Federal Court of Australia

Power Ledger Pty Ltd v Griffiths [2021] FCA 624

ORDERS

THE COURT ORDERS THAT:

1.    The time for filing an application for leave to appeal from the declaratory order of the Federal Circuit Court of Australia made 30 October 2020 be extended to 11 January 2021.

2.    The applicant have leave to appeal on grounds 1 to 10 inclusive (excluding ground 5) as set out in the proposed notice of appeal annexed to the application for an extension of time filed 11 January 2021, as particularised (with respect to ground 10) in the applicant's written reply submissions filed on 8 April 2021.

3.    The applicant is to file and serve any notice of appeal by no later than 16 June 2021.

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

REASONS FOR JUDGMENT

BANKS-SMITH J:

1    This is an application for an extension of time and leave to appeal, subject to a contested preliminary point as to whether leave is in fact required.

Circumstances giving rise to the application

2    The respondent, Mr Griffiths, was formerly employed by the applicant, Power Ledger Pty Ltd, as its 'chief technology officer' (CTO).

3    By his claim in the Federal Circuit Court of Australia, Mr Griffiths alleged that his employment was terminated by Power Ledger because he exercised workplace rights, namely: first, making complaints against another employee; second, that he was not given certain 'POWR tokens' (tokens) as part of his remuneration package as agreed; and third, that the employee share offer plan given to him on 28 May 2018 (ESOP) was not the offer upon which there had been an earlier agreement.

4    Pursuant to s 340 of the Fair Work Act 2009 (Cth) (FW Act), a person must not take adverse action against another person because that person exercised a workplace right. Pursuant to s 361 of the FW Act, it is presumed that the adverse action was taken for those reasons unless the employer proves otherwise.

5    Mr Griffiths sought a declaration that Power Ledger had contravened the FW Act, a compensation order arising out of the alleged contravention and pecuniary penalties.

6    The primary judge accepted Mr Griffiths' claim in part, declaring, relevantly:

That the Respondent, Power Ledger Pty Ltd, contravened s.340(1) of the Fair Work Act 2009 … by making the Applicant redundant after the Applicant made a complaint in relation to his employment.

7    The primary judge's reasons disclose that his Honour was not satisfied that Power Ledger had not taken adverse action against Mr Griffiths as a result of him making the complaint that the ESOP given to him on 28 May 2018 was not the offer upon which there had been an earlier agreement, and that Power Ledger had not abided by that earlier agreement. Therefore, Mr Griffiths succeeded with respect to the third limb of his complaints, but not otherwise.

8    Power Ledger seeks to appeal from that decision.

9    It should be noted that the primary judge also made orders adjourning the hearing for the purpose of any penalty and compensation.

Nature of the proposed appeal to this Court

10    The jurisdiction of the Federal Circuit Court derives from (at least) s 566 of the FW Act, which provides that jurisdiction is conferred on the Federal Circuit Court in relation to any civil matter arising under the FW Act. Section 568 of the FW Act provides that nothing in the FW Act limits the Federal Circuit Court's powers under s 14, s 15 or s 16 of the Federal Circuit Court of Australia Act 1999 (Cth) (FCC Act). Those sections provide, relevantly, that the Federal Circuit Court may grant all remedies to which the parties appear entitled (s 14), may make such interlocutory orders as it thinks appropriate (s 15) and may grant declaratory relief (s 16). Section 567(c) of the FCC Act anticipates that declaratory relief may be sought under s 16 of the FCC Act in relation to a matter under the FW Act.

11    Jurisdiction is conferred upon this Court to hear and determine an appeal from the Federal Circuit Court's disposition of the application by s 24(1)(d) of the Federal Court of Australia Act 1976 (Cth) (FCA Act). The appeal is conducted by way of a 'rehearing': Minister for Immigration and Multicultural Affairs v Jia [2001] HCA 17; (2001) 205 CLR 507 at [75], [128]; and Minister for Immigration and Border Protection v SZVFW [2018] HCA 30; (2018) 264 CLR 541 at [29]-[30].

12    The Court, upon appeal, may only exercise its appellate powers once error has been identified: Norbis v Norbis (1986) 161 CLR 513 at 519; and Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194 at [14]. Any errors of law or fact should be corrected, such that the appellate court gives the judgment 'which in its opinion ought to have been given in the first instance' while observing the 'natural limitations' that exist: Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at [23], citing Dearman v Dearman (1908) 7 CLR 549 at 561.

Leave to appeal

13    Whether or not leave to appeal is required is relevant not only because it may be a statutory requirement, but because Power Ledger's understanding (or that of its solicitors) as to whether or not leave is required contributed to matters relating to delay and, so, whether an extension of time should be granted. An applicant has fourteen days to seek leave to appeal from interlocutory orders (s 24(1A) of the FCA Act; r 35.13 of the Federal Court Rules 2011 (Cth) (Rules)) but 28 days to appeal from final orders (r 36.03 of the Rules). Power Ledger contends that leave is not required because the declaration made was in the nature of final relief.

14    The weight of the authorities, including decisions of the Full Court of this Court, favours the view that declarations in the present statutory context, made in circumstances where there remain issues such as penalty and other relief to be resolved, are interlocutory in nature.

15    The position was described succinctly by Logan J in Heiko Constructions T/A Heiko Constructions Pty Ltd v Tyson [2020] FCA 697, in circumstance where the Federal Circuit Court had made a declaration of contravention of s 348 of the FW Act but the hearing of submissions on the question of penalty and compensation was adjourned to a date to be fixed. His Honour stated:

[9]    The approach in respect of proceedings in the Federal Circuit Court for civil penalties for contravention of the Fair Work Act is initially to make findings as to liability, if any, and then, if there be a finding of a contravention, to proceed at a later date, rather than on the date of judgment, to hear submissions as to penalty and compensation.

[10]    In turn, the approach in this Court, where that has occurred and the contravener as found by the Federal Circuit Court seeks to challenge the finding of contravention, is that such a challenge requires a grant of leave to appeal. That view is taken because the declaration as to contravention, although in some respects it might be thought to have a quality of finality, is nonetheless regarded as interlocutory. As an interlocutory order of the Federal Circuit Court, an appeal to this Court only lies by way of a grant of leave: see s 24(1A) of the Federal Court of Australia Act 1976 (Cth) and also as to cases where that view has been taken: Qantas Airways Limited v Australian Licensed Aircraft Engineers Association [2011] FCA 401; BHP Coal Pty Ltd v Construction, Forestry, Mining and Energy Union [2012] FCA 1495.

16    On appeal (Heiko Constructions T/A Heiko Constructions Pty Ltd v Tyson [2020] FCAFC 208) the Full Court affirmed this position:

[19]    The Federal Circuit Court has yet to hear and determine the consequential questions as to the penalty, if any, which ought to be imposed and other orders, if any, which ought to be made in respect of the contravention found. Ordinarily, Heiko's challenge would have to await the making of such final orders. Even though it determined liability, the declaration was interlocutory in character …

17    I note that the decision in Qantas Airways Limited v Australian Licensed Aircraft Engineers Association [2011] FCA 401 (Stone J), to which Logan J referred in Heiko, as in this case, involved a declaration as to adverse action with the hearing otherwise adjourned on the question of penalty.

18    The approach to the question of leave in the Heiko and Qantas Airways decisions, where liability under the FW Act was determined ahead of penalty, is consistent with a body of cases that have proceeded on the basis that a declaration made by the Court in respect of a separate issue, which does not dispose of the whole of the proceedings, is interlocutory, and leave to appeal from the grant of the declaration is required.

19    For example, although dealing with declarations that unions and officials had engaged in conduct in contravention of s 298P(3) of the Workplace Relations Act 1996 (Cth), the Full Court in Construction, Forestry, Mining & Energy Union v Employment Advocate [2001] FCA 1442 said:

[8]    In the present matter, while the making of a finding of contravening conduct was a necessary precondition for the grant of relief under s 298U, such a finding even when expressed in a declaration (as here) did not of itself determine any liability of that conduct to any of the forms of relief specified in the section. It 'left undetermined the question whether any, and what [penalties] were payable': Computer Edge Pty Ltd v Apple Computer Inc (1984) 54 ALR 767 at 768. It was not equivalent to an order awarding penalties 'to be assessed': cf Hall v Busst (1960) 104 CLR 206 at 218; and see generally on this distinction National Australia Bank Ltd v Maher (No 2), above, at 592-595.

[9]    The declaratory orders made were clearly interlocutory in character: see Australian Builders' Labourers' Federated Union of Workers - Western Australian Branch v J-Corp Pty Ltd (1993) 42 FCR 452 at 454. Leave to appeal is required.

20    In N and E Bowder Pty Ltd v Australian Keg Company Pty Ltd [2014] FCA 288; (2014) 220 FCR 166, Rangiah J collected the authorities as follows:

[8]    There is a division of authority in this Court as to whether a declaration made in respect of a separate issue which does not dispose of the whole proceeding is interlocutory or final. A long line of authority holds that such a judgment is interlocutory: see, for example, the judgments of the Full Court in Australian Builders' Labourers' Federated Union of Workers - Western Australian Branch v J-Corp Pty Limited (1993) 42 FCR 452 at 454; Fisher & Paykel Healthcare Pty Ltd v Avion Engineering Pty Ltd (1991) 103 ALR 239 at 242; Caboche & Anor v Ramsay & Ors (1993) 119 ALR 215 at 226; NZI Securities Australia Ltd v Poignand (1994) 51 FCR 584 at 593-594; Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 at 457; Construction, Forestry, Mining and Energy Union v Employment Advocate [2001] FCA 1442 at [8]-[9]; Lewis v Hall [2005] FCAFC 251 at [7]. These cases applied the reasoning of the High Court in Computer Edge Pty Ltd v Apple Computer Inc (1984) 54 ALR 767 at 767-768.

[9]    Other decisions of this Court support the view that a declaration made in respect of a separate issue which does not finally dispose of the case is a final judgment, so that leave to appeal is not required. That view was strongly expressed by Finkelstein J in Warramunda Village Inc v Pryde (2002) 116 FCR 58 at [65]-[70]. In Ho v Grigor (2006) 151 FCR 236, the Full Court cited those passages from the judgment of Finkelstein J with approval. However, the Full Court was not directly deciding the question addressed by Finkelstein J and its apparent approval of those views appears to be obiter dicta. For present purposes, I consider that I am bound by the earlier Full Court decisions to conclude that the judgment was interlocutory and that leave to appeal is required.

21    Since that time, the position endorsed in N and E Bowder has been doubted by Snaden J of this Court in two decisions.

22    In Southern Migrant and Refugee Centre Inc v Shum [2020] FCA 832 his Honour stated:

[11]    In my view, the applicants do not require leave to appeal from the Primary Judgment. The 'declarations' (above, [4]) that it records are, plainly enough, in the nature of relief that the FCCA granted in consequence of the liability findings that it had made. Leaving aside for the moment whether it was appropriate for relief of that nature to be granted at the stage that it was, I consider that that relief can only be regarded as being final in nature. There is no such thing as an interlocutory declaration: Dovuro Pty Limited v Wilkins (2003) 215 CLR 317, 359 [127] (Kirby J), 363 [143] (Hayne and Callinan JJ); Australian Competition and Consumer Commission v Cement Australia Pty Ltd [2014] FCA 148, [11] (Greenwood J). If the relief that was granted was not interlocutory relief, it must have been final relief: Warramunda Village Inc v Pryde (2002) 116 FCR 58, 77 [68] (Finkelstein J, Lee and Gyles JJ offering no view).

23    The same point was addressed by Snaden J in King v Melbourne Vicentre Swimming Club Inc [2020] FCA 1639 at [5]. Whilst his Honour considered the issue to be a distraction in that case, and where the parties proceeded on the basis that the relevant judgment was interlocutory in nature, Snaden J accepted that an analysis based primarily upon Dovuro Pty Ltd v Wilkins [2003] HCA 51; (2003) 215 CLR 317 and Warramunda Village Inc v Pryde [2002] FCA 250; (2002) 116 FCR 58 might be too simplistic, at least in the context of contraventions of the FW Act and separate questions, citing Rangiah J's paragraphs in N and E Bowder to which I have referred.

24    I note that in Dovuro, in which Hayne and Callinan JJ stated at [143] that an '[i]nterlocutory declaration is a form of order not known to the law', the High Court was concerned with civil proceedings for damages for a negligence claim and a declaration as to a breach of duty. It did not seek to address the particular circumstances of a contravention and civil penalty regime, with split hearings for the consideration of what, if anything, should flow from a contravention by way of penalty or other relief, such as that frequently employed by the Court in considering claims under the FW Act. To my mind, such a regime falls within the ambit of the principles discussed in Computer Edge Pty Ltd v Apple Computer Inc (1984) 54 ALR 767. Whilst I acknowledge the doubts expressed by Snaden J and the force of his Honour's reference to Dovuro, I also acknowledge the relevance of Computer Edge Pty Ltd v Apple Computer Inc and the line of authorities that have followed and adopted that approach. I am not persuaded that the Full Court in Heiko was plainly wrong or clearly erroneous and I would accordingly follow it, particularly having regard to the analogous circumstances of both Heiko and Qantas: Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 at [135]; and see generally the authorities and principles collected in ''Plainly wrong': The application of the Federal Court's threshold of error', Lucas R (2020) 48 Australian Bar Review 372.

25    Therefore, I consider that leave to appeal is required.

Principles

26    Mr Griffiths opposes the application for an extension of time and the application for leave to appeal.

27    The matters to be considered on an application for an extension of time are well recognised and collected in Singh v Minister for Immigration and Border Protection [2017] FCAFC 195 at [20]:

(1)    An extension of time will not be granted unless the Court is positively satisfied that it is proper to do so.

 (2)    The length of the delay is a relevant factor.

(3)    The appellant must show an acceptable explanation for the delay and that it is fair and equitable in the circumstances to extend time.

(4)    Any prejudice to the respondent is a material factor militating against the grant of an extension, although the absence of prejudice does not, without more, suffice to justify the grant of an extension of time.

(5)    The merits of the substantive appeal, if leave were granted, are properly to be taken into account.

28    The considerations relevant to the exercise of the Court's discretion to grant leave to appeal are also well established. They include whether or not an appeal would have reasonable prospects of success and whether the applicant would suffer substantial injustice if leave were refused: Decor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-399.

29    It can be seen that there is some commonality with respect to the principles for both applications, although it is appropriate to start with the extension application and the question of delay.

Extension of time

30    In short, the primary judge delivered his judgment and made the declaration and orders referred to above on 30 October 2020. A notice of appeal was filed by Bennett + Co on 26 November 2020 and served on Mr Griffiths. The purported institution of proceedings in this Court was only out of time if leave was required, bringing into play the 14 day deadline for filing. A hearing in relation to penalty had been listed in the Federal Circuit Court for 14 December 2020 but was subsequently adjourned by consent pending the outcome of any appeal to this court.

31    Dr Jemma Green, the co-founder and chair of Power Ledger, deposed to the fact that at the time the primary judgment was delivered, it was represented by DLA Piper and was advised that it had 28 days in which to appeal, and was not advised that there might be any question about that time frame. Dr Green also said that Power Ledger engaged Bennett + Co to advise on and act on any appeal on 20 November 2020. It is not entirely clear whether the description of 'co-founder' is intended to encompass the position of director. Counsel for Mr Griffiths objected to reliance on this evidence at the hearing on the basis that it was unclear 'who Power Ledger is' and how it received advice or the nature of the advice. I reject the objection. 'Power Ledger' is undoubtedly the corporate entity that is a party to the proceedings. Dr Green is clearly in a senior position in the company and has deposed to matters 'of her own knowledge'. The evidence discloses that at least at the time of the proceedings before the primary judge she was a director (according to an organisational chart) and she was a witness in the proceedings. The evidence Dr Green gave in her affidavit as to the advice from DLA Piper and engagement of Bennett + Co is inherently credible, and the type of knowledge that one would expect a person in her position to have. I have no reason to doubt that a law firm may have given advice that an appeal was due to be filed in 28 days, having regard to the apparent confusion in this area as highlighted by Snaden J in King v Melbourne Vicentre Swimming Club at [8]-[9]. There is no reasonable basis upon which to reject or exclude Dr Green's evidence. It is not necessary to have each and every director or member of an executive team depose to their state of knowledge. Furthermore, the other evidence before me (to which I will now turn) is consistent with Dr Green's evidence.

32    Ms Lavan, a solicitor at Bennett + Co, explained that Mr Bennett (who also appeared as counsel before me on the application) informed her that he received the primary judgment and orders on 25 November 2021, that he considered them, and that he formed the view that the declaration was final in nature and that leave to appeal was not required. Mr Bennett then prepared and caused the notice of appeal to be filed the following day. DLA Piper remained the solicitors on the record for Power Ledger in the Federal Circuit Court proceedings, and on 2 December 2020 wrote to the associate to the primary judge requesting that those proceedings be stayed. By the associate's response, Power Ledger was informed that the primary judge took the view that leave to appeal was required, and accordingly it became aware of the position explained in Heiko.

33    On (or around) 5 December 2021 Ms Lavan researched that issue, and Mr Bennett then formed the view that leave should be sought out of an abundance of caution. Ms Lavan then identified that an extension of time would also be required, but as she was involved in a trial in the Supreme Court (with Mr Bennett), she requested another solicitor (Ms Comley) to assist her in that regard. Communications occurred with the Federal Court Registry as to the appropriate steps to be taken in circumstances where the notice of appeal had already been filed (for example, a letter to the Registry of 17 December 2020 was in evidence). On 22 December 2021 Bennett + Co were informed by Registry that the question of whether leave was required would be referred to the appellate court. Bennett + Co's offices were closed until 4 January 2021. Ms Lavan returned to the office from leave on 11 January 2021. Despite being on leave, Ms Lavan progressed the application for leave so that she was in a position to file the leave application and an affidavit explaining the delay on her return to work, a step which was undertaken. The application and supporting affidavit were filed on 11 January 2021.

34    Ms Lavan provided evidence as to Mr Bennett's court commitments during the period 25 November until 24 December 2020. Counsel for Mr Griffiths objected to that evidence on the basis it comprised hearsay. I accept that to be the case, but I also note that the court commitments to which Ms Lavan referred are to some extent a matter of public record, and indeed one of the hearings in which Mr Bennett was involved during December 2020 proceeded before me: Okewood Pty Ltd v Commissioner of the Australian Federal Police (No 3) [2021] FCA 2. In any event, hearsay evidence may be admitted on an interlocutory application: s 75 of the Evidence Act 1995 (Cth). I would admit the evidence. I accept that both Mr Bennett and Ms Lavan were busy during the period from 25 November 2021 to 24 December 2020, the relevance of that evidence being that there is no suggestion that they were deliberately or recklessly delaying taking steps with respect to the application for leave. Even without the evidence as to Mr Bennett's other commitments, having regard to Ms Lavan's evidence as to her own commitments and the communications with the Registry in the relevant period, I do not consider there has been unexplained delay of a length or nature that would deny the grant of an extension.

35    Furthermore, I would not deny an extension of time based only on the delay in filing of the application for leave to appeal because:

(a)    it is not as if Power Ledger failed to take any steps to pursue an appeal - the purported notice of appeal was filed less than a month after the orders were made;

(b)    there is a genuine question as to whether or not leave is required, as the discussion of the authorities above discloses - that Mr Bennett formed a particular view is understandable and explained;

(c)    Bennett + Co moved quickly to file the purported notice of appeal once retained;

(d)    the parties had consented to a stay of the remainder of the Federal Circuit Court proceedings, regardless of the question of leave; and

(e)    Mr Griffiths has been on notice of the intention of Power Ledger to appeal from the orders made by the primary judge since about 26 November 2020.

36    Leaving aside the prejudice to Mr Griffiths from potentially being the respondent to an appeal and from being heard on this application, he has not established any prejudice that flows from the delay in filing the application for leave.

37    The question then is to be determined primarily by reference to the merits of the proposed appeal grounds.

Findings of primary judge

38    As summarised above, Mr Griffiths complained in the Federal Circuit Court proceedings that, relevantly, the ESOP was not the offer upon which there had been earlier agreement, and that his complaint about that matter, amongst others, resulted in adverse action against him.

39    Power Ledger denied that claim, contending that:

(a)    no agreement had been reached as to the issue of share options; and

(b)    a decision was made by the Board in July or early August 2018 that Mr Griffiths' role as CTO would be made redundant but Power Ledger wished to retain the services of the respondent, albeit in a new position.

40    Relevant findings of fact as to the terms of Mr Griffiths' employment included the following.

(a)    Mr Griffiths was offered a full time employment contract as CTO by Power Ledger on around 14 July 2017 (reasons [45]);

(b)    there were email exchanges during July 2017 about, relevantly, shares being offered as part of the employment terms. Mr Griffiths said the contract received in July 2017 had a draft ESOP attached (reasons [45]). That draft ESOP referred to 150,000 options to be exercised in three equal tranche options any time after 28 April 2018, 2019 and 2020 respectively, with stated exercise prices (reasons 46]);

(c)    although expressed as a draft, the ESOP was consistent with the email exchanges except that it 'clarified' that the offer was 50,000 share options rather than $50,000 worth of shares (reasons [47]);

(d)    there was nothing to indicate that Power Ledger ever offered Mr Griffiths anything by way of shares other than what was referred to in the draft ESOP (reasons [53]);

(e)    the ESOP was not part of the employment contract 'per se', as no agreement was reached as to an ESOP 'because of the inability of the company to have a finalised a plan that met all appropriate legal requirements' (reasons [56]);

(f)    however, there was a 'handshake' agreement that meant that Mr Griffiths would receive an annual salary of $160,000, 5 million tokens and (relevantly) 150,000 share options, by way of a first-year option of 50,000 share options for the price of $1.50, a second-year option of 50,000 share options for the price of $3.00 and a third-year option of 50,000 share options for the price of $4.50 (reasons [58]);

(g)    Mr Griffiths signed a contract of employment on 22 November 2017 (reasons [59]). That contract contained a generic clause to the effect that he may become eligible to participate in Power Ledger's ESOP as approved from time to time;

(h)    on 28 May 2018, Power Ledger gave Mr Griffiths the 'official ESOP' (reasons [73]). It was in a 'totally different' form to any ESOP that had previously been discussed with Mr Griffiths (reasons [73]). It did not provide for any tranches of share options but provided for 14,285 share options with an exercise price per option of $1.50, such that Mr Griffiths would have to pay $21,427.50 to exercise those options (reasons [74]). In contrast, the November 2017 arrangement (as construed by the primary judge) meant that over the course of three years the Applicant would pay a total of nine dollars and would have 150,000 share options (reasons [74]);

(i)    Mr Griffiths refused to sign the ESOP and informed the financial controller of Power Ledger that he believed there had been a mistake (reasons at [76]). There was a further communications between the financial controller and Mr Griffiths (reasons [77]-[79]). Power Ledger did not accept there had been a mistake;

(j)    in around August 2018, the three directors of Power Ledger decided to restructure the company which involved making the roles of CTO and Chief Operating Officer redundant (reasons [101]-[102], [112]);

(k)    Mr Griffiths was offered a new role, which did not include any further allocations of tokens and would include the ESOP from May 2018, rather than the one Mr Griffiths believed had been agreed in November 2017 (reasons [108]); and

(l)    Mr Griffiths rejected the alternative role and his employment was terminated (reasons [111]-[112]).

41    The primary judge found that the actions of Power Ledger were actions that, first, altered the position of Mr Griffiths to his prejudice, and then, secondly, were an effective dismissal of Mr Griffiths and that pursuant to s 342 of the FW Act, Power Ledger had taken adverse action against Mr Griffiths (reasons [113]).

42    The primary judge then considered whether the adverse action was taken as a result of Mr Griffiths' complaints(s), having regard to the presumption in s 361 of the FW Act. Pursuant to s 341 of the FW Act, the ability to make such complaints was a workplace right.

43    Importantly, the primary judge determined that:

[129]    The negotiations as to share offers are quite evident in the email messages in evidence. The draft ESOP plan is also quite telling evidence. [Power Ledger] had been trying for around eight months to get [Mr Griffiths] to commit to a full-time role. It is quite evident that the provision of equity was the stumbling block.

[130]    I am of the view that if [Power Ledger] had not made the offer of share options in terms of the draft ESOP, [Mr Griffiths] would not have agreed to become a full-time employee of [Power Ledger].

[131]    It is also quite clear that the ESOP of 28 May 2018 is completely different from the draft ESOP. Given this history, I cannot accept that [witnesses] Dr Green, Mr Bulich or Mr Martin could ever have any doubt as to why [Mr Griffiths] was refusing to sign the ESOP of 28 May 2018.

[132]    Dr Green was asked as to the differences between the emails that she had sent [Mr Griffiths] in 2017 and the ESOP given to [Mr Griffiths] in May 2018. She testified that she could not see any inconsistency in those agreements. When she was asked how paying nearly $22,000 for just over 14,000 shares was the same as paying nine dollars for 150,000 shares, Dr Green gave an example that, if the shares were worth $100,000, then the employee had just been given $78,000.

[133]    The answer of Dr Green was totally unsatisfactory. Mr Martin attempted to put some doubt over the reliability of the draft ESOP and claimed that he didn't know what that particular document was and that he had not seen any verification of it. However, the document is absolutely consistent with the emails that had been sent by Mr Van Ek to the board and from Dr Green to the [Mr Griffiths].

[134]     I find that the complaint was made, the Board knew of the complaint and that the Board simply neither acknowledged the complaint nor set about trying to rectify the complaint.

44    The primary judge introduced his conclusion by stating:

[148]    I have taken into account these factors:

a)    the role of the [Mr Griffiths] as of 15 June 2018;

b)    the lack of management responsibilities in that organisational chart;

c)    the role that is offered on 6 September 2018 is exactly the same as the role [Mr Griffiths] had been fulfilling since 15 June 2018;

d)    the refusal to sign the 28 May ESOP was probably not known by the Board as at 15 June 2018;

e)    the query as to tokens was not made until 24 July 2018;

f)    that the Board knew that they had, in November 2017, agreed to a totally different plan by which [Mr Griffiths] could attain share options;

g)    the new role has the same salary aspect to remuneration but deletes the ability to attain tokens;

h)    the new role expressly will only allow the attaining of share options through the ESOP;

i)    the position that [Power Ledger] is in as at 6 September 2018 is that [Mr Griffiths] must accept that he will no longer be able to have anywhere near the equity in the company that he expected to have if he wishes to stay employed by [Power Ledger];

j)    the only demonstrable change in circumstance between 15 June 2018 and 6 September 2018 is that [Mr Griffiths] complained about the share options that he had been promised and asserted his right to his tokens.

45    His Honour then concluded that:

[149]    Looking at all the factors, I am not satisfied that [Power Ledger] has met the onus; that is [Power Ledger] has not satisfied me that it did not commit adverse action for the reason that [Mr Griffiths] made complaints as to [Power Ledger] not abiding by the agreement of 22 November 2017.

Merits of proposed appeal grounds

46    The draft notice of appeal contains ten grounds but I was informed by Counsel for Power Ledger that for the purpose of leave, grounds 1 to 4 were of particular relevance, the balance being linked (in large part) to the outcome with respect to those four grounds. Ground 10 is also of particular significance, as explained in the written reply submissions. No submissions were made as to ground 5 and it was said that ground 5 would not affect any outcome.

47    Power Ledger alleges that the primary judge:

(1)    erred in fact in finding that if Power Ledger had not made an offer of share options (being options to take up shares in Power Ledger) in terms of the draft ESOP, Mr Griffiths would not have agreed to become a full time employee of Power Ledger by misconstruing the terms of the draft ESOP, incorrectly holding that the agreement between Mr Griffiths and Power Ledger was that Mr Griffiths could exercise 150,000 options to acquire 150,000 shares in Power Ledger by paying the sum of $9.00;

(2)    insofar as the primary judge had regard to an email of 27 April 2017 from one of the co-founders of Power Ledger, Mr Van Ek, to the other co-founders, the primary judge misconstrued the express reference to 'strike price' in respect of options as being a total price when as a matter of proper construction the term 'strike price' meant a pre-determined price at which the underlying security, namely a share in Power Ledger, could be purchased upon the exercise of each option;

(3)    erred in his construction of the draft ESOP in construing the exercise price (being the price of which option could be exercised) as being an exercise price applicable to the exercise of the entire tranche of options; and

(4)    erred in finding that any employee options were agreed in circumstances where the primary judge should have found that by reason of significant tax concerns, Power Ledger at all material times was waiting for legal advice on the appropriate means by which to implement any employee share option plan and thus did not agree to provide to the respondent any employee options.

48    The proposed tenth ground of appeal links the above grounds to s 361 and the reason for action taken by Power Ledger. Power Ledger contends that the primary judge erred in fact and in law in determining that the appellant had not satisfied the onus of showing that it did not commit adverse action for the reason that Mr Griffiths had made the complaint about Power Ledger not abiding by the alleged 22 November 2017 agreement.

49    Whilst not apparent from the proposed notice of appeal, Power Ledger's reply submissions raised a number of particulars that informed its complaint that the primary judge erred in finding that the onus on Power Ledger 'to prove otherwise' under s 361 had not been met.

50    Relevantly, Power Ledger submits that:

Critical to the Learned Judge's reasoning that [Power Ledger] failed to discharge the onus in section [361] of the FW Act were his findings that:

[1]    Mr Bulich's evidence of his knowledge of [Mr Griffiths'] management experience was 'disingenuous' and [Power Ledger] did not have a 'true management role';

[2]    as of 15 June 2018 there was no readily discernible reason to make the role of CTO redundant;

[3]    Dr Green's evidence in relation to alleged inconsistencies between emails to [Mr Griffiths] in 2017 and the ESOP in May 2018 was 'totally unsatisfactory'; and

[4]    the Board was 'certainly aware' of [Mr Griffiths'] complaint to Mr Sly after 15 June 2018.

(cross-references omitted)

51    It is not necessary to deal with these contentions in great detail. The third, however, is significant. I have extracted above relevant paragraphs from the primary judge's reasons ([132] and [133]) in which criticism is made of Dr Green's evidence, a matter clearly relevant to the ultimate finding as to onus. From the evidence to which I was taken by counsel for Power Ledger, I consider there are reasonable arguments to be made that the primary judge misconstrued or misunderstood Dr Green's evidence, or drew inferences that ought not to have been drawn.

52    For example, it is reasonably arguable that the primary judge did not adequately explain or distinguish between the different expressions used in the evidence, including the exercise price for options, the meaning of the phrase 'tranche price' when used for a bundle of options, the difference between the number of shares and dollars' worth of shares, and the meaning of the term 'strike price'. This can be seen in particular by reference to the extract from the reasons at [132], which for ease of reference I repeat:

When she was asked how paying nearly $22,000 for just over 14,000 shares was the same as paying nine dollars for 150,000 shares, Dr Green gave an example that, if the shares were worth $100,000, then the employee had just been given $78,000.

53    The primary judge described this as 'highly unsatisfactory' evidence.

54    But, with respect, the primary judge's explanation itself is arguably unclear and Dr Green's evidence, properly understood, reveals an explanation that might well be described as reasonable and readily understandable.

55    The relevant evidence came about as a result of a line of questioning of Dr Green by the primary judge. A review of the transcript indicates that Dr Green's evidence was to the following effect:

(a)    the reference to 150,000 shares over three years that might have been anticipated by Mr Griffiths under earlier negotiations was properly a reference to $150,000 worth of shares - how many shares that might be at any given time would depend on their value;

(b)    the April 2018 offer referred to 14,285 share options at a strike price of $1.50, which meant that in theory Mr Griffiths would be obliged to pay around $22,000 for the 14,285 shares if he exercised the options;

(c)    the value of the shares at the time of any exercise of the options in the future could not be known, but if, for example, the value of shares increased so that at the time the option was exercised the 14,285 shares were worth $100,000, then the company had advice that Mr Griffiths would not be obliged to pay the $22,000 strike price up front, and instead he could pay nothing but receive fewer shares, being the number of shares that was worth $78,000 at the time;

(d)    by way of a separate example, Dr Green was asked by the primary judge and confirmed that if, hypothetically, there was an entitlement to $50,000 of shares and they were worth $100, then the person would receive only 500 shares - if the shares were worth 50c, then the person would receive 100,000 shares;

(e)    Dr Green was not sure that receiving 14,285 shares was 'totally different' to receiving $150,000 worth of shares because it would depend upon value; and

(f)    Dr Green said she could say with some certainty that the figure of 14,285 shares would have been selected at the time having regard to a share value (although Dr Green could not recollect that value).

56    It can reasonably be argued that Dr Green's evidence as to option numbers and share value was logical and consistent. As Dr Green observed, future share prices at the time of the communications were unknown. The dollar value of shares at the time the options might be exercised, less any strike price paid, would therefore lie somewhere on a spectrum. Dr Green's focus in her evidence on share value for the purpose of any comparison with dollars' worth of shares or otherwise (confirmed in re-examination) is readily understandable. Accordingly, the basis for the primary judge's description of such evidence as 'highly unsatisfactory' is itself arguably unclear.

57    There was some conflicting evidence as to whether the reference to '150,000' during discussions between Power Ledger and Mr Griffiths in or about July 2017 was to the number of share options or to options for $150,000 worth of shares, confusion that was perhaps caused by the fact that, according to Mr Griffiths' evidence at the hearing, at the relevant time the shares were valued at about $1 per share. Accordingly, there was no real value difference between referring to 150,000 shares or $150,000 worth of shares. However, Dr Green stated in writing by email of 14 July 2017 that what was being discussed was $150,000 worth of shares, and an email response from Mr Griffiths of the same date indicated that prior to that email he may not have understood that was the case, and so accordingly he now had some further questions. In other words, he was aware upon receipt of the email that Power Ledger was referring to $150,000 worth of shares in its discussions with him.

58    The relevance of reciting such evidence is that Dr Green's reference to $150,000 in the evidence that I have summarised above (at [55]) as being $150,000 worth of shares, rather than a number of shares, was supported by at least some of the documentary evidence.

59    Furthermore, when cross-examined by Mr Griffiths (following the questioning by the primary judge), Dr Green explained that 14,285 options may well have had a value equivalent to $50,000, depending upon the relevant time of the assessment of value of shares, having regard to the valuation of the company, a valuation that had increased in 2018/2019. Again, Dr Green's evidence as to assessing the value of the shares in the event options were exercised, and the potential for changes in such value, was consistent and readily understandable.

60    The primary judge clearly rejected aspects of Dr Green's evidence in reaching the conclusion as to onus. It is reasonably open to argue that had his Honour properly described the effect of the evidence to which I have referred, he may not have made the same criticism of Dr Green's evidence and may have accorded it different weight, a matter important to his consideration of the evidence generally, and relevant to assessing whether Power Ledger had met the onus upon it to rebut the presumption under s 361 of the FW Act.

61    As to the fourth particular at [50] above, having regard to the transcript, Dr Green's evidence as to knowledge about any complaint from Mr Griffiths arguably did not rise above a statement that she knew that a query had been raised with Mr Sly. When asked about her knowledge by the primary judge, Dr Green said that:

… so there was never anything raised to me or to the other directors, as far as I'm aware, that, like, you know, put to us that, 'This is different to - you know, in structure or value to what we had discussed or agreed,' or, 'I have a complaint about it.' There was no noise, is, I guess, what I'm saying. There was a query from [Mr Griffiths] to [Tim Sly, the financial controller] and that is all I'm aware of.

62    The primary judge found that the Board 'certainly was aware' about a complaint from Mr Griffiths. Reasonable questions arise as to whether or not there was a sufficient evidentiary basis for such a finding, and the impact of the primary judge's assessment of Dr Green's evidence may well also be relevant in that regard.

63    I do not purport to determine the issues raised by the proposed grounds of appeal, as explained by the reply submissions, but I am satisfied that there should be a grant of leave to appeal. The contentions as to the manner in which the primary judge assessed the issues as to share options, payment of strike rates, value and number are reasonably arguable underlie many of the proposed grounds of appeal and are reasonably arguable, within the relevant principles of a grant of leave to appeal.

64    I should add that I have given careful consideration to Mr Griffith's submission, in opposition to the grant of leave, that the primary judge simply did not accept key aspects of the evidence advanced by Power Ledger at trial, and that the grounds of appeal 'merely reflect a complaint by [Power Ledger] that the primary judge did not agree with their [witness's] evidence'. I accept that Mr Griffiths' central argument, as accepted by the primary judge, was that he made a complaint, and it was because of that complaint that the adverse action proceeded. Counsel for Mr Griffiths submitted that 'even if [the primary judge] got the detail wrong', whether or not Mr Griffith's complaint had substance is not to the point: the point being that a complaint was made.

65    However, the primary judge made findings as to discussions and purported agreement as to the terms of any entitlement to share options and relied on those factual finding in deciding that Power Ledger had not met the onus under s 361. The primary judge construed the draft ESOP, assumed that it 'clarified' the contrasting terms of the 14 July 2017 email from Dr Green, and in coming to those views, criticised the evidence of Dr Green (in particular). Indeed, the primary judge considered such matters under the heading 'Has [Power Ledger] met [its] Onus - Share options'. His Honour then recited his findings, in particular as to Dr Green's evidence, immediately before his finding that 'the Board simply neither acknowledged the complaint nor set about trying to rectify the complaint' (at [133]), and his reference to Mr Griffiths' claim that the Board was 'seeking to strip him of any equity in the company'.

66    Arguably the Board's conduct with respect to any complaint, and whether or not it 'set about trying to rectify it', would be informed by its understanding of its commitments to Mr Griffiths in terms of its ESOP and when any such commitments arose. The primary judge relied upon such conduct in finding that Power Ledger failed to meet its onus. So much is also readily apparent from the primary judge's conclusions at [148] (extracted in full above), where his Honour says, amongst other things:

(a)    '… the Board knew that they had, in November 2017, agreed to a totally different plan by which [Mr Griffiths] could attain share options';

(b)    'the new role expressly will only allow the attaining of share options through the ESOP'; and

(c)    'the position that [Power Ledger] is in as at 6 September 2018 is that [Mr Griffiths] must accept that he will no longer be able to have anywhere near the equity in the company that he expected to have if he wishes to stay employed by [Power Ledger].

67    The primary judge then concluded, in the next paragraph, that 'looking at all of the factors' he was not satisfied that the relevant onus was met by Power Ledger. It is not possible to separate reasonably his Honour's findings from his conclusion on this point: those findings clearly inform the conclusion and so are relevant to assessing whether and how any complaint was received, understood and acted upon (if at all) by Power Ledger. Such matters inform the question of onus.

68    I have also had regard to other matters raised by Mr Griffiths in opposition to the grant of leave. In particular, he complains of the fragmentation and inefficiencies that might occur by an appeal proceeding prior to any penalty hearing, with the potential for a further appeal or repetition of appeal points. I acknowledge that inefficiencies may result from a bifurcation of the appellate process. However, if Power Ledger is granted leave and succeeds in an appeal, then depending on what follows, there may be no need for a penalty hearing. Undoubtedly, this would result in a saving of time and money; however, were Power Ledger to be unsuccessful, then not only would there be a penalty hearing but there might well be a further appeal in relation to any penalties.

69    I must weigh that risk against the prejudice to Power Ledger if leave is denied, and having formed the view that leave to appeal from the declaratory order is required, then that prejudice is significant, and to my mind outweighs the inefficiencies that might otherwise result.

Orders

70    Accordingly, I find that there should be an extension of time for filing an application for leave to appeal, and that leave to appeal should be granted. The grant of leave is premised on the grounds of any appeal being those contained in grounds 1 to 10 inclusive (apart from ground 5) of the amended proposed notice of appeal filed 11 January 2021, as particularised (with respect to ground 10) in the written reply submissions filed on 8 April 2021.

Associate:

Dated:    9 June 2021