being. That, however, is an issue for the government of the day. There is little the Court can do to assist in that regard, despite the concerted efforts of its judges and those who assist them.
With this in mind, to the extent to which the proceedings may be delayed because any discovery orders might result in an inability to meet the deadlines for the filing of affidavit evidence, the Court does not believe this would be unduly prejudicial. The timeframe for the filing of evidence can be extended and will still provide sufficient opportunity for both parties to identify and prepare their evidence.
The Court notes the applicant’s submissions that, given the width of the request, the work and time expended to collate these documents (including, as Mr Baker acknowledged, the need to contact and work with the applicant’s accountant) carries some weight against allowing the discovery request. While the Court cannot speculate as to any costs incurred, it does not doubt that there will be an expense of some sort and it may well be significant given the number of documents being sought.
In Briggs-Smith v Moree Plains Shire Council [2012] FMCA 304 at [34]-[35] (“Briggs-Smith”), Turner FM stated:
34. Judgments in this Court have emphasised the rare circumstances in which processes of formal discovery will be directed. In this Court, it is usual for evidence to be presented in advance of hearings, by way of affidavit, including the foreshadowing of documentary tenders, and for any additional documents required to be tendered by a party to be procured by way of focused subpoenas and notices to produce. Those processes are far less expensive than processes of discovery, requiring the taking of detailed instructions, preparation of verified lists, and processes of inspection etc.
35 I am not at all persuaded that the present case cannot proceed fairly, expeditiously, and with a reasonable level of costs, without an order for discovery, even of the limited kind now pressed.
No affidavits have been filed in this proceeding. Notwithstanding that the respondents have foreshadowed that they may amend their defence (and thereby, arguably, address any deemed admission on their part), the Court can only focus on what it has before it. And what the Court has before it is an admission in the defence filed that the applicant was an employee.
The submissions and authorities the respondents refer to correctly outline the relevant considerations the Court must take into account to determine whether individual is an employee or an independent contractor. However, if this is currently not in issue before the Court because of the way the pleadings are pleaded, then the application for discovery should fail.
At paragraph 1 of the applicant’s statement of claim it is stated:
1. The applicant:
1.1. was an employee of the First Respondent between 15 May 2017 and 2 June 2018;
…
In their defence, the respondents state:
1. The respondents do not admit paragraph 1.
The applicant has referred to r.16.07 of the FC Rules, which provides:
16.07 Admissions, denials and deemed admissions
(1) A party pleading to an allegation of fact in another party’s pleading must specifically admit or deny every allegation of fact in the pleading.
(2) Allegations that are not specifically denied are taken to be admitted.
(3) However, a party may state that the party does not know and therefore cannot admit a particular fact.
(4) If a party makes a statement mentioned in subrule (3), the particular fact is taken to be denied.
Note: This rule requires a party to address each material fact pleaded in an opposing party’s pleading. A general denial or an evasive answer will not be sufficient.
The Court notes that the previous Federal Court Rules 1979 (Cth) O.11 r.13 provided that a party could plead a “specific non-admission”. The fact that the rules were amended so as to require a party to specifically admit or deny is significant.
In Australian Competition and Consumer Commission v Air New Zealand Ltd (No 6) [2012] FCA 1480 at [6] (“Air New Zealand”) Justice Perram stressed:
…[P]arties are now required to admit or deny allegations with the possibility of non-admission being reserved to those occasions where a party lacks sufficient knowledge to admit or deny.
Rule 16.07 of the FC Rules is applicable by virtue of r.1.05(2) and sch.3, pt.2 of the FCC Rules. Mr Baker conceded there was an issue with the defence in this respect and, as addressed above, he indicated that his instructors intended to amend the defence.
It is apparent that by their defence as it now stands, the respondents do not deny that the applicant was an employee; rather, they state that they “do not admit”. By virtue of r.16.07(2) of the FC Rules, the respondents are deemed to admit the allegation made.
A submission was made by the respondents that on the basis of the materials and information before the solicitor who prepared the defence, he could not admit or deny the allegation. He thus made a “non-admission”.
Pursuant to r.16.01 of the FC Rules, in order for the defence to be accepted, the solicitor in question was required to certify that he had a proper basis on the factual and legal material before him to make the non-admission. Arguably, the solicitor here had an insufficient basis on the factual and legal material before him to “deny” or “admit”; hence, he resorted to what he believes is a “non-admission”.
The respondents do not state that they “do not know and therefore cannot admit”. Whether saying “do not admit” is sufficient for r.16.07(3) of the FC Rules or an “evasive answer” is a matter that is not entirely clear. However, given the amendments between the 1979 and 2011 Rules, the Court is prepared to find that a bare “do not admit” is insufficient to enliven r.16.07(3) and is, therefore, a deemed admission.
Overall, the respondents are deemed to have admitted that the applicant was an employee. In these circumstances, the documents requested are currently of no relevance to the proceedings as currently pleaded.
In this context, the fact that an amendment might occur is irrelevant. Thus far, no amendment is before the Court and it is not entirely clear what that amendment might look like and what effect it will have on the litigation generally.
The Court cannot order discovery on the basis of what might occur. That is a slippery slope that would set an unwelcome precedent.
In this regard, the Court notes and agrees with Lucev FM in Abrahams at [38], wherein His Honour writes:
…it is not properly possible to finally ascertain what the relevant issues are, and therefore to finally determine to what extent, if any, a declaration of discovery might be in the interests of the administration of justice, until such time as all affidavits are filed. Once that is done it may be that the applicant can formulate a request for discovery which warrants a declaration.
In the circumstances of this case, where a great deal more may or may not occur in relation to arguments as to what the case is or is not actually about, it is not in the interests of the administration of justice, or necessary for the fair and expeditious conduct of the proceeding, to make the declaration now sought.
The Court is not satisfied s.45(2)(a) of the FCCA Act weighs in favour of the granting the respondents the orders they seek.
Other relevant considerations
Having referred (by reference to Abrahams at [25]-[26]) to the non-exhaustive list of factors that may be relevant when considering s.45(2)(b) of the FCCA Act, the Court now considers if any other matters outweigh the Court’s lack of satisfaction that s.45(2)(a) has been met.
Even if the Court were to proceed on the basis that an admission had not been made in relation to the applicant’s employment status, the Court still holds broad reservations as to whether an order for discovery is in the interests of the administration of justice. These concerns weigh heavily against granting the orders sought.
Assuming the Court did proceed on the basis that there was a broad issue as to whether an employee relationship existed or whether an independent contractor relationship existed, applying the principles outlined by Justice Bromberg in On Call (at [221]-[222]), it falls on the respondents to satisfy the Court that the applicant was engaged as an independent contractor. Arguably, the documents requested would be “relevant” to the substantive matter as amended.
Nonetheless, relevance alone is insufficient to warrant a declaration under s.45(1) of the FCCA Act: Abrahams at [22].
Before this Court, the respondents referred to a number of authorities that emphasised that it was “impossible to ignore taxation… the taxation implications of the mode of operation which parties to a relationship have voluntarily adopted: Tattsbet at [70]. It was submitted that, therefore, Categories 1 and 2 are relevant and necessary.
The Court agrees, but notes that in ACE Insurance Ltd v Trifunovski [2013] FCAFC 3 at [37] Buchanan J highlighted:
It is also difficult, in my view, to give much independent weight to arrangements about taxation, or even matters such as insurance cover or superannuation. These are reflections of a view by one party (or both) that the relationship is, or is not, one of employment. For that reason, in my view, those matters are in the same category as declarations by the parties in their contract (from which they often proceed). They may be taken into account but are not conclusive. These matters are less important than the adoption by the parties (where this occurs) of rights and obligations which are fundamentally inconsistent with basic requirements of a contract of employment, such as the ability to delegate the discharge of obligations under a contract to another person, or where there is a lack of control over how work is done.
These principles were recently referred to with approval in Moffet v Dental Corporation Pty Ltd [2019] FCA 344 by Flick J (at [70]) who stressed that care should be taken before too readily drawing inferences from tax returns.
The respondents seek the documents outlined in Category 1 and Category 2 over three consecutive financial years.
That the applicant may have been engaged as an independent contractor prior to his engagement with the respondents does not warrant an order for him to provide evidence that might indicate this.
As to Category 3 and Category 4, in On Call (at [286]) Bromberg J noted that the absence of a provision requiring exclusivity is not necessarily indicative of someone being an independent contractor.
In the Court’s view, the applicant may well have (and, by reference to the respondents’ defence, may have been encouraged to) undertaken work outside of that offered by the respondents.
Categories 3 and 4 are incredibly broad – even taking into account that the respondents initially (though have now conceded they will not) seeking documents “relating to” the business and accounting records and services provided to or for any person other than the respondents.
Modern day business management, even in a small business, requires the compiling of large volume of business records, much of which would not be relevant to establishing the legal status of the applicant here.
That a third party (here, an accountant) may be required to assist with identifying and collating any of the documents broadly sought also weighs against granting the orders sought as any requirement that he do so goes against the Court’s objectives of proceeding efficiently and economically.
The respondents’ defence pleads that they required the applicant to submit invoices and paid the applicant on receipt of those invoices. In seeking all tax invoices (Category 5) over three consecutive financial years, the respondents are likely to receive a significant number of documents it ought to have in its possession already. To the Court, the broad request sought appears onerous and inefficient.
At [7] of the respondents defence it is stated:
a. clauses 5.2 and 9 of the Written Agreement referred to the applicant as a contractor;
b. clause 5.2 of the Written Agreement required the applicant to make his own superannuation payments;
c. the first respondent did not withhold any tax for the applicant;
d. in accordance with his job description, the applicant was required to and did submit invoices for his work with his own Australian Business Number. Payment was made to the applicant upon receipt of the invoice, not on a set pattern;
e. the first defendant allowed and encouraged the applicant to engage employees or apprentices to perform the work;
f. the first respondent encouraged the applicant to take up other work outside of the first respondent and the respondents acknowledged that the applicant was offering his services to persons or entities other than the first respondent; and
g. the first respondent permitted the applicant to delegate the services to a subcontractor and/or his own staff.
All of these matters are matters which can be the subject of affidavit evidence. The respondents are at liberty to lead evidence of any agreement, whether taxation was withheld, how the applicant was paid, where, how and in what context the respondents encouraged the applicant to offer his services elsewhere and examples of when the applicant delegated his services to a subcontractor.
The respondents ought to have records of these matters (indeed, they are arguably required to keep them for workplace safety and insurance and risk management purposes).
At present, the respondents do not need an order for discovery in order to meet the case against them. The Court is not satisfied that any prejudice or disadvantage will arise if they are not granted the broad order for discovery they now seek.
In response to the submission that there has been no evidence led by the applicant that the discovery would be onerous and that it would not contribute to the fair and expeditious conduct of the proceeding, with respect, that submission is misplaced. It is not for the applicant to establish discovery should not be granted. Rather, it is for the respondents to establish that it should be. In doing so, they bare a heavy onus. In effect, they must satisfy the Court that it should exercise a “rarely used” discretion.
Finally, at [29] of the applicant’s written submissions it is stated that the documents:
(a) …may narrow the issues in dispute; and
(b) …will reduce the prospect of the Respondents making application for specific discovery and/or subpoenas.
The Court observes as follows:
a)the fact that the documents, if provided, “may” narrow the issues in the dispute does not encourage the Court to exercise a rarely used discretion. This statement simply indicates that the respondents are hoping the documents will be of some assistance to their position – not that the Court’s overriding objectives will be satisfied;
b)discovery in this Court is a “pared back” version of traditional discovery. Given the high threshold imposed by s.45 of the FCCA Act, it would have been beneficial had the respondents made their application as “specific” as possible in order to satisfy the Court that a declaration was warranted; and
c)as per Turner FM in Briggs-Smith, this Court stresses that focussed subpoenas and notices to produce, being less expensive, are the preferred manner for parties to seek to exchange or inspect documents unless a strong case can be made to bypass this process. No such case exists here.
For the reasons outlined above, the Court is not satisfied there are any other “relevant considerations” as per s.45(2)(b) of the FCCA Act that warrant a declaration under s.45(1) of the FCCA Act. Rather, having assessed the arguments as whole, the Court finds that any other considerations weigh against the granting of the declaration and orders sought.
Conclusions
The Court is not satisfied that a declaration for discovery under s.45 of the FCCA Act is warranted in the circumstances.
It follows that without such a declaration, the orders sought pursuant to r.14.02 of the FCC Rules cannot be made.
The respondents’ interlocutory application must, accordingly, be dismissed.
This does not preclude the Court, at a later stage, from entertaining a further application, or, once the evidence is filed, making a declaration on its own motion (FCC Rules, r.14.02(1)).
As a final observation, the Court wishes to emphasise to the parties that they are encouraged in proceedings before this Court to adopt a “show and tell” attitude with respect to the exchange of documents. Attempts to engage in a strategy of “hide and seek” are not well received and rarely productive.
I certify that the preceding eighty (80) paragraphs are a true copy of the reasons for judgment of Judge Kendall
Associate:
Date: 13 May 2019
CORRECTIONS
Coversheet, page 1, Applicant name – delete “Daniel” add “David”.
Paragraph 4(a), line 1 – delete “Daniel” insert “David”.
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