Supreme Court of WA|2001-08-03|Before: Mr P, Wheeler J

Deputy Commissioner of Taxation for The Commonwealth of Australia v Robinswood Pty Ltd [2001] WASC 191 (3 August 2001)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA -v- ROBINSWOOD PTY LTD [2001] WASC 191

BETWEEN : DEPUTY COMMISSIONER OF TAXATION FOR THE COMMONWEALTH OF AUSTRALIA

Practice and procedure - Defendants' application to strike out statement of claim or parts thereof

Practice and procedure - Plaintiff's application for admission of testimony from prior proceedings

Plaintiff to prepare Minutes of Orders in conformity with these reasons

1 WHEELER J: I have before me a defendant's application to strike out portions or alternatively the whole of the statement of claim in each of six actions, together with a plaintiff's application for orders pursuant to O 29 of the Rules of the Supreme Court in relation to certain evidence given at a criminal trial.

2 The factual background out of which these matters are said to arise is, so far as the plaintiff is concerned, conveniently set out in the affidavit of Robert Erskine Lindsay sworn 16 May 2001. The brief summary which follows is based upon that affidavit and upon the judgment of the Court of Criminal Appeal in Caratti v The Queen [2000] WASCA 279 which dealt with issues arising on an appeal from the criminal trial in question.

3 There are presently six actions before the court, each concerned with the recovery of unremitted and undeducted tax instalment deductions, penalties and interest. All but one were commenced in December 1997, the other being commenced in February 1998. The plaintiff in each case is the Deputy Commissioner of Taxation. The Deputy Commissioner asserts that the various defendants, all but one of which are corporations, are members of what he describes as the "Caratti Group" which is said to comprise a number of private companies, family trusts, a unit trust, partnership and individuals being involved variously in the earthmoving industry, civil engineering, mine site work and farming. For convenience the action against Robinswood Pty Ltd is the action to which these reasons, where necessary; refer although some actions differ slightly, those differences are not presently significant.

4 Members of the Caratti family, John Michael Caratti, Alan Bruce Caratti and Maddeliene Caratti were charged on indictment that between a period in 1988 and 1994 they conspired with each other and with Sergio Caratti to defraud the Commonwealth. The conspiracy alleged in that criminal proceeding was essentially that there was a continuing agreement to deprive the Commissioner of Taxation of tax instalment deductions from a large number of employees of various Caratti Group entities. The entities involved some eleven companies and the partnership of S and M Caratti. Each of those entities were said to be controlled by members of the Caratti family and to be engaged in the business of farming, mining or earthmoving. It was alleged that John Michael Caratti, Sergio Caratti and Maddeliene Caratti worked in the group's offices in Redcliffe, at which office financial control of the Caratti Group entities and the payment of wages was centralised.

5 The Crown sought to prove in the criminal proceedings that the various Caratti entities had employed a significant number of people over the period of the conspiracy and were liable to pay tax in respect of the remuneration paid to them, but had failed to deduct or remit the correct amounts of tax instalments in respect of such remuneration. There were a variety of methods alleged as the means by which the concealment or non-disclosure of wage payments and tax liability was effected. The Crown called witnesses who fell generally within identifiable groups.

6 The first group of witnesses were individual workers who described the details of their work for one or more of the Caratti entities; oral evidence and evidence by way of written statements was adduced from 66 of an alleged 697 workers. In relation to the balance of the workers, evidence was adduced to the effect that the majority of them either did not file tax returns or filed returns which made no mention of any relevant Caratti entity. Another group of witnesses were persons who were involved in the organisation or business of one or more of the relevant Caratti entities. Australian Federal Police officers and bank officers gave evidence to prove large numbers of documents, including large numbers of original and copy cheques. There were 7,506 exhibits in all, largely consisting of documents. The final group of witnesses comprised tax officers, some of whom gave evidence relating to Australian Tax Office procedures and one of whom, Mr Sutherland, prepared detailed schedules based upon his analysis of the documentary evidence and based upon certain assumptions which he identified, and prepared relevant calculations.

7 Of the alleged conspirators, Sergio Caratti had died in 1992; Alan Bruce Caratti was acquitted by direction of the learned trial Judge at the closing of the Crown case; Maddeliene Caratti was found not guilty by verdict of the jury; and John Michael Caratti was convicted by the jury. His appeal against conviction was dismissed. The criminal trial occupied four months.

8 Although some of the matters to which I now refer were raised by the defendants subsequent to the receipt of written submissions in relation to this application, I term them "preliminary objections" since they logically should be determined before I consider whether to go to the merits of the application. In broad terms, the history of the application is as follows. In May of 2000 this matter was first before me and I was informed in general terms about the nature of the action. At that stage the plaintiff foreshadowed an application which I then understood to be an application of the type now made pursuant to O 29. The counsel then representing the defendants made certain observations about that foreshadowed application although, of course, they were observations of principle and made without regard to any particular form of application. On 4 May this year, the solicitor for the plaintiff advised the solicitors for the defendants of his intention to bring on this application and the papers were filed on 16 May. The matter was listed for hearing on 29 May.

9 As I understand it, there are a number of objections now raised by the defendants to my dealing with this application. They are: the plaintiff's failure to comply with O 59 r 9; the defendants' desire to make oral submissions or at the least to file further written submissions; and what at this stage is put no higher than possible misconduct on the part of the plaintiff's solicitors.

10 By way of background, when the matter was before me on 29 May counsel for the defendants indicated that he understood that counsel for the plaintiff was to advise me that the matter would be adjourned. There then followed a few moments of confusion. The confusion appears to have had two sources. First, counsel for the plaintiff was, in relation to the adjournment matter, apparently acting on instructions received directly from officers of the plaintiff, while there had been some discussions between the solicitor for the plaintiff and solicitors for the defendants which had not at that stage been conveyed to counsel. The difference effectively was that the officers would "not oppose" an adjournment, while the solicitor had indicated that he would be prepared to consent to it. It appears from the transcript of the hearing before me, however, that counsel for the plaintiff advised me of his instructing solicitor's view at an early stage. The other source of confusion appears to have been the view taken in discussions between the solicitors that the question of adjournment or otherwise was a matter for them, rather than for the Court. It was necessary for me to point out that two applications had been listed before me and that it would be inconvenient were only one of them to be adjourned, resulting in an additional appearance and duplication of effort for all concerned. I noted that it was the policy of the Court to discourage serial interlocutory applications where possible.

11 Against this background, counsel for the plaintiff suggested that I should deal with the plaintiff's application on the written submissions already filed, and should afford the defendants the opportunity to file and serve written submissions in response. Counsel for the defendants advised me that the defendants' position was that they wished to have senior counsel make oral submissions to me in relation to the O 29 application, but that they did not suggest that there was any compelling reason why the matter required oral argument. Since that time, I have received very full written submissions from the defendants.

12 Turning to the O 59 point first, I would begin by noting that the rule is an important one and that it is very much in the interests of the parties, and in the interests of justice generally, that applications should not be needlessly made to the Court. The purpose of O 59 is to ensure that parties resolve issues between themselves so far as possible, that only those matters which are really in dispute are referred to the Court, and that on occasions when matters are to be determined by the Court all parties appreciate what the real issues in dispute are. However, in this case the subject matter of the application has been known for a very considerable time. The preliminary views of the parties were mentioned before me over a year ago. The defendants have had ample time to consider their position in relation to the application. Further, the matter is one which will very significantly affect the manner in which the trial proceeds. For reasons which I come to when dealing with the merits of the application, it is one which in my view should be determined at an early stage if possible. In those circumstances, it is in my view appropriate to determine the application notwithstanding a want of compliance with O 59.

13 So far as the misconduct issue is concerned, the short answer to that point is that there is before me no evidence of relevant misconduct on the part of the plaintiff, its solicitors, or counsel. It is possible to see how, when the issue first arose before me on 29 May, the solicitors for the defendants may, at first, have formed the impression that counsel for the plaintiff was not being entirely frank with the Court about previous discussions relating to the question of adjournment. However, that appears to have been due to a misapprehension on the part of counsel which was soon corrected. The suggestion then made by counsel for the plaintiff that I consider this matter on the basis of written submissions does not seem to me to have been an attempt to resile from any agreement concerning an adjournment, but rather to have been an attempt to deal with the foreseeable problem which would arise for the parties if I should refuse to grant the adjournment application.

14 So far as further oral or written submissions are concerned, on 25 July counsel for the defendants suggested that it would be appropriate for the matter to be the subject of further oral or written submissions on behalf of the defendants dealing, as I understood it, principally with two issues. One was the O 59 issue to which I have referred. The other related to certain authorities contained in the plaintiff's submissions which went to the admissibility of the evidence proposed to be given by a Mr Sutherland. As I note later in these reasons, as I understand it, it is proposed that Mr Sutherland's evidence be given by viva voce in any event. The admissibility of his evidence is a matter which does not require determination in the context of this application. It therefore seems to me that it is not necessary to have further submissions in relation to either of those issues. I now turn to the merits of the applications.

15 The plaintiff seeks orders that certain transcript evidence, which was given in the criminal trial and which is identified by relevant transcript page numbers in its "witness spreadsheet", be received as the evidence of each specified witness in these proceedings. It also seeks that the exhibits proved and tendered in evidence at the trial by those witnesses, together with certain evidence tendered at the criminal trial by consent, which evidence is identified in the spreadsheet, be received as the evidence in these proceedings. It seeks an order that the defendant notify the plaintiff no later than 90 days before the date set down for the hearing of the action in relation to any witness for the plaintiff whom the defendants may wish to cross-examine at trial. It further suggests that if the plaintiff wishes to adduce further evidence-in-chief in respect to any of the witnesses referred to in the witness spreadsheet, it should be required to give notice in writing to the defendants and to provide an outline of the witness' evidence at least 60 days before the commencement of the trial of the action. As I presently understand it, the effect of such orders would be that virtually the whole of the plaintiff's evidence in these proceedings would consist of the evidence led at the criminal trial, with the important exception of the evidence of Mr Sutherland, whom the plaintiff proposes to call to give viva voce evidence in relation to his schedules.

16 The attitude of the defendants towards this application appears to have altered somewhat over time. When the question was first raised before me in May 2000, counsel representing the defendants took the view that what was in effect proposed by the plaintiff was the use of the evidence in question from the criminal proceedings as a form of "glorified witness statement" and that there would be no objection to that course. However, counsel noted that there might be objections to the form of some of the evidence and to the relevance of other portions and it was foreshadowed that it was likely that the defendants would be seeking to cross-examine "quite a number" of those witnesses. Although the defendants' written submissions on this application suggest that it would be a misreading of the transcript of that day to understand the defendants' counsel as agreeing to the course proposed, it is in my view clear from the observations made by counsel on that day that, while there were certain reservations, there was no blanket opposition to such a course.

17 The position now taken by the defendants is one of blanket opposition. It appears to have a number of bases. There appears to be a suggestion by the defendants that most of the evidence is in any event inadmissible for one reason or another. I do not see it as my function on this application to determine questions of admissibility, and any orders made will be subject to the defendants having the opportunity at an appropriate time to object to any portions of the evidence in the criminal proceedings on the basis of inadmissibility for irrelevance or other reasons. More substantially, it is submitted: first, that it is "too early" in these proceedings to contemplate orders of the kind sought and; secondly, that O 20 r 2 does not permit the overriding of the rules of evidence and that at common law, the rules of evidence would not have permitted the admission of the evidence at the criminal trial in proceedings such as these. Alternatively, it is suggested that even if there is a discretion to admit such evidence, there is no reason to exercise it "at this time".

18 To take the timing point first, it is my view that in long causes of this type, it is very important that early attention to be given to all matters which may have a significant impact upon the length of the trial. What is proposed by the plaintiff is the tender of significant portions of both the examination-in-chief and cross-examination of relevant witnesses. In some cases, such a course may have the result that it will be unnecessary for the witness to be called at all, while in others it may significantly shorten the cross-examination to which the witness would otherwise be subject. A trial date cannot be set until there is some reasonable estimation of the probable length of the trial. It is therefore not possible to wait until trial dates are available and to work backwards from them in relation to an application such as the present one. Rather, it is desirable to take whatever steps can be taken to ensure that the parties are able to estimate the length of trial with some degree of accuracy at the earliest reasonable time. The order sought by the plaintiffs may well have the effect of shortening the time required for the trial by a matter of weeks, and perhaps even months. Although the pleadings are at an early stage, and there is as I have noted an application to strike out statements of claim, nevertheless it seems to me that the issues likely to arise at trial can be sufficiently well understood to enable proper consideration of this application. The defendants have not given any reason why it would be inappropriate to do so, or why prejudice might be caused to them, by the early determination of these matters.

19 The more substantial objection made by the defendants requires further consideration. It is submitted by them that at common law, testimony given by a witness in prior proceedings is admissible in a subsequent proceeding only where the proceedings are between the same parties or their privies (which the defendants say they are not here); the same issues are involved (which the defendants say are not here); the party against whom the evidence is tendered had on the former occasion an opportunity of cross-examination (which the defendants say is not the case here); and the witness is incapable of being called on the second trial.

20 It is submitted that it is self-evident the proceedings are not between the same parties or their privies, since the accused in the criminal proceedings were natural persons, while the defendants in the present matters (save for Maddeliene Caratti, to whom the defendants do not refer) are corporations. However, it appears to me that the defendants overstate the position, and that the better view is that evidence will be inadmissible where it was given in a suit which was between strangers to the second action, but will be admissible where it can be said that the parties are "virtually and substantially the same" (Wright v Doe d. Tatham [1834] 1 AD & E 4, 1108).

21 It can be seen from the summary of the criminal proceedings that it was a necessary part of the Crown case that the accused in that case were in a position to direct the activities of the various Caratti entities the tax liability of which was said to have been concealed. It is difficult to accept that where in the one case criminal proceedings are brought against those who are said to be in effect the directing minds and wills of corporate entities, and in another case proceedings are brought against a number of the corporate entities said to have been directed by the accused, that the parties are relevantly "strangers" to each other. Indeed, although it is often stated in the authorities as a separate requirement, it appears to me that the requirement that the proceedings be between the same parties rather shades into the question of whether the party against whom the evidence is tendered had on the former occasion an opportunity of cross-examination. It is this requirement which seems to be regarded as of central importance, both at common law and under the various rules which allow courts to make particular directions in relation to evidence: Meek v Guardian Assurance Co Ltd (1964) 80 WN 940, Tremelbye (Selangor) Rubber Co Ltd v Stekel [1971] 1 WLR 226, Pearce v Button [1986] FCA 51; (1986) 8 FCR 408.

22 Looking to the requirement that the party against whom the evidence is tendered had on the former occasion an opportunity of cross-examination, it is self-evident that the instructions in relation to cross-examination will be given in these proceedings on behalf of the corporate defendants by natural persons. It is not suggested by the defendants that there are any natural persons other than the accused in the former criminal proceedings who would be appropriate to give those instructions. They are the very persons who had the opportunity on the former occasion to cross-examine the witnesses whose evidence the plaintiff seeks to tender. Indeed the plaintiff seeks to tender not only evidence-in-chief but portions of the cross-examination of those witnesses. As I understand it, the plaintiff would be prepared to consent to an order that all of the relevant cross-examination be included as part of the evidence-in-chief of those witnesses for the purposes of these proceedings.

23 So far as the issues are concerned, it seems to me that the same issues are involved in this case as arose in the criminal proceedings; that is, there are issues as to whether certain persons were employees of any of the defendants and, if so, what steps were taken by the defendants in relation to the tax liabilities incurred in relation to those employees. It is true that in the criminal proceedings there was an additional issue of conspiracy - that is an issue as to whether there was an unlawful agreement between named persons - which does not arise here. In addition, in the criminal proceedings it was not necessary to establish that the plaintiff had been unlawfully deprived of any particular amount in respect of any employee or employees, while the question of the quantum of liability of each of the defendants is obviously an important issue in these proceedings. However, it does appear to me that there are some identical issues, such that it can truly be said that in these proceedings the issues in relation to which the evidence is sought to be adduced are "substantially the same" as in the criminal proceedings (see Pallante v Stadiums Pty Ltd (No 2) [1976] VicRp 32; [1976] VR 363).

24 Finally however, at common law, it is suggested that it is a prerequisite for the tender of evidence from a prior proceeding that the witness be incapable of being called on the second trial. It seems to me that, whatever the cause of the incapacity, the authorities to which I have been referred do suggest that it is necessary that it be demonstrated that a witness is "incapable" of being called in the second proceeding before the witness's evidence at the prior proceeding will be admissible. There is no evidence in this case that the witnesses are incapable of being called; rather, the application appears to be based upon the proposition that it would be an unnecessary expense and a waste of the time of both the parties and the court if they were to be called.

25 It appears to me that s 167(1)(o) of the Supreme Court Act authorises the making of rules which permit departure from the rules of evidence in the circumstances there nominated. I would respectfully adopt in that regard the observations of Owen and Steytler JJ in Bristile Holdings Ltd v Giacci Brothers Pty Ltd [2000] WASCA 48 at par 20. Section 167(1)(g) may also have that effect. The question appears to be whether O 29 r 2(1)(c), or perhaps the general power contained in the opening words of r 2(1) is intended to authorise the making of an order of the type sought here. The question is not one of power, but of construction of the rule. In that respect also, I would adopt the observations of Owen and Steytler JJ in Bristile Holdings v Giacci, at par 19.

26 It is my view that there is much to be said for the reasoning of Dixon AJ in Murine Eye Remedy Co v Eldred [1926] VLR 425. In a case where the rule-making power would in his Honour's view have authorised a rule permitting a departure from the rules of evidence, his Honour thought that it was appropriate that a rule made pursuant to that power should receive the construction which the words naturally required, rather than some more limited construction. Particularly having regard to the purpose of the case flow management rules, it appears to me that it is appropriate to give O 29 r 2(1) a broader, rather than a narrower construction. In my view, it would permit orders of the type sought by the plaintiff.

27 The interests of justice must be borne steadily in mind in deciding whether to make an order pursuant to that rule, and any questions of prejudice to any party must be carefully considered. However, where, as here, the evidence would have been admissible in these proceedings if the witness were "not capable" of being called, it is appropriate to depart from the common law rule to the extent of permitting the admission of the evidence where the witness may be capable of being called but where it appears that undue expense and inconvenience (to the parties, to the court, and - not least - to all those witnesses who would otherwise be called to give the same evidence a second time) would be caused by a requirement to call the witnesses. I have not been pointed to any prejudice which would be caused to the defendants by such an order in this case.

28 I should add that it appears to me that if I were wrong in the view that I have formed of O 29, it would nevertheless be possible to achieve the same effect by at least one, and possibly two, other routes. The first route would be to treat the evidence at the criminal trial as indeed "glorified witness statements" and to direct that the evidence at the criminal trial identified by the plaintiff stand as the written witness statements of proposed evidence-in-chief pursuant to O 29 r 2(1)(m) and (n) together with par 8 of Practice Direction No 4 of 1995. I would also in that case be prepared to make an order pursuant to the rules and the practice direction dispensing with the usual practice of calling the witness and requiring the witness to read the statement. Alternatively, it may be that the evidence could be read in any event pursuant to O 36 r 10. The commentary in "Seaman" on that rule suggests that it will only be applicable where the two causes were between the same parties or their privies, but it may well be that for reasons which I have already expressed, the parties in these two matters could be regarded as relevantly "the same".

29 I would therefore make orders in terms of par 1 and par 2 of the plaintiff's chamber summons for orders dated 16 May 2001. So far as par 3 and par 4 are concerned, I am of the view that orders broadly to this effect would be desirable. However, rather than working backwards from the date of the hearing, it seems to me that it is more desirable to order that the relevant notifications take place within a specified period from the date of this decision. The reason for this view is that it seems to me that it will be easier to estimate the length of the trial with some accuracy, and thus to set trial dates, once it is known how many witnesses are likely to be called for cross-examination and how many witnesses there may be in respect of whom the plaintiff wishes to adduce further evidence. I would therefore direct that the plaintiff draw up a proposed minute of orders reflecting these observations, and confer with the defendant's solicitors. The minute can then either be the subject of a consent order, or any difference in relation to the proposed times can be the subject of brief oral or written submissions.

Application to strike out portions of statements of claim

30 The application is made in respect of the minute of proposed amended statement of claim dated 30 November 2000. One submission effectively is that certain portions of the statements of claim are embarrassing in that they plead conclusions or assertions of law rather than material facts. It is further submitted that the defendants are not in a position to understand certain paragraphs and not in a position therefore to plead to them in any sensible manner. The issue around which the relevant paragraphs revolve is, broadly, the issue of whether certain persons were employees so as to constitute the defendants an employer with the duties attached to that position pursuant to the Income Tax Assessment Act and the Taxation Administration Act. The company Mine Exc Pty Ltd is in a somewhat different position from other defendants, since it is alleged to have been a group employer and registered as a group employer; nevertheless questions in relation to its employment of the "employees" also arise.

31 The pleadings by the plaintiff have taken an unusual form, no doubt because of the nature of the action. The minute of proposed statement of claim itself is a brief document, consisting of some 23 pages which, because of amendments which include deletion of particular passages, amount to perhaps 20 pages or thereabouts of allegations. There are then four schedules annexed to it, two of those being voluminous.

32 Schedule A in the case of Robinswood runs to 124 pages of closely spaced items. It is pleaded in the statement of claim that Schedule A identifies, in respect of each refusal to affix tax stamps for each employee, a number of matters, including: the date of the relevant payment of salary or wages; the name of the employee receiving the salary or wages; the amount of the salary or wages; the cheque number referrable to each payment; an identifier showing the account (alleged to be an account of the defendant) from which the cheque was drawn; and the document number of each of the documents (being documents which I am informed from the bar table have been computer imaged so as to be made available electronically to the defendants) which is relied upon to prove the character and amount of the payment. It is pleaded that each of the persons named in Schedule A was at the relevant time an employee of the defendant and that each payment recorded on Schedule A was a payment of wages or salary. Schedule A also contains a calculation contained in a column headed "deduction" which sets forth the amount in respect of which it is alleged tax stamps should have been affixed in respect of the payments to the employees.

33 Schedule B is a two page document which purports to set out, again in closely spaced columns, the total amount of deductions due for identified four week periods in respect of the particular defendant, and the penalties payable on that amount calculated pursuant to the provisions of the Income Tax Assessment Act.

34 Schedule C is another voluminous schedule, running to 78 pages of closely spaced items. It purports to identify, in respect of each failure to deduct an amount, the date of the payment of the relevant salary or wages, the name of the employee, the gross pay and additional pay payable to the employee, the tax deducted (if any), the employee's net pay, whether or not an employment declaration was made in respect of each employee, the amount required to be deducted by the Income Tax Assessment Act and the amount calculated as the difference between the amount required to be deducted and the amount (if any) actually deducted. It is alleged that each of the persons named in the schedule was at the date specified in respect of the relevant payment, an employee of the particular defendant.

35 Schedule D is another brief document setting out calculations for the amount not deducted and the penalty on the amount not deducted in respect of particular specified periods.

36 It should further be noted, that although they are not part of the pleadings, there was attached to the plaintiff's application pursuant to O 29, a very lengthy schedule specifying globally (that is in respect of all the defendants) the portions of the evidence of the criminal trial upon which the plaintiff seeks to rely, and the documents admitted in evidence at that trial upon which the plaintiff seeks to rely. In addition, I was handed up at the hearing of this application, a spreadsheet entitled "Witness and transcript spreadsheet" which is in effect a spreadsheet of the particular passages in the evidence of each of the witnesses in the criminal proceedings showing with particularity the portions of the transcript relevant to prove the indicia of employment alleged in the statement of claim. These documents were made available to the defendant and I am advised they are documents upon which the plaintiff will seek to rely at trial to prove the allegations that the persons referred to were in each case employees.

37 It is perhaps a curious suggestion that, where those in effective control of corporate entities have had a lengthy trial in which a relevant issue was the question of whether the corporate entities had employees, extensive evidence has been tendered in respect of that issue, witnesses have been cross-examined on behalf of the accused in respect of that issue, closing submissions of counsel and directions to the jury by the learned trial Judge have been made in respect to that issue, and the Court of Criminal Appeal has made observations in respect of that evidence and in respect of that issue, it could nevertheless be said that the corporate entities were not in a position to know what was to be alleged against them, in proceedings relying upon precisely the same evidence, in relation to that same issue. There are of course differences between the two types of proceedings. Most importantly, in the criminal proceeding it was not necessary for the Crown to establish that any particular amount or amounts had been wrongly left undeducted or that there had been a failure to affix tax stamps in relation to any particular amount or amounts while, as I have noted, in relation to these proceedings, proof of the amounts in question in respect of each of the alleged employees will be necessary in order to found the relief which the plaintiff seeks. Further, as a practical matter, I note that the accused in the criminal trial and these defendants are apparently represented by different counsel. However, the fact of the prior proceedings cannot be ignored, nor can the fact that the allegations in these proceedings involve very many payments of a relatively small amount alleged to have been made to very many different individuals on very many different occasions, adopting what are alleged to have been a number of different techniques to conceal the full liability of the defendants.

38 It is perhaps convenient to set out in full an example of the pleading to which the defendants object. While a variety of complaints are made about particular portions of the statement of claim, it appears that the central issue is the issue of the way in which the alleged employment status of the relevant persons is pleaded.

39 Paragraph 3 of the Robinswood statement of claim reads as follows:

"3. Each of the persons listed in Schedules A and C annexed hereto ('the persons') was an employee of the Defendant during the period 20 June 1989 to 17 November 1989 in that each of the persons satisfied the definition of employee in Section 221A of the Act being a person who received salary or wages paid as an employee within the ordinary meaning of that expression, or payments made under a contract that was wholly or principally for the labour of the person.

PARTICULARS

3.1 The Defendant paid a wage or salary to each of the persons on a regular basis by cash cheque and/or cheque in the person's name;

3.2 The Defendant directed and controlled the persons in relation to the type of work they carried out, where they carried the work out and the manner in which they carried it out;

3.3 The Defendant provided and maintained the equipment, and also provided the materials, used by the persons in the performance of their duties;

3.4 The persons' hours of work were specified by the Defendant in each case;

3.5 The Defendant had the right to direct and did so direct the persons where to work, when to work and what work to perform;

3.6 The persons had no right to delegate the work they were directed to perform by the Defendant;

3.7 The Defendant deducted amounts from the payments of salary and wages made to the persons by the Defendant as particularised in Schedule A;

3.8 The persons were obliged to perform their duties as employees of the Defendant pursuant to oral contracts of service which were made shortly prior to commencing their duties thereunder and in each case the person accepted an engagement in the capacity of an employee only;

3.9 The Defendant had the right to suspend or dismiss each of the persons;

3.10 The Defendant had the right to the exclusive services of each of the persons and did exercise that right in each case;

3.11 The persons employed were part of the Defendant's business organisation and the work they carried out was an integral part of the Defendant's business;

3.12 None of the persons employed issued their own invoices to the Defendant;

3.13 The Defendant's supervisor recorded the hours worked by each of the persons employed and forwarded or communicated the records to the Defendant's accountant who calculated the particular amounts payable to each of the persons as wages;

3.14 The persons employed were paid in accordance with the hours they worked as appeared from the records kept by the Defendant's supervisor;

3.15 In the Defendant's accounting records, comprising attachments to cheque requisitions and cheque requisitions, the payments to the persons were described as wages;

3.16 None of the persons employed had their own independent businesses."

40 The first objection made is that the whole of the paragraph is embarrassing, in that it is not clear in respect of each person whether the person is alleged to have been one who received salary or wages paid as an employee or a person who received payments made under a contract wholly or principally for the labour of the person, those matters being pleaded in the alternative. It seems to me that it is open to the plaintiff to plead in the alternative and no embarrassment necessarily flows from that course. More importantly however, the defendants assert the plaintiff has done no more than in effect plead the statutory definition of salary or wages together with a variety of legal indicia of the status of employee without specifying the material facts giving rise to the conclusion that any or all of those indicia are present and without, of course, specifying which of the indicia are said to be applicable to each of the individual employees. It is to be remembered that there are apparently in the region of 600 persons alleged to be employees. The defendants' submissions appear to suggest that it would be necessary, for example, in relation to par 3.8, to plead the date, place, parties to and substance of each conversation which constituted an oral contract, with respect to each alleged employee.

41 I think it is appropriate to deal broadly with the substance of the defendants' submissions, rather than go through the detail of each, since the complaint is essentially the same in respect of each.

42 The primary function of pleadings and particulars is to ensure a fair trial by putting the opposite party on notice of the case to be met and by defining the issues so that the preparation of the case and of the trial itself can be controlled. There is a very useful discussion of the function of pleadings and of the way in which the function may be achieved in cases of complexity in State of Queensland v Pioneer Concrete (Qld) Pty Ltd [1999] FCA 499; (1999) ATPR 41-691, a decision of Drummond J. Where it is said that a pleading is a pleading of a conclusion rather than of a material fact, a number of observations may be made. The first is that the distinction between a conclusion and a material fact will not always be easy to draw and may fall to be drawn differently in different cases depending upon the context. For example, in a case in which a person was suing upon a contract of employment, relevant material facts would be those such as the date, place and substance of the conversation which was said to give rise to the contract (if oral). The terms and existence of the contract would be the conclusions ultimately sought to be drawn from those material facts. However, in cases such as the present, the conclusion sought to be drawn is that each of the relevant persons was an employee. The existence of an oral contract of employment will be relevant to such a conclusion, but the precise terms of the contract will be of no interest whatever. It will be enough if there is material from which the court can draw the conclusion that there was a contract and that it was a contract of employment. In such a case, it may not be necessary to prove the terms of the contract at all; for example, it may be enough if evidence is called from either the alleged employee him or herself, or from someone who observed the person's work and the person's apparent relationship with the alleged employer, from which the inference may be drawn that a contract was in existence.

43 It seems to me that the real issue here is not whether the various assertions set out in par 3 are properly to be described as conclusions, whether of fact or of law, but whether the facts are pleaded at too great a level of generality for the defendant to be able properly to answer them: see State of Queensland v Pioneer Concrete at par 20, and the cases there cited. In this case, it seems to me that the majority of the allegations set out in the sub-paragraphs of par 3 are clear, and that they are not so general that the defendant is unable to answer them. For example, in relation to the allegation that "none of the persons employed issued their own invoices to the defendant" in par 3.12, or the allegation in 3.13 as to the recording of the times worked by each of the persons, or the broader allegation in 3.6 that the persons had no right to delegate the work they were directed to perform, I see no reason why the defendant could not, in respect of either all of the alleged employees globally, or in respect to certain of them, understand the allegation which is made and respond to it either by admission or denial.

44 I would add that it appears to me that there is one aspect of the framing of this paragraph which is objectionable. A number of subparagraphs, 3.5 being an example, plead either that the defendant or the persons in question had, or did not have, a "right" to do or not to do something. It seems to me that strictly that is a conclusion of law and that the relevant fact, for the purposes of 3.5 for example, would either be that the defendant did in fact direct the persons where to work, or that perhaps the defendant asserted a right to direct them. This seems to me to call for a minor reframing of those paragraphs and I would give the plaintiff leave to do so.

45 With amendments of the type to which I have referred, it seems to me that the pleading in par 3 is one to which the defendant is able to respond and is a pleading which does properly define the issues for decision.

46 In relation to the question of whether the statement of claim sufficiently puts the defendant on notice of the case to be met, the statement of claim is of course not to be considered in isolation, but must be considered together with the schedules which are expressed to be schedules to it, and should I think also be considered to be amplified and supplemented by the additional spreadsheet schedule to which I have referred. It is submitted on behalf of the defendants that the schedules do not assist in curing what are said to be the defects of the statement of claim, in part because the material facts must be found in the statement of claim itself and second, as I understand it, because the schedules contain matters of evidence. In my view, it is appropriate in a case where there is considerable factual detail, as here, but where it is also said that the facts fall into a relatively limited number of categories, to deal with the issues by categorising the facts in a relatively broad way in the statement of claim and particularising the detail of the allegations either by particulars or, as here, by picking up in the schedules the names of the alleged employees and the relevant dates at which their employment is alleged to have taken place.

47 So far as questions of evidence are concerned, it is true that the schedules and the spreadsheet go beyond allegations of material fact and set out in relation to each of the alleged employees, the evidence upon which the Crown relies in order to establish their status as employees. It is not however, as I understand it, suggested that the defendants will be required to plead to this evidentiary detail. Rather, it is there for the purpose of assisting the defendants to understand the nature of the case sought to be made against them in relation to each employee. While accepting that it is not a practice to be encouraged in the generality of cases, it appears to me that where the nature of the plaintiff's case is such that certain fairly broad and general conclusions alleged in the statement of claim are said to be supported by complex and detailed materials derived from a very large number of sources, it is appropriate for the plaintiff to assert the broad conclusions in the statement of claim and then to provide, either by way of affidavit or schedule or in some other form, the detailed matters which might otherwise more properly be inserted in pleadings by way of particulars, or even which may properly be considered to be evidence from which the conclusions may be drawn: see State of Queensland v Pioneer Concrete at par 18 and par 19, and Murchison Zinc Co Pty Ltd v Thiess Contractors Pty Ltd [2000] WASCA 167, particularly par 28.

48 It appears to me therefore that the plaintiff has pleaded with sufficient clarity, primarily in par 3 of the statement of claim, the material facts upon which it relies to establish that the persons named in the schedules are employees. The schedules name the relevant employees and particularise the dates on which they were said to be employed and the amounts which it is said they received by way of salary or wages, and the amount which it is alleged should have been represented by tax stamps or deducted as required by the Income Tax Assessment Act. Those are, it seems to me, the facts which are necessary for the proper disposition of this case. The statement of claim and schedules both enable the defendants to know the case which they have to meet in each case, and adequately define the issues alleged by the plaintiff to arise at trial. I would therefore dismiss the application to strike out the statement of claim or portion of it. I should add, for the sake of completeness, that the defendants' application was in form based upon O 20 r 19(1)(a) and (b), so that in order to succeed it would apparently require a finding either that the statement of claim disclosed no reasonable cause of action or that it was scandalous, frivolous or vexatious. However, it was argued before me by counsel for the defendants on the basis that the statement of claim was "embarrassing", and I have therefore considered the application on the basis that the defendants sought to meet this somewhat lower threshold.

Deputy Commissioner of Taxation for The Commonwealth of Australia v Robinswood Pty Ltd [2001] WASC 191

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Judgment (64 paragraphs)

Deputy Commissioner of Taxation for The Commonwealth of Australia v Robinswood Pty Ltd [2001] WASC 191 (3 August 2001)

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