Russel v Macquarie Bank Limited

Background 2 The applicants instituted proceedings under the Fair Work Act 2009 (Cth) in the Federal Circuit Court against their former employer, Macquarie Bank Limited. The applicants allege: (1) First, that each applicant was an "award/agreement free employee" within the meaning of s 12 of the Fair Work Act and that the applicants were "pieceworkers" within the meaning of s 21 of the Fair Work Act. The applicants contend that they were paid a commission on brokerage earned by them, being a quantifiable output or task, and not by reference to a period of time worked. The applicants contend that their annual leave entitlements under the Annual Holidays Act 1944 (NSW) should have been calculated by reference to their full commission earnings, not by reference to the "recoverable advance on commission" payable in accordance with the "Basic Cost Responsibility" (BCR) contained in their employment contracts. (2) Further and alternatively, the applicants allege that they were covered by the Banking, Finance and Insurance Award 2010 and were entitled to a minimum wage and annual leave loading. They allege that they were paid entirely by way of commission and that they were not paid their wages or annual leave loading under the Award. 3 Macquarie Bank's position is: (1) First, that the payment of 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. Macquarie Bank alleges that the employees were also paid commission to the extent the commission exceeded the BCR. The employees were not paid less than the BCR. (2) Secondly, Macquarie Bank should be entitled to set off amounts paid to the applicants as part of the BCR against any annual leave and wage entitlements which may be found to have been payable under the Award. 4 Other applicants have instituted proceedings against Macquarie Bank in the Federal Circuit Court raising similar issues. The applicants submit that one such proceeding concerns effectively identical issues to the present proceedings, namely proceedings numbered BRG735/2018 commenced by Mr Rodney Graham (Graham Proceedings). 5 On 18 October 2019, the primary judge made a declaration under s 45(1) of the Federal Circuit Court of Australia Act 1999 (Cth) (FCCA Act) that "it is in the interests of the administration of justice that there be discovery in this matter". The Court also made orders facilitating discovery between the parties which included orders for the exchange of desired categories of documents for discovery and for the parties to give discovery of documents in the categories to which no objection had been taken. The declaration and consequential orders were made by the primary judge on the application of the applicants. The applicants' discovery application had been opposed by Macquarie Bank. The declaration and consequential orders made on 18 October 2019 are not the subject of any challenge. 6 On 5 December 2019, the applicants objected to providing discovery in respect of certain categories of documents sought by Macquarie Bank. 7 On 9 December 2019, Macquarie Bank provided discovery to the applicants pursuant to the orders made on 18 October 2019. 8 By an "Application in a Case" dated 6 March 2020, Macquarie Bank sought a declaration under s 45(1) of the FCCA Act that "it is appropriate, in the interests of the administration of justice, to allow discovery in accordance with Order 2". Order 2 sought an order for disclosure under r 14.02 of the Federal Circuit Court Rules 2001 (Cth) (FCC Rules) of: (a) In respect of the period 1 July 2012 to 30 June 2019: i. copies of all tax returns filed by, or on behalf, of the First and Second Applicants; ii. any document issued by the ATO to the First or Second Applicant in respect of any assessment of income tax; iii. all correspondence between the First or Second Applicant and their respective tax advisors regarding any assessment of income tax or their tax returns in relation to their employment with the Respondent; and iv. all correspondence or other documentation that passed between the First or Second Applicant and any State or Federal government entity which disclosed, or contained any representations in relation to, the income received by them from the Respondent. (b) In respect of the period 1 July 2012 to 30 June 2018: i. copies of all tax returns filed by, or on behalf, of the Third Applicant; and ii. any document issued by the ATO to the Third Applicant in respect of any assessment of income tax; and iii. all correspondence between the Third Applicant and his tax advisors regarding any assessment of income tax or the Third Applicant's tax returns in relation to his employment with the Respondent; and iv. all correspondence or other documentation that passed between the Third Applicant and any State or Federal government entity which disclosed, or contained any representations in relation to, the income received by the Third Applicant from the Respondent. 9 Macquarie Bank's application for discovery of those categories of documents was heard on 18 March 2020. Macquarie Bank argued: (1) First, that the documents were relevant because they went to the issue of the applicants' understanding of the BCR payments. (2) Secondly, that the documents were relevant to whether or not the amounts paid by Macquarie Bank could be set off against any failure by Macquarie Bank to pay statutory entitlements - cf: Linkhill Pty Ltd v Director, Office of the Fair Work Building Industry Inspectorate (2015) 240 FCR 578. 10 The applicants submitted that the central issue in dispute was the correct construction of the employment contracts. The documents sought on discovery could only be relevant to the applicants' subjective understanding of the contracts and post-contractual conduct. On either basis the documents were irrelevant. 11 The primary judge initially rejected Macquarie Bank's application for reasons which may be found at J[1] to [8]. As to the first basis on which Macquarie Bank contended the documents were relevant, the primary judge stated: [4] For its part, the respondent bank points to the evidence of the applicants and the affidavit of Mr Russel was identified as an indicative example. The Court was taken in particular to para. 10 of Mr Russel's affidavit, sworn 19 February 2020: 10. At least from 13 June 2003 onwards, my remuneration consisted of commission payments paid through the Respondent's Basic Cost Responsibility (BCR) arrangements. The BCR was not an amount actually paid to me, but was a figure representing the total cost of my employment to Macquarie, and included all charges, benefits and other costs associated with my employment, including superannuation contributions, fringe benefits tax, payroll tax, salary continuation insurance, workers compensation insurance, and GST. My contract of employment - "GR-4" and "GR-5" respectively - stated that "The base BCR will be treated as a recoverable allocation against any commission earned" and "You will be allocated a BCR which is a recoverable allocation against any commission earned." The actual amounts received by me were commission payments derived from transactional revenue which I achieved for Macquarie. Particular emphasis was placed on the final sentence of that paragraph. [5] It was submitted that Mr Russel's evidence of the proper construction of the employment contract contradicted the evidence relied upon by the respondent, and so addressed a matter in issue, making the documents in question relevant. I am not persuaded of that argument. I read that sentence as being more in the nature of an expression of the witness's understanding of the contract rather than of evidence relied on. 12 As to the second basis on which Macquarie Bank contended the documents were relevant, the primary judge stated: [6] However, another issue in this case is whether there ought to have been set-offs of certain payments against the BCR. It is apparent from the authorities, in particular Linkhill Pty Ltd v Director, Office of the Fair Work Building Industry Inspectorate (2015) 240 FCR 578, to which I was taken, that the claim of set-offs will require evidence of the parties' agreement in relation to payments, and offsetting payments in particular. [7] The bank's argument is that any such agreement can be evidenced in conduct postdating the commencement of the contract. However, to frame it in that way tends to disguise the real substance of the argument, which is that the intention of the parties at the time of entering into the contract, including conditions on offsetting of any payments, are to be determined by the terms of the agreement, and perhaps facts relating to the making of the agreement. The High Court said, in Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165: This Court, in Pacific Carriers Ltd v BNP Paribas, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction. (at 179, [40]) (References omitted) [8] I have concluded that the application for further discovery should be dismissed, as the matters to which the documents sought on my understanding of them would go would be inadmissible to the matter relevantly in issue. 13 Having concluded that the application should be dismissed, the primary judge entertained further argument, withdrew "comments made dealing with the Linkhill case and replace[d] them" with the reasons set out at J[10] to [13], concluding at J[14], that the order for discovery should be made: J[9]. 14 The primary judge's reasons for concluding that the documents were relevant and that discovery was appropriate are at J[10] to [13]: [10] It is the respondent bank's contention that the conduct of the applicants during the course of their employment and the way they characterised, at that time, the payments that they received, may be evidence relevant to the proper understanding of the parties' relationships, and whether the applicants' contentions that their employment engagements operated in the way that they now say they did ought to be accepted by the Court. [11] Whether that approach is a well-founded one remains to be seen. However, a party is entitled to make their case as they reasonably see fit, and it is not for the Court, at an interlocutory stage, to unduly hamstring them. [12] That being so, it is important to have regard to the authorities cited by the bank in its written submissions as to the purpose of discovery, the relevant question being whether the documents of which discovery is sought could rationally affect, directly or indirectly, the assessment of the probability of the existence of a fact in issue. It is not unarguable that the documents in question might do so in this proceeding. [13] Although it seems to me that the bank's approach is unorthodox, it is too early to draw any conclusions on that, and it should be entitled to make its defence as it reasonably sees fit. 15 The Federal Circuit Court, differently constituted, had refused discovery in very similar circumstances in the Graham Proceedings on the basis that the documents sought were not shown to be sufficiently relevant to justify discovery. It was apparent from argument during this application that there were a number of proceedings against Macquarie Bank which raised similar issues to those raised in these proceedings. 16 On 1 April 2020, the applicants provided to Macquarie Bank a signed Notice of Appeal and supporting affidavit. The applicants attempted to file the Notice of Appeal in the Victorian Registry of the Federal Court of Australia. 17 On 2 April 2020, the Victorian Registry notified the applicants that the filing of the application had been rejected because it should have been lodged in the NSW Registry. 18 According to the applicants' solicitor, he was advised by the Victorian Registry that, even though the application was by that stage out of time, it might still be accepted by the NSW Registry. Accordingly, on behalf of the applicants, their solicitor lodged a Notice of Appeal in the NSW Registry on 2 April 2020 at 11.10am. This was not accompanied by an application for an extension of time. On 2 April 2020 at 5.28pm, the NSW Registry notified the applicants that the application was out of time and that they would need to apply for an extension of time. The applicants immediately instructed counsel to prepare an extension of time application. 19 On 7 April 2020, the applicants filed and served their application for an extension of time and leave to appeal.