Fair Work Ombudsman v Am Retail Solutions and Anor (No.2)

[2010] FMCA 135

FEDERAL MAGISTRATES COURT OF AUSTRALIA

FAIR WORK OMBUDSMAN v AM RETAIL SOLUTIONS & ANOR (No.2) [2010] FMCA 135

INDUSTRIAL LAW – Civil penalty proceedings against employer – privilege of director not to disclose evidence before closure of applicant’s case at trial – appropriate directions before and during trial – modification of directions setting deadline for affidavits.

Workplace Relations Act 1966 (Cth), s.824

Australian Competition & Consumer Commission v FFE Building Services Limited (2003) 130 FCR 37
Australian Securities & Investment Commission v Mining Projects Group Ltd (2007) 164 FCR 32
Rich v Australian Securities & Investment Commission (2004) 220 CLR 129
Workplace Ombudsman v AM Retail Solutions & Anor [2009] FMCA 1046

Applicant: FAIR WORK OMBUDSMAN

First Respondent: AM RETAIL SOLUTIONS (ACN 103 251 038)

Second Respondent: ADIL MAGAR

File Number: SYG 3333 of 2008

Judgment of: Smith FM

Hearing date: 22 February 2010

Delivered at: Sydney

Delivered on: 22 February 2010

REPRESENTATION

Counsel for the Applicant: Mr P Newall

Solicitors for the Applicant: FCB Lawyers

Counsel for the Respondents: Mr A Narayan

Solicitors for the Respondents: Law Partners

ORDERS

1. The name of the applicant is amended to ‘Fair Work Ombudsman’.

2. Order 6 made on 20 October 2009 is varied by the addition of the words “if any” after “affidavits”.

3. Order 8 made on 20 October 2009 is varied by the addition of the words “by way of affidavits, except with the leave of the Court” after “in the proceedings”.

4. The prehearing directions listing for 8 March 2010 is vacated.

5. The hearing on 16 March 2010 shall address issues of liability of the second respondent to penalties, and not quantum of penalties.

6. The form of any evidence which the second respondent may decide to present in chief at the trial will be as agreed or as directed when the applicant closes its case.  The parties should not assume that an adjournment will be granted to either party at that time.

7. The other orders made on those dates are otherwise confirmed.

8. The second respondent must on or before 1 March 2010 file and serve a list of the deponents of the applicant’s affidavits which are required for cross-examination, and an estimate of the time required for such cross-examination and any re-examination.

9. The second respondent must on or before 8 March 2010 file and serve a list identifying each part of the applicant’s affidavits to which objection is taken, and the basis for the objection.

10. The applicant must on or before 12 March 2010 forward to the Associate a folder (or folders), fully indexed, paginated and labelled, containing a judge’s copy of all the documents filed or intended to be filed or tendered by that party at the hearing.

11. The applicant must on or before 4pm on 15 March 2010 forward to the Associate and serve a short written outline summarising the case which is presented to the Court, referring to the material provisions of legislation and authorities, and attaching a short chronology of relevant events.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 3333 of 2008

FAIR WORK OMBUDSMAN

Applicant

And

AM RETAIL SOLUTIONS (ACN 103 251 038)

First Respondent

ADIL MAGAR

Second Respondent

REASONS FOR JUDGMENT

(revised from transcript)

1. The Fair Work Ombudsman alleges that Mr Magar, as a director of an employer company now in liquidation, was personally involved in a large number of contraventions of the Workplace Relations Act 1996 (Cth) involving unpaid entitlements of numerous employees. The nature of the allegations, and the protracted proceedings which have occurred in my list, were explained in a judgment I gave on 20 October, 2009 (see Workplace Ombudsman v AM Retail Solutions & Anor [2009] FMCA 1046). On that occasion, I ordered a time-table leading to a hearing appointed for 16 March 2010. My orders, made after discussion with the parties, included:

   (6) The second respondent’s affidavits must be filed no later than 11 February 2010.

   …

   (8) If the second respondent fails to comply with orders 4 [which required the filing of a defence] and 6, then he shall not be permitted to lead any evidence in chief in the proceedings, and the hearing will proceed on an undefended basis in relation to all issues of contravention.

2. A further listing occurred on 11 December 2009, at which the Fair Work Ombudsman applied to amend the timetable I made on 20 October, so as to give it leave to serve an amended statement of claim, and to provide for Mr Magar to file a defence by 21 December 2009.  The other orders made on 20 October were maintained.  The orders on 11 December were made by consent, with an appearance being made for the second respondent by his solicitor. 

3. Mr Magar has now filed an application in a case seeking to vacate the orders in paragraphs 6 and 8 made on 20 October 2009, as confirmed on 11 December 2009.  In submissions today an alternative order was sought in relation to Mr Magar's going into evidence, which was that I should direct “that statements of evidence be filed and served within 28 hours of the close of the applicant's case”.

4. In support of the application, I was referred to authorities which have upheld a privilege against being compelled to give discovery, or reveal in advance of a trial the evidence which might be elicited by a respondent, in answer to the allegations made in a civil penalty proceeding.  In particular, I was referred to Rich v Australian Securities & Investment Commission (2004) 220 CLR 129 and Australian Competition & Consumer Commission v FFE Building Services Limited (2003) 130 FCR 37. The procedure which Mr Magar now seeks appears to have been followed by Wilcox J at first instance in the latter case, and was upheld by the Full Court. In my opinion, their Honours did not, however, confine the general discretions available to a trial judge to control how a respondent who has availed himself of the privilege might be directed to present his evidence-in-chief at the close of the applicant's case.

5. Counsel for the Fair Work Ombudsman referred to previous directions I have given, and statements made by me at previous directions listings, in which I clearly informed Mr Magar that my directed time-tables for affidavits permitted, but did not compel, him to file affidavits in reply to the affidavit evidence of the Fair Work Ombudsman.  It was submitted that my Order 6 made on 20 October should be read in that light; that is, as if the words “if any" appeared after “affidavits”.  It was submitted that the foreclosure order which I made in paragraph 8, should be understood as having intended to foreclose the eliciting of evidence-in-chief by way of affidavits, but not to have foreclosed Mr Magar's right to present evidence-in-chief in some other mode if he elects to do so in the course of the trial.

6. It is not clear to me that I, in fact, had that reservation in mind when I made order 8, although it is likely that I was conscious that it would always be possible for Mr Magar to seek leave to depart from its terms at a later time, including during the trial.  As paragraph [22] of my judgment indicates, when I made those directions I was attempting to discourage any further manoeuvring by Mr Magar which would delay the trial.  However, in the light of the discussion today, and to avoid further doubt, I think it appropriate to clarify those orders by the addition of words which were probably implicit. 

7. It was submitted by counsel for the Fair Work Ombudsman that the failure of Mr Magar's solicitor on 20 October 2009 and 11 December 2009 to seek this clarification meant that it was now too late for alternative directions to be sought.  It was, as I understand it, also submitted that the conduct of the solicitor amounted to a waiver of Mr Magar's right to present evidence-in-chief other than by way of filing affidavits filed in accordance with the timetable which permitted this, and I was referred to the judgment of Finkelstein J in Australian Securities & Investment Commission v Mining Projects Group Ltd (2007) 164 FCR 32, in particular at paragraphs [18] – [25].

8. I do not consider that in the context of the two directions listings the conduct of Magar's solicitor amounted to clear waiver of his privilege.  Nor that I should preclude Mr Magar from exercising his right to seek to present his evidence at the closure of the applicant's case without its prior disclosure.  I consider that principles of fairness would require that, if necessary, I should clarify or modify my directions to recognise that he will have that right. 

9. However, the mode in which I will permit that right to be exercised at the trial will be governed by the circumstances in which the election to go into evidence occurs.  As the directions I am making today will confirm, the hearing will be confined to issues of contravention, and not quantum of penalty.  Mr Magar will before the hearing have received the fullest information of the case he must meet, both by way of the applicant’s pleadings and its affidavits.  He will have had more than ample time to prepare to present evidence in defence, whether by witnesses or documents.  I am at present disposed to continue the hearing after the conclusion of the applicant’s case without interruption, and to do so in the most efficient manner.  In particular, without further adjournments for the preparation or exchange of affidavits.  In the circumstances of this matter as they appear to me today, I am inclined to think that Mr Magar would not be able to complain if, having reserved his defence and elected not to serve affidavits before the trial, he were required to give his evidence-in-chief by oral evidence from the witness box. 

10. If that occurs, issues of contested fact and credibility may well have become dominant in the issues in dispute, and the testing of evidence and arriving at judgment is likely to be assisted, rather than the converse, by Mr Magar's evidence-in-chief being elicited orally rather than by affidavits subject to cross-examination.  Particularly, if the presentation of affidavits at that time would require adjournments which will disrupt the trial. The representatives of respondents to proceedings of the present type, particularly in inferior courts, should be very familiar with being required to go into evidence immediately at the closure of the prosecution's case.  The representatives of prosecutors should be accustomed to the challenges of conducting a cross-examination upon such evidence. I am therefore not disposed to make any directions foreshadowing that adjournments will be granted on the application of either party if, at the closure of the applicant's case, Mr Magar decides that he wishes to go into evidence.

11. My judgment today will, however, not foreclose the procedures to be followed.  In particular, if counsel for both sides can reach agreement as to the most efficient way in which the trial should be conducted, including any adjournments, I may well give way to their joint view of the matter.  However, as I have indicated, the parties should meanwhile prepare for the trial upon an assumption that I propose to conduct the trial in relation to taking evidence and submissions over the full period allotted, with the object of completing the trial in that period.    

12. I shall make directions confirming this, and also giving other suitable pre-hearing directions.

13. In relation to the costs of today’s listing, I accept that it is regrettable that this issue was not raised by Mr Magar's representatives when I was formulating my orders in October and December last year.  I have, however, been persuaded that some clarification of the orders was appropriate.  The listing today has, at least, and hopefully for the benefit of the efficient use of time at the trial, allowed the procedural issues to be fully explored with the two counsel briefed in the matter, and I have benefited from their written and oral submissions.  Today's listing has also been able to be used to make pre-trial directions, which I otherwise would have made on 8 March.  I accept, however, that counsels' presence at that listing would not have been necessary.

14. If this were a costs jurisdiction, I might have considered awarding costs in relation to today's listing, or part of them, in favour of the applicant. However, my power to award costs in relation to a particular procedural event is limited by s.824 of the Workplace Relations Act or s.570 of the Fair Work Act, whichever applies, to being satisfied that there was some failure by Mr Magar’s representatives which was “an unreasonable act or omission” and which caused additional costs to be incurred.

15. I have concluded that, although it might have been desirable, it was not clearly unreasonable for Mr Magar's legal representatives not to have earlier focussed their decisions about whether he should go into evidence, or should foreshadow his possible evidence-in-chief in affidavits served before the trial, and not to have voiced their concerns about the formulation of my earlier orders.  In all the circumstances, I am not persuaded that I should make a particular costs order in relation to today's listing.

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Smith FM

Associate:  Michael Abood

Date:  8 March 2010