Brant v BLK International Pty Ltd
[2021] FCCA 688
•8 April 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Brant v BLK International Pty Ltd [2021] FCCA 688
File number(s): BRG 216 of 2020
BRG 309 of 2020Judgment of: JUDGE JARRETT Date of judgment: 8 April 2021 Catchwords: INDUSTRIAL LAW – Alleged contraventions of the Fair Work Act 2009 (Cth) – cross claim for misappropriation and breaches of Corporations Act 2001 (Cth) –transfer proceedings to the Federal Court of Australia.
HIGH COURT AND FEDERAL COURT – Federal Circuit Court – procedure – discovery and inspection.
Legislation: Corporations Act2001 (Cth) ss 18, 58AA, 58AA(2), 180, 181, 182, 1317H
Fair Work Act 2009 (Cth) ss 90(2), 323(1), 323(4), 546, 547
Federal Circuit Court of Australia Act 1999 (Cth) ss 39(2)(b), 39(3)(a)-(d), 40(2), 45(1)
Federal Circuit Court Rules 2001 (Cth) rr 3.05, 3.05(1), 3.05(3), 7.01, 8.02(4)(a)-(e), 13.07, 28.08, 28.09, 28.10
Trade Practices Act 1974 (Cth) ss 52, 52AB, 82
Cases cited: Alfaro v Crown Commercial Cleaning Pty Ltd & Anor [2012] FMCA 478
Amponsem v Laundy (Exhibition) Pty Ltd (2014) 245 IR 240
Cai v Tiy Loy & Co Ltd (No 2) [2015] FCCA 2924
Davis v ABL Nominees Pty Ltd [2014] FCCA 2069
Ioakimidis v Lygon Court Travel Pty Ltd Trading as Helloworld Lower Templestowe [2020] FCCA 1687
Joseph v Parnell Corporate Services Pty Ltd ( 2020) 295 IR 49
Lynch v Cash ConvertersPersonal Finance Pty Ltd [2016] FCA 1536
McDermott v King [2013] FCCA 2348
Ogawa v Federal Magistrate Phipps (2006) 151 FCR 311
Sims v RM Capital Pty Ltd & Anor [2014] FCCA 2977
Wright v Norris Real Estate Pty Ltd [2016] FCCA 707
Number of paragraphs: 60 Date of last submission/s: 15 October 2020 Date of hearing: 15 October 2020 Place: Brisbane Counsel for the Applicants: Mr Fitzsimmons Solicitor for the Applicants: Pathway Legal Pty Ltd Counsel for the Respondent: Mr Clift Counsel for the Respondent: Lyndon Duhs Law ORDERS
BRG 216 of 2020 BETWEEN: TYRON HOWARD BRANT
Applicant
AND: BLK INTERNATIONAL PTY LTD
Respondent
ORDER MADE BY:
JUDGE JARRETT
DATE OF ORDER:
8 APRIL 2021
On the application in a case filed on 9 October, 2020 by the applicant
1.Pursuant to s.45 of the Federal Circuit Court Act 1999 (Cth) the Court declares that that it is appropriate, in the interests of the administration of justice, to allow the interrogatories or discovery in these proceedings.
The Court further orders that:
2.Within 28 days from the date of these orders, the respondent must make discovery in relation to the following classes of documents in the way provided for in Part 14 of the Federal Circuit Court Rules 2001 (Cth):
(a)“Final sales agreement between McGrath Nicol (MN) and BLK International / Esperanca Timor Oan (ETO) including confirmation on all salaries and benefits for all staff and Executive officers moving forward”;
(b)“Email from Shannon Moore (SM) the then COO to Nilton and Buka with spreadsheets attached showing all salaries, allowances, remunerations and benefits for all staff”;
(c)“Copy of the Vantage report”; and
(d)“All Auditors’ and Accountants’ reports” from 2017 to March 2020.
3.The applicant have leave to amend his application filed on 9 April, 2020 to include a claim for the imposition of a pecuniary order upon the respondent for contraventions of the Fair Work Act 2009 (Cth) and consequential orders.
4.Otherwise the application in a case be dismissed.
On the application in a case filed on 9 October, 2020 by the respondent, the Court orders that:
5.Pursuant to rule 3.05 of the Federal Circuit Court Rules 2001 (Cth) the time for the respondent to file and serve all affidavits of evidence in chief by itself or any other witnesses upon which it intends to rely at trial be extended to 15 October, 2020.
6.Pursuant to rule 7.01 of the Federal Circuit Court Rules 2001 (Cth) the respondent have leave to amend its response filed 13 May, 2020 in the form annexed to the affidavit of Jonathan Leslie Duhs filed on 11 October, 2020.
7.This proceeding be heard together with proceeding BRG 309 of 2020 between Michael Robinson and BLK International Pty Ltd.
8.The evidence in BRG 309 of 2020 be evidence in this proceeding.
9.The evidence in this proceeding be evidence in BRG 309 of 2020.
10.The application filed on 9 April, 2020 be transferred to the Federal Court of Australia.
11.Otherwise the application in a case be dismissed.
ORDERS
BRG 309 of 2020 BETWEEN: MICHAEL ROBINSON
Applicant
AND: BLK INTERNATIONAL PTY LTD
Respondent
ORDER MADE BY:
JUDGE JARRETT
DATE OF ORDER:
8 APRIL 2021
On the application in a case filed on 9 October, 2020 by the applicant
1.Pursuant to s.45 of the Federal Circuit Court Act 1999 (Cth) the Court declares that that it is appropriate, in the interests of the administration of justice, to allow the interrogatories or discovery in these proceedings.
The Court further orders that:
2.Within 28 days from the date of these orders, the respondent must make discovery in relation to the following classes of documents in the way provided for in Part 14 of the Federal Circuit Court Rules 2001 (Cth):
(a)“Final sales agreement between McGrath Nicol (MN) and BLK International / Esperanca Timor Oan (ETO) including confirmation on all salaries and benefits for all staff and Executive officers moving forward”;
(b)“Email from Shannon Moore (SM) the then COO to Nilton and Buka with spreadsheets attached showing all salaries, allowances, remunerations and benefits for all staff”;
(c)“Copy of the Vantage report”; and
(d)“All Auditors’ and Accountants’ reports” from 2017 to March 2020.
3.The applicant have leave to amend his application filed on 4 June, 2020 to include a claim for the imposition of a pecuniary order upon the respondent for contraventions of the Fair Work Act 2009 (Cth) and consequential orders.
4.Otherwise the application in a case be dismissed.
On the application in a case filed on 9 October, 2020 by the respondent the Court orders that:
5.Pursuant to rule 3.05 of the Federal Circuit Court Rules 2001 (Cth):
(a)the time for the respondent to file and serve all affidavits of evidence in chief by itself or any other witnesses upon which it intends to rely at trial be extended to 15 October, 2020; and
(b)the time for the respondent to file and serve its response and defence and cross-claim be extended to 27 July, 2020.
6.Pursuant to rule 7.01 of the Federal Circuit Court Rules 2001 (Cth) the respondent have leave to amend its response filed 27 July 2020 and defence and cross-claim filed 27 July 2020 in the forms annexed to the affidavit of Jonathan Leslie Duhs filed on 11 October, 2020.
7.This proceeding be heard together with proceeding BRG 216 of 2020 between Tyron Brant and BLK International Pty Ltd.
8.The evidence in BRG 216 of 2020 be evidence in this proceeding.
9.The evidence in this proceeding be evidence in BRG 216 of 2020.
10.The application filed on 4 June, 2020 be transferred to the Federal Court of Australia.
11.Otherwise the application in a case be dismissed.
REASONS FOR JUDGMENT
JUDGE JARRETT:
These reasons relate to competing interlocutory applications in the two principal proceedings identified in the title to these reasons. The principal proceedings are related. The applicants are represented by the same solicitors and counsel. So too, the respondent in each proceeding. The submissions made in the competing interlocutory applications are the same. It is convenient to deal with the applications in both proceedings together in these reasons.
Mr Brant, the applicant in BRG216 of 2020, was employed by the respondent as its chief executive officer. Mr Robinson, the applicant in BRG309 of 2020 was employed as its chief financial officer. The applicants’ employment by the respondent came to an end on 3 March, 2020 in the case of Mr Brant and on 30 April in the case of Mr Robinson. The relief sought by each of the applicants in their respective principal proceedings is fundamentally the same, although each case differs as to quantum. The respondent to each proceeding is the same.
There are a number of applications in each of the principal proceedings, namely:
(a)the applicant in each proceeding seeks:
(i)orders for discovery in respect of 37 categories of documents; and
(ii)summary judgment on part of his application; and
(b)in each proceeding the respondent seeks:
(i)an extension of time to file evidence and pleadings;
(ii)leave to amend its pleadings in each proceeding;
(iii)that the proceedings be consolidated or heard together; and
(iv)that the consolidated proceeding (or each proceeding together) be transferred to the Federal Court of Australia.
BRIEF BACKGROUND
Mr Brant and Mr Robinson filed applications on 9 April and on 8 June, respectively, seeking to recover unpaid entitlements from the respondent. Mr Brant seeks $97,282.89. His case is straight forward. He claims for unpaid annual leave and long service leave accrued as at the date of termination of his employment. He also claims reimbursement for expenses paid by on behalf of the respondent.
Mr Robinson seeks $62,106.42. His claim includes an amount for payment in lieu of notice of termination of his employment. He also claims unpaid annual leave and long service leave accrued as at the date of termination of his employment.
This Court has jurisdiction to entertain the applicants’ claims for accrued but unpaid annual leave. Section 90(2) of the Fair Work Act 2009 (Cth) requires an employer to pay an employee when the employment ends the amount of accrued annual leave. The balance of the claims are comfortably within the Court’s associated jurisdiction.
The respondent filed responses to the applications on 13 May, 2020 (to Mr Brant’s application) and on 27 July, 2020 (to Mr Robinson’s application). In each case the respondent admits part of the claims made by each applicant as follows:
(a)in respect of Mr Brant’s claim:
(i)annual leave: $53,602.50 (having regard to the evidence of Ms Belinda Marschke);
(ii)long service leave: $26,578.79; and
(iii)expenses: $7,743.87;
TOTAL = $87,925.16
(b)In respect of Mr Robinson’s claim:
(i)Annual leave: $27,798.05.
In each case the respondent has made a counterclaim against the applicant. In the case of Mr Brant, the counterclaim seeks $268,116.55 pursuant to s.1317H of the Corporations Act2001 (Cth), as compensation for the applicant’s contravention of ss.180, 181 and/or 182 of the Corporations Act. Alternatively, the counterclaim is pursued as a damages claim for breach by the applicant of his employment contract. The counterclaim has two aspects. The first appears in paragraph 10 as follows:
10. The Applicant:
a. made;
b. caused and/or permitted the Respondent’s payment of;
c. failed to promptly (or at all) return; and/or
d. has had the benefit of payment by the Respondent of,
expense claims which were not claims for reasonable business expenses of the Respondent’s business, which the Respondent had no obligation to pay under the Employment Agreement or otherwise, and which the Respondent therefore ought not to have paid (Improperly Paid Expense Claims).
The second aspect involves payments that Mr Brant is alleged to have caused, or authorised to be made to his wife that the respondent alleges were improper and in breach of the duties owed by Mr Brant to the respondent.
The counterclaim against Mr Robinson is of a similar sum and is advanced as a damages claim for breach by the applicant of his employment contract. Alternatively, the counterclaim is pursued pursuant to s.1317H of the Corporations Act as compensation for the applicant’s contravention of ss.180, 181 and/or 182 of that Act. The counterclaim asserts that Mr Robinson breached certain duties he owed to the respondent because in his role as chief financial officer for the respondent he:
(a)caused the respondent to hire equipment and consumables from an entity associated with Mr Robinson at allegedly inflated rates;
(b)he wrongly approved and paid expenses for the other applicant, Mr Brant;
(c)failed to protect the respondent’s interests by failing to lodge fringe benefits tax returns; and
(d)approved or permitted payments to be made to Mr Brant’s wife in circumstances where he should not have done so.
Orders were made in each case for the parties to file affidavits of evidence in chief of any witnesses to be relied upon at any trial of the proceedings and for the parties to participate in court sponsored mediation. The applicants filed their evidence. The respondent did not. A mediation took place, but unsurprisingly, it was unsuccessful.
THE APPLICANTS’ APPLICATIONS
Discovery
Both applicants apply for declarations and orders for discovery of documents.
Interrogatories and discovery are not ordinarily permitted in proceedings in this court unless the court declares that it is appropriate, in the interests of the administration of justice, to allow the interrogatories or discovery. In deciding whether to make a declaration under s.45(1) of the Federal Circuit Court of Australia Act 2009 (Cth), the Court must have regard to:
(e)whether allowing the interrogatories or discovery would be likely to contribute to the fair and expeditious conduct of the proceedings; and
(f)such other matters (if any) as the Court considers relevant.
There is a rebuttable presumption against discovery. The applicants bear the onus of rebutting that presumption. In that regard, the applicants’ evidence is identical and consists of nothing more than an assertion by them that discovery should be made because:
I believe that allowing disclosure of the relevant documents in the table marked as Exhibit A is appropriate, in the interests of the administration of justice, and discovery would be likely to contribute to the fair and expeditious conduct of the proceedings, because the Respondent holds or has in its possession or control, data and documents that will support my case and which data and documents I am aware of from working for the Respondent but I no longer have any access to.
The documents sought by the applicants are set out in an annexure to the affidavits filed by them in support of their discovery applications. There is no explanation as to how or why discovery will support the applicants’ cases. Their belief, as deposed in the affidavits in support of the application, is irrelevant.
In the context of an application such as the present, where specific categories of documents are sought by way of discovery, a critical consideration will be whether the documents relate to a matter in issue between the parties. It is axiomatic, I think, that discovery will not be permitted and a declaration will not be made where the documents that are sought on the application for discovery have no relevance to the issues in the proceedings. In a case where there are pleadings, the issues are generally determined by reference to those pleadings. Here there are no initial pleadings by the applicants. Their cases are put in an affidavit that accompanied their applications. The respondent filed defences in both proceedings and thereafter the applicants filed replies to the defences. In addition to that, there has been an order for the filing of affidavits of evidence in chief by all witnesses upon which the parties intend to rely at the hearing of this application. The applicants have complied with that direction. The respondent has not, although delivered its evidence late. From that material the issues in dispute between the parties can be identified and the relevance of the documents in respect of which discovery is sought to those issues explained.
However, none of that was attempted in the present applications beyond generalised statements. The applicants submitted that the documents sought go to the matters in issue in these proceedings and most particularly to the allegations made by the respondent against the applicant in its cross-claims. Just how that is so, however, was not explained. There was no descent into particularity.
The respondent concedes that it should make discovery of some documents and, to the extent of those concessions, I am prepared to order discovery of those categories of documents. They are documents in categories numbered 1, 3, 14, and part of 37 of annexure A to the applicants’ affidavits in support of their discovery applications.
The balance of the categories do not, on their face, appear relevant to any material fact in issue at all. That is so in respect of categories 2, 4 – 13, 15 – 36. Having regard to the description of the documents in the applicants’ affidavits, the material facts in issue as disclosed in the applicants’ initial affidavits and the balance of the pleadings, I have been unable to conclude that any of the documents are relevant or are likely to be relevant to a fact in issue in the proceedings.
As I have indicated, I am prepared to make an order in respect of the categories of documents in respect of which the respondent concedes there ought to be discovery, but otherwise the applicants have not demonstrated that discovery is in the interests of the administration of justice in relation to the remainder of the documents.
Summary judgment
The applicants each seek summary disposal under FCCR 13.07 of parts of their applications for payment for unpaid entitlements. The basis for that relief is that certain payments have been admitted to be owing and admitted to not having been paid to each applicant. On that basis, the applicants depose to their belief that there is no answer to the relevant parts of their claim. The applicants also seek pecuniary penalties and interest pursuant to ss.546 and 547 of the Fair Work Act 2009 (Cth) despite not seeking such relief in their primary applications.
That the pecuniary penalty orders were not sought by the applicants in their initiating process led them to abandon their summary judgment application on the basis that they now sought leave to amend their respective originating process to include a claim for such relief. No submissions in reply to that application were made on behalf of the respondent in opposition to that course. In those circumstance I shall to grant that relief.
It is worth pointing out, however, that on its face, the applicants are entitled to the orders that they seek based on the respondent’s admissions in each of the proceedings. The respondent argues that by reason of the cross-claims made by it and the off-setting orders sought by it under FCCR 28.09 summary relief should be refused. In each proceeding, the relief sought by the respondent in its cross-claim exceeds the amount claimed by the applicant. Thus, the respondent argues that the set-off claimed by it operates as an entire defence to each application.
The answer, the applicants say, lies in s.323(1) of the Fair Work Act. That section provides as follows:
323 Method and frequency of payment
(1) An employer must pay an employee amounts payable to the employee in relation to the performance of work:
(a) in full (except as provided by section 324); and
(b) in money by one, or a combination, of the methods referred to in subsection (2); and
(c) at least monthly.
Little argument was directed to this provision (the decision to abandon the application being communicated after the argument upon it was completed and so more fulsome argument might have been expected). However, I have doubts that ss.323(1) or 323(4) of the Fair Work Act are applicable in the circumstances of this case given the nature of the claims by the applicants. The amounts for which they sue are arguably not amounts payable to them in relation to the performance of work. Rather, they are amounts that accrue to them by reason of the length of their service with the respondent.
The respondent directed me to Amponsem v Laundy (Exhibition) Pty Ltd (2014) 245 IR 240. In that case the court was dealing with a claim similar to the present. The applicant bought a claim for accrued but unpaid annual leave and a bonus payment that he alleged was owed to him by the respondent. The respondent cross claimed for damages for compensation against the applicant for breach of his contractual duty of fidelity and breach of his fiduciary duties owed to the respondent. Both claims succeeded. Indeed, the applicants claim was not in dispute. At [142] and following Judge Manousaridis considered the law of set-off and concluded at [150] that:
(a)the respondents claim for compensation could not, under the principles of legal set-off, be set off against the applicants claim for unpaid accrued annual leave; and
(b)the respondent was unable to engage the principles of equitable set-off so as to have entitled the respondent to set off its claims for equitable compensation against the applicants claim for unpaid accrued annual leave.
His Honour considered that the provisions of FCCR 28.09 were not inconsistent with s.90(2) of the Fair Work Act which obliges an employer to pay accrued annual leave on termination of employment. His Honour applied the provisions of FCCR 28.09 to give one judgment for the respondent against the applicant for so much of the respondent’s claim (as determined by his honour) as exceeded the applicant’s claim for unpaid annual leave.
It is worth noting, however, that in Joseph v Parnell Corporate Services Pty Ltd ( 2020) 295 IR 49 Flick J declined to follow such a course and gave two judgments, one for the applicant/cross-respondent against the third respondent/third cross-claimant and one for the respondents/cross-claimants against the applicant/cross-respondent.
Here, the respondent argues that given the terms of FCCR 28.09 it is appropriate to refrain from entering judgment on the admissions at this point because in the event that the respondent is successful on its cross-claim there will be a balance owing to it.
However, I would have determined that I should enter judgment for the applicants in each of their cases for the amounts that are not in dispute but I would have ordered that execution on those judgements be stayed until determination and judgment is given in respect of the cross-claim. In my view that course would have been appropriate because:
(a)the applicants’ claims are admitted, either on the respondent’s pleading or evidence;
(b)FCCR 28.08 provides that a cross-claim may proceed after judgment is given in the original proceeding and so the giving of judgment for the applicants on their claims will not jeopardise the progress of the cross-claim;
(c)the respondent’s position can be preserved by the imposition of a stay pursuant to FCCR 28.10; and
(d)in the event that the cross-claim succeeds, a judgment can be given and orders made which set-off the judgment.
As is set out in the reasons of Judge Manousaridis in Amponsem (above), there is no entitlement to a set-off either at law or in equity in the circumstances of this case. The entitlement to set one judgment off against another is to be found in FCCR 28.09. If the Court gives judgment against a party who claims relief against the party obtaining the judgment, the Court may stay execution on, or other enforcement of, the judgment until determination of that claim. It is not a set-off that operates as a defence.
The respondent did raise the prospect of a contractual entitlement to set-off the amounts pursuant to cll 19.4 and 23.2 of the employment agreements. However, that matter was not raised in the respondent’s pleadings and although a late application for an appropriate amendment was made in the respondent’s written submissions I have decided to refuse that request because of the lateness of it, the insufficiency of the prospects of its success and the abandonment of the summary judgment application in any event.
THE RESPONDENT’S APPLICATIONS
Extension of time
The respondents seek an extension of time within which to deliver their affidavits of evidence in chief. FCCR 3.05 permits the extension of time fixed by an order (FCCR 3.05(1)), even if the time fixed as passed (FCCR 3.05(3)) – that is, the extension may occur at any time, even retrospectively. The rule describes no criteria for the extension of time, which has been held to mean that the discretion is unfettered: Davis v ABL Nominees Pty Ltd [2014] FCCA 2069 at [15].
The respondent’s solicitor has deposed to the reasons for the delay in filing and serving the respondent’s material. The applicants’ solicitors were kept updated with the progress of the respondent’s efforts to meet the time limited for filing and service of the respondent’s evidence.
The majority of the evidence was filed by 22 September, 2020 and was six weeks late. There were some more recently filed affidavits that are nine weeks late. Bearing in mind that the proceedings were commenced in early April and early June, I accept the respondent’s submissions that the delay is not substantial and no prejudice is likely to be occasioned to the applicants by the extension of time.
For those reasons, the time for the respondent to file and serve any affidavit evidence in chief upon which it intends to rely will be extended to 15 October, 2020.
Leave to amend
FCCR 7.01 relevantly provides that at any stage in a proceeding, the court may allow a party to amend a document in the way and on the conditions the court thinks fit. Leave to amend should be granted unless the proposed amendment is obviously futile or would cause substantial prejudice or injustice for which the prejudiced party could not be compensated. These considerations require the court to take account of the nature of the proposed amendment, whether it is made in good faith, the stage in the proceedings at which leave is sought, the nature of the prejudice that may be caused and the means by which such prejudice might be redressed. The question of delay is relevant to these considerations however it is not the purpose of the court to punish a party for delay in seeking an amendment: see generally Cai v Tiy Loy & Co Ltd (No 2) [2015] FCCA 2924 at [27].
As the respondents submit, the general principles that relate to applications for leave to amend a pleading are well established and were summarised in Lynch v Cash ConvertersPersonal Finance Pty Ltd [2016] FCA 1536 at [55]:
(a)the starting point is “that all amendments should be made and allowed that are necessary to ensure the real questions in controversy between the parties are decided”;
(b)an amendment will “ordinarily be allowed provided it can be done without harm to the other party which cannot be compensated by an award of costs or an adjournment”;
(c)leave should be granted unless the proposed amendment “is so obviously futile that it would be struck out if it had appeared in the original pleading or would cause substantial injustice which cannot be compensated for in the manner”;
(d)the allowance of an amendment before the commencement of a trial “stands in a very different position from amendment towards the end of a trial”; and
(e)relevant matters the Court may consider include the nature and importance of the amendment to the party applying for it and the prejudice caused by the amendment.
The amendments to the pleadings in these proceeding involve adding further cross-claims against each of the applicants as well as adding claims for breaches of fiduciary duties against each of the applicants. The respondent submits that the amendments are not obviously futile. They are made in good faith, not at a late stage in the proceedings and would not cause substantial prejudice or injustice to the applicants. I accept those submissions.
The respondent shall be given leave to amend in both applications as it seeks.
CONSOLIDATION OR HEARING TOGETHER
Having regard to the material filed by the parties in each of the proceedings, I accept that there is substantial overlap, both factually and legally, between the two proceedings. The proceedings both concern claims for unpaid entitlements by executive employees of the respondent and cross-claims for breaches of contractual, Corporations Act and fiduciary duties by the applicants. The cross-claims are closely related and concern related conduct by the applicants.
I accept that there are substantial issues of fact and law common to each proceeding and determining the proceedings separately involves a significant risk of conflicting decisions (for example, part of the case against Mr Brant is his knowing involvement in breaches of the Corporations Act and fiduciary duties by Mr Robinson. If determined separately, there is a risk of conflicting decision regarding Mr Robinson’s actions.
The witnesses in one proceeding will most likely be witnesses in the other proceeding.
I accept the respondent’s submission that each proceeding is likely to take between about five to eight days on its own and that consolidated proceeding is not likely to take much more time than that, given the amount of overlap between the cases.
There is a commonality of parties (the respondent is the same in each proceeding) and the lawyers for the applicants and respondent are the same. I accept that each applicant is substantially involved in the events at the foundation of both proceedings and if the respondent’s cross-claims had been brought by way of originating application, it would have been appropriate for a single proceeding to have been brought against both of them.
The proceedings should be heard together rather than consolidated. It was not suggested that there was advantage to the parties by adopting one way of proceeding over the other.
TRANSFER TO THE FEDERAL COURT
The making of an order to transfer proceedings from this Court to the Federal Court of Australia is discretionary and can be made on the Court’s own initiative: s.39(2)(b) of the Federal Circuit Court of Australia Act. There are, however, factors that the Court must take into account under s.39(3)(a)-(d) of that Act, namely:
(a)any Rules of Court made for the purposes of s.40(2) of the Federal Circuit Court of Australia Act;
(b)whether proceedings in respect of an associated matter are pending in the Federal Court;
(c)whether the resources of the Federal Circuit Court are sufficient to hear and determine the proceeding; AND
(d)the interests of the administration of justice.
FCCR 8.02(4)(a)-(e) provides for other factors to be considered, namely:
(a)whether the proceeding is likely to involve questions of general importance, such that it would be desirable for there to be a decision of the Federal Court or the Family Court on one or more of the points in issue;
(b)whether, if the proceeding is transferred, it is likely to be heard and determined at less cost and more convenience to the parties than if the proceedings is not transferred;
(c)whether the proceeding will be heard earlier in the Court;
(d)the availability of particular procedures appropriate for the class of proceeding; AND
(e)the wishes of the parties.
The respondent submits that although there are no questions of general importance involved, there is a question of jurisdiction that is relevant. I will return to that matter later in these reasons.
The evidence does not reveal whether the proceedings could be determined at more convenience and less cost if transferred. The evidence demonstrates that enquiries of the Federal Court registry were not fruitful. In this court, the proceedings could be heard within four months of the proceedings being ready for trial. This court could accommodate a hearing of up to two weeks if that was necessary.
It was not suggested that there are any particular procedures available in either court that would mean that it would be best heard in one particular court rather than the other.
I note that the respondent wishes to have the proceedings transferred, but the applicants are ambivalent. There are no associated proceedings in the Federal Court.
The respondent argues that a key feature in favour of transfer concerns whether this court has jurisdiction to hear the respondent’s cross-claims insofar as they concern breaches of Corporations Act duties. The question is whether this court’s associated jurisdiction (as distinct from its accrued jurisdiction), created by s.18 of the Act, is sufficient in the circumstances of these proceedings to give it authority to decide the Corporations Act matters.
The approach to this question is informed by the decision in Ogawa v Federal Magistrate Phipps (2006) 151 FCR 311. In that case, a proceeding initially commenced in the Federal court but then transferred to the Federal Magistrates Court (as this court was then known). The proceedings were for compensation pursuant to s.82 of the Trade Practices Act 1974 (Cth) for a breach or breaches of s.52 of that Act. After transfer, a claim that s.52AB of the Act was added by the applicant. The significance of this is explained by Finkelstein J as follows:
10. I will now explain why the Federal Magistrates Court had no jurisdiction to entertain the claim under s 51AB. By Ch III of the Constitution federal Parliament is given power to create federal courts and to invest them with federal jurisdiction, including jurisdiction which is exclusive of the jurisdiction of other federal courts: Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457. The jurisdiction which may be conferred on a federal court is in respect of federal subject matters, that is matters of the kind mentioned in ss 75 and 76 of the Constitution. The jurisdiction of a federal court is not, however, confined to matters which are expressly conferred on the court. It will include what is sometimes referred to as “accrued jurisdiction” and, in the case of both the Federal Court and the Federal Magistrates Court, it also includes “associated jurisdiction”: Federal Court of Australia Act 1976 (Cth), s 32; Federal Magistrates Court Act 1999 (Cth), s 18. As to the distinction between “accrued jurisdiction” and “associated jurisdiction” see Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261. (See also WMC Gummow, “Pendent Jurisdiction in Australia – Section 32 of the Federal Court of Australia Act 1976” (1979) 10 Federal Law Review 211; L Zines, “Federal, Associated and Accrued Jurisdiction” in B Opeskin and F Wheeler (eds) The Australian Federal Judicial System, Melbourne University Press, 2000, p 265).
11. Immediately before the establishment of the Federal Magistrates Court, the Federal Court had jurisdiction to deal with any matter arising under the Trade Practices Act. The jurisdiction was conferred by s 86(1) of the Trade Practices Act. When the Federal Magistrates Court was established s 86 was amended to give that court jurisdiction “in any matter arising under Division 1 or 1A of Part V in respect of which a civil proceeding is initiated by a person other than the Minister or the Commission.”: see s 86(1A). Thus the Federal Magistrates Court is able to deal with claims based on a contravention of s 52, which is found in Pt V, Div 1, but not for a contravention of s 51AB, which is located in Pt VA.
12. It is now necessary to notice s 86AA(4). This sub-section relevantly provides that the jurisdiction of the Federal Court conferred by s 86(1) is “exclusive of the jurisdiction of any other court other than: (a) the jurisdiction of the Federal Magistrates Court under subsection (1A).” I think the intent of this provision is clear. Parliament has laid down that the Federal Magistrates Court is precluded from exercising jurisdiction in a matter arising under any part of the Trade Practices Act apart from a matter under Pt V. This is so whether or not an action in respect of that mater has begun in the Federal Court. Moreover, it would subvert Parliament’s intention if one were to accept the University’s contention that s 18 of the Federal Magistrates Court Act (the “associated jurisdiction” provision) has the effect of giving to the Federal Magistrates Court jurisdiction over a federal claim that is within the exclusive jurisdiction of the Federal Court. In my view whatever claims may be picked up as part of the Federal Magistrates Court’s associated jurisdiction they do not include claims that are within the exclusive jurisdiction of another federal court.
Thus, it is necessary to determine whether jurisdiction for matters under the Corporations Act have been exclusively conferred upon any other federal court.
Section 58AA of the Corporations Act relevantly provides:
58AA Meaning of court and Court
(1)Subject to subsection (2), in this Act:
court means any court.
Court means any of the following courts:
(a) the Federal Court;
(b) the Supreme Court of a State or Territory;
(c) the Family Court of Australia;
(d) a court to which section 41 of the Family Law Act 1975 applies because of a Proclamation made under subsection 41(2) of that Act.
(2)Except where there is a clear expression of a contrary intention (for example, by use of the expression “the Court”), proceedings in relation to a matter under this Act may, subject to Part 9.6A, be brought in any court.
Section 1317H of the Corporations Act provides:
1317H Compensation orders—corporation/scheme civil penalty provisions
Compensation for damage suffered
(1)A Court may order a person to compensate a corporation, registered scheme or notified foreign passport fund for damage suffered by the corporation, scheme or fund if:
(a)the person has contravened a corporation/scheme civil penalty provision in relation to the corporation, scheme or fund; and
(b)the damage resulted from the contravention. …
Having regard to s.58AA(2), the use of the term “Court” in s.1317H should be taken as expressing an intention that orders under that section are within the exclusive jurisdiction of a “Court”. This court is not such a court. In my view, the expression in s.1317H is apt to invest jurisdiction in the Federal Court which is exclusive of the jurisdiction of other federal courts and in particular this court. Although it was not the subject of argument, I note that a similar approach was taken in Alfaro v Crown Commercial Cleaning Pty Ltd & Anor [2012] FMCA 478; McDermott v King [2013] FCCA 2348; Sims v RM Capital Pty Ltd & Anor [2014] FCCA 2977; Wright v Norris Real Estate Pty Ltd [2016] FCCA 707; and Ioakimidis v Lygon Court Travel Pty Ltd Trading as Helloworld Lower Templestowe [2020] FCCA 1687.
In the absence of any applications by the applicants to have the respondent’s cross-claims pursuant to the Corporations Act disallowed or struck out, that the court is bereft of jurisdiction to deal with them means, I think, that these applications should be transferred to the Federal Court.
I make the orders set out at the commencement of these reasons.
I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Jarrett delivered on 8 April, 2021. Associate:
Dated: 8 April 2021
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