Russel v Macquarie Bank Limited

extension of time application 20 Rule 35.13 of the Federal Court Rules 2011 (Cth) provides the time limit for filing an application for leave to appeal: 35.13 Time for filing application The application must be filed: (a) within 14 days after the date on which the judgment was pronounced or the order was made; or (b) on or before a date fixed for that purpose by the Court from which leave to appeal is sought. 21 The application for leave to appeal had to be filed within 14 days of the relevant orders, that is, by 1 April 2020. 22 Where an application for leave to appeal has not been filed within time, the applicant may apply for an extension of time to seek leave to appeal in accordance with r 35.14: 35.14 Extension of time to seek leave to appeal (1) A person who wants to apply for an extension of time to seek leave to appeal must file an application, in accordance with Form 118. (2) The application may be made during or after the period mentioned in rule 35.13. (3) The application must be accompanied by the following: (a) the judgment or order from which leave to appeal is sought; (b) the reasons for the judgment or order, if published; (c) an affidavit stating: (i) briefly but specifically, the facts on which the application relies; and (ii) why the application for leave to appeal was not filed within time; and (d) a draft notice of appeal that complies with rules 36.01(1) and (2); (e) a statement by the applicant of whether the applicant wants to have the application considered without oral argument. 23 The overarching consideration when determining whether to grant an extension of time is whether injustice may arise by a strict application of the time limit: Gallo v Dawson (1990) 93 ALR 479 at 480; Outboard Marine Australia Pty Ltd v Byrnes [1974] 1 NSWLR 27 at 30; Finch v The Heat Group (No 3) [2017] FCA 64 at [33]. 24 In considering whether to grant the extension, the Court generally considers matters such as: the length of the delay; whether an acceptable explanation for the whole of the delay has been provided; in a context such as the present, the likelihood of leave to appeal being granted; and the consequences of granting or refusing the extension, including any prejudice to the respondent: Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 at 348-9; Parker v The Queen [2002] FCAFC 133 at [6]; Pfizer Ireland Pharmaceuticals v Samsung Bioepis Au Pty Ltd [2017] FCA 573 at [3]-[4]; Fualau v Minister for Home Affairs [2020] FCAFC 11 at [6]. Ultimately, it is the terms of the particular provision permitting an extension which is determinative of the considerations which are appropriate. 25 The applicants submit that the delay has been explained by the following factors: (1) events occasioned by the COVID-19 global pandemic - being the initial difficulty in obtaining instructions to appeal, and then delays in obtaining the transcript despite at least 13 follow up calls to convey the urgency; (2) confusion as to the correct registry in which to file the originating application, which the applicants had attempted to file within time; and (3) the need to instruct counsel regarding preparation of the extension of time application. 26 As stated in WAAD v Minister for Immigration and Multicultural Affairs [2002] FCAFC 399 at [7], cited in Fualau at [6], "where the delay is short and no injustice will be occasioned to the respondent, justice will usually be done if the extension of time is granted". 27 In Gambaro v Mobycom Mobile Pty Ltd [2019] FCA 910, an applicant sought an extension of time for leave to appeal under r 35.14 in similar circumstances to the present. The applicant in Gambaro had also explained his late application by reference to delays in obtaining the transcript of hearing before the primary judge: Gambaro at [6]. The applicant was only two days late in filing the application and the respondents had not asserted that they were prejudiced by the delay: Gambaro at [8]. 28 Contrary to Macquarie Bank's submission that the delay of about 6 days has not been fully explained and that an extension of time should be refused, I consider there has been an adequate explanation for the delay and that an extension should be granted. 29 Macquarie Bank submits that it would be prejudiced by the granting of the application in two ways: (1) First, in circumstances where the Federal Circuit Court has made a declaration relating to discovery and the applicants have obtained the benefit of discovery from Macquarie Bank, Macquarie Bank will be denied an opportunity to obtain discovery from the applicants as to the disputed categories. (2) Secondly, it would not be able to obtain documents that it considers are relevant to issues in dispute. 30 I do not regard either of these matters as militating against granting an extension of time. The consequences that Macquarie Bank submits would flow from the appeal being allowed do not flow from a short extension of time being granted and are not the sorts of matters courts are concerned with when determining prejudice in this context - see: Hunter Valley at 349 and 352. 31 As to the likelihood of leave to appeal being granted, the applicants submit that, in a case of minimal delay such as this, an extension should only be denied where the appeal is "plainly hopeless": Ford v La Forrest [2002] 2 Qd R 44 at [4]. For the reasons discussed below, the appeal has sufficient merit. 32 For these reasons, time is extended for the applicants to seek leave to appeal.

Leave to appeal 33 Section 24(1A) of the Federal Court of Australia Act 1976 (Cth) provides that an appeal shall not be brought from a judgment of the Federal Circuit Court that is an interlocutory judgment unless the Court or a Judge gives leave to appeal. 34 The question of whether leave to appeal should be granted turns on whether: (1) the decision giving rise to the orders from which the applicant wishes to appeal is attended with sufficient doubt to warrant its being reconsidered by a Full Court; (2) substantial injustice would result if leave were refused: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-399. 35 As was stated in Décor at 399, these two issues are interrelated: [T]he sufficiency of the doubt in respect of the decision and the question of substantial injustice should not be isolated in separate compartments. They bear upon each other, so that the degree of doubt which is sufficient in one case may be different from that required in another. Ultimately, a discretion must be exercised on what may be a fine balancing of considerations. 36 It is often observed that leave to appeal is less readily given where the issue is one of practice and procedure: Décor at 400; Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177 (Gibbs CJ, Aickin, Wilson and Brennan JJ); United States Tobacco Co v Minister for Consumer Affairs (1988) 20 FCR 520 at 532 (Davies, Wilcox and Gummow JJ); Minogue v Williams (2000) 60 ALD 366 at [19] (Ryan, Merkel and Goldberg JJ). 37 In Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177, Gibbs CJ, Aickin, Wilson and Brennan JJ said (footnotes omitted): Nor is there any serious dispute between the parties that appellate courts exercise particular caution in reviewing decisions pertaining to practice and procedure. Counsel for Brown urged that specific cumulative bars operate to guide appellate courts in the discharge of that task. Not only must there be error of principle, but the decision appealed from must work a substantial injustice to one of the parties. The opposing view is that such criteria are to be expressed disjunctively. Cases can be cited in support of both views: for example, on the one hand, Niemann v Electronic Industries Ltd; on the other hand, De Mestre v A D Hunter Pty Ltd. For ourselves, we believe it to be unnecessary and indeed unwise to lay down rigid and exhaustive criteria. The circumstances of different cases are infinitely various. We would merely repeat, with approval, the oft-cited statement of Sir Frederick Jordan in In re the Will of F B Gilbert (dec): "... I am of opinion that, ... there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal." 38 As discussed further below, I am of the view that the decision is attended by doubt. 39 As to substantial injustice if leave to appeal were refused, the applicants submit: (1) first, that the applicants would be put to the burden of discovering many documents in circumstances where the costs of doing so are generally unrecoverable by virtue of s 570 of the Fair Work Act; and (2) secondly, the discovery orders would require disclosure of confidential financial and tax information, in circumstances where discovery is restricted in the Federal Circuit Court to circumstances where the order is "appropriate, in the interests of the administration of justice": s 45(1) of the FCCA Act. 40 In response to the first matter, the respondent submits that: (a) there was no evidentiary foundation for a conclusion that substantial costs would be incurred in complying with the order for discovery; and (b) no such submission had been made to the primary judge. 41 As to the respondent's first response, (a): the evidence on this application from the applicants' solicitor included that the documents the subject of the discovery order were "voluminous" and that production of them would be "onerous". There is no reason to doubt that unchallenged evidence. 42 As to the respondent's second response, (b): the question about substantial injustice arises on this application because it is a consideration relevant to whether leave to appeal should be granted. The applicants did not put to the primary judge that the orders for discovery should be refused on the basis that to do so was onerous. That does not preclude consideration, in the context of the present application, of a submission that substantial injustice would be worked if leave to appeal were refused such that the applicants were required to give onerous discovery of voluminous documents which, on appeal, were shown to be irrelevant. 43 I accept that substantial injustice would result if leave to appeal were refused with the result that the applicants were required to give onerous discovery of documents which, on appeal, were shown to be irrelevant and in circumstances where the costs of discovery are unlikely to be recoverable. This is sufficient of itself to satisfy the second requirement in Décor. 44 As to the second matter relied upon by the applicants as constituting substantial injustice, Macquarie Bank submits that: (a) the applicants did not rely before the primary judge upon the confidential nature of the material as a reason not to order discovery; and (b) there was no evidence on the issue before the court below. This was contended to have the consequence that the applicants could not now raise the issue. 45 I do not regard the fact that the matter was not referred to before the primary judge as prohibiting the matter being raised now. The present question is whether substantial injustice would result if leave to appeal were refused. That is not a question which was before the primary judge. Nor do I regard the absence of evidence on the topic before the primary judge as significant. It was not necessary to put forward evidence to support a submission that discovery of the categories of documents sought by Macquarie Bank was likely to result in the disclosure of confidential information. The information sought by Macquarie Bank was, by its nature, confidential. I accept that substantial injustice would result if leave to appeal were refused with the result that the applicants are required to give discovery of confidential documents which, if leave to appeal were granted, were ultimately shown to be irrelevant. 46 As to the principle that restraint should be exercised in granting leave to appeal on interlocutory matters of practice and procedure, there is an additional consideration present in this case. That consideration is that the Federal Circuit Court has reached different conclusions in respect of discovery in two cases which involve substantially identical issues. As mentioned earlier, it was apparent that there are other cases which involve similar issues. The ordering of discovery is discretionary and depends on the particular circumstances of each case such that cases which at first appear similar may have subtle but important differences warranting a different exercise of discretion. Judges may also have different views as to the appropriate exercise of discretion on the same facts. Nevertheless, it is desirable for equivalent cases to be dealt with consistently where possible and, if one discretionary decision can be seen to be the product of error, the administration of justice is served by an appellate court interfering where, as here, it is likely that the equivalent question will arise in other proceedings. This is a factor which supports a relaxation in the usual restraint. 47 For these reasons, leave to appeal is granted.

Discovery 48 Section 45 of the FCCA Act provides: 45 Interrogatories and discovery (1) Interrogatories and discovery are not allowed in relation to proceedings in the Federal Circuit Court of Australia unless the Federal Circuit Court of Australia or a Judge declares that it is appropriate, in the interests of the administration of justice, to allow the interrogatories or discovery. (2) In deciding whether to make a declaration under subsection (1), the Federal Circuit Court of Australia or a Judge must have regard to: (a) whether allowing the interrogatories or discovery would be likely to contribute to the fair and expeditious conduct of the proceedings; and (b) such other matters (if any) as the Federal Circuit Court of Australia or the Judge considers relevant. 49 Division 14.2 of the FCC Rules, comprising rr 14.02 to 14.11, is entitled "Obligation to disclose". Rule 14.02 provides: 14.02 Declaration to allow discovery (1) A declaration may be made under subsection 45(1) of the Act to allow discovery on the application of a party or on the Court's own motion. Note: Discovery is not allowed in relation to a proceeding unless the Court or a Judge declares that it is appropriate in the interests of the administration of justice: see section 45 of the Act. (2) If a declaration is made, the Court or a Registrar may make an order for disclosure: (a) generally; or (b) in relation to particular classes of documents; or (c) in relation to particular issues; or (d) by a specified date. 50 In Devine Marine Group Pty Ltd v Fair Work Ombudsman [2013] FCA 442 at [51] to [54], Lander J made the following observations about s 45 of what was then the Federal Magistrates Act 1999 (Cth): [51] The presumption in s 45(1) of the Federal Magistrates Act is that discovery will not be permitted in any proceedings in the Federal Magistrates Court unless the Federal Magistrate has made the declaration provided for in s 45(1). [52] Section 45(1) assumes that, unless the declaration is made, discovery is not necessary for the orderly disposal of proceedings in the Federal Magistrates Court. That assumption is consistent with s 3(2) of the Federal Magistrates Act, which provides that the objects of the Act are for informality, streamlined procedures, and the use of appropriate dispute resolution processes. [53] The purpose of discovery is to assist in resolving disputes as to fact. Discovery can be a lengthy and expensive process. Because of the high cost to the parties of the discovery process, both in giving discovery and taking inspection, the modern trend is to contain the obligation to give discovery by giving the Court control over the process; by limiting the circumstances in which discovery is to be given; and, if discovery is to be given, by limiting the extent of the discovery given. The cost of discovery can far outweigh the benefits. [54] Section 45(2) identifies the circumstances in which it would be "appropriate", in "the interests of the administration of justice", to make an order for discovery, by requiring the Federal Magistrate to have regard to whether an order for discovery "would be likely to contribute to the fair and expeditious conduct of the proceedings" and any other relevant matter. An application for discovery in the Federal Magistrates Court should be approached on the basis that the application should be refused unless the making of an order requiring a party to give discovery would be likely to contribute to the fair and expeditious conduct of the proceeding or there is some other relevant matter that would mean that an order would be in the interests of the administration of justice. The expression, "the administration of justice", must be understood by reference to the scheme of the Act and the presumption that discovery is not usually necessary for the fair and expeditious disposal of the proceeding. 51 In Hartnett Legal Services Pty Ltd v Ballantyne [2016] FCA 1116, the Federal Circuit Court made a declaration under s 45(1) and an order that the parties make disclosure in accordance with r 14.02 of the FCC Rules. This occurred at a directions hearing after both parties had indicated that they would be seeking discovery and wanted the matter to be listed for their applications for discovery to be heard. It was clear from the transcript that the judge was making an order for general discovery. 52 Hartnett appealed on the basis that the order was oppressive because it required them to make disclosure of the width required by Compagnie Financiere et Commerciale du Pacifique v Peruvian Guano Company (1882) 11 QBD 55. Rangiah J stated at [25]: … Under that test, every document which may - not will - either directly or indirectly enable the opposite party to either advance its own case or damage the case of the discovering party must be discovered: Peruvian Guano at 64. That test requires discovery of any document which may fairly lead to a train of inquiry having either of those consequences: Peruvian Guano at 64. 53 Rangiah J rejected the proposition that an order for general discovery made under the FCC Rules required discovery of the breadth required by Peruvian Guano. At [30] and [31], his Honour said: [30] … Rule 1.05 of the FCC Rules provides: (1) It is intended that the practice and procedure of the Court be governed principally by these Rules. (2) However, if in a particular case the Rules are insufficient or inappropriate, the Court may apply the Federal Court Rules or the Family Law Rules, in whole or in part and modified or dispensed with, as necessary. … [31] The FCC Rules do not state whether a direct relevance test or the Peruvian Guano test is to apply to "discovery generally". It is appropriate to apply r 20.14(1) of the Federal Court Rules in deciding that issue. Rule 20.14 of the Federal Court Rules states that standard discovery refers to discovery of documents "that are directly relevant to the issue raised by the pleadings or the affidavits". 54 At [33] his Honour said: [I]t would be quite inconsistent with s 45 of the FCC Act to construe "disclosure generally" as importing a wide test of relevance. The Peruvian Guano test was formulated on the basis of a desire to "make the rule as large as we can with due regard to propriety": Peruvian Guano at 63. In contrast, s 45 operates to cut down the circumstances in which discovery may be ordered. It would be inconsistent with s 45 to interpret "discovery generally" as referring to the traditional test for discovery when, as Lucev FM observed in Abrahams [v Qantas Airways Limited (No 2) (2007) 210 FLR 314], traditional discovery is generally prohibited in the Federal Circuit Court. 55 Rangiah J concluded at [34] that an order for "disclosure generally" under r 14.02(2)(a) of the FCC Rules is: (a) limited to disclosure of documents that are, or have been, in the disclosing party's possession, custody or control; and (b) limited to documents that are directly relevant to the issues raised by the pleadings or in the affidavits. 56 His Honour continued at [35]: That is not to say that it is beyond the power of the Court to make a more expansive order where it is in the interests of the administration of justice to do so, but no such order was made in this case. 57 As has been pointed out in the cases just mentioned, the statutory starting point is that discovery is "not allowed in relation to proceedings in the Federal Circuit Court of Australia": FCCA Act s 45(1). However, discovery may be permitted if "a Judge declares that it is appropriate, in the interests of the administration of justice": FCCA Act s 45(1). In deciding whether to make a declaration under s 45(1), the Federal Circuit Court must take into account the matters in s 45(2). The Court must always take into account "whether allowing the … discovery would be likely to contribute to the fair and expeditious conduct of the proceedings": s 45(2)(a). That mandatory consideration should be approached in the context of the FCCA Act as a whole which includes as express statutory objects enabling the Court to "operate as informally as possible" and to do so using "streamlined procedures": s 3(2)(a) and (b). 58 As noted earlier, the primary judge ordered discovery on the basis that it was "not unarguable" that the documents might "rationally affect, directly or indirectly, the assessment of the probability of the existence of a fact in issue". That is, his Honour concluded that it was "not unarguable" that the documents might be relevant. The bases for that conclusion were: (1) First, the manner in which the employees characterised the payments they received during their employment in communications to third parties "may be evidence relevant to the proper understanding of the parties' relationships": J[10], [12]. (2) Secondly, the documents might be relevant to "whether [the employees'] contentions that their employment engagements operated in the way that they now say they did ought to be accepted": J[10]. 59 His Honour described Macquarie Bank's case as "unorthodox" but stated that "it [was] too early to draw any conclusion on that, and it should be entitled to make its defence as it reasonably sees fit": J[13]. The primary judge did not expressly address the mandatory consideration why the order for discovery "would be likely to contribute to the fair and expeditious conduct of the proceedings" - cf: s 45(2)(a). 60 Whilst not free from doubt, the primary judge's reasons for ordering discovery suggest that he approached the issue on the basis that Macquarie Bank had an entitlement to discovery if it could show that it was "not unarguable" that the documents it sought through discovery might ultimately be shown to be relevant. The primary judge's approach departed from the statutory directive that discovery is "not allowed" unless the Judge "declares that it is appropriate, in the interests of the administration of justice" having taken into account why the order for discovery "would be likely to contribute to the fair and expeditious conduct of the proceedings" - cf: s 45(2)(a). Whilst the primary judge had, on 18 October 2019, already declared that discovery was appropriate, the question whether the categories of discovery sought by Macquarie Bank were appropriate arose for the first time on Macquarie Bank's application the subject of this appeal, that application being made under s 45(1) and rule 14.02. 61 In House v The King (1936) 55 CLR 499 at 504-5, Dixon, Evatt and McTiernan JJ expressed the principles to be applied in an appeal against the exercise of a discretion as follows: The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred. 62 In my view, the primary judge acted upon wrong principle within the meaning of House v The King for the reasons given at [60] above. For the reasons given below, the primary judge also erred in concluding that the documents sought on discovery were sufficiently relevant to warrant an order for disclosure under r 14.02. 63 Macquarie Bank had to establish that the documents it sought were sufficiently relevant to a question in issue in the proceedings. It would not be "in the interests of the administration of justice" or "likely to contribute to the fair and expeditious conduct of … proceedings" to order discovery of documents not shown to be sufficiently relevant to a question in issue in the proceedings. A fortiori, in litigation in which costs are awarded only in exceptional circumstances. 64 Discovery is a "serious invasion of the privacy and confidentiality of a litigant's affairs" ordered where "the public interest in securing that justice is done between the parties is considered to outweigh the private and public interest in the maintenance of confidentiality": Home Office v Harman [1983] 1 AC 280 at 308, cited with approval in Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34 at 37. The public interest in securing that justice is done is not served by ordering discovery of documents, which are not sufficiently relevant to matters in question in the proceedings, a fortiori confidential irrelevant documents. 65 On appeal, consistently with its argument before the primary judge, Macquarie Bank submitted that the documents were relevant for two reasons. First, Macquarie Bank submitted: In their evidence, each of the Applicants rely, in identical terms, on their understanding of the remuneration which they received to the effect that the remuneration consisted of commission payments paid through the BCR arrangements and that the BCR was not an amount "actually paid to me, but was a figure representing the total cost of my employment to Macquarie". Further, each of the Applicants asserts that the "the actual amounts received by me were commission payments derived from transactional revenue which I received from Macquarie". Given the manner in which the Applicants have cast their claims and their evidence, there are issues as to the proper characterisation of the BCR which was paid to the Applicants and the understanding of the Applicants of such remuneration. 66 The evidence to which Macquarie Bank referred in this submission is the evidence set out at J[4], extracted at [11] above. 67 Secondly, Macquarie Bank submitted that there was "a separate question of the proper designation and purpose" of the payments. This was said to arise "in connection with the defence of Macquarie that any BCR payments can be set off against award and statutory entitlements". Macquarie Bank submitted: In assessing whether or not there is any correlation between the payments made to the Applicants and any award and statutory entitlements, it will be necessary to have regard to evidence going to the circumstances of the understanding of the parties. 68 As to the first argument, the applicants' understanding of the effect of the contractual arrangements is irrelevant to the correct construction of the relevant contracts. The correct characterisation of the BCR must be objectively determined. The applicants' post-contractual subjective understanding of the payments received, uncommunicated to Macquarie Bank, is irrelevant. So too is their post-contractual description of their remuneration to third parties. 69 As to the second argument, Macquarie Bank referred first to the decision of Rares J in Fair Work Ombudsman v Transpetrol TM AS [2019] FCA 400 at [113], where his Honour stated: [T]here is no inflexible principle that precludes a creditor, who has appeared to designate or appropriate a payment to discharge a specific liability, from relying on all of the circumstances to demonstrate that the true character of the payment is, in fact, different or, alternatively, to justify the use of that payment as a set off to a different liability. And this is so even in respect of wholly domestic situations involving Australian industrial agreements and legislative instruments, such as awards: cf. Finance Sector 111 IR at 239-240 [55]-[56]. 70 Secondly, Macquarie Bank referred to paragraph (d) in the passage below in the reasons of White J in WorkPac Pty Ltd v Rossato (2020) 378 ALR 585 at [865]: For the purposes of the resolution of the present case, the authorities reviewed above may be taken to stand for the following propositions concerning the entitlement of an employer to set off in analogous circumstances: (a) the issue may require the application of the parties' contract: Poletti at 332. If they agree that a sum of money is paid and received for a specific purpose which is over and above or extraneous to an award entitlement, the contract precludes the employer from later seeking to rely on the payment as satisfying an award obligation which is outside the agreed purpose of the payment: ibid. If the payment was made for the purpose of satisfying the kind of award obligation sought to be satisfied, it may be brought into account as satisfaction or part satisfaction of that obligation. If it was paid for some other purpose, then the employer cannot bring the payment into account: Discount Lounge Centre at [23]. Stated more generally, an employer cannot later reallocate an amount agreed to be paid to an employee in respect of subject A (for example, ordinary hours of work) to meet a claim in respect of subject B (for example, overtime): Ray v Radano at 478-9 (Sheldon J); Pacific Publications at 419; Discount Lounge Centre at [57]. The focus is on the purpose of the payment. If it arises out of the same purpose as the award obligation, it can be set off: ANZ v FSU at [48]-[52]. I will refer to this as the "Contractual Principle"; (b) the issue may involve application of the common law principles concerning payment by a debtor to a creditor: Poletti at ALR 393-4; IR 332-3. When there are outstanding award or enterprise agreement entitlements, a payment designated by the employer as being for a purpose other than satisfaction of the award entitlement cannot be regarded as having satisfied the award or enterprise agreement: ibid. I will refer to this as the "Designation Principle"; (c) close regard must be had to the character of the payment on which the employer relies for the claimed set off and the purpose (usually, the agreed purpose) for which it was made; and (d) the purpose for which a payment was made will be a question of fact in each case. It may be express or may be implied from the parties' agreement or from the employer's conduct: James Turner at [21(3)]. The "designation and appropriation" are matters to be determined by reference to the whole of the evidence: ANZ v FSU at [56]. 71 Thirdly, Macquarie Bank referred to the reasons of Bromberg J in WorkPac at [234]: [I]f a payment is made pursuant to a contract its purpose will be governed by the contract and must be objectively ascertained by reference to the common intention of the parties as understood by a reasonable person in the position of each of the parties taking into account the text of the contract as well as the surrounding circumstances known to the parties and the purpose and object of the transaction: Toll at [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ). 72 Macquarie Bank has pleaded in its Defence, in summary form, that: (1) the payments it made to the applicants, being the BCR, represented the total cost of employment including annual remuneration, superannuation, fringe benefits tax, payroll tax, workers compensation insurance and goods and services tax where applicable: Defence [5(b)]; (2) the salary component of the BCR was each applicant's base rate of pay within the meaning of section 16 of the Fair Work Act and for the purposes of the minimum salary component required by clause 13.1 of the Award: Defence [5(d)]; (3) the applicants were paid for periods of annual leave at a rate based on the salary component of the BCR: Defence [5(e)]; (4) the BCR "was paid … in satisfaction of any minimum salary or other payment which may have otherwise been payable … under the Award": Defence [29(a)]; (5) the amounts paid to the applicants for periods of annual leave (including the BCR) are in satisfaction of any entitlement which may otherwise have been payable to the applicants, including in relation to annual leave loading: Defence [31(b)]; (6) it is entitled to set off the BCR against wages which may have otherwise been payable under the Award and against any entitlements which may have been payable to the applicants under the Award, including in relation to annual leave loading: Defence [29(c)]; [31(c)]. 73 The issue Macquarie Bank raises in its pleadings is whether the payments under the contracts of employment also operated to satisfy the relevant statutory obligations to pay entitlements. The applicants' subjective understanding of the payments, which were not alleged to have been communicated to Macquarie Bank, was not shown to be relevant to that issue. As Wheelahan J observed in WorkPac at [1007]: That question involves an inquiry that must look to the objective purpose of the payments under the terms of the contracts of employment set against the circumstances known to both parties, and the surrounding statutory framework, which amounts to determining what a reasonable person would have understood by the terms: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; 211 ALR 342; [2004] HCA 52 at [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ). 74 Macquarie Bank has not pleaded that there was a circumstance known to both parties which is relevant to an objective construction of the terms of the contract or otherwise relevant to whether the payments might be set off, nor identified one in submissions. Macquarie Bank has not pleaded that it made a post-contractual "designation" or "appropriation" in respect of a payment made to the applicants, different to its contractual obligations. In any event, the categories of discovery it sought are not apparently directed to such contentions. 75 In oral argument on appeal, Macquarie Bank emphasised what Rares J said in Transpetrol at [113], set out at [69] above, in particular that it was entitled to rely "on all of the circumstances to demonstrate … the true character of the payment". There are at least two answers to this: (1) First, Macquarie Bank does not plead a case that, although it appeared to designate or appropriate a payment to discharge a specific liability consistently with its pleaded case, the true character of the payment was something different or that there were particular identified circumstances which justified the set off of the payments to different liabilities. Accordingly, the observations made by Rares J were not shown to be relevant to this case. (2) Secondly, the observations of Rares J do not suggest that the true character of the payment which an employer has appeared to designate or appropriate can be determined by the subjective understanding of the recipient of the payment which was not communicated to the employer. 76 It is perhaps appropriate also to note that, of the observations of Rares J in Transpetrol at [113], White J (with whom Wheelahan J relevantly agreed) said in WorkPac at [849]: If the statement of Rares J that there is no inflexible principle precluding a payment being used as a set off against a different liability is taken literally, then there appears to be some tension between it and the previous decisions, including the decisions of Full Courts. 77 Macquarie Bank has not identified how the documents sought on discovery could be relevant to determining whether Macquarie Bank should be permitted to set off the payments it has made to the applicants. Macquarie Bank has not shown that the applicants' private post-contractual communications with third parties, uncommunicated to Macquarie Bank, could be relevant to any pleaded issue, including whether Macquarie Bank would be entitled to set off payments made by Macquarie Bank, or to any question arising in the proceedings, including by reason of the evidence filed. The applicants' subjective understanding of the nature or characterisation of the payments they each received is as irrelevant to the issues as their post-contractual description of their remuneration to third parties. 78 The most that could be made of the documents sought on discovery is, perhaps, to inflict a degree of embarrassment if any documents obtained were to indicate something different to the submission the applicants have each made in their affidavits about the correct characterisation of their contracts. The embarrassment could only be minimal at best given that each applicant states exactly the same thing, lending further support to the natural conclusion that all the applicants intended by their identical statements was a summary of the contention each made in the proceedings as to the legal effect of their contracts. That is not a sound basis for concluding that discovery "is appropriate, in the interests of the administration of justice". 79 Given the conclusion that the documents sought were not shown to be sufficiently relevant to any question arising in the proceedings, it is not necessary to consider a further argument put by the applicants by their second ground of appeal that the primary judge ought to have followed, as a matter of comity, the decision of the Federal Circuit Court, differently constituted, in the Graham Proceedings.

conclusion 80 The application for the extension of time should be granted as should the application for leave to appeal. The appeal should be allowed and the orders for discovery made by the primary judge should be set aside. I certify that the preceding eighty (80) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Thawley.