Fair Work Ombudsman v Hu [2017] FCA 1081 | Case summary

RANGIAH J: 1 This is an interlocutory application brought by the second respondent, Marland Mushrooms Qld Pty Ltd (Marland Mushrooms) and the third respondent, Troy Marland (Mr Marland) seeking: (1) vacation of orders requiring them to file and serve affidavits and submissions prior to trial; and (2) an order that they be excused from filing affidavits and any amended defence until the close of the applicant's case. 2 In the principal proceeding, the applicant alleges that each of the respondents contravened s 45 of the Fair Work Act 2009 (Cth), which provides that a person must not contravene a modern award. The applicant alleges that the respondents were accessories to the under-payment of workers who picked mushrooms at Marland Mushrooms' farm. The applicant seeks declarations and the imposition of civil penalties on the respondents. 3 The question of whether the respondents breached the Act has been set down for hearing from 9 to 11 October 2017 (the Liability Hearing) and is to be heard separately from the question of any relief. 4 The originating application and statement of claim were filed on 12 September 2016. On 18 October 2016, the Court ordered, by consent, that the respondents each file a defence. Mr Marland and Marland Mushrooms, who have the same legal representation, filed a defence on 10 November 2016. 5 On 16 March 2017, the Court ordered, by consent, that the matter be listed for the Liability Hearing and that the parties file and serve affidavits and submissions by specified dates prior to the trial. 6 On 3 July 2017, the National Farmers' Federation was granted leave to intervene in the proceeding, making it necessary to vary the dates for the filing and service of affidavits and submissions. The Court ordered that: … 4. The evidence in chief of witnesses called in the Liability Hearing, other than any person subpoenaed to give evidence, be given by way of affidavit. 5. The first, second and third respondents each file and serve any affidavits that they intend to rely on at the Liability Hearing by 19 July 2017. … 9. The first, second and third respondents each file and serve any outline of submissions that they intend to rely on at the Liability Hearing and a list of authorities by 8 September 2017. 7 Mr Marland and Marland Mushrooms have not complied with orders 5 and 9 and seek to have those orders vacated. Mr Marland submits that he is entitled to claim privilege against exposure to a penalty and, accordingly, neither of them can be compelled to file and serve affidavits. 8 The applicant does not dispute that penalty privilege applied to Mr Marland, but submits that he waived that privilege by filing a defence containing admissions and making positive allegations, and by consenting to orders for the filing and service of affidavits prior to trial. 9 In response, Mr Marland argues that there has been no waiver of privilege, firstly, because he has done nothing inconsistent with the maintenance of privilege and, secondly, because privilege cannot be waived by a solicitor acting without instructions to do so, and no such instructions were given. 10 The solicitor for Mr Marland deposes that he had not taken specific instructions as to whether Mr Marland wished to waive any privilege at the time the solicitor signed the minute of consent order of 16 March 2017. The solicitor deposes that it had not occurred to him that signing the minute might affect Mr Marland's ability to claim penalty privilege. I accept that Mr Marland has not provided his solicitor with instructions to waive privilege. 11 Penalty privilege is similar to but distinct from privilege against self-incrimination: Anderson v ASIC [2012] 2 Qd R 401 at [17]. A party should not be ordered to disclose any information that would assist in establishing the liability of the party to a penalty: ACCC v FFE Building Services Pty Ltd (2003) 130 FCR 37 at [12]; Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat and Live-Stock Corporation (1979) 42 FLR 204 at 207. The privilege serves the purpose of ensuring that those who allege criminality or other illegal conduct should prove it: Daniels Corporation International Pty Ltd v ACCC (2002) 213 CLR 543 at [31]; Trade Practices Commission v Abbco Ice Works Pty Ltd (1994) 52 FCR 96 at 129. 12 Modern pleading rules require parties to expose their case for trial and, so, are contrary to a claim for penalty privilege: Anderson v ASIC at [27], [32]-[36]; ASIC v Mining Projects Group Ltd (2007) 164 FCR 32 at [12]. Procedural rules yield to rights conferred by the law of privilege unless there is clear statutory authority to the contrary: McDonald v ASIC (2007) 73 NSWLR 612 at [39]; Anderson v ASIC at [20]. 13 Accordingly, penalty privilege operates to relieve a respondent from the need to deliver a defence that complies with the pleading rules if the rules would override the privilege: ASIC v Mining Projects Group Ltd at [12]. 14 Penalty privilege also prevents a respondent from being ordered to file statements of evidence prior to a trial: ACCC v FFE Building Services Pty Ltd at [14], [29]; One Tel (in liq) v Rich (2005) 53 ACSR 623 at [77]. 15 Penalty privilege does not apply to a corporation: s 187 of the Evidence Act 1995 (Cth). However, a Court should not make an order requiring a corporate respondent to make discovery if, by complying with that order, a natural person would be denied the privilege the person is otherwise entitled to: Microsoft Corporation v CX Computer Pty Ltd (2002) 116 FCR 372 at [31]-[33]; Devine Marine Group Pty Ltd v Fair Work Ombudsman [2013] FCA 442 at [66]. 16 Mr Marland is the sole director and shareholder of Marland Mushrooms. In the statement of claim, the applicant alleges that, pursuant to s 793 of the Fair Work Act, Mr Marland's state of mind is that of Marland Mushrooms. 17 There is no doubt that requiring Mr Marland to file affidavits, or a defence that positively pleads his case, or submissions dealing with the facts of the case, prior to trial, would expose him to a penalty. Further, if Marland Mushrooms is required to take those steps, that would effectively deprive Mr Marland of his privilege against exposure to a penalty. 18 Penalty privilege, like other forms of privilege such as the legal professional privilege and privilege against self-incrimination, can be waived expressly or impliedly: ASIC v Mining Projects Group Ltd at 39; Gemmell v Le Roi Homestyle Cookies Pty Ltd (in liq) (2014) 46 VR 583 at 596. 19 The applicant submits that Mr Marland has waived privilege by doing two acts inconsistent with the maintenance of privilege. The first is said to be by filing a defence which, in part, makes admissions and pleads a positive case. The applicant submits that, given the extent of the admissions and positive allegations advanced by Mr Marland in the defence, it cannot be asserted that there has only been a limited waiver of penalty privilege, and submits that privilege has been waived in full. 20 In their defence, Mr Marland and Marland Mushrooms make admissions as to the status of applicant, the incorporation of relevant companies, the entry of Marland Mushrooms into contracts and the terms of the contracts, the applicable awards and some admissions as to the roles of Mr Marland and a named employee of Marland Mushrooms. There are some positive assertions of facts, including that they rely on some further contractual terms, that Mr Marland was involved in the growing of mushrooms, that Mr Marland knew of certain rates of pay and that a named employee was acting within the scope of her authority. The remainder of the defence consists of non-admissions, denials and assertions that it is not necessary to plead to particular paragraphs of the statement of claim. A number of the paragraphs which make non-admissions state that the respondents reserve their right to amend and advance additional material in support of their defence after the close of the applicant's case. 21 The admission of allegations made in a statement of claim constitutes a waiver of privilege against self-exposure to a penalty: Bridal Fashions Pty Ltd v Comptroller-General of Customs (1996) 17 WAR 499 at 516; Hadgkiss v Construction, Forestry, Mining and Energy Union [2005] FCA 1453 at [29]. However, a respondent who admits a particular fact in his or her defence does not thereby waive the right to claim privilege for all other facts: John Holland Pty Ltd v Construction, Forestry, Mining and Energy Union (No 2) [2011] FCA 368 at [22]; ASIC v Mining Projects Group Ltd at [24]. 22 I accept that Mr Marland has waived penalty privilege in respect of the admissions and positive assertions of fact made in the defence. However, there is no indication of any intention to waive privilege in respect of any other facts or matters. The waiver goes no further than the facts and matters admitted and asserted in the defence. 23 That limited waiver of privilege means that Mr Marland and Marland Mushrooms could be compelled to provide affidavits dealing with the matters in respect of which privilege has been waived. However, there seems no point in that course. 24 The applicant also submits that Mr Marland waived penalty privilege in full by consenting, through his solicitor, to orders that he provide affidavits prior to trial. Mr Marland contends that there has been no waiver because only he could waive the privilege and he provided no instructions to do so. He submits that a lawyer is not capable of unilaterally waiving the privilege held by his or her client. 25 Mr Marland relies upon the judgment of Gibbs CJ in Attorney-General for the Northern Territory v Maurice (1986) 161 CLR 475. In that case, in the course of a land claim, lawyers representing the claimants prepared a claim book, which they filed with the Aboriginal Land Commissioner and distributed to the other parties. The question was whether legal professional privilege had been waived in respect of source documents for certain reports contained in the claim book. Gibbs CJ, speaking of legal professional privilege, said at 480-481: However, like every privilege properly so called, it can be waived, although only by the person entitled to claim it, that is the client, and not the client's legal representative. 26 His Honour went on to observe that there was no express waiver of privilege and there was nothing to suggest that the claimants had any actual intention to waive privilege in the source documents. His Honour held that in a case where there is no intentional waiver, the question whether a waiver should be implied depends on whether it would be unfair or misleading to allow a party to refer to or use material and yet assert that that material, or material associated with it, is privileged from production. His Honour's consideration of implied waiver assumes that even though the claimants did not intend to waive privilege, privilege was capable of being waived by their legal representatives' action of including the reports in the claim book. The judgments of the remaining four judges also proceeded on the tacit basis that legal professional privilege in the source documents was capable of being waived by the lawyers' conduct in circumstances where the claimants had not provided instructions to waive privilege. 27 In my opinion, the judgment of Gibbs CJ in Attorney-General v Maurice does not stand for the proposition that privilege cannot be waived by a lawyer's actions unless the lawyer has received the instructions of the person entitled to the privilege to waive privilege. In fact, privilege may be waived by the actions of a lawyer acting with the ostensible authority of the person entitled to claim privilege: see Sovereign Motor Inns Pty Ltd v Bevillesta Pty Ltd [2000] NSWSC 521 at [24]; Meltend Pty Ltd v Restoration Clinics of Australia Pty Ltd (1997) 75 FCR 511 at 523; Dunstan v Orr (2008) 217 FCR 559 at [143]. 28 In this case, the applicant submits that the solicitor acted with Mr Marland's ostensible authority when consenting to orders that he provide his evidence prior to trial. That may be accepted, but it does not necessarily follow that Mr Marland thereby waived privilege. Mr Marland has not filed and served any affidavits, and he seeks to be relieved from any obligation to do so. On the face of it, the consent orders were merely an indication of his intention to waive privilege in the future. 29 However, the applicant contends that Mr Marland waived privilege by his entry into a binding agreement to provide affidavits prior to the Liability Hearing. The applicant relies upon Birrell v Australian National Airlines Commission (1984) 1 FCR 526, where Gray J said at 531-532: In any event, it is well established that the privilege against self-incrimination itself can be waived by a person otherwise entitled to claim it. Wigmore on Evidence (McNaughton Revision, 1961) in par. 2275 said: "It has never been doubted that the privilege against self-incrimination, like all privileges, is waivable. There are two possible ways of waiving: (a) By contract or other binding pledge before trial, or (b) by voluntarily testifying in the case." It can hardly be doubted that, if a respondent to a claim made under s. 119 of the Conciliation and Arbitration Act 1904 (Cth) chooses to enter the witness box in the course of the trial of the matter, that person could be cross-examined and required to answer questions the answers to which may tend to subject him or her to the penalty claimed; the privilege would be taken to have been waived. Similarly, if such a respondent were to bind himself or herself before such a claim is brought or during the interlocutory stages of a proceeding upon it, to supply information without claiming the privilege, the privilege would be lost. See East-India Company v. Atkins (1720) I Com. 346 at 352. Further in the paragraph cited above, Wigmore said: "A bare contract to waive the privilege will not be enforced specifically. Rather, it will be enforced, where possible, by indirect sanctions similar to those (short of arrest and contempt) available to punish civil litigants who refuse to comply with orders to make discovery - e.g., dismissal of the action." … I conclude, therefore, that if the respondent in the present case bound itself not to claim the privilege against the production of documents on the ground of self-exposure to a penalty, it should be compelled to make such discovery. It is necessary to determine the effect of the orders and directions made by consent on 27 April 1984. That the consent of each party to these orders and directions constituted a contract cannot be doubted. There was involved the agreement that each party would submit to the orders and directions proposed and would consent to them being made and given by the court. Consideration lay in the promise of each party to be bound. The respondent did not place before me any evidence which suggested mistake or inadvertence on its part or the part of its legal advisers, or any other element which might lead to the conclusion that no contract existed. It is my view that the respondent must be bound by the contract which it has made. (Emphasis added.) 30 In ASIC v Mining Projects Pty Ltd at [18]-[21], Finkelstein J expressed doubt that self-incrimination privilege can be waived by contract. Nevertheless, the application of Gray J's reasoning in Birrell makes it necessary to consider whether there was a contract between the applicant and Mr Marland requiring him to provide affidavits prior to the Liability Hearing. 31 In JL Holdings Pty Ltd v State of Queensland (1996) 71 FCR 545, Keifel J (as the Chief Justice was then) referred at 547 to Siebe Gorman & Co Ltd v Pneupac Ltd [1982] 1 WLR 185 and said: The order Lord Denning was there concerned with was one expressed to be "by consent". In that connection his Lordship pointed out the difference between an order expressed to be by consent and which does in fact evidence a real contract, and an order which conveys merely the absence of objection to a proposal. In the context of orders made during the course of proceedings and concerning their conduct, it seems to me that they will more commonly fall into the latter category and that it will be difficult to find a truly binding contract. 32 In this case, I have difficulty seeing that the applicant provided any consideration for Mr Marland's agreement to provide his affidavits prior to trial. The original consent order made on 16 March 2017 was made following a case management hearing conducted in the normal course and the order of 3 July 2016 was made as a consequence of the need to amend the timetable to take into account the intervention of the National Farmers' Federation. The position is unlike Birrell, where there were consent orders for mutual discovery. The respondent in that case presumably consented to discovery in order to avoid an application for discovery being made if the respondent refused, with the possibility of adverse cost consequences. In this case, there was no element of give and take. There is no suggestion that the applicant's consent to any of the orders was procured by Mr Marland's agreement to provide his affidavits prior to trial. 33 In my opinion, the applicant provided no consideration for Mr Marland's consent to provide his affidavits prior to trial. Therefore, the agreement to do so is not binding on Mr Marland. Penalty privilege has not been waived by any mechanism of Mr Marland entering into a contract binding him to provide his affidavits prior to trial. 34 In Attorney-General NT v Maurice, where the High Court considered that where there was no intentional waiver by the claimants, the question was whether waiver should be implied or imputed. It was held that that depends upon whether a party has performed some act which makes it unfair to another party for the privilege to be maintained. 35 In Goldberg v Ng (1995) 185 CLR 83, the plurality said at 96: Necessarily, the basis of such an imputed waiver will be some act or omission of the persons entitled to the benefit of the privilege. Ordinarily, that act or omission will involve or relate to a limited actual or purported disclosure of the contents of the privileged material. When some such act or omission of the person entitled to the benefit of the privilege gives rise to a question of imputed waiver, the governing consideration is whether "fairness requires that his privilege shall cease whether he intended that result or not". 36 In Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303, the Court said at [49]: The courts will normally only permit an error to be corrected if a party acts promptly. If the party to whom the documents have been disclosed has been placed in a position, as a result of the disclosure, where it would be unfair to order the return of the privileged documents, relief may be refused. 37 In this case, the relevant act is that Mr Marland, through his solicitor, consented to provide his affidavits prior to trial. The affidavits have not been provided. There is no suggestion that the applicant has altered its position in reliance upon the agreement, or of any other prejudice to the applicant. In my opinion, there is no relevant unfairness arising from Mr Marland's agreement to provide the affidavits and his failure to do so. There has been no waiver of penalty privilege. 38 As there has been no waiver, Mr Marland cannot be compelled to provide affidavits or submissions dealing with factual issues prior to the close of the applicant's case. Further, Marland Mushrooms should not be required to do so, as that would deprive Mr Marland of the benefit of the privilege. 39 It may be noted that Mr Marland and Marland Mushrooms have already provided written submissions as to matters of law in support of an application to strike out paragraphs of the statement of claim. It was not argued either that penalty privilege had been waived by delivery of such submissions, or that further submissions as to the legal issues should be ordered. 40 Orders 5 and 9 of the order made on 3 July 2017 should be vacated. An order should be made excusing the second and third respondents from filing and serving any affidavits, submissions and any amended defence until the close of the applicant's case at the Liability Hearing. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rangiah.

Fair Work Ombudsman v Hu

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