Federal Court of Australia

Muthu v Radeshar Pty Ltd [2022] FCA 1157

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be allowed.

2.    The judgment and orders of the Federal Circuit Court of Australia of 15 September 2020 be set aside.

3.    The proceeding be remitted to the Federal Circuit and Family Court of Australia – Division 2 for a new trial before a different judge.

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

REASONS FOR JUDGMENT

KATZMANN J:

1    In an action commenced in the Federal Circuit Court of Australia, Christopher Siluvai Muthu sued Radeshar Pty Ltd for damages, amongst other things, for unpaid wages. Radeshar not only denied it employed Mr Muthu but it also denied having ever entered into a commercial relationship with him. The primary judge dismissed the action and ordered Mr Muthu to pay Radeshar’s costs. This is an appeal from that judgment.

2    Radeshar was duly served with the notice of appeal and appointed a lawyer to act for it but on 15 July 2022 the lawyer filed a notice of ceasing to act. Thereafter, Radeshar took no part in the proceeding until the day before the hearing when Raman Pillay, one of its directors, lodged submissions with the Court. When he appeared in Court the next day he was granted leave to appear on behalf of the company.

The appellant’s case in the court below

3    Mr Muthu’s case was poorly pleaded. It was also badly run. And the evidence was messy. The hearing was conducted by video conference during the COVID-19 lockdown in 2020 and the transcript is replete with elipses, indicating that the transcriber was unable to catch everything that was said by counsel and witnesses. Large parts of it are unintelligible.

4    In his statement of claim Mr Muthu pleaded that he was employed by Radeshar as a result of an oral agreement he struck with Mr Pillay and was not paid the agreed salary. He also pleaded that his employment was covered by one or more unspecified awards.

5    In an amended statement of claim Mr Muthu alleged that he commenced employment with Radeshar as a “training and documentation coordinator” on or about 13 November 2011. He alleged that they agreed he would be paid an annual starting salary of $65,000, payable fortnightly, and rising to $80,000 in the second year; that free accommodation would be provided for him in the vicinity of the company’s office in Quakers Hill; and that he would work six days a week between 8 am and 6 pm. He also pleaded that it was a term of the agreement that “such tobacco etc as the applicant should need for his personal use” would be provided. The agreement was alleged to have been struck in the presence of an unnamed witness. Mr Muthu claimed that, despite the terms of the agreement, Radeshar only paid him between $100 and $200 a week for about two years and, although he asked Mr Pillay for his unpaid wages each fortnight and was assured he would be paid, he received no more. Mr Muthu also claimed that on one such occasion in October 2013, Mr Pillay told him to take a short break and go to India, that he would give him a return ticket and send him all his money, but Mr Pillay did not provide the money for a return ticket and he was left stranded in India.

6    Mr Muthu claimed $143,215 in damages plus interest. The sum claimed was presumably based on the difference between the total amount Mr Pillay allegedly agreed to pay over the period in which he was allegedly employed ($150,000) and the total amount he received from Radeshar ($6,785).

7    The allegations in the pleadings were largely supported by three affidavits sworn or affirmed by Mr Muthu, although there were some inconsistencies in his evidence.

8    In his affidavit of 26 July 2017 Mr Muthu deposed that he was hired by Mr Pillay to work in his office at 5/15 Railway Road Quakers Hill as a training and documentation coordinator. He said his duties included concluding a national franchising agreement for UCMAS (an abacus based mental arithmetic system for children) and completing immigration visa applications, occasionally liaising with the company’s migration agent, Vasu Rathinam. He said he had daily meetings with Mr Pillay, usually lasting two hours, and daily email exchanges, and claimed to have retrieved about 300 of them.

9    Mr Muthu stated that Radeshar participated in a federally funded National Traineeship Scheme and that Radeshar enrolled him in that scheme as part of his employment. Documents relating to the scheme were annexed to his affidavit of 17 July 2020.

10    Mr Muthu also deposed that Radeshar agreed to pay him $65,000 per year as salary for his work, omitting any mention of an agreement to increase the amount in the second year, but added that Radeshar had also agreed to pay him 10% of the net profit raised from UCMAS. He said he was paid a total amount of $6,750 (equating to an average of about $100 per week) from 13 November 2011 until he left on 16 October 2013. He said that each time he was underpaid he asked Mr Pillay for a pay slip and each time he was told he would do it “this week”. He said that in August 2013 he told Mr Pillay that he would like to buy a car. He stated that Mr Pillay agreed to organise one and called the Pennant Hills Toyota dealership after which a salesman “came with the car” and Mr Pillay gave him “a letter of my employment”. He said that Mr Pillay told him not to worry about his salary, said that he was keeping the money safe, and promised to “fix” the group certificate and superannuation details “soon”. Mr Muthu explained that he left the job because he was “upset by the non-payment of salary”.

11    In his 20 November 2017 affidavit Mr Muthu deposed that he was employed by Radeshar as an “operations manager” which entailed, amongst other things, preparing documents relating to sponsorship of temporary and permanent employees on subclass 457 visas and “ENS” (Employer Nomination Scheme). ENS is a scheme designed for Australian employers wanting to nominate one or more overseas workers for permanent residence.

12    The omission from the July 2017 affidavit of the salary increase was rectified in this affidavit and the affidavit also contained additional details about the conversation in which the employment agreement was allegedly struck. Mr Muthu deposed that “around” 10 October 2011 Mr Pillay “gave him an appointment” to meet him in his office at 5/15 Railway Road, Quakers Hill in relation to the sponsorship of a person, whom he named. He said that he was living in Campsie at the time, doing freelance work as a student advisor, liaising with employers and finding workplace experience for students who had completed a certificate III in commercial cookery and hospitality. He deposed that Mr Pillay told him that he could “stay free” at his property in Lovegrove Drive Quakers Hill “as I need you to be available 24/7”. Mr Muthu said he asked Mr Pillay how much he would be paid, that Mr Pillay responded by asking him much his last salary was, and that when Mr Muthu told him it was $65,000 Mr Pillay agreed to pay him $65,000 for the first year. Mr Muthu said that Mr Pillay continued:

Listen, my sister …. is an UCMAS trained teacher and I have to do something for her… If you do a good job and get the UCMAS National Franchise then I will raise your salary to $85,000 for the second year. I will also offer you 10% share in the UCMAS National Franchise project. I know you are a spendthrift and you love to drink and smoke. Don’t worry about money, I will pay your tax and superannuation and I will keep your net salary with me safe and help you to buy a house, if you work with me for few years.

13    At the time the proceeding commenced, Mr Muthu was unrepresented. He was the author of the originating application and the statement of claim. By the time of the trial, however, he had legal representation.

14    In written submissions prepared by his then counsel, Mr Muthu contended that an employment agreement could be purely oral, citing Mathieson v South End Mixed Business [2013] FCCA 1749 (appeal dismissed: Neild v Mathieson [2014] FCAFC 74 per Tracey, Bromberg and Mortimer JJ). In the alternative, he contended that he was entitled to be paid on a quantum meruit basis, drawing attention to the remarks in Mathieson at [177]-[178] in which Judge Burchardt recognised that a claim for quantum meruit may be contractual or restitutionary in character and held that on the facts of that case there was a contract “to the effect that the applicant would receive reward (albeit never very properly or clearly defined) for the work that she did and, in the alternative, that there was no contract but it was “plainly unjust to allow the respondents to have had the benefit of the applicant’s labour without reward”.

15    In its defence, Radeshar denied that it had ever employed Mr Muthu and that any contract had ever been made with him. It admitted that Mr Pillay purchased a ticket for Mr Muthu to travel to India, but claimed that he did so in a personal capacity, and denied that Mr Pillay had any involvement in Mr Muthu’s trip to India as alleged.

16    In his affidavit Mr Pillay denied agreeing to pay Mr Muthu any money at all on behalf of Radeshar. He also denied engaging Mr Muthu to do any work for the company. He deposed that he met Mr Muthu at a function in about 1996, when Mr Muthu was working as a registered migration agent, and then again in about late 2011 or early 2012. Mr Pillay said that on this latter occasion Mr Muthu came to see him, told him he did not have a job because he was no longer allowed to work as a migration agent, and asked him to help him out, including by putting “a roof over his head” as he was unable to afford to pay rent. Mr Pillay said he took pity on Mr Muthu, allowed him to stay in a granny flat located on the property in Quakers Hill which he owned with his wife, and later in the main house. He further alleged that Mr Muthu was receiving unemployment benefits and collecting rent from other tenants but not paying rent himself in accordance with his lease. He alleged that, although Mr Muthu was not allowed to work as a migration agent, he was providing advice and assistance to people in connection with their visa applications and filing documents with the Department of Immigration. He claimed that those people engaged Mr Muthu directly and paid him individually. He said that one day Mr Muthu asked for his help to “find a place to sit” and that, since he had a number of “vacant seats” in an office he occupied in Railway Road Quakers Hill, he permitted Mr Muthu to use one of those seats.

17    In cross-examination Mr Pillay admitted assisting Mr Muthu to purchase a second-hand car by contacting a person at the Toyota dealership and paying “some money for him as an advance”. Notably the loan application recorded Mr Muthu’s occupation as a manager for Radeshar for 11 months and that for a period of four years and one month he had previously worked at the Ascot Motor Inn, which the primary judge described as “an establishment owned by [Radeshar]”.

18    Payroll summaries for Radeshar were annexed to Mr Pillay’s affidavit. They covered the period from 1 July 2010 to 31 July 2013. Mr Muthu’s name did not appear on any of them. Also annexed to Mr Pillay’s affidavit was a residential tenancy agreement between Mr and Mrs Pillay as the landlords and Mr Muthu as the tenant. The period of the agreement was for 12 months from 1 January 2013 in which rent was fixed at $520 per week. But the agreement is not signed by any of the parties. An executed copy of a residential tenancy agreement with respect to the same property for the same period was lodged with the court by Mr Muthu on 2 November 2018. It revealed that Mr Muthu was one of six tenants.

19    The only witnesses called at the trial were Mr Muthu and Mr Pillay. Annexed to Mr Muthu’s affidavit of 17 July 2020 were several statutory declarations which his counsel tendered but the primary judge rejected the tender.

The reasons of the primary judge

20    The primary judge began his reasons with a criticism of the legal representatives of both parties. In what appears to be quite an understatement, his Honour observed that the preparation of the case for hearing was “less than satisfactory”. Amongst other things, he referred to the fact that two working days before the hearing was due to start Radeshar filed an interlocutory application for an order to “set aside” Mr Muthu’s statement of claim and, in the alternative, summarily dismissing the proceedings. The basis of the application, set out in the affidavit in support, was that the amended statement of claim did not disclose a cause of action within the court’s jurisdiction and pleaded only “a pure breach of contract without any associated or accrued federal jurisdiction” such that the matter was outside federal jurisdiction. Rather than dealing with the application first, however, as might reasonably be expected, his Honour resolved to determine the issues raised by the interlocutory application “as part of the hearing of the substantive matter”.

21    His Honour proceeded to summarise the evidence and submissions but barely engaged with the evidence and did not grasp the full import of the submissions. It is fair to say, however, that the assistance he received from counsel left a lot to be desired.

22    The primary judge considered both Mr Muthu and Mr Pillay to be “wholly unimpressive witnesesses” (at [37]). He described Mr Muthu as “evasive” under cross-examination and unresponsive to many questions (at [13]). He said it was clear from his demeanour that he held Mr Pillay in contempt. His Honour said that Mr Pillay was similarly unresponsive to many questions in cross-examination and his explanations as to why Mr Muthu would have been included in many emails and documents as part of Radeshar’s business affairs “strained credibility”. Indeed, his Honour rejected the entire underlying premise for Radeshar’s case. He said (at [38]–[39]):

Mr Pillay’s suggestion that as a successful businessman, he took pity on [Mr Muthu] and provided him with a roof over his head and a place for him to conduct his business, without any gain on his part, is wholly unbelievable. On Mr Pillay’s own admission, he was aware that the applicant was working as an unregistered Migration Agent, providing assistance and advice to employees of his company in relation to their work visas. The Court does not accept that there was not some sort of “arrangement” between Mr Pillay and the applicant that was considered to be to their mutual benefit.

The attitude of Mr Pillay towards [Mr Muthu] can be best summed up, by his admission, that he paid for a return airline ticket for [Mr Muthu] to India and then cancelled the return portion of the ticket once [Mr Muthu] was in India so as to be rid of him. It does him no credit whatsoever and indicates a person who will take actions that suits his own needs, to the detriment of others. This action left the applicant stranded in India for some time. The Court does not accept that Mr Pillay allowed [Mr Muthu] to reside in his premises at Quakers Hill while [Mr Muthu] collected rent from other tenants, whilst not paying any rent to Mr Pillay. The Court does not accept that Mr Pillay allowed [Mr Muthu] to work from his premises without there being some sort of return to Mr Pillay.

(Emphasis added.)

23    His Honour confirmed (at [40]) that he had found that there was an “arrangement” between the parties but did not accept that it was an employment relationship because, as he put it, it was simply Mr Muthu’s word against Mr Pillay’s. As both were unreliable witnesses, his Honour said that “the Court is simply unable to prefer the evidence of one over the other”. He said that Mr Muthu had “no documentary evidence which can of itself, sustain that there was an employment contract between [him] and [Radeshar]”. At the same time he acknowledged that there was “a significant amount of documentation which would support a finding that [Mr Muthu] was involved and assisted by (sic) [Radeshar’s] business”.

24    At this point the primary judge turned to the question of jurisdiction. He said that he agreed with Radeshar’s submissions that there was no material before the Court that would indicate that, even if there were “some sort of employment relationship”, the relationship was covered by an award and “so engaged the provisions of the [FW Act] and thus, engage the jurisdiction of the Court” (at [41]). His Honour added (also at [41]) that, “[i]f any relationship existed, it was more in the nature of a contractual relationship, rather than an employment relationship”.

25    Finally, his Honour considered that the decision in Mathieson was distinguishable on the facts (at [42]) and held that, “[a]s there is no employment relationship”, the quantum meruit principles do not apply (at [44]).

The appeal

26    Mr Muthu commenced the appeal himself. After the matter was docketed, I referred him for legal assistance in accordance with r 41.2 of the Federal Court Rules 2011 (Cth). Mr Moorhouse of counsel kindly accepted the referral. Mr Moorhouse prepared an amended notice of appeal and written submissions. He also appeared for Mr Muthu at the hearing of the appeal. He did an admirable job.

27    By his amended notice of appeal, Mr Muthu alleges that the primary judge erred in the following respects:

(1)    in concluding that he was not an employee of Radeshar (ground 1);

(2)    in holding that the Court’s jurisdiction was “not engaged” by his claim (ground 2);

(3)    by rejecting the tender of the statutory declaration of Hiranie Kulatilake (ground 3);

(4)    by dismissing the quantum meruit claim solely on the basis that there was no employment relationship (ground 4); and

(5)    by ordering Mr Muthu to pay Radeshar’s costs (ground 5).

28    In his written submissions Mr Pillay addressed grounds 1, 3 and 4. Neither in his written submissions nor oral argument, however, did he engage with the submissions made on Mr Muthu’s behalf.

29    Mr Muthu submitted that the Court should draw a Jones v Dunkel inference because the appellant deposed that the oral agreement was made in the presence of a witness but that witness was never called to give evidence. He further submitted that the emails annexed to Mr Muthu’s affidavit were sent by him in his personal capacity and not on behalf of the respondent. He claimed that the documents refer to Mr Muthu as being an employee of Raman Pillay The Trustee for the Pillay Family Trust and not Radeshar and contends that there is no evidence of control over Mr Muthu’s activities. He said that, under cross-examination, when questioned about the employment relationship, Mr Muthu agreed that Mr Pillay had never employed him, which potentially contradicted his entire case. In relation to grounds 3 and 4, Mr Pillay submitted that the primary judge was correct to find that the statutory declaration was not in proper form and not relevant and a quantum meriut claim could not be successful because there was no employment relationship and the facts of Mathieson could be distinguished.

30    In oral argument Mr Pillay submitted that the primary judge was correct to dismiss the application, insisted that he never employed Mr Muthu, and made a number of offensive remarks about him.

31    For the reasons that follow, grounds 1, 2, 4 and 5 should be upheld and the appeal allowed.

Did the court below have jurisdiction (ground 2)?

32    It is convenient to begin with ground 2. Indeed, this is where the primary judge should have begun. That is because the “first duty of every judicial officer is to satisfy himself that he has jurisdiction”: Federated Engine Drivers’ and Firemen’s Association of Australasia v The Broken Hill Proprietary Company Limited (1911) 12 CLR 398 at 415 (Griffith CJ).

33    The primary judge summarised Radeshar’s arguments at [20]–[36] of his reasons. As he put it, Radeshar argued that the court had no jurisdiction to hear the matter because no contract of employment existed and no rights or duties were established under the Fair Work Act 2009 (Cth) (FW Act) such as to “ground” jurisdiction in the Federal Circuit Court. His Honour went on to observe that Radeshar also argued that, even if there was a contract, there was no evidence about its precise terms and conditions, by reference to award conditions, that would bring it under the FW Act and attract federal jurisdiction.

34    It is apparent from his remarks at [41] that the primary judge considered the court lacked jurisdiction because of the absence of evidence to indicate that, if there were an employment relationship, the relationship was covered by an award for only then would the court’s jurisdiction be attracted. With respect, his Honour’s approach was wrong. The rejection of his claim to award coverage did not mean that the court had no jurisdiction to hear and determine his case.

35    Section 10(1) of the Federal Circuit Court of Australia Act 1999 (Cth) (FCCA Act) provides that the Federal Circuit Court has such original jurisdiction as is vested in it by laws made by the Parliament, either by express provision or by the application of s 15C of the Acts Interpretation Act 1901 (Cth) to a provision authorising the institution of a civil proceeding in that court in relation to a matter. Section 566 of the FW Act expressly confers jurisdiction on the Federal Circuit Court “in relation to any civil matter arising under [that] Act”. Section 15C of the Acts Interpretation Act relevantly provides that:

Where a provision of an Act, whether expressly or by implication, authorises a civil or criminal proceeding to be instituted in a particular court in relation to a matter:

(a)    that provision shall be deemed to vest that court with jurisdiction in that matter; [and]

(b)    the jurisdiction so vested is not limited by any limits to which any other jurisdiction of the court may be subject[.]

36    A matter arises under a law of the Parliament “if the right or duty in question in the matter owes its existence to federal law or depends upon federal law for its enforcement, whether or not the determination of the controversy involves the interpretation (or validity) of the law” (R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 at 154 per Latham CJ). Whether or not a matter arises under a federal law does not depend upon the form of relief sought: LNC Industries Ltd v BMW (Australia) Ltd (1983) 151 CLR 575 at 581 (Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ). As Lee J observed in Mulley v Hayes (2021) 286 FCR 360 at [16], this means that federal jurisdiction is attracted in any case in which a right or duty based on a Commonwealth statute arises even if it has not been pleaded or a federal issue need not be decided.

37    For these reasons, Radeshar’s arguments were largely misconceived and the primary judge’s decision to accept them ill-advised.

38    For the following reasons federal jurisdiction was engaged in the present case.

39    First, Mr Muthu invoked the jurisdiction of the court in his originating application identifying the source of jurisdiction as the Workplace Relations Act 1996 (Cth) and the FW Act.

40    Second, while there was no evidence that he was covered by an award and no allegation that a term of an award had been breached, the primary judge appears to have accepted that Mr Muthu was making a claim to be covered by an award. Badly pleaded though it was, that claim was made in [2] of the amended statement of claim:

The respondent and its employees are at all material times covered by the State/Federal Award and minimum salary level as prescribed by the Department of Immigration and Citizenship but now known as Department of Immigration and Border Protection.

41    In her written submissions Mr Muthu’s then counsel rather unhelpfully submitted that:

There is not simply one industrial award which encompasses the work Mr Muthu did. It meets at least three or four awards within events/hospitality/ catering, driving /delivery, training/coordination and operations / office management.

42    Notwithstanding the way the allegation was pleaded, following the passage of the Industrial Relations (Commonwealth Powers) Act 2009 (NSW) and the award modernisation process any such award could only have been a federal award. The duty to comply with the terms of an award arises by force of statute (Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 419 (per Brennan CJ, Dawson and Toohey JJ), in this case the FW Act, s 45 of which provides that a person must not contravene a term of a modern award. Award rates are imported into a contract of employment “as a statutory right imposing a statutory obligation to pay them”: Byrne at 420 (Brennan CJ, Dawson and Toohey JJ). In these circumstances, the legal relations between the parties are determined in part by contract and in part by the award: ibid.

43    Third and in any event, Mr Muthu pleaded that he was employed by Radeshar and that Radeshar failed to pay him the amounts due to him in full in relation to the work he performed. That was not merely a claim in contract. It also invoked a right or duty that owed its existence to federal law.

44    Section 323 of the FW Act provides that an employer must pay an employee amounts payable to the employee in relation to the performance of work in full (except to the extent that s 324 allows for certain deductions to be made), in money, and at least monthly. “Employer” in this context is a reference to a “national system employer” and “employee” a “national system employee”: FW Act, s 322. A constitutional corporation which employs or usually employs an individual falls within the definition of “national system employer” (FW Act, s 14) and a “national system employee” is an individual who is employed or usually employed by a national system employer except on a vocational placement (FW Act, s 13). Radeshar is a constitutional corporation and a national system employer. A constitutional corporation means a corporation to which s 51(xx) of the Constitution applies: FW Act, s 12. Section 51(xx) of the Constitution applies to both foreign corporations and trading or financial corporations formed within the limits of the Commonwealth. Moreover, ss 30B and 30C extend the meaning of national system employer and employee respectively to cover employees and employers in referring States and NSW is a referring State: see FW Act, s 30B and the Industrial Relations (Commonwealth Powers) Act.

45    Mr Muthu did not plead that Radeshar contravened s 323. Indeed, neither in his originating application nor his amended statement of claim did he apply for any relief under the FW Act. But he did claim that the Court had jurisdiction under the FW Act. And he did plead that Radeshar was a corporation, that he was employed by Radeshar, that Radeshar agreed to pay him a salary payable fortnightly and that it failed to pay that salary. That was enough to attract federal jurisdiction. In this way he was in fact invoking a right or duty that owed its existence to federal law. It is immaterial for this purpose that Mr Muthu did not refer to s 323.

46    As Barwick CJ observed in Phillip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 at 473, cited with approval by the plurality in Agar v Hyde (2000) 201 CLR 552 at [64]:

[In] fact pleading as it was introduced in the judicature system, there is no necessity to assert or identify a legal category of action or suit which the facts asserted may illustrate, involve or demonstrate and on which the particular relief claimed is based or to which it is relevant.

47    Fourth, it is also immaterial that Mr Muthu did not satisfy the primary judge that he was employed by Radeshar, that he did not make out a case that a federal award had been breached, or that his Honour did not consider that the evidence supported his case.

48    A “non-colourable assertion of a federal law” is generally sufficient to attract federal jurisdiction and once a matter attracts federal jurisdiction, it remains in federal jurisdiction irrespective of the manner in which the federal issue or issues are resolved: Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at [7] (Gleeson CJ, Gaudron and Gummow JJ); Rana v Google Inc (2017) 254 FCR 1 at [21] (Allsop CJ, Besanko J and White J). That is so even if the only federal aspect of a matter has been struck out: Unilan Holdings Pty Ltd v Kerin (1993) 44 FCR 481 at 481 (Neaves, Ryan and Gummow JJ). Similarly, in Moorgate Tobacco Co Ltd v Phillip Morris Ltd (1980) 145 CLR 457, where a matter arising under the Trade Marks Act 1955 (Cth) had been pleaded but was not pressed and all other matters were non-federal, the case was considered to be wholly within federal jurisdiction. In other words, “once federal, only and ever federal”: Allsop J, “Federal Jurisdiction and the Jurisdiction of the Federal Court of Australia in 2002” (2002) 23(1) Aust Bar Rev 29 at 41.

49    There is no reason to think that the assertion of federal jurisdiction in the present case was colourable. As I observed in Massarani v Kriz [2022] FCA 80 at [51]:

In this context, a colourable assertion is one which is not made in good faith (Hopper v Egg and Egg Pulp Marketing Board (Vict) (1939) 61 CLR 665 at 673 per Latham CJ) or for the improper purpose of “fabricating” jurisdiction (Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212 (FC) at 219, citing Lane PH, Lane’s Commentary on the Australian Constitution (Law Book Co, 1986), pp 367–368 and the authorities mentioned there). “Improper purpose or lack of bona fides carries with it the notion of an abuse of process”: Allsop J, “Federal Jurisdiction and the Jurisdiction of the Federal Court of Australia in 2002” (2002) 23 Aust Bar Rev 29 at 45.

50    The mere fact that a claim is untenable or misconceived does not mean that it is colourable: see Leeming M, Authority to Decide: The Law of Jurisdiction in Australia (Federation Press, 2012) at 40–1 and the authorities referred to there.

51    Ground 2 must therefore be upheld.

Did the primary judge err by rejecting the tender of Mr Kulatilake’s statutory declaration (ground 3)?

52    Mr Kulatilake was one of the people who had provided statutory declarations which were annexed to Mr Muthu’s third affidavit. Encouraged by the primary judge, counsel for Radeshar objected to this evidence. The primary judge did not formally rule on the matter but it is reasonable to infer from his remarks at the hearing that he considered the statutory declarations to be inadmissible because the evidence was not “in proper form”, that is to say contained in affidavits. He certainly did not have regard to their contents.

53    Having regard to Mr Pillay’s acknowledgment that Mr Muthu worked at the office at 5/15 Railway Road, Quakers Hill, four of the statutory declarations contained no probative evidence. That is why the appeal ground is limited to the rejection of the tender of the statutory declaration from Mr Kulatilake, which went further than the others.

54    In his statutory declaration, made in the presence of a justice of the peace on 15 July 2020, Mr Kulatilake said he had known Mr Muthu for 20 years as an education and migration consultant. Mr Kulatilake declared that between 2011 and 2013 he attended a function for “UCMAS” representing the Sri Lankan Consulate General and met Mr Muthu and Mr Pillay there. He stated that Mr Pillay was “the Chairman of the said establishment” and he introduced his staff to him. In particular, he introduced Mr Muthu as “the coordinator of the Company”. About a year later Mr Kulatilake said he visited “their office at Quakers Hill” and met Mr Muthu who was working there.

55    Mr Moorhouse submitted that this evidence was capable of amounting to an admission by Mr Pillay that Mr Muthu was one of “his staff”, working as a coordinator, and was capable of contradicting Mr Pillay’s evidence. He argued that the Federal Circuit Court was required to proceed without undue formality (FCCA Act, s 42), could receive evidence “orally or by affidavit” (FCCA Act, s 64), and was obliged to act with expedition and operate as informally as possible (FCCA Act, s 3). He also pointed to the Court’s power to direct that particular testimony be given either orally or by affidavit (FCCA Act, s 64(2) and to allow testimony to be given by video or audio link (FCCA Act, s 66). In view of these matters, Mr Moorhouse submitted that the primary judge erred in rejecting the statutory declarations on the ground that they were not affidavits and therefore not “in proper form”. He argued that it was open to the primary judge, “and consistent with justice”, to have allowed the declarants to adopt their declarations orally under oath.

56    It is true that it was open to the primary judge to admit Mr Kulatilake’s statutory declaration into evidence and/or to permit him to give oral evidence. Mr Muthu’s then counsel had informed the court that each of the declarants was available for cross-examination, albeit by telephone. There was no conceivable prejudice to Mr Pillay if Mr Muthu were permitted to call oral evidence from Mr Kulatilake.

57    But the question is whether the primary judge erred by not taking this course. Two observations should be made here. The first is that a court order had been made for all the evidence to be given by affidavit. The second is that no application was made on behalf of Mr Muthu to vary the orders or to receive the evidence in this way. In these circumstances it is difficult to see how the primary judge can be said to have erred by rejecting Mr Kulatilake’s statutory declaration. I am not persuaded that he did.

Did the primary judge err in concluding that Mr Muthu was not an employee of Radeshar (ground 1)?

58    Mr Moorhouse submitted that there were two principal errors associated with this central finding.

59    The first was the finding that there was “an arrangement and a contractual relationship existed between the parties under which [Mr Muthu] undertook certain activities for Radeshar” was inconsistent with his Honour’s reasoning that he was unable to prefer the evidence of one witness over the other. Mr Moorhouse submitted that the finding that there was “an arrangement and a contractual relationship” cannot stand with Mr Pillay’s evidence and so undermines his Honour’s reasoning. That was because this finding involved rejecting Mr Pillay’s evidence and accepting “at least in part” the evidence of Mr Muthu.

60    The second principal error was said to be this. Having found that there was “an arrangement and a contractual relationship” pursuant to which Mr Muthu undertook some work, the primary judge was required to determine whether the parties had an employment relationship or contract or some other kind of relationship in which work was performed such as a relationship of principal and contractor, that is to say a contract for services rather than a contract of service. When addressing the nature of the “arrangement” or contract, his Honour did not refer to the legal test or to a single authority on the subject and did not consider or make any finding as to Radeshar’s right to control Mr Muthu’s work, which, Mr Moorhouse submitted, is “a hallmark of an employment relationship”. Mr Moorhouse also submitted that the primary judge erred by failing to have regard to admissions made by Mr Pillay during the time Mr Muthu claimed to be working for Radeshar that he was one of his “staff” and admissions allegedly made to Mr Muthu, recorded in his affidavit evidence, concerning his salary.

61    It may be doubted that his Honour found that there was a contractual relationship. It is questionable whether the statement at the end of [41] of the reasons (that “if any relationship existed, it was more in the nature of a contractual relationship …”) rises that high. Nevetheless, there is merit in the submissions. In my opinion, the fact-finding in this case seriously miscarried.

62    First, in order to determine whether Mr Muthu was an employee of Radeshar, it was incumbent on the primary judge to consider whether there was a contract between Mr Muthu and Radeshar and, if so, to decide whether it was an employment contract. It is trite to observe that in order to decide whether there was a contract his Honour had to ask himself whether the parties intended to enter into legal relations, whether there had been an offer by one party accepted by the other, and, if so, whether there was valuable consideration. He then had to identify the terms of the contract. As McHugh and Gummow JJ explained in Byrne at 442, in the case of an oral contract or a contract which is partly oral and partly in writing:

[T]he first task is to consider the evidence and find the relevant express terms. Some terms may be inferred from the evidence of a course of dealing between the parties. It may be apparent that the parties have not spelled out all the terms of their contract, but have left some or most of them to be inferred or implied. Some terms may be implied by established custom or usage … Other terms may satisfy the criterion of being so obvious that they go without saying …

63    The primary judge did not even embark on this exercise.

64    In determining whether the relationship between the parties was one of employee and employer, a significant, if not critical, consideration was whether the putative employer, Radeshar, had a right to control how, where and when Mr Muthu worked and whether there was evidence of the exercise of such a right: Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1; 96 ALJR 89, 312 IR 1 at [73]–[78], [89] (Kiefel CJ, Keane and Edelman JJ); at [113]–[122] (Gageler and Gleeson JJ).

65    Yet the primary judge did not explore this question at all.

66    Second, this was not simply a case of one man’s word against another’s. While Mr Muthu may not have had documentary evidence which, of itself, could “sustain” the existence of an employment contract between him and Radeshar, he did produce documentary evidence which supported his account and which the primary judge failed to address. Where the contemporaneous documents were consistent with his case and inconsistent with Mr Pillay’s defence, the primary judge neglected to resolve the inconsistencies.

67    There are many examples but the following will suffice.

68    Mr Muthu’s evidence was that Mr Pillay had put forward his name to the Department of Immigration and Citizenship as a trainee in FLM (frontline management). In his July 2020 affidvit he said that Mr Pillay had asked Shady Tannous, the Business Development Mangager of REACH for Training, a vocational training organisation, for a list of enrolled employees undergoing training and the document provided in response to the request listed Mr Muthu as an employee of the Pillay Family Trust. Mr Pillay admitted in cross-examination that Mr Tannous trained a number of his employees. Annexed to Mr Muthu’s November 2017 affidavit was a certificate from REACH signed by its Chief Executive Officer, dated 28 June 2013, showing that Mr Muthu had fulfilled the requirements for a Certificate IV in Frontline Management.

69    Annexed to Mr Muthu’s July 2020 affidavit was an email from Mr Tannous addressed to Mr Muthu and Mr Pillay, asking them to look at the attached eligibility forms for their records and advise whether they were “happy with all the details”. The email attached “Traineeship Eligibility Form[s]” for some of Mr Pillay’s businesses. One eligibility form provided a list of employees of a legal entity described as “Raman Pillay The Trustee for Pillay Family Trust” trading as Windsor Motel. The ABN number recorded on the document was Radeshar’s. One of the listed employees was Mr Muthu. His job title was recorded as “Operations Manager” and he was noted to be undertaking a Certificate IV in Frontline Management, consistent with his evidence in the court below.

70    It was common ground that at all material times Mr Pillay was a director of Radeshar. The evidence established that Radeshar was the trustee of the Pillay Family Trust.

71    The evidence also included an email from VETASSESS (Vocational Eduation and Training Assessment) to Mr Pillay about the company’s application for a Trade Skills Assessment. Mr Pillay forwarded the email to Mr Muthu and asked “what is happening with this (sic) people…pls call me today and let me know”. As Mr Moorhouse submitted, this evidence supported Mr Muthu’s contention that he was responsible for organising training programs, that he reported to Mr Pillay, and was some evidence that Mr Pillay exercised control over his work.

72    Also annexed to the July 2020 affidavit was a judgment in an action (Radeshar’s action), published on 22 July 2011, brought by Radeshar (as trustee for the Pillay Family Trust) against the Minister for Immigration and Citizenship: Radeshar Pty Ltd v Minister for Immigration [2011] FMCA 560 (the 2011 judgment). Radeshar’s action was an application for review of a decision of the Minister to refuse to grant subclass 457 visas to four of Radeshar’s employees whom it had sponsored. The contents of the judgment, which was admitted into evidence without any limitation as to the use to which it could be put, provides some support for other aspects of Mr Muthu’s case.

73    In the 2011 judgment, Radeshar was described as “an umbrella” for eight hospitality businesses including the Windsor Motel and the Ascot Motor Inn. Amongst other things, the court noted that Radeshar “wanted to promote an excellent training record” and, in order to obtain some specialised skills, it acted as a business sponsor for overseas nationals holding subclass 457 visas (at [7]). The judgment also reveals that Radeshar was found to have been in breach of the minimum salary regulations contained in the Minimum Salary Levels and Occupations of a Temporary Business Long-Stay Notice 2008 (Cth) and was barred from being a sponsor for 18 months.

74    A copy of a letter dated 17 July 2013 from Wayne Price, the independent accountant and tax agent for Mr and Mrs Pillay and their family business, described the Pillay family business as Radeshar Pty Ltd ATF the Trustee for Pillay Family Trust – ABN 75 808 185 297. That letter shows that Radeshar had a number of employees, one of whom was an overseas worker on a subclass 457 visa.

75    An earlier email, sent to Mr Pillay by Mr Price on 14 March 2013, which attached the 2012 accounts and tax returns for two Pillay entities, advised that:

The accounts and tax return of the Pillay Family Trust (Radeshar Pty Ltd) will follow with the next couple of hours.

76    That email was forwarded to Mr Muthu by Mr Pillay the same day. If Mr Muthu was not working for Radeshar, Mr Pillay or any of his businesses, there is no logical reason why Mr Pillay would have done so.

77    Furthermore, Mr Pillay was unable to explain why Mr Muthu was sent or copied into emails in connection with Radeshar’s business if, as he maintained, Mr Muthu did not work for Radeshar.

78    Other documents supported Mr Muthu’s evidence that he was employed by Radeshar. They included a payroll document which recorded Mr Muthu as having an annual salary of $37,000 and receiving gross wages of $1,423.08 for the fornightly pay periods from 27 June to 10 July and 11 July to 24 July 2013. While the document suggests that the employer was “Arvideep Pty Ltd”, which Mr Pillay testified was another of his companies, the ABN number was Radeshar’s. This evidence was inconsistent with Mr Pillay’s account. His evidence was that Radeshar never paid any money to Mr Muthu as salary or wages because he was not employed by Radeshar and was therefore not entitled to be paid.

79    Apart from this particular payroll document, the primary judge made no reference to any of these matters in his reasons.

80    The primary judge referred to the payroll document (at [30] of his reasons) and to Mr Pillay’s evidence that he had never seen the document before it was put to him in cross-examination. His Honour observed that at one point Mr Pillay claimed not to know how it had been created and later suggested that Mr Muthu had access to Radeshar’s computer system “and it was possible, on that basis, that the document could have been created”. But his Honour made no finding as to whether the document was genuine or not.

81    Mr Pillay’s evidence is difficult to reconcile with the following email annexed to Mr Muthu’s affidavit of 20 November 2017. The email was sent by Mr Pillay to Ken Stewart, a barrister, on 1 April 2013. Omitting the salutations, it reads (without alteration):

I am raman pillay pual gase friend and client

Are you still practising or retired

I have a case for you one of my staff who was a migration agent and his licence cancelled in 2005 and almost 8 years and he wants his license back and you will be able to help him if we give the papers to you this is in federal court

his name is CHRISTOPHER SILUVAI MUTHU

please let me know by email or phone [Mr Pillay’s mobile phone number appears here]

(Emphasis added.)

82    Having regard to Mr Pillay’s defence, this was a significant piece of evidence. But the primary judge did not refer to it.

83    Mr Pillay referred to this email in his affidavit. He insisted that Mr Muthu was never employed by Radeshar and that he never indicated that he was. He claimed that he told the barrister Mr Muthu was one of his staff “in an attempt to convince him to take the matter on”. He was also cross-examined on the email. The quality of the transcript is generally poor but, from what I can discern of it, he was unable to provide a persuasive explanation for referring to Mr Muthu as a member of his staff if, as he had led the court to believe, he was not.

84    In the loan application to Toyota, Mr Muthu’s occupation is described as “Manager – Large Business Employer: Radeshar Pty Ltd”. The document also recorded that Mr Muthu was in receipt of a net monthly salary/wage/retainer of $3530, which is consistent with a gross annual salary of around $65,000.

85    The primary judge referred to the loan application at a number of places in his judgment. The first reference is at [15] in the course of his Honour’s account of the cross-examination of Mr Muthu. He also referred to it at [29] and [31] in the course of his Honour’s account of the cross-examination of Mr Pillay. At [15] his Honour stated that it was put to Mr Muthu that “he was solely responsible” for the loan application which contained “incorrect factual details” of his employment history. At [29] his Honour noted that Mr Pillay admitted in cross-examination that he had assisted Mr Muthu to organise the purchase of the car and obtain the loan. At [31] his Honour observed that Mr Pillay denied ever having seen the loan application previously. At no point, however, does the primary judge indicate what he made of the document in the context of the issues he was required to resolve, except to say (at [37]) that it “contained clearly false particulars regarding [Mr Muthu’s] employment history with the Ascot Motor Inn”.

86    The “significant amount of documentation”, which the primary judge said (at [40]) would support a finding that Mr Muthu was involved in Rashedar’s business, supported his case and contradicted Mr Pillay’s.

87    For these reasons the primary judge fell into appealable error and his findings on this question cannot stand.

The quantum meruit claim (ground 4)

88    This ground must succeed.

89    The quantum meruit claim was rejected solely on the basis that there was no employment relationship. Yet a quantum meruit claim does not depend on the existence of an employment relationship. Nor does it depend on the existence of a contract, express or implied; rather, it is available in any case in which work has been done by one party and accepted by another: Basi v Namitha Nakul Pty Ltd [2022] FCA 712 at [199] (Halley J). So much is clear from Pavey & Matthews Proprietary Limited v Paul (1987) 162 CLR 221, which is perhaps the leading Australian authority on the subject, and from Benedetti v Sawiris [2014] AC 938, a judgment of the Supreme Court of the United Kingdom.

90    In Pavey, which was concerned with payment for building work for a home owner, Deane J remarked at 256:

The quasi-contractual obligation to pay fair and just compensation for a benefit which has been accepted will only arise in a case where there is no applicable genuine agreement or where such an agreement is frustrated, avoided or unenforceable. In such a case, it is the very fact that there is no genuine agreement or that the genuine agreement is frustrated, avoided or unenforceable that provides the occasion for (and part of the circumstances giving rise to) the imposition by the law of the obligation to make restitution.

91    In Benedetti at [9] Lord Clark JSC, with whom Lords Kerr and Wilson JJSC agreed, observed that:

It is common ground that the correct approach to the amount to be paid by way of a quantum meruit where there is no valid and subsisting contract between the parties is to ask whether the defendant has been unjustly enriched and, if so, to what extent. The position is different if there is a contract between the parties. Thus, if A consults, say, a private doctor or a lawyer for advice there will ordinarily be a contract between them. Often the amount of his or her remuneration is not spelled out. In those circumstances, assuming there is a contract at all, the law will normally imply a term into the agreement that the remuneration will be reasonable in all the circumstances. A claim for such remuneration has sometimes been referred to as a claim for a quantum meruit. In such a case, while it is no doubt relevant to have regard to the benefit to the defendant, the focus is not on the benefit to the defendant in the way in which it is where there is no such contract. In a contractual claim the focus would in principle be on the intentions of the parties (objectively ascertained).

92    At trial, Mr Benedetti argued that the respondents were in breach of an acquisition agreement, which had impliedly been varied, or that they were in breach of a collateral contract. Before the Supreme Court, Mr Benedetti did not rely on the contractual claim. Consequently, the focus was only on the law of unjust enrichment. It follows that the questions the court was required to ask itself were first, whether the defendant had been enriched and, if so, whether it was at the claimant’s expense; second, whether the enrichment was unjust; and third, whether there were any available defences.

93    These are questions the primary judge in the present case should have asked himself but did not.

Did the primary judge err by making a costs order against Mr Muthu (ground 5)?

94    Mr Muthu alleged that the primary judge fell into error because this was a matter arising under the FW Act; s 570 of the FW Act provides that a costs order can only be made against a party in limited circumstances; and the primary judge failed to consider s 570 or give reasons as to why costs were payable notwithstanding the general bar. Section 570 relevantly prevents a court from making a costs order against a party unless it is satisfied that the proceedings were instituted vexatiously or without reasonable cause or that the party’s unreasonable act or omission caused the other party to incur the costs. Mr Muthu contended that the primary judge should have made no order as to costs.

95    For the reasons given above, the proceeding did raise a matter arising under the FW Act. The primary judge erred by failing to consider whether he had the power to make a costs order and, if so, whether it should be exercised against Mr Muthu. In these circumstances, the costs order must be set aside.

What is to be done?

96    As I have already said, the appeal must be allowed.

97    There was evidence upon which a court might well conclude that Mr Muthu was employed by Radeshar as he claimed. But a positive finding cannot be made without evaluating the oral evidence against the documentation. That is an impossible task for this Court, not only because it did not hear and see the witnesses give their evidence but also because of the poor quality of the transcript.

98    In the circumstances, the matter should be remitted to the Federal Circuit and Family Court – Division 2, as the Federal Circuit Court is now called, for a new hearing before a different judge who is able to approach the case without any preconceptions.

99    There will be orders accordingly.

Associate:

Dated:    4 October 2022