FEDERAL COURT OF AUSTRALIA

Danthanarayana v Commonwealth of Australia (No 2) [2016] FCA 157

ORDERS

THE COURT ORDERS THAT:

1.    The applicant’s Application for Leave to Amend his Originating Application and his Amended Statement of Claim in accordance with the proposed Amended Originating Application and proposed Second Further Amended Statement of Claim both dated 22 September 2014 be dismissed.

2.    Pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) and r 26.01(1)(a), (b) and (c) of the Federal Court Rules 2011, this proceeding be wholly dismissed.

3.    The applicant pay the respondent’s costs of and incidental to this proceeding incurred in the period from 28 May 2014 to 26 August 2014 on an indemnity basis.

4.    The applicant pay the respondent’s costs of and incidental to this proceeding incurred after 26 August 2014 on an indemnity basis.

5.    Order 9 made on 28 May 2014 be vacated and in lieu thereof ORDERS that the costs ordered to be paid in par 2 of the Orders made on 28 May 2014 as varied on 26 August 2014 may be taxed forthwith.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

FOSTER J:

1    On 28 May 2014, I struck out the applicants’ Further Amended Statement of Claim filed on 22 August 2012 and summarily dismissed all of the claims made against the second to eighth respondents (Danthanarayana v Commonwealth of Australia [2014] FCA 552) (Danthanarayana No 1). The specific orders which I made on that day were:

THE COURT ORDERS THAT:

1.    The whole of the Further Amended Statement of Claim filed on 22 August 2012 be struck out.

2.    Pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) and r 26.01(1)(c) of the Federal Court Rules 2011, the claims for damages and exemplary damages made by the applicants, or either of them, against the respondents, or one or more of them, based upon the tort of civil conspiracy, misfeasance in public office and s 52 and s 82 of the Trade Practices Act 1974 (Cth) be summarily dismissed.

3.    As a consequence of Orders 1 and 2 above, the proceeding as against the second to eighth respondents be wholly dismissed.

4.    The first applicant, Wajira Danthanarayana, have leave to endeavour to replead a case for damages in negligence against the first respondent, the Commonwealth of Australia.

5.    By 27 June 2014, the first applicant, Wajira Danthanarayana, serve and lodge with the Associate to Foster J a draft Amended Originating Application and draft Second Further Amended Statement of Claim in which he pleads such claims in negligence against the Commonwealth as he may be advised consistent with Reasons for Judgment of Foster J delivered this day and by which he deletes from his claims for relief and pleading all claims made by the second applicant, Nirvana Consulting Pty Ltd, all claims against the second to eighth respondents and all other claims against the first respondent, the Commonwealth of Australia.

6.    By 18 July 2014, the solicitors for the Commonwealth of Australia inform the solicitors for the first applicant, Wajira Danthanarayana, whether the Commonwealth opposes the grant of leave to the first applicant to file and serve an Amended Originating Application and Second Further Amended Statement of Claim in conformity with the drafts served upon the solicitors for the Commonwealth in accordance with Order 5 above.

7.    The proceeding be adjourned to 9.15 am on 1 August 2014 before the A.C.T. List Judge, at which time the Court will consider whether leave to amend should be granted as sought by the first applicant.

8.    The applicants pay the respondents’ costs of and incidental to the Interlocutory Application filed by the respondents on 7 August 2012.

9.    The costs of and incidental to the said Interlocutory Application may be taxed forthwith.

2    On 27 June 2014, pursuant to Orders 4 and 5 made on 28 May 2014, the remaining applicant, Wajira Danthanarayana, served and lodged with my Associate a draft Amended Originating Application and a draft Second Further Amended Statement of Claim (DSFASOC). By those documents, the applicant sought to plead cases in negligence against the respondent, Commonwealth of Australia (Commonwealth) and also sought to introduce a new claim based upon the Fair Work Act 2009 (Cth) (FWA). The cases in negligence pleaded in the DSFASOC were not confined to allegations that the Commonwealth was itself directly negligent vis-a-vis the applicant. In the DSFASOC, the applicant sought to plead an entirely new negligence case, namely, that the Commonwealth was vicariously liable for the conduct of those of its servants and agents who bullied, disparaged and unfairly treated the applicant. Neither this new negligence case nor the case based upon the FWA was a case which was the subject of the leave to replead which I had granted to the applicant on 28 May 2014.

3    As anticipated by the orders which I made on 28 May 2014, the matter came before me on 1 August 2014. On that occasion, the Commonwealth was ready to argue the question whether leave to amend should be granted as sought by the applicant but the applicant was not in a position to do so. Counsel who appeared for the applicant on 1 August 2014 frankly conceded that the DSFASOC constituted an entirely fresh pleading in which the applicant sought to articulate cases which were outside the leave to replead which had been granted to him on 28 May 2014. In addition, notwithstanding the terms of Order 7 made on 28 May 2014, Counsel proposed that I treat the listing on 1 August 2014 as a Directions Hearing and then set a program for Written Submissions directed to the DSFASOC.

4    Counsel who appeared for the Commonwealth on 1 August 2014 submitted (correctly) that the listing on that day had been designated as a hearing (not a Directions Hearing) and resisted any attenuated program for Written Submissions.

5    In order to make sensible use of the time allocated to the matter on 1 August 2014 and to progress the matter without visiting substantial prejudice upon the applicant, I directed that Counsel for the Commonwealth address me orally and comprehensively in relation to his client’s objections to the DSFASOC and that the applicant’s legal representatives be required to respond orally on a subsequent occasion. Accordingly, Counsel for the Commonwealth addressed me fully on 1 August 2014 in support of the Commonwealth’s proposition that leave to amend in accordance with the 27 June 2014 drafts should be refused.

6    Subsequently, the matter was relisted before me on 26 August 2014 at which time Counsel for the applicant were expected to address me orally in support of the applicant’s application for leave to amend in accordance with the 27 June 2014 drafts. Counsel for the Commonwealth was expected to make his reply submissions orally on the same occasion. The legal representatives of the Commonwealth are based in Canberra and, as was well known to the applicant and his lawyers, were obliged to travel to Sydney for the 26 August 2014 listing.

7    Soon after the commencement of the hearing on 26 August 2014, it became apparent that the applicant’s legal representatives accepted that they needed to revise the DSFASOC in order to accommodate some of the criticisms of that draft pleading which Counsel for the Commonwealth had made on 1 August 2014. In effect, the applicant’s legal representatives sought an adjournment of the listing on 26 August 2014 in order to prepare a further revised draft Statement of Claim.

8    Because of the significance of the current application to the applicant but most reluctantly on my part, I agreed to defer further argument in respect of the applicant’s application for leave to amend. The orders which I made on 26 August 2014 were:

THE COURT:

1.    GRANTS leave to the Commonwealth to file in Court a Written Submission dated this day in support of its application for an order varying Order 8 made on 28 May 2014 so that the costs to be ordered are the costs of the proceeding generally up to and including 28 May 2014 and so that those costs are ordered to be paid on an indemnity basis.

2.    ORDERS that Order 8 made by Foster J on 28 May 2014 be vacated and in lieu thereof, ORDERS that the applicants pay the respondents’ costs of and incidental to this proceeding up to 28 May 2014 (including the respondents’ costs of and incidental to the Interlocutory Application filed by the respondents on 7 August 2012) on an indemnity basis.

3.    DIRECTS that, by 19 September 2014, the applicant serve upon the solicitor for the Commonwealth and lodge with the Associate to Foster J:

(a)    His final proposed Amended Originating Application and Second Further Amended Statement of Claim; and

(b)    A Written Submission which supports the documents so served and the claims made therein and which addresses the matters raised by the Commonwealth on 1 August 2014 as defects in the earlier drafts of those pleadings.

4.    DIRECTS the Commonwealth to file and serve any answering Written Submissions by 21 October 2014.

5.    DIRECTS the applicant to file and serve any Submissions in Reply by 31 October 2014.

6.    GRANTS liberty to apply to both parties on three (3) days’ notice or such shorter notice as a Judge might allow.

7.    ORDERS that the applicant pay the Commonwealth’s costs of and incidental to today’s listing (26 August 2014) (including the Commonwealth’s reasonable costs of having its Counsel and solicitor travel from Canberra to Sydney for today’s appearance) on an indemnity basis.

8.    ORDERS that the costs ordered to be paid in par 7 above may be taxed forthwith.

9.    RESERVES the question of costs in respect of the proceedings in the period from and including 29 May 2014 up to and including 1 August 2014.

10.    ORDERS that the current application for leave to file amended pleadings made by the applicant be decided on the papers after the orders made in respect of submissions and proposed further pleadings have been complied with.

9    Order 2 which I made on 26 August 2014 was made upon the application of the Commonwealth. That application was supported by the affidavit of Karina Elizabeth Harvey sworn on 6 August 2014 and by a Written Submission dated 26 August 2014.

10    Brief oral argument directed to the Commonwealth’s indemnity costs application took place on 26 August 2014 after which I made Order 2. The applicant then requested that I provide reasons for making that order. I shall do so below.

11    The applicant did not request formal reasons explaining why I made Order 7. My reasons for making that order were made sufficiently clear during argument. However, I will also address that order below.

12    By an email sent by the Commonwealth’s solicitor to my Associate on 28 August 2014, the Commonwealth applied for an order that I amend the orders made on 28 May 2014 and on 26 August 2014 under the slip rule. The applicant did not oppose the requested amendment. I will, therefore, accede to the Commonwealth’s request and make clear in the orders which I will make that the order for costs which I made at par 9 of the Orders which I made on 28 May 2014 (as varied on 26 August 2014) may be taxed forthwith. That is to say, the indemnity costs order in respect of the Commonwealth’s costs incurred up to and including 28 May 2014 may be taxed forthwith.

13    On 22 September 2014, the legal representatives of the applicant lodged with my Associate a revised draft Amended Originating Application (OA Version 2) and a revised draft Second Further Amended Statement of Claim (ASC Version 2) together with a Written Submission seeking to support those documents dated the same day.

14    On 24 October 2014, the Commonwealth lodged with my Associate its answering Written Submission.

15    On 31 October 2014, the applicant lodged with my Associate his Submissions in Reply.

16    By these Reasons for Judgment, I determine the applicant’s application for leave to file OA Version 2 and ASC Version 2. I also provide my reasons for making the indemnity costs order which I made on 26 August 2014 (Order 2 of 26 August 2014).

The Applicant’s New Claims for Relief

17    By his OA Version 2, the applicant claims damages for loss and damage suffered by him caused by:

(a)    Breaches of alleged duties of care owed directly by the Commonwealth to him (pars 24, 25, 26, 27, 28, 29, 30, 31 and 46 of ASC Version 2); and

(b)    Wrongful conduct on the part of Commonwealth employees working in the Department of Defence for which the Commonwealth is vicariously liable (pars 5 to 23, 32 to 39 and 46 of ASC Version 2).

18    The heads of damage sought to be claimed by the applicant for the breaches of duty described in [17(a)] above comprise:

(a)    Damages for the development of a psychiatric injury in the nature of a generalised anxiety disorder and an adjustment order;

(b)    Damages for pain and suffering and loss of amenity or enjoyment of life, including hurt, distress, embarrassment, humiliation and anxiety;

(c)    Medical expenses; and

(d)    Damages for the serious diminution in the applicant’s capacity to obtain further work from the Commonwealth. This may be an economic loss claim although the pleading does not make clear whether that is so.

19    By his OA Version 2, the applicant also claims statutory compensation pursuant to s 545(2) of the FWA for a contravention of the FWA constituted by the Commonwealth’s conduct in taking adverse action against the applicant in breach of s 340(1)(a)(i) of the FWA (pars 40 to 46 of ASC Version 2).

The Relevant Contractual Relationships

20    At pars 1 and 3 of ASC Version 2, the applicant recounts his employment history with the Commonwealth and the existence and terms of certain contracts pursuant to which the applicant’s services were provided to the Commonwealth from time to time. In this section of these Reasons, I set out the relevant facts concerning these matters.

21    The facts and matters which I now set out are taken from the affidavit of the applicant affirmed on 26 June 2012 and from ASC Version 2. The facts and matters which I have extracted from the applicant’s affidavit in this section are broadly consistent with the allegations made in pars 1–3 of ASC Version 2 although some of the allegations in the pleading differ slightly from the evidence given by the applicant in his affidavit. Where there are differences, I have preferred the evidence given by the applicant in his affidavit. There is no dispute about the facts and matters set out in this section of these Reasons.

22    For some months commencing in March 1989, the applicant was employed by the Commonwealth as an employee of the Australian Public Service (APS). He worked in a graduate position with the Australian Bureau of Statistics in Canberra. Later the same year, he moved to the Department of Primary Industries and Energy. From 1990 to 1997, the applicant was an APS employee engaged by the Australian Quarantine Inspection Service as an ICT Infrastructure and Applications Program/Project Manager.

23    In 1997, the applicant transferred to another Commonwealth agency, Agriculture, Fisheries, Forestry Australia, as an IT Infrastructure Manager. He remained as an employee in that agency until 2000.

24    In 2000, the applicant resigned his employment as an APS employee.

25    Immediately thereafter, he took up work as an IT contractor providing services to the Commonwealth. His first contract was with the Department of Finance as an IT Infrastructure Solutions Architect. It appears that he may have contracted directly with the Commonwealth in respect of this engagement.

26    In 2001, the applicant recommenced employment with the APS, taking up a position with Defence Housing Australia. He was employed by that agency as an ICT Solutions Architect/Project Manager. He remained in that position until 2005 when he again resigned as an APS employee. He then again took up work as a contractor. He did not subsequently resume working directly for the Commonwealth as an APS employee.

27    From June 2000 to February 2010, the applicant was either a partner in a partnership known as Professional Consultancy in Information or the controller of a corporation called Professional Consultancy in Information Technology Pty Ltd. I shall refer to that business partnership or corporation (as the case may be) as “PCIT”.

28    In ASC Version 2, at subpar 1(f), the applicant claims to have been a “partner” in the partnership known as “Professional Consultancy in Information Technology as a sole trader”. However, in his affidavit at par 44, he said that from November 2006 he had worked under a contract between Professional Consultancy in Information Pty Ltd and Icon Recruitment Pty Ltd (Icon) (Annexure WD-5 to his affidavit). That contract showed PCIT, the corporation, as the contracting party. The applicant signed that contract on behalf of PCIT, the corporation. I refer to that contract in more detail at [30]–[32] below.

29    In 2005, PCIT entered into a contract with a service provider known as M & T Resources. That contract ran from 9 November 2005 until 24 October 2006. Pursuant to that contract, M & T Resources engaged PCIT to provide IT consultancy services to Defence Chief Information Officer Group (CIOG), a division of the Department of Defence. The work itself was to be carried out by the applicant.

30    By a formal contract in writing made on 6 November 2006 between PCIT, the corporation, and Icon, PCIT agreed to provide the services of the applicant to Icon for the period 7 November 2006 up to and including 30 June 2007. Under that contract, the applicant was required to report to an appointed nominee of the Department of Defence and thereafter to attend the premises of that Department in order to provide IT consulting services in consultation with that Department.

31    Clause 7 of that contract provided that the relationship between PCIT and Icon should be that of an independent service provider and neither PCIT nor Icon had any power, right or authority to bind the other or assume or create any obligation or responsibility, whether express or implied, on behalf of the other or in the other’s name. The clause went on to provide that nothing in the contract should be construed as constituting PCIT and Icon as partners or creating the relationship of employer and employee, master and servant, or principal and agent between PCIT and Icon.

32    In 2007, PCIT’s contract with Icon was extended until 30 September 2008.

33    In the period from 1 October 2008 to 25 October 2009, the applicant’s services were provided to the Department of Defence under a contract in writing between that Department and Frontier Group Australia Pty Ltd (Frontier) which, in turn, had procured the provision of those services pursuant to a contract between it and PCIT.

34    In the period from 30 October 2009 to 20 December 2009, the applicant’s services were provided to the Department of Defence pursuant to similar multi-party arrangements. On this occasion, the service provider which held the formal written contract with the Commonwealth was Talent International (ACT) Pty Ltd (Talent). That company had, in turn, contracted with PCIT to provide the services of the applicant to it for the purpose of enabling it to provide his services to the Commonwealth. In that contract, there were express provisions governing the nature of the relationship (cl 12) between Talent and PCIT. PCIT was said not to be an employee, servant or agent of Talent.

35    On 2 February 2010, the applicant caused to be incorporated a company called Nirvana Consulting Pty Ltd (Nirvana). Since its incorporation, the applicant has been the sole director and shareholder of Nirvana.

36    In the period from 3 February 2010 to 30 September 2010, the applicant’s services were provided to the Department of Defence by a service provider called Peoplebank Australia Ltd (Peoplebank) pursuant to a formal written contract between Peoplebank and the Commonwealth. That corporation had, in turn, entered into a contract with Nirvana whereby Nirvana undertook to provide the applicant’s services to Peoplebank for the purpose of having those services provided to the Department of Defence by Peoplebank.

37    In the period from 4 October 2010 to 30 June 2011, the applicant’s services were provided to the Department of Defence by a service provider called Whizdom Pty Ltd (Whizdom) pursuant to a formal written contract between Whizdom and the Commonwealth. Whizdom had, in turn, entered into a contract with Nirvana whereby Nirvana was to provide the applicant’s services to Whizdom for the purpose of allowing Whizdom to provide the applicant’s services to the Department of Defence.

38    As noted at [26] above, the applicant resigned his employment as an APS employee for the last time in 2005.

39    Thus, throughout the period from about November 2005 until 30 June 2011, one of Icon, Frontier, Talent, Peoplebank or Whizdom, each of which was a service provider corporation separate and independent from the applicant, entered into a formal written contract with the Commonwealth pursuant to which the particular service provider undertook to provide specified IT consultancy services to the Department of Defence. Different projects were involved but all of the work was in IT, the area of the applicant’s expertise. Each of those service providers, in turn, entered into a contract with either PCIT or Nirvana pursuant to which either PCIT or Nirvana (as the case may be) promised to provide the services of the applicant to the service provider in question and thus ultimately to the Department of Defence.

40    Although the applicant had been an APS employee for most of the period from 1989 up to his resignation in 2005 and thus employed by the Commonwealth for most of that period, immediately before he resigned in 2005, he was not working in any of the divisions of the Department of Defence in which he subsequently worked as the employee or principal of PCIT under its contractual arrangements with the various corporate service providers which contracted with PCIT from time to time.

41    None of PCIT, Nirvana or the applicant had any express contractual arrangements with the Commonwealth or any of its departments of state or agencies at any time after November 2005. The contracts for the provision of consultancy services were always entered into between the Commonwealth, on the one hand, and the relevant service provider, on the other hand. Those contracts were supported by the back-to-back arrangements constituted by the contracts between the service providers and PCIT or Nirvana.

42    The period of time during which the alleged wrongful conduct on the part of the Commonwealth and its employees took place was from about June 2009 to about mid-May 2011.

The Applicant’s Pleaded Case in ASC Version 2

43    At par 2 of ASC Version 2, the applicant sets out the titles and positions of four APS employees—Messrs Sykes, Pope, Billett and Brown. All of these men were employed in the CIOG.

44    After referring to some of the relevant contractual relationships, the applicant pleads at par 4 of ASC Version 2:

Throughout the Engagement:

a)    The Applicant was required under the Contracts to perform specific work at the direction and control of the Respondent given directly to him by the respondent’s officers and employees, for a set number of hours as directed by the Respondent, at locations dictated by the Respondent, in all respects as though he were engaged directly by the Respondent.

b)    The Applicant relied upon the Respondent to provide computer hardware and software in order to perform his duties under the Contracts.

c)    The Respondent provided regular training to the Applicant in relation to workplace conduct (Campus Program) and security.

d)    The Applicant was directly and personally bound by policies and procedures that applied to employees of the Respondent at the Department of Defence, including but not limited to the Defence Instructions (General) PERS 35-3.

e)    The Respondent made arrangements, and reimbursed the Applicant, for all travel as required in performance of his duties under the Contracts.

f)    The Applicant was not permitted under the Contracts to delegate his duties under the Contracts to another person.

45    The abbreviation “the Engagement” as used in par 4 is not defined anywhere in ASC Version 2. The abbreviation “the Contracts” is a reference to the contracts between the service providers (Icon et al) and the Commonwealth referred to in par 3 of ASC Version 2.

46    At pars 5 and 6 of ASC Version 2, the applicant alleges that Messrs Sykes and Pope engaged in conduct that was “… derogatory, disparaging, insulting, humiliating, harassing and bullying of and to the applicant …”. These are the core allegations of misconduct for which the applicant seeks to hold the Commonwealth responsible.

47    Particulars of the conduct are provided at pars 5 and 6. In the case of Mr Sykes, the conduct is said to have taken place between about June 2009 and about December 2009. In the case of Mr Pope, the conduct is alleged to have occurred in November and December 2009.

48    At pars 7, 8, 9 and 10 of ASC Version 2, the applicant sets out details of various complaints he made about the conduct to other employees of or consultants to the Commonwealth. Relevantly, these complaints were made during the period from about June 2009 to late December 2009.

49    At pars 12 and 13 of his proposed pleading, the applicant alleges that the investigations into his complaints carried out by the Commonwealth involved “… invasive, harsh and improper procedures” and were not carried out expeditiously.

50    The investigations took place in the period from December 2009 to November 2010.

51    The applicant also claims that one investigator was biased against him, that the confidentiality of his complaints was not protected and that the Commonwealth did not provide ongoing adequate feedback in relation to the progress of the investigations.

52    At pars 14 to 16 of ASC Version 2, the applicant alleges that Messrs Sykes and Pope took steps to procure the cancellation of the applicant’s security clearance with the Commonwealth. It is difficult to discern the complaint being made in these paragraphs. It is said that Messrs Sykes and Pope asked an employee of Talent to arrange for the applicant to sign a form (Form XP101) which the applicant did voluntarily and without question. His signing of that form resulted in his security clearance being terminated in January 2010.

53    At pars 17 to 21 of his proposed pleading, the applicant alleges that Messrs Sykes and Pope and others made formal allegations of security breaches against the applicant which, once investigated, resulted in his not being granted a Negative Vetting Level 2 security clearance in mid-May 2011. The applicant does not allege that the allegations made against him were not, in fact, true. Rather, he complains about the way in which the allegations were dealt with by the Commonwealth.

54    At pars 24 to 25 of ASC Version 2, the applicant alleges that the Commonwealth directly owed him the following duties of care:

Duty to take care to avoid exposing the Applicant to unnecessary risks of injury

24.    At all times during the Engagement, the Respondent owed the Applicant a duty to take reasonable care to avoid exposing the Applicant to unnecessary risks of injury, including of the Injury or of psychiatric or psychological injury or harm to the same or similar effect.

Duty to take care to avoid injury to the Applicant arising from an unsafe workplace

25.    Further, or in the alternative to paragraph 24, at all times during the Engagement the Respondent owed the Applicant a duty of care to take reasonable care to avoid foreseeable risk of injury, including of the Injury or of psychiatric or psychological injury or harm to the same or similar effect, to the Applicant arising from an unsafe workplace.

Particulars

The duty of care arose in circumstances where:

i)    the Respondent as principal engaged the Applicant as an independent contractor by way of the Contracts;

ii)    the Respondent was responsible for, and did direct, the manner of the performance of the work by the Applicant under the Contracts;

iii)    the risk of foreseeable harm to the Applicant arose from the nature of the workplace, in respect of which:

a)    according to the nature of the work required to be performed under each of the Contracts, the Applicant was expected, and required, to work at premises of, or controlled by, the Respondent;

b)    under the Contracts the Applicant would be working with, and among, employees of the Respondent, at premises of, or controlled by, the Respondent;

c)    the Applicant had limited or no control over the conduct of the Respondent’s employees;

d)    the Respondent had, or should have had, control over its employees at the premises where the Applicant performed his duties under the Contracts.

iv)    the Respondent took responsibility for training the Applicant in relation to workplace behaviour, and the Applicant was trained by the Respondent.

v)    neither ICT nor Nirvana was, at the relevant time:

a)    aware, or could have been taken to be aware, of the harm to the Applicant arising from the Conduct; or

b)    in a position to protect the Applicant from harm arising from verbal abuse, threatening behaviour and victimisation of the Applicant arising from the Conduct.

vi)    the Applicant put the Respondent on notice of the Conduct, and the Respondent knew, or can be taken to have known, about the Conduct.

vii)    the Respondent had the means to alleviate the risk to the Applicant.

55    At pars 26 to 31, the applicant pleads breaches of the duties pleaded in pars 24 and 25.

56    At pars 32 to 39 of ASC Version 2, the applicant alleges that each of Messrs Sykes and Pope owed him a duty of care “… to not engage in conduct that would expose the applicant to the risk of [injury including psychological injury]” and that each of them breached that duty. He claims in these paragraphs of his proposed pleading that the Commonwealth is vicariously liable for the conduct of Messrs Sykes and Pope.

57    At pars 40 to 45 of ASC Version 2, the applicant pleads his case under the FWA. At par 40, he alleges that the applicant had a workplace right to make the complaints which he made in 2009 to the Secretary of the Department of Defence. At par 42, he alleges that the Public Service Act 1999 (Cth) was, and is, a workplace law as defined in s 12 of the FWA. At par 44, the applicant claims that, in contravention of s 340(1)(a)(i) of the FWA, the Commonwealth took adverse action against him in that it:

a)    injured the Applicant in relation to the terms and conditions of the Contracts; and/or

b)    altered the position of the Applicant to the Applicant’s prejudice.

c)    refused to make use of, or agree to make use of, or supply, or agree to supply, services offered by the Applicant.

The applicant relies upon Item 3 of s 342(1) of the FWA.

58    The particulars of the alleged adverse action recite a number of matters. They all relate to the effect or impact upon PCIT to gain further contracts with relevant service providers to do work for the Commonwealth. In one case, the applicant alleges that, on 16 January 2012, he was denied the opportunity to take up a role with the Therapeutic Drugs Administration as a result of actions taken by two Commonwealth employees other than Messrs Sykes and Pope.

The Applicant’s Submissions

59    After the aborted hearing on 26 August 2014, the applicant filed a Written Submission dated 22 September 2014 in which he sought to support OA Version 2 and ASC Version 2. The Commonwealth filed a Written Submission in answer dated 24 October 2014. The applicant then filed a Written Submission in reply dated 31 October 2014.

Direct Duties of Care owed by the Commonwealth

60    In his initial Written Submission, the applicant argued that the first of the direct duties which he alleges at par 24 of ASC Version 2 was owed to him by the Commonwealth is an analogue of the duty conventionally owed by an employer to an employee. The applicant submitted that, when due regard is paid to the matters pleaded at par 4 of his proposed pleading, the Commonwealth is properly seen as his “surrogate employer”.

61    The applicant supported the second direct duty pleaded at par 25 of ASC Version 2 by submitting that the Commonwealth owed a direct duty to the applicant, even though he was an independent contractor, to provide a safe system of work in circumstances where an employee might otherwise have been employed to do the work that the contractor was doing and where the principal directed the manner in which the work was to be performed. He relied upon Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 (Stevens) at 31 and Leighton Contractors Pty Ltd v Fox (2009) 240 CLR 1 (Leighton).

Vicarious Liability of the Commonwealth

62    The applicant also argued in his Written Submissions in Chief that the Commonwealth was vicariously liable for the acts of Messrs Sykes and Pope because those acts were wrongful acts committed by each of them in the course of their employment by the Commonwealth.

The FWA Claim

63    As far as the FWA claim is concerned, the applicant relies upon the matter pleaded at par 1(e) of ASC Version 2. That subparagraph is in the following terms:

The applicant:

…

(e)    In 2005, resigned as an APS employee and was engaged as an independent contractor within the meaning of s 342 of the Fair Work Act 2009 (Cth), inter alia, by reason of the circumstances set out in paragraph 5 under an implied contract with the respondent whereby the applicant performed work in the Department of Defence as an IT contractor.

64    The reference to “paragraph 5” in par 1(e) of the applicant’s proposed pleading is probably meant to be a reference to paragraph 4 of that proposed pleading. I have reproduced par 4 of ASC Version 2 at [44] above.

65    In addition, the applicant alleges at par 2(e) of his proposed pleading that the Commonwealth was, at all material times, a principal for the purposes of Item 3 of s 342 of the FWA inter alia by reason of the circumstances set out in par 5 under the alleged implied contract with the applicant referred to in par 1(e) of the proposed pleading.

66    The applicant recognised some of the difficulties posed by his proposed FWA case. In his Written Submissions in Chief, the applicant submitted that he was a party to an independent contract with the Commonwealth. According to his proposed pleading, this contract was an implied contract. The applicant also submitted that his claim was merely an extension, by analogy, of the reasoning in Damevski v Guidice (2003) 133 FCR 438 (Damevski) in which the Full Court looked beyond the written contract of employment between the applicant in that case and a labour hire firm to find that there was an implied contract of employment between the applicant and the hirer.

The Commonwealth’s Submissions

67    The Commonwealth’s submission in writing constituted a wholesale attack on the applicant’s endeavour to secure leave to file his OA Version 2 and his ASC Version 2.

68    At the outset, the Commonwealth reminded me that the leave to replead which I had granted on 28 May 2014 was confined to a potential case at the suit of the applicant for damages suffered by him as a result of breaches of a duty of care or duties of care owed directly by the Commonwealth to him. That submission is correct, as far as it goes. While it is true that the applicant’s present endeavour to obtain leave to file his OA Version 2 and his ASC Version 2 involves an attempt on his part to raise causes of action which have never been part of the case to date, I do not consider that that circumstance provides a complete answer to the present application. I think that the better approach is to decide the present application upon the basis that it is an application for leave to amend.

69    At the beginning of its Written Submissions, the Commonwealth made detailed submissions as to why leave to amend (or replead) should be refused altogether. These Submissions drew attention to the unsatisfactory history of the several attempts on the part of the applicant to formulate an arguable case in circumstances where he had been represented by Senior Counsel, Junior Counsel and experienced solicitors.

70    The Commonwealth then addressed specific submissions to each of the causes of action now sought to be relied upon by the applicant.

71    The Commonwealth submitted that the direct non-delegable duty of an employer to an employee cannot arise in the present case because the applicant does not claim to have been an employee of the Commonwealth at the relevant time. The Commonwealth submitted that the applicant’s reliance upon the proposition that the Commonwealth was a surrogate employer is misplaced. The Commonwealth submitted that, in light of the High Court’s decision in Leighton, the NSW decision of Rockdale Beef Pty Ltd v Carey [2003] NSWCA 132 relied upon by the applicant should no longer be considered good law. The same may be said of Nationwide News Pty Ltd v Naidu (2007) 71 NSWLR 471.

72    Furthermore, so the Commonwealth submitted, the applicant’s attempt to plead a case that the Commonwealth owed him a direct duty to provide a safe system of work is also beset with difficulties. The Commonwealth submitted that the existence of the claimed duty is not an automatic corollary of the principal/contractor relationship. If such a duty arises in any given case, it is because of the particular characteristics of the particular relationship.

73    The Commonwealth then submitted that the particulars given at par 25 of ASC Version 2 do not support the direct duty claimed. There is absolutely no basis for finding that the Commonwealth and the applicant entered into a form of direct implied contract. All of the relevant contracts which the Commonwealth had were with service providers which were unconnected with the applicant in terms of ownership and control. Those providers contracted in turn with PCIT and Nirvana and not with the applicant himself. It was PCIT and Nirvana which undertook to provide the applicant to perform the work.

74    The alleged duties directly owed by the Commonwealth to the applicant conflict with other important duties owed by the Commonwealth. For example, when granting security clearances, the Commonwealth must give priority to Australia’s national security interests.

75    The Commonwealth went on to submit that the injuries relied upon as constituting loss or damage were not reasonably foreseeable by the Commonwealth itself.

76    The law is that, in order for it to be directly liable in negligence, it is the Commonwealth itself which must have been aware of the facts which made the harm reasonably foreseeable. ASC Version 2 does not plead facts and matters which could conceivably justify the allegation of foreseeability.

77    The applicant’s answer to these latter submissions made on behalf of the Commonwealth is to assert that, while they are unable to plead that any particular individual could be said to be the directing mind and will of the Commonwealth, the Commonwealth was seised with knowledge of the facts from which, it is said, the injury became reasonably foreseeable. In any event, so the applicant submitted, the pleading can still stand because no requirement to plead such facts exists in any event. The Commonwealth responded to these arguments by submitting that this is not the law. The Commonwealth said that these deficiencies present an insurmountable problem for the applicant. The Commonwealth relied upon Western Australia v Watson [1990] WAR 248 (Watson) in support of its submissions on these matters.

78    As far as the attempt to plead vicarious liability on the part of the Commonwealth is concerned, the Commonwealth submitted that the pleaded duty is expressed in absolute terms rather than in terms of a need to take reasonable care. This is an unsatisfactory attempt to reintroduce averments which have previously been rejected in Danthanarayana No 1.

79    In addition, the Commonwealth submitted that both Messrs Sykes and Pope had conflicting duties to the Commonwealth which would negate the imposition upon them of any individual duty of care owed to the applicant.

80    The Commonwealth then submitted that the pleaded case concerning the cancellation of the applicant’s security clearance is nonsensical.

81    At pars 46 and 47 of its Written Submissions, the Commonwealth said, in relation to the FWA pleading:

46.    The pleaded cause of action under the Fair Work Act 2009 can properly be seen as a late invention, introduced for tactical reasons. When first proposed in the 181 SFASOC, the Commonwealth set out the following reasons why that pleading ought not be permitted [Transcript of proceedings of 1 August 2014 at 11 to 31].

46.1.    The only ‘workplace right’ asserted by the applicant is the right to complain to the Secretary of the Department of Defence about something, a right which is obviously shared by Australians as a whole.

46.2.    There was no particularisation at all of the allegation that the Commonwealth was motivated to take the adverse action because of that ‘workplace right’.

46.3.    Indeed, the Fair Work Act claim introduced a reverse onus which would put the Commonwealth to a very substantial and unfair burden of positively proving that adverse action was not taken because he had that workplace right: see ss 360 and 361.

46.4.    That unfairness was compounded by the extravagant, vague and expansive particulars of ‘adverse action’, which brought in many old complaints such as the refusal of a security clearance and the applicant’s failure to secure a myriad of positions and contracts, including many outside of Defence. It thus reintroduced under a new guise the same basic complaints as had been struck out and summarily dismissed when raised as conspiracy and misfeasance complaints.

46.5.    The costs provisions of the Fair Work Act raised the real spectre that, were that claim to be included, the entire proceedings (including the common law claims) would be converted to a 'no costs' proceeding: sees 570 and Goldman Sachs JBWere Services Ply Ltd v Nikolich (2007) 163 FCR 62.

46.6. The proposed Fair Work Act pleading fell wholly outside the grant of leave to attempt to replead.

47.     The applicant does not take issue with any of those concerns, or explain how they may be ameliorated. He does not dispute that the Commonwealth would suffer the unfairness explained above, making it plain that he is persisting with the claim in the hope of securing the obvious and significant tactical and costs advantages it would afford him. Indeed, he now has inserted an express reliance upon ss 360 and 361 as the sole ‘particulars’ of why the Commonwealth was motivated to take the adverse action (see paragraph 45). Far from seeking to explain or ameliorate the unfair effect which those provisions would have in the particular circumstances of this case, he has in fact positively underlined his intention of exploiting them to his tactical advantage. He has not even taken the obvious and small step of moderating the extravagant allegations as to ‘adverse action’ (see paragraph 44(c)(ii)), again underscoring his intention to enlarge the claim to include the same raft of factual complaints which were previously summarily dismissed.

82    The Commonwealth went on to submit that there is nothing in Damevski which suggests that the analysis applied by the Court in that case might apply to this matter. In that case, the implied contract was found to arise because of the pre-existing employment relationship between the parties and the fact that the so called contractor relationship was developed as a frankly acknowledged device to keep the same employees doing the same jobs in the same conditions but without the legal obligations attending the employment relationship. The Commonwealth submitted that none of those features are present in this case. In this case, the applicant had not been an employee of the Department of Defence immediately prior to being engaged under the relevant contracts. He had a business history and practice of operating as an independent contractor and he had himself created business vehicles through which to provide his services as a consultant.

The Applicant’s Reply Submissions

83    In his Reply Submissions, the applicant accepted that his case should stand or fall upon the worth of OA Version 2 and ASC Version 2.

84    The applicant submitted that there was a reasonable question to be tried as to whether or not a duty arose under the principles explained by the High Court in Leighton. A similar submission was made in relation to the proposition that the alleged duties of care are inconsistent with other duties owed by the Commonwealth and its employees. The applicant also took issue with the Commonwealth’s contentions concerning the need to plead facts going to the question of foreseeability. The applicant argued that the test was whether the risks were reasonably foreseeable not whether they were actually foreseen.

85    As far as the Commonwealth’s proposition that the duty of care underpinning the alleged vicarious liability of the Commonwealth for the conduct of Messrs Sykes and Pope is concerned, the applicant took issue with the proposition that the duty, as sought to be pleaded, was absolute. The applicant argued that he was intending to put that duty of care more narrowly than this and that it is a duty not to engage in particular conduct which would lead foreseeably to the applicant suffering a psychiatric injury.

Consideration and Decision

Direct Duties of Care Owed by the Commonwealth

86    In my view, it is plain beyond argument that, at no time since 2005, has the applicant worked directly for the Commonwealth as an APS employee. The applicant’s last job as an employee of the Commonwealth was his employment by Defence Housing Australia as an ICT Solutions Architect/Project Manager which ended in 2005, four years before the events about which he now complains. At all times from November 2006, the applicant’s services to the Commonwealth had been provided to it by third party service providers (such as Icon) which in turn had contracted with PCIT, not the applicant. In the period from November 2005 onwards, the applicant himself had no direct contractual relationship with the Commonwealth nor did he have any such relationship with the service providers which themselves had a direct contractual relationship with the Commonwealth. He was, in every sense of the word, an independent contractor whose services were provided to the Commonwealth by a service provider which, in turn, had contracted with PCIT to provide the applicant’s services. There is no basis in the pleaded facts and matters nor in the evidence in the applicant’s affidavit affirmed on 26 June 2012 for the applicant’s contention that he was engaged as an independent contractor under an implied contract between him and the Commonwealth. Nor is there any basis for a contention that he was engaged by the Commonwealth directly as its employee under some other implied contract.

87    The matters to which I have referred at [86] above are fatal to the imposition of either of the direct duties relied upon by the applicant at pars 24 and 25 of his proposed pleading. Furthermore, as submitted by the Commonwealth, the fact that the applicant worked with the Commonwealth’s employees and that the Commonwealth should have had control of those employees does not engage the duty to provide a safe system of work explained by the High Court in Stevens. The claim as pleaded here lacks the crucial factor of a need to co-ordinate activities which were inherently dangerous and which, absent co-ordination, gave rise to a foreseeable risk of injury. See also Leighton at 23–24 [52]–[57] per French CJ, Gummow, Hayne, Heydon and Bell JJ.

88    Further, the Commonwealth’s submissions to the effect that the pleaded duties conflict with other obligations of the Commonwealth are sound and I accept them. They provide another basis for the Court to find that neither of the direct duties relied upon by the applicant existed in the present case.

89    When considering whether the Commonwealth itself had knowledge of facts relevant to establishing a duty (including a duty of care), or must be taken to have known those matters, it is necessary to consider whether those persons said to have the relevant knowledge can be said to be the directing mind and will of the Commonwealth (see HMS Truculent: The Admiralty v The Divina (Owners) [1951] 2 All ER 968; and Watson).

90    The applicant has not pleaded any facts which identify who, for present purposes, was the directing mind of the Commonwealth and has failed to plead facts which, if proved, could show that the Commonwealth as a legal entity separate from its employees and officers knew or ought to have known of the alleged risks to the applicant.

91    In any event, the failures said to give rise to a breach of the claimed direct duties are pleaded in a way which is impossibly general and vague. The applicant has not undertaken the task of specifying in the pleading the reasonable steps that the Commonwealth should have undertaken in order to fulfil the alleged duties.

Vicarious Liability of the Commonwealth

92    As far as the vicarious liability case is concerned, the duty pleaded is pleaded as an absolute duty to avoid exposing the applicant to the risk of injury. No such duty is known to the law. As submitted by the Commonwealth, the difficulties caused by pleading an absolute duty is brought into sharp focus when it is appreciated that the pleaded breaches by Messrs Sykes and Pope relate to matters where they had conflicting duties to the Commonwealth. This is yet another reason why the pleaded absolute duty cannot be allowed to stand.

The FWA Claim

93    At par 1(e) of his ASC Version 2, the applicant pleads that he was engaged as an independent contractor within the meaning of s 342, Item 3 of the FWA. At par 2(e) of his proposed pleading, he pleads that the Commonwealth was a principal for the purposes of Item 3 of s 342 of the FWA.

94    The case which the applicant seeks to put, therefore, is that the Commonwealth, as principal, took adverse action against the applicant, as its independent contractor, by allowing the applicant to be bullied, disparaged and mistreated in the workplace by its employees.

95    Item 3, Column 1, provides that:

Adverse action is taken by … a person (the principal) who has entered into a contract for services with an independent contractor against the independent contractor, or a person employed or engaged by the independent contractor

96    Reliance is placed upon subpars (b), (c) and (d) of Column 2 of Item 3 in s 342 of the FWA. Those subparagraphs are in the following terms:

Adverse action is taken … if … the principal:

…

(b)    injures the independent contractor in relation to the terms and conditions of the contract; or

(c)    alters the position of the independent contractor to the independent contractor’s prejudice; or

(d)    refuses to make use of, or agree to make use of, services offered by the independent contractor; or

…

97    I do not think that the applicant was engaged by the Commonwealth as an independent contractor within the meaning of Item 3 of s 342 of the FWA. The evidence speaks with one voice on this matter. There was no express contractual arrangement between the Commonwealth and the applicant at any time in the period 2009–2011. The applicant was not engaged directly by the Commonwealth nor was he employed or engaged by any service provider (such as Icon) with whom the Commonwealth had a contract. The alleged implied contract for services is completely inconsistent with the express contractual arrangements pursuant to which the applicant did work at the Commonwealth’s premises. The matters relied upon by the applicant at par 4 of his ASC Version 2 are equally consistent with his services being provided under the express contractual arrangements to which I have already referred.

98    In any event, the actions of Messrs Sykes, Pope and others which constitute the subject matter of the applicant’s complaints do not engage any of subpars (b), (c) or (d) of Column 2 of Item 3 of s 342.

99    The submissions made by the Commonwealth at pars 46 and 47 of its Written Submissions (which I have extracted at [81] above) and the submissions made by the Commonwealth which I have summarised at [82] above are sound and I accept them.

100    For all of the above reasons, the applicant’s proposed case based upon the FWA is hopeless.

Conclusions (Leave to Amend)

101    For the reasons which I have explained, I consider that the applicant has no real prospect of succeeding with any of the causes of action which he seeks to propound in ASC Version 2. Leave to amend in order to introduce those causes of action should therefore be refused. There is no reason why costs should not follow the event.

The Indemnity Costs Order made on 26 August 2014 (Order 2)

102    On 26 August 2014, I ordered that the applicant and Nirvana pay all of the respondent’s costs of and incidental to this proceeding up to 28 May 2014 on an indemnity basis.

103    My reasons for making that order were that, in the period from the commencement of this proceeding up to 28 May 2014, when I delivered Danthanarayana No 1, the applicants had had many opportunities to address the respondents’ concerns about the form of their pleading but had steadfastly refused to take heed of the many warnings given to them by the solicitors for the respondents. In her affidavit sworn on 6 August 2014, Ms Harvey traversed the entire history of the respondents’ efforts to secure a sensible pleading from the applicants. The affidavit disclosed a sorry history indeed. It is not necessary for present purposes to traverse in detail the history of the dealings between the parties.

104    The substance of the matter is that, apart from the slim possibility that the applicant in his individual capacity might be able to bring a claim for breaches of a duty of care owed directly to him by the Commonwealth, the case pleaded by the applicants throughout the period 2011 and 2012 was a case which had no reasonable prospects of success. In my judgment, it was a case which should never have been brought.

105    It was for these brief reasons that I considered that an indemnity costs order for the entire case up to 28 May 2014 was justified.

Costs for the Period after 28 May 2014

106    At [2]–[8] above, I set out the steps that were taken in this proceeding between late May 2014 and 26 August 2014.

107    In my view, the applicant should have been ready to make his submissions in support of the DSFASOC on 1 August 2014. He was not then in a position to do so. Although the time in Court on 1 August 2014 was not completely wasted, the fact that the applicant was not ready to proceed on that occasion caused further delay in the disposition of his Application for Leave to Amend. In the end, of course, he chose to propound a further draft of his proposed claim which first became available on 22 September 2014.

108    Against that background, and having had 25 days to consider the Commonwealth’s oral submissions made on 1 August 2014, the applicant was still not ready to proceed on 26 August 2014. The applicant’s lack of preparedness to proceed on 26 August 2014 became apparent soon after the commencement of the hearing on that day. The applicant’s defaults were made more serious by the circumstance that, not only was he not ready to proceed on that day, but Senior Counsel then appearing for him sought yet a further indulgence. Counsel had formed the view that the DSFASOC would need to be amended yet again and he sought time within which to consider and propound further amendments. This was most unsatisfactory since the whole purpose of adjourning the matter at the request of the applicant on 1 August 2014 was to have his Application for Leave to Amend finally resolved on 26 August 2014.

109    The above history amply demonstrates that the total waste of time and money incurred by the Commonwealth in relation to the aborted hearing on 26 August 2014 was the direct result of the failure on the part of the applicant and his lawyers to consider submissions made by the Commonwealth on 1 August 2014 and to prepare themselves for the hearing on 26 August 2014. The applicant and his lawyers should have realised that further work needed to be done on the DSFASOC long before 26 August 2014. The inutility of that fixture was entirely the fault of the applicant and his lawyers.

110    These were my reasons for making the second indemnity costs order which I made on 26 August 2014 (Order 7 made on that day).

111    It seems to me that the current applicant, Mr Danthanarayana, also conducted his case in the period after 28 May 2014 up to and including 26 August 2014 in the same manner as he had conducted it in the period prior to 28 May 2014. He brought forward a pleading (the DSFASOC) which was defective. He took no steps to remedy it prior to 26 August 2014 and left the Commonwealth with no choice but to persist with its opposition to the applicant’s endeavour to plead a sensible case.

112    For these reasons, I think that the applicant should be ordered to pay indemnity costs in respect of this proceeding for the period from 28 May 2014 to 26 August 2014.

113    Finally, there are the costs for the period after 26 August 2014.

114    In light of the fact that I have refused leave to amend upon the basis that the applicant has no reasonable prospect of succeeding in any of the causes of action which he has sought to maintain, I think that he should also pay indemnity costs in respect of costs incurred after 26 August 2014.

115    The effect of all of the orders for costs which I have now made in the proceeding is that:

(a)    All costs ordered against the applicants are to be paid on an indemnity basis; and

(b)    Costs up to and including 28 May 2014 are to be paid by Mr Danthanarayana personally and also by Nirvana while costs after that date up to and including today are to be paid only by Mr Danthanarayana personally.

Conclusions

116    As is apparent from Danthanarayana No 1 and from these Reasons, Mr Danthanarayana has had ample opportunity to bring forward an arguable case against the Commonwealth. He has conspicuously been unable to do so. In those circumstances, I propose to dismiss this proceeding pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) and also pursuant to r 26.01(1)(a), (b) and (c) of the Federal Court Rules 2011.

117    There will be orders accordingly.

Associate:

Dated:    29 February 2016