Carbone v James McConvill and Associates Pty Ltd

LOGAN J: 1 The present application is a sequel to orders made by Collier J on 19 August 2019. At that time, her Honour ordered: 1. The date for compliance by the Respondents with Orders 1 and 2 made by the Court on 16 July 2019 be extended to 4.00pm on 26 August 2019. 2. If the Respondents do not comply with Order 1 of these Orders: (a) The Respondents' Further Amended Defence be struck out; and (b) Judgment be entered in favour of the Applicant. 3. The Applicant file any application for a formal Order giving effect to Order 2 of these Orders by 4.00pm on 30 August 2019. 4. The Respondents pay the Applicant's costs of and incidental to this interlocutory application and the case management hearing on an indemnity costs basis, in a lump sum payment to be fixed by the Registrar and paid forthwith. 2 Those orders were made that day for reasons set out at some length by her Honour in reasons for judgment: see Carbone v James McConvill and Associates Pty Ltd [2019] FCA 1305. 3 These reasons for judgment must be read in conjunction with those delivered by her Honour that day. As is apparent from order 2 of the orders made by her Honour, they have a conditional, but self-executing, quality about them. The question for resolution today, it seems to me, is nothing more than whether or not there has been non-compliance with order 1 of the orders made by her Honour on 19 August 2019. Those orders must be read in conjunction with earlier orders, in particular, with an order made by her Honour on 16 July 2019, which provided: 1. The Respondents comply with the Orders of 5 March 2019, 28 May 2019 and 28 June 2019 regarding discovery within 14 days of the date of these Orders. 2. The Respondent file and serve a further amended defence within 7 days of the date of these Orders. 3. The Applicant file and serve any reply to the further amended defence within 21 days of the date of these Orders. 4. The Respondents pay the Applicant's costs of and incidental to this application and the case management hearing on an indemnity costs basis, in a lump sum payment, to be fixed by the Registrar and paid forthwith. 4 The orders of 16 July 2019 reveal in order 1 an earlier interlocutory history. The long and the short of that history is that there has been an enduring controversy as to whether the respondents have complied with their discovery obligations and, it might be said, an enduring conclusion as to recalcitrance on the part of the respondents in that regard. Mr Carbone submits that each of the conditions for default judgment in accordance with the order of 19 August 2019 has been met. It is convenient to consider the questions of compliance in relation to the further amended defence and discovery separately. 5 As to the further amended defence, the Court's records disclose that a further amended defence was lodged at 3.27 pm on 26 August 2019. An unsealed version of that was sent by email to Mr Carbone at 3.59 pm that day. The respondents had second thoughts about the adequacy of that further amended defence, lodging a further document entitled "Further Amended Defence" at 4.13 pm on 26 August 2019. That, of course, is later than the time prescribed in the order of 19 August 2019. It seems to me, though, that the question of compliance so far as it relates to the filing of the further amended defence should be measured by reference to that lodged on 26 August 2019 at 3.27 pm. 6 Under r 2.25(1) of the Federal Court Rules 2011 (Cth) (Rules), a document is filed with the Court if two conditions are met. The first is that it has to have been lodged in accordance with r 2.21(1). Secondly, it has to have been accepted in the proper Registry as being stamped as "filed". Rule 2.25(3) provides that if a document is sent electronically and accepted under r 2.25(1), it is taken to have been received on a given business day if the whole document has been received by 4.30 pm on that day and, otherwise, on the following business day. The temporal specification in r 2.25(1), namely 4.30 pm, must be read subject to the specification in the orders made on 19 August 2019, which required filing and service by 4.00 pm on 26 August 2019. As to r 2.21(1), a document is lodged in accordance with that rule if, materially, it is sent by electronic communications to a registry in accordance with r 2.23. Rule 2.23(3) provides that a document is sent to the Registry using the Court's website and thus, by what is known as the Commonwealth Courts Portal, the latter being the practitioner accessible part of the Court's electronic court file. 7 The long and the short of that excursion through the Rules in relation to filing is that it seems to me that the further amended defence was filed before 4.00 pm electronically in the sense that it was lodged in the Registry. The Court's records further disclose that there was a lag in the listing of the document as being received. But in the context of a default order for judgment, I do not regard that lag as pertinent. 8 The sealed version was not served before 4.00 pm on 26 August 2019. Instead, what is conceded to be an exact copy of that which was filed was sent electronically. 9 In my view, in relation to the construction of this default order, one should look as to the substance rather than the form of compliance or non-compliance. It has been said that in relation to the service of an unstamped copy of a document that this may "be excused": Chelring Pty Ltd v Coombs [2000] WASC 60 at [9] per Master Sanderson. In this state, Queensland, the approach has been that non-compliance will be found if the failure does not, "reflect the original in a matter of substance": see LJAW Enterprises Pty Ltd v RJK Enterprises Pty Ltd [2004] QSC 134 at [9] per Holmes J, as she then was; see also Cooloola Dairys Pty Ltd v National Foods Milk Ltd (2004) 211 ALR 293 at [32] - [35] per Chesterman J. 10 So I am not persuaded that there has been non-compliance with the requirement for the filing of a further amended defence. True it is that the respondents have had second thoughts about the adequacy of what was filed, but that is a matter which ought to have been the subject of an application for leave further to amend, preceded, one might have hoped and expected, by the sending of a proposal to Mr Carbone to consent to the making of such an amendment. That the respondents did have occasion further to reflect upon the adequacy of what was filed within time does though intrude upon the approach to take, in my view, in relation to whether to regard what has occurred in relation to discovery as compliance. 11 So too does the foreshadowing orally of a cross-claim based on an alleged overpayment made today by the respondents by their counsel. And that, without the sending to the applicant of any draft of a proposed costs claim. Each of these stances intrudes upon a question which has formed, in my mind, in succession to that so obviously formed by Collier J in her reasons for judgment of 19 August, as to whether the respondents have appreciated either adequately or at all the obligations found in s 37M of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act) and the basal proposition that Court orders are not aspirational statements. 12 As to the further amended defence, Mr Carbone raised questions as to the adequacy, in any event, of that which was filed. I am not persuaded that the defence which was filed before 4.00 pm was so inadequate as to amount to noncompliance. 13 I turn then to the question of the compliance or otherwise with the discovery obligation. The list of documents was filed at 3.57 pm. For reasons which I have given in relation to the defence, it seems to me that it was filed in time and at least in substance served within the time limited by the order of 19 August. However, it was not a list which complied with the requirements of the Rules. As to r 20.17(2), there are many instances in the filed list which evidence a failure to discover at all or identify properly specified periods or dates for categories of documents. This was a requirement for compliance with order 1 of the orders made on 19 August. 14 As to r 20.17(2)(b), in Part 3 of the list, the second respondent affirms in the "Date of Document" column that he is unsure of the date each document was last in the respondent's control. In "What Became of the Document", the second respondent deposes that he cannot account for what became of them. The exception to this is at paragraph 18, where he affirms that emails, text messages and "leads rosters" for the period "1 July 2015 - 31 March 2017 are currently being obtained from Accountant and will be discoverable as soon as we receive" [sic]. 15 In a later affidavit made by him and filed on 12 September, the second respondent deposes at paragraph 4(b), that in part 3, paragraph 18, under the heading "What Became of Documents", the following wording should have been deleted: 1 July 2015 - 31 March 2017 will be obtained from accountant and will be discoverable as soon as we receive. 16 He then states: I confirm that the Respondents have now discovered their documents received from the Accountant. There are no documents which have been but are no longer in the control of the First and Second Respondents and, therefore no documents to be listed under Part 3 of the List of Documents. 17 So there is, then, an acknowledgement by the second respondent of the inadequacy of the list. Yet further in that list lodged on 26 August: paragraph 5 appears twice; paragraph 12 is missing; paragraph 13 appears twice, with one paragraph 13 having a strikethrough; paragraph 17 appears twice, with one paragraph 17 having a strikethrough; and paragraph 18 appears twice, with one paragraph 18 having a strikethrough. That strikethrough method is apt for pleadings, but a pleading in terms of the Rules does not include a list of documents. 18 In my view, there is substance in Mr Carbone's submission that the list as filed does not comply with the Rules and that it is not possible to say with certainty which categories of documents have been discovered as the respondents were required to do in accordance with order 1 of the 19 August orders. 19 Of course, it might be said that the respondents have done their inadequate best. It is certainly a strong thing for default judgment to go on the basis of noncompliance, thereby shutting respondent parties out from a trial on the merits. That sentiment, though, must be tempered not only by s 37M of the Federal Court Act but also by observations made about the need for cost effective use of public resources in the judicial branch of government, being, itself, a consideration beyond just that of the interests of the parties: see UBS AG v Tyne (2018) 92 ALJR 968. 20 Looking back over the history of this particular case in its case management, the view which I have reached is that the respondents are either unable or unwilling to comply with the requirements of responding to a case in accordance with this Court's Rules and their obligations under s 37M of the Federal Court Act. My conclusion is that there has, as to the orders made on 19 August 2019, been non-compliance with so much of the order as required the filing and service of a list of documents. The consequence of non-compliance is specified in the order of 19 August 2019 at order 2. It is not for me to revisit that order; rather, it is for me, upon being satisfied, as I am, with noncompliance with order 1 of the order of 19 August, to give effect to order 2. That being the case, the orders are in terms of order 2. 21 In terms of the consumption of the resources of this Court, what would remain would be the assessment of penalty and damages. This case has already occupied too much of this Court's time. The Court shares concurrent jurisdiction with the Federal Circuit Court of Australia (Federal Circuit Court) in relation to the assessment of penalties. The parties are at one that it is unlikely that the case as to assessment of damages and penalty would take any more than one or perhaps two days. The case is, therefore, one apt for the Federal Circuit Court. For the avoidance of doubt, I should indicate that the assessment of damages and penalty is all that is remitted. 22 It necessarily follows from judgment being entered in favour of the applicant that the respondents are foreclosed from the filing or application for the filing of any cross-claim. The time for the making of an application for a cross-claim was well before today. That the respondents, even at the last moment, could do no more than foreshadow the prospect of an oral application is eloquent as to why it is there should be no opportunity further for them to agitate any question as to overpayment. All that remains is an assessment of penalty and damages. 23 As to costs, Mr Carbone has yet again been put to the expense by the respondents of having to come to Court on an interlocutory application to seek that which he was entitled to expect at the outset, namely, compliance by the respondents not just with the Rules, but also with their obligation under s 37M of the Federal Court Act. 24 It will be apparent from the reasons for judgment above that, in my view, the respondents have conducted themselves unreasonably such that, insofar as it intrudes, s 570(2) of the Fair Work Act 2009 (Cth) is applicable in this case. There should therefore be an order for costs, to be taxed on an indemnity basis. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.