Bartlett v Goodwin
[2022] FedCFamC2G 691
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Bartlett v Goodwin [2022] FedCFamC2G 691
File number(s): ADG 371 of 2020 Judgment of: JUDGE BROWN Date of judgment: 25 August 2022 Catchwords: INDUSTRIAL LAW – fair work – claim for unpaid leave entitlements on termination of employment – applicant commenced proceedings against his former corporate employer alone – former employer placed into liquidation – applicant given leave to proceed against liquated former employer – liquidator elected not to defend proceedings – judgment and pecuniary penalties imposed on liquidated employer on an undefended basis in earlier proceedings – applicant commences current proceedings against directors and officer holders of liquidated company on basis of alleged accessorial liability – respondents seeking summary dismissal of applicants application on basis such proceedings represent an abuse of process – respondents assert that applicant made forensic decision to proceed against liquidated company alone – prejudice – interests of the administration of justice – matters to be considered Legislation: Evidence Act 1995 (Cth) s 91
Fair Work Act 2009 (Cth) ss 3, 90, 550, 550(1) 550(2)
Federal Circuit & Family Court of Australia of Australia Act 2021 (Cth) s 190
Federal Circuit and Family Court of Australia (Division 2)(General Federal Law) Rules 2021 (Cth) div 13.4, r 13.13
Cases cited: Aon Risk Management Limited v Australian National University (2009) CLR 175
Bartlett v Goodwin [2021] FCCA 1871
Bartlett v Signostics (In Liquidation) (No 1) [2019] FCCA 2989
Bognar v Skilled Offshore Pty Ltd & Anor [2016] FCCA 2962
CFMEU v BHP Coal Pty Ltd (2015) 230 FCR 298
Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365
Johnson v Gore Wood & Co [2002] 2 AC 1
Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507
UBS AG v Tyne as Trustee of the Argot Trust (2018) 265 CLR 77
Welsh v Digilin Pty Ltd [2008] FCAFC 149
Yorke v Lucas [1985] HCA 65
Division: Division 2 General Federal Law Number of paragraphs: 117 Date of hearing: 28 March 2022 Place: Adelaide Counsel for the Applicant: Mr Rice Solicitor for the Applicant: Bartlett Workplace Lawyers & Consultants Counsel for the First, Second & Fourth Respondents: Mr Duggan QC Solicitor for the First, Second & Fourth Respondents: Fair Work Lawyers Counsel for the Third Respondent: Mr O’Grady QC Solicitor for the Third Respondent: Hall & Wilcox ORDERS
ADG 371 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: STEWART BARTLETT
Applicant
AND: KEVIN GOODWIN
First Respondent
YOON SHIN
Second Respondent
DAVID KEOGH (and others named in the Schedule)
Third Respondent
ORDER MADE BY:
JUDGE BROWN
DATE OF ORDER:
25 AUGUST 2022
THE COURT ORDERS THAT:
1.The applications in a case filed by the third respondent on 7 October 2021 and by the first, second and fourth respondent on 15 November 2021 are dismissed.
2.The applicant file and serve an amended statement of claim within forty-two (42) days of the date of these orders.
3.The first, second, third and fourth respondents file and serve a defence within a further forty-two (42) days of Order 2.
4.Further consideration of the matter is adjourned to 30 November 2022 at 9:30am for directions, where consideration will be given to referring the matter for alternative dispute resolution.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE BROWN:
INTRODUCTION
These reasons for judgment relate to an interlocutory application brought by individuals previously involved in a company formerly incorporated in Australia but is now in liquidation. The applicant proceeded against the liquidated company and gained a significant judgment against it on an undefended basis without any evidence being taken from its former directors, sole shareholder, or public officers.
In simple terms, the applicant alleged that he had been denied his leave entitlements on the termination of his employment. The undefended judgment resulted in him being awarded those entitlements together with significant pecuniary penalties relating to contraventions of the Fair Work Act 2009(Cth).[1]
[1] Hereinafter referred to as “the FWA” or “the Act”.
The applicant now has issued further proceedings against these individuals in respect of issues previously ventilated in the earlier undefended proceedings against the now defunct company. The basis of his claim is that these individuals bear accessorial liability for the actions of the company. In practical terms, the proceedings are directed to effect the recovery of the monies ordered to be paid by that company from its previous officers.
It is the position of these persons, that it is an abuse of the court’s processes to allow these proceedings to continue as it was open to the applicant to join them in the earlier proceedings but he took a forensic decision not to do so. These reasons for judgment are directed towards the resolution of this interlocutory application.
BACKGROUND
Between early-2005 and mid-2017 Stewart Bartlett, the applicant in the substantive proceeding currently before the court, was employed as the Chief Operating Officer of a company known as Signostics Ltd.[2] Signostics was incorporated in Australia. As I understand matters, Signostics was a medical technology company.
[2] Hereinafter referred to as “Signostics”.
It is his case that, at the direction of its United States owner, Signostics down-sized its Australian operations in response to the Global Financial Crisis and let go many of its Australian-based employees. In this context, he asserted that Signostics’ management determined to make his on-going position at the firm as difficult as possible.
On 18 December 2017, Mr Bartlett commenced the earlier proceedings, in this court, against Signostics, pursuant to the provisions of the FWA. He claimed to be owed salary, leave entitlements and other employment benefits by Signostics, due to the provisions of the contract of employment between them. His case was supported by a statement of claim.
Mr Bartlett also invoked civil penalty proceedings under the FWA. In general terms, the court is conferred with jurisdiction to impose fines on employers and their agents if it is established that there has been a breach of any of the National Employment Standards or a relevant workplace right applicable to a person employed by them.
In late-December of 2017, solicitors for Signostics filed a notice of address for service and on 30 January 2018 a defence. No other significant documents were filed on behalf of Signostics, in the proceedings, thereafter.
On 28 February 2018, Signostics entered into liquidation. Accordingly, Mr Bartlett was unable to proceed further against the company without the leave of the Federal Court, which was granted to him on 13 June 2019. Thereafter, the relevant liquidator of Signostics, Mr Phillips, indicated that he did not intend to defend the proceedings brought by Mr Bartlett.
In these circumstances, Mr Bartlett continued with his application, against Signostics, on an undefended basis before Judge Heffernan, formerly a judge of this court. These proceedings are now concluded, without the court taking any evidence directly from any person previously related with Signostics. Mr Bartlett himself provided evidence in support of his position in affidavit form, including an affidavit of documents.
It would seem to be the case that Mr Bartlett had access to affidavits prepared by Mr Goodwin and Ms Shin as these were tendered by him on 4 July 2019 during the undefended hearing before Judge Heffernan and have been subsequently returned to him by the court’s administration. I have not read these documents. Certainly none of the present respondents to Mr Bartlett’s current application gave oral evidence or was cross-examined.
In this context, on 21 October 2019, Judge Heffernan declared that Signostics had breached provisions of the National Employment Standards, relating to Mr Bartlett’s employment by Signostics, and, as a consequence, he was due an amount of $33,627.91. In addition, Judge Heffernan imposed pecuniary penalties and ordered other compensation, in Mr Bartlett’s favour, which attracted interest, in a total amount of $250,112.67.[3] Judge Heffernan found as follows:
I have considered the affidavit material read by the applicant, the annexures to those affidavits, and the various exhibits tendered by him at trial. In the absence of a respondent, the applicant understandably did not give evidence. I accept the evidence of the applicant as set out in his affidavits. I accept the underlying thesis of his submissions. In other words, I accept that once the respondent realised that the applicant was, from its perspective, less co-operative than it would have liked, having been told of the respondent’s decision to drastically reduce the size of its Australian operations and retrench most of its local work force, it determined to make his position with it untenable and made a series of decisions aimed at avoiding its obligation to pay the applicant his full entitlements when his employment ceased. It clearly took the view that the applicant had become a thorn in its side. Those inferences are open on the evidence and I am prepared to draw them. The respondent’s actions were clearly motivated by the issues raised by the applicant in the discussions and correspondence referred to in his evidence.[4]
[3] See Bartlett v Signostics (In Liquidation) (No 1) [2019] FCCA 2989.
[4] Bartlett v Signostics (In Liquidation) (No 1) [2019] FCCA 2989 at [50].
This was a pyrrhic victory so far as Mr Bartlett was concerned. At the time of the judgment Signostics was in liquidation and, in practical terms, all he could do was inform the liquidator of the judgment in his favour. It would seem apparent that the major reason Mr Phillips did not defend the proceedings against the liquidated company was that it had no significant realisable assets.
It is necessary to set out this background to set the scene for the current proceedings, which Mr Bartlett commenced on 9 December 2020, again pursuant to the provisions of the FWA. This application named Kevin Goodwin; Yoon Shin; David Keogh; and EchoNous Incorporated[5] as the Respondents.
[5] Hereinafter referred to as “EchoNous”.
Each of these individuals has had a prior association with Signostics but none of them were directly involved in the earlier proceedings, although there can be no doubt that each was aware of them, at least in general terms.
Mr Goodwin and Ms Shin are residents of the United States of America. EchoNous is a company based in Washington State but incorporated in Delaware. Mr Keogh, the Third Respondent, is a resident of Australia, as is Mr Bartlett.
Mr Keogh instructed solicitors in Victoria and a response was filed on his behalf on 11 February 2021, seeking either the summary dismissal of Mr Bartlett’s claim or its permanent stay.
Issues arose in respect of service on the respondents located outside of Australia. There was no dispute that Mr Keogh had been validly served in Australia. I attempted to resolve the controversies related to international service in an earlier judgment.[6] This led to each of the respondents instructing solicitors in South Australia and the filing of a response on their behalf on 22 September 2021. They fall in line with Mr Keogh’s position and seek the same orders.
[6] See Bartlett v Goodwin [2021] FCCA 1871.
The grounds on which it is submitted that the proceeding constituted an abuse of process can be summarised as follows:
·The issues raised by Mr Bartlett in the proceedings against them should have been litigated in the first set of proceedings, involving Signostics;
·The continuation of the current proceedings would deprive the respondents of the ability to invoke penalty privilege;
·The proceedings represent an abuse of process;
·The proceedings do not disclose a cause of action; and
·The proceedings have no reasonable prospects of success.
The present reasons for judgment relate to their application to strike out Mr Bartlett’s application against them on the basis that it represents an abuse of process, given the fact that he essentially elected to proceed against Signostics, in his early proceedings to recover his wage and contractual entitlements, rather than against them.
In general terms, they each assert that the correct time for Mr Bartlett to pursue them, for any legal responsibility which they held for the administration of Signostics was at the time of his first action and when he knew the company was in liquidation.
From their perspective, it represents an abuse of the court’s processes that it is, in effect, called upon to utilise its resources to adjudicate the same issues twice. Nonetheless, more significantly it would represent a gross unfairness to each of them if Mr Bartlett is able to harness findings of fact made by Judge Heffernan, against them, which were made in their absence and without any reference to the factual issues in contention as perceived by each of them, which have the potential to involve the imposition of a significant pecuniary penalty on them.
In his statement of claim, filed on 9 December 2020, Mr Bartlett alleges that EchoNous owned 100% of the issued shares of Signostics and elected to place the latter company into liquidation in order to defeat his claim against it. In these circumstances, he asserts that he is entitled to pursue his claims against the current respondents on the basis of what he asserts are their relationship with Signostics and their directorial and accessorial liability under the relevant provisions of the FWA and it would be grossly unfair to him if he was deprived of the opportunity to pursue them in such circumstances.
In this context, Mr Bartlett points to the fact that Mr Goodwin and Mr Keogh were formerly directors of Signostics and remain directors of EchoNous, whilst Mr Goodwin is its Chief Executive Officer and Ms Shin is its Company Secretary and Chief Legal Counsel. In these circumstances, Mr Bartlett asserts that they were individuals responsible for ensuring that Signostics complied with its obligations owed to him pursuant to the provisions of the Act.
THE STATEMENT OF CLAIM
In the statement of claim, Mr Bartlett claims as follows:
·He was employed by Signostics and was subject to the direction of Mr Goodwin and Mr Keogh. He began his employment in early 2005. Signostics’ Chief Financial Officer was Mr Stanislav Zinkov;
·His employment ceased on 11 August 2017, after having given six months’ notice, at which stage his salary was $200,000.00 per annum;
·He had accrued leave of approximately 430 hours, which equated to a value of $41,498.25, of which sum he was actually paid, $7,870.34;
·The basis of these assertions was said to be the findings of Judge Heffernan in the first proceedings against Signostics;
·Mr Bartlett queries his termination pay with staff of ADP, a payroll company, which had provided payroll services to Signostics since May of 2009;
·Thereafter, the statement of claim alludes to electronic correspondence passing between Mr Bartlett, Mr Zinkov and staff at ADP regarding issues such as:
·the extent of Mr Bartlett’s accrued annual leave;
·its relationship with carer’s leave;
·discrepancies and omissions in the records;
·Mr Goodwin, Mr Keogh and Mr Zinkov denied that Mr Bartlett was owed leave entitlements based on 430 hours and the correct balance was around 82 hours;
·Signostics filed a defence to his first action in which it admitted the following:
·It maintained wage records between January 2005 and May 2009;
·These records aggregated erroneously annual leave and carer’s leave;
·Mr Bartlett was responsible for the errors;
·It had subsequently corrected the errors.
·The defence had been prepared on the instructions of EchoNous, Mr Goodwin, Mr Keogh and Ms Shin; and
·In support of its defence regarding these matters, Signostics’ solicitor provided a falsified payslip for Mr Bartlett for April 2009, which was a ruse to support its contention regarding the amount of leave which was actually owed to Mr Bartlett on his termination.
In support of these allegations – the extent of annual leave owed and the falsified payslip, the statement of claim relied on specified paragraphs of Judge Heffernan’s earlier decision, namely:
I am satisfied on the balance of probabilities of the following matters:
(a)That the applicant was entitled to be paid the amount of untaken annual leave when his period of employment with the respondent ended;
(b)That the amount of annual leave accrued was, as he alleged, 431.5 hours in the total amount of $41,498.25;
(c)That the respondent paid the applicant $7,870.34 on account of untaken annual leave;
(d)That the applicant is entitled to be paid $33,627.91 on account of unpaid accrued annual leave; and
(e)That the respondent’s failure to pay the applicant for unpaid annual leave contravened a civil remedy provision.
…
I am satisfied that the chronology in that affidavit strongly suggests that EchoNous, the respondent, and the external payroll provider, ADP, colluded to confect the adjusted figure for annual leave entitlement on which the respondent relied at the time of the applicant’s termination. On 11 May 2018, after proceedings were issued in this matter, the respondent disclosed to the applicant through its solicitor a pay slip that purported to be his April 2009 pay slip which, if genuine, had the effect of proving that as of that date he was only owed 13.2 hours of accrued leave. The purpose of this disclosure was to support its claim that document ‘RD87’, which it had previously disclosed and which supported the applicant’s claim that his accrued annual leave at that time was approximately 426 hours, was incorrect.[7]
[7] See Bartlett v Goodwin [2019] FCCA 2989 at [51] – [53].
As a consequence of these matters, Mr Bartlett contends that Signostics breached the National Employment Standards in respect of its employment of him and took adverse action in contravention of workplace rights germane to him. This was the subject of the first proceedings and resulted in adverse findings being made against Signostics and, in its absence EchoNous, particularly in respect of the so-called forged pay-slip.
In the more recent proceedings currently before this court, Mr Bartlett, to some extent on the basis of the findings of Judge Heffernan, alleges that Mr Goodwin, Ms Shin, Mr Keogh and EchoNous bear accessorial liability for the actions of Signostics, in this regard, pursuant to the provision of section 550 of the FWA, on the basis each was knowingly involved in the alleged deception regarding the leave records pertaining to Mr Bartlett.
As a consequence, he seeks that Mr Goodwin, Ms Shin, Mr Keogh and EchoNous pay the compensation and pecuniary penalties imposed by Judge Heffernan on Signostics and that supporting declarations be made regarding their involvement in the FWA contraventions alleged against each of them.
THE EVIDENCE
Each party has filed affidavit material either in support of the dismissal application or in Mr Bartlett’s case seeking the rejection of the application. Mr Keogh, Mr Goodwin, Ms Shin and EchoNous rely on the following affidavit:
·Two affidavit of Jessica Kamleh filed on 22 April 2021 & 7 October 2021 respectively. She is Mr Keogh’s solicitor.
Mr Bartlett relies on the following affidavit:
·An affidavit of himself filed on 3 December 2021.
As these are interlocutory proceedings, none of this evidence has been subject to scrutiny through cross-examination. Accordingly, the court is not able to resolve factual controversy arising from the comparison of the affidavits.
DISCUSSION
Mr Keogh responded to the application brought by Mr Bartlett on 11 February 2021. As indicated above, Mr Goodwin, Ms Shin and EchoNous join in the application on the same bases and each has formally filed an application in case. They each seek the dismissal of the application on one of the following basis:
·It is an abuse of process; or
·Mr Bartlett’s Statement of Claim does not disclose a Cause of Action; or
·Mr Bartlett has no reasonable prospects of success in his application.
Division 13.4 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)[8] provide a regime for the summary disposal and stay of proceedings. In particular, Rule 13.13 provides as follows:
The Court may order that a proceeding be stayed, or dismissed generally or in relation to any claim for relief in the proceeding, if the Court is satisfied that:
(a)the party prosecuting the proceeding or claim for relief has no reasonable prospect of successfully prosecuting the proceeding or claim; or
(b)the proceeding or claim for relief is frivolous or vexatious; or
(c)the proceeding or claim for relief is an abuse of the process of the Court.
[8] Hereinafter referred to as “the Rules”.
Mr Bartlett’s current application relies on the provisions of section 550(1) of the FWA. Section 550(1) provides that a person who is involved in a contravention of a civil remedy provision of the Act is also taken to have contravened that provision. Section 550(2) provides a definitive list of the circumstances in which a person is taken to be involved in a contravention. A person is so involved only if the person concerned:
·has aided, abetted, counselled or procured the contravention; or
·has induced the contravention, whether by threats or promises or otherwise; or
·has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or
·has conspired with others to effect the contravention.
As previously indicated, Judge Heffernan found that Signostics had contravened a civil remedy provision of the Act by failing to pay Mr Bartlett his employment entitlements. This finding forms the basis for the allegation that the various respondents in the current matter has accessorial liability for Signostics’ conduct.
In this context, the respondents assert that it represents an abuse of process for Mr Bartlett, in effect, to rely on findings of fact, relating to them, from proceedings in which they were not involved and which, on their case, Mr Bartlett made a conscious decision not to include them directly in by adding them as parties. This is particularly so given the fact that Mr Bartlett made significant allegations of fraud against them in respect of the forged payslip issue, which led to Judge Heffernan imposing significant pecuniary penalties upon Signostics.
In this context, it is the position of the respondents that Mr Bartlett made a calculated forensic decision to prosecute the earlier proceedings against Signostics, to their conclusion, without including any of the current respondents as accessories.
In the first proceedings he was able to make allegations of misconduct against Mr Keogh, Mr Goodwin, Ms Shin and EchoNous itself, which necessarily could not be answered by them specifically in evidence, as they were not directly parties to the relevant proceedings, which was a course he must implicitly have elected to have taken.
In the second and more recent proceedings, these allegations are asserted as having being established on the basis of the findings of the trial judge. This is both unfair and founds an advantage in the subsequent proceedings, which has been unfairly obtained by Mr Bartlett.
More significantly, it is submitted that Mr Bartlett must have been aware that his case, at the time of the first proceedings, involved serious allegations of misconduct against the public officers of EchoNous, on the basis of their accessorial liability for the actions of Signostics. Yet he elected not to proceed directly against them, when it was open to him to amend his first application to include them as respondents in addition to Signostics. In this context, reliance is placed upon an email Mr Bartlett himself sent to Mr Goodwin, on 22 August 2017, prior to the instigation of the first proceedings, asserting as much.[9]
[9] See Annexure JK-2 to the affidavit of Jessica Kamleh filed 7 October 2021.
In support of this contention, counsel for Mr Keogh also relies on a letter dated 15 March 2021, from Mr Bartlett’s solicitor to his instructor’s firm, which reads as follows:
At the commencement of the proceedings in 2017, it was not incumbent upon our client to commence separate proceedings against your client or to include him as a party. It was obvious at that time that commencing proceedings against Mr Goodwin, Ms Shin, EchoNous Inc. and your client would have significantly delayed and complicated matters. In addition, our client had been a key executive of Signostics and was well aware at that time that Signostics had significant financial capacity including to meet the legal obligations owed to him. There was no need to pursue other parties including Mr Keogh…regrettably those circumstances changed…[10]
[10] See Annexure JK-7 to the affidavit of Jessica Kamleh filed 22 April 2021.
In a letter dated 6 May 2019, from Mr Bartlett’s solicitors to Mr Keogh, which was drafted shortly prior to Federal Court granting Mr Bartlett leave to proceed against Signostics, the basis on which Mr Bartlett asserted he was not proceeding against Mr Keogh was provided in the following terms:
The proceedings are currently “stayed” in the Federal Circuit Court due to a creditor’s liquidation of Signostics instigated by Signostics’ sole shareholder, EchoNous Inc. We understand you are a director of EchoNous Inc and formerly a director of Signostics, and assume you voted on the resolution to liquidate a 100% subsidiary of EchoNous. We also understand the liquidation of Signostics resulted in the forfeiting of significant tax losses which could have been offset against future earnings in Australia, and forfeited the CY 2018 tax refund, which our client has been advised by the liquidator that EchoNous had requested the liquidator not complete. We cannot see how this was or could possibly be in the best interest of EchoNous shareholders, including our client, and in our view confirms the only plausible reason for the liquidation is to defeat our client’s claim in the listed proceedings.[11]
[11] See Annexure JK-1 to the affidavit of Jessica Kamleh filed 7 October 2021.
In support of his contention that it would be an abuse of process to allow the proceedings for accessorial liability to proceed against him, Mr Keogh relies on the letter sent to him by Mr Bartlett’s solicitor in May 2019, prior to leave to proceed being granted. In this letter, it is alleged that Mr Keogh had full knowledge of the contraventions alleged against Signostics, in Mr Bartlett’s first proceedings and therefore he and the other directors of EchoNous and several of its officers, including Ms Shin, were directly and knowingly parties to the contraventions of the FWA alleged against Signostics and therefore bore accessorial liability for them pursuant to section 550 of the Act.
In these circumstances, Mr Keogh submits that Mr Bartlett and those advising him made a forensic decision not to pursue him and the other directors and officers of EchoNous in June 2019 and afterwards, full knowing the basis of his current application against them and it would be abusive to allow this issue to be re-litigated in new proceedings.
On the other hand, it is the contention of Mr Bartlett that he believed, at the time of his decision to proceed against Signostics alone he had prospects of recouping his entitlements against the company. Notwithstanding its liquidation, on the basis that it would be able to recoup significant funds due to it, by way of refund from the Australian Tax Office, as a consequence of research and development tax returns for the 2016 and 2017 financial years, which he estimated to be in the vicinity of $2,000,000.00. The fact that this amount was never realised and an application was made to the Commission of Taxation in regards to them represented the change of circumstances, as perceived by Mr Bartlett, in the 15 March 2021 correspondence.
In order to be able to seek the Federal Court’s leave to proceed against Signostics, whilst it was in liquidation, it was necessary for Mr Bartlett to provide a concise statement of facts important, from his perspective, which justified the continuation of the proceedings. In his statement, Mr Bartlett asserted as follows:
The individuals who induced the contravention [under the FWA] are an EchoNous and Defendant [Signostics] director and EchoNous officers.[12]
[12] See Annexure JK-3 to the affidavit of Jessica Kamleh filed 7 October 2021
Given this assertion, Mr Keogh submits that it is disingenuous for Mr Bartlett now to rely on the contention that his decision not to join him and the other Respondents, to the earlier proceedings, was due to the fact that it would have significantly delayed and complicated matters and as a consequence there was no need to pursue them.
In this context, counsel for Mr Keogh, Mr O’Grady, submits as follows:
The asserted significant delay and complication could only have arisen by the Current Respondents exercising their legitimate right to actively defend the proceedings and put Mr Bartlett to the burden of proving the alleged contravention. That is a burden Mr Bartlett, and he alone, elected to eschew.
The just resolution of the dispute, as properly acknowledged by Mr Bartlett prior to issuing the Earlier Proceeding, would have required each of the Current Respondents to have been named, or joined, as respondents to the Earlier Proceedings. That would have minimised delay and expense and resulted in the determination of all issues which ought reasonably to have been raised for determination in the Earlier Proceedings, avoiding duplication of proceedings and the impact on the court and others of the conduct of this proceeding. It would also have protected the Current Respondents from oppression, and vexation.[13]
[13] See outline of submissions of the Third Respondent filed 21 October 2021 at [17]-[18].
Mr Bartlett has filed an affidavit supporting his position that the respondent’s application to have his application dismissed should itself be dismissed.[14] In this affidavit, Mr Bartlett has deposed as follows:
·Prior to 1 March 2019, he had been unaware of any issue relating to the solvency or other financial difficulty of Signostics. Prior to that time, both Mr Goodwin and Ms Shin had been involved in defending the proceedings brought by him, on behalf of Signostics.
·On 5 March 2019 he was advised by Mr Phillips that Signostics had received two ATO refunds on 24 January 2019 and 25 September 2018 in the sum of $1,038,287.90 and $992,704.12 respectively.
·Mr Bartlett was informed that it was likely Signostics would have a similar entitlement for an R & D tax refund for the 2018 financial year, when it completed the necessary return.
[14] See affidavit of Stewart Bartlett filed on 3 December 2021.
In this context, Mr Bartlett deposed as follows:
On Thursday 2 May 2019, in the morning, Mr Phillips called me to discuss the R&D tax return. Mr Phillips stated that at that moment the only creditor was EchoNous who did not want the tax return completed, and therefore he would take more proactive action regarding the R&D tax if I was successful in being granted leave and then with my claim.
Around this date, I was of the view that Signostics had recently completed the 2016 and 2017 tax returns and received large refunds, and therefore logically they would be entitled to a refund if they submitted the 2018 tax return as there had been no material changes in the activities or business. Based on the general ledger received by Mr Phillips and forwarded to me, I believed the size of the refund would be around $600,000. I formed the view at that time that Mr Phillips would complete the tax return if I pursued leave and the case was awarded in my favour, and any judgement would be able to be satisfied from the tax refund as my status as an employee would see my debt settled under section 556 (l)(e) of the Corporations Act as a priority to the only other creditor EchoNous, considering that my last day as a director of Signostics was 13 February 2017, over 12 months prior to liquidation.
While I held the view that the Respondents were involved in the contraventions pleaded against Signostics in ADG524/2017, I considered there would be significant additional cost and delay in joining four additional parties to the proceedings, and that could be avoided if Signostics obtained a refund from the completed tax return.[15]
[15] See affidavit of Stewart Bartlett filed on 3 December 2021 at [26]-[28].
Mr Goodwin and the other respondents do not accept that this provides a sufficient basis for Mr Bartlett not to take pause on the liquidation of Signostics and prior to leave being sought to proceed against the liquidated company by him amending the relevant proceedings to include the current respondents. Rather he elected to proceed on against Signostics alone on the basis of his un-established assumptions regarding its potential tax status.
In this context, Mr Keogh places reliance on the fact that Mr Bartlett conceded, in the concise statement provided in support of the leave to proceed application that the individuals who induced the contravention are an EchoNous and Defendant director and EchoNous officers.[16]As such, having made this concession regarding his perception of the culpability of Mr Keogh and the others concerned, he nonetheless elected not to pursue them and therefore it would be abusive to allow him to, in effect, to change his mind in this regard, on the basis of his false assumptions.
[16] See Annexure JK-3 to the affidavit of Jessica Kamleh filed 7 October 2021.
In all these circumstances, Mr O’Grady submits the following:
·Mr Bartlett made a conscious and strategic decision to seek leave to proceed against Signostics alone well aware that his case also concerned allegations of misconduct against Mr Keogh and the other officers of both it and EchoNous;
·The consequence of this decision was to secure him a forensic advantage over Mr Keogh and the other current respondents because he could muster evidence and secure findings of fact against them, from Judge Heffernan, with fear of contradiction of either assertions of fact or law;
·By necessary implication, Mr Bartlett and his advisors knew that this was likely to be the case and consciously elected to proceed in this manner;
·At this stage, having armed himself with adverse findings made against Mr Keogh in his absence, Mr Bartlett seeks to utilise them in the current proceedings against Mr Keogh and the other respondents. This is the abuse, which Mr Bartlett requests that the court complete by allowing the current statement of claim to proceed;
·In reality, the current proceedings are directed to the satisfaction of the orders made by Judge Heffernan, in which Mr Keogh and the other respondents took no part, as a consequence of Mr Bartlett’s tactical election to proceed against Signostics alone; and
·In these circumstances, in order to protect the due administration of justice and protect itself from being complicit in Mr Bartlett’s abuse of process, it is necessary for the court to dismiss or permanently stay the proceedings.
Mr O’Grady makes the following further submissions:
·The essence of Mr Bartlett’s case in the proceedings against Signostics was that Mr Keogh and others had engaged in serious misconduct in concealing or subverting pay records in respect of Mr Bartlett’s employment by Signostics;
·Such serious allegations must be strictly pleaded and supported by assertions of material facts which give rise to them;
·In addition, the current statement of claim does not provide details of the material facts on which Mr Bartlett asserts that he was due untaken leave;
·Other than the findings of Judge Heffernan there are no such material facts asserted in the current proceedings;
·The findings of fact arising from the judgment of Judge Heffernan are not admissible in the current proceedings[17] and nor are Mr Keogh and the other respondents bound by the declarations made in it, given they were not parties to the proceedings concerned;
·Given these strictures, the current statement of claim does not disclose a proper cause of action; and
·In addition, apart from the inadmissible findings in the judgment of Judge Heffernan, there is no pleaded material fact to support the allegation that any of respondents concerned were knowingly involved in the contraventions alleged against Signostics.
[17] See Evidence Act 1995 (Cth) at section 91.
Mr Duggan, counsel for the United States-based respondents adopts these submissions. In his submissions, if Mr Bartlett wanted the orders made against his clients, which he (Mr Bartlett) now seeks, he should have joined them in the first proceedings and so given them the opportunity to refute the allegations made against them. In these circumstances:
Having conducted the proceedings in a way that has already involved findings against the US Respondents, it is an abuse of process to then seek to re-litigate the same matters against the US Respondents but on this occasion proceeding against them as parties. If the US Respondents were to be subjected to such serious allegations and if it was intended that they should be bound as parties, then the proceedings ought not have been fragmented.[18]
[18] See outline of submissions of the First, Second and Forth Respondents filed 12 November 2021 at [7].
In addition, Mr Duggan submitted that to allow Mr Bartlett to potentially litigate the same set of issues in two discrete sets of proceedings offends against the approach of modern-day case management principles [in respect of dealing] with proceedings in an efficient and time effective manner.[19]
[19] See outline of submissions of the First, Second and Forth Respondents filed 12 November 2021 at [8].
As is apparent, the parties have radically different views as to the state of Mr Bartlett’s mind, in the period between early-2018 and mid-2019, when the decision was made by him to seek leave to proceed against Signostics alone and not join the other current respondents. In these circumstances, his counsel Mr Rice points to the following assertions made by Mr Bartlett in his affidavit material. These issues relate to the change in circumstances relating to the financial situation of Signostics in the period in question, particularly whether its liquidator Mr Phillips would be able to secure the taxation rebates said to be available in respect of research and development deductions.
These assertions can be summarised as follows:
·In December of 2017 Signostics was a company of significant financial substance;
·Prior to its liquidation, the current respondents were involved in defending Mr Bartlett’s action on its behalf, as its relevant officers and shareholders;
·Axiomatically, joining further respondents in December 2017 would have delayed the proceedings and added to costs;
·The decision to wind up Signostics was not as a consequence of the actions of any third party creditor of the company. Rather it was made as a consequence of a special resolution passed by its only shareholder EchoNous;
·Mr Bartlett learnt of this decision when he was contacted by Mr Phillips on 1 March 2019;
·Mr Bartlett was advised by Mr Phillips that between October 2018 and February 2019 Signostics entered into a series of transactions pursuant to which a sum of approximately $1m was transferred by it to EchoNous to satisfy a loan agreement between the two entities;
·Mr Goodwin had signed the relevant loan agreement on behalf of Signostics;
·EchoNous was the only other creditor of Signostics;
·Mr Bartlett learnt in April of 2019 that former employees of Signostics had been seconded to work for EchoNous;
·In May of 2018, on the basis of its tax returns lodged in 2016 & 2017, Mr Bartlett was of the view that Signostics was likely to receive a tax rebate in an amount of around $600,000.00 for the 2018 financial year;
·At this stage, he was of the view that Mr Phillips would complete the necessary return given EchoNous were apparently disinterested in pursing the issue;
·On 28 May 2019 Mr Phillips reported to creditors of Signostics that its previous accountants BDO had declined to prepare a return for the year on a speculative basis. He further indicated that the likelihood of any dividend being paid to creditors depended on recovery of funds from the R&D tax incentive scheme;
·At this stage, Mr Phillips reported that he was investigating the possibility of recovering funds through this mechanism;
·In these circumstances, he (Mr Bartlett) reached the view that the costs of adding further respondents in the proceedings was not warranted;
·Between May of 2019 and prior to judgment being delivered by Judge Heffernan, Mr Bartlett conferred with Mr Phillips and another tax expert, from time to time, regarding the preparation of the R&D tax return in question;
·It was only in November of 2020 that it became apparent to Mr Bartlett that it was not possible for the R&D return to be lodged as it was likely that the earlier refunds made in 2016 & 2017 might be challenged by the ATO; and
·It was this circumstance which led him to institute the current accessorial liability proceedings against Mr Keogh and the other United States based respondents, in December of 2020.
It is the submission of Mr Rice that, given this combination of factors, it was reasonable for Mr Bartlett to continue his proceedings against Signostics alone. In those proceedings he established, on the balance of probabilities, that the company had breached relevant provisions of the National Employment Standards in respect of his leave entitlements. He asserts that there can be no doubt that both Mr Keogh and the United States-based respondents were aware of the nature of this claim, given their directorial role in respect of Signostics’ Australian operations.
In this factual context, Mr Rice asserts that it was the actions of EchoNous, in placing Signostics into liquidation and stripping it of its asset, which were the factors which led to Mr Bartlett’s first proceedings being rendered nugatory and therefore it is hollow for them to now complain of being disadvantaged in the accessorial proceedings, given this situation was entirely of their own making.
Essentially, Mr Rice contends that if EchoNous had not determined to liquidate Signostics and transfer its assets to itself, Mr Keogh and the United States-based respondents would have able to defend the proceedings and provide all necessary evidence to refute Mr Bartlett’s assertions and Signostics itself would have been able to meet any judgment which might be potentially entered against it. Thus Mr Rice contends that it is EchoNous and its officers, rather than Mr Bartlett, who has secured an improper advantage in the proceedings as a consequence of its conduct.
In this context, Mr Rice points to the fact that the accessorial provisions of the FWA are directed to remedying the evil which confronted Mr Bartlett in 2019, namely employers should not be allowed to escape the provision of the industrial safety net, provided by the National Employment Standards, by assuming voluntary insolvency. In this regard, he relies on the following principle, as enunciated by Judge Lucev in Bognar v Skilled Offshore Pty Ltd & Anor:[20]
A further reason for allowing persons involved under s.550 of the FW Act to be joined as parties to an application for an order in respect of a civil penalty contravention is that where a corporate respondent becomes insolvent, and is unable to pay an applicant, or the application is stayed by reason of the insolvency: Corporations Act 2001 (Cth), s.471B, the provisions of s.550 of the FW Act allow an applicant to proceed against, and obtain relief from others involved in a contravention.[21]
[20] Bognar v Skilled Offshore Pty Ltd & Anor [2016] FCCA 2962.
[21] See Bognar v Skilled Offshore Pty Ltd & Anor [2016] FCCA 2962 at [42].
In his written submissions, Mr Rice summarises what he characterises as the improper advantages secured by the current respondents and why it would not be in the interests of the administration of justice to allow them to take advantage of them in the following terms:
The Court should not overlook the improper advantages which the Respondents sought to achieve by their conduct in depriving Signostics of funds to meet Mr Bartlett’s claims, before placing Signostics into voluntary liquidation. The Respondents now seek to gain a further benefit from that improper conduct by also avoiding these proceedings.
In the circumstances, there is no abuse of process as:
(a)any oppression to the Respondents is justifiable as a consequence of the Respondent’s own conduct; and
(b)the continuation of these proceedings would not bring the administration of justice into disrepute. In fact, preventing Mr Bartlett from seeking his entitlements from the Respondents in these circumstances would itself be unjust.[22]
[22] See outline of submissions of the Applicant filed 3 December 2021 at [32]-[33].
Essentially, as I understand his case, Mr Bartlett contends that it would be unfair to him to deprive him of the opportunity to pursue his case for accessorial liability given that it was the actions of the various respondents, which frustrated his earlier proceeding. In tandem with this submission, he points to the fact that, in his view, he has provided an adequate explanation as to why he elected to continue against Signostics alone, namely his belief that the company was likely to have resources behind it, when its R&D tax entitlements were pursued. In these circumstances, it is submitted that the dismissal of the action would be disproportionate to any potential prejudice likely to be occasioned to the respondents.
APPLICABLE LEGAL PRINCIPLES
The court is conferred with a discretion, pursuant to Rule 13.13 of the Rules to summarily dismiss an application if satisfied that the relevant proceedings have no reasonable prospects of success and significantly, so far as the current matter is concerned, the proceedings can be characterised as being frivolous or vexatious; or an abuse of process.
As with all discretions, the discretion provided by Rule 13.13 must be exercised judicially and according to the dictates of justice. At a fundamental level, the court has an obligation to investigate and determine any claim for judicial relief, which has been honestly made in the proceedings before it, by the suitor concerned. The power to dismiss an application summarily has been frequently described as being one which is to be invoked sparingly even in cases which can be characterised as being inherently weak.
On the other hand, the court retains the authority to bring proceedings to an end prematurely if such proceedings would amount to an abuse of process or their prolongation would clearly inflict unnecessary injustice upon the opposite party.[23] These two considerations must be carefully balanced against one another in any application for summary dismissal bearing in mind the potentially significant implications for any party who will be the subject of such an order.
[23] Welsh v Digilin Pty Ltd [2008] FCAFC 149 at [32] (Tamberlin, Greenwood and Collier JJ).
It is a significant aspect of Mr Keogh’s case and that of United States-based parties that considerations relating to case management and the efficient use of court resources are relevant matters in informing how the court should exercise the discretion conferred upon it by Rule 13.13. In particular, it is in the overall public interest that cases before the court should be conducted in a cost efficient manner, with an eschewal of the potential for any duplication of proceedings, with a concomitant increase costs in being required to be borne by both the litigants themselves and the public purse.
I acknowledge that this is a significant element of the case for Mr Keogh and the United States-based parties. From their perspective, it will be an unacceptable imposition for the court to be called upon to investigate the same factual circumstances, which resulted in the earlier judgment of Judge Heffernan.
Division 2 of the Federal Circuit and Family Court is a busy court of first instance. Part of its raison d’être is to facilitate the just resolution of disputes as quickly, inexpensively and efficiently as possible.[24]This is described, in the relevant legislation, as the overarching purpose of case management provisions.
[24] See Federal Circuit & Family Court of Australia of Australia Act 2021 (Cth) at section 190(1). Hereinafter referred to as the FCFCOA Act.
As was pointed out by French CJ in Aon Risk Management Limited v Australian National University (“Aon”)[25] courts have an obligation to ensure that the litigation coming before them is transacted effectively and efficiently, not only in the interests of the individual parties concerned but also in the interests of other litigants and users of the court, whose cases are inevitably affected by how other cases in the system are managed. His Honour said as follows:
…the adversarial system has been qualified by changing practices in the courts directed to the reduction of costs and delay and the realisation that the courts are concerned not only with justice between the parties, which remains their priority, but also with the public interest in the proper and efficient use of public resources.[26]
[25] Aon Risk Management Limited v Australian National University (2009) 239 CLR 175.
[26] See Aon Risk Management Limited v Australian National University (2009) 239 CLR 175 at [23].
In the case, French CJ also noted that courts have the inherent authority to control their processes and prevent their application in a way which would be unfair to a party or would otherwise bring the administration of justice into disrepute among right-thinking people.[27]In this context it was noted that it was impossible to comprehensively list all possible categories of abuse. In this context, his Honour noted:
A broad merits-based judgment [is] required, taking account of public and private interests affected and focussing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it an issue which could and should have been raised earlier. As Lord Bingham said:
“As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not”. [28]
[27] See Aon Risk Management Limited v Australian National University (2009) 239 CLR 175 at [33]; citing Johnson v Gore Wood & Co [2002] 2 AC 1 at 31 per Lord Bingham of Cornhill.
[28] See Aon Risk Management Limited v Australian National University (2009) 239 CLR 175 at [34].
From this I take it that, in the present matter, I must approach the issue of whether the institution of the further proceedings for accessorial liability represents an abuse of process by attempting to balance the competing interests of the parties themselves in broad terms. The central question being whether Mr Bartlett could and should have raised the issue earlier and the implications of this from the perspective of the overall administration of justice. It is not an issue which can be determined formulaically.
The majority in the case (Gummow, Hayne, Crennan, Kiefel & Bell JJ) considered the meaning of the expression just resolution, which also appears in section 190 of the FCFCOA Act. Their Honours considered that speed and efficiency, in the sense of a minimum of delay and expense were essential ingredients in what constituted a just resolution but this should not detract from a proper opportunity being given to parties to present their respective cases.[29] However, the court always retains the authority to control its processes according to appropriate case management principles.
[29] See Aon Risk Management Limited v Australian National University (2009) 239 CLR 175 at 113 [98].
In the case of Tomlinson v Ramsey Food Processing Pty Ltd (“Tomlinson”)[30] the High Court recognised that the making of a claim, which ought reasonably to have been made or raised in earlier proceedings, can constitute an abuse of process. The court said as follows:
Accordingly, it has been recognised that making a claim or raising an issue which was made or raised and determined in an earlier proceeding, or which ought reasonably to have been made or raised for determination in that earlier proceeding, can constitute an abuse of process even where the earlier proceeding might not have given rise to an estoppel. Similarly, it has been recognised that making such a claim or raising such an issue can constitute an abuse of process where the party seeking to make the claim or to raise the issue in the later proceeding was neither a party to that earlier proceeding, nor the privy of a party to that earlier proceeding, and therefore could not be precluded by an estoppel. (footnotes omitted)[31]
[30] Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507.
[31] See Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 at 518 [26].
Abuse of process is related to estoppel but is inherently broader and more flexible. As such, it is insusceptible of a formulation which compromises closed categories, rather it is capable of any application in any circumstance in which the use of a court’s procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute. For obvious reasons, it would be an anathema to justice if a claimant could recover more than once for the breach of a legal duty owed to them.
Having already noted that there can be no closed or settled instances in which it can be said that the actions of a party constitute an abuse of process but rather that the circumstances of each case must be assessed idiosyncratically, these two considerations appear to me to be central to the determination of the issue in the present matter. Namely, would the furtherance of Mr Bartlett’s case be unjustifiably oppressive to Mr Keogh and the United States-based respondents and/or would it bring the administration of justice into disrepute?
The High Court returned to the issues raised in Aon and Tomlinson in UBS AG v Tyne as Trustee of the Argot Trust (“UBS”).[32] As the case concerns whether litigation commenced and abandoned in discrete jurisdictions, from the perspective of Mr Keogh and his related respondents, what was said in the case is germane to the present matter.
[32] UBS AG v Tyne as Trustee of the Argot Trust (2018) 265 CLR 77.
Mr Tyne was described as being the controlling mind of a family trust and related investment company which had sought advice from the UBS, an international bank. In 2010 the bank commenced proceedings in the Supreme Court of Singapore against the trust asserting its loan account was in default. The trust countered with proceedings in the Supreme Court of New South Wales alleging the bank had provided it with negligent advice. The bank brought anti-suit proceedings in Singapore, which were successful.
Mr Tyne and the trust then discontinued their claim in the Supreme Court of New South Wales, leaving only the investment company as a plaintiff. The company’s case was then permanently stayed on the basis that it was seeking to re-litigate a claim which had been adjudicated by the Supreme Court of Singapore. Mr Tyne then commenced proceedings, against the bank, in the Federal Court of Australia. It was the bank’s contention, with which the High Court agreed, that these proceedings constituted an abuse of process.
In my assessment, the factual situation in UBS was complex. As such, I must be careful not to lose sight of the fact that each case involving assertions of abuse of process must be adjudged on their individuals facts and must be directed to the degree of oppression to which a party is subject and whether there are issues relating to the potential for the overall administration of justice being brought into disrepute.
In blunt terms, the question being whether a party has utilised multiple proceedings to gain an unfair tactical advantage over another, which the court should not condone. However, as will be discussed later, the absence of oppression to the party seeking dismissal does not of itself resolve the issue, given the public’s interest in the timely and efficient conduct of litigation.
The plurality of the High Court (Kiefel CJ, Bell & Keane JJ) found as follows:
The fact that UBS is a large commercial corporation does not deny that permitting the Trust's claim to proceed will subject it to unjustifiable oppression. That oppression is found not only in the significant delay in the resolution of the dispute and the inevitability of increased costs to UBS. At its core is the vexation of being required to deal again with claims that should have been resolved in the SCNSW proceedings. The fact that UBS has not been required to admit or defend the Trust's claim does not lessen that vexation. Between December 2010 and May 2013, when the SCNSW proceedings were finally determined, UBS was engaged in litigation with a party controlled by Mr Tyne, arising out of its alleged dealings with Mr Tyne in respect of the loss that is claimed by the Trust in these proceedings. On the final determination of the SCNSW proceedings, it was reasonable for UBS to order its affairs upon the understanding that the dispute between it and Mr Tyne, and the entities that he controlled, arising out of those dealings was at an end.
For the Federal Court to lend its procedures to the staged conduct of what is factually the one dispute prosecuted by related parties under common control with the attendant duplication of court resources, delay, expense and vexation, … is likely to give rise to the perception that the administration of justice is inefficient, careless of costs and profligate in its application of public moneys. The primary judge was right to permanently stay the proceedings as an abuse of the processes of the Federal Court.[33]
[33] See UBS AG v Tyne as Trustee of the Argot Trust (2018) 265 CLR 77 at 100 [58] – [59].
As events subsequently transpired, the action of EchoNous rendered Mr Bartlett’s action against Signostics of no practical significance, either to him or to Mr Keogh and the other United States-based respondents. Mr Bartlett was left with a judgment against a defunct company, which had no assets as a consequence of the actions of EchoNous alone. The judgment did not advance Mr Bartlett and had no implications for either Mr Keogh or the other respondents.
In these circumstances, I do not consider that it can be said to be reasonable for EchoNous and those related to it to consider that they would be subject to no further action from Mr Bartlett because they had in common parlance stripped Mr Bartlett’s corporate employer, in Australia, of all its assets. If any tactical advantage was gained from this course, in my view, it resides with the respondents.
In a minority but concurring judgment Gageler J, seized on what had been said by Lord Bingham in Johnson v Gore Wood[34] and focussed on the fact that issues related to abuse of process, particularly so far as the potential for successive proceedings to bring the administration of justice into disrepute, should be concerned with the timely and efficient administration of justice.[35]This being part of the merits based judgment which [took into] account of all the facts of the case.[36]
[34] Johnson v Gore Wood & Co [2002] 2 AC 1.
[35] See UBS AG v Tyne as Trustee of the Argot Trust (2018) 265 CLR 77 at [70].
[36] See UBS AG v Tyne as Trustee of the Argot Trust (2018) 265 CLR 77 at [7].
Lord Bingham, in summary, identified potential abuse which might arise from the bringing of successive proceedings as including the following types of consideration:
·The desirability that there be finality in litigation;
·As such, a party should not be twice vexed in the same matter;
·It was not necessary to establish abuse for dishonesty per se to be demonstrated or that the subsequent proceedings represent a collateral attack on a previous decision, rather what was necessary was the demonstration of unjust harassment of a party; and
·The public interest was served by an emphasis on efficiency and economy in the conduct of litigation
His Honour cited the following statement of Lord Bingham:
It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not.[37]
[37] See UBS AG v Tyne as Trustee of the Argot Trust (2018) 265 CLR 77 at [67]; citing Johnson v Gore Wood & Co [2002] 2 AC 1 at 31.
In concluding that Mr Tyne’s proceedings in the Federal Court did represent an abuse of process, vis-à-vis UBS, Gageler J said as follows:
It was not necessary for the effect of the Federal Court proceedings on UBS to rise to the level connoted by language such as "unfairness" or "oppression". Rather, UBS's private interest was sufficiently engaged by UBS being compelled by the coercive authority of the Federal Court to respond to a process designed to vindicate a claim which should have been brought in the SCNSW proceedings, which UBS had already gone to the time and expense of bringing to completion. With that private interest was to be weighed the public interest in the timely and efficient resolution of claims within the integrated Australian legal system of which the Supreme Court and the Federal Court each form part.[38]
[38] See UBS AG v Tyne as Trustee of the Argot Trust (2018) 265 CLR 77 at 105 [75].
CONCLUSIONS
The issue of whether to characterise the current proceedings as an abuse of process or otherwise is one which requires a broad based merits judgment, involving an assessment of all the factors in the case. This encompasses two broad limbs, namely the potential oppression to the party subject to the impugned litigation and the interests of the public regarding possible perceptions relating to the manner in which the relevant litigation is being conducted. The court should not condone unfairness in litigation.
However, regardless of the degree or otherwise of potential unfairness to a party, the inquiry must have regard to the benefits implicit to the community of cost efficient and timely disposal of litigation. In conducting this exercise, the court must beware of adopting too dogmatic approach. It requires a balance of the public and the private interest.
I do not think that it can be said that EchoNous and the United States-based respondents have been twice vexed in the proceedings or indeed that there is the possibility that Mr Bartlett may receive some form of double recompense if the second proceedings continue. Rather, the need for the second round of proceedings arose because of the actions of EchoNous in liquidating Signostics and the fact that the earlier judgment obtained against it has no financial consequences.
Accordingly, any tactical advantage or indeed disadvantage relating to the insolvency of the company, vis-à-vis EchoNous and its officers, is attributable solely to the actions of those persons, not Mr Bartlett. The company was liquidated when the proceedings against it had been fixed for final hearing, which was comparatively imminent. No evidence has been provided by Mr Keogh or any of the other respondents to refute Mr Bartlett’s assertion that the liquidation was a calculated exercise, on the part of the guiding hands of Signostics, to frustrate his claim.
In my assessment, Mr Bartlett did not continue the proceedings against Signostics alone due to any desire on his part to derive some form of unfair tactical advantage over that company or indeed over any other person. In this sense, he was in a materially different position to Mr Tyne, who was conducting complex litigation over several fronts and involving several entities, each of which he controlled. Significantly, Mr Bartlett cannot have been privy to the decision to liquidate Signostics, which occurred after he had commenced his proceedings against it and after his application had been fixed for hearing.
Rather, in my assessment, on a prima facie basis the likely catalyst for the liquidation was his claim, which was a comparatively simple claim for leave entitlements, which named the individuals at Signostics, whom he alleged were involved in the evasion of these entitlements and the alleged mechanism through which those entitlements had been avoided.
If there was any dishonest tactical advantage arising in the case, it was derived by EchoNous who, in effect, attempted to pull the rug out from under the feet of Mr Bartlett, so they could avoid the consequences of the trial in respect of which it had been indicated that liability was denied. I agree with the submission of Mr Rice that it is EchoNous which now seek to take advantage of its improperly motivated tactics in seeking to have Mr Bartlett’s action characterised as an abuse of process.
With the benefit of hindsight, it would have been more cost efficient and expedient for Mr Bartlett to have amended his claim in March of 2019, after Signostics had been placed into liquidation and to have included other respondents. However, in my view, expediency is not the overall test. Rather the court must examine the probity of Mr Bartlett’s actions and the reasons which motivated it in the context of its assessment of public perceptions and expectations regarding how justice should be administered.
I accept that, at this stage, he had to make an assessment of how best to proceed from his perspective. This included an assessment of the costs involved and the best mechanism, as he perceived it, of recouping the leave entitlements to which he asserted he was entitled. Necessarily, this cannot have been an exercise capable of producing a definitive answer.
The major factor at work in his mind was the belief, which later turned out to be fallacious, that Signostics was sitting on a large R&D tax rebate, which would easily satisfy his claim. His decision was tactical in the sense that he considered that this was the most expedient avenue to recoup his entitlements but the mere fact that it was a tactical decision does not render it either an improper or dishonest one. Certainly, in my view, it does not amount to an unjust harassment of EchoNous or any of the United States-based respondents.
I accept that in these circumstances it was reasonable for Mr Bartlett to consider that the most cost efficient manner for him to proceed was to continue on against Signostics alone. He was not to know that this was a pointless exercise. In my view, there is no evidence to indicate that he was motivated by any desire in so doing that he would obtain some negative findings against Mr Keogh and the other respondents, which he could then marshal unfairly against them in subsequent proceedings.
I agree that it is regrettable that the court is called upon to adjudicate the same factual matrix in two discrete proceedings and this must have financial implications for the court itself and public perceptions regarding the efficient conduct of litigation. However, in my view, there is no financial detriment to EchoNous or the United States-based respondents themselves, as a consequence of this, given they did not take part in the earlier proceedings but rather elected to do what they could to avoid them.
As previously indicated, in my view, the only basis on which it could be said each of the current respondents was entitled to conclude that they were free from any further suit from Mr Bartlett was the fact that they had unilaterally liquidated Signostics, whilst his suit was pending against it and the company’s assets transferred from it.
In my view, in assessing the public interest, the court is entitled to examine the nature of the legislation pursuant to which Mr Bartlett brings his claim. The objects of the FWA are contained in section 3 of the Act. They include the provision of an industrial safety net, for Australian employees, which is maintained through the enforcement of a system of minimum terms and conditions specified in the modern award system. The public also have an interest in ensuring that beneficial legislation, such as the FWA, is applied by the court as envisaged by the legislature.
The gravamen of Mr Bartlett’s claim is that he was deprived of his proper leave entitlements pursuant to the National Employment Standards. Presently, in the absence of Signostics, Mr Bartlett’s claim relates to the potential accessorial liability of Mr Keogh and the other respondents, pursuant to section 550 of the FWA, in not paying him his proper leave entitlements.
I agree with Mr Rice’s submission that the central legislative rationale for the provision is to avoid situations in which employees are deprived of their entitlements because of the insolvency of their corporate employers, particularly in questionable circumstances. In my view, this context, to a very large extent, must inform the court’s judgment as to whether or not the second round of proceedings can be characterised as an abuse of process. In all these circumstances, I have reached the conclusion that Mr Bartlett’s second application cannot be characterised as an abuse of the court’s processes.
The final issue requiring the court’s attention is whether the manner in which Mr Bartlett’s second case is currently pleaded is misconceived and, as a consequence, has provided him with some sort of unfair tactical advantage. As previously indicated, he has pleaded as material facts in the relevant statement of claim, the various findings of Judge Heffernan regarding the quantum of entitlements due to him.
Pursuant to section 91(1) of the Evidence Act 1995 (Cth) evidence of a finding of fact in another proceeding is not admissible to prove the existence of a fact that is in issue in subsequent proceedings. Accordingly the quantum of what is or is not owed, as a consequence of his employment by Signostics, cannot be proved by reference to any finding of Judge Heffernan.
In Yorke v Lucas[39] the High Court indicated that in order to establish that any of Mr Keogh, Mr Goodwin, Ms Shin or EchoNous were involved in the relevant contravention of section 90 of the Act, it must be established that they were intentional participants in the contravention and had knowledge of each of the essential elements of it.
[39] Yorke v Lucas [1985] HCA 65.
In Fair Work Ombudsman v Devine Marine Group Pty Ltd[40] White J explained the concept of a party being knowingly concerned in a contravention under the FWA in the following terms:
The notion of being “knowingly concerned” in a contravention has a different emphasis from that of aiding, abetting, counselling or procuring” a contravention. To be knowingly concerned in a contravention, the person must have engaged in some act or conduct which “implicates or involves him or her” in the contravention so that there be a “practical connection between” the person and the contravention…[41]
[40] Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365.
[41] See Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365 at [178].
In CFMEU v BHP Coal Pty Ltd[42] the Full Court indicated the probity consideration relating to cases involving allegation of contraventions of the industrial law against individuals who were potentially liable to the imposition of a civil penalty, vis-à-vis pleadings. It held that such cases were in a special category of case, which dictated that such individuals should know with some precision the case to be made against them.[43]
[42] CFMEU v BHP Coal Pty Ltd (2015) 230 FCR 298.
[43] See CFMEU v BHP Coal Pty Ltd (2015) 230 FCR 298 at [63] – [65].
The Court went on to say as follows:
The long and the short of it, then, is that, in a civil proceeding of a penal nature, 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. Nevertheless, where an applicant’s pleading is ambiguous but a respondent has nonetheless meaningfully engaged with it in its defence, that engagement and the manner in which an applicant’s case is consequentially opened and the trial conducted and defended can and ought to be considered in deciding whether a respondent has suffered any procedural unfairness. That is so even if there has been no formal application to amend the pleading.[44]
[44] See CFMEU v BHP Coal Pty Ltd (2015) 230 FCR 298 at [65].
At the present stage, each respondent has been alerted to the essence of the case each of them is expected to meet. Mr Bartlett’s case cannot be described as inherently complex. Although it might be characterised as expedient or convenient for Mr Bartlett to rely on the findings made by Judge Heffernan to delineate his case, it does not necessarily mean that this is the only manner in which he can make out his case. Rather, it is possible for him to indicate how he alleges he continues to be deprived of his leave entitlements and how each of the respondents was knowingly involved in this outcome. Thereafter, each respondent can deny any such assertions as they consider fit.
In my view, any defect or prejudice arising to Mr Keogh and the other respondent can be remedied by Mr Bartlett re-pleading his case in respect of the alleged contravention under section 90 of the FWA. In my view, it is open to him to plead the amounts which he asserts are owed to him by Signostics by detailing the periods of his employment; the amount of his untaken leave; his rate of pay; and the deduction of any amount paid to him on termination.
Thereafter, it will be incumbent on him to plead how he alleges each of the respondents was either directly or indirectly knowingly involved in the failure or omissions leading to the alleged underpayment. In my assessment, it would be unfair to Mr Bartlett to stay his current application on the basis of any defects in the current statement of claim, which are potentially capable of being remedied.
I will direct that Mr Bartlett file and serve his amended statement of claim within 42 days of the date of these orders and direct that the respondents file a defence within a further 42 days of that. The case will then be listed for directions on 30 November 2022 on which occasion consideration will be given to referring the matter to an appropriate process of alternative dispute resolution. In this later context, it is appropriate to bear in mind that the case concerns allegations of underpayment of leave entitlements.
For all these reasons the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and seventeen (117) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Brown. Associate:
Dated: 25 August 2022
SCHEDULE OF PARTIES
ADG 371 of 2020 Respondents
Fourth Respondent:
ECHONOUS INC
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