Danthanarayana v Commonwealth of Australia

THE COURT: 1 The principal issue in this application for leave to appeal is whether the primary judge was right to summarily dismiss the proceeding on the basis that the applicant's (New Proposed) Second Further Amended Statement of Claim (the proposed pleading) did not disclose any cause of action with a reasonable prospect of success. A secondary issue concerns an order for indemnity costs that the primary judge made against the applicant. 2 The application for leave to appeal and the appeal were heard together. If the primary judge was right to summarily dismiss the proceeding, leave should be refused. If the primary judge erred and, in considering the matter, we conclude that the applicants' case as disclosed in the proposed pleading had a reasonable prospect of success, leave should be granted and the appeal allowed. 3 For the reasons set out below, we consider that the primary judge's conclusion was right.

The circumstances leading up to the judgment 4 It is first necessary to describe the circumstances in which the primary judge was required to consider the proposed pleading. This is because to summarily dismiss a proceeding, and thereby preclude a person from having their case determined on its merits at a final hearing, is a serious step taken only with great care and if it is possible to conclude with confidence that there is no reasonable prospect of success; this is so despite the fact that under s 31A(2) of the Federal Court of Australia Act 1976 (Cth) (the Court Act) the power to summarily dismiss a proceeding is not dependent on the case being "hopeless" or "bound to fail" for it to have no reasonable prospect of success (Spencer v Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118 at [17]-[26]). 5 The applicant (in fact, two applicants at the time, the additional one being a company controlled by the applicant) filed an originating application and statement of claim on 30 November 2011. The applicants sought damages, including exemplary damages, from the Commonwealth and employees of the Commonwealth on the basis of allegations of breach of the Trade Practices Act 1974 (Cth) (the TPA), negligence, conspiracy, and misfeasance in public office. The claims, insofar as they could be understood, arose from the (then) first applicant's position as the principal of companies (one being the then second applicant) engaged by a contractor to the Commonwealth to provide information technology services to the Commonwealth's Department of Defence. 6 On 3 January 2012 the applicants filed and served an amended statement of claim. The solicitors for the respondents advised the solicitors for the applicants of various deficiencies in the pleading and that, if not remedied, an application to strike out the pleading and for indemnity costs would be filed. On 11 May 2012 the primary judge ordered the applicants to file and serve a proposed further amended statement of claim by 1 June 2012, with all affidavits in chief to be filed and served by 22 June 2012. On 6 June 2012 the applicants served a proposed further amended statement of claim. On 15 June 2012 the solicitors for the respondents advised that they did not consent to the filing of that document as it did not address many of the deficiencies set out in the original correspondence, but said the respondents would be prepared to consider another redraft if received by 22 June 2012. Instead, the applicants filed and served an application seeking leave to rely on the proposed further amended statement of claim. Amongst other things, the applicants pleaded a conspiracy, misfeasance in public office, negligence occasioned by the Commonwealth breaching a duty of care to avoid exposing the first applicant to a risk of injury from the acts of the Commonwealth's employees, and misleading and deceptive conduct in breach of the TPA, and a right to exemplary damages. 7 On 6 July 2012 the primary judge granted the applicants leave to rely on the proposed further amended statement of claim but on the basis that all of the respondents' arguments to resist the grant of leave could be made in respect of an application to strike out the revised pleading. As a result, and on 7 August 2012, the respondents filed a defence and an application seeking to strike out the further amended statement of claim and for summary dismissal. This application came before the primary judge on 5 September 2012. The hearing of the application remained incomplete on that day and the hearing was adjourned to 11 October 2012. Further submissions were also submitted on 2 November 2012. 8 The primary judge gave judgment on 28 May 2014 (Danthanarayana v Commonwealth of Australia [2014] FCA 552 (Danthanarayana v Commonwealth of Australia (No 1))). He struck out the whole of the statement of claim and summarily dismissed the claims for damages and exemplary damages for the torts of conspiracy, misfeasance in public office and under the TPA, and otherwise gave the applicant alone leave to "endeavour to replead a case in negligence against the first respondent, the Commonwealth of Australia" by 27 June 2014. In his reasons for judgment in respect of the pleading of negligence which was struck out, his Honour said: 112 Mr Danthanarayana has not pleaded any facts which identify who, for present purposes, was the directing mind of the Commonwealth and has failed to plead facts which, if proved, could show that the Commonwealth as a legal entity separate from its employees and officers, knew or ought to have known of the alleged risks to Mr Danthanarayana. 113 Senior Counsel for the applicants did not come to grips with these difficulties. At times I thought that he was, contrary to the pleading, arguing that the Commonwealth was, in fact, vicariously liable. 114 Counsel for the respondents went on to submit that the imposition of the alleged duty directly on the Commonwealth would conflict with other duties owed by the Commonwealth. 115 There is considerable force in these submissions but, in the view which I take of the negligence case sought to be run by Mr Danthanarayana, it is not necessary to traverse the respondents' submissions in any more detail. 116 As presently pleaded, Mr Danthanarayana's case in negligence does not, in my view, rely upon vicarious liability as a basis for attributing liability to the Commonwealth. 117 Notwithstanding that Senior Counsel for Mr Danthanarayana disavowed any application that his clients should be given leave to replead, I think that Mr Danthanarayana should be given an opportunity to articulate more precisely the negligence case which he intends to take to trial. As matters presently stand, I think that there are difficulties with a case based upon a duty of care being owed by the Commonwealth directly to Mr Danthanarayana although I am inclined to think that such a case would not be impossible for Mr Danthanarayana to plead and run. In the circumstances, I think that it may well be possible for him to plead and conduct a case in negligence against the Commonwealth as being vicariously liable for the conduct of its employees. 118 I will, therefore, strike out the negligence case as currently pleaded but give leave to Mr Danthanarayana to endeavour to replead that case in conformity with these Reasons for Judgment. 9 On 27 June 2014 the applicant filed and served an amended originating application and second further amended statement of claim which pleaded negligence against the Commonwealth, including a new claim based on vicarious liability, and a new cause of action under the Fair Work Act 2009 (Cth) (the Fair Work Act) involving an allegation of unlawful adverse action against the applicant by reason of a workplace right (the right to complain). The application for leave to rely on these documents came before the primary judge for hearing on 1 August 2014 but the applicant was not ready to proceed. The Commonwealth made submissions in full against any grant of leave and the primary judge adjourned the application for leave until 8 and then 26 August 2014. In the course of the hearing on 26 August 2014 the applicant conceded that the pleading remained deficient and sought further time to replead the case. The primary judge, amongst other things, directed the applicant to file and serve his "final proposed Amended Originating Application and Second Further Amended Statement of Claim" and written submissions in support of the grant of leave by 19 September 2014, and ordered that the application be determined on the papers. 10 On 22 September 2014 the applicant filed and served the (New Proposed) Second Further Amended Statement of Claim which is the subject of the application for leave to appeal, with written submissions in support of the grant of leave. The Commonwealth filed and served written submissions opposing leave on 24 October 2014, with the applicant's submissions in reply being filed and served on 31 October 2014. Both parties filed supplementary submissions in April 2015 as a result of the decision in Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20; (2015) 229 FCR 221 dealing with costs under the Fair Work Act.

The judgment 11 The primary judge gave reasons for judgment in Danthanarayana v Commonwealth of Australia (No 2) [2016] FCA 157 explaining why he considered the case in the proposed pleading had no real prospect of success, as a consequence of which his Honour summarily dismissed the proceeding as a whole under s 31A of the Court Act. 12 After recording the history of the application for leave to amend the pleading (in large part, reflected above) at [1] - [15] the primary judge identified the causes of action now raised by the applicant against the Commonwealth as follows (referring to the proposed pleading as ASC Version 2 and the amended originating application as OA Version 2): 17 By his OA Version 2, the applicant claims damages for loss and damage suffered by him caused by: (a) Breaches of alleged duties of care owed directly by the Commonwealth to him (pars 24, 25, 26, 27, 28, 29, 30, 31 and 46 of ASC Version 2); and (b) Wrongful conduct on the part of Commonwealth employees working in the Department of Defence for which the Commonwealth is vicariously liable (pars 5 to 23, 32 to 39 and 46 of ASC Version 2). … 19 By his OA Version 2, the applicant also claims statutory compensation pursuant to s 545(2) of the FWA for a contravention of the FWA constituted by the Commonwealth's conduct in taking adverse action against the applicant in breach of s 340(1)(a)(i) of the FWA (pars 40 to 46 of ASC Version 2). 13 The primary judge then described the relationships between the applicant and the Commonwealth, about which there is no material dispute. Relevantly: 29 In 2005, PCIT [the applicant's company] entered into a contract with a service provider known as M & T Resources. That contract ran from 9 November 2005 until 24 October 2006. Pursuant to that contract, M & T Resources engaged PCIT to provide IT consultancy services to Defence Chief Information Officer Group (CIOG), a division of the Department of Defence. The work itself was to be carried out by the applicant. 30 By a formal contract in writing made on 6 November 2006 between PCIT, the corporation, and Icon [a company contracting to the Department of Defence], PCIT agreed to provide the services of the applicant to Icon for the period 7 November 2006 up to and including 30 June 2007. Under that contract, the applicant was required to report to an appointed nominee of the Department of Defence and thereafter to attend the premises of that Department in order to provide IT consulting services in consultation with that Department. 31 Clause 7 of that contract provided that the relationship between PCIT and Icon should be that of an independent service provider and neither PCIT nor Icon had any power, right or authority to bind the other or assume or create any obligation or responsibility, whether express or implied, on behalf of the other or in the other's name. The clause went on to provide that nothing in the contract should be construed as constituting PCIT and Icon as partners or creating the relationship of employer and employee, master and servant, or principal and agent between PCIT and Icon. 32 In 2007, PCIT's contract with Icon was extended until 30 September 2008. 33 In the period from 1 October 2008 to 25 October 2009, the applicant's services were provided to the Department of Defence under a contract in writing between that Department and Frontier Group Australia Pty Ltd (Frontier) which, in turn, had procured the provision of those services pursuant to a contract between it and PCIT. 34 In the period from 30 October 2009 to 20 December 2009, the applicant's services were provided to the Department of Defence pursuant to similar multi-party arrangements. On this occasion, the service provider which held the formal written contract with the Commonwealth was Talent International (ACT) Pty Ltd (Talent). That company had, in turn, contracted with PCIT to provide the services of the applicant to it for the purpose of enabling it to provide his services to the Commonwealth. In that contract, there were express provisions governing the nature of the relationship (cl 12) between Talent and PCIT. PCIT was said not to be an employee, servant or agent of Talent. 35 On 2 February 2010, the applicant caused to be incorporated a company called Nirvana Consulting Pty Ltd (Nirvana). Since its incorporation, the applicant has been the sole director and shareholder of Nirvana. 36 In the period from 3 February 2010 to 30 September 2010, the applicant's services were provided to the Department of Defence by a service provider called Peoplebank Australia Ltd (Peoplebank) pursuant to a formal written contract between Peoplebank and the Commonwealth. That corporation had, in turn, entered into a contract with Nirvana whereby Nirvana undertook to provide the applicant's services to Peoplebank for the purpose of having those services provided to the Department of Defence by Peoplebank. 37 In the period from 4 October 2010 to 30 June 2011, the applicant's services were provided to the Department of Defence by a service provider called Whizdom Pty Ltd (Whizdom) pursuant to a formal written contract between Whizdom and the Commonwealth. Whizdom had, in turn, entered into a contract with Nirvana whereby Nirvana was to provide the applicant's services to Whizdom for the purpose of allowing Whizdom to provide the applicant's services to the Department of Defence. 38 As noted at [26] above, the applicant resigned his employment as an APS employee for the last time in 2005. 39 Thus, throughout the period from about November 2005 until 30 June 2011, one of Icon, Frontier, Talent, Peoplebank or Whizdom, each of which was a service provider corporation separate and independent from the applicant, entered into a formal written contract with the Commonwealth pursuant to which the particular service provider undertook to provide specified IT consultancy services to the Department of Defence. Different projects were involved but all of the work was in IT, the area of the applicant's expertise. Each of those service providers, in turn, entered into a contract with either PCIT or Nirvana pursuant to which either PCIT or Nirvana (as the case may be) promised to provide the services of the applicant to the service provider in question and thus ultimately to the Department of Defence. … 41 None of PCIT, Nirvana or the applicant had any express contractual arrangements with the Commonwealth or any of its departments of state or agencies at any time after November 2005. The contracts for the provision of consultancy services were always entered into between the Commonwealth, on the one hand, and the relevant service provider, on the other hand. Those contracts were supported by the back-to-back arrangements constituted by the contracts between the service providers and PCIT or Nirvana. 42 The period of time during which the alleged wrongful conduct on the part of the Commonwealth and its employees took place was from about June 2009 to about mid-May 2011. 14 The primary judge then identified the causes of action as pleaded (at [43]-[58]), followed by a summary of the competing submissions (at [59]-[85]). His Honour then concluded as follows.

Direct liability of the Commonwealth - negligence (1) Because the applicant was: in every sense of the word, an independent contractor whose services were provided to the Commonwealth by a service provider which, in turn, had contracted with PCIT to provide the applicant's services…. (at [86]), the negligence claim directly against the Commonwealth must fail as this was: fatal to the imposition of either of the direct duties relied upon by the applicant at pars 24 and 25 of his proposed pleading… and, in any event, the pleading: lacks the crucial factor of a need to co-ordinate activities which were inherently dangerous and which, absent co-ordination, gave rise to a foreseeable risk of injury… (at [87] citing, in support, Leighton Contractors Pty Ltd v Fox [2009] HCA 35; (2009) 240 CLR 1 (Leighton)). (2) Further, the duties of care said to be directly owed by the Commonwealth to the applicant would be inconsistent with other obligations of the Commonwealth, which was a further reason to conclude that the duties did not exist (at [88]). (3) In addition, when: considering whether the Commonwealth itself had knowledge of facts relevant to establishing a duty (including a duty of care), or must be taken to have known those matters, it is necessary to consider whether those persons said to have the relevant knowledge can be said to be the directing mind and will of the Commonwealth… (at [89]), but the applicant has not pleaded any facts which identify who, for present purposes, was the directing mind of the Commonwealth and has failed to plead facts which, if proved, could show that the Commonwealth as a legal entity separate from its employees and officers knew or ought to have known of the alleged risks to the applicant… (at [90]). (4) "In any event, the failures said to give rise to a breach of the claimed direct duties are pleaded in a way which is impossibly general and vague. The applicant has not undertaken the task of specifying in the pleading the reasonable steps that the Commonwealth should have undertaken in order to fulfil the alleged duties" (at [91]).

Vicarious liability of the Commonwealth - negligence (5) The pleaded duty is: an absolute duty to avoid exposing the applicant to the risk of injury. No such duty is known to the law. As submitted by the Commonwealth, the difficulties caused by pleading an absolute duty is brought into sharp focus when it is appreciated that the pleaded breaches by Messrs Sykes and Pope relate to matters where they had conflicting duties to the Commonwealth. This is yet another reason why the pleaded absolute duty cannot be allowed to stand…. (at [92]).

The Fair Work Act claim (6) Section 342 of the Fair Work Act, as pleaded, requires adverse action to be taken by: a person (the principal) who has entered into a contract for services with an independent contractor against the independent contractor, or a person employed or engaged by the independent contractor. However, the applicant was not "engaged by the Commonwealth as an independent contractor within the meaning of Item 3 of s 342 of the FWA". Specifically (at [97]): The evidence speaks with one voice on this matter. There was no express contractual arrangement between the Commonwealth and the applicant at any time in the period 2009-2011. The applicant was not engaged directly by the Commonwealth nor was he employed or engaged by any service provider (such as Icon) with whom the Commonwealth had a contract. The alleged implied contract for services is completely inconsistent with the express contractual arrangements pursuant to which the applicant did work at the Commonwealth's premises. (7) The applicant's case based on the Fair Work Act was thus "hopeless" (at [100]). (8) Further, the Commonwealth's submissions, including that the "proposed Fair Work Act pleading fell wholly outside the grant of leave to attempt to replead" (at [81]) were "sound and I accept them" (at [99]).

Direct liability of the Commonwealth - negligence 15 It is appropriate to record that we do not necessarily agree with the primary judge's observations at [87] and [88]. 16 First, it was not necessarily "fatal" to the Commonwealth owing a duty of care to the applicant that he was present in a workplace the Commonwealth controlled under a series of contractual arrangements between the Commonwealth and an independent contractor and between the independent contractor and a company providing the services of the applicant. Nor was the primary judge's conclusion that there could be no implied contract between the applicant and the Commonwealth necessarily fatal to the existence of such a duty of care. This is because the existence of a duty of care in a novel case (assuming, for this purpose, the asserted duty was novel) depends upon an examination of all salient features of the relationship between the parties (see, for example, New South Wales v Spearpoint [2009] NSWCA 233 at [21]-[23] and Caltex Refineries (Qld) Pty Ltd v Stavar [2009] NSWCA 258; (2009) 75 NSWLR 649 at [102]-[104]). 17 Second, we do not understand Leighton to decide that the only case in which a party (for example, a person in control of a site or, in this case, a workplace) might owe a duty of care to an independent contractor is where the activities in question are inherently dangerous, thereby giving rise to a foreseeable risk of injury if activities are not co-ordinated. Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; (1986) 160 CLR 16 (Stevens v Brodribb) was such a case, but there is no suggestion in it that the duty which might exist at law is confined by the particular factual circumstances of that case. Leighton also does not decide that Stevens v Brodribb is confined to its facts. In Leighton the alleged negligence involved an activity of one independent contractor harming another. In the present case, the allegation was of employees of the Commonwealth harming the applicant. Leighton was not necessarily fatal to the applicant's case. 18 Third, the asserted inconsistent obligations of the Commonwealth were not amenable to resolution on a summary dismissal application. They were fact and context dependent at least in large part. Sullivan v Moody [2001] HCA 59; (2001) 207 CLR 562, a strike out case, involved an inconsistency between the alleged duty and the applicable statutory regime which meant that the duty could never exist. The inconsistencies on which the Commonwealth relied in the present case were of a different character, not suited to summary disposal outside of the context set by knowledge of all of the relevant circumstances. 19 Because the primary judge did not identify which of his conclusions were necessary or sufficient to justify his decision to strike out the proposed pleading and summarily dismiss the proceeding, these conclusions must mean that, insofar as we are concerned, it must be taken that the primary judge erred so that this Court is required to decide the issues for itself. On that basis, we are satisfied not only that the primary judge was right in the views expressed at [89]-[91] and that, of themselves, each such conclusion was sufficient to justify the striking out of the causes of action in negligence, but that the duties as pleaded at paragraphs 24 and 25 of the proposed pleading were unintelligible and incapable of founding a claim with any reasonable prospect of success. 20 In dealing with paragraphs 24 and 25 of the proposed pleading, what must be recalled is that this was the applicant's final opportunity to attempt to plead his case. So much was clear from the order the primary judge made on 26 August 2014 (and even then, in the face of the order, describing the re-pleading as "final", the applicant was granted the further indulgence of yet another attempt). The primary judge had given the applicant multiple opportunities to plead the case. In coming to the proposed pleading the primary judge could not be expected to read in words that do not appear or to undertake a complicated process of construction of the pleading on the basis that any ambiguity ought to be resolved in the applicant's favour. Nor, for that matter, can we be expected to do so. Yet this is what the applicant's case involves. 21 Paragraph 24 pleads that at all times "during the Engagement" the Commonwealth owed the applicant a duty of care to avoid exposing the applicant to unnecessary risks of injury. In common with his Honour, we are prepared to overlook the lack of any definition of the Engagement and to take it as a reference to the work the applicant performed under the contracts referred to in paragraph 4 of the pleading. Yet the applicant had to go further. No material facts are pleaded which are said to give rise to this duty of care. The applicant submitted that we should read the words "during the Engagement" as meaning something like "during and in the circumstances of the Engagement as pleaded in paragraph 4". It is not possible to read paragraph 24 in this way. As the Commonwealth submitted, the proposed pleading is replete with what appear to be immaterial facts relating to events which pre-date the so-called Engagement by many years. Why paragraph 24 should be read as invoking the circumstances in paragraph 4 relating to the contracts, let alone only paragraph 4, is not apparent. The pleading thus fails to disclose any material facts capable of supporting the duty of care asserted in paragraph 24. 22 Paragraph 25 is particularised but, again, it was said that the paragraph should be construed as invoking the circumstances in paragraph 4 (but not, presumably, the many other paragraphs containing apparently immaterial facts). For the same reasons as for paragraph 24, we consider this an inappropriate exercise in the particular circumstances which confronted the primary judge. For a final attempt to plead a claim in negligence (after what, in truth, should be described as the third attempt to do so), paragraph 25 is patently inadequate as it does not identify all of the material facts on which the applicant relies to support the alleged duty; the Commonwealth would thus be left to guess that it is intended to invoke paragraph 4 and paragraph 4 alone as the relevant facts, apart from those particularised under paragraph 25. 23 In any event, as the primary judge appreciated, the existence of a duty of care is only part of a cause of action. This was the applicant's final chance to plead a complete cause of action in negligence. The attempt to plead breach in paragraph 26 is a series of generalised assertions by reference to another series of generalised allegations defined as the Complaints Investigation, the Security Breach Allegations, and the Security Breach Investigation. When regard is then had to how the pleading identifies those defined terms, the problems are compounded. For example, the Complaints Investigation is said to be attended by features, each of which might or might not be said, of itself or perhaps cumulatively, to involve a breach of the duty. Those features include the length of time the investigation took, the changes in personnel within the Commonwealth involved in the investigation, the involvement of a named person which caused the applicant to "feel that the investigation was not being conducted impartially", failing to keep certain things confidential and not providing the applicant with "ongoing feedback" about the investigation. It is impossible from the pleading to know how these features, individually or cumulatively, are said to involve breach of the duty of care. The same observations apply to the Security Breach Allegations as identified in paragraph 18 and the Security Breach Investigation as identified in paragraph 20. 24 The primary judge's description of the pleading of breach of the duties of care as "impossibly general and vague" at [91] is amply supported by the terms of the pleading. As such, no complete cause of action is pleaded, by reason of which the case in negligence had no reasonable prospects of success. 25 The primary judge was also right at [90] to identify the manifest inadequacy of the pleading in respect of identifying the persons said to have knowledge attributable to the Commonwealth which would make the Commonwealth directly, as opposed to vicariously, liable for harm said to have been suffered by the applicant (see Western Australia v Watson [1990] WAR 248 at 267-271). In submissions on the appeal it was said for the applicant that two employees of the Commonwealth had been identified in paragraphs 28 to 30 (Mr Mountstephen and Mr Slattery) and they were the relevant "agents to know" (adopting the phrase referred to in Nationwide News Pty Ltd v Naidu [2007] NSWCA 377; (2007) 71 NSWLR 471 at [43], in a discussion about imputing knowledge to a corporation at [38]-[43]). But the pleading is hopelessly confused and confusing. One particular refers to an email to Mr Mountstephen but at a time before the alleged bullying in the workplace which caused the injury is said to have commenced. Another refers to an email to Mr Mountstephen but after his relevant role is said elsewhere in the pleading to have ceased. The third communication to Mr Slattery is well after the alleged bullying. In any event, it is not apparent from the face of the pleading that the applicant relies only on the communications to Mr Mountstephen and Mr Slattery as the basis for the imputation of the relevant knowledge to the Commonwealth. Numerous other employees are referred to and, as noted, the proposed pleading contains many allegations the relevance of which is unable to be discerned. 26 For these reasons the primary judge was right to conclude that the causes of action in negligence as pleaded had no reasonable prospect of success.

Vicarious liability of the Commonwealth - negligence 27 The duty of care alleged against certain employees of the Commonwealth in paragraph 33 is also fraught with difficulty. The allegation begins with the words "In the premises". We are prepared to accept that this refers back to the circumstances of reasonable foreseeability of harm to the applicant set out in the immediately preceding paragraph. But, said the applicant, it should also be construed as a reference back to all of the relevant "premises", including paragraphs 4 and 28 to 31. We do not consider it open to construe the pleading in this way. And as we have said, it was not for the Commonwealth, at this stage of the debate about the pleading, to attempt to identify for itself which of the "premises" were considered by the applicant to be relevant and which were not. How the Commonwealth was meant to do so is also not apparent. Further and as the Commonwealth said, it is not possible to read this paragraph as asserting a duty to take reasonable care to avoid reasonably foreseeable harm to the applicant. This limitation cannot be read into paragraph 33 which, as the primary judge said at [92], asserts an absolute duty, unknown to the law, to not engage in conduct that would expose the applicant to a risk of injury. This pleading is hopeless on its face. 28 The pleading of breach is also hopeless. It cannot be that the employees breached the duty of care alleged against them merely by engaging in the so-called Security Clearance Cancellation Conduct. That conduct is identified at paragraph 14 as bringing about the cancellation of the applicant's security clearance without justifiable cause, but it is particularised by reference to actions taken, not by the employees, but by an independent contractor to the Commonwealth who is said to have asked the applicant to sign a form, which the applicant did, and it is that action which is then said to result in the cancellation of the applicant's security clearance. 29 It follows that the primary judge was also right to conclude that this cause of action could not be permitted to proceed to hearing.

Fair Work Act claim 30 There is a fundamental impediment to the success of this claim as pleaded. It relies upon an allegation, unsustainable on the material facts pleaded, that the applicant was engaged by the Commonwealth as an independent contractor pursuant to an implied contract for services. 31 Relying upon s 340(1)(a)(i) of the Fair Work Act, the applicant claims that the Commonwealth took adverse action against him because he had a workplace right. The meaning of "workplace right" is given by s 341 of the Fair Work Act. The circumstances in which one person may take "adverse action" against another are set out in a table to s 342 of the Fair Work Act. The proposed pleading relies upon those circumstances described in Item 3 of the table to s 342. As set out at [14(6)] above, Item 3, column 1 provides that adverse action is taken by: a person (the principal) who has entered into a contract for services with an independent contractor against the independent contractor, or a person employed or engaged by the independent contractor. 32 Paragraph 2(e) pleads that the Commonwealth was a principal for the purposes of Item 3 and that a contract of services was made between the Commonwealth and the applicant. That contract is described at paragraph 1(e) as an implied contract made by reason of the circumstances set out at what is referred to as paragraph 5 but which is an intended reference to paragraph 4 of the proposed pleading. Paragraph 4 is the pleader's attempt to set out the material facts relied upon to establish an implied contract for services between the applicant and the Commonwealth. Broadly stated, the material facts relied upon are these: (1) Under contracts (defined as "Contracts") made between the Commonwealth and other identified entities (in each case, a service provider providing personnel) and, in turn, between the service provider and a partnership or entity controlled by the applicant, the applicant performed specific work at the direction and control of the Commonwealth "in all respects as though he were engaged directly" by the Commonwealth. (2) The applicant relied upon the Commonwealth to provide computer hardware and software in order to perform his duties under the Contracts. (3) The Commonwealth provided the applicant with regular training in relation to workplace conduct and security. (4) The applicant was bound by policies and procedures that applied to employees of the Commonwealth. (5) The Commonwealth made arrangements for the applicant to travel in the performance of his duties under the Contracts and reimbursed him for travel costs. (6) The applicant was not permitted under the Contracts to delegate his duties under the Contracts to another person. 33 The implied contract contended for by the pleading is co-extensive in time with the Contracts. There is no allegation pleaded that the Contracts were a sham, a pretence, or were ineffectual or inoperative. To the contrary, the pleading proceeds on the basis that the services provided by the applicant to the Commonwealth were provided pursuant to the Contracts. The material facts pleaded do not allege conduct or circumstances from which a contract made between the applicant and the Commonwealth for the provision of services by the applicant could be implied. To the contrary, the pleading leaves no room for the implication of such a contract in circumstances where the pleading itself alleges that the services provided by the applicant were provided pursuant to the Contracts (see Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] FCAFC 37; (2015) 228 FCR 346 at [132]-[234], especially at [167]-[171] and [187]-[188]. 34 As the applicant's counsel correctly accepted, the absence of a contract for services between the applicant and the Commonwealth, whether express or implied, is fatal to the applicant's reliance on Item 3 of the table to s.342 and thus the Fair Work Act claim. 35 There are other difficulties with the Fair Work Act claim but, in the circumstances, it is not necessary for those to be addressed other than to express our agreement with the primary judge's acceptance of the Commonwealth's submission that the Fair Work Act claim was outside the leave which the primary judge gave to the applicant to re-plead the case in negligence against the Commonwealth, which provided a further, and in our view sufficient, reason to reject this part of the proposed pleading.

Conclusions on summary dismissal 36 The primary judge was right to characterise the proceeding, as disclosed in the proposed pleading, as one which had no real prospect of success. He was thus right to strike out the pleading and, in the circumstances of this case, to summarily dismiss the proceeding. It is unnecessary, given these conclusions, to deal with each of the alleged errors by the primary judge in the draft notice of appeal. The application for leave to appeal must be dismissed with costs to this extent, subject to the remaining issue about the indemnity costs orders below.

Costs 37 The primary judge ordered the applicant to pay the Commonwealth's costs on an indemnity basis up to 28 May 2014, from 28 May to 26 August 2014, and from 26 August 2014 onwards. His Honour explained: THE INDEMNITY COSTS ORDER MADE ON 26 AUGUST 2014 (ORDER 2) 102 On 26 August 2014, I ordered that the applicant and Nirvana pay all of the respondent's costs of and incidental to this proceeding up to 28 May 2014 on an indemnity basis. 103 My reasons for making that order were that, in the period from the commencement of this proceeding up to 28 May 2014, when I delivered Danthanarayana No 1 [Danthanarayana v Commonwealth of Australia (No 1)], the applicants had had many opportunities to address the respondents' concerns about the form of their pleading but had steadfastly refused to take heed of the many warnings given to them by the solicitors for the respondents. In her affidavit sworn on 6 August 2014, Ms Harvey traversed the entire history of the respondents' efforts to secure a sensible pleading from the applicants. The affidavit disclosed a sorry history indeed. It is not necessary for present purposes to traverse in detail the history of the dealings between the parties. 104 The substance of the matter is that, apart from the slim possibility that the applicant in his individual capacity might be able to bring a claim for breaches of a duty of care owed directly to him by the Commonwealth, the case pleaded by the applicants throughout the period 2011 and 2012 was a case which had no reasonable prospects of success. In my judgment, it was a case which should never have been brought. 105 It was for these brief reasons that I considered that an indemnity costs order for the entire case up to 28 May 2014 was justified. COSTS FOR THE PERIOD AFTER 28 MAY 2014 106 At [2]-[8] above, I set out the steps that were taken in this proceeding between late May 2014 and 26 August 2014. 107 In my view, the applicant should have been ready to make his submissions in support of the DSFASOC [draft Second Further Amended Statement of Claim] on 1 August 2014. He was not then in a position to do so. Although the time in Court on 1 August 2014 was not completely wasted, the fact that the applicant was not ready to proceed on that occasion caused further delay in the disposition of his Application for Leave to Amend. In the end, of course, he chose to propound a further draft of his proposed claim which first became available on 22 September 2014. 108 Against that background, and having had 25 days to consider the Commonwealth's oral submissions made on 1 August 2014, the applicant was still not ready to proceed on 26 August 2014. The applicant's lack of preparedness to proceed on 26 August 2014 became apparent soon after the commencement of the hearing on that day. The applicant's defaults were made more serious by the circumstance that, not only was he not ready to proceed on that day, but Senior Counsel then appearing for him sought yet a further indulgence. Counsel had formed the view that the DSFASOC would need to be amended yet again and he sought time within which to consider and propound further amendments. This was most unsatisfactory since the whole purpose of adjourning the matter at the request of the applicant on 1 August 2014 was to have his Application for Leave to Amend finally resolved on 26 August 2014. 109 The above history amply demonstrates that the total waste of time and money incurred by the Commonwealth in relation to the aborted hearing on 26 August 2014 was the direct result of the failure on the part of the applicant and his lawyers to consider submissions made by the Commonwealth on 1 August 2014 and to prepare themselves for the hearing on 26 August 2014. The applicant and his lawyers should have realised that further work needed to be done on the DSFASOC long before 26 August 2014. The inutility of that fixture was entirely the fault of the applicant and his lawyers. 110 These were my reasons for making the second indemnity costs order which I made on 26 August 2014 (Order 7 made on that day). 111 It seems to me that the current applicant, Mr Danthanarayana, also conducted his case in the period after 28 May 2014 up to and including 26 August 2014 in the same manner as he had conducted it in the period prior to 28 May 2014. He brought forward a pleading (the DSFASOC) which was defective. He took no steps to remedy it prior to 26 August 2014 and left the Commonwealth with no choice but to persist with its opposition to the applicant's endeavour to plead a sensible case. 112 For these reasons, I think that the applicant should be ordered to pay indemnity costs in respect of this proceeding for the period from 28 May 2014 to 26 August 2014. 113 Finally, there are the costs for the period after 26 August 2014. 114 In light of the fact that I have refused leave to amend upon the basis that the applicant has no reasonable prospect of succeeding in any of the causes of action which he has sought to maintain, I think that he should also pay indemnity costs in respect of costs incurred after 26 August 2014. 38 The applicant submitted that these reasons are: sparse, do not engage any of the features that ordinarily would be present in order to permit the making of a costs order on an indemnity basis and would appear to visit upon the applicant an inappropriately harsh penalty for having attempted to rectify his pleading, in accordance with the leave granted to him by the Court on 28 May 2014. 39 No error of principle is apparent from the primary judge's reasons. Nor are the reasons inadequate given the nature of the issue and the fact that his Honour expressly referred to the history of the proceeding at [106]. There was a proper basis for orders for indemnity costs as made by his Honour. In particular, although his Honour gave the applicant leave to re-plead on 28 May 2014, this was done on the express basis that his Honour accepted that it: may well be possible for [the applicant] to plead and conduct a case in negligence against the Commonwealth as being vicariously liable for the conduct of its employees. (Danthanarayana v Commonwealth of Australia (No 1) at [117]). 40 This observation is sound. Such a pleading may well have been possible. The problem is that despite repeated attempts the applicant was incapable of making such a pleading. Instead, the applicant persisted in versions of pleadings which were hopeless. This is a well-recognised category in which an order for indemnity costs might be appropriate. No error in the exercise of discretion is identified, and this ground must thus also fail. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Jagot, Bromberg and Murphy.