Fair Work Ombudsman v Darna Pty Ltd & Anor
[2014] FCCA 595
•28 March 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FAIR WORK OMBUDSMAN v DARNA PTY LTD & ANOR | [2014] FCCA 595 |
| Catchwords: INDUSTRIAL LAW – Interlocutory application – whether leave should be granted to permit the Second Respondent director to represent the First Respondent company – application dismissed. |
| Legislation: Fair Work Act 2009, ss.350, 716 |
| Alcantara and Anor v Buildpower Pty Ltd [2010] FMCA 626 Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241 Worldwide Enterprises Pty Ltd v Silberman and Anor (2010) 26 VR 595 |
| Applicant: | FAIR WORK OMBUDSMAN |
| First Respondent: | DARNA PTY LTD (ACN 135 545 069) |
| Second Respondent: | YOAV OREN |
| File Number: | MLG 932 of 2013 |
| Judgment of: | Judge Hartnett |
| Hearing date: | 13 March 2014 |
| Delivered at: | Melbourne |
| Delivered on: | 28 March 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr Tracey |
| Solicitors for the Applicant: | Office of the Fair Work Ombudsman |
| The First Respondent: | Mr Oren (director of the First Respondent) |
| The Second Respondent: | In person |
THE COURT ORDERS THAT:
The Application in a Case filed 7 January 2014 is dismissed.
The matter is otherwise adjourned for directions hearing on 24 April 2014 at 10am.
Costs are reserved.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 932 of 2013
| FAIR WORK OMBUDSMAN |
Applicant
And
| DARNA PTY LTD (ACN 135 545 069) |
First Respondent
| YOAV OREN |
Second Respondent
REASONS FOR JUDGMENT
These Reasons go to the determination of an Application in a Case filed on 7 January 2014 by a director of the First Respondent to be granted the leave of the Court to appear for the First Respondent corporation Darna Pty Ltd (‘Darna Pty Ltd’). The Application by Mr Yoav Oren, the Second Respondent (‘Mr Oren’), is opposed by the Applicant, the Fair Work Ombudsman (‘the Applicant’). Mr Oren is not entitled to represent Darna Pty Ltd except by leave of the Court (s.44 of the Federal Circuit Court of Australia Act 1999 (Cth) and r.9.04 of the Federal Circuit Court Rules 2001 (Cth)).
The substantive application before the Court is an application for orders under the Fair Work Act 2009 (Cth) (‘the Act’) which allege contravention of the terms of a Compliance Notice served on Darna Pty Ltd by a Fair Work Inspector, pursuant to s.716 of the Act, to pay an employee, Mr Moshe Ittah, an amount of $4,222.05. The Applicant alleges Darna Pty Ltd did not comply with the Compliance Notice and has provided no reasonable excuse for its failure to do so.
In the substantive claim, the Applicant also alleges that Mr Oren, was an accessory to Darna Pty Ltd’s contravention, by reason of being a person knowingly involved in or party to Darna Pty Ltd’s contravention, pursuant to s.350 of the Act. The claims of the Applicant are contested by Darna Pty Ltd and by Mr Oren.
Darna Pty Ltd does not have legal representation and in the proceedings to date which have involved only procedural matters, Mr Oren has acted on Darna Pty Ltd’s behalf. The Applicant flagged at the earlier hearing that it would likely object to Mr Oren so acting in the hearing of the substantive matter. Mr Oren has also sought to act on Darna Pty Ltd’s behalf in commencing additional proceedings (MLG55/2014), filing an Application for Review of a Compliance Notice (‘ the Review Application’).
On 7 January 2014, in accordance with the Court's directions of 10 December 2013, Mr Oren filed an Application to seek leave of the Court to represent Darna Pty Ltd in these proceedings. The Applicant opposes Mr Oren being granted leave to represent Darna Pty Ltd in both proceedings which are on foot. The Applicant did not oppose Mr Oren acting on behalf of Darna Pty Ltd for the purposes of the initial timetabling of the proceedings, or participating in a mediation held on 9 October 2013.
Mr Oren swore an Affidavit almost entirely being one of opinion, in support of his Application in a Case in the proceedings on 6 January 2014. In that document tendered in evidence Mr Oren deposes to the following:-
“1. The Cooperation, Darna Pty Ltd, is a small business which has only three shareholders
And two directors. One is a chef and the other an Accountant
2. The company hasn't got the ability to pay for a lawyer. The company has a 25,000 overdraft on its bank account and cannot afford to pay for a lawyer services
3.The company is being sued for $4,222.05 and any fee pay to a lawyer for its defence
Will put the cooperation in a lose-lose position. Furthermore, the company might end up worse
off financially as a result which might in danger its solvency.
4.The second respondent is a director and shareholder of the First respondent who has been duly
authorised by the board of directors to act as a legal representative of the cooperation
5. The second respondent is a CPA Practitioner, and holds has besides his accountancy degree a Master of law (L.LM) which include labour law studies and therefore has the ability to defend the company’s case in the Federal Circuit court
6. The arguments in this case aren't complicated. The main question is was the former employee a casual or a full time employee when dismissed and as a result - what were his entitlements.
7. The second respondent has been premeditated together with the first respondent by the FWO
Who wrapped the two together. Therefore, it is only fair and just to allow the Second respondent
To represent the First Respondent.
8. The interests of the First respondent (company) are very much aligned with those of the second respondent seeking to represent the cooperation.”
Ought a corporation be represented other than by a lawyer?
This is a discretionary matter. The principles which govern the Court’s exercise of that discretion were summarised by Lucev FM (as His Honour then was) in Fair Work Ombudsman v Finetune Holdings Pty Ltd and Anor [2010] FMCA 889 (‘Finetune Holdings’).
The general rule, as adopted in this Court, is that corporations may only be represented before federal courts by legal practitioners (s.44 of the Federal Circuit Court of Australia Act 1999 (Cth) and r.9.04 of the Federal Circuit Court Rules 2001 (Cth)). The policy behind that rule is that in the interests of the administration of justice, the courts should be assisted by persons who are qualified and experienced in arguing factual and legal disputes and who have ethical duties to clients and the courts (Alcantara and Anor v Buildpower Pty Ltd [2010] FMCA 626 at [10]; Worldwide Enterprises Pty Ltd v Silberman & Anor (2010) 26 VR 595 at [35] per Weinberg JA). Incorporation confers many benefits on those connected with a company; it also imposes some corresponding burdens, one of which is that in litigation a company must normally be represented by a lawyer (Worldwide Enterprises Pty Ltd v Silberman & Anor (2010) 26 VR 595 at [76] per Bongiorno JA; Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241 at [14]).
The Court has discretion to depart from the general rule, as stated in the preceding paragraph, having regard to all of the relevant considerations. In Finetune Holdings at [24] to [47], the Court identified the following considerations as relevant to determining whether to permit a director respondent (as the Second Respondent, Mr Oren is) to represent the corporate respondent in the matter:-
a)the complexity or simplicity of the matter;
b)whether a non-lawyer appears or has previously appeared for any of the parties;
c)the objects and purposes of the Federal Circuit Court of Australia Act 1999 (Cth) and the Federal Circuit Court Rules 2001 (Cth), including the impact of those objects and purposes on case management considerations;
d)whether a party can be effectively represented without a lawyer appearing, and whether prejudice will be suffered by any party by reason of the appearance or non-appearance of a lawyer for the party;
e)whether there has been an appropriate opportunity for a party to arrange legal representation;
f)the financial position of a party; and
g)whether the granting of leave to appear is opposed.
The list of factors, as submitted by Counsel for the Applicant, is not exhaustive; the Court may have regard to any consideration relevant to the exercise of its discretion (Alcantara and Anor v Buildpower Pty Ltd [2010] FMCA 626 at [11] and [12]).
Mr Oren submitted to the Court that the matters it should consider in the exercise of its discretion included that Darna Pty Ltd was not a public company and was a small company; that he himself was a person against whom no adverse finding of credibility has been made in any court (the Court notes there is no evidence before it nor suggestion by the Applicant that this is the case); that Darna Pty Ltd has no ability to pay for a lawyer; that he as a director and shareholder of Darna Pty Ltd has been duly authorised by the board of directors to act as the corporation’s representative in the proceedings; that the nature of the action and the complexity of the issues to be decided would not make it seriously unfair to the opposite party to have the corporation represented by a non-lawyer; and that the interests of the corporation were aligned with his. Thus Mr Oren argued that in respect of each and every matter he proposed be considered, the only available exercise of judicial discretion should be one in his favour.
Consideration
Mr Oren stated to the Court that each of the directors and shareholders of Darna Pty Ltd requested of him that he represent Darna Pty Ltd in these proceedings. There are two directors and three shareholders of Darna Pty Ltd. He is both a director and shareholder. There is no other evidence before the Court as to that matter, save the evidence of Mr Oren himself. Nevertheless, accepting that evidence, this is but a small consideration in the exercise of my judicial discretion, as is the size of Darna Pty Ltd in the circumstances of this case.
Financial position of Darna Pty Ltd
A company that is impecunious is not automatically entitled to be represented by a non-lawyer (Finetune Holdings at [41]). It was necessary for Mr Oren to provide sufficient evidence to the Court that Darna Pty Ltd and/or persons sitting behind the company could not afford legal representation (Finetune Holdings at [45]). In particular, in circumstances where Darna Pty Ltd remains registered and the restaurant business which it operates remains trading.
Mr Oren's Affidavit sworn 6 January 2014 asserts that Darna Pty Ltd does not have the ability to pay for the services of a legal practitioner. His opinion evidence is insufficient. Mr Oren did not provide any documentary evidence to demonstrate Darna Pty Ltd’s or his own, financial position. His submissions to the Court on the hearing of the matter attributed a personal motive to the Applicant’s pursuit of him, namely, that it wanted him to “start to bleed money”, and that in respect of Darna Pty Ltd and he “They want us to bleed. They want me to bleed”. This was said in the context of legal costs which might be incurred by Darna Pty Ltd and paid by him. Mr Oren’s submissions went to him not wishing to engage a legal practitioner for the company so as to avoid legal fees, in particular, given the quantum of such fees might exceed that owing as set out in the Compliance Notice. His submissions were not indicative of any impecuniosity of either Darna Pty Ltd or himself.
This consideration does not support leave being granted to Mr Oren to represent Darna Pty Ltd.
The nature of the matter
When considering the nature of the matter, the Court determines there is a risk of a conflict of interest between Darna Pty Ltd as the First Respondent and Mr Oren as the Second Respondent, if Mr Oren were to represent Darna Pty Ltd. Mr Oren is alleged to be involved in the Applicant’s claim, in that the Applicant seeks to attach liability to Mr Oren personally on the basis that he was knowingly concerned and involved in the matters; had responsibility for ensuring that Darna Pty Ltd complied with the Compliance Notice; and was an intentional participant in Darna Pty Ltd’s failure to comply with the Compliance Notice. The conflict of interest may occur where Mr Oren is “a witness in his own defence and also making submissions and presenting evidence for the companies’” (see Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (2004) FCA 1361 at [3] per Kiefel J).
The Applicant submits that despite the relative lack of complexity (from a lawyer's perspective) of the Applicant’s claim and the Review Application, Mr Oren has demonstrated a fundamental misunderstanding of the nature of the proceedings and an inability to understand the requirements of the Federal Circuit Court Rules2001 (Cth). The Applicant submits that if Mr Oren represented Darna Pty Ltd in contesting these proceedings, it is likely that unnecessary costs and delay and an undermining of the administration of justice will occur. The Court agrees with these submissions.
There is nothing before the Court which indicates that the Applicant’s position of opposing leave being granted is based on anything other than a proper assessment of the usual factors relevant to the issue of whether a corporation ought to be represented by a non-lawyer. The submissions by Mr Oren as to the Applicant having many and varied vindictive reasons to such opposition is not supported by the evidence, submissions, and/or legal authority. His remarks and submissions on the hearing of the matter were at times offensive to the Applicant, the Applicant’s Counsel and its instructing solicitor. They were irrelevant and inappropriate. They included that the Applicant’s submissions were “purely rubbish”; some of the submissions were:-
(a)“They are trying to make it a lose–lose situation. “Go get yourself a lawyer, start to bleed money, and then it’s not really worth it, yeah?””;
(b)“They spend huge amounts of money on a $4,200 case. Obviously in the public sector, they all would be sent home telling them, “Listen, you have to be productive” but it’s taxpayers money and they feel free to spend it”;
(c)“This one, this rubbish, this – this – this one, I can go each and any sections and explain why they are going around all the time. They don't have really arguments so they are kind of going around saying things, "Yeah, he doesn't know". What's wrong with my affidavit, Mr – whatever his name is (this was a reference to Mr Tracey). What's my wrong with my application for review?”;
(d)“So what they're saying is, "Listen, it's kind of unfair for us because you're not giving up. You are not facing defeat. You like to contest". It's like, "We better have somebody else which will be more lenient because basically it's not his funds”.”;
(e)“It's like this guy is showing no respect whatsoever to other professionals.”;
(f)“They are making all these points, your Honour, in order to try to convince your Honour not to allow me to represent Darna. And why they are doing so? They are doing so for the mere reason to try to make their life easier. They know that if I need to pay for a lawyer, and I will not, obviously I'm going to bleed, and if I'm going to bleed, I will be more willing to give up. Well, I'm not.”;
(g)“Mr Tracey doesn't really care about the cost. He's a public servant and he's spending huge amount of taxpayers' money in order to prosecute a claim for $4200.”; and
(h)“How, Mr Tracey? How exactly it's going to prejudice Darna's interests? He's not explaining. Obviously he hasn't got an answer. He hasn't got an argument. He hasn't got nothing. The only thing he has is that he rather deal with somebody else. He doesn't like to contest arguments. He doesn't like to explain, to give any proof for what he's saying. He's inventing a conflict of interest. He's hinting that Mr Oren lacks the capacity to represent Darna effectively in any contested proceedings. And he's having a brilliant conclusion: “As a consequence, allowing him to appear on behalf of Darna may prejudice Darna's interest.” Now, Mr Tracey is really concerned with the interests of the corporation. He feels that Mr Oren will endanger the interests of the company in favour of himself and he's so concerned about the corporation that he's asking for the court to deny it – not in the interests of the Fair Work Ombudsman, no; in the interest of the corporation himself. It might danger the interest of the corporation. Come on. This is rubbish.”.
In addition, Mr Oren stated in correspondence to the Applicant's solicitors dated 6 July 2013, which was not denied by him, that:-
“If you will indeed continue your path of going after me personally I will reply with the same coin and make it a personal conflict . ... Once I had taken this path, I can assure you I won’t let go. It’s going to be very ugly and very personal all the way.”"
The Court concludes the interests of justice would be best served by Darna Pty Ltd being represented by a legal practitioner who is bound to observe professional rules of conduct and who has ethical duties to the Court (Worldwide Enterprises Pty Ltd v Silberman and Anor (2010) 26 VR 595 at [26] and Alcantara and Anor v Buildpower Pty Ltd [2010] FMCA 626 at [10]).
Other Matters
There has been, and will be, ample opportunity for Darna Pty Ltd to obtain legal representation in this matter. This also works against the exercise of judicial discretion in favour of Mr Oren.
I accept the submissions of Counsel for the Applicant and the examples given that indicate that on numerous occasions Mr Oren has confused the issues raised by the Applicant’s Claim - that is whether Darna Pty Ltd complied with the Compliance Notice or provided a reasonable excuse for not complying - by seeking to dispute the legal or factual basis on which the determinations in the Compliance Notice were made. The examples given were that:-
a)in his Affidavit of 6 January 2014, Mr Oren states that the “main question is was the former employee a casual or a full time employee when dismissed and as a result - what were his entitlements.”;
b)in the Response filed 7 January 2014, Darna Pty Ltd and Mr Oren do not admit that Fair Work Inspector Pronk formed a reasonable belief that the 12 contraventions occurred, because of Darna Pty Ltd’s “belief” that Mr Ittah was employed on a casual basis; and
c)in correspondence to the Applicant's solicitors dated 9 July 2013, Mr Oren offered to undergo a polygraph test to establish he was telling the truth as a means of resolving the proceedings.
Further, it was submitted and the Court accepts the Statement of Claim filed on 7 January 2014 by Mr Oren demonstrates a fundamental misunderstanding of the legal basis for the determinations made in the Compliance Notice. Some examples given which are accepted by the Court were that the Statement of Claim:-
d)asserts that Mr Ittah was not entitled to the amounts determined in the Compliance Notice on the bases that Mr Ittah did not previously make a claim for these entitlements to Darna Pty Ltd and that Mr lttah was not acting in good faith;
e)asserts, with no further explanation, that entitlements to penalty rates for time worked on weekends, split-shift allowances and penalty payments in lieu of unpaid meal breaks found in the Restaurant Industry Award 2010 (‘the Award’) do not apply to full-time employees; and
f)seeks to rely on a representation by an unnamed migration agent to establish that the amounts paid to Mr Ittah were above Award entitlements.
In addition the Statement of Claim includes matters that are scandalous and embarrassing without making allegations of fact.
Mr Oren also demonstrated a lack of understanding of the Applicant's allegation that he was an accessory to Darna Pty Ltd’s failure to comply with the Compliance Notice. In particular, Mr Oren failed to distinguish between himself and Darna Pty Ltd.
In the circumstances of this matter, the Court has concluded that the Court will not exercise its discretion to grant leave to Mr Oren to appear for Darna Pty Ltd at the hearing of the application. It follows that the Application in a Case must be dismissed. The Court will order accordingly.
The Court will hear the parties as to costs.
The matter will otherwise be adjourned to a directions hearing on 24 April 2014 at 10am.
I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Judge Hartnett
Associate:
Date: 28 March 2014
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