Windsor v Sydney Medical Service Cooperative Ltd

Notice of Motion 7 On 13 June 2007 the respondent filed a notice of motion moving the Court for orders pursuant to O 11 r 16 of the Federal Court Rules that the statement of claim be struck out. In support of the motion, the respondent filed an affidavit of Timothy James Unsworth sworn 13 June 2007. 8 The matter came before me for the second time on 19 June 2007 when I fixed the hearing of the respondent's motion for 16 August 2007. I also ordered that Ms Windsor should file any evidence upon which she wished to rely in opposing the motion by 17 July 2007 and that the respondent should file any further evidence upon which it proposed to rely in support of the motion by 31 July 2007. 9 On the return of the motion on 16 August 2007, the respondent appeared by its counsel but there was no appearance by or on behalf of Ms Windsor. I gave the respondent leave to file in Court an affidavit of Christine Parkes sworn 31 July 2007 in support of the motion. I indicated to counsel for the respondent that, at that stage in time, I was not prepared to proceed with the motion in Ms Windsor's absence. I asked counsel for the respondent to have those instructing him to contact Ms Windsor, who was not represented, and arrange with my associate for a mutually convenient date for the motion to be heard and that if there was no appearance by or on her behalf on that day, I would proceed to hear the motion in default of appearance. Counsel for the respondent undertook to have those instructing him communicate my intentions to Ms Windsor and outlined the two main bases upon which the strike out motion was to be argued. First, that the party to the agreement with the respondent was not Ms Windsor but a company called InterNEOn Corporation Pty Limited ('InterNEOn'). Second, that the claim under ss 82 and 87 of the TPA founded upon a contravention of s 52 of the TPA was time-barred. No argument was advanced at that time with respect to either basis. 10 The motion was re-listed before me on 28 August 2007 at which time Ms Windsor appeared in person. The motion was effectively heard that day although at the conclusion of the hearing I adjourned rather than reserved to enable documents, the subject of a notice to produce, to be produced and, if necessary, for either party to tender and make submissions in respect of such documents the party wished to rely on. On or about 18 September 2007 the applicant filed further submissions on the motion in response to the documents produced. 11 The matter was again listed before me on 5 October 2007 when Ms Windsor was represented by Mr Simon Ioannou of counsel instructed by Mr Philip Relf, solicitor, of Auslegal Lawyers. In the absence of anything further, I indicated that I proposed to reserve on the motion. 12 On 12 October 2007, the solicitors acting for Ms Windsor filed in the Registry of the Court an affidavit of Timothy Patrick Muldoon sworn 31 August 2007 and further submissions in support of Ms Windsor's opposition to the motion. While the affidavit was not read in Court and is not in evidence on the motion, I have had regard to the further submissions in coming to the findings and conclusions I have. 13 At the time of the hearing of the motion, no Defence had been filed by the respondent and that is still the case.

Evidence on the Motion 14 By letter dated 9 January 2001, and on the letterhead of InterNEOn, Mr Neil Windsor, Ms Windsor's husband, wrote to Mr Tim Muldoon of the respondent in the following terms: Tim Muldoon Sydney Medical Service Co-operative Limited 122 Clovelly Road Randwick NSW 2031 LOCUM - DR GINA WINDSOR Provider number: 2265353T Dear Tim, Further to our meeting yesterday and the short telephone conversation today, I would like to summarise the points we discussed as follows: 1. ABN: Dr Windsor's service will be provided through InterNEOn Corporation Pty Ltd, ACN 007 316 584. An Australian Business Number will be provided in due course. 2. Commencement: Dr Windsor will commence work at 4:00PM Sat 13 Jan 2001. 3. Weekly Timetable: Dr Windsor will work the following shifts on a regular weekly basis: SAT 4:00PM - 1:00AM 9 hours MON 1:00AM - 8.00AM 7 hours TUE 1:00AM - 8.00AM 7 hours WED 1:00AM - 8.00AM 7 hours THU 1.00AM - 8.00AM 7 hours FRI 1.00AM - 8.00AM 7 hours Please note that the day corresponds to the actual day at the start of shift. 4. Payments: Payments will be based on the number of calls completed and the MBS item associated with the call. In addition, stand by time will be paid at a fixed rate. A fixed shift allowance will also apply to the 1:00AM-8:AM shift. 5. Transport: A driver with car can be made available, if required, for a fee. 6. Stationery: Prescription pads can be provided until personalised prescription pads arrive. As planned Dr Windsor will be meeting you at office tomorrow at 10:00AM. Dr Windsor also wishes to utilise SMS's driver/car service. Thanks and best regards (signed N. Windsor) Neil Windsor, for InterNEOn Corporation Pty Ltd. 15 Mr Windsor was a director of InterNEOn and on its face the letter was written for and on behalf of that company and, presumably, with the knowledge of Ms Windsor. 16 Locum Pay Summary Reports of the respondent for the period March 2001 to December 2001 and National Australia Bank Direct Payments File Detail Reports issued to the respondent dated 9 August 2001 to 11 January 2002 disclose that payments referable to Ms Windsor's services as a locum in the period July 2001 to December 2001 were paid to a bank account in the name of InterNEOn. 17 Ms Windsor's income tax returns for the years ended 30 June 2001 and 2002 disclosed no income derived from the respondent or, for that matter, from InterNEOn. InterNEOn's income tax return for the year ended 30 June 2001 disclosed 'other gross income' of $90,641 and contactor/sub-contractor expenses of $58,183. Particulars of the source of this income and the destination of the expense payments are not disclosed in the return. No other copy income tax returns of Ms Windsor and InterNEOn were produced in response to the notice to produce, notwithstanding that the notice called for the production of copy returns of Ms Windsor for the years ended 30 June 2001 to 2007 inclusive and copy returns of InterNEOn for the same years of income. No explanation for that non-production of those copy returns was forthcoming.

Submissions on the Evidence 18 The respondent submits that it is clear on the evidence that, from at least July 2001, InterNEOn received income from the respondent. The inference that arises is that it was also the recipient of income from the respondent during the 2001 financial year. It is unarguably clear that Ms Windsor did not receive the sums that were paid by the respondent for the services provided by Ms Windsor (on behalf of InterNEOn) in, at least, March 2001, April 2001, May 2001 and June 2001. So much is clear from the absence of disclosure of any income from the respondent in Ms Windsor's tax returns. 19 From the above, the respondent submits that the following conclusions arise: (a) InterNEOn enjoyed the benefit of the contract with the respondent; (b) Ms Windsor was not remunerated by InterNEOn for the services performed by her; and (c) it does not matter, for the purposes of the present application, why Ms Windsor chose to conduct her arrangement with the respondent in the way that she did. The only relevant question is the identification of the party who made promises to the respondent for the performance of services in exchange for payment. That person is clearly InterNEOn, evidenced not only by the letter from that corporation, where it promised to provide services to the respondent, but also by the financial documents produced. 20 Ms Windsor submits that: (a) the respondent's argument is based upon the fact that Ms Windsor initially directed the respondent to pay the third party, InterNEOn, the monies due to Ms Windsor for the work that she undertook for the respondent and must therefore be the contracting party; (b) this argument is fundamentally flawed, as InterNEOn only received payments from the respondent for a limited period. Other parties were the recipients of the respondent's payments for the remainder of Ms Windsor's employment period (as such evidence adduced by the respondent shows), such third parties were used for tax benefits accruing to Ms Windsor, not as the respondent suggests, to the benefit of InterNEOn; (c) Ms Windsor's employment negotiations were carried out solely between Mr Neil Windsor on behalf of Ms Windsor and Mr Timothy Muldoon, on behalf of the respondent; (d) the respondent has failed to show the relevance, in respect of ascertaining the contracting party, that the tax returns of both the applicant and InterNEOn have, but agree with the respondent that 'the only relevant question is the identification of the party who made promises to the respondent for the performance of services in exchange for payment' and this has been made clear by the person charged by the respondent as being responsible for employing the applicant, Mr Timothy Muldoon; and (e) accordingly, the respondent has failed to prove that the contracting party was an entity other than Ms Windsor.

Analysis 21 It is clear on the evidence that InterNEOn, and not Ms Windsor, was the party contracting with the respondent for the provision of Ms Windsor's services as a locum. The letter at [14] above would, in the absence of any other evidence, be sufficient to found that conclusion, but such a conclusion is also supported by reference to the following matters: (1) There was no other evidence to the contrary apart from statements by Mr Neil Windsor that InterNEOn was not the contracting party; that his dealings with Mr Muldoon were on behalf of Ms Windsor. In the face of the letter at [14] above, the existence of which he does not explain save in the manner referred to below, it is not possible to attach any weight to this evidence. (2) InterNEOn's presence in the scheme of the negotiations between Mr Windsor and the respondent was sought to be explained away on the basis that it was merely the initial recipient of the payments for income tax purposes; that this could be, and was in fact, changed to interpose another party between the respondent and Ms Windsor who was the real contracting party. (3) There are at least two difficulties with the proposition in (2). First, it inevitably involves the inference that InterNEOn was a nominee or 'money-box' receptacle for payments by the respondent for Ms Windsor's services. That, in truth, they were payments made by the respondent to InterNEOn for Ms Windsor. (4) Second, it leaves unanswered why Ms Windsor would not include those payments in her accessible income. (5) The fact is that Ms Windsor cannot on the one hand claim that she contracted with the respondent in her own right and on the other hand assert that the income represented by the payments made by the respondent is not her income but the income of InterNEOn. (6) Having regard to the way in which the income represented by the payments made by the respondent for Ms Windsor's services as a locum was returned, the only conclusion open is that the contracting party with the respondent is InterNEOn. 22 It follows, in my view, that Ms Windsor has no cause of action in contract; she has no standing in respect of the breach of contract claim pleaded in her statement of claim.

Respondent's Submissions 23 The respondent submits that the cause of action founded upon a contravention of s 52 of the TPA is doomed to fail in that it is time barred: s 82(2) and Schedule 1, item 21 of the Trade Practices Amendment Act (No 1) 2001 (Cth). Ms Windsor seeks damages under s 82 and s 87. In the case of any cause of action which had not expired as at 26 July 2001, that action must be commenced within six years of the date upon which the cause of action accrued. Ms Windsor's case appears to be that she was induced to enter into a contract on the basis of representations made in contravention of the TPA. That contract (putting aside the question of parties) was made on 8 January 2001: see para 4 of her statement of claim. Proceedings were commenced on 28 February 2007. The cause of action accrued when the loss was ascertained (the date of entry into the contract) or was reasonably ascertainable (on 13 January 2001, when the representations were first shown to be false): see Wardley Australia Limited and Another v The State of Western Australia (1992) 175 CLR 514 as to the date of accrual of the cause of action. As such, the cause of action is time barred. 24 The respondent submits that it is not clear from the pleading whether Ms Windsor contends that the representations were rendered misleading or deceptive by reason of the fact that the contract did not contain terms consistent with the representations. Ms Windsor does not expressly plead that the representations were false, misleading or deceptive. If the case propounded by Ms Windsor is that the contract did contain terms consistent with the representations, Ms Windsor did not suffer loss by reason of the representations, but rather by reason of a breach of contract. Conversely, if Ms Windsor's case is that the contract did not contain those terms, the cause of action plainly accrued when she entered into a bargain devoid of those terms or when the representations were first shown to be false.

Applicant's Submissions 25 Ms Windsor submits that the respondent's arguments that her claim is doomed to fail because it is time barred is fatally flawed in that it incorrectly assumes that all causes of action occurred before 28 February 2001. 26 She submits that the statement of claim is time specific in respect of some causes of action: (a) paragraph 15(a) - failure to pay guaranteed insurance earnings (30/02/2001); (b) paragraph 7(c) - increase in commission rate (01/11/2001); (c) paragraph 7(f) - change of payment date (15/08/2005). 27 Ms Windsor accepts the respondent's application of the principle expounded in Wardley Australia Limited and Another v the State of Western Australia as to the date of accrual. However, she submits that applying that principle, she only discovered that the respondent intended to pay her at rates below those advertised, when she actually received the first payment from the respondent. As indicated in the statement of claim, the cause of action accrued after 28 February 2001; paragraph 15(a) - (30/02/2001). Accordingly, the claim is not time barred.

Analysis 28 Contrary to Ms Windsor's submissions, only two causes of action are pleaded in her statement of claim - one in contract and the particulars provided in para 7 relate to that cause of action. Those particulars do not relate to the other cause of action which relies on alleged contravention of s 52 of the TPA. That is enough to put to one side Ms Windsor's submissions in [26] above in relation to paras 7(c) and 7(f) of her statement of claim. 29 The reference to para 15(a) of her statement of claim is also flawed in that the paragraph refers to a date which does not exist. More fundamentally, Ms Windsor has pleaded that the respondent's failure in a number of respects as constituting breach of contract occurred from about 13 January 2001: see paras 7(a), 7(b) and 7(d) of her statement of claim. Relevantly, the particulars at para 7(d) correspond with those at para 15(a). 30 I agree with the respondent's submission that if the case propounded by Ms Windsor is that the contract did contain terms consistent with the representations, she did not suffer loss by reason of the representations, but rather by reason of a breach of contract. Conversely, if her case is that the contract did not contain those terms, the cause of action plainly accrued when she entered into a bargain devoid of those terms or when the representations were first shown to be false. The case is put, further and in the alternative, that the representations contravened s 52 of the TPA by reason of the fact that the respondent failed to comply with them. On Ms Windsor's own case, the cause of action accrued on 13 January 2001, when she first suffered loss: see paras 7(b) and 7(d) of her statement of claim. Accordingly, the case put, on either basis, is time barred.

CONCLUSION 31 Order 11 rule 16 of the Federal Court Rules permits the Court to strike out a pleading (in whole or in part) where no reasonable cause of action is disclosed; where the pleading has a tendency to cause embarrassment or is otherwise an abuse of process such as where an action is time barred: Jobbins v Capel Corporation Limited and Another (1989) 25 FCR 226. It is an abuse of process to bring a proceeding which can clearly be seen to be foredoomed to fail: Walton v Gardiner (1993) 177 CLR 378 at 393. 32 For the foregoing reasons the statement of claim must be struck out. The applicant must pay the respondent's costs of the motion. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds J.

Counsel for the Respondent: Mr D R Sibtain with N McGarrity

Date of Hearing: 16, 28 August and 5 October, 2008