FEDERAL COURT OF AUSTRALIA

The Environmental Group Ltd v Bowd [2019] FCA 951

ORDERS

AND

THE COURT ORDERS THAT:

1.    The parties are to file within 14 days hereof consent orders giving effect to the reasons of this judgment, or if the parties cannot so agree, submissions limited to four pages setting out what each party contends should be the form of final relief.

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

REASONS FOR JUDGMENT

STEWARD J:

1    Before me are two proceedings. In one, Mr Peter Bowd sues his former employer, The Environmental Group Ltd (“EG”), and its then managing director, Mr Ellis Richardson, contending that there were contraventions of ss 340 and 352 of the Fair Work Act 2009 (Cth) (the “FW Act”) and Pt 9.4AAA of the Corporations Act 2001 (Cth) (the “CA”). He seeks damages and the imposition of the maximum penalty. In the other proceeding, EG and two of its subsidiaries, namely Baltec IES Pty Ltd (“Baltec”) and Total Air Pollution Control Pty Ltd (“TAPC”), sue Mr Bowd for breach of contract, detinue and breach of copyright in relation to confidential information and property retained by Mr Bowd following his dismissal by EG. Both proceedings are the product of a breakdown in the relationship between the board and Mr Bowd who had been the Chief Executive Officer (“CEO”) of EG. That breakdown was severe. It left both the board of EG and Mr Bowd damaged. Reflecting this state of affairs, the parties in both proceedings filed statements of facts in dispute; there were 32 disputed facts.

2    By agreement of the parties the issue of liability was tried separately from the assessment of damages and penalty (if any) in both proceedings. What follows is my judgment in relation to the issue of liability.

Applicable Legislation

3    Section 340 of the FW Act provides:

(1)    A person must not take adverse action against another person:

(a)    because the other person:

(i)    has a workplace right; or

(ii)    has, or has not, exercised a workplace right; or

(iii)    proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or

(b)    to prevent the exercise of a workplace right by the other person.

(2)    A person must not take adverse action against another person (the second person) because a third person has exercised, or proposes or has at any time proposed to exercise, a workplace right for the second person’s benefit, or for the benefit of a class of persons to which the second person belongs.

4    Section 342 of the FW Act relevantly defines the term “adverse action” as follows:

(1)    The following table sets out circumstances in which a person takes adverse action against another person.

…

5    Section 341(1) of the FW Act defines the term “workplace right” as follows:

A person has a workplace right if the person:

(a)    is entitled to the benefit of, or has a role or responsibility under, a workplace law, workplace instrument or order made by an industrial body; or

(b)    is able to initiate, or participate in, a process or proceedings under a workplace law or workplace instrument; or

(c)    is able to make a complaint or inquiry:

(i)    to a person or body having the capacity under a workplace law to seek compliance with that law or a workplace instrument; or

(ii)    if the person is an employee—in relation to his or her employment.

6    Section 341(2) of the FW Act defines the term “process or proceedings under a workplace law or workplace instrument” as follows:

Each of the following is a process or proceedings under a workplace law or workplace instrument:

(a)    a conference conducted or hearing held by the [Fair Work Commission];

(b)    court proceedings under a workplace law or workplace instrument;

(c)    protected industrial action;

(d)    a protected action ballot;

(e)    making, varying or terminating an enterprise agreement;

(f)    appointing, or terminating the appointment of, a bargaining representative;

(g)    making or terminating an individual flexibility arrangement under a modern award or enterprise agreement;

(h)    agreeing to cash out paid annual leave or paid personal/carer’s leave;

(i)    making a request under Division 4 of Part 2-2 (which deals with requests for flexible working arrangements);

(j)    dispute settlement for which provision is made by, or under, a workplace law or workplace instrument;

(k)    any other process or proceedings under a workplace law or workplace instrument.

7    Section 12 of the FW Act, the Dictionary, defines the term “workplace law” as follows:

workplace law means:

(a)    this Act; or

(b)    the Registered Organisations Act; or

(c)    the Independent Contractors Act 2006; or

(d)    any other law of the Commonwealth, a State or a Territory that regulates the relationships between employers and employees (including by dealing with occupational health and safety matters).

8    Section 352 of the FW Act is in these terms:

An employer must not dismiss an employee because the employee is temporarily absent from work because of illness or injury of a kind prescribed by the regulations.

9    Relevant to the alleged breaches of ss 340 and 352 is s 361(1), which prescribes a presumption that relevantly adjusts the onus of proof. It is in these terms:

(1)    If:

(a)    in an application in relation to a contravention of this Part, it is alleged that a person took, or is taking, action for a particular reason or with a particular intent; and

(b)    taking that action for that reason or with that intent would constitute a contravention of this Part;

it is presumed that the action was, or is being, taken for that reason or with that intent, unless the person proves otherwise.

10    Mr Bowd also contended that there had been breaches of what are sometimes called the “whistleblower” provisions as contained in Pt 9.4AAA of the CA. The relevant provisions are ss 1317AA, 1317AB, 1317AC, and 1317AD, which provide as follows:

1317AA Disclosures qualifying for protection under this Part

(1)    A disclosure of information by a person (the discloser) qualifies for protection under this Part if:

(a)    the discloser is:

(i)    an officer of a company; or

(ii)    an employee of a company; or

(iii)    a person who has a contract for the supply of services or goods to a company; or

(iv)    an employee of a person who has a contract for the supply of services or goods to a company; and

(b)    the disclosure is made to:

(i)    ASIC; or

(ii)    the company’s auditor or a member of an audit team conducting an audit of the company; or

(iii)    a director, secretary or senior manager of the company; or

(iv)    a person authorised by the company to receive disclosures of that kind; and

(c)    the discloser informs the person to whom the disclosure is made of the discloser’s name before making the disclosure; and

(d)    the discloser has reasonable grounds to suspect that the information indicates that:

(i)    the company has, or may have, contravened a provision of the Corporations legislation; or

(ii)    an officer or employee of the company has, or may have, contravened a provision of the Corporations legislation; and

(e)    the discloser makes the disclosure in good faith.

(2)    A reference in subsection (1) to a person contravening a provision of the Corporations legislation includes a reference to a person committing an offence against, or based on, a provision of this Act.

1317AB Disclosure that qualifies for protection not actionable etc.

(1)    If a person makes a disclosure that qualifies for protection under this Part:

(a)    the person is not subject to any civil or criminal liability for making the disclosure; and

(b)    no contractual or other remedy may be enforced, and no contractual or other right may be exercised, against the person on the basis of the disclosure.

(2)    Without limiting subsection (1):

(a)    the person has qualified privilege in respect of the disclosure; and

(b)    a contract to which the person is a party may not be terminated on the basis that the disclosure constitutes a breach of the contract.

(3)    Without limiting paragraphs (1)(b) and (2)(b), if a court is satisfied that:

(a)    a person (the employee) is employed in a particular position under a contract of employment with another person (the employer); and

(b)    the employee makes a disclosure that qualifies for protection under this Part; and

(c)    the employer purports to terminate the contract of employment on the basis of the disclosure;

the court may order that the employee be reinstated in that position or a position at a comparable level.

1317AC Victimisation prohibited

Actually causing detriment to another person

(1)    A person (the first person) contravenes this subsection if:

(a)    the first person engages in conduct; and

(b)    the first person’s conduct causes any detriment to another person (the second person); and

(c)    the first person intends that his or her conduct cause detriment to the second person; and

(d)    the first person engages in his or her conduct because the second person or a third person made a disclosure that qualifies for protection under this Part.

Threatening to cause detriment to another person

(2)    A person (the first person) contravenes this subsection if:

(a)    the first person makes to another person (the second person) a threat to cause any detriment to the second person or to a third person; and

(b)    the first person:

(i)    intends the second person to fear that the threat will be carried out; or

(ii)    is reckless as to causing the second person to fear that the threat will be carried out; and

(c)    the first person makes the threat because a person:

(i)    makes a disclosure that qualifies for protection under this Part; or

(ii)    may make a disclosure that would qualify for protection under this Part.

Officers and employees involved in contravention

(3)    If a company contravenes subsection (1) or (2), any officer or employee of the company who is involved in that contravention contravenes this subsection.

Threats

(4)    For the purposes of subsection (2), a threat may be:

(a)    express or implied; or

(b)    conditional or unconditional.

(5)    In a prosecution for an offence against subsection (2), it is not necessary to prove that the person threatened actually feared that the threat would be carried out.

1317AD Right to compensation    

If:

(a)    a person (the person in contravention) contravenes subsection 1317AC(1), (2) or (3); and

(b)    a person (the victim) suffers damage because of the contravention;

the person in contravention is liable to compensate the victim for the damage.

Relevantly, and in general terms, once validly engaged the “whistleblower” provisions prevent a company from dismissing an employee who has made a complaint, for example, to the Australian Securities and Investments Commission (“ASIC”).

Facts

11    EG is a publicly listed company which relevantly owns two subsidiaries, namely Baltec and TAPC. Baltec designs and manufactures products for companies within the power industry. It was formerly owned by the Richardson family. From time to time, it had dealings with an Indonesian subsidiary, known as PT Baltec Indonesia (“PT Baltec”). Baltec owned 80% of the shares in that company; the other 20% were owned by an Indonesian national. It was said that the most valuable “asset” of Baltec was its staff. This included Mr Sinan Boratav, Mr Dexter Hartono, Mr Olivier Latorre and Mr Quang Ly.

12    TAPC is in the business of industrial air pollution control, particularly in the field of particulate capture using electrostatic precipitation and fabric filters.

13    At all material times the board of EG comprised its chairman, Mr David Cartney, its managing director, Mr Ellis Richardson, and its non-executive director, Ms Lynn Richardson. The chief financial officer (“CFO”) was Mr Allan Fink. Each member of the board gave evidence before me as did Messrs Latorre and Hartono.

14    Mr Bowd’s contract of employment comprised a letter of offer sent to him by EG on 12 September 2016. This was signed by each of Mr Bowd and Mr Richardson. The contract provided for the appointment of Mr Bowd to be the CEO of EG. The letter described that position in the following way:

Position

Chief Executive Officer (CEO) – reporting to the board, initially through the Managing Director Ellis Richardson. In this capacity you will be responsible for the development, profitability, and culture of EGL. The effective use of cash flow will be a critical aspect of your role. The full roles and responsibilities of this role will be described separately in a position description.

Direct Reports

Sinan Boratav, Rob Henderson and Stirling Schunemann who are senior members of the management team, will report directly to you. You will be responsible for assisting and directing each manager to achieve the outcomes agreed by the board.

The Chief Financial Officer (CFO), Allan Fink, will continue to report to the board through the Managing Director for the remainder of the 2016/2017 financial year.

Both Mr Bowd and EG were entitled to terminate this contract on three months’ notice. The letter recorded:

Termination

Either party may terminate the employment relationship on 3 months’ written notice.

The company may terminate your employment at any time without notice if:

•    you are guilty of serious misconduct or

•    you are in material breach of a provision of this contract, including confidentiality undertakings.

Following the termination of your employment you will be required to return all company property.

The letter also contained terms requiring Mr Bowd to comply with company policies and to keep confidential company information.

15    Mr Bowd’s initial focus was on TAPC’s business. It would appear that he had considerable success in improving that business, for which he was praised. However, when in late 2016 he subsequently focused his efforts on Baltec’s business, difficulties were encountered. It is useful to give a brief summary of those difficulties about which the parties were in dispute.

16    According to Mr Bowd, he performed well at Baltec. He uncovered irregularities in that company’s dealings with PT Baltec. He commenced an investigation into those irregularities, dismissed an employee for misconduct (Mr Ly), ultimately reported some of the irregularities to the board, and then reported more serious allegations to ASIC, to the Victorian police and to the Australian Federal Police (the “AFP”). According to Mr Bowd, he was first told that there were issues about his performance at Baltec in January 2017. He was suspended and then dismissed on 2 March 2017. The letter of termination gave no reason for this decision.

17    According to the board of EG, they had serious concerns about Mr Bowd’s performance at Baltec, which they had first raised with him in November and December 2016. At that time Mr Richardson said he had counselled Mr Bowd that he should learn how things were done at Baltec, before criticising staff and making changes. Mr Bowd’s behaviour led to the resignation of a key employee, namely Mr Boratav, on 23 November 2016. Baltec staff complained about Mr Bowd. They were unhappy. The board was also concerned with the hiring by Mr Bowd of three new employees, namely Mr Gordon Blakemore, Mr Brian Hooker and Ms Sally Stahmer. Each of these employees was perceived to be primarily loyal to Mr Bowd. Only one of them gave evidence before me, namely Mr Blakemore. When the board confronted Mr Bowd with these concerns at a meeting in January 2017, Mr Bowd left the meeting, on one view, abruptly. He sought legal advice and engaged new third-party auditors to investigate the Baltec irregularities, without the consent and knowledge of the full board. He then made his complaints to ASIC and to the police before the commencement of that audit, again without the knowledge or consent of the board. What followed was an understandable and complete breakdown in the board’s relationship with its CEO. EG exercised its contractual right to terminate its contract with Mr Bowd.

18    For the reasons which follow I have generally accepted EG’s account of what happened. The complaint to ASIC did not just contain allegations about possible irregularities at Baltec; it included allegations which were far more serious. I have found that Mr Bowd made his complaints because he feared that he would be dismissed as a result of his performance at Baltec, and he wished to secure the protection from dismissal afforded by the whistleblower provisions of the CA, which he knew about at that time. To secure that protection he needed to make his complaint to ASIC. As it happens, his complaint was misconceived. No severe irregularities have been uncovered. Neither ASIC nor the police have taken any action against EG or Mr Richardson.

19    It is not uncommon for a new CEO to want to stamp his or her own objectives and aspirations on a business he or she has been asked to lead; this can lead to changes in work practices and culture; it can lead to the insertion of new employees over the top of existing employees; and it can lead to resignations and terminations. Sometimes, changes of this kind can lead to success; sometimes they do not. Sometimes they result in personality clashes, paranoia and plotting. In essence, that is what happened here when Mr Bowd commenced to lead the Baltec business. It led to the irretrievable breakdown in the relationship between him and the board.

Concerns regarding Mr Bowd’s performance as CEO

20    I turn to consider the chronology of events in more detail. It was Mr Bowd’s case that until 19 January 2017 he had received no prior notification from any director or officer of EG concerning his performance as CEO of the Baltec business. I reject that contention. Difficulties commenced with the resignation of Mr Boratav on 23 November 2016; he was a key man who had worked at Baltec for approximately 20 years. Mr Boratav did not give evidence before me, but I accept that he resigned because he had a personality clash with Mr Bowd. His resignation greatly concerned the board. On 23 November 2016, Ms Richardson attended a Baltec marketing meeting. She was appalled by Mr Bowd’s dismissive attitude to the Baltec staff. The next day, EG held its annual general meeting. After that, the members of the board met with Mr Bowd and raised with him what they considered were his poor communications with the staff at Baltec and what they thought was his mishandling of the employment of Mr Boratav.

21    Contemporaneous emails are consistent with the board’s version of what happened at this meeting. On 24 November 2016, Ms Richardson sent the following email to Mr Bowd:

Hi Pete

Did not get a chance to say goodbye before you left today but I wanted to wish you well with your procedures tomorrow and also let you know that I will be thinking of you and Rona (? sorry not sure of the spelling).

I am sorry we did not get a chance to speak a little more constructively before the meeting today. I feel like we probably had a smash and grab version of what should have been a longer and more supportive conversation and although we reached a more productive place by the end of the board meeting I am still feeling a bit flat about the situation and honestly hate to think that this has caused you distress. I hope you are feeling a little more settled now than earlier in the day. I very much appreciate all that you have done over the past 3 months and the pace and effort you have put into the business.

22    On 29 November 2016, Mr Bowd replied to Ms Richardson’s email and relevantly wrote as follows:

There is a lot of risk mitigation to implement, I am still trying to ascertain the best way to communicate this without offending people, given the feedback from last Thursday, however we must also remove the risk to our board and executive. A more rounded view of how to achieve this will be discussed between the Ex-com team at our next meeting.

23    In a further email sent on the same day to Ms Richardson, Mr Bowd said, amongst other things:

We remain inspired and keep focused on the positives, Thursday was a good reminder that we are all human and make mistakes on occasions…it keeps me grounded

24    On 16 December 2016, Mr Bowd sent the following email to Mr Richardson which, in relation to a decision to remove him from all communications concerning a certain issue, relevantly stated as follows:

I believe the board and I must meet at a matter of urgency as soon as I am home to discuss this immediate issue and the Increasing lack of trust in my judgement and ability to [fulfil] my role as CEO. There is an ongoing pressure and view that I caused [Mr Boratav] to resign. However, I believe the decisions regarding provision of parts from China to IHI and the lack of governance around the project in Egypt are more specific to the decisions.

Should the board wish to discuss my current choices as CEO and my decisions re staffing and changes, I am happy to remain awake tonight to take a group call.

It is most unusual that the executive managing me would openly discuss their unhappiness in my management and choices unless there was other intent in the background. Which I am happy to discuss immediately.

(Errors in the original.)

Whilst this email referred to an “increasing lack of trust”, some of the language used in other emails sent at this time, which I have not reproduced, was also polite and encouraging. The board having only recently hired Mr Bowd were keen for him to succeed. Nonetheless they continued to have concerns. On 20 December 2016, Mr Richardson sent the following email to his fellow board members, reproduced in part as follows (the reference to “Pete” is to Mr Bowd):

Hi David and Lynn, I am sending a few emails re communications from Pete which I would like to share with you. please do not distribute and keep confidential. I am returning to Melbourne tomorrow morning and am free to meet say 9:30 Thursday or earlier if required.

I am concerned at the emails from Peter,

…

It appears anyone on Pete’s team can do no wrong and anyone on the other side can be bullied to submission. If this attitude is reflected towards other staff then no wonder people are uncomfortable.

(Errors in the original.)

25    I infer that the reference to “Pete’s team” is a reference to the staff hired by Mr Bowd. There was another board meeting held on 22 December 2016, which Mr Bowd attended. The board raised with him again his poor communications with the board and Baltec staff members, and his appointment of new employees who reported directly to him. In cross-examination, Mr Bowd admitted that his performance had been raised at this board meeting. He conceded that the board said to him that if he continued to be critical of Baltec staff they would not feel welcome. It is unnecessary for me to decide further whether Mr Bowd also told Baltec staff that they had made “crap” decisions.

26    Contemporaneous emails also support the board’s version of what took place at this meeting and the growing concern with Mr Bowd’s performance. In one email, dated 5 January 2017, sent to Mr Richardson, Mr Bowd wrote that he had had to take an “almost bullish approach” to get to the bottom line on issues. Mr Richardson responded on the same day as follows:

Hi Pete, I too feel saddened as Baltec has been profitable for over 20 years yet over the past 3 months’ new senior people at every level of management has been engaged to fix the Baltec problems. As you mentioned this bullish approach was necessary however this high-risk strategy was not fully explained to the board and will bring with it significant risks to customer and technical reputation.

In hindsight if all of these people needed to be replaced then one would expect that their replacements would be researched, considered and be far more competent than their predecessors. You and the Board need to review the performance of the new team to be comfortable that they are the best in the market place and will achieve outcomes in excess of the team they replaced. I have already raised my concerns with you but will await other board member’s comments which we should discuss ahead of our strategic meeting.

Thanks

Ellis

(Errors in the original.)

27    A more extensive email was then sent in reply by Mr Bowd to Mr Richardson later that day which relevantly stated:

I am sorry that my choices have left the board feeling disconnected, more importantly that my work has left you personally feeling that I am putting down what is a great business. I am not, the brand is a great brand that I am personally engaged with. I am unsure how best to reconcile this issue, because at no stage have I placed the Baltec/EGL/TAPC brands at risk, promoting it with some very senior people in Solar turbines, the US government, Arizona state government. We have a growing profile with Origin energy, that with on-going discussions will hopefully lead to a scope of work on their Qld asset base.

I appreciate that the board are unhappy in regards to the decisions [Mr Boratav] has made, I am sure I could have done a better job of engaging, however the challenges of time with TAPC, the need to have a positive shift with regards to cashflow has in many ways been the driving factor. I am a part of the board team and am trying to do my best to navigate the nuances of the business whilst rectifying the small but significant challenges that face our company.

Ellis, I am here to help you as our MD achieve the success you want for your/our company, I have been committed from the very first day, working long hours, placing work before personal matters and genuinely taking on the responsibility of your company so that you can find balance with your own. family, if I have not achieve this I am truly sorry, because I like working for you.

I hope that my words can bring us closer as a team and friends, I am at no stage trying to damage what you have spent many years building.

Have a good week off next week and know I am deeply committed to the ongoing success of your/our company.

(Errors in the original.)

Discovery of potential expense irregularities at Baltec

28    One of the issues Mr Bowd was confronting at this time at Baltec was potential inaccuracies in reporting expenditure, especially in relation to expenses incurred by Baltec employees whilst working overseas. Some of these appeared to Mr Bowd to have no supporting evidence or data. His evidence was that during December he continued to conduct a “detailed internal audit” of Baltec’s expenses. That audit was not mentioned in his report to the board for their meeting held on 22 December 2016. However, the minutes of the December meeting do record that Mr Bowd had undertaken an “analysis into expense claims”. It was during this same period that Mr Bowd hired Mr Blakemore, Mr Hooker and Ms Stahmer. Mr Bowd exhibited to his affidavit some of the expense claims which he considered were not corroborated by “supporting data”. They included relatively small payments for drivers, for lunches and for dinners.

29    Other Baltec staff uncovered potential expense irregularities. For example, in December 2016, Mr Hartono raised directly with Mr Richardson certain marketing expense irregularities he had found. Significantly, Mr Richardson told him to follow the formal reporting lines and speak to Mr Bowd about the issue. Mr Latorre also found some potential cost irregularities. He raised these with Mr Richardson in early January 2017. Mr Richardson told him to raise the issue with Mr Blakemore. In these proceedings, Mr Bowd has made a series of allegations against Mr Richardson which, if true, would be inconsistent with Mr Richardson directing staff to raise irregularities with Mr Bowd or Mr Bowd’s staff.

30    On 10 January 2017, a Baltec employee, Mr Ly, was dismissed by Mr Bowd. This was done with the knowledge and support of Mr Richardson. He was dismissed, according to Mr Bowd, for “serious misconduct” although the Court was not told what this was. Mr Latorre gave evidence that the dismissal was “abrupt” and that Mr Ly was not given the opportunity to say goodbye to his fellow staff members or given the chance to collect his belongings. The dismissal of Mr Ly, and Mr Bowd’s handling of it thereafter, was a turning point for Mr Latorre. Whilst he was initially impressed with Mr Bowd, Mr Latorre’s relationship with him had deteriorated over time. Following the dismissal of Mr Ly, Mr Latorre ceased to trust Mr Bowd. He deposed:

… I lost all trust in the man as a leader and a CEO, and only saw a person willing to carry out a personal agenda with little to no regard for the consequences it may have on the [EG] staff. From that moment on, I was convinced that the only way for [EG] to survive as a company was for Peter Bowd to leave the company.

Needless to say, Mr Bowd’s evidence was that he needed, as CEO, to dismiss Mr Ly. Whether his actions were justified or not is a matter I express no views about.

31    On the same day, Mr Bowd claims he established a whistleblower policy for EG. However, no contemporaneous documents were adduced into evidence to support that assertion. In fact, the policy was adopted later in January. Mr Bowd’s knowledge of the whistleblower provisions was striking for someone who is not legally qualified. As we shall see, this included him at one point emailing Mr Cartney the provisions contained in Pt 9.4AAA of the CA.

32    On 11 January 2017, a meeting took place at Baltec. What happened at this meeting is disputed. According to Mr Bowd, Messrs Hartono and Latorre raised with him concerns that payments had been made to PT Baltec in relation to two projects “without formal processes being followed” and that payments were still being made in relation to certain other projects which had closed. The accumulated amount of irregularities was said to be in the order of $17,500. This meeting prompted further investigative work by Mr Bowd who said he then discovered additional “discrepancies” in excess of $95,000. The exact nature of the irregularities and discrepancies was never clearly identified by Mr Bowd.

33    In an email exchange earlier on 11 January 2017, Mr Bowd had written to Mr Hooker to say that there needed to be carried out a “subtle review on PT Baltec and its invoicing strategy”. Mr Hooker replied: “Ok, [Mr Hartono] has called a meeting this morning titled PT Baltec so not sure what that is about”. Mr Bowd asked for the time of the meeting. When told when it was to be held he responded: “Ok, that’s bloody good news ... I will attend to [sic]”.

34    In cross-examination, Mr Bowd said that the “news” which was “bloody good” was a reference to Mr Hooker coming back from Egypt. It was put to him that in fact the “news” was the prospect of finding irregularities in Baltec. I reject Mr Bowd’s evidence that the news concerned the return of Mr Hooker to Australia. In the context of the email exchange, I find that the “news” was the meeting to discuss PT Baltec.

35    Mr Hartono gave evidence about this meeting. He said that towards the end of it one of either Mr Bowd, Mr Hooker or Mr Blakemore made reference to the “Whistleblowers Act” and that they seemed “excited” by the concerns raised by Messrs Hartono and Latorre about the financial irregularities.

Mr Bowd’s suspicions of breaches of the CA

36    It was Mr Bowd’s evidence that between 11 and 13 January 2017 he conducted further investigations. Within a matter of days, he commenced to form firm conclusions. As a result of finding “discrepancies” Mr Bowd deposed that he had formed the view that there “could have been” breaches of the CA. He based this conclusion on “the fact” that PT Baltec had not been audited for two years contrary to the requirements of the CA and “secondly because expense claims appeared to me to be outside of Australian Tax Legislation”. As to the first reason given, in cross-examination Mr Bowd admitted that this was a mistake. PT Baltec’s accounts had in fact been audited for the year ended 31 December 2015; in relation to the 2016 year, the time for completing and publishing those accounts had yet, by January 2017, to pass. I also find that any failure to prepare audited accounts for PT Baltec could not have amounted to breaches of the CA; PT Baltec is an Indonesian company. It is not subject to the requirements of the CA. As for the second reason given – it simply makes no sense. At no stage did Mr Bowd submit any evidence concerning breaches of what he called “Australian Tax Legislation”. At this stage, Mr Bowd’s highly generalised conclusions appeared to me to lack a proper basis.

37    Then Mr Bowd did something which I find odd. He stated in his main affidavit that on 13 January 2017 “while searching the [Australian Securities Exchange (“ASX”)] for details on who owned” PT Baltec he came across two forms titled “Notice of change of interest of substantial holder”. Both notices were exhibited to Mr Bowd’s affidavit. Neither concerned PT Baltec. Each concerned EG and the Richardsons. Attached to one document was a copy of an “Option Deed” entered into between Messrs Boratav and Richardson whereby Mr Boratav granted an option to Mr Richardson to purchase his shares in EG. Why the CEO of EG was doing searches on the ASX about the ownership of PT Baltec was not explained. It is not conduct I would expect a CEO to undertake without proper cause.

38    In his affidavit, Mr Bowd then made the following statement:

I carried out a detailed review of these documents and came to the conclusion that these actions were in breach of the Corporations Act 2001 (Cth). It was my honest belief that Mr Richardson may have procured the 14 September 2016 Options Agreement whilst he possessed information not generally known to the market. In particular, I believed there may have been a breach of section 182 and section 611 of the Corporations Act 2001 (Cth). I also believed that both Mr Richardson and Ms Richardson had failed to disclose a change in director’s interests. No Appendix 3Y form had been lodged in accordance with Rule 3.19A.2 of the ASX Listing Rules.

39    How these conclusions were reached was not explained. Suffice to say the documents obtained from the ASX do not appear to support the conclusions reached by Mr Bowd and no other evidence was adduced by him to support them. I have found this aspect of Mr Bowd’s evidence to be troubling. Within a day or so of meeting Messrs Hartono and Latorre, Mr Bowd’s highly generalised suspicions about possible breaches of the CA and concerns about the accuracy of the accounts and expense irregularities had transformed into firm conclusions about misuse of market information, as well as breaches of ss 182 and 611 of the CA and of directors’ duties by Mr Richardson. It would appear that a routine investigation into irregularities in the accounts had been turned into a much wider search into the probity of Mr Richardson, with Mr Bowd, as CEO, taking it upon himself to undertake searches and investigations on the ASX. In cross-examination, Mr Bowd denied that he undertook a witch-hunt of Mr Richardson. “Witch-hunt” may be too strong a word to describe what had occurred. But certainly I find that at this time Mr Bowd appeared to be going out of his way to find breaches of the CA concerning Mr Richardson.

40    On 12 January 2017, Mr Bowd engaged the accounting firm BDO Australia (“BDO”) in a telephone meeting with Mr Hooker to perform the following services:

    examination of employee expenses to ensure compliance with EG policy and procedure;

    examination of the payment of invoices across multiple projects, as determined by EG, to ensure compliance with EG policy and procedure;

    to undertake any further work as directed by EG; and

    preparation of a report detailing the results of the examination.

41    Mr Bowd did not disclose this retainer to the full board at this time. Nor did he engage EG’s usual external auditors. Strangely, he used BDO’s Perth office instead of its Melbourne office. No part of the retainer would appear to address, at least expressly, the conclusions Mr Bowd had formed about Mr Richardson at this time.

42    During the period 11 to 17 January 2017, Mr Richardson states that Mr Boratav made frequent phone calls to him advising him that a succession of Baltec employees had complained about Mr Bowd. Mr Boratav did not give evidence before me but what he said was corroborated, in general terms, by Messrs Hartono and Latorre.

Mr Bowd’s CEO Report

43    On 16 January 2017, Mr Bowd submitted his CEO’s report for the January board meeting. The report described the audit into Baltec’s expenses in measured tones. It did not disclose the BDO retainer but did refer to the “urgent need” to implement a “whistle blower policy”. It recorded relevantly:

Baltec:

A difficult month, with substantial unrest due to the implementation of an audit into the governance and application of expenses. The audit continues with a more refined and delicate application across projects and fabrication suppliers. We are applying ourselves in regards to team based communication and how we re-engage the team, it has become evident that there are still substantial external influences at hand with [Mr Ly] meeting team members outside of work and expressing his views and influence where possible.

Ex-Com have reviewed a number of group needs, including IT and systems management, action plans for the rectification and development of group based systems is well under way.

The Audits of TAPC/Baltec expenses and cost management has led to the urgent need to implement a formal “Whistle Blower” policy in line with Australian and ASIC standards. This policy is specifically designed to protect our staff, executive and Board members from inappropriate retaliation should they feel the need to come forward with an occurrence of inappropriate behaviour across the group. This is an operational policy that is normal corporate governance with ASX listed companies and will be in place ASAP so that the [sic] we are protecting all employees from Board down and across the business.

44    The report also highlighted the need for a “more detailed review” of the expenses issue. It recorded the following:

There have been a number of significant breaches of process in regards to expense claims by staff members, with an audit underway and a more detailed investigation into expense submission protocol and lodgement of expenses against projects and cost codes. It has been noted that there are substantial variances across a number of projects where expenses and additional costs have been recognised without supporting documents, invoices or quotes from suppliers.

…

As with November and December there are on-going challenges in regards to the implementation of project related decision making. The audit into payments has highlighted a number of areas in regards to PT Baltec projects and payments of invoices for local supervision that has been charged to the project and then invoiced again and paid for on separate invoices. There are substantial variances in the initial projects costing Vs the final costs and invoices from PT Baltec, this includes costs without any supporting data and payment for work scope that has then been carried out by Baltec, which in effect is double or triple dipping. This requires a more detailed review which is underway, the scope of which will also look into the substantial increase of costs by sub-contractors and how we manage the contracts/agreements for PT Baltec.

45    The report also stated that “a more formal report will be provided to the board once the factual details have been correlated and governance applied”. The views Mr Bowd had formed at this time about Mr Richardson were not disclosed.

Lead up to the strategic meeting

46    On 17 January 2017, Mr Bowd met with the board at the offices of a recruitment agency. EG was looking to hire a new CFO. Prior to that meeting the board had met at a café to discuss Mr Bowd’s performance. Ms Richardson’s evidence was that the board was concerned that experienced Baltec staff had not been invited to an upcoming “strategic meeting” scheduled for 18 January 2017 and was also concerned about Mr Hooker’s recent appointment as Group Operations Manager of Baltec. When the board met with Mr Bowd later that day, it was his evidence that his performance was not discussed. Ms Richardson disagreed with that evidence. So did Mr Cartney. His evidence was that the board discussed with Mr Bowd his poor communications with board members and with Baltec staff, and the fact that the board had not received details from Mr Bowd about any of the new senior staff he had hired. Given the board’s existing concerns about Mr Bowd, I prefer the evidence of Ms Richardson and Mr Cartney. That conclusion is also supported, inferentially, by the email Mr Bowd sent to the board early the next day, which included details of the new employees and which stated:

I appreciate that there is a perception that I am not doing a very good job, this needs to be openly discussed as we attempt to realign over the coming 48 hours.

47    The day before this meeting Mr Bowd was sent what is called the “Board Pack”. The pack contained highly confidential information about EG. At 3:19pm on 17 January 2017, Mr Bowd emailed the Board Pack to Mr Blakemore. This email had been relied upon as part of a claim that Mr Bowd had breached his obligation of confidence to EG. That claim has not been pursued. Mr Bowd said that he had made a mistake in emailing the Board Pack to Mr Blakemore.

The strategic meeting

48    On 18 and 19 January 2017, the “strategic meeting” was held. In attendance was the board, Messrs Bowd, Hooker, Blakemore, Mr Ian Buick and Ms Stahmer. The board was not happy about the non-attendance of Baltec staff. Mr Bowd’s evidence was that on 18 January his performance was not discussed. Both Mr Richardson and Ms Richardson have given evidence that contradicts that assertion. Again, I prefer the evidence given by the board members. It is improbable that Mr Bowd’s performance was not discussed. Mr Richardson also gave evidence that he said that with the loss of Mr Boratav, the lowest cost option might have been to close PT Baltec. Mr Bowd’s recollection was that Mr Richardson said that he had decided to close PT Baltec. I prefer Mr Richardson’s evidence. There is no contemporaneous evidence which supports the making of a decision to close PT Baltec in January 2017.

49    That evening, Mr Richardson’s evidence was that he had an “off-site” meeting with a long-standing Baltec employee, Mr Phil Dart, at a well-known fast food chain “restaurant”. Mr Dart made broad complaints against Mr Bowd. He said that the new management style was “threatening” and that there would be a “mass exodus” if things were not addressed quickly. This employee was not called to give evidence before me. However, the complaints made are generally consistent with the evidence of Messrs Hartono and Latorre.

50    On the second day of the strategic meeting (19 January 2017), there occurred a breakdown between the board and Mr Bowd. It will be recalled that Mr Bowd’s evidence was that it was only on this day that he received for the first time from the board a complaint or concern about his behaviour. There was a dispute about what was said at this meeting. However, I accept that Mr Richardson drew, on a whiteboard, two diagrams of chimneys with foundations. One chimney was said to have strong foundations and was identified by Mr Richardson as being the business of TAPC. The other chimney was said by Mr Richardson to represent the business of Baltec. He said that it had weak foundations. The foundations were said to represent the staff of each business. Mr Richardson told Mr Bowd that Baltec staff had complained about him. He said that morale was low and that staff were nervous that they could lose their jobs. Mr Richardson said there was a risk that EG could lose $4 million of value from the Baltec business unless things improved. Mr Richardson otherwise denied blaming Mr Bowd for all these problems. He denied that he said to Mr Bowd that he would be the subject of an internal investigation. He said that his expectation was that the issues would be worked out with Mr Bowd over time. He said that Mr Bowd appeared to take all of this as a personal criticism and that he packed his papers and left the meeting.

51    Ms Richardson’s evidence was that during the course of the meeting Mr Bowd became “increasingly belligerent” and at a break in the meeting, she said Mr Bowd took his belongings and left without explanation. Mr Cartney gave evidence that Mr Bowd “stormed out”.

52    In contrast, Mr Bowd said that Mr Richardson stated that there was to be an internal investigation into his behaviour. Mr Blakemore also gave evidence that the issue of investigation was raised at the meeting. He said that the meeting was not pleasant.

53    I accept that the meeting was tense. Whether Mr Bowd was told that he was to be investigated or not, I certainly find Mr Bowd thought, rightly or wrongly, that he was being accused of something in relation to Baltec. As it happens, the board ended up ordering an investigation into his behaviour on 21 January 2017. Mr Blakemore’s evidence was that Mr Bowd was “shattered” by what he had been told at the meeting, and that when he left he said “I have got to excuse myself” and “I just can’t do this at the moment”. I find that Mr Bowd left the meeting abruptly.

54    From time to time Messrs Bowd and Cartney sent each other text messages. When Mr Bowd left the meeting, Mr Cartney sent the following text to Mr Bowd: “Pete call me”. Mr Bowd texted back:

I need a moment please David I have to re group because I am seeing an accusation that I’ve lost the company $4M in value but the share value has increased... I am seeking legal advice re my position...Thanks

55    The evidence is that Mr Bowd then rang a former colleague from Gadens lawyers seeking advice about how he should handle the situation. Mr Bowd returned later that day to attend a board meeting. At that meeting, Ms Richardson stated that earlier that day she had observed Mr Blakemore reading what she thought was the January Board Pack. Mr Blakemore said he could not recall reading the Board Pack on that day, but could not be sure.

56    Mr Blakemore also gave evidence that after Mr Bowd left the meeting he met with Mr Cartney who was disparaging of Mr Richardson. He said that Mr Cartney told him that he should make a complaint to ASIC. Mr Blakemore was cross-examined about this meeting and swore that the conversation took place. On balance, I am persuaded that a conversation probably did take place along these lines. However, I am not persuaded that it took place on 19 January 2017. That is because I accept, for the reasons set out below, that Mr Cartney was only told about Mr Bowd’s plan to complain to ASIC the following day. Before that time, Mr Cartney was unaware of the seriousness of the allegations Mr Bowd would make. After 20 January 2017, Mr Cartney, in his capacity as chairman, may have suggested to Mr Blakemore that he should lodge a complaint with ASIC because this was what he knew Mr Bowd was doing. In my view, the evidence suggests that Mr Cartney tried to behave as a chairman would in the light of the very serious allegations Mr Bowd had commenced to make. Quite properly, given the nature of what was alleged, and not knowing anything more, he may have encouraged both Messrs Bowd and Blakemore to go to ASIC. At the very least, he probably acquiesced in, and did not resist, the plan to make a complaint to ASIC. He was concerned to do the right thing. None of this is inconsistent with the view he had formed that Mr Bowd was not performing well as CEO.

Key events of Friday 20 January 2017

57    The next day, 20 January 2017, which was a Friday, four events took place:

(1)    First, Mr Bowd decided to make his complaint to ASIC. He told Mr Cartney about this in a text sent at 7:24am. The text, sent in response to an invitation for coffee, was as follows:

Ok. 10.30. I am currently drafting an initial report for ASIC and will be instructing the Audit company today. I am unsure that my attendance at the CFO interviews is or will be a positive given the past 48 hours and the discussion I have had with my family. Happy to discuss further today.. Best … Pete.

Mr Cartney did not tell his fellow board members about this until 27 January 2017. Mr Cartney also gave Mr Bowd the phone number of a contact in Victoria Police at a meeting held later that day in a café. In cross-examination, Mr Bowd said that Mr Cartney had suggested he lodge the complaint with ASIC and that it was his idea. This allegation did not appear in Mr Bowd’s numerous affidavits. He also said that Mr Cartney had told him to instruct Gadens. He denied that he had reached his decision to lodge the ASIC complaint in order to protect his position as CEO by triggering the protections contained in the whistleblower provisions. I shall return to this issue. For the moment, I record my finding that on 20 January 2017 Mr Bowd assumed he was going to be removed as CEO. He said as much in the witness box. Later that day he sent in the evening the following text to Mr Cartney:

Please let me know if you’ve spoken to Ian ... I’m wondering how copler will be completed when I am removed? Because Brian, Sally and Gordon will follow! That’s huge risk David!

“Copler” was a project Mr Bowd had been working on. The references to “Brian, Sally and Gordon” are to Mr Hooker, to Ms Stahmer, and to Mr Blakemore respectively.

At another meeting held at the same café on 24 January 2017, Mr Cartney said he had raised with Mr Bowd why it had been necessary to lodge the ASIC complaint before commencement of the external audit. Mr Cartney’s evidence is that Mr Bowd told him he went to ASIC because he thought his job was on the line and that he would be going. I accept that evidence as accurate.

Mr Cartney otherwise denied that he had suggested to Mr Bowd that he should go to ASIC; it was not his idea. He also denied that he had first been given notice of a proposed ASIC complaint either on 17 or 19 January 2017. His evidence was that the first time he had heard about a possible complaint to ASIC was when he read Mr Bowd’s text. I accept that evidence. In my view, if Mr Cartney had really been the person who had proposed the making of a complaint to ASIC, this would have appeared in one of Mr Bowd’s affidavits. It did not. It only emerged for the first time in cross-examination. There is no contemporaneous evidence to support the contention that the ASIC complaint originated with Mr Cartney. Perhaps Mr Bowd had confused the chronology of events. In any event, I find that the ASIC complaint was Mr Bowd’s idea. I otherwise accept that it is possible that Mr Bowd had discussed the need for an audit of the Baltec expenses with Mr Cartney earlier on 17 January 2017. I also accept that around this time Mr Bowd possibly raised the effect of the whistleblower provisions with Mr Cartney.

(2)    Secondly, at 4:55pm, Ms Stahmer sent an email to all EG employees stating that Mr Bowd had approved a whistleblower policy for EG. The policy was attached to the email. Whilst Mr Bowd had asserted that he had established this policy on 10 January 2017, there were no supporting documents or additional evidence which corroborated that claim. Reading the email sent by Ms Stahmer, I find that the policy was not implemented and announced until 20 January. Mr Bowd denied in cross-examination that he had deliberately implemented the policy on that day to protect his position as CEO. I find otherwise.

(3)    Thirdly, at 6:17pm, Mr Bowd himself emailed all of EG’s employees about the whistleblower policy (calling them “team”) stating, amongst other things:

Please rest assured, these procedures are here to keep you safe, keep you out of harm’s way and to support your position in the company and group that you are an integral part of. I know we have had lots of change, and this change is difficult to understand and in many ways accept.

However, our need to keep our company well governed so that you have jobs that are safe and free of inappropriateness is the intention and the commitment from me as your CEO.

Just before sending this email, Mr Bowd sent an email to the board concerning a meeting he had had with a Mr James Shaw, who worked for a recruitment agency, about hiring the new CFO earlier that day. Mr Bowd complained in the email that Mr Shaw seemed to know about his issues at Baltec. He said that this was unacceptable. He made allegations that he had been bullied and witnessed yelling at meetings, and demanded that this behaviour needed to stop. He said that there needed to be an “immediate resolution” by the board. He said that he was seeking “external advice”. The email should be set out in full as follows:

Board,

I have just taken a call from James Shaw in regards to the CFO interviews.

However, the conversation moved very quickly to my current role, how things are and issues with regards to feedback he is getting about my performance.

I am letting you know that [Mr Boratav] has met with James and has discussed the following in person with him, my performance and the issues, the impact I am having on the business and how I have taken a good business and broken it. I have a number of issues with this, and need to inform the board that in all of my years of executive management I have never experienced such behaviour. I am seeking immediate resolution from the board.

The discussion with James made it very clear that the ongoing improvement and engagement with TAPC was in fact a problem in regards to how I was leading Baltec, and his language reflected exactly the language used in the meeting with [Mr Richardson] yesterday. That I was engaged with TAPC and not engaged with Baltec and the gravitas of the situation. The team I have engaged and their fit with Baltec, the perception that I am not engaged with Baltec people, and that I have disregarded the team. I have a number of questions I require answers to please:

1.    How does James Shaw know that I have problems in the company and with [Mr Boratav]?

2.    How did James Shaw become aware that there is conflict in regards to the views of TAPC and Baltec an my leadership

3.    How is it James used almost the same language used yesterday in regards to Baltec and the view that I was not taking Baltec forward and was not respecting the people within it.

James Shaw is a 3rd party, and an external recruiter, he is an influential leader in his industry and has influence in the market, I am appalled that I am now in a position where someone outside of this organisation has become involved in what can only be considered inappropriate, what is more disappointing is the reality that the discussion creates a potential for deformation of character.

There comes a time when we all have to look at the ongoing behaviour of staff and people within the work place because of the following, you might consider this with regards to the above and the yelling that has taken place in recent meetings by [Mr Boratav].

BULLYING

Bullying is defined as any on-going anti-social or unreasonable behaviour that offends, degrades, intimidates or humiliates a person, and has the potential to create a risk to health, safety, and wellbeing. Bullying refers to activities that create an environment of harm through repeated, unreasonable and unwelcomed acts such as:

•    Cruelty, belittlement, or degradation

•    Public reprimand or behaviour intended to punish, such as isolation and exclusion from workplace activities

•    Ridicule, insult(s) or sarcasm

•    Trivialisation of views and opinions, or unsubstantiated allegations of misconduct

•    Physical violence such as pushing, shoving, or throwing of objects

•    Playing jokes or spreading rumours

This behaviour cannot go on any further, and as previously mentioned in this email, I am seeking immediate resolution from the board, the above information is not fabricated and as such in am seeking external advice on the impact this can potentially have on my personal and professional circumstances and my career. I am disappointed and feel that the past 48 hours and [Mr Boratav’s] actions with Six Degrees Personnel has impacted on the current relationship between the board and myself as CEO.

Peter Bowd

Chief Executive Officer

(Errors in the original.)

(4)    Fourthly, at about 6:00pm, Mr Bowd saw a portable Z drive sitting at the reception of EG. It was a Friday night. The drive contained EG’s confidential information, including: fabrication drawings and designs of equipment; engineering data; a supplier database; a customer database; historical and current information concerning contracts, tenders and pricing; information about Baltec’s business and about employee resumes, leave entitlements and emergency contact details. Mr Bowd picked it up and put it in his bag. Mr Bowd denied in cross-examination that he took this drive to give to ASIC and the police. He said he took the drive to keep it safe as it was late in the day. I reject that explanation as improbable. He gave the drive to BDO which at some point gave it back to him. Mr Bowd eventually returned it to EG on 24 May 2017.

58    The contents of Mr Bowd’s email to the board corroborates my earlier finding that he thought that his job was under threat. That is why he was seeking external advice. In circumstances where he expected to be terminated, I also find that Mr Bowd planned on 20 January 2017 to invoke the whistleblower provisions of the CA by making his complaint to ASIC in order to protect his job as CEO. That was his defence. That defence also explains the timing of the issue of the whistleblower policy on that day and, inferentially, the taking of the Z drive.

59    Timing in this case is important. Mr Bowd had reported to the board days earlier that he had commenced an audit into expense irregularities at Baltec. His CEO report expressly stated that the inquiry was incomplete and that more work was needed. Mr Bowd, for that purpose, had engaged external auditors. They had yet to commence their work. There was thus no need yet to make any complaint to ASIC. That Mr Bowd decided to make that complaint on 20 January 2017 was, I find, the product of his fear of dismissal. I find that Mr Bowd was in a heightened state of emotion on that day as a result of that fear. That is reflected in the contents of the email he sent to the board and the complaints he made about bullying. He had never before raised the issue of bullying. In the witness box, Mr Bowd presented as a man who had plainly been scarred by the events leading up to his dismissal. He struggled at times to contain himself. That is not intended as a criticism of him. Rather, it is entirely understandable that he found the process of his dismissal and this court case to be very stressful. The events which took place after 20 January 2017 support these findings.

Contemporaneous text messages of significance to the narrative

60    One of the difficulties about this case has been the lack of contemporaneous evidence as to what had been said at the various meetings which had taken place. That includes the strategic meeting of 19 January 2017 where the parties had strikingly different recollections of what was said. The principal sources of contemporaneous evidence have been the emails sent by the parties and the text messages sent between Messrs Bowd and Cartney. Where possible, I have placed greatest probative value on these types of evidence. The text messages, some of which I have already referred to, are deserving of particular mention. In that respect I note the following texts:

(a)    Mr Bowd sent the following text to Mr Cartney on 21 January 2017 at 8:05am:

Hi David, I just wanted to share a thought... This decision by board members and share holders to call the employees into a closed meeting where they can “gang up” without fair and due process will prevent any further ability for any management in the company to apply good governance and the FWA process. Because every time management do something to pull the individual into line this will happen.... And the Richardson family will oust the manager who’s responsible without following due process

I have 3 management team members all on edge an in fear of losing their jobs. Because of this, which is now going to cause a knock on effect with regards to morale in TAPC also.

Just want you to have a think about that before your meeting,

If [Mr Richardson’s] wife is present then we have a more serious problem.

Best Regards

Peter

(Errors in the original.)

It is not clear to me what was meant when Mr Bowd referenced “FWA process”.

(b)    On 24 January 2017, Mr Bowd texted Mr Cartney to say that it was “[a]ll good with ASIC, once it’s lodged I will receive immediate response with a case number confirmation that I’ve lodged a whistleblowing case”. Mr Cartney then texted Mr Bowd to say that Mr Richardson was about to withdraw Mr Bowd’s email access. This followed the board’s decision the day before to remove Mr Bowd, at least temporarily. That decision is discussed below. Later that day, Mr Bowd texted Mr Cartney telling him that he had “lodged with ASIC”. The complaint itself was not attached to the text and Mr Cartney did not at that stage tell the other board members about this development.

(c)    On 26 January 2017, in a text sent by Mr Bowd to Mr Cartney, Mr Bowd said that he needed to inform Mr Cartney that his internal investigation had highlighted that payments had been made “outside of our due process… AbsoluteLY [sic] fraud… Skimming monies out of the company… I have almost completed my own police statement. I am planning on seeking legal advice on behalf of the company [shareholders]… Whilst still being CEO. Do you wish to be in this meeting? Thanks. Peter”.

(d)    Later that day, another text was sent by Mr Bowd. It told Mr Cartney that Mr Bowd and two others had submitted statements to Victoria Police and suggested the need for “an immediate injunction” in relation to his “removal”. It was in these terms:

David, this text message informs you that 3 of the company executives, [myself] included have submitted statements to the Victorian Police. These statements explain the expense fraud and other substantial anomalies that specifically show and confirm payments being made to PT Baltec.

With this in mind I strongly suggest we seek legal advice for the company and its “public shareholders” as per my last message, you are welcome to attend this meeting that will be held tomorrow. If you have a specific preference in regards to whom we meet with, please advise.

I appreciate this has been a tough journey but we now have substantial data. Expressly highlighting [Mr Boratav] as a main contributor.

More will come to light as we carry on with this process... We must also apply for an immediate injunction on the board in regards to my removal. I am working on this today and tomorrow AM.

Best

Peter

The evidence does not support Mr Bowd’s belief that he in fact was about to be removed and no such injunction was sought. Mr Cartney responded to Mr Bowd’s text with concern about whether he had a duty to tell his fellow directors about “the fraud”.

(e)    On the same day Mr Bowd texted Mr Cartney, following a phone conversation with police, that “interestingly the locks have been changed at the Baltec offices”. I shall return to consider the issue of the change of locks. Mr Cartney replied later that day to explain that he was trying to set up a meeting with Ms Richardson to consider the issue of the expenses.

(f)    The next day, 27 January 2017, commenced with a text from Mr Bowd to Mr Cartney stating “I believe [Mr Richardson] has intentions of removing me next week. Locks changed! I have informed the police and the [officer’s] comment was interesting! “Why lock me out unless there is something to hide” … What does that tell you?”. He then observed that the auditors had enough with which to start. There was then an exchange of texts about the whistleblowing provisions and about getting legal advice. For example, at one stage Mr Bowd sent Mr Cartney a text saying he had just sent him “the Act”, which I infer is a reference to the CA.

(g)    There are also texts in which Mr Bowd explains that he had engaged with Gadens, had been attending their offices, and that, he needed copies of EG’s constitution and shareholders agreement.

61    In my view, these text messages show that Mr Bowd was taking very active steps to protect his job, including the consideration of “injunctive relief”, engaging with his lawyer and lodging complaints with ASIC and the police.

Lead up to the suspension of Mr Bowd

62    Returning to the events of 20 January 2017, Mr Latorre had earlier contacted Mr Richardson seeking to have a meeting at a cake shop. They met at about 4:00pm. Mr Latorre complained about Mr Bowd. He said that the Baltec business would “fold” in three to six months unless something was done. He said that key employees were actively considering leaving Baltec. He told Mr Richardson that Mr Bowd should be relieved of his position as CEO.

63    Mr Richardson decided that he should now share Mr Latorre’s concerns with his fellow board members and for that purpose organised a meeting with Ms Richardson and Mr Cartney for the following day. In Mr Richardson’s own language, Mr Bowd’s “position was now irretrievable”. The meeting took place on 21 January 2017 with Mr Latorre explaining his concerns separately to each of Ms Richardson and Mr Cartney. The board then met to consider what to do. It was suggested that the concerns should be raised with Mr Bowd who was to be encouraged to take a month off. Mr Bowd had previously disclosed that he had a pressing health issue concerning his kidney, and had been prescribed pain medication. The board was worried about his health (Mr Cartney’s evidence was that he was only told about this health issue the next day). The board also decided to engage Lewis Holdway Lawyers to conduct an independent workplace investigation into Mr Bowd’s conduct.

64    On 23 January 2017, members of the board and Mr Bowd conducted more interviews of potential CFOs. At the end of the day Mr Richardson met with Mr Hartono, and other Baltec team members. This meeting was important for Mr Bowd’s case. These employees made similar complaints about Mr Bowd. They said a major client was at risk.

65    Mr Hartono gave evidence that he then met Mr Richardson in private and said to him that he believed that Mr Bowd was “going after him”. In cross-examination, Mr Hartono said that when told of this warning Mr Richardson seemed surprised, leaned back in his chair and said something like “really”. Mr Richardson was cross-examined about this conversation. He had no recollection of it. He said that he had simply said goodbye to Mr Hartono and the others at the lift well area. His evidence was that Mr Hartono was agitated because he had been told by Mr Bowd that he was not to speak to Mr Richardson.

66    I accept Mr Hartono’s recollection that he told Mr Richardson that Mr Bowd was going after him. I have no reason to doubt that evidence. I also accept that Mr Richardson did not remember being told this.

67    In closing address, counsel for Mr Bowd placed great emphasis on this meeting. He said that it was the likely “trigger point” that led to Mr Bowd’s suspension and then dismissal. He contended that if it were true that Mr Bowd had been dismissed for poor performance, and nothing else, one might have expected to see a gradual build-up of repeated warnings and reports concerning his performance. Instead, Mr Bowd was suspended seven days later. The inference I was asked to draw from this chronology was that Mr Richardson suspended (and ultimately dismissed) Mr Bowd because he had been told that Mr Bowd was “going after him”. I shall return to the reasons for the dismissal of Mr Bowd, but note that the board was already considering a suspension of Mr Bowd (or time off) before this “trigger” had occurred.

68    After the meeting with the Baltec employees, the board met again separately and decided that Mr Bowd had to be removed, at least temporarily. Mr Richardson’s evidence was that when he got home he started to draft an email to staff, which he then sent in draft to Mr Cartney and Ms Richardson the following day. A copy of that email, including Ms Richardson’s comments concerning its contents, was in evidence. The draft relevantly said as follows (with Mr Cartney’s comments at the start and Ms Richardson’s comments bolded and underlined):

Ellis,

I agree with [Ms Richardson’s] suggestions and Questions.

Paragraph 3 about [Mr Bowd’s] health is more problematic.

Perhaps say: To bed down the rapid changes and to re-establish the core Baltec way of doing business we are going to step [Mr Bowd] back to focus on TAPC for the next few months and give the Baltec team time to settle down and adapt to the recent changes. We will reassess the health of the business during this period and any lessons to be learned or changes needed to make improvements.

Sent from my iPhone David Cartney

On 24 Jan 2017, at 11:48 am, Lynn Richardson (EGL)

[redacted] wrote:

My thoughts - See below

Draft

Draft

Dear xxxx,

I would like to thank you for your support and valuable contribution to the success of [EG], it is very much appreciated by myself and the [EG] Board.

Over the past 3 months there have been many and rapid changes in the structure and culture within the company and it is time to pause and take stock of where we are and refine our current position to build on the successful integration of our 2 brands. Many of the changes made have been to improve our company safety and governance and the board supports those changes and insists that they continue.

The health of our CEO is a major concern to the board and I am sure all staff. I am pleased to advise that [Mr Bowd] has agreed to take extended leave (not sure about this wording – [Mr Bowd] and his team [may] object to the open ended nature of extended leave) to undergo his major surgery and then to fully recover his health. I will step back into a full­time position during this period and be in my “old “office as [Mr Bowd] has expressed a wish to be located in the general office area so that you can get to know him better.

I am pleased to advise that [Mr Boratav] has decided to remain with us in Business development and this is a great relief to me and for our market. – Is this true? As an employee or agent? MUST sort out the behaviour issue including an apology to [Ms Stahmer] and [Mr Buick].

To enhance the integration of our businesses we will refine the organisation structure as follows.

1.    [Mr Hooker] and [Mr Boratav] will work together to head business development where [Mr Boratav] will defer to [Mr Hooker]decision regarding TAPC issues and [Mr Hooker] will defer to [Mr Boratav] regarding Baltec issues. This way both managers can learn from one another and build on their combined experience to the benefit of the group.

2.    Similarly, [Mr Blakemore] and [Mr Hartono] will work together. Announce [Mr Hartono] as Ops Manager? Or do we have a PME TAPC and PME Baltec? - What is the term of [Mr Blakemore’s] contract?

3.    The same arrangements will be implemented for Ryan and Michael. What about Andrew? -Who is Michael? Peter has advised of significant issues with the Vietnamese manufacturing operations - in light of the concerns raised by the team I am unsure what is real and what has been ‘exaggerated’. Any real issue fixes and therefore improvements need to be maintained.

4.    [Messrs Hooker, Boratav, Blakemore, Hartono and Bowd] will be located in the newly created office which will also have a desk for [Mr Buick] during his visits. [Ms Stahmer] will take over [Mr Hartono’s] desk.

5.    The ex com will be chaired by [Mr Buick] and comprise of [Messrs Hooker, Boratav, Blakemore, Hartono] plus the CFO. [Mr Bowd] and myself will attend these meetings as appropriate. The CEO/MD is integral to excom. My understanding is that the chair and note taker rotates through the members and this is not a bad model. [Ms Stahmer] needs to remain on this if she is the IT/HR/Systems person

Please refer to the attached organisation chart for further details. - This needs to be clear and with some supporting detail - Potentially may reduce [Mr Buick’s] scope and this needs to be managed carefully so that he does not see this as a negative.

Thanks again for your support of our great company.

Ellis

69    In my view, this is contemporaneous evidence of EG’s general objectives and intentions in relation to Mr Bowd as at 24 January 2017. Contrary to Mr Bowd’s subjective beliefs about dismissal, the board at this stage had no intention of dismissing Mr Bowd, but did intend to reconsider his role within EG. The board was concerned both about his performance and his health. At this time, neither Mr Richardson nor Ms Richardson knew that Mr Bowd was about to launch his complaint to ASIC and the Victorian police and was considering seeking an injunction against EG. Mr Cartney knew about these matters, but he informed neither Mr Richardson nor Ms Richardson about them at this stage. It is true that by this time Mr Hartono had told Mr Richardson that Mr Bowd was “going after him”, but I do not find that this was the reason for the suspension decision. There was no evidence before me in support of the proposition that both Ms Richardson and Mr Cartney knew about Mr Hartono’s warning to Mr Richardson. The board’s concern was the future of the Baltec business, and about fixing the specific problems that had been reported to the board by Baltec employees. In contrast, and in my view, Mr Hartono’s warning was far too general to be of any real consequence.

70    On 24 January 2017, Mr Cartney sent the following email to Mr Bowd:

Pete,

Following the various comments you have made yesterday re your health (and Kidneys in particular) the Board are concerned and must now be satisfied on your health prior to your imminent air travel.

We appreciate this is short notice however please provide either appropriate medical advice or we can arrange a medical as soon as possible.

I would also like you to attend a meeting with the board members this Thursday (Australia Day) at 9 am at Baltec to discuss possible solutions to the current organisational problems.

The board wanted to discuss, I infer, his proposed suspension. Mr Bowd immediately responded and agreed to have his specialist send a letter about his health, but he otherwise declined to meet with the board because he had committed to spending Australia Day, which was a public holiday, with his family. That evening Mr Bowd emailed Mr Cartney. The email stated:

… I have formally lodged my report with ASIC. I now invoke the Whistleblower policy by ASIC as CEO of [EG].

71    Mr Bowd explained the reasons for lodging his complaint to ASIC as follows:

I provided the report to ASIC as it was my honest opinion that there had been breaches of the Corporations Act 2001 (Cth). I was fulfilling my duties as Chief Executive Officer of the First Respondent.

As already mentioned, I do not accept that explanation. On the same day he made what he called a report of “inappropriate governance” to Victoria police.

Mr Bowd’s complaint to ASIC

72    The complaint to ASIC is short and thin on detail. This is what it relevantly said:

My name is Peter Bowd, I am the CEO of The Environmental Group Limited. (An ASX Listed company) I am writing to inform ASIC of a serious fraud within EGL. At 2PM on the 11/1/17 I received an invite to a meeting by two of my engineering team. In this meeting the two employees enacted our company (whistleblower policy) they explained to my self, and two of my management team that monies had been paid to one of our sister companies in Indonesia. Monies that did not have supporting invoices or documentation that substantiates the costs occurring in Indonesia (PT Baltec). Upon further investigation I have found that multiple transactions have taken place and substantial funds have been transferred from the ASX listed business unit (EGL)(Baltec) to the Indonesian company PT Baltec without any supporting documents or evidence of costs or third party invoices. The PT Baltec business has not been audited for over two years and substantial monies have been transferred on multiple occasions without the application of financial governance or appropriate evidence relating to these cost. these monies are in excess of $400,000 for the past 12 months. there are loans to the PT Baltec company that have not been repaid over the past 3 years. the Managing Director (Ellis Richardson) told EGL executives that he intends to close PT Baltec. The closure will lead to substantial loan defaults. In turn this will lead to share holders of the company loosing substantial capital and operating profit. At this stage documents and reports highlight substantial discrepancies. As CEO I believe there is substantial fraud and laundering of funds from the Australian business into the Indonesian company by the MD & Sales Director. I have implemented a forensic Audit by a 3rd party. And I have informed our non executive board member (Chairman) in regards to these findings. and given the seriousness of this breach of duties by the Managing Director I am informing ASIC as per the whistleblowing process. Regards Peter Bowd

(Errors in the original.)

73    I make the following observations about this complaint:

(1)    The statement that two employees had “enacted” the company’s whistleblower policy at the meeting on 11 January 2017 is false. Neither Mr Hartono nor Mr Latorre had made such a claim. No such claim was made by Mr Bowd in his affidavit. Further, no such whistleblower policy was in existence on that day which could be enacted.

(2)    The claim that PT Baltec had not been audited for two years was mistaken, for reasons already given at [36], supra.

(3)    The statement that Mr Richardson intended to close PT Baltec was mistaken. That was never said. Rather, it was said that it might be an option if things did not improve. The contention that closure of that company would lead to substantial defaults was thus also not true. It was no more than speculation. There was no evidence before me that if the business of that company were to close it would decline to repay its loans. There was no evidence before me of any loans. Nor have I been referred to any balance sheet or profit and loss statement of that company for the year ended 31 December 2015 or 31 December 2016 which might have evidenced these loans.

(4)    The statement of belief that there had been substantial fraud and money laundering by Mr Richardson was baseless. It was not supported by any evidence. The allegation was only ever expressed in the most general way.

(5)    In one of his affidavits, Mr Bowd deposed that he believed that there had been potential breaches of ss 182 and 611 and “Pt 2M.3 Div 3” of the CA. Subsequent to his suspension, Mr Bowd continued to analyse the financial data he had taken with him. He made further allegations to ASIC that a loss had been “carried over” or deferred to permit payment of directors’ fees and bonuses to Mr Richardson as well as to Mr Boratav. That allegation has never been made out. On 4 April 2017, Mr Bowd made the following allegation of insider trading in an email to ASIC:

As discussed and reported in previous emails, the breaches of the 2001 Corporations Act laid out to ASIC by myself as CEO of EGL are many. Ranging from in-appropriate financial reporting, record keeping, reporting to the market in regards to financial statements and more importantly insider trading of shares by the director - Ellis Richardson, Lynn Richardson and other members of the Richardson family and Mr Sinan Boratav.

No evidence which might have supported these allegations was adduced. They remain as they were – bare allegations.

(6)    As at the date of the trial before me, ASIC has made no allegation against EG, or any of its officers, of contraventions of the CA. The evidence suggests that no officer of EG has ever been contacted by ASIC. I infer that ASIC is not satisfied that the allegations Mr Bowd has made have any substance. I infer there is no ongoing investigation. On 1 February 2017, Mr Bowd made a report to the AFP by phone. It would appear that the AFP have not interviewed or charged any officer of EG. Like ASIC, I infer there is no ongoing investigation by the AFP into EG or any of its officers. Further, on 8 March 2017, Victoria Police, following one visit by a police officer to the offices of EG, emailed Mr Bowd to tell him that they had concluded that no offence had been committed.

Leadership team meeting

74    On 24 January 2017, a leadership team meeting was held with senior executives from both Baltec and TAPC. On 25 January 2017, minutes of this meeting were sent by email to Mr Bowd and to the board. They record a great deal of dissatisfaction at Baltec following the arrival of Mr Bowd. The reasons included the following, which I have extracted from the minutes:

•    The Ex-Comm is seen to be “hiring mates”. It is believed that all individuals have a relation with each other in some shape or form. This bothers Baltec. It was clarified in the meeting that [Mr Bowd] & [Mr Hooker] did not know each other previously.

•    The opportunities which were created and filled recently should have been opened up to the market and provided opportunities for internal promotion.

•    Baltec used to be very close knit, there was trust in everyone. It was felt that individuals had the backing of senior management.

•    It is felt now that people cannot “make the call” because they will be crucified. A blame culture has started.

•    Clients are starting to be hurt due to delays in schedules. This results from not having an answer because internally Baltec is trying to find who is guilty for the issue, this is in addition to the extra bureaucracy in company procedures that have been recently introduced. Furthermore, additional delays in process are introduced because those making the decisions having too much workload and not enough familiarity of Baltec or TAPC businesses.

•    There seems to be a focus on who was guilty, rather than finding a solution. Some examples were given in the meeting highlighting this and how they impacted job execution.

…

•    Baltec has a lot of confusion on who reports to who. This is despite existence of an organisation chart.

…

•    Changes have been done in Baltec without explanation of the nature of the change. Then when the change is implemented, there is an expectation of immediate understanding and compliance.

…

•    Regarding [Mr Ly’s] termination, not a single person in Baltec is happy about it.

•    [Mr Ly] was the individual who brought everyone together in Baltec, he had a very clear direction of where to go. He was all about finding a solution.

•    [Mr Ly] on a personal level was honest and not afraid to speak up to senior management. He coached and mentored many in Baltec, particularly for professional development.

•    There were issues in the past where people were grossly underpaid, [Mr Ly] brought issues to senior management to correct them.

•    The justification used for [Mr Ly’s] termination means anyone could be fired.

•    It was noted that full justification could not be disclosed as the business needs to protect itself and the individual’s personal privacy.

•    The way in which [Mr Ly] was terminated did not allow for a transition to those who were taking on these duties and did not allow for the “know-how’’ to be transferred or accessed afterwards.

•    It was explained that [Mr Boratav] made huge personal sacrifices for the business and spent holidays with his daughters working.

•    It was noted that [Mr Boratav] was nearly 100% devoted on business development, and was overloaded. Questions were raised about how [Mr Hooker] is going to handle this with operations responsibilities as well. It was noted that [Mr Hooker] often states that he has 200 unread emails and he is extremely busy when asked about responding to issues.

…

•    It is noted that the level of bureaucracy has increased significantly in Baltec over the last 2 months.

•    Baltec is perceived to be losing its flexibility and its ability to be responsive which was one of its selling points to clients.

…

•    The situation was described as a “Perfect Storm”. Everything has come in a short time. One or two of these issues could have been tolerated

•    People are strongly considering leaving Baltec. Some have job offers on the table now, and are close to signing this week. Approximately half or two thirds of the individuals in Melbourne looking to leave.

•    Many believe that all the issues experienced has severely damaged the trust of the team towards management.

…

•    Solutions from Baltec team were broad from “I’m out, that’s it”, “we can work through this” to “[Mr Bowd] needs to be out”.

75    However, the minutes also record that possible solutions to the problems at Baltec were also considered. Thus:

•    Possible Solutions Tabled – Senior management to relax and get to know the team

•    Open and clear communication

•    Don’t treat it like a corporate cooperation but more like a family business

•    Adapt and be flexible

•    Baltec need to be taken on the journey

•    TAPC need Business development

•    Combined training of both businesses for all

•    Clarity on who reports to who

76    These minutes represent an important document. They are contemporaneous evidence of how Mr Bowd was perceived by Baltec employees. It shows that employees were seriously unhappy with both Mr Bowd and the new employees he brought into the business (Messrs Hooker, Blakemore and Ms Stahmer). Employees were now threatening to leave or wanted Mr Bowd to leave. The long list of complaints made about him strongly support the board’s concerns about his performance.

Commencement of Mr Bowd’s personal leave

77    On 25 January 2017, Mr Bowd did not attend work. He said he was ill and relied upon a medical certificate from a Dr David Lim which was in the following terms:

This is to certify that

Mr Peter Bowd

Attended

Was unable to work

Will be unfit to work for

from Wednesday, 25 January 2017 to Monday, 30 January 2017 inclusive.

78    Such a spartan certificate did not greatly assist me in understanding what particular condition Mr Bowd found himself to be in which prevented him from working. In the context of an application for adjournment in this Court, certificates of this kind have been found to be greatly wanting: cf MZABV v Minister for Immigration and Border Protection [2017] FCA 105 at [5] per Pagone J. That is important in this case because over the period covered by the certificate (25 to 30 January 2017), Mr Bowd was reasonably busy. He attended meetings with BDO, he prepared a written statement for Victoria police, he was working on an injunction and he engaged in communications with, amongst others, Mr Cartney.

79    The statement he gave Victoria police is four pages long and contains a central allegation which was incorrect. It alleged that because Mr Richardson owned 80% of the shares in PT Baltec, the Richardson family would “personally benefit substantially” from “monies ... being inappropriately transferred … out of the country” to PT Baltec. That statement concerning the ownership of PT Baltec was incorrect, and I find that Mr Bowd knew that at the time. He admitted in cross-examination that in 2017 he knew that 80% of PT Baltec was owned (indirectly) by EG.

Rising tension within EG

80    The other event which took place on 25 January 2017 was that Mr Richardson directed that the locks at the premises of Baltec be changed. He said that he did this because Mr Boratav had told him that intellectual property was being taken from the premises and that Mr Hooker had not checked in one of his “travel hard drives”. These were external drives containing extensive confidential information which were used by EG’s executives when travelling. In contrast, Mr Bowd interpreted this change of locks as an attempt to frustrate BDO obtaining access to the premises. They were due to arrive on 28 January 2017 at Baltec’s premises. I do not think that this was the reason for the change of locks. The evidence is that Mr Richardson only became aware of BDO’s proposed visit on the evening of 27 January 2017. In this context, I was invited to draw an inference from the failure to call Mr Boratav. However, the inference I should draw was not specifically identified; in such circumstances the rule in Jones v Dunkel (1959) 101 CLR 298 is of limited application: Kordan Pty Ltd v Federal Commissioner of Taxation [2000] FCA 1807; (2000) 46 ATR 191 at [47]-[48]. I otherwise am prepared to infer that the decision to change the locks was made in the context of rising tension within EG.

81    On 26 January 2017, Mr Bowd met with BDO and submitted his statement to Victoria police. On the same day the board considered the minutes of the leadership team meeting.

82    On 27 January 2017, Mr Cartney received the interim report from Lewis Holdway Lawyers about Mr Bowd’s performance which, in his evidence, only “reinforced” his deep concerns about Mr Bowd. That report was not in evidence, even though it was called for.

Proposed audit of Baltec pursuant to the ASIC complaint

83    Later on the same day, which was a Friday, Mr Richardson and Ms Richardson were first told about the ASIC complaint as well as the appointment of external auditors from the Perth office of BDO. The board had still yet to see a copy of the complaint. The disclosure was first made by Mr Cartney to Ms Richardson in the evening in a telephone call. He said that the purpose of his communication with Ms Richardson was that he needed to organise for BDO to have access to the office the following day. Ms Richardson wanted to know why the company was not using its normal auditors. She then spoke to Mr Richardson. She told Mr Richardson to ring Mr Cartney. Mr Richardson rang Mr Cartney and told him that a change in auditors would require the approval of a board committee and suggested they meet the next morning at the Baltec offices to discuss the matter and, if required, to give BDO access to the premises. Mr Richardson was also made aware of the complaint lodged with ASIC at this point. In cross-examination he said that on Friday night he did not yet fully appreciate what that meant. He said, nonetheless, that he was “devastated”.

84    Early on the morning of Saturday 28 January 2017, the board met outside Baltec’s premises. Mr Richardson said that he discovered that EG’s regular auditors, solicitors and financial controller had not been told about the allegations that Mr Bowd had raised with ASIC or about BDO. He was determined, following advice received over the phone from EG’s auditors and lawyers, that the company’s normal auditors should be used for the proposed audit. At first, Mr Cartney supported using BDO and giving them access to the premises. He thought, mistakenly, that they had already commenced working on the audit, and that it would be cheaper and quicker to let them complete that task. However, when he discovered that the BDO staff were coming from Perth, and had yet to commence working on the audit, he formed the view that retaining their services would “cost us an arm and a leg”. He telephoned the company’s regular auditor who said he would be happy to get the work done as fast as possible. The board thus decided not to use BDO and to proceed instead with the company’s usual auditors.

Suspension of Mr Bowd

85    The board also decided to formally suspend Mr Bowd whilst the final investigation into his behaviour remained pending. That decision had been made in principle on 23 January 2017, but its announcement had been deferred because the board had wished to speak to Mr Bowd on 26 January 2017. This did not occur because he preferred to spend time with his family. The board also discussed the appointment of Mr Dean Dowie as an acting CEO. Mr Dowie had been a candidate for the CEO job the previous year. It was resolved that he should be contacted.

86    Each of Ms Richardson, Mr Richardson and Mr Cartney denied that the ASIC complaint was one of the reasons, or indeed the reason, for Mr Bowd’s suspension. Ms Richardson’s evidence was as follows:

My decision to stand [Mr Bowd] down was motivated solely by the poor behaviour that [Mr Bowd] had demonstrated with the board and with Baltec staff over the proceeding months, which I believed (and continue to believe) put the company at risk. The complaint to ASIC, and any other complaints made by [Mr Bowd] either directly or through his lawyers, or [Mr Bowd] being on medical leave at the time, played no role in my decision to suspend him.

87    Mr Richardson’s evidence was as follows:

My decision to stand [Mr Bowd] down was motivated by my concern about [Mr Bowd’s] management and its impact on staff. I was of the view that the risk of losing the value of the Baltec business was extremely high because of the impact of [Mr Bowd’s] management approach on the staff. I was very concerned that, without Baltec, the whole of [EG] could be non-viable.

88    Mr Cartney’s evidence was as follows:

The next day, on Saturday morning, 28 January 2017, during the board meeting held outside Baltec’s offices, [Ms Richardson], [Mr Richardson] and I discussed the need to suspend [Mr Bowd] unilaterally since we had been unable to do this by agreement with him since deciding to do this on Monday, 23 January 2017. We also discussed the need to appoint an acting-CEO, since it would have been inappropriate to appoint [Mr Richardson], who was Managing Director, since he had been implicated in [Mr Bowd’s] ASIC complaint. We resolved to approach Mr Dean Dowie, who had been a candidate for [Mr Bowd’s] job initially before withdrawing his candidacy, to accept the position, since we knew that Dean was likely available at short notice, and would start with at least some familiarity with [EG’s] business.

89    Mr Dowie gave evidence and was cross-examined. His evidence was that he was asked to become acting CEO “for a short period of time”. He thought Mr Bowd’s employment had already been terminated when he arrived. In fact it had not. Mr Dowie’s understanding about this issue was mistaken.

90    Mr Richardson was cross-examined about the events which took place over the weekend of 28 to 29 January 2017. He denied that the reasons for suspending Mr Bowd was because he had just found out about the complaint made to ASIC. He denied that this had angered him. He pointed to the draft email he had prepared earlier in the week which proposed that Mr Bowd would take “extended leave”, and which I have referred to above. This had been drafted before he knew about the ASIC complaint. His evidence was that he thought that giving Mr Bowd a break from duties would result in a “win–win position all round”. He said that the purpose of the draft email was to “keep Peter Bowd within the organisation, not to get rid of him”. He said that on 28 January 2017, after doing some research about ASIC, he knew that “something fairly serious was going on” and became “concerned about anything going to ASIC”. He first obtained a copy of the ASIC complaint on 29 January 2017 (sent by Mr Bowd to Mr Cartney by email). He said he had two emotions when he saw it: relief and sadness. When asked in cross-examination why he was relieved, he said “one just had to look at it to see that it was nonsense”. He said that when he decided to suspend Mr Bowd his concern was more about Mr Bowd’s management and the impact he was having on Baltec staff.

91    Mr Cartney was also cross-examined about his reasons for “removing” Mr Bowd, which I interpreted to include both his suspension and dismissal. He denied that EG was looking for reasons to terminate Mr Bowd. He denied the contention that he saw Mr Bowd as a “troublemaker”. He said he was a “very poor CEO” and that in early 2017 he had come to assess that Mr Bowd was not good at his job. He denied he was dismissed because of the complaint to ASIC and the invocation of the whistleblower policy; he denied he was dismissed because he was absent from work.

92    Ms Richardson was also cross-examined about the decision to suspend Mr Bowd. She denied that the reason for it was the complaint to ASIC. Her evidence was that the decision to suspend had really been taken on Monday 23 January 2017 before and prior to her having knowledge of any such complaint.

93    I shall return to these reasons for suspension and dismissal.

94    Text messages sent around this time between Messrs Bowd and Cartney reveal that Mr Cartney was continuing to perform his role as chairman by not taking sides. His intention, at least on 27 January 2017, was to try to get BDO engaged as the external auditors. Thus, in a series of texts sent to Mr Bowd on the evening of 27 January he said the following:

… Now [Ms Richardson] is asking who engaged BDO. I said you engaged them but they work for the company and I will be down there tomorrow. And Robert Baker knows I will be there if he picks up his emails.

[Mr Richardson] trying to have a meeting of the Board at 7.30 tomorrow. I guess he knows from [Ms Richardson] that he is implicated.

I just sent this to [Ms Richardson]: Ideally we get a quick independent BDO report. That would head ASIC off and protects [Mr Richardson]. If we get a bad report then we are stuffed. If we take no action then ASIC will do the same work and they will wonder why we did not get an independent report. Then we are stuffed. If we have an audit that [Mr Richardson] gets involved in then ASIC will still do their thing and they will wonder why the audit committee did not keep [Mr Richardson] out of it to comply with the whistle blower legislation. That will make them look even harder. Perhaps time to explain this all to [Mr Richardson]?

95    At about 1:00am on 28 January 2017, Mr Bowd replied by making allegations about “bribes”. He said:

That’s very true. So I have to ask you a question, the jobs that we discussed that we’ve paid substantial costs or monies into that “[Mr Boratav]” says “will” or “might” eventuate! The “WIP” I discussed! What if these Are bribes to get us work? I have to look very very hard at some of these jobs David! It’s now all making a lot of sense! The 3 jobs that [Mr Boratav] would have won for us! That will come but we will lose if he goes! Could well be bribes to win work.... We’ve had huge costs and these projects have not eventuated. Hundreds of thousands of dollars.

I must look at all of this David! It’s a real hornets nest.

It’s much bigger than I initially thought or saw, the 3 jobs with “cash retention” are potential bribes or some other kind of leverage that [Mr Boratav] may well of used!

Thanks

Pete

(Errors in the original.)

No evidence of bribery was adduced before me in support of these allegations.

96    At 6:42am, Mr Cartney replied to this text as follows:

[Ms Richardson] now playing for time audit may yet get stopped.

Pete I told [Ms Richardson] you went to Gaden’s at my request after you told me verbally that the ASIC complaint had been lodged and the police were involved. And this was under the whistleblower protection.

Pete your email confirmation from ASIC the PDF attachment doesn’t open can you re email this to me including the PDF thanks.

(Errors in the original.)

Mr Bowd responded saying that “it’s critical that we get in … We must get the team in”. The team, I infer, is a reference to BDO. On Sunday, Mr Cartney tried to contact Mr Bowd. Amongst other things, Mr Bowd said in a text that he proposed to give the police a “data dump” as well as his “PC” the next day, being 30 January 2017. He said that he had meetings with his counsel that he was going to attend and that it would be a “long day”. This was a day, I note, covered by his medical certificate.

97    On the evening of 29 January 2017, Mr Bowd sent Mr Cartney the following “without prejudice” email which attached a copy of the ASIC complaint (Mr Cartney had not previously seen it). It again invoked the whistleblower provisions of the CA. It also evidences, in the clearest terms, Mr Bowd’s belief that he was going to be dismissed. It relevantly said as follows:

Dear David,

Without Prejudice

I am informing you that on Friday afternoon I took a call from an ASIC officer, please find the attached copy of my statement to ASIC, I am now formally including you as a part of the whistleblowing process, as Chairman of [EG] I am also formally notifying you of the report, and the details in the report.

I am also clarifying that I qualify for full protection of the act under section 1317AA as an employee and CEO of [EG], I have supplied a copy of the whistleblowing provisions of the act here for your information, the following parts of the corporations act that protect me from any further inappropriate action from the board and specifically [Mr Richardson] Managing Director of [EG]. Please see the following information, which I am assuming you will provide to the board:

[The text of ss 1317AA to 1317AE in Pt 9.4AAA of the CA is then set out.]

I wish to make my situation very clear, I have lodged with both ASIC and the Victorian Police, I have protection under the Corporations Act 2001 whistleblowers part 9.4AAA, as listed above.

I am informing you that I have opened dialog with legal counsel and have informed them of the changes to the locks at the Baltec offices, the engagement of staff by [Mr Richardson] in regards to my removal, including the meetings arranged by the Managing Director [Mr Richardson] with a number of the staff over the past week, a complete breach of executive confidence, I have informed my legal counsel of the meeting of the Baltec staff at lunchtime Tuesday the 24th where they made comments in regards to my removal, I have independent statements that Staff member Marco Tomasi stated “we need to out this CEO”.

I have sent my legal counsel and ASIC copies of the minutes from both of the meeting’s with the board and executive on the 18th and 19th of January, copies of the November and December board reports, copies of the minutes of the meeting with staff at Wollongong. I have informed my legal counsel and ASIC in regards to the intent to stand me down. More importantly I have informed legal counsel that members of my team have been told by [Mr Richardson] that they are not to talk to me, this is victimisation and contravenes section 1317AC, please refer to the above clauses in the act. At this stage I am in fear of losing my job based on the immediate feedback from other employees within the TAPC part of the company, please see section 1317AD part 5. I have statements from a number of the management team, and a number of employees in the group that I will lodge with my legal counsel on Monday.

I am formally reporting the above to you as Chairman of [EG], I appreciate this is a lot to take on David, I will be meeting with Victorian Police early Monday so I will be late into the office for any meetings, given the current behaviour of our Managing Director [Mr Richardson] and my report to ASIC, any meetings that we have on Monday will require an independent 3rd party to be present.

(Errors in the original.)

98    On 30 January 2017, Mr Bowd sent a further email to Mr Cartney informing him that he was going to take a day of personal leave, and acknowledging that Mr Richardson wished to discuss matters with him but that he needed to have clarification about his position under the “whistleblower” provisions of the CA. Once again, this was a day covered by Mr Bowd’s medical certificate.

99    On the same day the board met and formally suspended Mr Bowd. The following letter was sent by Mr Cartney to Mr Bowd suspending him:

Peter,

A number of matters have recently come to the attention of the Board concerning your performance as CEO.

Due to the nature of the matters, the Board has resolved to temporarily relieve you from the performance of your duties as CEO effective immediately.

Mr Dean Dowie has accepted an appointment as acting CEO for the foreseeable future.

Please note that it is only the performance of your duties as CEO which has been temporarily suspended. Your contract of employment remains on foot, and you will continue to be paid during the suspension period.

The Board intends to carry out an independent investigation of the matters concerning your employment. You will be required to cooperate with any investigation during normal business hours, and it is intended that you will be afforded procedural fairness throughout the process.

During the period of your suspension:

1.    You must direct all enquiries made to you in your capacity as CEO to Mr Dowie;

2.    You must not take or continue any action on behalf of [EG] in your capacity as CEO;

3.    You must carry out any lawful instruction given to you by or on behalf of the Board;

4    If you have not already done so, you must return your company laptop computer and that of [Mr Ly] to [EG];

5.    Access to your company email address will be suspended, and diverted to Mr Dowie;

6.    You must not contact or have any communication with any employees, contractors, customers or suppliers of the company (other than the directors);

7.    You must not hold yourself out as still carrying out duties as CEO to any employees, contractors, customers or suppliers of the company, or to the general public (including ASX and/or the news media);

8.    You must not attend any business premises of [EG]; and

9.    You remain bound by your employment obligations to [EG], including the terms of your contract of employment, as well as your fiduciary duties under statute and at common law.

You will be contacted about participating in the investigation process in due course. In the meantime, please contact me directly if you have any questions.

100    Eventually, Mr Cartney contacted Mr Bowd by phone and requested that he return EG’s property, including his computer and phone. He also asked Mr Bowd to meet on 1 February 2017 with the independent investigator appointed by the board.

101    On the same day Ms Richardson attended the offices of Baltec and met with the company’s regular auditors. Their “preliminary view” was that the ASIC complaint contained misinformation.

102    On 31 January 2017, Mr Bowd wrote an email to the police, his lawyer, EG’s auditors and Mr Cartney making allegations that bribes had been paid. Later that day, Mr Bowd sent a text to Mr Cartney stating that he would not attend any meeting with EG’s auditors and would leave the matter to the “AFP, ASIC and the courts”. In cross-examination, Mr Bowd gave a different reason for his failure to attend the meeting with the auditors; he said he was sick.

103    On 1 February 2017, Mr Bowd contacted, as already mentioned, the AFP by phone. He was told to wait for the serious fraud team to contact him and to retain all evidence. I have no reason to doubt that this is what was said to him. On the same day, Mr Bowd also got a medical certificate for the period 1 to 6 February 2017 from the same doctor. It simply said that Mr Bowd “will be unfit to work for” that period.

104    On 2 February 2017, Mr Bowd emailed data files to ASIC. On 3 February 2017, Mr Cartney contacted Mr Bowd by email and asked him what his intentions were in relation to return of his two laptops and phone. Mr Bowd replied on the same day saying that he was retaining company items in his possession as evidence for the AFP.

105    On 6 February 2017, the solicitors for Mr Bowd sent Mr Cartney a lengthy letter. It recited a number of matters on the instructions of Mr Bowd, and made an allegation that Mr Richardson and others were attempting to “Phoenix” the business, namely taking steps to reduce the market price of EG’s share, so they could be bought back cheaply. I have seen no evidence to support that allegation. The letter went on to state that there “was absolutely no basis” for the suspension. The letter referred to Pt 3-1 of the FW Act and stated that EG had been in breach of s 340 of the FW Act. The letter stated that Mr Bowd reserved his rights under the FW Act in the event that he was not reinstated. It also stated that Mr Bowd reserved his rights under the whistleblower provisions of the CA as well as under the Defamation Act 2005 (Vic).

106    On 9 February 2017, EG’s regular auditors, McIntosh Bishop, sent to EG their report concerning Mr Bowd’s complaint to ASIC. The report found, in general terms, that the complaint was misconceived. The “board summary” was in the following terms:

We have examined the complaint made by Peter John Bowd. Our examination confirmed $400,000 went to PT Baltec. It was cost of goods sold, tender expenses and loans to PT Baltec. There is supporting documentation for cost of goods sold and tender expenses. The loan balance will be confirmed when the audit of PT Baltec for the year ended 31 December 2016 is completed in Indonesia.

In Peter John Bowd’s ASIC eComplaint it includes: “substantial funds have been transferred from the ASX listed business unit ([EG]) (Baltec) to the Indonesian company PT Baltec without any supporting documents or evidence of costs or 3rd party invoices”.

In our examination there were 11 loans totalling US$169,000, AUD$227,089 and these would have been approved by either [Mr Richardson] or [Mr Boratav] or both. At the meeting held 11 January 2017, page 2 of 3 of the ASIC eComplaint that group believed [Mr Richardson] and Ahmad Basalamah or [Mr Richardson], [Mr Boratav] and Ahmad Basalamah owned PT Baltec.

Peter John Bowd’s claim is incorrect as he did not understand PT Baltec is a subsidiary company with Baltec IES owning 80% and Ahmad Basalamah owning 20%.

On page 3 of 3 of the ASIC eComplaint Peter John Bowd states that the PT Baltec business has not been audited for over 2 years. The audited financial statements for the year ended 31 December 2015 can be obtained from Allan Fink. The audited financial statements for the year ended 31 December 2016 are expected to be received on 10 February 2017.

Peter John Bowd’s claim that the PT Baltec accounts have not been audited is incorrect.

(Emphasis in the original.)

107    Counsel for Mr Bowd submitted that this document should not be admitted into evidence pursuant to s 135 of the Evidence Act 1995 (Cth), which is in the following terms:

The court may refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might:

(a)    be unfairly prejudicial to a party; or

(b)    be misleading or confusing; or

(c)    cause or result in undue waste of time.

108    The submission was that, as the reasoning in the report was somewhat thin, its probative value was substantially outweighed by the prejudice arising from the fact that its authors had not been called to give evidence, thus denying Mr Bowd the opportunity to test the accuracy of its contents. In circumstances where counsel for Mr Bowd put on the record that he did not seek to attack EG’s auditors, I reject that submission. In my view, the document is admissible as a business record and its contents potentially received as evidence of their truth. It was always open to Mr Bowd to call the auditors himself. Nonetheless, I agree that the reasoning is not detailed. Moreover, I do not consider that I need be troubled by the possible accuracy or reliability of the report. Whether there were in fact expense irregularities at Baltec is not an issue which I can decide. The evidence before me fell short of what I would need to adjudicate that issue. Rather, I have received the report as evidence of what was reported to the board in February 2017. In that respect, I infer that the board accepted that the contents of the report were true.

109    On 9 February 2017, Mr Bowd also obtained a third medical certificate for the period 7 to 26 February 2017. Once again the certificate contained no explanation for why Mr Bowd was unfit to work. The necessity of the certificate was also unclear to me as Mr Bowd was suspended from work during this period. Over this period, Mr Bowd nonetheless analysed data on the hard drive taken from EG, and kept looking for evidence that might support the claims he had made to ASIC and the police.

110    On 14 February 2017, solicitors for EG responded to the letter sent to Mr Cartney by Mr Bowd’s solicitors. The letter stated that the accuracy of the facts recited in Mr Bowd’s letter was disputed. It recorded denials that there had been any breach of s 340 of the FW Act or the whistleblower provisions of the CA. Enclosed with the letter was an annexure entitled “Summary of allegations” against Mr Bowd. There were six pages of these. A good many were not raised before me. Counsel for Mr Bowd contended that they represented an attempt by EG to trawl through Mr Bowd’s time at that company to find reasons for his dismissal. Each of Mr Richardson, Ms Richardson and Mr Cartney denied that contention in cross-examination. In any event, on 23 February 2017, the solicitors for Mr Bowd sent EG a response addressing the allegations.

Termination of Mr Bowd’s employment and aftermath

111    On 1 March 2017, the board of EG resolved to terminate Mr Bowd’s employment. Each board member gave evidence that the contract of employment was terminated because of Mr Bowd’s poor performance as CEO. Each denied that the making of the complaint to ASIC or to the police was a reason for dismissal. The letter of termination invoked the clause of the contract permitting each party to terminate the employment relationship on three months’ notice. The letter did not disclose any reasons for termination. It did, however, request the return of the following company property from Mr Bowd:

(a)    his laptop;

(b)    the laptop of [Mr Ly];

(c)    backups or copies of any company electronic files;

(d)    his mobile phone including sim card;

(e)    any keys, access cards or the like relating to any company premises;

(f)    all company records, files and working documents; and

(g)    any copies of company information or other property.

The letter also expressly referred to the clause in the contract concerning confidential information in the following terms:

In light of the Termination, we now take this opportunity to remind you of your ongoing confidentiality obligations. In this regard we refer you to the following clause in the Employment Contract.

Confidentiality of Information

During your employment you will become aware of information relating to the business of [EG], including but not limited to client lists, trade secrets, and client details and pricing structures.

Confidential information, including client lists, trade secrets, intellectual property, pricing structures and any and all documents created by you in the course of your employment remain the sole property of [EG]. You shall not, either during or after [your] employment, without prior consent of [EG] directly or indirectly divulge to any person or use the confidential information for your own or another’s benefit.

112    The items of company property identified in the letter of termination were not returned as requested.

113    On 18 May 2017, EG, Baltec and TAPC (the “EG parties”) obtained search orders to recover possession of the company property from Mr Bowd. The orders were expressed to be in respect of an address in Coorparoo in the state of Queensland (the “Coorparoo Residence”). This was the address of Mr Bowd’s former wife. She was not at home when it was sought to execute the orders. No search took place. An attempt was made to serve the orders on Mr Bowd at a different address. He refused service and instead drove to a friend’s house. Before doing so he told the independent solicitor, tasked with the execution of the orders, that everything covered by them was in the hands of his solicitors and the “AFP”. That statement was false. Mr Bowd was in possession of the company property. At his friend’s house he copied confidential EG data onto a personal USB and he deleted data from a laptop. He did this, he said, to assist in the ongoing investigation. He then destroyed a hard drive.

114    On 24 May 2017, Mr Bowd delivered into the possession of the independent solicitor the following items:

1    Microsoft Surface tablet computer;

2    Microsoft Surface tablet computer;

3    Red Western Digital portable hard drive;

4    iPhone;

5    1 x Microsoft Surface Power Supply;

6    Paper bound document entitled Agenda, EGL, 24 November 2016;

7    Paper bound document entitled Agenda, EGL, 19 January 2017; and

8    Toshiba Satellite A100 laptop.

115    Months later, upon discovering that Mr Bowd had downloaded some of EG’s confidential data onto a USB drive or drives, the EG parties returned to court. Orders were obtained for the delivery up of those USB drive or drives. These orders were served on Mr Bowd on 15 August 2017. He then delivered up the USB drives on 17 August 2017.

116    The EG parties have now received all their property, and Mr Bowd no longer retains company property or confidential data. The EG parties have nonetheless persisted in their claims of breach of contract, detinue and breach of copyright, even though there is no evidence that Mr Bowd’s retention of company property has caused any loss or damage. The EG parties now merely seek costs on an indemnity basis and possibly nominal damages.

117    Amongst other things, I was invited by the parties to adjudicate as to whether there was company property “located at the premises in the search order issued on 18 May 2017”. I take the reference to “premises” to be the Coorparoo Residence. However, there was no evidence before me concerning that issue. I make no adjudication.

118    I should finally record a submission made on behalf Mr Bowd concerning EG’s failure to produce minutes of board meetings held, for example, on 19, 28 and 30 January 2017. It was said that EG was either in breach of s 251A of the CA by not keeping minutes, or if minutes were kept, these had been withheld from inspection by the Court. The minutes, it was submitted, were “important documents potentially providing evidence of the motivations of” EG in its dealings with Mr Bowd. I am not prepared to infer that no minutes were kept, although I have been concerned that they were not before me. A forensic choice had been made not to tender them. Such choices are made in litigation. However, Mr Bowd was free to seek them by a Notice to Produce and then tender them himself as business records. This did not happen.

119    I was perhaps more concerned about the fact that the independent lawyer’s interim report (and final report, assuming one was made) concerning Mr Bowd as prepared by Lewis Holdway Lawyers was not in evidence. I have already mentioned that a call was made for its production but neither side tendered it.

The Adverse Action Claims

120    It will be helpful to summarise the claims made by Mr Bowd under the FW Act. Mr Bowd submitted that he had exercised four “workplace rights” for the purposes of s 341, namely:

(1)    the making by him of his CEO report to the board on 16 January 2017 (the “CEO Report”);

(2)    the making of his complaint to ASIC on 24 January 2017;

(3)    the taking of personal leave in January 2017 (as pleaded, the leave taken in February was not relied upon); and

(4)    the sending of his letter to EG on 6 February 2017 (the “Second Employment Complaint”).

Mr Bowd submitted that he had been subject to a number of “adverse actions”, as defined, by EG because he had exercised these workplace rights. Those adverse actions were his dismissal, his suspension, the investigation into his conduct, and the making of allegations against him by the lawyers for EG in their letter of 14 February 2017. In addition, Mr Bowd submitted that there had also been a separate breach of s 352 of the FW Act.

121    For the reasons set out below I have decided that the presentation of the CEO report and the letter of 6 February 2017 were not exercises of “workplace rights” as defined. I have also found that the lodgement of the ASIC complaint was not an exercise of a workplace right because, amongst other things, it was not made in good faith. The taking of leave was an exercise of a workplace right. However, I have found that Mr Bowd was not dismissed or suspended because he took that leave. Rather, I have found that he was suspended, and ultimately dismissed, because of his performance as CEO and because of the making of the ASIC complaint and the complaints to the police. These events led to a breakdown in the relationship between Mr Bowd and the board. Because of that finding, I also find that s 352 was not breached. It is also my view that the sending of the letter dated 14 February 2017 was not adverse action. Finally, the investigation into Mr Bowd may have been adverse action, but it was not undertaken “because” of the exercise of any of the alleged workplace rights.

The Exercise of Workplace Rights

(i)    The CEO Report

122    Mr Bowd submitted that the CEO Report was a “complaint” made “in relation to his … employment” for the purposes of s 341(1)(c)(ii) of the FW Act because it drew to the attention of the board potential financial irregularities concerning Baltec. The reporting of such irregularities to the board, it was submitted, was a “complaint” because it constituted a “grievance” and it was “in relation to” Mr Bowd’s employment because it had “potential implications” of a reputational nature for his role as CEO: Hill v Compass Ten Pty Ltd (2012) 205 FCR 94; Shea v TRUenergy Services Pty Ltd (No 6) [2014] FCA 271; (2014) 242 IR 1. I respectfully disagree with that submission.

123    First, I would not characterise the CEO Report as a complaint or grievance. It was a report. When Mr Bowd reported to the board that he was undertaking an ongoing audit into Baltec’s expenses, that was the communication of an historical fact. Similarly, when Mr Bowd reported that there had been a number of “significant breaches of process in regards to expense claims by staff members” that was not a protest or expression of grievance. It was not said with the object of causing the board to react with some form of remedy. It was the disclosure of information to enable the board to carry out its functions.

124    Secondly, I am also not satisfied that the CEO Report was relevantly “in relation to” Mr Bowd’s employment. As an expression of a sufficient nexus, the High Court has observed that the similar phrase “in respect of” has a “chameleon-like quality”. It takes its meaning from its context: Technical Products Pty Ltd v State Government Insurance Office (1989) 167 CLR 45 at 47; see also Commissioner of Taxation v Scully (2000) 201 CLR 148 at 182-183. In my view, that observation applies equally to the phrase “in relation to”. The statutory context here is the protection of employees who exercise workplace rights. One of those rights is an entitlement to make a complaint about a person’s employment without the fear or risk of retribution.

125    In Walsh v Greater Metropolitan Cemeteries Trust (No 2) [2014] FCA 456; (2014) 243 IR 468, Bromberg J decided that a report made by an employee about a linen supplier providing sub-quality service was a “complaint” in relation to that employee’s employment. His Honour observed that a complaint that raises “potential implications” about a person’s employment was likely to be one that would satisfy the nexus required in s 341(1)(c)(ii). His Honour said at [43]:

In this case, Ms Walsh raised a probity issue in relation to a contract with a supplier who supplied services including to an operation which Ms Walsh managed in the course of her employment. Whether or not Ms Walsh was under a contractual duty to report the possible misdeed of others (see the discussion in Irving, The Contract of Employment (LexisNexis Butterworths, 2012) at [7.21]), her failure to report suspected wrong-doing had the potential to reflect badly upon her and cause prejudice to her in her employment. By reason of either of those two factors, the Alsco contract complaint made by Ms Walsh raised an issue with potential implications for Ms Walsh’s employment and was “in relation to ... her employment” within the meaning of s [341(1)(c)(ii)] of the FW Act.

See also Milardovic v Vemco Services Pty Ltd (Administrators Appointed) [2016] FCA 19 at [69] per Mortimer J.

126    A test of “potential implications” may be too broad a statement of principle. At least with respect to a person with the functions and responsibilities of a CEO, almost anything communicated by such an officeholder would have “potential implications” for that person’s employment. In my view, in the case of a CEO, the complaint must be one directed at or concerned with that person’s employment in a substantive way. In that respect, observing that the required nexus may be direct or indirect, may not greatly assist. It must, as a matter of substance, be about that CEO’s employment.

127    Here, the CEO Report was not, as a matter of substance, about Mr Bowd’s employment as CEO. It was not directed at his relationship of employment. Rather, it was directed at or concerned with, the state of the EG group of companies as at January 2017. It was made as part of EG’s processes of corporate governance. Whilst I accept that the allegations about Baltec’s expenses might have had “potential implications” for Mr Bowd’s employment, those implications were, as at 16 January 2017, too remote from the subject matter of his employment, for the purposes of s 341(1)(c)(ii).

128    In any event, I am not satisfied that in making the CEO Report Mr Bowd was relevantly exercising a workplace right; he was instead performing his obligations as CEO. In Shea, Dodds-Streeton J said at [625] about s 341(1)(c)(ii):

In my opinion, the requirement that the complaint be one that the employee “is able to make” in relation to his or her employment suggests that there are complaints which the employee is not able to make in relation to his or her employment. The ability to make a complaint does not arise simply because the complainant is an employee of the employer. Rather, it must be underpinned by an entitlement or right. The source of such entitlement would include, even if it is not limited to, an instrument, such as a contract of employment, award or legislation.

That the “right” to complain must be found in some entitlement or right contained, for example, in a contract, has more recently been confirmed by the Full Court of this Court in Cigarette & Gift Warehouse Pty Ltd v Whelan [2019] FCAFC 16 where Greenwood, Logan and Derrington JJ said at [28] that the primary judge, in that case, was correct to observe that:

… a complaint that an employee is able to make in relation to his or her employment is not at large, but must be founded on a source of entitlement, whether instrumental or otherwise.

I am bound to follow this decision notwithstanding the observations of Jessup J at [141] in Murrihy v Betezy.com.au Pty Ltd [2013] FCA 908; (2013) 238 IR 307.

129    Mr Bowd held no “entitlement” or “right” to make his CEO Report. Rather, consistently with the letter of offer which he accepted, it was his responsibility to report from time to time to the board. That duty or obligation is not a “right” which Mr Bowd was “able” to exercise. For these reasons, I reject Mr Bowd’s contention that the giving of the CEO Report was an exercise of a “workplace right”.

(ii)    The making of the ASIC Complaint

130    Mr Bowd submitted that the making of his complaint to ASIC was an exercise of a “workplace right” for the purposes of either s 341(1)(a), (b) or (c) of the FW Act.

Did s 341(1)(a) or (b) of the definition of “workplace right” apply?

131    It was submitted that for the purposes of s 341(1)(a) and (b) that the CA was a “workplace law” as defined by s 12 of the FW Act. Consequently, Mr Bowd:

(1)    was “entitled to the benefit of” the protections afforded by Pt 9.4AAA of the CA (s 341(1)(a)); or

(2)    by making the complaint, was able to “initiate, or participate in, a process or proceedings under a workplace law” (ss 341(1)(b) and 341(2)).

132    It was said that the CA was a “workplace law” because it contained ss 182 and 183, as well as Pt 9.4AAA itself. Section 182 provides as follows:

(1)    A director, secretary, other officer or employee of a corporation must not improperly use their position to:

(a)    gain an advantage for themselves or someone else; or

(b)    cause detriment to the corporation.

(2)    A person who is involved in a contravention of subsection (1) contravenes this subsection.

Section 183 of the CA provides as follows:

(1)    A person who obtains information because they are, or have been, a director or other officer or employee of a corporation must not improperly use the information to:

(a)    gain an advantage for themselves or someone else; or

(b)    cause detriment to the corporation.

(2)    A person who is involved in a contravention of subsection (1) contravenes this subsection.

These provisions were said to be workplace laws because they imposed duties upon employees in the performance of their employment.

133    Pt 9.4AAA was said to be a workplace law because it gave protection “to an employee of a company” (s 1317AA(1)(a)(ii)). That protection included a right of reinstatement in the event of termination of an employee’s “contract of employment”(s 1317AB).

134    The first issue for consideration is what did Parliament intend when it referred to “any other law of the Commonwealth” in para (d) of the definition of “workplace law” set out above. On one view, the word “law” might have been intended to refer to another “Act”. That is supported by the identification of three preceding Acts of Parliament in paras (a) to (c) of the definition and the use of the word “other” in the phrase “other law of the Commonwealth”. However, authority suggests otherwise. The word “law” means “rule”. Thus, in Tattsbet Ltd v Morrow (2015) 233 FCR 46, Jessup J (with whom Allsop CJ and White J agreed) said at [102]:

The presently critical aspect of para (d) of the definition of “workplace law” is the term “law of the Commonwealth”. In Clyde Engineering Co Ltd v Cowburn [1926] HCA 6; (1926) 37 CLR 466, 497, Isaacs J said:

[T]he “law” is not the piece of parchment or paper, nor is it the letters and words and figures printed upon the material. It consists of the “rule” resolved upon and adopted by the legislative organ of the community as that which is to be observed, positively and negatively, by action or inaction according to the tenor of the rule adopted. Constitutions may prescribe, and do prescribe, how that rule shall be arrived at and how evidenced. But “the law” is essentially the rule itself, and not the material evidence of it.

See also Momcilovic v The Queen (2011) 245 CLR 1, 106-107 [226]-[233] per Gummow J.

In that case, the issue for determination was whether certain provisions (being rules) of the Superannuation Guarantee (Administration) Act 1992 (Cth) were workplace laws, and not whether that Act itself was a “workplace law”.

135    It follows from the approach in Tattsbet that applicable workplace laws are rules which regulate the relationships between employees and employers.

136    Nonetheless, in my view, neither s 182 nor s 183 of the CA conferred any discernible “benefit” on Mr Bowd for the purposes of s 341(1)(a), even if they be workplace laws. Rather, each imposed obligations on Mr Bowd in his capacity as CEO. I also doubt whether it can be said that either provision conferred on Mr Bowd a “role or responsibility” for the purposes of s 341(1)(a); none, at least, was suggested by Mr Bowd. In that respect, in my view, it cannot be said that either provision conferred on Mr Bowd a role or responsibility in any “representative” capacity: cf Auimatagi v Australian Building and Construction Commissioner [2018] FCAFC 191 at [71]-[73]. It was not otherwise suggested that s 341(1)(b) or (c) was relevant to ss 182 and 183 of the CA.

137    With respect to Pt 9.4AAA, it is easier to conclude that Mr Bowd is “entitled to the benefit of” the protection of the whistleblower provisions, but only if they applied to him (as to which see below). It was not otherwise suggested that they created any “role or responsibility” for Mr Bowd.

138    It was also submitted that s 341(1)(b) was satisfied because, at the very least, Mr Bowd could “initiate” pursuant to these rules a process “under a workplace law”. For the moment, I am prepared to accept that a complaint made to ASIC could initiate a process, namely an investigation. However, I do not think that Pt 9.4AAA is a law that regulates, or comprises rules that regulate, relationships between employees and employers. In my view, no relevant provision of Pt 9.4AAA is a workplace law.

139    In Australian Licenced Aircraft Engineers Association v Sunstate Airlines (Qld) Pty Ltd (2012) 208 FCR 386, one issue for determination was whether regs 51 and/or 215(9) of the Civil Aviation Regulations 1988 (Cth) were workplace laws. Those regulations were in the following form:

51    Reporting of defects in Australian aircraft – general

(1)    Where a person who, in the course of his or her employment with an employer, is engaged in the maintenance of an Australian aircraft becomes aware of the existence of a defect in the aircraft, the person shall report the defect to his or her employer.

...

(4)    If the holder of the certificate of registration for an Australian aircraft becomes aware of the existence of a defect in the aircraft, he or she must:

(a)    have an investigation made of the defect;

...

215    Operations manual

...

(9)    Each member of the operations personnel of an operator shall comply with all instructions contained in the operations manual in so far as they relate to his or her duties or activities.

Penalty: 25 penalty units

Logan J concluded that neither regulation was a workplace law. His Honour said at [33]:

A regulation which, like reg 51 or reg 215(9) of the CA Regs, imposes a duty on a person as an incident of undertaking a particular task in the course of employment — “engaged in the maintenance of an Australian aircraft” (reg 51) or as an incident of a particular type of employment — operations personnel of an operator (reg 215(9)) does not regulate the relationship between that person and his employer. Having regard to the dictionary definitions cited by Barker J in ALAEA v International Aviation Service, each of these provisions in the CA Regs might readily be characterised as a provision which “regulates” the conduct of a person to whom it applies but the object of that regulation is not the relationship between that person as an employee and his employer but rather that of air safety by the imposition of particular reporting obligations. Common to the definitions of “workplace instrument” and “workplace law” in s 12 of the Fair Work Act is the object of the relationship between employer and employee. Provisions which do no more than use the status of employer or employee as an incidental touchstone for the imposition of duties serving other ends do not fall within the terms of these definitions.

140    To secure the benefit of the protections afforded by Pt 9.4AAA, the disclosure must qualify for protection by satisfying the requirements of s 1317AA of the CA. I consider these in more detail below. For the moment, it may be noted that the provisions of Pt 9.4AAA are not only concerned with employees. They extend to disclosures made by suppliers of goods and services to a company, and to employees of such suppliers, which have been made to ASIC, to the company’s auditor, to a person authorised to receive such disclosures or to certain senior identified executives. Their object is not the regulation of relations between employees and employers. Rather, their object is to encourage compliance with the terms of the CA by giving statutory protection to “whistleblowers”. It may be accepted that the provision recognises that employees of a company are likely to be such “whistleblowers”, and thus expressly refers to employees and provides for a right of reinstatement. But what is being regulated is not that employee’s relationship with the company, but rather, and ultimately, that company’s potential contravention of provisions of the CA. The relevance of an employee to the provisions contained in Pt 9.4AAA is to that person in his or her capacity as a whistleblower, who perhaps also happens to be an employee, rather than as someone employed by a company. As was the case in Australian Licenced Aircraft Engineers Association, s 1317AA and Pt 9.4AAA more generally, deploy “the status of an employer or employee” for the “imposition of duties serving other ends”, namely the regulation of corporate behaviour. If it matters, the same conclusion should also apply to ss 182 and 183 of the CA. Each provision is directed at the regulation of corporate governance.

Did s 341(1)(c) of the definition of “workplace right” apply?

141    For the foregoing reasons, I am also not satisfied that the making of the complaint to ASIC was a complaint “to a person or body having the capacity under a workplace law to seek compliance with that law” for the purposes of s 341(1)(c)(i). That is because, for the reasons given, Pt 9.4AAA of the CA is not a “workplace law”.

142    However, but for one issue, I would have been satisfied that the ASIC complaint was “in relation to” Mr Bowd’s employment for the purposes of s 341(1)(c)(ii). Unlike the CEO Report, the ASIC complaint was plainly a grievance. It was also, I find, sufficiently connected with Mr Bowd’s employment. His reputation was plainly and directly in issue. Nonetheless, in my view, it was not otherwise a “complaint” for the purposes of s 341(1)(c)(ii) because it was not relevantly made in good faith.

143    In Shea, Dodds-Streeton J decided that, properly construed, s 341(1)(c)(ii) only applied to a grievance communicated for a proper statutory purpose. A complaint made without good faith would not be the type of “complaint” covered by the provision. Her Honour said at [619]-[624]:

The relevant object of the provision is to protect employees from retribution in the form of adverse action because they have exercised a workplace right by making a complaint in relation to their employment, rather than to protect employees who have proved, or are able to prove, that the grievance or accusation is justified or meritorious. Were it otherwise, the protection afforded by the provision would be largely illusory, as persons would be vulnerable to retribution for making a complaint unless, and perhaps until, their case could subsequently, by some unspecified means, be proved or found valid.

It does not follow, however, that the making of false, baseless, unreasonable or contrived accusations of grave misconduct against fellow employees constitutes the making of a complaint that an employee is able to make in relation to his or her employment, and thus invokes the statutory prohibition on adverse action.

While the factual basis of a complaint need not be “true” or capable of ultimate substantiation, in my view, the grievance must at least be genuinely held and, where it takes the form of an accusation of fault, the complainant must believe it to be valid. There would otherwise be no real, but merely a spurious, grievance. The exercise of the workplace right constituted by the making of a complaint is not within the scope of statutory protection if it is made without good faith or for an ulterior purpose, extraneous to that for which the statutory protection was conferred.

The protection conferred by the provision is directed at workplace rights. When the relevant workplace right is the employee’s ability to make a complaint in relation to his or her employment, to make a complaint not in order to communicate the stated grievance or accusation so that it may be appropriately considered and redressed, but to achieve some collateral advantage or objective, would not, in my opinion, invoke the statutory protection. No legitimate statutory objective would be achieved.

Accordingly, in my view, the complainant must hold a genuine belief in the truth of the matters communicated as a grievance or accusation. In the absence of such a belief (which may be difficult, albeit not impossible, to establish in the absence of some reasonable basis) the complaint would not be a genuine grievance or finding of fault.

Further, the grievance or accusation must be communicated for a proper statutory purpose, which would, at least, entail giving the employer notice of the relevant matters or securing information, protection, redress or some other appropriate response.

144    Mr Bowd submitted that one should not read into s 341(1)(c)(ii) a requirement of good faith. He relied upon the following passage from the judgment of the Full Court of this Court on appeal in Shea v EnergyAustralia Services Pty Ltd [2014] FCAFC 167; (2014) 242 IR 159 at [12] (Rares, Flick and Jagot JJ):

Considerable care needs to be exercised before implying into s 341 any constraint that would inhibit an employee’s ability to freely exercise the important statutory right to make a “complaint”. To too readily imply into the language of ss 340 and 341 the necessity for a complaint to be a “genuine” complaint, necessarily would be productive of argument about whether a “complaint” is bona fide and may serve to discourage those who may well have mixed motives for making a complaint. The expression or drafting of a “complaint” should not require the sophistication or knowledge of an experienced industrial lawyer or legal advice regarding whether it should in fact be made. Care should also be taken before construing the term “right” in s 341 in a manner which may have more far-reaching implications for the meaning of that term when it is employed elsewhere in the Fair Work Act. When considering the construction of these provisions, there is an obvious need to balance the legitimate interests of both employees and employers in a manner consistent with the objects of the Act as a whole and the objects of Pt 3-1.

Whilst the Full Court do not appear to have adopted Dodds-Streeton J’s implication of good faith, they did not decide to reject it. The appeal was resolved by a consideration of other issues with the Full Court observing at [13] as follows:

Notwithstanding the fundamental importance of ss 340 and 341 to the scheme of protection established by the Fair Work Act, questions regarding their construction and application do not need to be now resolved. These fundamental questions of statutory construction have, to date, received limited judicial attention: eg. Jones v Queensland Tertiary Admissions Centre Ltd (No 2) [2010] FCA 399, (2010) 186 FCR 22 at [55]-[57], [84] per Collier J. Indeed, it was contended by both parties on appeal that the ambit of the term “complaint” (as employed in the Fair Work Act) had not been previously considered.

145    In my view, I am not bound to reject the implication drawn by Dodds-Streeton J that only complaints made in good faith fall within s 341(1)(c)(ii). However, such an implication should only be made after exercising, to use the language of the Full Court, “considerable care” and not “too readily”.

146    One starts with the following fundamental proposition, which was made by French J (as his Honour then was) in Bropho v Human Rights and Equal Opportunity Commission (2004) 135 FCR 105 at [85]:

The valid exercise of statutory powers is conditional upon their exercise in good faith. That is so notwithstanding their protection by the most robust of privative clauses – R v Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598.

The foregoing proposition applies to powers exercisable by grant of private law as well as by statute or regulation. Thus, in Isles v Daily Mail Newspaper Ltd (1912) 14 CLR 193, in a private law context (in relation to a power to modify the rights of debenture holders), Isaacs J (as his Honour then was) said at 202:

Twice within the last few weeks I have read the statement of the law by Lord Lindley in British Equitable Assurance Co. Ltd. v. Baily, a statement of fundamental importance, and applicable in an infinity of instances, and I will read it again. He said:-“Powers must be exercised bonâ fide, and having regard to the purposes for which they were created, and to the rights of persons affected by them.” That terse formula sums up all material considerations.

(Footnotes omitted.)

147    In Pyneboard Pty Ltd v Trade Practices Commission (1982) 57 FLR 368, in a public law context (in relation to the former power in s 155 of the Trade Practices Act 1974 (Cth) to require the furnishing of information), Northrop, Deane and Fisher JJ said at 373-374:

The power to require the furnishing of information and the production of documents which is conferred by s.155(1) is subject to at least two general limitations, one express and one implied. … The implied limitation is the ordinary one that it is a condition of a valid exercise of the power that it be used in good faith for the purpose for which it was conferred and with regard to the effect that the exercise of the power will have upon the person affected thereby (see Federal Commissioner of Taxation v. Australia and New Zealand Banking Group Ltd. [(1979) 53 ALJR.336]).

148    In my view, for the purpose of construing s 341(1)(c)(ii), there is no reason not to imply a similar limitation, namely that if a complaint is to qualify for protection it should be made in good faith and for the purpose for which the right to make such a complaint was conferred. Parliament could hardly have intended that the maker of a dishonest complaint, or one otherwise made in bad faith, should be entitled to the protections offered by Div 3 of Pt 3-1 of the FW Act. As Judge Riethmuller observed in Morley v Monza Imports Australia Pty Ltd [2018] FCCA 622 at [51]-[52]:

The difficulty of this issue is apparent from the reality that not all complaints would be substantiated. Clearly, the mere fact that a complaint is not substantiated could not make it a complaint that was not genuinely held or otherwise not made in good faith. To place any significant restriction upon the types of complaints that are not protected by the statutory provisions would have the potential to significantly undermine the protections provided by those sections.

However, it is easy to imagine some complaints being so frivolous or vexatious, or simply made for ulterior motives that the conduct of the employee could not be intended to be protected by the provisions of the statute. For example, if a series of groundless complaints were made against another employee as part of a course of conduct designed to bully and harass the other employee, it cannot be thought that the provision was intended to protect the perpetrator of such conduct simply because part of the bullying or harassing conduct manifested itself by way of making complaints.

I respectfully agree with these observations. I also respectfully agree with the reasons of Dodds-Streeton J set out above and the way her Honour has described the requirement of good faith for the purposes of s 341(1)(c)(ii).

149    In Bropho, French J described the content of a requirement of good faith in a statutory context at [93] as follows:

In a statutory setting a requirement to act in good faith, absent any contrary intention express or implied, will require honest action and fidelity to whatever norm, or rule or obligation the statute prescribes as attracting the requirement of good faith observance. That fidelity may extend beyond compliance with the black letter of the law absent the good faith requirement. In ordinary parlance it may require adherence to the “spirit” of the law. This may attract the kind of penumbral judgments by courts of which Professor Stone wrote. That is not necessarily a matter for concern in the case of civil proscriptions. They are evaluative judgments which the courts are authorised and required by the legislature to make. A good faith provision offers a warning that game playing at the margins of a statutory proscription or obligation may attract a finding of liability. There is nothing in principle to prevent the legislature protecting a rule by attaching an uncertain risk of liability to conduct in the shadow of the rule.

150    Earlier, his Honour observed that absence of good faith was not “limited to cases of dishonesty or malice or personal interest”. It could extend to a “reckless or capricious approach”. Ultimately, however, the precise content of any requirement of good faith will turn upon the particular statute or rule of law in which those words are used or by implication are taken to exist (at [87]).

151    I have found that Mr Bowd made his ASIC complaint animated by a desire to activate statutory protections in order to prevent the termination of his employment arising from his performance as CEO. He did it to save his job. A complaint made for the purpose of preserving employment in and of itself will not necessarily be one made for an extraneous purpose or in bad faith. An employee who, for example, uncovers contraventions or possible contraventions of the CA may complain to ASIC with subjective knowledge of the whistleblower provisions and do so deliberately for the purpose of obtaining protection. Such a complaint would not be made in bad faith. Nor would it be made for an extraneous purpose. The provisions exist as an inducement or incentive to encourage people to make complaints in the knowledge that the law will protect them.

152    However, that is not the position here. Mr Bowd made his complaint to ASIC with the intent of triggering the whistleblower provisions as a means of preventing his dismissal for poor performance as CEO. The allegations contained in that complaint were concocted, or at the very least, deliberately exaggerated. There was no or no sufficient basis for their making. The complaint was used as a calculated device. As such, in my view, it was not made in good faith for the purposes of s 341(1)(c)(ii).

153    For these reasons, in my opinion, the making of the ASIC complaint was not an exercise of a “workplace right”.

(iii)    Leave

154    It was submitted that when Mr Bowd took leave from 25 to 30 January 2017 he was exercising a “workplace right” pursuant to s 97(a) of the FW Act, which is in the following terms:

An employee may take paid personal/carer’s leave if the leave is taken:

(a)    because the employee is not fit for work because of a personal illness, or personal injury, affecting the employee;

EG submitted that I should find that Mr Bowd was not in fact on leave because of illness notwithstanding the production of a medical certificate signed by a doctor. EG contended that during this time Mr Bowd made phone calls, made a statement to police, met with BDO, met with his lawyers, met with a fellow employer and police, and engaged in communications with Mr Cartney. None of this was denied by Mr Bowd. Nonetheless, in cross-examination, he insisted that he was sick.

155    Both the sparse content of the medical certificate and the physical and mental activity undertaken by Mr Bowd during this period, leave me to doubt whether Mr Bowd was generally unwell and thus unable to perform his duties as CEO. The timing of the commencement of the period of leave, being the very day after he launched his complaint to ASIC, also leads me to doubt that Mr Bowd was truly unwell. It is open to me to infer that Mr Bowd wanted to use this time to further his claims against EG and Mr Richardson. However, the medical certificate suggests otherwise. For present purposes, I will assume that Mr Bowd validly took sick leave. As such that was an exercise of a “workplace right” for the purposes of s 341(1) of the FW Act. I note that in closing, Mr Bowd also sought to rely on the leave taken in February 2017. EG objected to this. This ground had never been pleaded. I agree with EG that I should not have regard to the sick leave taken in February.

(iv)    The Second Employment Complaint

156    Finally, it was submitted that the letter prepared on behalf of Mr Bowd by his lawyers and sent on 6 February 2017 to EG was the making of a complaint for the purposes of s 341(1)(c)(ii). It certainly was a “complaint”. And it was plainly “in relation to” Mr Bowd’s employment. However, it was not made pursuant to any particular instrument, contract, award or legislation: Shea and Cigaratte & Gift Warehouse Pty Ltd, supra. The letter was sent in accordance with that same liberty, enjoyed by both ordinary citizens and by Mr Bowd, to record grievances in writing and have them communicated to someone. It follows that the sending of the letter was not an exercise of a “workplace right”.

Adverse Action

157    Mr Bowd submitted that EG took adverse action against him in a number of ways. Primarily, he contended that his dismissal was adverse action. But he also alleged that the investigation into his conduct, his suspension, and the allegations made against him in EG’s letter of 14 February 2017, were all instances of adverse action.

158    EG did not, and could not, deny that Mr Bowd’s dismissal constituted “adverse action” for the purposes of s 342 of the FW Act. However, it did contend that the other alleged instances of adverse action did not fall within the definition of that term in s 342.

159    To constitute adverse action, relevantly the incident or event must constitute something that injured Mr Bowd or altered his position to his detriment for the purposes of Item 1 of the definition in s 342(1). In that respect, there may be some conflict in the applicable authorities.

160    Mr Bowd relied upon the decision in Jones v Queensland Tertiary Admissions Centre Ltd (No 2) (2010) 186 FCR 22 for the proposition that the commencement of an investigation could constitute the taking of adverse action. In that case the investigation was into workplace bullying. Collier J said at [81]:

As a general proposition I consider that the commencement of an investigation into bullying allegations could be adverse action against someone in Ms Jones’ position within the meaning of s 342 of the Act. I form this view because:

•    In light of her position as CEO, the commencement of the investigation into allegations of bullying either could injure her in her employment or cause a deterioration in her standing in her workplace so as to alter her position within the meaning of s 342 of the Act; and

•    As observed by Goldberg J in United Firefighters Union [[2003] FCA 480; (2003) 198 ALR 466], Ms Jones’ position would be altered to her prejudice because of the exposure to a potential disadvantage of imposition of a penalty if the charges are ultimately proven

At [82], her Honour did not accept that disciplinary investigation was a “normal” incident of employment, even when commenced in good faith and with a proper prima facie evidentiary basis.

161    Earlier, in Police Federation of Australia v Nixon (2008) 168 FCR 340 at [48], Ryan J took the opposite view about disciplinary action being a normal incident of employment. His Honour was of the view that not every disciplinary hearing will amount to an injury to an employee or to an alteration in that employee’s position. At [42] and [46], his Honour said:

In the light of the history which I have just recounted, I consider that a serious question remains as to whether the resumption of the inquiry by Biggin and Cartwright amounts to an injury to Mullett in his employment. Not every disciplinary inquiry or investigation of alleged misconduct by an employee will have that effect. For example, the inquiry may be conducted in such a way that only the affected employee and a few other persons directly involved in it are aware that it is taking place. Likewise, the subject matter or particulars of the alleged breach of discipline may, on balance, not be reasonably capable, at least before the investigation has been completed, of damaging the reputation of the employee or adversely affecting his or her standing in the workforce or among the wider community, assuming the fact of the inquiry to be so widely known.

…

In light of the conclusion just reached on “injury”, it is strictly unnecessary to consider the alternative question of whether the resumption of the [Ethical Standards Division] investigation of the Bullying Allegations can amount to an alteration of Mullett’s position as an employee of Victoria Police. However, in my view, “alteration” in this context requires a substantive change in, or reduction of, the advantages enjoyed by the employee in that capacity. Merely to be subject to a disciplinary inquiry or investigation does not, without more, constitute such a substantive change. Examples of relevant substantive changes include reduction of salary, deprivation of overtime, diversion to a less congenial shift, forced taking of leave, transfer to lower duties or suspension from duties. Some changes of this kind are expressly contemplated as being within the disciplinary regime for Victoria Police instituted by s 71 of the [Police Regulation Act 1958 (Vic)] and noted at [24] above

Importantly, at [48] his Honour said:

I consider, with respect, that amenability to a disciplinary charge brought in good faith and on a proper prima facie evidentiary basis is a normal incident of employment and does not of itself, before the laying of the charge, constitute “an adverse affection of, or deterioration in, the advantages enjoyed by the employee” in the sense used by the High Court in the passage from Patrick Stevedores 195 CLR 1 quoted at [14] above. Of course, it is otherwise where the charge is made out and some deleterious consequence is visited on the employee. That is the significance of the words to which I have added emphasis in the extract from Goldberg J’s reasons reproduced at [47] above. Until the charge has been proved, the disadvantage to the employee, as his Honour acknowledged, remains merely “potential.”

162    In Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Visy Packaging Pty Ltd (No 3) (2013) 216 FCR 70, Murphy J agreed with the views of Collier J in Jones (at [103]). An investigation which threatened the possibility of dismissal, it was said, reduced the security of future employment and was thus adverse action: cf Community and Public Sector Union v Telstra Corporation Ltd (2001) 107 FCR 93 at [17].

163    For my part, and if it matters, I respectfully prefer the reasoning of Ryan J in Nixon, at least with respect to CEOs of publicly listed companies. The very great responsibilities and duties which fall upon the shoulders of such senior officers, ordinarily reflected in the size of their salary, make both public (regulatory) and private investigation of their conduct a likely incident of their employment. That includes ongoing scrutiny of a CEO by the board of directors. Such scrutiny is an ordinary incident of the fiduciary duty each director owes to the company and its shareholders. When appointed, every CEO should know this and welcome such scrutiny. Ultimately, of course, whether an investigation does or does not constitute an injury or a prejudicial alteration in an employee’s position will depend upon the facts and the type of investigation. In that respect, as is well-known, injury includes here “any adverse affection of, or deterioration in, the advantages enjoyed by” an employee: Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 18.

164    The decision to seek an independent review of Mr Bowd’s conduct at Baltec was made by the board on 21 January 2017. Subsequently, Mr Cartney engaged Mr Foster of Lewis Holdway Lawyers to undertake that review. The terms of that review were not before me. Mr Foster produced an interim report to the board on 27 January 2017. That report was not before me. It is mentioned in passing in the letter of 14 February 2017. In those circumstances, it is difficult for the Court to know how the commissioning of that report, and the carrying out of an investigation, by Mr Foster injured Mr Bowd or altered his position in the required way. Mr Foster and Mr Bowd never met. Mr Bowd never participated in the investigation. The interim report was received after the decision to suspend Mr Bowd was made, but before the full board became aware of the complaint to ASIC.

165    Because I have found that Mr Bowd only exercised one “workplace right”, namely the taking of sick leave, and because that right was first exercised after the decision to investigate Mr Bowd, I need not finally determine whether the investigation was adverse action. That is because taking sick leave could not have been one of the reasons for that investigation. The decision to make the investigation predated the taking of sick leave.

166    In contrast, suspending Mr Bowd was “adverse action”. Even though it was prompted by concerns for Mr Bowd’s health, suspending a CEO is a serious matter and would have injured Mr Bowd’s standing within EG, and his career more generally. The fact that he remained on full pay is no answer to that conclusion. I shall need to return to the reasons for suspension.

167    The sending of the letter of 14 February 2017 was not greatly pressed by Mr Bowd’s counsel as an incident of adverse action. In my view, the sending of this letter to Mr Bowd’s solicitors neither injured him at that time nor prejudicially altered his position. The letter was not made public and by 14 February Mr Bowd had already been suspended and was not at work. His relationship with EG did not change following the receipt of the letter in any way: cf Metcalfe v Clayton Church Homes Inc [2015] FCA 219 at [131] per Besanko J.

Was adverse action taken “because” of the exercise of a workplace right?

168    I have found that Mr Bowd relevantly exercised one “workplace right”, namely the taking of sick leave. I have also found that the acts of suspending and dismissing the Bowd were adverse actions as defined. The next issue for determination is thus whether Mr Bowd was dismissed and/or suspended “because” he took that leave for the purposes of s 340 of the FW Act.

169    Mr Bowd emphasised:

(a)    that, by reason of s 360 of the FW Act, it was sufficient that I be satisfied that one of the reasons for either suspending or dismissing him was the taking of sick leave. Section 360 provides:

For the purposes of this Part, a person takes action for a particular reason if the reasons for the action include that reason.

(b)    that, because of s 361, it was, practically, for EG to prove that the taking of sick leave was not one of the reasons for Mr Bowd’s suspension or dismissal.

170    Otherwise, the parties agreed that the applicable meaning of the term “because” in s 340 connoted the existence of a particular reason, being an operative and immediate reason, for taking adverse action: Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 248 CLR 500; Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (2014) 253 CLR 243.

171    EG in particular highlighted the following propositions:

(a)    in Construction, Forestry, Mining and Energy Union v Endeavour Coal Pty Ltd (2015) 231 FCR 150, Jessup J, after considering Barclay and BHP Coal, said at [32]:

The “connection” which was held not to be sufficient in BHP Coal was between the adverse action taken by the employer and the industrial activity in which the employee had engaged. It was not between two different characterisations of the conduct of the employee, in that case, as a contravention of the employer’s conduct policy and as participation in industrial activity. As French CJ and Kiefel J made clear, if adverse action was taken because the conduct involved such a contravention, it did not become a breach of s 346 merely because the conduct was, at the same time, participation in industrial activity. The existence of such a “connection” was insufficient. What was necessary was that the actual reason of the decision-maker, in his or her own mind, be the employee’s participation in industrial activity. To see their Honours’ reasons in this way is, in my view, to recognise the consistency of those reasons with the statements of principle contained in the reasons of Gageler J in the same case. Those statements represent the law after Barclay and BHP Coal.

We are here dealing, of course, not with s 346, but with s 340, of the FW Act. But the formula which the legislature has chosen to define the relationship between the adverse action and the factual circumstance involving the employee against whom the action was taken is the same in each instance. The law as I have identified it above is to be applied under s 340 no less than under s 346. The contrary was not submitted by either party in the present case.

(b)    in BHP Coal, Gageler J said at [92]:

… The protection afforded by s 346(b) is not protection against adverse action being taken by reason of engaging in an act or omission that has the character of a protected industrial activity. It is protection against adverse action being taken by reason of that act or omission having the character of a protected industrial activity.

For the reasons given by Jessup J in Endeavour Coal, the foregoing observation of Gageler J applies equally to s 340.

(c)    in Construction, Forestry, Mining and Energy Union v De Martin & Gasparini Pty Ltd (No 2) [2017] FCA 1046, Wigney J at [307] said:

The distinction drawn by Gageler J is potentially important to the resolution of the issue concerning the decision-maker’s reasons in this matter. BHP Coal concerned an alleged contravention s 346 of the Fair Work Act. While it might be thought to be a very fine and highly nuanced distinction, if Gageler J’s distinction is applied to s 340 of the Fair Work Act, it would follow that the protection afforded by s 340 is not protection against adverse action by reason that an employee had, or exercised, a right that happened to have the character of a workplace right. It is a protection against adverse action being taken by reason of the fact that the right possessed by the employee had the character of a workplace right.

172    Based on the foregoing authorities, the issue is whether EG has satisfied me that none of the reasons for suspension or dismissal included the taking of sick leave by Mr Bowd. In each case, that invites a determination of the actual reasons for why the board of EG suspended and/or dismissed Mr Bowd. In that respect, I am satisfied that all three members of the board, each of whom gave evidence and was cross-examined, collectively controlled EG so that the Court’s function is the ascertainment of that collective will in relation to the two adverse actions taken against Mr Bowd: Federal Commissioner of Taxation v Whitfords Beach Pty Ltd (1982) 150 CLR 355 at 370 per Gibbs CJ. In that respect, and at least in relation to each adverse action, I am not satisfied that Mr Richardson played a more dominant role, or that I should give greater weight to his reasons for acting. Nor is this a case where one must ascertain a majority view. All three directors acted in concert in making the decision to suspend and then dismiss Mr Bowd.

173    In relation to the decision to suspend Mr Bowd, I am satisfied that EG has demonstrated that the taking of sick leave was not one of the reasons for Mr Bowd’s suspension. The genesis of the decision to suspend Mr Bowd was the board deciding on 21 January 2017 that Mr Bowd needed to take a short-term leave of absence. The reasons for that decision were that the board wanted to repair the position at Baltec and assist Mr Bowd in his recovery from ill health. Leave of absence was intended to allow the board to focus on assessing the damage within Baltec. These reasons are consistent with the draft email circulated at the time by Mr Richardson to his fellow board members on 24 January 2017, and the comments made with respect to that draft email by Ms Richardson and Mr Cartney. At that stage, Mr Bowd had not communicated to the board his own need for leave. That occurred, I infer, on 25 January 2017. The decision to formally suspend Mr Bowd was then taken on 30 January 2017. It followed the weekend meeting at the offices at Baltec and Mr and Ms Richardson discovering for the first time that a complaint had been made to ASIC. The letter informing Mr Bowd of his suspension does not refer in any way to him taking personal leave. Rather, it states that the reason for his suspension was because “[a] number of matters have recently come to the attention of the Board concerning your performance as CEO”. In my view, that was an accurate statement.

174    In relation to the dismissal of Mr Bowd, I am also satisfied that EG has demonstrated that the taking of sick leave was not one of the reasons for that dismissal. Each director explained their reasons for dismissal and each was cross-examined about those reasons. Each deposed that Mr Bowd was dismissed because of his performance as CEO of the Baltec business. In cross-examination, Mr Cartney and Ms Richardson denied the taking of sick leave was the reason for dismissal. Mr Richardson also denied that he was angered by the taking of sick leave. In closing submissions, the reason for dismissal was characterised by EG’s counsel in a more generalised way: it was said that the only reason for Mr Bowd’s dismissal was an irretrievable “breakdown” in the relationship between Mr Bowd and the board. Characterising the reasons for dismissal in that way does not assist in the ascertainment of the activating reasons for dismissal. It is just another way of describing those reasons.

175    I am quite satisfied that the taking of leave was not a reason for Mr Bowd’s dismissal. Each director knew that Mr Bowd had problems with his kidney. Each director was concerned with his health, and wanted him to take time off. The draft letter Mr Richardson composed on 23 to 24 January 2017 confirms that. In the letter dated 14 February 2017 sent to Mr Bowd’s solicitors, the issue of leave was not raised. There is no contemporaneous evidence before me that shows that the taking of leave was a reason for dismissal. I also have no reason to doubt the answers given by Mr Richardson, Ms Richardson and Mr Cartney in cross-examination, save in one respect.

176    My acceptance of the evidence of each director of EG is supported by the significant amount of contemporaneous evidence concerning Mr Bowd’s leadership at Baltec. It was a disaster for the EG group. Key employees had resigned, or were threatening to resign. The minutes of the leadership meeting held on 24 January 2017 (and not written by any board member) well describes the damage done to Baltec’s business by Mr Bowd. The taking of leave, in contrast, was a minor matter. I infer it was of no moment in the decision-making process to dismiss Mr Bowd. The key factor was to save the Baltec business.

177    I am satisfied that the principal actual reason for Mr Bowd’s dismissal was his overall poor performance. But I find it improbable that this was the only reason for his dismissal. Mr Bowd had committed a singular act for a new CEO of a listed company. Without the knowledge and consent of his board, he had made a complaint, comprising very serious allegations, to ASIC and the police. He had done so without waiting for either the commencement or completion of the external audit into the concerns he held about Baltec’s expenses. He had also expressly invoked the whistleblower provisions of the CA. In my view, such extraordinary actions must have played a significant role in the board’s decision that it could not continue to work with Mr Bowd. In my view, in the circumstances of this case, that is entirely understandable. However, that conclusion does not assist Mr Bowd. That is because, for the reasons I have given, the making of the ASIC complaint was not an exercise of a workplace right.

178    For these reasons, Mr Bowd’s claims under s 340 of the FW Act are dismissed.

179    It also follows that Mr Bowd’s claims made in relation to s 352 of the FW Act are also dismissed. Mr Bowd was not dismissed because he was temporarily absent from work because of illness.

Part 9.4AAA of the CA

180    For Mr Bowd to succeed in relation to the claim he has made under Pt 9.4AAA of the CA, I must be satisfied that he fulfilled those circumstances that would qualify his complaint for protection. Those circumstances are prescribed by s 1317AA as follows:

(1)    First, the discloser must relevantly have been an officer or employee of a company. Mr Bowd satisfies this requirement.

(2)    Secondly, the disclosure needed to have been to be made to, amongst other persons and entities, ASIC. This requirement is satisfied.

(3)    Thirdly, the discloser must have revealed his or her name. Mr Bowd did this.

(4)    Fourthly, the discloser must have had “reasonable grounds” to suspect that the company, or an officer or employee of the company, may have contravened a provision of the CA. To have reasonable grounds for such a state of mind probably requires the existence of facts which are sufficient to induce that state of mind in a reasonable person: George v Rockett (1990) 170 CLR 104 at 112. Suspicion is a “state of conjecture or surmise where proof is lacking”: George at 115. Nevertheless, some factual basis for the suspicion must be shown: George at 115. The complaint to ASIC did not expressly identify any provisions of the CA which had been contravened. However in one of Mr Bowd’s affidavits he contended that the provisions that he thought might have been breached were ss 182 and 611 and Div 3 of Pt 2M.3, which imposes obligations on a company to be audited. In my view, and if it matters, Mr Bowd did not have reasonable grounds to suspect that these contraventions may have taken place. First, as to the claim about the auditing of PT Baltec, it was based only upon an unspecified and general discussion which Mr Bowd, in cross-examination, said had taken place at a board meeting on 17 January 2017. That was not a sufficient basis for a suspicion that there had been a contravention of the CA concerning the auditing of the accounts. In fact, and as Mr Bowd ultimately conceded, what he said about the lack of auditing in his complaint was wrong. It was also a claim, as already mentioned, about an Indonesian resident company which was not governed by the CA. Secondly, the reliance upon s 611 is puzzling. That provision sets out exceptions to the rules, contained in s 606 of the CA, concerning prohibited acquisitions of relevant interests in voting shares. As such, s 611 does not contain rules which must not be contravened. Moreover, the complaint to ASIC made no mention of any prohibited acquisition of voting shares. Such an allegation, as already mentioned, appears in one of Mr Bowd’s affidavits; but no facts were disclosed in that affidavit which might have induced suspicion about contravention of the CA in the mind of a reasonable person. The two notices discovered during searches on the ASX undertaken by Mr Bowd did not support the allegation made. Thirdly, as to s 182, in the ASIC complaint it was alleged that the EG group was going to lose “substantial capital and operating profit” because there were outstanding loans to PT Baltec, a company which, it was alleged, Mr Richardson intended to close. Upon closure, it was said, there would be “substantial loan defaults”. Leaving aside the likelihood that PT Baltec might close, as already mentioned, no facts which might have supported a suspicion concerning probable loan defaults were ever identified. Moreover, this allegation was based upon a misunderstanding that Mr Richardson owned shares in PT Baltec.

(5)    Fifthly, the disclosure must have been made in “good faith”. EG submitted that the disclosure here was not made in good faith. Mr Bowd, however, deposed that the complaint was his “honest opinion” that there had been breaches of the CA. The Explanatory Memorandum to the Corporate Law Economic Reform Program (Audit and Corporate Disclosure) Bill 2003 (Cth), which accompanied the amending Act which introduced Pt 9.4AAA, states that the purpose of the provisions, unsurprisingly, was to encourage the report of suspected breaches of the CA to ASIC or internally within a company. As to the requirement of good faith, [5.391] states:

It should be noted that the application of Part 9.4AAA relies on the disclosure being made in good faith. This differs to requirements currently contained in section 89 of the Corporations Act which provide qualified privilege in circumstances where there is an ‘absence of malice’ in making the disclosure. The use of ‘good faith’ is intended to raise the threshold for obtaining qualified privilege. This is considered appropriate given the need to discourage malicious or unfounded disclosures being made and ensure the integrity of these provisions of the Bill. Where a person has a malicious or secondary purpose in making a disclosure, it is considered that the good faith requirement would not be met.

(Emphasis added.)

It is not necessarily antithetical to the requirements of good faith that a person makes a disclosure motivated by the benefit of the protections offered by Pt 9.4AAA. The provisions, as previously mentioned, represent a statutory inducement or incentive to encourage appropriate disclosure. Disclosure made for a purpose of securing protection, without more, may nonetheless still be made in good faith where the person making the complaint is concerned that the very act of disclosure will lead to adverse consequences, such as the termination of employment.

181    Here, Mr Bowd had knowledge of the whistleblower provisions. He procured the implementation of the whistleblower policy and sent a copy of the provisions of Pt 9.4AAA to Mr Cartney. He invoked that policy. He made his complaint to ASIC with the intent of securing the protections offered by those provisions. By so acting, and without more, his disclosure might have been made in good faith.

182    But there was, I find, more to that disclosure. Mr Bowd thought he was going to be dismissed because of the way he, as CEO, had managed the Baltec business. I find that he made his ASIC complaint to avoid dismissal on those grounds, as distinct from, dismissal because of the act of disclosure. In my view, Mr Bowd’s disclosure was made for this “secondary purpose”, to use the language of the Explanatory Memorandum. That secondary purpose was to frustrate his dismissal on reasonable grounds. The disclosure was, accordingly, not made in good faith.

183    Because Mr Bowd’s complaint does not meet the criteria for eligibility under s 1317AA, his claims under Pt 9.4AAA for compensation are accordingly dismissed.

EG Parties’ Causes of Action against Mr Bowd

184    The EG parties maintained three causes of action against Mr Bowd concerning his retention of company property and information, namely:

(1)    breach of contract;

(2)    detinue; and

(3)    breach of copyright.

185    Given that Mr Bowd has for some time returned all of the EG parties’ property, and does not retain any confidential information or data, and it is not alleged that the EG parties have suffered any loss or damage arising from any alleged misuse of its property or information, the utility of these causes of action may be doubted. The EG parties merely seek costs (albeit on an indemnity basis) and possibly nominal damages.

Breach of contract

186    EG’s claim of breach of contract arises from the term contained in the offer of employment concerning the return of company property following termination, which I have set out above. EG contends that it made five lawful and reasonable directions to Mr Bowd for the return of its property. Mr Bowd submits that these directions were not lawful and reasonable because he was told by the AFP to retain the evidence that he had kept. I have already found that the AFP made that request of Mr Bowd.

187    No statutory provision was cited in support of Mr Bowd’s case which would have lawfully permitted him to retain this “evidence” because of the AFP direction. Nor was any authority referenced in support of lawful retention, other than a decision of the Fair Work Commission, which upon examination, did not support the retention of EG’s property in the circumstances here: see Barkhazen v Conair Australia Pty Ltd [2016] FWC 6520.

188    It was not suggested that I should imply a term into Mr Bowd’s contract that he specifically be entitled to retain company property at the request of a law enforcement agency. Rather, it was submitted that a more general term be implied, namely that any request for the return of company property had to be made lawfully and reasonably. I am prepared to assume the existence of such an implied term. However, in my view, each of EG’s requests, were both lawful and reasonable.

189    I make the following three findings. First, the term in the letter of offer required Mr Bowd to return “all company property” following termination. That obligation was self-executing. It did not depend on EG giving directions to Mr Bowd, whether or not lawful and reasonable. Secondly, if it matters, each direction was lawful because it was made consistently with the obligation on Mr Bowd to return company property following the termination of the contract. The AFP request did not and could not affect that obligation. Thirdly, each request was reasonable. There was an extant obligation on Mr Bowd to return company property. Each request was made within the confines of that duty. The timing of each request did not impose on Mr Bowd any oppressive burden. The AFP request did not excuse Mr Bowd from the performance of his contractual obligations. No doubt, the AFP meant their request to be considered as one to retain evidence, if it be lawful to do so. Here it was not lawful to keep EG’s property. The AFP, if it had wanted to preserve this evidence, had other lawful means of doing so.

190    It follows that I find Mr Bowd was in breach of his contract for failing for a period of time to return EG’s property.

Detinue

191    The cause of action in detinue is not made out. In Alicia Hosiery Ltd v Brown Shipley & Co Ltd [1970] 1 QB 195, Donaldson J distilled the essence of the action as follows at 207:

A claim in detinue lies at the suit of a person who has an immediate right to the possession of the goods against a person who is in possession of the goods and who, upon proper demand, fails or refuses to deliver them up without lawful excuse.

192    In General and Finance Facilities Ltd v Cooks Cars (Romford) Ltd [1963] 2 All ER 314, Diplock LJ (as his Lordship then was) observed at 317-318:

There are important distinctions between a cause of action in conversion and a cause of action in detinue. The former is a single wrongful act and the cause of action accrues at the date of the conversion; the latter is a continuing cause of action which accrues at the date of the wrongful refusal to deliver up the goods and continues until delivery up of the goods for judgement in the action for detinue.

…

Demand for delivery up of the chattel was an essential requirement of an action in detinue, and detinue lay only when at the time of the demand for delivery up of the chattel made by the person entitled to possession the defendant was either in actual possession of it or was estopped from denying that he was still in possession.

In the circumstances of this case, the cause of action in detinue was spent or exhausted when Mr Bowd returned all of the company property: cf Healing (Sales) Pty Ltd v Inglis Electrix Pty Ltd (1968) 121 CLR 584 at 602. At the time of trial, as Mr Bowd was no longer wrongfully detaining the EG parties’ property, a necessary element of the cause of action for detinue was no longer present: Jones v Dowle (1841) 9 M & W 19. Before me, the EG parties were thus not dispossessed owners; they did not require restitution of their chattels as Mr Bowd had already delivered up the company property. In addition, counsel for the EG parties did not otherwise press a claim for damages in detention: cf Strand Electric and Engineering Co Ltd v Brisford Entertainments Ltd [1952] 2 QB 246. This cause of action is accordingly dismissed.

Breach of copyright

193    The breach of copyright arises out of Mr Bowd’s copying of files onto a USB drive on 23 May 2017. The copying was not denied. Mr Bowd explained that he copied information because of the direction from the AFP and because, in his view, the ASIC and AFP investigations were ongoing. I accept that explanation.

194    As I understood it, it was not disputed that:

(a)    the information copied was an original literary or artistic work in which copyright subsisted;

(b)    EG was the owner of that copyright; and

(c)    Mr Bowd reproduced a substantial part of that work in a material form, without the licence, consent or authority of EG.

195    EG submitted that the case was not distinguishable from a decision of Collier J in Leica Geosystems Pty Ltd v Koudstaal (No 3) [2014] FCA 1129; (2014) 245 IR 422. In that case, her Honour found that a former employee had breached copyright when he copied his former employer’s information onto an external hard drive. Mr Bowd submitted that Leica was distinguishable. He also submitted that the copying here was a fair dealing, and, for that purpose, he relied upon s 43(1) of the Copyright Act 1968 (Cth) (the “Copyright Act”) which provides as follows:

The copyright in a literary, dramatic, musical or artistic work is not infringed by anything done for the purposes of a judicial proceeding or of a report of a judicial proceeding.

The Copyright Act defines a “judicial proceeding” to mean “a proceeding before a court, tribunal or person having by law power to hear, receive and examine evidence on oath”. The legal proceeding said to be engaged here was not identified. In 2017, when the copying took place, the only proceeding on foot was the present case brought by the EG parties. The copying was not made for the purposes of that proceeding. It was made for the purposes of the ASIC and AFP investigation which Mr Bowd thought was taking place. I have considered the possibility that the reference to a judicial proceeding could include a reference to a future possible proceeding, such as a criminal prosecution of Mr Richardson. On balance, in my view, the reference in that section to a “judicial proceeding” must be to a proceeding which is in existence at the time of the copying. That conclusion is supported by the following observation concerning s 43(1) made by Sundberg, Kenny and Gyles JJ in Ogawa v Spender (2006) 151 FCR 228 at [15]: