Fair Work Ombudsman v VicPro Security Pty Ltd

[2024] FedCFamC2G 1040

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Fair Work Ombudsman v VicPro Security Pty Ltd [2024] FedCFamC2G 1040  

File number:

MLG 2303 of 2023

Judgment of:

JUDGE CHAMPION

Date of judgment:

10 October 2024

Catchwords:

INDUSTRIAL LAW – Application for leave under r. 9.04 for corporation to carry on proceeding otherwise than by a lawyer – Where director of corporation proposes to carry on a proceeding for corporation – Effectiveness of representation – Financial position of the corporation – Leave to carry on a proceeding otherwise than by a lawyer not granted

Legislation:

Fair Work Act 2009 (Cth) s. 716

Federal Circuit and Family Court of Australia Act 2021 (Cth) ss. 175, 190

Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) r. 9.04

Cases cited:

Fair Work Ombudsman v ABMENG Pty Ltd [2024] FedCFamC2G 636

Fair Work Ombudsman v ANSA Finance Pty Ltd [2022] FedCFamC2G 833

Fair Work Ombudsman v Finetune Holdings Proprietary Limited & Anor [2010] FMCA 889

Molnar Engineering Pty Ltd v Burns (1984) 3 FCR 68; [1984] FCA 201

Silkearl Pty Ltd v Ainsworth Game Technology Ltd [2006] FCA 949

Slattery v Canard Consolidated Pty Ltd [2023] FedCFamC2G 198

Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241

Wong v Dong Lai Sun Massage Pty Ltd [2016] FCCA 18

WorkPac Pty Ltd v Rossato [2020] FCAFC 84

Worldwide Enterprises Pty Ltd v Silberman (2010) 26 VR 595

Division:

Division 2 General Federal Law

Number of paragraphs:

36

Date of hearing:

10 October 2024

Place:

Melbourne

Counsel for the Applicant:

Mr McKenna

Solicitor for the Applicant:

Office of the Fair Work Ombudsman

Counsel for the Respondents:

In person

ORDERS

MLG 2303 of 2023

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

BETWEEN:

FAIR WORK OMBUDSMAN

Applicant

AND:

VICPRO SECURITY PTY LTD

First Respondent

DAMIEN BLACK

Second Respondent

ORDER MADE BY:	JUDGE CHAMPION
DATE OF ORDER:	10 OCTOBER 2024

THE COURT ORDERS THAT:

1.Pursuant to rule 9.04 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) the First Respondent may not take any further step in this proceeding otherwise than by a lawyer.

2.By 6 December 2024, the First Respondent has leave to file and serve an Amended Defence which has been signed off by the lawyer referred to in order 1 above (or Counsel briefed on their behalf).

3.By 6 December 2024, the Second Respondent has leave to file and serve an Amended Defence (which may be the same as the Defence referred to in order 2 above).

4.By 20 December 2024, the Applicant file and serve any reply to the Defence filed by the First and Second Respondent.

5.By 21 February 2025, the Applicant is to file and serve any affidavit material on which it intends to rely on the issue of liability.

6.By 27 March 2025, the Respondents are to file and serve any affidavit material on which they intend to rely on the issue of liability.

7.By 24 April 2025, the Applicant is to file and serve any affidavit material in reply and an outline of submissions on the issue of liability.

8.By 10 May 2025, the Respondents are to file and serve their submissions on the issue of liability.

9.By 23 May 2025, the Applicant is to file and serve any submissions in reply.

10.By 30 May 2025, each party is to:

(a)file and serve any objections to the admissibility of another party’s affidavits; and

(b)advise the other party of any witness required for cross-examination at the hearing of the matter.

11.By 6 June 2025, any response to those objections is to be filed and served.

12.The matter be set down for a hearing with an estimated duration of 1 day on 13 June 2025.

13.The parties have liberty to apply on 3 days’ notice.

Note: The form of the order is subject to the entry in the Court’s records.

Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).

EX TEMPORE REASONS FOR JUDGMENT
Revised from transcript

JUDGE CHAMPION:

1. The Fair Work Ombudsman (FWO) is the Applicant in an action seeking various remedies against VicPro Security Proprietary Limited (VicPro), the First Respondent, as to a failure to comply with a compliance notice given to the First Respondent under s. 716(2) of the Fair Work Act 2009 (Cth). Mr Damien Black is one of two directors of VicPro. He is VicPro’s managing director. Mr Black is the second named respondent in the proceeding against whom the FWO seeks remedies as a person who was involved in the alleged contraventions under s. 550 of the Act.

2. Mr Black seeks leave to represent VicPro in the substantive proceeding. He requires leave to do so under r. 9.04 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth). He has made an affidavit on 2 September 2024 in support of his application.

3. I note at the outset that Mr Black argued the application today on behalf of VicPro and I granted leave for that limited purpose. The FWO opposes the grant of leave in the substantive proceeding.

4. The issue for my decision is whether I ought to grant leave for VicPro, a corporation, to carry on a proceeding otherwise than by a lawyer.

5. I have decided not to grant leave to VicPro to carry on a proceeding otherwise than by a lawyer. My reasons follow.

   The Act and the Rules

6. Under s. 175 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (FCFCOA Act), a party to a proceeding is not entitled to be represented by another person unless the other person is entitled to practise as a barrister or solicitor, or both, in a Federal Court. 

7. Under the Rules, r. 9.04 is as follows:

   9.04 Corporation must be represented

   Except as provided by or under an Act or regulations made under an Act, or with the leave of the Court, a corporation may not start or carry on a proceeding otherwise than by a lawyer.

   The legal principles

8. Judge Symons set out the relevant legal principles as to when a corporation will be granted leave to carry on a proceeding otherwise than by a lawyer in Slattery v Canard Consolidated Pty Ltd [2023] FedCFamC2G 198 at [46], as follows:

   The many authorities on the exercise of the discretion to dispense with compliance with rule 9.04 disclose that the following considerations, among others, are relevant: the complexity of the case; the manner in which the case has progressed at the time application is made and the manner in which it may proceed in the future; financial considerations that would inhibit a company from obtaining representation (noting the onus is on an applicant seeking to dispense with the requirement of legal representation to provide evidence of incapacity); the ability of the representative to exercise the objectivity of a practitioner; whether the matter can be conducted in an orderly manner without a solicitor; whether the person seeking to represent the company is likely to be a principal witness in the trial particularly if credit is an issue and the effect, if any, that a grant of leave will have on the Court resources and the effect upon other litigants in the Court.

9. Recently, in Fair Work Ombudsman v ABMENG Pty Ltd [2024] FedCFamC2G 636 at [2], Judge Ladhams added to the matters which Judge Symons identified. These additional issues referred to in AMBENG include: whether there has been an appropriate opportunity for the party to arrange legal representation; whether the grant of leave is opposed; and the objects and purpose of the Rules and the FCFCOA Act, including the overarching principles set out in s. 190(2).

10. Weinberg JA explained the policy behind the rule in Worldwide Enterprises Pty Ltd v Silberman (2010) 26 VR 595 at [35] as to promote the proper administration of justice. I accept the FWO’s characterisation of the policy behind the rule as being that the court should be assisted by persons qualified and experienced in arguing factual and legal disputes and who have ethical duties to clients and to the courts. As French J, as he then was, said in Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241 at [14], incorporation confers benefits, but it also confers burdens, one of which is that in litigation, a company must normally be represented by a lawyer.

11. In Molnar Engineering Pty Ltd v Burns (1984) 3 FCR 68; [1984] FCA 201, the Full Court recognised that the discretion as to the grant of leave was a broad one, to be exercised judicially depending on the existence of a sufficient cause (approved by Allsop J Silkearl Pty Ltd v Ainsworth Game Technology Ltd [2006] FCA 949, [4]). It is a broad discretion, and it is not necessary for the corporation to establish exceptional circumstances in order to be granted leave. Further, as French J stated in Termi-Mesh at [14]:

    A distinction may be drawn between the case in which the company in question is applicant and that in which it is respondent.  In the latter case it may be a more liberal approach to the grant of leave is warranted.

12. Nonetheless, it was uncontroversial before me that the considerations Judge Symons identified in Slattery were the relevant considerations as to any grant of leave.

13. Finally, as to legal principles, I note that in exercising any discretion to depart from the general rule, having regard to the relevant considerations, it is not necessary for each factor to be given equal weight: see, Wong v Dong Lai Sun Massage Pty Ltd [2016] FCCA 18 at [20].

    APPLICATION OF THE PRINCIPLES

    Complexity of the proceeding

14. The court has made orders in the course of this proceeding with a view to the preparation of a statement of agreed facts to narrow issues in dispute.  With no criticism of either party, no agreement has been reached, but pragmatically, I must anticipate that this will be a contested hearing. 

15. The defence that VicPro has currently filed raises issues of set-off and the correct methodology for calculating any underpayment. Mr Black reiterated to me today that it is VicPro’s intention to proceed at trial by way of providing the court with a copy of the employment agreements of the affected employees, demonstrating that there was a mutually agreed clause that any overtime payments would be “offset” by the “above award wages” and "paid breaks paid by the employer to each employer", and in this regard, I refer to Mr Black's affidavit at [35].

16. The FWO’s primary position is that these matters are not relevant under s. 716 of the Act, and that the proceeding as to a compliance notice is not necessarily a complex one. However, at this interlocutory stage, if issues as to set-off and as to the methodology of underpayment are to be litigated, they are complex, factually and legally. In this regard, I was referred to in the FWO's outline and reminded of the decision in WorkPac Pty Ltd v Rossato [2020] FCAFC 84, [818]–[978] as an example of the factual and legal complexity of these issues.

17. The fact that the proceeding will be contested and possibly complex weighs against the grant of leave. 

    Financial considerations

18. VicPro bears the onus of putting before me material to establish that there are financial considerations which would inhibit it from obtaining representation. 

19. I have some evidence in Mr Black’s affidavit as to its financial considerations. Judge Symons referred to financial considerations that would “inhibit the company from obtaining representation”: Slattery, [46]. To similar effect, in Fair Work Ombudsman v Finetune Holdings Proprietary Limited & Anor [2010] FMCA 889, Federal Magistrate Lucev (as he then was) spoke about an inability to engage legal representation. In that regard, his analysis was synonymous with Judge Symons’ analysis.

20. VicPro was candid in providing some financial information to the court on its application. Mr Black deposed that VicPro has been invoiced approximately $27,000 for legal fees in this matter at a time when it retained lawyers and was provided with an estimate as to future legal costs approximating $100,000 (Affidavit of Mr Black’s, [11]–[13]). He deposed that the costs of engaging legal representation would have a “significant impact on the ongoing profitability of VicPro”. He annexed some financial statements as Attachment “A” to his affidavit. Those financial statements indicate that the profit and loss statement for VicPro for the year ended 30 June 2023 is that the company achieved a net profit of $314,567.

21. The balance sheet, which also forms part of Attachment “A”, discloses total equity at the end of 30 June 2023 of $439,701. Mr Black emphasised to me that his business operates in an environment of changing business conditions. Further, that it likes to keep reserves of approximately $200,000 in respect of employee contingent entitlements, which are not necessarily fully apparent on its balance sheet or its profit and loss statement. To his credit, though, in an exchange with me as to whether VicPro would be “inhibited” from obtaining legal representation were I not to grant leave, Mr Black admitted by reference to those financial reports that VicPro would not be inhibited, albeit that there would be pressure placed on cash reserves if I declined leave.

22. Although doubtless VicPro would prefer to deploy funds elsewhere, adopting Judge Symons language in Slattery, the evidence does not establish that financial considerations would “inhibit” VicPro from obtaining legal representation. The snapshot of its financial position provided by its profit and loss statement and balance sheet disclose it to be a substantial trading entity with sufficient financial resources to obtain legal representation in this matter and conduct its business. 

23. I accept the FWO’s submissions that the amount of any penalty that may be imposed, should the FWO be successful in the litigation, is not relevant to any decision as to the grant of leave under r. 9.04. 

24. Financial considerations do not support a grant of leave. 

    The effectiveness of representation

25. In Slattery at [46], Judge Symons referred to “the manner in which the case has progressed at the time the application is made”.

26. Mr Black submitted to me that “allowing the company to be represented by one of its officers will expedite the proceedings, reducing the burden on both the company and the court.” 

27. I am not persuaded that this is so. The discursive nature of the defence does not respond to issues raised in the statement of claim in the manner required by the rules. If, at trial, issues are not defined as required by the Rules, that fact is likely to prolong rather than expedite the hearing. Having regard to the content of the current defence, if VicPro intends to rely upon a defence of reasonable excuse under s. 716(5) of the Act, the Defence does not set out the material facts alleged that establish that defence.

28. Further, on the documents the court currently has to hand, namely the Respondents' Defence as filed on 15 April 2024, the Defence does not grapple with the observations of Judge Forbes in Fair Work Ombudsman v ANSA Finance Pty Ltd [2022] FedCFamC2G 833, at [148] that the court’s consideration of whether there is a “reasonable excuse” is properly directed to the steps required to be taken under the compliance notice and is not an enquiry into whether the alleged substantive contravention of fair work instruments has been made out.

29. Suffice to say, for present purposes, the issues canvassed in the Defence show that this matter may be more complex than at first may be appreciated.

30. The complexity weighs against the grant of leave. Mr Black says that he is the person who is familiar with this case.  I accept entirely that he is familiar with the facts.  In my view, however, that is a matter which is conceptually distinct from whether it is appropriate to grant leave for him to represent the company. I also note that Mr Black submitted to me that he would undertake to conduct the proceedings with due respect for court processes. Having regard to the professional and courteous way he conducted the proceeding this morning, I have no reason to doubt that statement.  In the end, that has not swayed the exercise of my discretion in favour of granting leave.   

31. In Slattery, Judge Symons also referred to “the ability of the representative to exercise the objectivity of a practitioner” and “whether the person seeking to represent the company is likely to be a principal witness in the trial.” For present purposes, I note that it is likely that it appears that Mr Black will be, if not the principal witness, a significant witness for VicPro. He was pre-eminently involved in communications between the company and Fair Work as to the compliance notice. It is difficult to wear two hats. That matter weighs against the grant of leave. The FWO emphasised that these matters are not a criticism of Mr Black, rather they represent a tension which arises in a situation where a person who will be the principal witness for a company also seeks to act as its legal representative. 

32. By way of subsidiary matters, I note the following, which were matters Judge Ladhams referred to in ABMENG.

33. First, there is no doubt that there has been an opportunity for VicPro to obtain representation and any timetable which I will set working towards a hearing in June 2015 will enable VicPro to obtain representation. 

34. Second, I must have regard to the overarching purpose set out in s. 190 of the FCFCOA Act. In that regard, there are competing considerations. Certainly, it will be more expensive for VicPro because I require it to retain legal representation. On the other hand, on the matters as they are presented to me, I anticipate it will be more efficient if a lawyer is engaged who will assist the parties and the court to define the issues and confine the case to the real issues which I must consider.

35. Third, I give some limited weight to the fact that this is not a situation in which there is a consent position that VicPro be able to proceed by way of a lawyer.

    CONCLUSION

36. I do not intend to grant leave to VicPro to proceed other than by way of a lawyer.  I will hear the parties as to the appropriate form of the orders I will make, including consequential orders timetabling the progression of this matter.

I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of Judge Champion.

Associate:

Dated:       28 October 2024