Federal Court of Australia

Burt v Commonwealth of Australia [2023] FCA 55

ORDERS

THE COURT ORDERS THAT:

1.    The interlocutory application filed by the applicant on 4 August 2022 be dismissed.

2.    Costs be reserved.

3.    The parties confer with a view to agreeing on a timetable for:

(a)    the respondent to file and serve submissions in support of its interlocutory application;

(b)    the applicant to file and serve:

(i)    any evidence in response to the respondent’s interlocutory application and/or give notice to the respondent of his intention to rely on evidence already filed; and

(ii)    his submissions on the respondent’s interlocutory application;

(c)    the respondent to file and serve any evidence and submissions in reply and to provide the Court with soft copies of authorities raised in all the submissions; and

(d)    the listing of the respondent’s interlocutory application.

4.    Any agreed or competing timetables be forwarded to the Court by email to the Registry within seven (7) days.

5.    The respondent’s interlocutory application be listed for hearing on a date to be fixed.

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

REASONS FOR JUDGMENT

KATZMANN J:

Introduction

1    This is a representative action brought under Pt IVA of the Federal Court of Australia Act 1976 (Cth) (FCA Act) and conducted by a litigant in person, Tristan Burt, on his own behalf and on behalf of certain candidates for higher degrees by research, as defined in the Commonwealth Scholarships Guidelines (Research) 2012 and 2017. The action arises from Dr Burt’s claims that the stipend payable to higher degree students is well below the minimum wage and that scholarship recipients are employees of the universities in which they are studying.

2    In his statement of claim Dr Burt alleges that he and the group members were entitled to be paid in accordance with the enterprise agreement applying to their “employing University” or the relevant award (the Higher Education Industry Award) or the national minimum wage, but were paid less in contravention of various civil remedy provisions of the Fair Work Act 2009 (Cth) (FW Act). He also alleges that there were other contraventions of the FW Act because he and the group members were not paid the value of any untaken annual leave at the conclusion of their “employment” (described in the originating application as “the end of their HDR [Higher Degree by Research] candidacy”), in accordance with ss 87 and 90(2) of the FW Act and that superannuation contributions were not made on their behalf, in breach of the relevant industrial instrument and therefore in contravention of s 50 or, alternatively, s 45 of the FW Act.

3    In his originating application he seeks various forms of relief including declarations, orders for compensation and pecuniary penalties (with interest), and injunctive relief.

4    According to the allegations in the statement of claim, Dr Burt was a PhD student at the University of Sydney (University) from 1 July 2016 until 24 December 2019 and the recipient of an Australian Postgraduate Award scholarship (APA) and a Research Training Program stipend (RTP Stipend) successively. I understand “RTP Stipends” to refer to stipends to assist students with living costs under the Australian Government’s Research Training Program which are paid to holders of RTP scholarships provided by the Australian Government to support students undertaking postgraduate research degrees. Dr Burt pleads that he undertook supervised research work into the textual transmission of Plato’s Republic using the University’s facilities, resources and equipment, in accordance with the University’s guidelines, regulations, policies or procedures and under its exclusive control. On this basis, it appears, he claims to have been an employee of the University. He does not identify the particular terms of the University of Sydney Enterprise Agreement or the Higher Education Industry Award he alleges the University contravened.

5    Dr Burt pleads that a contract was created between him and each group member on the one hand and the relevant higher education provider on the other because each of the former was offered and accepted an APA or an RTP Stipend (at [22]–[23]). Paragraph [23] of the statement of claim reads:

The offer and acceptance of each stipend constituted a contract.

Particulars

The contract involved the exchange of the obligation to maintain enrolment in a HDR, consisting of a minimum two-thirds research work, including by not withdrawing or failing to perform research work to the satisfaction of the enrolling University, in exchange for regular fortnightly cash payments. 2017 Guidelines 1.6.40; 2012 Guidelines 2.25.30.

6    The group members are defined at [11] in the following way:

The group members to whom the proceeding relates are or were during the six years preceding the filing of this proceeding (the claim period) domestic candidates for higher degrees by research as defined in whichever of the 2012 Guidelines or the 2017 Guidelines was in force at the relevant time at the Universities, and are or were recipients of APAs or RTP Stipends, save for any officer or employee of the Applicant’s solicitors (the Group Members).

I note that at the time the originating application and statement of claim were filed, there was no solicitor on the record for Dr Burt and, as far as I am aware, he has never had solicitors acting for him.

7    The sole respondent is the Commonwealth of Australia. For various reasons, Dr Burt alleges that the Commonwealth was involved in the University’s contraventions and is therefore taken to have contravened the relevant provisions of the FW Act: see FW Act, s 550.

8    On 1 July 2022 the Commonwealth filed an interlocutory application seeking orders that the whole of the statement of claim be struck out, that summary judgment be given against Mr Burt in respect of the whole or parts of the proceeding, and that Mr Burt pay the Commonwealth’s costs. The Commonwealth’s interlocutory application was supported by an affidavit of Emma Gill filed the same day.

9    Dr Burt retaliated with an interlocutory application of his own. On 5 August 2022 he filed an interlocutory application seeking orders that the Commonwealth’s application be struck out as an abuse of process and directing him to file an amended statement of claim in the form annexed to his supporting affidavit. While none of them is a party to the proceeding or the interlocutory application, Dr Burt also seeks declarations that Ms Gill and Simone Krauss, respectively a Senior Executive Lawyer and Senior Lawyer with the Australian Government Solicitor (AGS), and another lawyer, David Hertzberg, have engaged in professional misconduct. He claims that the Commonwealth’s application was brought “for the illegitimate purpose of causing confusion and delay with no real prospects of success, causing undue oppression to the Applicant, and bringing the administration of justice into disrepute”.

10    While common sense suggested that the two applications should have been listed and heard together, I was persuaded to list Dr Burt’s first. For the reasons that follow, Dr Burt’s interlocutory application should be dismissed and the Commonwealth’s should proceed to a hearing.

The Commonwealth’s application

11    Shortly put, the Commonwealth’s position as outlined by its lawyers in correspondence with Dr Burt as early as January 2022, was as follows.

12    First, the statement of claim was defective because:

(1)    it did not plead facts which would establish an employment relationship between the group members and the higher education providers; and

(2)    the claim against the Commonwealth fails to plead the essential elements to establish accessorial liability.

13    Second, if the originating application is to proceed at all, it is inappropriate that it proceed as a class action, noting in particular that:

(1)    the definition of “group members” is ambiguous, particularly in circumstances where “the Applicant’s solicitors” is not a defined term; and

(2)    the class action involves different universities under different industrial instruments containing different provisions involving different circumstances; and

(3)    the common questions listed in the originating application do not deal with the key issues.

The issues on the present application

14    In his submissions Dr Burt identified five questions which he proceeded to address. Those five questions were:

(1)    Can it not reasonably be argued that the Commonwealth actually knew that he and the group members were employees, were being underpaid and that the Commonwealth was therefore in breach of the FW Act?

(2)    Have Ms Krauss, Ms Gill and the instructing lawyers at the Department of Education engaged in professional misconduct in connection with the Commonwealth’s interlocutory application?

(3)    Can it not be reasonably argued that the Commonwealth is wrong at law as regards the required form of the pleadings?

(4)    Can it not be reasonably argued that Dr Burt and the group members form a class for the purposes of maintaining a class action?

(5)    Can Dr Burt’s interlocutory application be brought in respect of the Commonwealth’s interlocutory application? If so, what are the legal principles applicable to the determination of the Applicant’s interlocutory application?

15    It is convenient to deal first with the last question.

Can Dr Burt’s interlocutory application be brought in respect of the Commonwealth’s interlocutory application? If so, what are the legal principles applicable to the determination of the Applicant’s interlocutory application?

16    The Federal Court Rules 2011 (Cth) (FCR) include a rule (r 16.21(1)) which can be invoked by a party to proceedings in the Court to strike out a pleading as an abuse of process. That is the rule invoked by the Commonwealth on its interlocutory application to strike out Dr Burt’s statement of claim. But an interlocutory application is not a pleading.

17    Dr Burt purportedly relied on “the inherent power of the Court to guard against abuse of its procedures” (see prayer 1 of the interlocutory application), relying principally on the judgment of the High Court in Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256.

18    Batistatos was concerned with the processes of the Supreme Court of New South Wales, which unarguably has such a power. Unlike the Supreme Court, however, which is a court of unlimited or general jurisdiction, this court does not have inherent powers. This court is created under the authority of s 71 of the Constitution and takes its character and authority from Ch III of the Constitution and the FCA Act, which is the source of its power. See Flint v Richard Busuttil & Co Pty Limited (2013) 216 FCR 375 at [19] (Allsop CJ, Katzmann and Perry JJ) and the authorities referred to there.

19    It is well established, however, that the Court has an implied power of the kind to which Dr Burt referred. In Deputy Commissioner of Taxation v Huang [2021] HCA 43; 96 ALJR 43; 395 ALR 616; 113 ATR 831 at [16] Gageler, Keane, Gordon and Gleeson JJ referred to the Court’s “implied power as a superior court … which confers power upon the Court to make such orders as are appropriate for the proper exercise of its statutorily conferred jurisdiction and powers”. The implied power of the Court in relation to its jurisdiction is no less than the inherent power of the common law courts of unlimited or general jurisdiction: Jackson v Sterling Industries Limited (1987) 162 CLR 612 at 619 (Wilson and Dawson JJ). That power “extends to all those categories of cases in which the processes and procedures of the court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness”: Walton v Gardiner (1993) 177 CLR 378, 393 (Mason CJ, Deane and Dawson JJ).

20    As for the relevant principles, Dr Burt relied on the following passage in Rogers v The Queen (1994) 181 CLR 251 at 286 in which McHugh J remarked that:

Although the categories of abuse of procedure remain open, abuses of procedure usually fall into one of three categories: (1) the court’s procedures are invoked for an illegitimate purpose; (2) the use of the court’s procedures is unjustifiably oppressive to one of the parties; or (3) the use of the court’s procedures would bring the administration of justice into disrepute.

21    Dr Burt also relied on his Honour’s additional remarks:

Many, perhaps the majority of, cases of abuse of procedure arise from the institution of proceedings. But any procedural step in the course of proceedings that have been properly instituted is capable of being an abuse of the court's process.

22    These remarks were endorsed by the plurality (Gleeson CJ, Gummow, Hayne and Crennan JJ) in Batistatos at [15]. The Commonwealth’s interlocutory application is a procedural step in the course of a proceeding.

23    As the Commonwealth pointed out in its submissions, where an abuse of process occurs the usual remedy is the grant of a stay of proceedings. If the alleged abuser is a defendant or respondent, a court may be persuaded to strike out the defence as an abuse of process (see, for example, McCabe v British American Tobacco Australia Services Ltd [2002] VSC 73) in which Eames J struck out the defence for non-compliance with discovery orders and destroying documents before the commencement of the proceedings in anticipation of litigation, reversed on appeal: British American Tobacco Australia Services Ltd v Cowell (2002) 7 VR 524. But it is difficult to see how a court could or, if it could why it would, strike out an interlocutory application to strike out a pleading. Everything Dr Burt wanted to say could be put in response to the Commonwealth’s interlocutory application.

24    It is convenient to deal next with the third of Dr Burt’s questions.

Can it not be reasonably argued that the Commonwealth is wrong at law as regards the required form of the pleadings?

25    This question is misconceived. In effect Dr Burt is seeking an order that the Commonwealth’s strike out application be summarily dismissed. On the assumption that such a remedy is available, the circumstances in which it would be granted is that the application has no reasonable prospects of success. The question, then, is whether the Commonwealth’s case for striking out the statement of claim is not reasonably arguable.

26    One of the Commonwealth’s principal grievances is the way the claim that it was involved in the universities’ alleged contraventions was pleaded.

27    Section 550(1) of the FW Act provides that a person who is involved in a contravention of a civil remedy provision of the Act is taken to have contravened that provision. Section 550(2) prescriptively defines the circumstances in which a person is involved in a contravention. It states that:

A person is involved in a contravention of a civil remedy provision if, and only if, the person:

(a)    has aided, abetted, counselled or procured the contravention; or

(b)    has induced the contravention, whether by threats or promises or otherwise; or

(c)    has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or

(d)    has conspired with others to effect the contravention.

(Original emphasis.)

28    The statement of claim does not specify which paragraph of s 550(2) is said to be engaged. In their letter to Dr Burt of 7 March 2022, the lawyers for the Commonwealth said that they assumed he was relying on para (c), that is to say that he was alleging that the Commonwealth was knowingly concerned in, or party to, the contraventions. Dr Burt’s response, in an email to the AGS the same day, was that:

Section 550(2)(a)(b) and (c) are all relevant. I have no evidence of (d) at this stage and do not allege it though something demonstrative of this might come up in discovery, one never knows until one has been through that process. In respect of (c) you ask in what way the Cth could be said to be an ‘intentional participant’ and the answer to this is that the Cth was responsible for enacting and maintaining in force each of the CSG 2012 and CSG 2017.

29    If Dr Burt wishes to argue that the Commonwealth aided, abetted, counselled or procured the contraventions or induced them, then he needs to plead the material facts which he alleges would establish that kind of involvement. If he intends to argue that the Commonwealth is an intentional participant in the contraventions because it was responsible for enacting and maintaining in force the Commonwealth Scholarship Guidelines, then he needs to plead the material facts necessary to support such an allegation. It is trite that one of the purposes of a pleading, perhaps the most basic, is to enable the other party or parties to know the case they have to meet. More than a century ago, in Gould v The Mount Oxide Mines Ltd (in liquidation) (1916) 22 CLR 490 at 517 Isaacs and Rich JJ explained:

Undoubtedly, as a general rule of fair play, and one resting on the fundamental principle that no man ought to be put to loss without having a proper opportunity of meeting the case against him, pleadings should state with sufficient clearness the case of the party whose averments they are. That is their function.

30    In several letters going back to January 2022, the Commonwealth drew Dr Burt’s attention to what it claims are deficiencies in his pleading. In those letters and in its submissions it referred, among other things, to the relevant principles for determining whether a person is “involved” in a contravention within the meaning of s 550 of the FW Act and how such an allegation is to be pleaded.

31    The Commonwealth’s submissions on this question were as follows.

32    First, the Commonwealth referred to the statements made by the Full Court in Construction, Forestry, Mining and Energy Union v BHP Coal Ltd (2015) 230 FCR 298 at [63]–[65]. There, the Court stressed the importance of precision in pleading in a case in which civil penalties are sought. The Court said (at [63]) that “it is especially important that those accused of a contravention know with some precision the case to be made against them”. And at [65] the Court stated that “a statement of claim must allege a contravention known to law and with a sufficient statement of material facts to alert a respondent to the case to be met”.

33    Second, the Commonwealth pointed out that in Sabapathy v Jetstar Airways (2021) 283 FCR 348 at [29] Logan and I observed that “[a]ctual knowledge of the ‘essential matters’ which go to make up the events is an essential element of a cause of action based on s 550”, which means it is “a material fact and it had to be pleaded”. “Material” in this context, means “necessary for the purpose of formulating a complete cause of action” and, if any material fact is omitted, the statement of claim is liable to be struck out: Bruce v Odhams Press Ltd [1936] 1 KB 697 at 712 (Scott LJ); Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2017] FCAFC 50 at [53] (BHP Coal (2017)) (Greenwood, Flick and Rangiah JJ).

34    Third, the Commonwealth submitted that actual knowledge may be established if the alleged accessory “has knowledge and deliberately refrains from asking questions or seeking further information in order to maintain a state of apparent ignorance”, citing Fair Work Ombudsman v South Jin Pty Ltd [2015] FCA 1456 at [233] (White J).

35    Fourth, the Commonwealth submitted that, in order to establish that the Commonwealth as a body politic possessed the requisite knowledge, it is necessary for Dr Burt to plead “or at least particularise – and ultimately prove – actual knowledge of identified persons” acting on behalf of the Commonwealth, citing BHP Coal (2017) at [50]–[67]. There, the Full Court held that the primary judge was justified in striking out a paragraph of a statement of claim which alleged that two corporations were knowingly concerned in contraventions by another company of s 340(1)(a) of the FW Act because the applicant failed to identify any officer of the company who had such knowledge. The Commonwealth also cited Lamont v University of Queensland (No 2) [2020] FCA 720 at [81]-[82], [91] and [137-[139]. In Lamont at [91] Rangiah J said that the effect of the judgment in BHP Coal (2017) at [62] is that the identity of each official of a body corporate whose state of mind is relied upon must be pleaded or particularised.

36    Fifth, the Commonwealth submitted that the knowledge of different people and agencies is an essential element of a cause of action and the knowledge of various individuals cannot be aggregated to “comprise” the knowledge of a body politic like the Commonwealth, citing Farah Custodians Pty Limited v Commissioner of Taxation [2018] FCA 1185 at [108]–[111] (Wigney J) in which it was held that liability for the tort of misfeasance in public office cannot be established by aggregating the acts and knowledge of various tax officers, and also Commonwealth Bank of Australia v Kojic (2016) 249 FCR 421 at [89] (Edelman J, Allsop CJ and Besanko J agreeing at [62] and [69] respectively) in which it was held that a concept of aggregated corporate knowledge cannot be applied in order to reach the conclusion that a corporation has acted unconscionably contrary to statutory proscriptions.

37    Sixth, the Commonwealth referred to the observation made in Sabapathy at [33] to the effect that, where extensive amendments are required to pleadings, the Court is entitled as a matter of discretion to strike out the whole of the pleading.

38    The case against the Commonwealth is pleaded in Pt E of the statement of claim at [71]–[83] and reads as follows (without alteration):

71.    The Respondent is and was at all material times responsible by the Fair Work Commission for the setting of wage rates in industrial instruments applying to the Universities, and for setting the national minimum wage.

72.    The Respondent is and was at all material times responsible for the provisions of the FW Act, including those that proscribed the contraventions set out in Part D above.

73.    As set out above, the Respondent at all material times determined the amount that could be paid by the Universities as an APA and paid the Universities in order that they make these payments.

74.    As set out above, the Respondent at all material times determined the range of amounts that could be paid by the Universities as an RTP stipend and paid the Universities in order that they make these payments.

75.    As set out above, the Respondent at all material times required that the Applicant and Group members carry out research work, a minimum of two-thirds of their course load, under the management and direction of the Universities in exchange for stipend payments.

76.    The Respondent at all material times knew that the Universities prescribed policies, procedures, guidelines and regulations which governed the conduct of the Group Members’ supervised research work.

77.     The Respondent at all material times knew that the Universities could undertake disciplinary action or terminate enrolment if the Group Members failed to carry out the supervised research work as directed [sic]

78.    The Respondent at all material times knew of the requirements of an HDR contained in the AQF, the 2012 and 2017 Guidleines.

79.     The Respondent knew that the dominant purpose of the APA and RTP Stipends was to attract and retain the Applicant and Group Members for the performance of research work, not the provision of educational services by the Universities to the Applicant and Group Members and, in fact, mandated this through the 2012 and 2017 Guidelines.

80.    The Respondent knew that Australian Tax Office Class Ruling 2003/84 could not be said to apply [sic] the Applicant and the Group Members because paragraph 33 of the Class Ruling could not be applied to the circumstances of the Applicant and the Group Members. The Respondent none the less claimed that the ‘strong parallels’ between the Class Ruling and the circumstances of the Applicant and Group Members meant that stipend payments should not properly be characterised as ‘income’ for the purposes of the Income Tax Assessment Act 1997.

Particulars

Department of Education, Research Training Program Frequently Asked Question Number 17, available through Department of Education website.

81.    By reason of the matters set out in paragraphs 71 to 80, the Respondent had knowledge of the essential elements of each contravention by each University in respect of the Applicant and each Group Member.

82.    Alternatively, the Respondent refrained from investigating the essential elements of each contravention by each University in respect of the Applicant and each Group Member.

83.    By reason of the matters set out in Part D above, paragraphs 71 to 80 above and s 550 of the FW Act, the Respondent is taken to have contravened each civil remedy provision contravened by the universities in respect of the Applicant and the Group Members.

39    The allegation in [71] is misguided. The Fair Work Commission is an independent statutory authority established under s 575 of the FW Act. It is not the Commonwealth or a Commonwealth agency. The allegation in [72] is also misguided. The Commonwealth is not and was not “responsible for the provisions of the FW Act”. The Parliament was responsible for the legislation.

40    The Commonwealth submitted that paras [71]–[81] plead “conclusion[s], absent facts”. The Commonwealth indicated that in support of its interlocutory application it will submit that these paragraphs suffer from the following deficiencies:

(1)    They are evasive and ambiguous and likely to cause prejudice, embarrassment and delay because either knowledge of the essential elements of the alleged contraventions is not pleaded or where knowledge is pleaded, it is not done with sufficient precision.

(2)    They proceed from the implicit premise that the knowledge of unidentified Commonwealth officers and employees can be aggregated and attributed to the Commonwealth for the purpose of s 550 of the FW Act, which is incorrect.

(3)    they fail to plead that the Commonwealth had actual knowledge of the following matters each of which is said to be an essential element:

(a)    the existence of an employment relationship between Dr Burt and the University and between each of the group members and their respective higher education providers;

(b)    the material facts which gave rise to that relationship of employment and the Commonwealth’s knowledge that those facts gave rise to the existence of such a relationship;

(c)    the entitlements of each of Dr Burt and the group members it is said that they did not receive; and

(d)    the fact that each of Dr Burt and the group members did not receive their relevant entitlements from the relevant higher education providers.

(4)    To the extent that the facts are pleaded, they are pleaded with insufficient clarity.

41    In his submissions Dr Burt did not address any of these points, all of which had been raised with him by the Commonwealth in correspondence well before it filed its interlocutory application, other than to “reject the suggestion that there [was] any vagueness or ambiguity” in his pleading. Each of them is at least reasonably arguable.

42    Dr Burt’s submission on this question was that the Commonwealth was wrong to assert that his case was analogous to Fair Work Ombudsman v Hu [2019] FCAFC 133; (2019) 289 IR 240. Dr Burt argued that “nothing in Hu should be taken as negating the classical position … that, where actual knowledge of essential factual matters can be established … actual knowledge of relevant matters or conclusions of law are also established”. Yet, the Commonwealth made no mention of this judgment in its submissions or its correspondence with Dr Burt.

43    For present purposes I am prepared to accept that a person could be involved in a contravention within the meaning of s 550(2) of the FW Act even if that person was unaware that, as a matter of law, the relationship between the applicant and the alleged contravener was one of employee and employer. But to be an accessory for the purposes of s 550, that person would have to know the essential facts that lead to the legal conclusion and that means that that person’s knowledge of the material facts must be pleaded. Here, it means that Dr Burt had to plead at the very least that a particular person or persons for whom the Commonwealth could be legally responsible had knowledge of those facts and particularise the basis upon which he claims they had that knowledge.

Can it not reasonably be argued that the Commonwealth actually knew that he and the group members were employees, were being underpaid and that the Commonwealth was therefore in breach of the FW Act?

Have Ms Krauss, Ms Gill and the instructing lawyers at the Department of Education engaged in professional misconduct in connection with the Commonwealth’s interlocutory application?

44    I now turn to the first two of Dr Burt’s questions.

45    The first question may arise on the Commonwealth’s interlocutory application. But it does not arise on Dr Burt’s interlocutory application.

46    In an email to the AGS on 1 February 2022, Dr Burt explained his case that the Commonwealth was involved in the universities’ alleged contraventions in the following way:

I refer you to paragraph [80] of the Statement of Claim. It is evident that the Cth has been wilfully blind to the question of whether graduate researchers are employees of their Universities (and therefore also all of the questions you set out at 26(a-e) of your letter) and should therefore be taken as having actual knowledge that they were.

This is so because the Department of Education, in addressing the question ‘How is the RTP Scholarship considered by the ATO as taxable income?’, simply cites 51-10 of the ITAA 1997 and makes no reference to 51-35(c) and (d) of the ITAA. The Department of Education does, however, cite CR 2003/84 in which it was decided that 51-35(c) and (d) did not apply to PhD stipend recipients at Bond University because those graduate researchers were under no ‘requirement to perform work for [the benefit of] the scholarship provider’.

You acknowledge in your letter (at 13) that there is a requirement to perform research work imposed by Research Doctorates and Masters for which stipends arc paid under the CSG arrangements. You go on to acknowledge (at 24(f)) that this work may be to the benefit of the Universities. It is therefore obvious that the question of whether 51-35(c) and (d) apply in the case of stipends paid under the CSG arrangements needs to be addressed in considering the appropriate tax treatment of APA/RTP Stipends by the ATO and that CR 2003/84 docs not satisfactorily answer this question.

The fact that the Department of Education make no reference to 51-35(c) and (d) in addressing the question of the appropriate tax treatment of stipends paid under the CSG arrangements is therefore demonstrative of a willful [sic] blindness to the question of whether such stipend recipients were employees of their Universities (and also, therefore, the other questions set out at 26(a-e) of your letter) and therefore actual knowledge that they were.

47    Later, in reply to an email from the AGS on 7 March 2022, Dr Burt elaborated:

[W]hat I am saying at paragraph [80] of the Statement of Claim is the Cth had actual knowledge that CR2003/84 (and, more specifically, paragraph 33 of the Class Ruling) did not apply to the circumstances of the Group Members. Nonetheless, the Cth refrained from investigating whether s51-35 of the ITAA 1997 applied to the Group Members as is evidenced by the FAQ cited below and particularised in the pleadings (further evidence of this will likely be forthcoming in discovery). This, I say, is demonstrative of willful blindness because, had the Cth engaged with the question of whether s51-35 applied to the class members the whole truth of the matter would have emerged. The Cth, in other words, was resisting being put to a ‘precise proof’ regarding the application of s51-35 to the Group Members as [sic] was therefore wilfully blind as to all of the matters you set out at paragraph 26 of your letter of 24 January 2022 (see, Fair Work Ombudsman v South Jin Pty Ltd [2015] FCA 1465 at [232]).

(Original emphasis.)

48    To the extent that Dr Burt’s submissions purport to address the first question, they are therefore focused on the proposition that the Commonwealth falsely asserted that scholarships paid to full-time students for educational purposes are treated under s 51-10 of the Income Tax Assessment Act 1997 (Cth) (ITAA 1997) as “exempt income”. The assertion is said to have been made in answer to question 17 in the “Research Training Program – Frequently Asked Questions for students” (FAQ 17) published on the website of the Department of Education. The assertion is said to be false because “a scholarship will only be treated as exempt income if can [sic] be said to be paid principally for educational purposes (s51-35(e)) and does not fall within any of the other cases listed in s51-35(a),(b),(c),(d) or (f) of the ITAA”. Dr Burt submitted that this allegedly false assertion, coupled with what the AGS had to say about it in a letter to him on 27 May 2022, means that the Commonwealth is not litigating in good faith and to allow its interlocutory application to proceed in these circumstances would bring the administration of justice into disrepute. He also submitted that, because the Commonwealth must know that “it is lying about lying”, it necessarily follows that the only reason it has filed its interlocutory application is for the illegitimate purpose of delaying or avoiding having to file a defence.

49    These submissions are difficult to understand but are apparently related to Dr Burt’s submissions on the second question. One thing, however, is clear. That is that Dr Burt appears to think that the fact that a person is required to pay income tax necessarily means the person is an employee. That is a fallacy.

50    There are many situations in which a person is liable to pay tax on income earned from their work even though they are not employed by the person who paid them. A classic example is an independent contractor, who is liable to pay tax on the income they earn from each client although they are, by definition, not employed by any of their clients. A wedding photographer, for example, is not employed by the bridal couple merely because they may be liable to pay income tax on the amount paid for their services. A company director is not an employee of the company just because they may be liable to pay income tax on fees associated with their directorship. A shareholder of a company is not employed by the company merely because they may have to pay income tax on their dividends. In short, whether income tax was payable by Mr Burt on the amount of his APA and RTP Stipend is simply irrelevant to the question of whether he was employed by the University. The same is true for each group member and the relevant higher education provider.

51    Like the abuse of process argument, Dr Burt’s contention that the lawyers engaged in professional misconduct is based on statements made in the letter from the AGS of 27 May 2022, which is annexure EG-11 to Ms Gill’s affidavit. The letter, which is signed only by Ms Krauss, addresses the proposed amended statement of claim which was attached to an email from Dr Burt on 29 April 2022. The letter began with a statement that the proposed amendments would be liable to be struck out on the basis that they contain material which is contrary to s 16(3) of the Parliamentary Privileges Act 1987 (Cth) and otherwise fails to comply with the requirements of r 16.02 of the FCR. Dr Burt has since decided to remove those parts of his proposed amended statement of claim that the Commonwealth contended would be “inconsistent with” parliamentary privilege and an abuse of process. His “revised” statement of claim omits the paragraphs to which the Commonwealth took objection on that ground. It is the following part of the letter that has raised Dr Burt’s ire and prompted him to seek orders against the lawyers.

52    In his email of 29 April 2022 Dr Burt claimed that the Commonwealth was “‘put on notice’ as to the existence of the employment relationship between the Group Members and their respective Universities” and endeavoured to explain why. In substance, his contention is that the Commonwealth was wilfully blind. He referred to South Jin at [232]–[233], which the AGS had mentioned in earlier correspondence and in which White J said:

The conclusion that a person has actual knowledge of the elements of a contravention by reason of that person’s knowledge of suspicious circumstances coupled with a deliberate failure to make enquiries which may have confirmed those suspicions requires consideration of the person’s knowledge of the matters giving rise to the suspicion, the circumstances in which the person did not make the obvious enquiry and the person’s reasons, to the extent that they are known, for not having made the enquiry. It is not every deliberate failure to make enquiry which will support the inference of actual knowledge. In several cases, including Official Trustee in Bankruptcy v Mitchell [1992] FCA 521, (1992) 38 FCR 364 at 371 and Richardson & Wrench (Holdings) Pty Ltd v Ligon No 174 Pty Ltd [1994] FCA 1222, (1994) 123 ALR 681 at 693 4, this Court has referred with approval to a passage from the advice of Lord Sumner in Zamora (No 2) [1921] 1 AC 891 at 812 3 in which his Lordship noted two senses in which a person may be said not to know something because they do not wish to know it:

A thing may be troublesome to learn, and knowledge of it, when acquired, may be uninteresting or distasteful. To refuse to know any more about the subject or anything at all is then a wilful but a real ignorance. On the other hand, a person is said not to know because he does not want to know, where the substance of a thing is borne in upon his mind with a conviction the full details or precise proofs may be dangerous, because they may embarrass his denials or compromise his protests. In such a case he flatters himself that whereas ignorance is safe, ‘tiz folly to be wise, but there he is wrong, for he has been put upon notice and his further ignorance, even though actual and complete, is a mere affectation and disguise.

In the former circumstance described by Lord Sumner, the person will not have actual knowledge of the matter. In the latter circumstance, the person does have that knowledge but deliberately refrains from asking questions or seeking further information in order to maintain a state of apparent ignorance. That is not a circumstance of constructive or imputed knowledge, but of actual knowledge reduced to minimum by the person’s wilful conduct: Richardson & Wrench at 694 (Burchett J).

53    In his email of 29 April 2022 Dr Burt said that he wanted to make it very clear how those paragraphs of Jin should be understood. He contended that:

What Lord Sumner said in Zamora was that ‘a person is said not to know because he does not want to know where...the full details or precise proofs...may embarrass his denials or compromise his protests’ and the person avoids being put to a precise proof (or otherwise encountering a precise proof) or considering the full details even though that person has been asked to provide such a precise proof or consider these details in full (or has otherwise been presented with such a precise proof). In such a case a person has been ‘put on notice, and his further ignorance, though actual and complete, is a mere affectation or disguise’.

54    Dr Burt asserted that this was “precisely” what happened when the Department of Education answered FAQ 17 in the way that it did.

55    The orders Dr Burt seeks against the lawyers are these:

2.     By reason of the sending of the letter dated 27 May 2022 on behalf of the Australian Government Solicitor, which letter contained a deliberate attempt to mislead and deceive the Applicant as to the truth of the Respondent’s proposed interpretation of s51-10 of the Income Tax Assessment Act 1997, Ms. Simone Krauss is declared to have engaged in professional misconduct.

3.    By reason of supervising the sending of the letter dated 27 May 2022 on behalf of the Australian Government Solicitor, which letter contained a deliberate attempt to mislead and deceive the Applicant as to the truth of the Respondent’s proposed interpretation of s51-10 of the Income Tax Assessment Act 1997, Ms. Emma Gill is declared to have engaged in professional misconduct.

4.    By reason of instructing Ms. Simone Krauss to send the letter dated 27 May 2022 on behalf of the Australian Government Solicitor, which letter contained a deliberate attempt to mislead and deceive the Applicant as to the truth of the Respondent’s proposed interpretation of s51-10 of the Income Tax Assessment Act 1997, Mr. David Patrick Hertzberg is declared to have engaged in professional misconduct.

5.    By reason of filing her affidavit dated 30 June 2022 in support of the Respondent's interlocutory application dated 30 June 2022, which affidavit annexed the above letter dated 27 May 2022, and which affidavit therefore sought to deliberately mislead and deceive the Court as to the truth of the Respondent’s interpretation of s51-10 of the Income Tax Assessment Act 1997, Ms. Emma Gill is declared to have engaged in professional misconduct

56    Before turning to the allegedly misleading and deceptive representation, it is necessary to refer to the context in which the offending remark was made. Ms Krauss began by referring to the proposed amendments to the statement of claim in which allegations were made against Commonwealth employees:

In new proposed paragraphs 82 to 94 and 103 to 123 of the proposed ASOC you make a number of serious allegations against employees of the respondent who are or were engaged in the Australian Taxation Office (ATO) or in the Department of Education, Skills and Training and its predecessor Departments (the Department), including the allegations set out below:

Allegations against employees of the ATO

a.    That an employee (or employees) of the ATO who was or were aware of the Commonwealth Scholarship Guidelines 2012 and 2017, deliberately refrained from investigating various matters, including whether payments made pursuant to the Commonwealth Scholarship Guidelines were made subject to the condition that the graduate researcher (receiving the scholarship) enter into or remain in an employment relationship with their administering university (paragraphs 83 and 87).

b.    That an employee (or employees) of the ATO who received and read the submissions of the Department and the Group of Eight in respect of the Review of Scholarships did not take any further steps to investigate, and deliberately avoided any further investigation of, various questions including whether the scholarships paid under the Commonwealth Scholarship Guidelines were 'a proxy for employment relationships and ought to have complied with the National Employment Standards ... the FW Act and the Superannuation Guarantee requirement' (paragraph 120).

c.    That the motivation of the employee (or employees) of the ATO for these alleged failures to investigate was to continue to fail to provide the Applicant and Group Members with their statutory entitlements under the Fair Work Act 2009 (FW Act) (paragraphs 85, 89 and 123).

Allegations against employees of the Department

d.    That an employee or employees of the Department (including, but not limited to, Mr Hertzeberg, Principal Lawyer), deliberately refrained from asking the ATO to provide a class ruling in respect of the Applicant and Group Members or asking the Universities to seek class rulings (paragraph 91).

e.    That an employee or employees of the Department who had read the Group of Eight paper entitled 'The Changing Nature of the PhD' deliberately avoided making further enquiries into the question of whether the work of graduate researchers in receipt of stipendiary scholarships, including the Applicant and each Group Member, was in breach of employment law obligations (paragraphs 104 to 105).

f.    That an employee of the Department deliberately misrepresented that ‘under s 51-10 of the Income Tax Assessment Act 1997 (ITAA 1997) scholarships paid to full time students for educational purposes are treated as exempt income’ by publishing this information on the Department’s website in answer to the Research Training Program Frequently Asked Question ‘How is the RTP Scholarship considered by the Australian Taxation Office (ATO) as taxable income?’ (paragraphs 108 to 109).

g.     That the motive of the employee or employees of the Department (for the action or inaction described in the paragraphs above) was to continue to fail to provide the Applicant and Group Members with their statutory entitlements under the FW Act (paragraphs 94, 107, 117).

(Emphasis added.)

57    Ms Krauss proceeded to summarise what the AGS considered were “a number of serious deficiencies” with the proposed amended statement of claim. There is no need to refer to them all. It is sufficient for present purposes to refer to what she wrote about the allegations in [108]–[109] of the proposed amended statement of claim because that is the basis for the orders Dr Burt seeks against the lawyers. This is what Ms Krauss wrote on that subject (the offending statement appears as paragraph e):

d.    We understand that the allegations in paragraphs 108 to 117 are based on statements made on the Department’s website under the heading ‘Research Training Program (RTP) – Frequently Asked Questions for students’ (the website text). This states:

…

e.    The statement made on the website that ‘under section 51-10 of the Income Tax Assessment Act 1997 scholarships paid to full-time students for educational purposes are treated as exempt income’ is not false. It is, at most, incomplete, in so far as it does not acknowledge that this is subject to certain exceptions as set out in s 51-35 of the ITAA 1997. This is consistent with the fact that this is general advice to students being provided by the Department not the ATO, which is subject to the important proviso that students are responsible for ensuring that they comply with their tax liabilities.

f.    Hence, the website text you have referred to in the ASOC does not provide any basis for the serious allegations which have been made in paragraphs 108 to 117.

58    Dr Burt submitted that because Ms Gill and Ms Krauss, “acting on instructions from solicitors at the Department of Education (including Mr. David Patrick Hertzberg)”, insisted in their correspondence that “a particular factually false interpretation of s 51-10 of the ITAA is ‘not false’ each of these solicitors must be found to have acted so as to attempt to deliberately mislead and deceive”. He argued that the only alternative explanation is gross incompetence in that they are unable to interpret s 51–10. He contended that, by seeking to bring a strike out and summary judgment application against him based on “this false and misleading interpretation of the ITAA”, “Ms. Gill must be seen as attempting to mislead and deceive the Court”. And, he continued, attempting to mislead a litigant in person and the Court is professional misconduct or, at least, unsatisfactory professional conduct, referring to the definitions in the Legal Profession Act 1987 (NSW) (1987 Act), which was repealed on 1 October 2005.

59    The current law regulating the legal profession in NSW is the Legal Profession Uniform Law (NSW). The definitions of the terms in that Act are similar to the definitions in the 1987 Act: see s 296 (unsatisfactory professional conduct) and s 297 (professional misconduct).

60    Dr Burt’s allegations should be rejected. The allegations are indeed serious and the evidence relied on goes nowhere near proving them to the requisite standard: see Evidence Act 1995 (Cth), s 140; Briginshaw v Briginshaw (1938) 60 CLR 336 at 361 (Dixon J). There is no evidence that Ms Gill or Ms Krauss were acting on Mr Hertzberg’s instructions. And I am not in the least persuaded that there is anything about Ms Krauss’s response or Ms Gill’s conduct that would warrant a finding that either of them engaged in professional misconduct or unsatisfactory professional conduct as alleged. Furthermore, there is no reason to think that the Commonwealth’s application was brought because of the lawyers’ or the Department’s interpretation of s 51-10 of the ITAA 1997 or for the alleged illegitimate purpose. Certainly the evidence does not support such a conclusion.

Can it not be reasonably argued that Dr Burt and the group members form a class for the purposes of maintaining a class action?

61    I do not propose to deal at this point with question 4. That is a matter upon which I would benefit from oral argument. It also raises a more fundamental question which has troubled me from the time this case was docketed to me. That is whether Dr Burt should be permitted to continue the proceeding without legal representation. In Wilkinson v Wilson Security Pty Ltd [2022] FCA 756 at [11] Colvin J rightly observed that representative proceedings are inherently complex and require considerable care in the definition of group members, the notifications concerning opting out and the steps to be taken in the conduct of common questions. His Honour expressed the view at [22] that, where a person without legal representation wishes to take an active role in the conduct of representative proceedings, leave to do so should be sought and would almost invariably be refused. See also Wilkinson v Wilson Security Pty Ltd (No 2) [2022] FCA 1161 at [8]–[10].

62    In their submissions on the present application, the Commonwealth foreshadowed that it intends to argue that the fact that Dr Burt is unrepresented is relevant to whether the Court should exercise its discretion to summarily dismiss the proceeding. That remains to be seen. If Dr Burt’s own case is reasonably arguable, there are less draconian steps that can be taken, like staying the proceeding until legal representation is obtained or ordering that the proceeding no longer continue as a representative proceeding. If the Commonwealth fails in its interlocutory application, it will be necessary to consider such matters.

Conclusion

63    Dr Burt submitted, in effect, that the Commonwealth’s application fell within all three of the categories mentioned by McHugh J in Rogers. He contended that it was brought for the illegitimate purpose of causing confusion and delay by advancing unintelligible arguments with no reasonable prospects of success, causing undue oppression to a self-represented litigant, and, having regard to the fact that the Commonwealth is a model litigant, bringing the administration of justice into disrepute.

64    I cannot accept the submission. The evidence does not support the contention that the Commonwealth’s application was brought in order to cause confusion and delay. The lawyers for the Commonwealth have not acted improperly. The Commonwealth’s application is brought for an entirely legitimate purpose. The Commonwealth’s arguments are far from unintelligible. Moreover, I am not persuaded that they have no prospects of success, although some may be weaker than others. The filing of the application is not unjustifiably oppressive to Dr Burt. Nor would it bring the administration of justice into disrepute. To the contrary, it is in the interests of the administration of justice to allow it to proceed. It will be necessary to make orders to enable it to proceed to hearing.

65    Finally, I am not minded to make the order Dr Burt seeks with respect to the so-called revised statement of claim. In any case, as the pleadings have not closed, Dr Burt does not need a court order to file an amended statement of claim: FCR r 16.51(1). As he recognises, however, even if he does file his amended statement of claim that does not mean that the Commonwealth will not pursue the remedies it seeks in the present application if the matters it has raised are not appropriately addressed in the amended pleading.

66    The Commonwealth submitted that the proposed amended statement of claim has numerous deficiencies. They include:

(1)    the failure to comply with r 16.43(1), which requires a party who pleads a condition of mind to state in the pleading particulars of the facts on which the party relies;

(2)    ambiguity in the allegations against unnamed individuals; and

(3)    the failure to plead the material facts to support the allegation that the unnamed individuals knew the essential elements of the contraventions.

67    In addition, the Commonwealth submitted that the allegations about the conduct of ATO employees proceeded on the incorrect premise that receipt of money taxable as income is determinative of whether the graduate researchers were employees.

68    Since these matters are likely to be raised in argument at the hearing of the Commonwealth’s application, Dr Burt might wish to await the outcome of that application before filing any amended pleading. He would be well advised in the meantime to give close attention to the principles of pleading and the relevant provisions of the FCR.

69    It follows that Dr Burt’s interlocutory application should be dismissed. I will reserve the question of costs. As this is a proceeding in relation to a matter arising under the FW Act, the Court’s power to award costs is limited by the terms of s 570 of that Act. If the Commonwealth is minded to apply for costs, that application will be listed for hearing at the same time as the Commonwealth’s interlocutory application.

Associate:

Dated:    7 February 2023