Fair Work Ombudsman v Priority Matters Ltd

Case [2016] FCA 1415

FEDERAL COURT OF AUSTRALIA

Fair Work Ombudsman v Priority Matters Ltd [2016] FCA 1415

Appeal from: Fair Work Ombudsman v Priority Matters Pty Ltd & Anor and Fair Work Ombudsman v Superlattice Solar Pty Ltd & Anor and Fair Work Ombudsman v Geneasys Pty Ltd & Anor and Fair Work Ombudsman v Kia Silverbrook & Anor and Fair Work Ombudsman v Mpowa Pty Ltd & Anor [2016] FCCA 1474
File numbers: NSD 1939 of 2016, NSD 1940 of 2016,
NSD 1941 of 2016, NSD 1942 of 2016,
NSD 1943 of 2016
Judge: MARKOVIC J
Date of judgment: 16 November 2016
Date of publication of reasons: 25 November 2016
Catchwords: PRACTICE AND PROCEDURE – applications for stay of costs orders pending the determination of appeals – principles relevant to stay – applications granted
Legislation:

Fair Work Act 2009 (Cth) s 570(2)

Federal Court Rules 2011 (Cth) r 36.08

Cases cited:

Australian Federation of Consumer Organisations Inc v Tobacco Institute of Australia Ltd (1991) ATPR 41-138

Flight Centre Limited v Australian Competition and Consumer Commission [2014] FCA 658

Phone Directories Company Australia Pty Ltd v Telstra Corporation Limited (No 3) [2015] FCA 926

Quincolli Pty Ltd v Fair Work Ombudsman [2012] FCA 373

Wooldridge v Australian Securities and Investments Commission [2015] FCA 349

Date of hearing: 16 November 2016
Registry: New South Wales
Division: Fair Work Division
National Practice Area: Employment and Industrial Relations
Category: Catchwords
Number of paragraphs: 32
Counsel for the Appellant: Mr A Moses SC
Solicitor for the Appellant: Fair Work Ombudsman
Solicitor for the Respondents: Mr P Argy, Keypoint Law

ORDERS

NSD 1939 of 2016
BETWEEN:

FAIR WORK OMBUDSMAN

Appellant
AND:

PRIORITY MATTERS PTY LTD ACN 089 759 973

First Respondent

KAI SILVERBROOK

Second Respondent

JUDGE:

MARKOVIC J

DATE OF ORDER:

16 NOVEMBER 2016

THE COURT ORDERS THAT:

1.Order 2 of the Orders of Judge Street of the Federal Circuit Court of Australia dated 21 October 2016, in Proceedings No. SYG 3209/2013 be stayed pending the determination of this appeal.

2.The Court reserves the costs of the interlocutory application.

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


ORDERS

NSD 1940 of 2016
BETWEEN:

FAIR WORK OMBUDSMAN

Appellant
AND:

SUPERLATTICE SOLAR PTY LTD ACN 147 948 605

First Respondent

KAI SILVERBROOK

Second Respondent

JUDGE:

MARKOVIC J

DATE OF ORDER:

16 NOVEMBER 2016

THE COURT ORDERS THAT:

1.Order 2 of the Orders of Judge Street of the Federal Circuit Court of Australia dated 21 October 2016, in Proceedings No. SYG 3210/2013 be stayed pending the determination of this appeal.

2.The Court reserves the costs of the interlocutory application.

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


ORDERS

NSD 1941 of 2016
BETWEEN:

FAIR WORK OMBUDSMAN

Appellant
AND:

KAI SILVERBROOK

First Respondent

JANETTE LEE
Second Respondent

JUDGE:

MARKOVIC J

DATE OF ORDER:

16 NOVEMBER 2016

THE COURT ORDERS THAT:

1.Order 1 of the Orders of Judge Street of the Federal Circuit Court…

Continue reading Fair Work Ombudsman v Priority Matters Ltd

Sign in free to access the full text

Details
AGLC
Fair Work Ombudsman v Priority Matters Ltd [2016] FCA 1415
Case
[2016] FCA 1415
Decision Date

CaseChat Overview and Summary

The Fair Work Ombudsman sought a stay of the costs orders made by the Federal Circuit Court against it in proceedings relating to alleged contraventions of the Fair Work Act. The primary judge had ordered the Fair Work Ombudsman to pay $800,000 as costs to the respondents, including Mr Silverbrook and Ms Lee. The Fair Work Ombudsman appealed from these costs orders and sought an interlocutory stay of the costs orders pending the determination of the appeal. The duty judge considered the applications on an urgent basis and made the orders sought by the Fair Work Ombudsman, staying the costs orders made by the primary judge. The duty judge identified the principles relevant to the exercise of the court's discretion in granting a stay of execution of a costs order pending the determination of an appeal. The duty judge found that the Fair Work Ombudsman had established a proper basis for a stay that will be fair to all parties. The duty judge found that the Fair Work Ombudsman had demonstrated a reason or an appropriate case to warrant the exercise of the court's discretion in its favour and that there was a real risk that the Fair Work Ombudsman will suffer prejudice or damage, if a stay is not granted, which will not be redressed by a successful appeal.

The court made orders staying the costs orders made by the primary judge pending the determination of the Fair Work Ombudsman's appeals. The court reserved the costs of the interlocutory application.

Orders

Orders of the court

1. Order 3 of the Orders of Judge Street of the Federal Circuit Court of Australia dated 21 October 2016, in Proceedings No. SYG 1780/2014 be stayed pending the determination of this appeal.

2. The Court reserves the costs of the interlocutory application.

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

Background

Background to the litigation

The applications came before me as duty judge on an urgent basis because the last day for complying with the Costs Orders was 18 November 2016. After hearing from the parties I made the orders sought by the Fair Work Ombudsman and granted a stay of the Costs Orders made by the primary judge in each of the Federal Circuit Court proceedings pending determination of the appeals. These are my reasons for making those orders.BACKGROUND The Costs Orders the subject of the applications for a stay were in substantially identical terms in each proceeding. In effect, they required the Fair Work Ombudsman to pay, as a single set of costs, $800,000 as the costs of Mr Silverbrook in proceedings SYG 3209 of 2013, SYG 3210 of 2013, SYG 3228 of 2013, SYG 1743 of 2014 and SYG 1780 of 2014 and the costs of Ms Lee in proceedings SYG 1743 of 2014. Mr Silverbrook was a respondent to each of the proceedings in which the Costs Orders were made and Ms Lee was a respondent to only one of those proceedings. The proceedings in the Federal Circuit Court that gave rise to the Costs Orders concerned alleged contraventions by various corporate employers of the Fair Work Act in relation to employee entitlements. Mr Silverbrook was a director of each of the corporate employers and was a respondent to each of the proceedings and Ms Lee was joined to one of the proceedings because she was a director of the relevant corporate employer. The primary judge heard the five proceedings together first hearing issues of “alleged contraventions including the making of any orders in respect of underpayments” i.e. liability issues. His Honour made orders and gave judgment on those issues on 17 June 2016. In doing so in each case his Honour made an order that further directions were to be made for hearing as to penalty and costs, as applicable: Fair Work Ombudsman v Priority Matters Pty Ltd & Anor and Fair Work Ombudsman v Superlattice Solar Pty Ltd & Anor and Fair Work Ombudsman v Geneasys Pty Ltd & Anor and Fair Work Ombudsman v Kia Silverbrook & Anor and Fair Work Ombudsman v Mpowa Pty Ltd & Anor [2016] FCCA 1474 (Priority Matters). There followed on 21 October 2016 there followed a hearing on penalty and costs at the conclusion of which the primary judge gave an ex tempore judgment and, among others, made the Costs Orders. His Honour’s reasons have not yet been published. On 9 November 2016 the Fair Work Ombudsman filed five notices of appeal seeking to appeal from, among others, orders made in Priority Matters and from the Costs Orders. In each case in the notices of appeal the Fair Work Ombudsman also seek as order 1 a stay of the Costs Orders. On 15 November 2016 the Fair Work Ombudsman filed the interlocutory applications for a stay of the Costs Orders which were required to be satisfied by 18 November 2016. THE EVIDENCE In support of the interlocutory applications, the Fair Work Ombudsman relied on an affidavit affirmed by Jasmine Therese Dennis, Special Counsel with the Office of the Fair Work Ombudsman. Ms Dennis’ evidence in support of each application is substantially the same. She deposes to the following:(1)the evidence filed by the respondents in the Federal Circuit Court proceedings on the issue of costs was that their costs, including those of Mr Silverbrook and Ms Lee, were $1.2 million, most of these costs had not been paid and were a personal debt of Mr Silverbrook and Ms Lee and the respondents, including Mr Silverbrook and Ms Lee, had suffered irreparable financial and solvency damage; (2)based on searches conducted of the Personal Property Securities Register and Land and Property Information (LPI):(a)Mr Silverbrook does not own any assets; and(b)Ms Lee does not own any assets but an historical search of LPI records in Ms Lee’s name showed that she had transferred six properties between 1996 and 2016; and(3)she is not aware of any other assets held by Mr Silverbrook or Ms Lee which could be used to effect reimbursement of the Costs Orders should the Fair Work Ombudsman be successful in its appeals.

Evidence

Evidence Before The Court

On 9 November 2016 the Fair Work Ombudsman filed five notices of appeal seeking to appeal from, among others, orders made in Priority Matters and from the Costs Orders. In each case in the notices of appeal the Fair Work Ombudsman also seek as order 1 a stay of the Costs Orders. On 15 November 2016 the Fair Work Ombudsman filed the interlocutory applications for a stay of the Costs Orders which were required to be satisfied by 18 November 2016. THE EVIDENCE In support of the interlocutory applications, the Fair Work Ombudsman relied on an affidavit affirmed by Jasmine Therese Dennis, Special Counsel with the Office of the Fair Work Ombudsman. Ms Dennis’ evidence in support of each application is substantially the same. She deposes to the following:(1)the evidence filed by the respondents in the Federal Circuit Court proceedings on the issue of costs was that their costs, including those of Mr Silverbrook and Ms Lee, were $1.2 million, most of these costs had not been paid and were a personal debt of Mr Silverbrook and Ms Lee and the respondents, including Mr Silverbrook and Ms Lee, had suffered irreparable financial and solvency damage; (2)based on searches conducted of the Personal Property Securities Register and Land and Property Information (LPI):(a)Mr Silverbrook does not own any assets; and(b)Ms Lee does not own any assets but an historical search of LPI records in Ms Lee’s name showed that she had transferred six properties between 1996 and 2016; and(3)she is not aware of any other assets held by Mr Silverbrook or Ms Lee which could be used to effect reimbursement of the Costs Orders should the Fair Work Ombudsman be successful in its appeals. The Fair Work Ombudsman also relied on a letter dated 17 July 2015 from Keypoint Law, the solicitors for the respondents, which sets out the basis upon which that firm acted for the respondents, other that Geneasys Pty Ltd, in the Federal Circuit Court proceedings (the Costs Agreement) and a tax invoice from Keypoint Law dated 15 August 2016 addressed to Mr Silverbrook and Ms Lee for their work representing those respondents for whom they acted in the Federal Circuit Court proceedings in accordance with the Costs Agreement (the Tax Invoice). The Costs Agreement provides that Keypoint Law will only be entitled to receive payment in the event of a “successful outcome” as that term is defined in the Costs Agreement. It further provides that, in the event of a successful outcome, Keypoint Law will charge an additional 25% “uplift” premium on its fees. The Tax Invoice is for a total of $728,166.83 inclusive of GST and notes that, in accordance with the Costs Agreement, Keypoint Law is entitled to charge an additional 25% uplift on account of achieving a successful outcome. The respondents relied on a letter dated 31 October 2016 from their solicitors to the Office of the Fair Work Ombudsman in which under the heading “Payment of Costs”, their solicitors referred to the Costs Orders and requested that the costs be paid as one single set of costs in the fixed amount of $800,000 into an account in the name of Keypoint Law Pty Limited, details of which were provided. The letter concludes:Please confirm that you will ensure that cleared funds will be available in the account on or before 18 November 2016 so that your client will be in compliance with the 28 day payment deadline as advised by Judge Street in response to your client’s senior counsel’s enquiry on 21 October 2016 (at T33.7-33.10).(emphasis in original)

Decision

Reasons for decision

The Fair Work Ombudsman made her applications for a stay of the Costs Orders pursuant to r 36.08 of the Federal Court Rules 2011 (Cth) which relevantly provides:36.08 Stay of execution or proceedings under judgment appealed from(1) An appeal does not:(a)operate as a stay of execution or a stay of any proceedings under the judgment subject to the appeal; or(b)invalidate any proceedings already taken.(2)However, an appellant or interested person may apply to the Court for an order to stay the execution of the proceeding until the appeal is heard and determined. The principles governing the exercises of the Court’s discretion in determining whether to grant a stay are not in contention. In Wooldridge v Australian Securities and Investments Commission [2015] FCA 349, Middleton J at [9] and [11] set out the relevant principles as follows:9In Alexander v Cambridge Credit Corp Ltd (Receivers Appointed) (1985) 2 NSWLR 685, the New South Wales Court of Appeal identified a number of principles guiding the exercise of discretion in granting a stay. Relevantly for the stay application before me the Court said (at 694-5):…The onus is upon the applicant to demonstrate a proper basis for a stay that will be fair to all parties. The mere filing of an appeal will not, of itself, provide a reason or demonstrate an appropriate case, nor will it discharge the onus which the applicant bears. The Court has a discretion whether or not to grant the stay and, if so, as to the terms that would be fair. In the exercise of its discretion, the Court will weigh considerations such as the balance of convenience and the competing rights of the parties before it. Where there is a risk that if a stay is granted, the assets of the applicant will be disposed of, the Court may, in the exercise of its discretion, refuse to grant a stay. Sometimes as a condition of the grant of a stay, where funds are available, a court will impose on the applicant the payment of the whole, or part, to the judgment creditor. Even where no order is made for the payment of part of a verdict, it is not at all unusual for the Court, in the exercise of its discretion, to grant a stay on terms that the appellant give to the judgment creditor security in terms defined by the Court as appropriate to the fair adjustment of the rights of the parties. …Two further principles can be mentioned. The first is that where there is a risk that the appeal will prove abortive if the appellant succeeds and a stay is not granted, courts will normally exercise their discretion in favour of granting a stay. Thus, where it is apparent that unless a stay is granted an appeal will be rendered nugatory, this will be a substantial factor in favour of the grant of a stay. Secondly, although courts approaching applications for a stay will not generally speculate about the appellant's prospects of success, given that argument concerning the substance of the appeal is typically and necessarily attenuated, this does not prevent them considering the specific terms of a stay that will be appropriate fairly to adjust the interest of the parties, from making some preliminary assessment about whether the appellant has an arguable case.(citations omitted)…11It is to be first appreciated that a first instance decision is not, and should not be treated as, a provisional decision. This is reflected in and acknowledged by r 36.08(1) of the Federal Court Rules 2011 (Cth). As Gleeson CJ observed in Swain v Waverley Municipal Council (2005) 220 CLR 517, at [2], the “system does not regard the trial as merely the first round in a contest destined to work its way through the judicial hierarchy until the litigants have exhausted either their resources or their possibilities of further appeal”. There is a prima facie assumption that the judgment the subject of the appeal is correct. The Court should not deprive a person of the fruits of victory by granting a stay unless the circumstances warrant the Court’s intervention.

Ratio Decidendi

Legal Principle Established

In Flight Centre Limited v Australian Competition and Consumer Commission [2014] FCA 658 at [9], Rangiah J summarised the principles as follows: 9I was not referred to any authorities in which an application for a stay of a pecuniary penalty order had been considered. The application fell to be determined having regard to the nature of the order and upon general principles. Those principles include the following:(a)There is an onus on the applicant to demonstrate a proper basis for a stay that will be fair to all parties.(b)There is a prima facie assumption that the judgment appealed from is correct.(c)There is a prima facie assumption that the Court should not deprive a litigant of the benefit of a judgment in its favour.(d)The Court has a broad discretion as to whether to grant a stay, and it is not necessary for an applicant for a stay to demonstrate special or exceptional circumstances. It is sufficient that the applicant demonstrates a reason or an appropriate case to warrant the exercise of discretion in its favour.(e)The mere filing of an appeal will not, of itself, provide a reason or demonstrate an appropriate case. (f)A stay will usually be granted if there is a real risk that the applicant will suffer prejudice or damage, if a stay is not granted, which will not be redressed by a successful appeal.(g)In the exercise of its discretion, the Court will weigh considerations such as the balance of convenience and the competing rights of the parties before it.[Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685 at 694; Powerflex Services Pty Ltd v Data Access Corporation (1996) 67 FCR 65 at 66; McLean Technic Pty Ltd v Digi-Tech (Australia) Ltd (2002) 55 NSWLR 737 at [18]].CONSIDERATION The respondents submitted that the applications for a stay had to be viewed in context and against the unusual circumstances of the Federal Circuit Court proceedings. In that regard, they submitted that:(1)the primary judge handed down his judgment on liability on 17 June 2016. No appeal was filed by the Fair Work Ombudsman in relation to that judgment at that time despite bringing other applications for determination in the Federal Circuit Court proceedings. The respondents submitted that the appeals were not competent because they were out of time insofar as the Fair Work Ombudsman sought to appeal from the orders and judgment in Priority Matters and no application for an extension of time in which to appeal had been filed;(2)on 31 October 2016 the Fair Work Ombudsman was provided with details of where to pay the amount of the Costs Orders. There was no objection to that course;(3)the Fair Work Ombudsman then served notices of appeal;(4)the power to award costs against a party in proceedings under the Fair Work Act is limited to the circumstances set out in s 570(2) and relevantly where “the Court is satisfied that the party’s unreasonable act or omission caused the other party to incur costs”;(5)the Costs Orders were the subject of a contested application which followed findings by the primary judge of unreasonable conduct in Priority Matters. The primary judge gave the Fair Work Ombudsman the opportunity to argue on 21 October 2016 that the costs claimed were not incurred by reason of that unreasonable conduct;(6)the primary judge made findings about the Fair Work Ombudsman’s conduct. The Court was taken to the primary judge’s judgment in Priority Matters at [284], [288], [291] and [292] in that part of the judgment where the primary judge considered as application in a case for contempt and costs brought by the Fair Work Ombudsman in one of the proceedings. That application sought to have a solicitor “dealt with for contempt”: Priority Matters at [283];(7)at [292] of Priority Matters there was a clear finding:The effect of this strategy was one where Mr Silverbrook lost the potential representation by Ms Inverarity in these proceedings and but for the taking over of the matters by Mr Argy the position is that Mr Silverbrook and the companies may have been unrepresented. I regard the conduct of the FWO in relation to this strategy in the filing of the contempt application and the keeping of it alive until the close of the respondents’ case as unreasonable conduct that has caused the respondent companies, Mr Silverbrook and Ms Lee to incur costs within the meaning of s.570 of the Fair Work Act 2009.(8)Mr Silverbrook and Ms Lee were essentially “acquitted” by the primary judge who found that they were not liable as accessories;(9)on 21 October 2016, the primary judge gave extensive ex tempore reasons. His Honour took the amount claimed for costs, $1.2m, and applied a 20% reduction for party/party costs and a further 10% reduction to account for costs incurred by the corporate respondents, to arrive at the amount of $800,000;(10)without some payment the respondents will be unrepresented in the appeal proceedings because they have no money; and(11)a stay will severely impact if not completely imperil the respondents’ ability to run the appeals and referred to the email dated 16 November 2016 where Mr Silverbrook and Ms Lee said it was not practical for them to transfer the proceedings to another firm and that, given Mr Silverbrook’s illness, he cannot put the time and effort into briefing someone new.