Fair Work Ombudsman v South Jin Pty Ltd - [2012] FMCA 331

FEDERAL MAGISTRATES COURT OF AUSTRALIA

FAIR WORK OMBUDSMAN v SOUTH JIN PTY LTD & ORS

[2012] FMCA 331

INDUSTRIAL LAW – Applications under Fair Work Act for compensation and pecuniary penalties for contravention of civil remedy provisions – application for leave to amend to file third Amended Statement of Claim – whether leave should be granted.

Fair Work Act 2009, ss.45, 545, 546 & 570
Workplace Relations Act1996, s.719
Cleaning Services Award 2010
Federal Magistrates Court Act 1999, s.4
Federal Magistrates Court Rules 2001, rr.4.05 & 7.01

Fair Work Ombudsman v Nerd Group (2010) 197 IR 431

Applicant:

FAIR WORK OMBUDSMAN

First Respondent:

SOUTH JIN PTY LTD

Second Respondent:

KI BOK JIN

Third Respondent:

COASTAL TROLLEY SERVICES PTY LTD

Fourth Respondent:

EDWARD STROOP

File Number:

ADG 159 of 2011

Judgment of:

Lindsay FM

Hearing date:

17 April 2012

Date of Last Submission:

17 April 2012

Delivered at:

Adelaide

Delivered on:

20 April 2012

REPRESENTATION

Counsel for the Applicant:

Ms Richards

The Applicant:

Fair Work Ombudsman

Counsel for the Second Respondent:

Mr Manuel

Solicitors for the Second Respondent:

WBH Legal Solicitors

Counsel for the Third & Fourth Respondents:

Mr Lazarevich

Solicitors for the Third & Fourth Respondents:

Camatta Lempens Pty Ltd Lawyers

ORDERS

Pursuant to Rule 7.01(1) of the Federal Magistrates Court Rules 2001 the applicant be given leave to file a third Amended Statement of Claim in the form set forth in the annexure EP11 of the Affidavit of Elizabeth Anne Priest filed on 12 April 2012.
That the application for costs by the second, third and fourth respondents of and incidental to the application to amend be reserved to the trial.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT ADELAIDE

ADG 159 of 2011

FAIR WORK OMBUDSMAN

Applicant

And

SOUTH JIN PTY LTD

First Respondent

KI BOK JIN

Second Respondent

COASTAL TROLLEY SERVICES PTY LTD

Third Respondent

EDWARD STROOP

Fourth Respondent

REASONS FOR JUDGMENT

The applicant seeks leave pursuant to Rule 7.01(1) of the Rules of Court to file a third Amended Statement of Claim.
The proposed Statement of Claim is an annexure to an affidavit of Elizabeth Anne Priest filed on 12 April 2012.
If the leave is granted it will, obviously, be the fourth form in which the Statement of Claim has been presented.
The application for leave is opposed by the second, third and fourth respondents. The first respondent is no longer represented in the proceedings. The second respondent, an officer of the first respondent, continues to be represented.
Rule 7.01(1) provides:
Power to amend
At any stage in a proceeding the Court or a Registrar may allow or direct a party to amend a document (other than an affidavit) in the way and on the conditions the Court or the Registrar sees fit.
The circumstances in which the power should be exercised were considered by Lucev FM in Fair Work Ombudsman v Nerd Group (2010) 197 IR 431. The judgment in that case was delivered in the context of the leave to amend order being made by consent but with the Court’s reasons for making the order being at some variance than those which were contended for by the applicant in that case. His Honour said at [19] to [20]:
There are several relevant considerations in determining whether or not to exercise the discretion that the power under r7.01(1) of the FMC Rules gives to the Court:
(a)firstly, the interests of justice. In SZGTE v Minister for Immigration and Multicultural Affairs [2006] FCA 443 it was said that the interests of justice were paramount, and in both SZGTE and Vijayakumar and interests of justice were said to be the “ultimate considerations” (see SZGTE (supra));
(b)secondly, it is relevant to consider whether the party seeking the amendment is acting in good faith (see SZGTE (supra));
(c)thirdly, it is relevant to consider whether the amendment would be futile. (see SZGTE (supra)) If the grounds for the amendment are of “doubtful merit” it is likely that they will be refused (see SZGTE (supra));
(d)fourthly, it is relevant to consider whether any injustice to the non-amending party cannot be adequately compensated for (see SZGTE (supra)). This includes consideration of the consequences of a late adjournment if an amendment is granted, including consideration of whether costs orders are likely to be met (the latter is a factor applicable especially in migration cases in this Court) (see SZGTE (supra)); and
(e)fifthly, it is relevant to consider the question of case management (see SZGTE (supra)).
In exercising any discretion, the Court must take into account the objects of the FM Act in s 3, the mode of operation of the Court in s 42 of the FM Act, and the objects of the FMC Rules in r 1.03, which make it apparent that the Court is intended to operate in a manner:
(a)as informal as possible in the exercise of judicial power;
(b)which is not protracted in its proceedings;
(c)which resolves proceedings justly, efficiently and economically;
(d)which uses streamlined procedures; and
(e)that avoids undue delay, expense and technicality.
All parties accepted those remarks were an accurate description of the matters relevant to the exercise of the discretion.
I should note that the Rules of Court, and Rule 4.05 in particular, permit, by implication at least, the filing of a Statement of Claim with an Application (if it is filed with an Application an Affidavit need not be filed). That is what transpired in this proceeding.
The orders sought in the proceedings are for declarations that the respondents have contravened certain clauses of the Federal Minimum Wages provisions of the Workplace Relations Act1996 and the Cleaning Services Award 2010 and by so doing contravened s.45 of the Fair Work Act 2009. That section is a civil remedy provision.
Pecuniary penalty orders pursuant to s.546 of the Fair Work Act 2009 are sought in addition to orders compensating a range of employees in respect of underpayments pursuant to s.545 of the Fair Work Act 2009 and s.719 of the Workplace Relations Act 1996.
It is unnecessary for me to canvass the facts of the matter in this judgment other than to note that the third respondent was involved in providing a trolley collection service in South Australia and that the fourth respondent was the manager of the third respondent’s trolley collection operations. The first respondent was a contractor who provided trolley collection services to the third respondent. The second respondent was the manager and sole director and shareholder of the first respondent.
The second respondent opposes the grant of leave and contends that if leave is granted it should be conditional upon the applicant being obliged to file and serve affidavits of evidence in chief in accordance with an order I made on 1 February 2012 prior to the filing of any Defence by any respondent and also contends that I should make an order that the applicant pay the second respondent’s costs in relation to the proposed amendment on an indemnity basis.
The third and fourth respondents oppose the grant of leave to amend and also ask that any leave that is granted be conditional upon the filing and service of the affidavits of evidence in chief prior to the filing of defences. They also sought an order that the applicant pay the costs of the amendments. In the event that leave was granted on the conditional basis sought then and in that event the third and fourth respondents asked for a period of 21 days following upon the service of the affidavits in which to make application for summary judgment, indicating that if no such application was brought in that period they would be obliged to file and serve defences in a timely manner.
The Statement of Claim in its present form was filed on 16 February 2012 pursuant to leave which was granted on 12 December 2011. Strictly speaking it ought to have been filed and served by 31 January 2012. The affidavits of evidence, pursuant to those same orders were to be filed by 13 March 2012. The proposed Amended Statement of Claim will be a complicated document of some 117 paragraphs extending over 55 pages with the orders sought extending over a further five pages.
Preceding each metamorphosis of the Statement of Claim have been the making of contentions by the respondents to the applicant that the pleading is inadequate either on account of ambiguity, lack of particularity or oppression. The applicant has responded on each occasion by purporting to address the multiplicity of criticisms made by formulating the claim in a new way.
This is precisely what has happened following the receipt of the third version of the Statement of Claim (the second amended version). So, we find the solicitors for the second respondent writing to the applicant on 29 February 2012 and saying:
Ordinarily, we would advise our clients to apply to strike out the further Amended Statement of Claim. However, in order to avoid the need to do this, we wish to point out what we see as fundamental flaws and provide you with an opportunity to correct them. Should you not share our views in respect of these flaws then we will make an application to strike out. (See annexure EP4 to the affidavit of Elizabeth Priest filed on 12 April 2012.)
The legal representatives of the third and fourth respondents wrote to the applicants on 2 March 2012 in similar terms (see annexure EP6 to that same affidavit).
The strike-out claim adumbrated by the respondents has never been made because the applicant has responded to the criticisms by attempting to accommodate (so far unsuccessfully it would appear in the view of the respondents) the various criticisms of the pleading by the respondents. The parties were always at liberty to conduct themselves in a different fashion. The respondents or one or more of them could have brought an application to strike out the pleading without notice; the deficiencies could have been identified in defences filed (the first and second respondent have filed defences to the second version of the Statement of Claim). The applicant, consistent with its general position of not conceding that the amendments were required as a matter of law or good practice, could have indicated an intention to leave the Statement of Claim in unredacted form and invited the summary dismissal proceedings to be brought. None of the parties have behaved in these ways and none of them can be criticised for the positions they have adopted.
The various criticisms that have been made as to the form in which the claim has been pleaded (sometimes very stridently) have only been made, surely, to elicit amendment; the various amendments to the claim have only been made by the applicant and are only now proposed to be made by the applicant because some benefit is perceived in so doing, whether because a failure to make any such amendment might have left the application vulnerable to striking out or because it was perceived that such a course of action would minimise costs and avoid unnecessary interlocutory hearings.
Given the reality of that situation it does not seem to me to be a logical response to the present circumstances to disallow the proposed amendments. I do not see any purpose in insisting that the applicant continue to present its case on the basis of a formulation of it that it wishes to eschew. That is likely to elicit strike out applications but no such applications have been filed by any respondent to date. There is a circularity about the predicament which will not be cured by refusing the amendment. The amendments sought to be made by the applicant ought to be allowed to be made. No-one suggests that any particular amendment is futile or that the applicant is not acting in good faith in promoting any particular amendment.
There is an argument advanced by the third and fourth respondents that any unfairness associated with any form in which the Statement of Claim has appeared cannot be compensated by an order for costs. In proceedings under the Fair Work Act 2009, including proceedings of this kind, I can only make an order for costs in the circumstance identified by s.570(2) of the Fair Work Act 2009.
Section 570(2)The party may be ordered to pay the costs only if:
(a)the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or
(b)the court is satisfied that the party’s unreasonable act or omission causes the other party to incur the costs; or
(c)the court is satisfied of both of the following:
(i) the party unreasonably refused to participate in a matter before FWA;
(ii) the matter arose from the same facts as the proceedings.
In determining whether to give the leave to file the latest version of the Statement of Claim it was submitted that I should have regard to the significant fetter upon the discretion the Court would usually have in relation to an award of costs constituted by this section of the Act. I do so.
As a general observation, I think I can say that the first three forms of the Statement of Claim certainly appear in parts to be cumbersome and confusing or ambiguous. However, the applicant should not be criticised for jettisoning such parts of the former versions of the claim when such defects were brought to their attention. Earlier amendments to the Statement of Claim were authorised by the parties’ consent to an order granting leave.
If the Statement of Claim still includes vague or oppressive or unparticularised formulations then presumably a summary dismissal application will be filed (the possibility of which was adumbrated by counsel for the third and fourth respondents) or the application will simply fail in those respects or in all respects at the trial. We shall see if that happens. I am not in a position to know at the present time whether such will be the case. Quite properly, given the way the argument before me proceeded, no counsel took me to the detail of the alleged flaws in the pleading proposed to be filed if leave were granted.
I was told by the applicant’s counsel that the number of contraventions alleged has been reduced by two in the latest pleading and that the statutory bases for the claims remains the same.
I propose to allow the amendments to be made in accordance with the relevant Rule of Court.
I have noted the application by the second, third and fourth respondents to make the grant of leave conditional upon the filing and service by the applicant of the affidavits of evidence of the applicant’s witnesses.
Section 4 of the Federal Magistrates Act 1999 permits the evidence to be given by affidavit.
It would be a very unusual step for the Court to take to direct a party to file its evidence in chief before a Defence had been filed. I understand that the respondents say that these unusual circumstances of the filing of a fourth version of the Statement of Claim following upon their consent to the filing and service of the previous two amended pleadings mandate the Court taking this step. It is said that only if the evidence in chief is disclosed will the respondents be able to determine whether the current version of the pleading is adequate.
But such an argument could be raised in the case of every Statement of Claim filed in the Court in any of its jurisdictions. There is no need for the respondents to know the applicant’s case in all its particularity at this point. The Statement of Claim needs to disclose the nature of the claim that the respondents are required to meet with the bases of the claim, both in terms of propositions of law and allegations of fact, being identified with clarity and precision. But the obligation at this point is confined to the filing of a pleading not the adduction of evidence to substantiate the factual contentions advanced in the pleading.
I understand the second respondent’s point that the time for the filing of the witness statements under the regime constituted by my orders of 12 December 2011 has already expired and that the applicant is putatively in contempt of that order but I know the circumstances in which that has arisen and they relate to the applicant’s response to the latest series of criticisms made about the pleading by filing a new version.
The respondents asked for the costs related to the filing and service of this third amended Statement of Claim. I propose to reserve to the trial the question of whether the Court is satisfied of the existence of one or more of the factual matters identified in s.570(2) of the Fair Work Act 2009 necessary to ground an order for costs. That task is optimally carried out when the Court has a clear understanding of the nature of the applicant’s case. The Court will be in a better position then to determine whether the failure to include or omit matters in one or more of the earlier versions of the Statement of Claim or, indeed, the failure to include or omit matters in this version, was unreasonable and whether such unreasonable act or omission, if found to exist, was the cause of the other party incurring costs.
I order accordingly.

I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of Lindsay FM

Date: 20 April 2012