Chyb v Commonwealth Scientific and Industrial Research Organisation

AND: COMMONWEALTH SCIENTIFIC AND INDUSTRIAL RESEARCH ORGANISATION

JUDGE: FOSTER J DATE OF ORDER: 17 august 2012 WHERE MADE: sydney VIA VIDEO LINK TO CANBERRA (HEARD IN CANBERRA)

1. GRANTS leave to the respondent to file and serve by 22 August 2012 its Further Amended Defence in accordance with the document marked "MFI-2" referred to in Reasons for Judgment delivered by Foster J on 17 August 2012.
2. ORDERS that, by 29 August 2012, the applicant file and serve any Reply to the respondent's Further Amended Defence.
3. ORDERS that, by 31 August 2012, each party provide further discovery by filing and serving a verified list of documents in respect of the matters raised in paragraphs 27 to 30 of the Further Amended Defence (the misconduct allegations).
4. ORDERS that, by 14 September 2012, the applicant file and serve any further evidence-in-chief upon which he intends to relay at the final hearing and the respondent file and serve any further affidavits in respect of the misconduct allegations.
5. ORDERS that, by 28 September 2012, the respondent file and serve any further evidence-in-chief upon which it intends to rely at the final hearing and the applicant file and serve any answering affidavits in respect of the misconduct allegations.
6. ORDERS that, by 12 October 2012, the applicant file and serve any further evidence in reply and the respondent file and serve any affidavits in reply in respect of the misconduct allegations.
7. ORDERS that the parties confer in an endeavour to be in a position to file and serve by 31 October 2012 an Agreed Statement of Issues in this proceeding and in proceeding ACD 12 of 2011, failing which, each party is to file and serve his or its proposed Statement of Issues.
8. ORDERS that the proceeding be listed for directions at 9.15 am on 9 November 2012 before the ACT List Judge. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY GENERAL DIVISION ACD 12 of 2011

AND: COMMONWEALTH SCIENTIFIC AND INDUSTRIAL RESEARCH ORGANISATION

JUDGE: FOSTER J DATE: 17 AUGUST 2012 PLACE: SYDNEY via video link to canberra (HEARD IN CANBERRA)

REASONS FOR JUDGMENT 1 Dr Sylwester Chyb is a former employee of Commonwealth Scientific and Industrial Research Organisation (CSIRO) whose employment with CSIRO was terminated on 4 January 2011 in circumstances which have now become controversial as between Dr Chyb and CSIRO: So much so, that Dr Chyb has brought two separate actions in this Court against CSIRO (proceeding ACD 12 of 2011 and proceeding ACD 14 of 2011). Dr Chyb and CSIRO are the only parties to those proceedings. 2 In the first of these proceedings, which was commenced on 1 March 2011 (the contract proceeding), Dr Chyb claims damages for breach of his contract of employment. He also claims damages pursuant to s 82 of the Trade Practices Act 1974 (Cth) (the Trade Practices Act) by reason of alleged contraventions by CSIRO of s 52 and s 53B of that Act. The gravamen of Dr Chyb's case under the Trade Practices Act is that CSIRO made a number of representations to him prior to his taking up employment with CSIRO which were misleading or deceptive or which were likely to mislead or deceive. 3 In the second of these actions, which was commenced on 21 April 2011 (the adverse action proceeding), Dr Chyb claims compensation pursuant to s 545(2)(b) of the Fair Work Act 2009 (Cth) (the Fair Work Act). In the adverse action proceeding, Dr Chyb contends that he was dismissed by CSIRO in contravention of certain general protections afforded to him under the Fair Work Act. He says that he was the victim of adverse action: (a) For exercising workplace rights; (b) Arising from discrimination due to a mental disability; and (c) Following a temporary absence due to illness. Dr Chyb relies upon ss 340, 341, 342, 351, 352 and 545 of the Fair Work Act. 4 Both sets of proceedings have been before the Court on several occasions. A Court-annexed mediation was conducted in June 2011. It is highly likely that both sets of proceedings will be heard at the same time, with the evidence adduced at that concurrent hearing being evidence in both sets of proceedings. 5 Both sets of proceedings are to be tried on pleadings. In each proceeding, CSIRO has amended its Defence on one occasion. In the contract proceeding, Dr Chyb filed an Amended Statement of Claim on 6 July 2012 pursuant to leave granted by me on that day. So far, 12 affidavits have been filed in each proceeding - five on behalf of Dr Chyb and seven on behalf of CSIRO. The 12 affidavits filed in proceeding ACD 12 of 2011 are the same 12 affidavits as have been filed in proceeding ACD 14 of 2011. 6 No hearing date has yet been fixed for the hearing of either proceeding. 7 In late July 2012, as previously foreshadowed by it to Dr Chyb, CSIRO notified its intention to seek the leave of the Court to amend its Defence further in both the contract proceeding and in the adverse action proceeding. Dr Chyb refused to consent to either amendment. 8 On 10 August 2012, I heard argument directed to CSIRO's application for leave to amend its Defences. On that day, after the argument had concluded, I informed the parties that I proposed to grant leave to CSIRO to file a Further Amended Defence in each proceeding in the form sought by CSIRO and to make consequential directions along the lines of the directions sought by CSIRO. I also informed the parties that I proposed to order CSIRO to pay Dr Chyb's costs of and incidental to its amendment applications and also to pay Dr Chyb's costs thrown away by the making of the amendments. 9 These Reasons for Judgment support the orders which I now make in respect of CSIRO's amendment applications.

The Proposed Amendments 10 I will mark the proposed Further Amended Defence in proceeding ACD 12 of 2011 as MFI-1 and the proposed Further Amended Defence in proceeding ACD 14 of 2011 as MFI-2. 11 By his Amended Statement of Claim filed in the contract proceeding, Dr Chyb introduced a new par 18A into that pleading. That paragraph is in the following terms: 18.A The Employment Contract provided that the Applicant's employment would be for an indefinite period and could be terminated only on the grounds of misconduct, incompetence, becoming excess to the CSIRO's staffing requirements or invalidity. That allegation was repeated in par 63(a)(i) of that pleading. The introduction of that allegation placed a new and very different complexion on the terms of Dr Chyb's employment. 12 Other amendments are sought to be made by means of Dr Chyb's Amended Statement of Claim but they are not presently relevant. 13 Apart from certain minor amendments, there are four discrete matters of substance covered by the proposed amendments about which Dr Chyb complains. I shall deal with these four matters in turn. 14 First, in the contract proceeding, CSIRO wishes to withdraw the admission which it had previously made to the effect that CSIRO is a trading corporation within the meaning of the Trade Practices Act. The amendments dealing with this matter are to be found in pars 2, 78 and 79 of MFI-1. 15 On this point, Senior Counsel for CSIRO submitted that the admission made by CSIRO in the earlier versions of its Defence was made inadvertently and not deliberately after due consideration. He said that the matter had "… got under our guard … [and was] overlooked". 16 Counsel for Dr Chyb submitted that the admission must have been made after due consideration and, in circumstances where no adequate explanation has been given for its withdrawal, should not be allowed to be withdrawn. He submitted that, were I to allow the amendments, Dr Chyb would need to put on further evidence. He also submitted that there may be a need for further discovery. 17 Both parties referred me to a number of relevant authorities (Drabsch v Switzerland General Insurance Co Ltd (unreported, NSWSC, Santow J, 16 October 1996); Jeans v Commonwealth Bank of Australia Ltd (2003) 204 ALR 327 at [18] (pp 330-331); Optical 88 Ltd v Optical 88 Pty Ltd [2010] FCA 310 at [27]; and Celestino v Celestino (unreported, Federal Court, Spender, Miles and von Doussa JJ, 16 August 1990)). 18 I accept that the admission previously made was made inadvertently and not deliberately after due consideration. I do so because Senior Counsel for CSIRO has informed me that this was the case and also because his submission to that effect is supported by the evidence of his instructing solicitor given in an affidavit sworn on 10 August 2012 and relied upon by CSIRO in connexion with the present applications. If the withdrawal of this admission is allowed, the prejudice to Dr Chyb is likely to be minimal. He will need to prove his allegation. His present intention is to do so by tendering a few documents. Furthermore, any likely prejudice to Dr Chyb can be adequately met by appropriate costs orders. For these reasons, I propose to allow CSIRO to withdraw the admission previously made by it to the effect that it was a trading corporation within the meaning of the Trade Practices Act and to allow the amendments sought in this respect. 19 Second, CSIRO wishes to introduce into the contract proceeding a number of allegations which have been conveniently described by the parties as "the misconduct allegations". In the contract proceeding, these amendments are found in pars 84 to 87 of MFI-1. Similar amendments are sought to be made in the adverse action proceeding although, in that proceeding, it must be said that two of the three misconduct allegations have already been pleaded in the existing Amended Defence. The proposed amendment in the adverse action proceeding fleshes out the existing allegations and brings them into line with the allegations made in pars 84 to 87 of MFI-1. 20 The matters covered by the misconduct allegations are said to constitute available grounds for the summary dismissal of Dr Chyb from his employment with CSIRO as at 4 January 2011. In very brief terms, Dr Chyb is alleged to have obtained a financial advantage for himself in breach of his contract of employment by procuring a colleague, Dr Stevenson, to rent at the cost of the CSIRO an apartment owned by Dr Chyb at an excessive rent and for a longer period than was appropriate. In addition, Dr Chyb is alleged to have misused his corporate credit card. Finally, he is said to have continued in paid employment after the commencement of his employment with CSIRO in breach of his contract of employment. All of these matters are said to be of such seriousness as would have justified his summary dismissal as at 4 January 2011. 21 Two of these allegations were pleaded in the Amended Defence filed in the adverse action proceeding. 22 Against this, Counsel for Dr Chyb submitted that, notwithstanding that two of these matters had been raised in that pleading, CSIRO had not so far attempted in any way to support the allegations with evidence with the consequence that Dr Chyb was entitled to assume that there was not going to be any real attempt on the part of CSIRO to prove these matters. 23 Senior Counsel for CSIRO submitted that: (a) The misconduct allegations were live issues right up to Dr Chyb's termination by CSIRO and were under investigation by CSIRO up until that time; (b) Those allegations assumed a larger significance in light of Dr Chyb's allegation made in par 18A of his Amended Statement of Claim (and repeated in par 63(a)(i) of the same pleading) that his employment was indefinite; (c) There is no real prejudice to Dr Chyb. He has been well aware of these allegations for some time. The only reason that the investigations into them ceased was because his employment was terminated; (d) The proposition that CSIRO was entitled to summarily dismiss Dr Chyb as at 4 January 2011 is not a hopeless proposition and the new defence sought to be introduced by the current bundle of amendments is not bound to fail; and (e) The fact that there may need to be further discovery and affidavits, at this stage of the proceeding, is not a good reason for declining leave to amend. 24 Counsel for Dr Chyb submitted that: (a) These amendments should not be permitted in the absence of a satisfactory explanation as to why they had not been raised at an earlier stage; (b) There is prejudice to Dr Chyb because further discovery will be required and further evidence will need to be put on. It is likely that the hearing will be longer than it would otherwise have been; and (c) The substance of the defence proposed to be introduced by these amendments is bound to fail because CSIRO will ultimately be found to have waived its right to summarily dismiss Dr Chyb (Rankin v Marine Power International Pty Ltd (2001) 107 IR 117 at [351]-[357] (pp 154-155)). 25 There is no doubt that two of the three misconduct allegations have been issues in the adverse action proceeding for some time. Furthermore, all of the misconduct allegations were under investigation for some time prior to the termination of Dr Chyb's employment. The question of waiver is a question of fact which should only be determined after a trial. The likely prejudice to Dr Chyb can be compensated satisfactorily by appropriate orders as to costs. Finally, no hearing date has yet been set and there is no serious contention that the likely delay caused by this group of amendments is so significant as to warrant the denial of leave. 26 For all of these reasons, I propose to grant leave to CSIRO to introduce the misconduct allegations into the contract proceeding and to amend its Amended Defence in the adverse action proceeding to flesh out those allegations in that proceeding. To deny CSIRO the right at trial to litigate these allegations and the ground of defence based upon them would be to visit a substantial injustice upon CSIRO. 27 Third, at pars 88-91 of MFI-1, CSIRO proposes to raise a new issue in the contract proceeding, namely that, by reason of his conduct, Dr Chyb is estopped from bringing his claims. This is a new defence but is based upon one or two items of correspondence only. It has already been pleaded in the adverse action proceeding. There will be no real prejudice to Dr Chyb caused by the introduction of these new allegations into the contract proceeding. I propose to allow them. 28 Fourth, at par 92 of MFI-1, CSIRO relies upon a statutory prohibition against the bringing of Dr Chyb's claims said to arise out of s 44 of the Safety, Rehabilitation and Compensation Act 1988 (Cth). That argument is essentially one of law based upon principles of statutory interpretation. It has already been raised in the adverse action proceeding. There is no reason why leave should not be granted to CSIRO to raise it in the contract proceeding. I propose to give CSIRO leave to do so.

Costs and Relief 29 In my view, Dr Chyb was justified in opposing the amendments sought by CSIRO at a very late stage in the proceedings notwithstanding that, contrary to the submissions made on his behalf, I have decided to grant leave to CSIRO to make those amendments. Furthermore, there may be significant costs consequences for Dr Chyb arising out of the making of the amendments. CSIRO is seeking a substantial indulgence late in the piece. For these reasons, I propose to make the costs orders to which I referred at [8] above. 30 For all of the above reasons, I propose to make the orders which I broadly described at [8] above. The further directions which I indicated I would make will be included in those orders. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.