Hyne v Concourse Golf Pty Ltd
[2021] FedCFamC2G 301
•29 November 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Hyne v Concourse Golf Pty Ltd [2021] FedCFamC2G 301
File number(s): MLG 438 of 2021 Judgment of: JUDGE FORBES Date of judgment: 29 November 2021 Catchwords: INDUSTRIAL LAW – FAIR WORK – Application by Respondents for joinder of non-party – Court’s discretion under rule 11 – whether cross-claim procedure under rule 24 should have been used – whether claims against non-parties are necessary or arguable – matters relevant to exercise of discretion – case management considerations – joinder allowed. Legislation: Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), rr.11, 24 Cases cited: Lukies v S2V Consulting Pty Ltd (2018) 333 FLR 226 Division: Division 2 General Federal Law Number of paragraphs: 118 Date of last submission/s: 12 November 2021 Date of hearing: 4 November 2021 Place: Melbourne Counsel for the Applicants: Ms Stojanova Solicitor for the Applicants: Legal Made Easy Counsel for the Respondents: Ms Bingham Solicitor for the Respondents: Barry Nilsson Lawyers Counsel for the proposed joinder parties (written submissions): Mr Howard Solicitor for the proposed joinder parties (written submissions) Maddocks ORDERS
MLG 438 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: CHARLOTTE HYNE
First Applicant
CHRISTOPHER HYNE
Second Applicant
EMMANUEL LEONDAKIS
Third Applicant
AND: CONCOURSE GOLF PTY LTD
First Respondent
DAVID MICHAEL MACKAY
Second Respondent
ORDER MADE BY:
JUDGE FORBES
DATE OF ORDER:
29 NOVEMBER 2021
THE COURT ORDERS THAT:
1.
In accordance with Rule 11.02(2) of the Federal Circuit Court and Family Court
of Australia (Division 2) (General Federal Law) Rules 2021 (“the Rules”), leavebe given to the First and Second Respondents to include A&JTM Investments Pty Ltd (ABN 12 064 624 497) as the Third Respondent and Fourth Cross-Respondent to this proceeding.
2.In accordance with Rule 11.02(2) of the Rules, leave be given to the First and Second Respondents to include Anthony Micallef as the Fourth Respondent and Fifth Cross-Respondent to this proceeding.
3.
In accordance with Rule 7.01 of the Rules, that the First and Second Respondents
be given leave to file an Amended Notice of Cross-Claim and the Amended Cross-Claim, in the form of the pleading attached as CLD-7 of the affidavit of Corrina Dowling affirmed on 7 October 2021, with those claims be further particularised
to address the concerns raised by the joinder parties’ counsel in his written submissions dated 12 November 2021.
4.Pursuant to Rule 11.02(1)(b) of the Rules, that the First and Second Respondents jointly serve on A&JTM Investments Pty Ltd (ABN 12 064 624 497) as the Third Respondent and Anthony Micallef as the Fourth Respondent, a copy of the Application, Second Amended Statement of Claim, Response, Defence and Amended Reply and upon all Cross-Respondents any Amended Notice of Cross-Claim and Amended Cross-Claim filed in this proceeding.
5.The dates for the Respondents compliance with orders 3 and 4 herein be determined at the directions hearing on 3 December 2021.
6.Costs of this application be reserved.
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).REASONS FOR JUDGMENT
JUDGE FORBES
INTRODUCTION
On 1 November 2021 the Respondents in this matter, Concourse Golf Pty Ltd (“Concourse Golf”) and Mr David MacKay (“Mackay”), filed an Application in a Case seeking orders
in the following terms:
(1)in accordance with Rule 11.02(2) of the Federal Circuit Court and Family Court
of Australia (Division 2) (General Federal Law) Rules 2021 (“the Rules”), leave be given to the First and Second Respondents to include A & JTM Investments Pty Ltd (ABN 12 064 624 497) as the Third Respondent and Fourth Cross-Respondent to this proceeding;(2)in accordance with Rule 11.02(2) of the Rules, leave be given to the First and Second Respondents to include Anthony Micallef as the Fourth Respondent and Fifth Cross-Respondent to this proceeding;
(3)
in accordance with Rule 7.01 of the Rules, that the First and Second Respondents
be given leave to file an Amended Notice of Cross-Claim and the Amended Cross-Claim (in the form of the pleading attached to the affidavit of the Respondents’ solicitor); and
(4)pursuant to Rule 11.02(1)(b) of the Rules, that the First and Second Respondents jointly serve on A & JTM Investments Pty Ltd (ABN 12 064 624 497) as the Third Respondent and Anthony Micallef as the Fourth Respondent, a copy of the Application, Second Amended Statement of Claim, Response, Defence and Amended Reply and upon all Cross-Respondents the Amended Notice of Cross-Claim and Amended Cross-Claim filed in this proceeding.
The Applicants oppose the proposed joinder on various bases which are touched upon below. The proposed joinder parties, A & JTM Investments Pty Ltd (“A&JTM”) and Mr Anthony Micallef (“Micallef”) also oppose the orders sought, for reasons which align in part with those raised by the Applicants.
I am persuaded that A&JTM and Mr Micallef should be joined as parties to these proceedings, notwithstanding the joinder may add some further complexity to already complex litigation.
I am satisfied on the material presently before the Court that the Respondents have an arguable case for relief against the proposed joinder parties and I am of the view that the Court cannot completely and finally determine all matters in dispute in the proceeding without their participation as parties. I am also of the view that case management considerations and the overarching purpose of Federal Circuit and Family Court of Australia Act 2021 (Cth)[1] and Rules[2] weigh strongly in favour of the joinder.
[1] Federal Circuit and Family Court of Australia Act 2021 (Cth) s 190
[2] Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules r 1.04(1)
I will make orders to affect the joinder. I will also make orders granting leave for the Respondents to file and serve an Amended Notice of Cross-Claim and an Amended Cross-Claim although I will order that those claims be further particularised to address the concerns raised by the joinder parties’ counsel in his written submissions dated 12 November 2021.
Lest there be any doubt, my ruling in favour of joinder says nothing about the merits of the Applicants’ case or the Respondents’ Defence and Cross-Claims. These proceedings are still in their early stages, no substantive evidence has been filed and I am not in a position to make any findings of fact. Notwithstanding my ruling, it remains open to the parties to make such applications in respect of pleadings, discovery, evidence and case management (including alternative dispute resolution) as they consider appropriate to ensure that this proceeding
is brought to trial and determined in the most timely and efficient manner possible.
LITIGATION BACKGROUND
The Applicants in this proceeding are Charlotte Hyne, Christopher Hyne and Emmanuel Leondakis.
The First Respondent (“Concourse Golf”) is a company which, broadly speaking, is engaged
in the design, manufacture and sale of golf equipment both online and at golf stores across Australia. The company is also engaged in research and development of “smart wheel” technology for use in electric golf carts and other wheeled appliances. The Second Respondent (“David MacKay”) is a shareholder in Concourse Golf and is its sole director and secretary.
These proceedings were commenced by the Applicants on 12 March 2021.
The Statement of Claim filed on behalf of the Applicants is a lengthy and immensely detailed document, running to nearly 250 paragraphs over 111 pages in its current form. The pleading, which has been amended since the commencement of proceedings, traverses a broad array
of allegations against the Respondents including that one or other of them:
(a)employed the Applicants as permanent, ongoing or indefinite employees;
(b)
was bound by the Fair Work Act 2009 (Cth) (“FW Act”) and Regulations
in respect of the employment of the Applicants;
(c)contravened the provisions of modern industrial awards in respect of the Applicants’ employment;
(d)alternatively, engaged each of the Applicants as independent contractors;
(e)was bound by the Independent Contractors Act 2006 (Cth) (“IC Act”) in respect of engagement of the Applicants as contractors;
(f)engaged in sham contracting;
(g)are liable to each of the Applicants in respect of various unpaid entitlements, including wages, overtime, annual leave, personal leave, public holidays, notice of termination and redundancy pay;
(h)are liable to each of the Applicants in respect of unpaid superannuation in breach of the Superannuation Guarantee (Administration) Act 1992 (Cth) (“SG Act”);
(i)
failed to maintain proper records and failed to pay the Applicants according
to the method and frequency prescribed by the FW Act;
(j)engaged in breach of contract;
(k)engaged in undue influence or pressured the Applicants in contravention of the FW Act; and
(l)engaged in various acts of adverse action in breach of s 341 of the FW Act.
It is alleged by the Applicants that David MacKay was an accessory to Concourse Golf’s breaches of the FW Act and that he was involved in contraventions within the meaning of
sub-s 550 (1) of that FW Act.
The relief sought by the Applicants includes, among other things, that the Respondents pay compensation to the Applicants (which the Respondents estimate totals around $1 million) and that each of the Respondents be the subject of pecuniary penalties, payable to the Applicants. Based on the pleaded contraventions, the potential penalties sought by the Applicant in this case could run to hundreds of thousands of dollars.
In their Response filed on 21 April 2021, the Respondents formally opposed the orders sought by the Applicants and sought orders that the application and statement of claim be dismissed. The filed Response stated that the Respondents intended to file a comprehensive defence to the Statement of Claim and, relevantly for the purposes of this application, also foreshadowed that they would seek interlocutory/case management orders for A & JTM Investments (“A&JTM”) and Anthony Micallef to be joined as the parties to the proceedings.
At the first Court event on 14 May 2021 Judge O’Sullivan made directions requiring
the Respondents to file and serve their defence and any cross-claim by 4 June 2021 and for the Applicants to file and serve any reply and any defence to the cross-claim by 2 July 2021. His Honour also directed that the matter be referred to mediation to be held after 2 July 2021 but prior to 20 September 2021.
On 7 June 2021 the Respondents filed their defence. In that defence, which is an equally comprehensive pleading running to nearly 70 pages, the Respondents in broad terms:
(a)deny the existence of employment contracts between the Applicants and Concourse Golf;
(b)
in denying the employment allegation, contend that the Applicants were engaged
as independent contractors;
(c)deny the allegations of sham contracting;
(d)deny the Applicants’ claims in respect of unpaid entitlements and contraventions of the FW Act;
(e)deny any contravention of the IC Act;
(f)deny that there has been any breach of contract;
(g)deny the allegations of undue influence and pressure as alleged by the Applicants’; and
(h)deny the adverse action allegations.
It is important to note that the defence is framed around a central proposition that from about August 2016 to May 2020 the Respondents engaged A&JTM to provide various services, through its nominee Anthony Micallef[3]. The services provided to the Respondents by A&JTM and Micallef are said to have included marketing and selling Concourse Golf products and, significantly, operating and managing Concourse Golf’s Victorian based business, including its warehouse facility.
[3] Respondents’ Defence e.g. at paragraphs 2(a)(iii), 2(d)
The Respondents plead, in light of this arrangement, that if any of the Applicants were employees (which the Respondents deny), they were engaged by and were employees
of A&JTM[4]. Accordingly, the Respondents plead that A&JTM and/or Micallef was responsible for providing the Applicants with the various payments and other employee benefits to which they claim an entitlement.[4] Defence at paragraph 2(d), 2(e)
In the alternative, the Respondents’ Defence denies the existence of independent contracts between the Applicants and Concourse Golf but pleads that if the Applicants were contractors, they were engaged as independent sub-contractors by A&JTM or Micallef[5] for the purpose
of delivering contracted services to Concourse Golf. They allege that A&JTM and Micallef made representations to the Applicants regarding the nature and type of their engagement, were responsible for setting the terms and conditions of their engagement and were responsiblefor meeting the Applicants’ contractual entitlements.[5] Defence at paragraphs 3 - 5
At paragraphs 5A and 5B of the Defence the Respondents positively plead against A&JTM and Micallef that one or other of them engaged the Applicants, set the terms and conditions
of their engagement and/or supervised and directed the Applicants in their work.In summary, central to the Respondents’ defence is the contention that the Applicants were engaged as employees or independent contractors by A&JTM through its nominee Micallef
to facilitate and support A&JTM investments to provide marketing, sales and business management services to Concourse Golf’s Victorian business.The Respondents have also filed a cross-claim against the Applicants in this proceeding.
In the cross-claim, the Respondents allege that the Applicants were engaged by Micallef
as nominee of A&JTM to provide various services for the purpose of fulfilling A&JTM’s responsibilities in running the Respondents’ Victorian business. It is alleged that the Applicants held themselves out as independent contractors, were engaged by Micallef as such and that the Respondents, relying upon the representations of Micallef and the Applicants, paid significant fees to the Applicants for the work they performed. The amounts paid by the Respondents are claimed as loss and damage arising from this misrepresentation.To complicate matters further, the Respondents have also alleged that each of the Applicants breached contractual and/or statutory duties owed to the Respondents by reason of their conduct in assisting Micallef and A&JTM to set up a competing business while at the same time purporting to perform services for the Respondents. In respect of these breaches
the Respondents claim damages, interest and costs against each of the Applicants, totalling some hundreds of thousands of dollars.For completeness, I note that the Respondents’ defence also pleads a set off against the Applicants’ claims. The Respondents allege that any fees paid to the Applicants for their work and any damages awarded in favour of the Respondents on account of the Applicants’ breach of duties[6], should be set off against any liability that the Respondents may have to the Applicants.
[6] which is the subject of the cross-claim.
The Applicants’ filed a Reply to the Respondents’ defence and a defence to the Respondents’ cross-claim. It is not necessary for the purposes of these reasons to traverse those pleadings, suffice to say both Micallef and A&JTM Investments are prominent in the response narrative such that it is difficult to fathom how the principal claim or the counterclaim could proceed without Micallef’s involvement as a witness.
APPLICATION FOR JOINDER
As previously mentioned, the Respondents seek orders granting them leave to:
(a)include A&JTM and Micallef as the Third and Fourth Respondents to the proceeding;
(b)include A&JTM investments and Micallef as the Fourth and Fifth Cross-Respondents in the proceeding;
(c)amend the Notice of Cross-claim and Cross-claim accordingly.
When the Respondents’ Application in a Case came before me on 4 November 2021, I made directions inviting each of the parties to file written submissions in relation to the application. I also directed the Respondents solicitors to draw this application and its supporting materials to the attention of the proposed joinder parties and I extended an invitation to those parties
to also file written submissions in relation to the application. I informed the parties that I would determine the application on the papers.
On 9 November 2021 the Court received written submissions from counsel representing the Applicants. Those submissions also relied upon and referenced affidavits which were filed
by each of the Applicants that day.
On 12 November 2021 the Court received a written submission from counsel representing the Respondents. Those submissions also relied upon a further recently filed affidavit, that being the affidavit of David MacKay sworn on 12 November 2021.
On 12 November 2021 the Court also received a written submission from counsel representing the proposed joinder parties.
I will not in the course of these reasons fully articulate the arguments in support of or opposing the joinder, other than as necessary. However, I can inform the parties that I have read and carefully considered counsels’ submissions and found them to be very helpful.
The Respondents’ case for joinder
The Court presently has no power to make any orders for relief against A&JTM Investments or Micallef in the context of the current proceedings. The Respondents wish to bring a cross-claim against them.
In its proposed Amended Statement of Counterclaim[7] (“PASCC”), the Respondents make various allegations against the proposed joinder parties including that:
(a)they used the Respondents’ business contacts and resources to establish a competing business;
(b)they induced the Applicants to breach the terms of their independent contractor agreements or, alternatively, their employment agreements with Concourse Golf (in the event such agreements existed, which is denied);
(c)
if the Applicants were engaged in an employment relationship with Concourse Golf, the proposed joinder parties were involved in any contraventions of the FW Act
by Concourse Golf and are liable to make a contribution in respect of any compensation or penalties that may be payable by the Respondents to the Applicants;
(d)further, the Respondents plead that if the Applicants were independent contractors, the proposed joinder parties engaged each of them as subcontractors and entered into contracts for services with each of them.
[7] annexed as CLD-7 to the affidavit of Corrina Louise Dowling affirmed 7 October 2021
In terms of the relief sought, the Respondents seek damages in respect of the proposed joinder parties’ breach of contract and inducement of the Applicants to breach their contract, and contribution or indemnity from the proposed joinder parties for any amount that the Respondents are found liable to pay the Applicants, including all compensation, costs and/or interest and penalties.
The Respondents argue that the purpose of the proposed joinder is to allow them to exercise their entitlement to seek indemnity or contribution against A&JTM and/or Micallef and
to make a claim against each of them arising from or connected with the subject matter of the original proceedings. They contended that the Court has a broad discretion to decide whether to include a person as a party and that this is an appropriate case in which the Court should exercise that discretion.
In support of the orders they seek, the Respondents say that there are no distinct rules in this Court regarding the joinder of third parties or third-party procedures, but the rules do provide for an ability to cross-claim against a person other than an applicant. In this respect, I have been directed to r 24 of the Court’s Rules.
The Respondents submit that based on the pleadings which have already been filed and those that are proposed to be filed, it should be self-evident that the proposed joinder arises out
of the same facts and circumstances of the current proceedings. The Respondents assert that to the extent that the Applicants are successful in any one of their claims, liability ought to be attributed to Micallef and/or A&JTM or that those parties should contribute to any remedy so ordered. The Respondents submit that there is an obvious overlap and duplicity between the factual and legal issues that arise.
The Respondents submit that their Defence filed on 7 June 2021 clearly asserted
the involvement and liability of A&JTM and/or Micallef. They say that their defence and
the affidavits of David MacKay affirmed on 6 October 2021 and Corrina Louise Dowling affirmed on 7 October 2021 together provide an arguable case which justifies the joinder.
The Respondents’ submit that a refusal of the joinder application will have a number
of undesirable consequences. They contended for example that a refusal of the application will result in a duplication of matters before the Court because the Respondents will be forced
to issue separate proceedings, resulting in increased cost to all parties in what is a “no costs” jurisdiction.
The Respondents also rely upon the Court’s overarching purposes which require the resolution of disputes in an inexpensive and proportionate manner. They make the obvious point that participation by parties in more than one proceeding is an inefficient use of the Court’s time and resources. Furthermore, the risk of inconsistent findings in separate proceedings is highly undesirable, as is the risk that a judgment in one proceeding might have to be stayed pending the outcome of another.
As to any prejudice that might be suffered by the Applicants, the Respondents submit that evidentiary material has not been filed, interlocutory processes are not yet complete and the trial date is yet to be set. They argue that any additional costs likely to be incurred as a result of the joinder are overstated by the Applicants as it is clear from the current pleadings that Micallef is integral to the proceedings and will be required as a witness in any event. The Respondents also argue that any personal or business relationship between the Applicants and Micallef (a matter to which I will return shortly) is not a proper basis for objection to the joinder. Indeed, the Respondents submit that it would be a miscarriage of justice if the Respondents were deprived of an entitlement to seek contribution or indemnity against the proposed joinder parties because the Applicants did not want to disturb their personal and/or business relationship with Micallef.
As to any perception of delay in making the joinder application, the Respondents rely on pre-litigation correspondence between solicitors and submit that the Applicants have been on notice of the proposed joinder since at least October 2020. The Respondents say they sought
to address the joinder issues at the first directions hearing of this matter on 14 May 2021 but given the Applicants’ resistance the Respondents agreed to hold over any such application
for joinder until after the court-ordered mediation. They say that after the unsuccessful mediation, further efforts were made to obtain the consent of the Applicants for joinder, but that consent has not been forthcoming and this application is now necessary.
Finally, Respondents vehemently reject any allegation that the joinder application has been made for an improper purpose. They say that the Applicants’ speculation as to the reason
for the application (to which I refer below) is scandalous and without basis.
The Applicants oppose joinder
In a comprehensive and well-researched written submission counsel for the Applicants advances a number of bases in opposing the Respondents application, which I will endeavour to summarise below.
First, the Applicants contend that the Respondents have not led any or any sufficient evidence to support the proposed joinder. It is submitted that the affidavits of Ms Dowling and
Mr MacKay do not provide a sufficient basis for the Respondents’ allegation that Mr Micallef was responsible for engaging each of the Applicants. Counsel submits that the joinder application does not include or even refer to any objective evidence which would support the application. It is submitted that Mr MacKay’s assertion that he did not intend to enter into contracts with the Applicants is subjective and not enough.
Secondly, the Applicants submit that the Court should not permit a respondent to force another respondent on an unwilling applicant. The Applicants contend that further parties should not be added to proceedings merely because it is convenient for them to be joined. It is submitted that an application to join a “co-respondent” despite an applicant’s opposition should only
be approved if it is necessary for the co-respondent to become a party in order for the court
to completely adjudicate the issues between the existing parties. Counsel for the Applicants cites various authorities in support of this proposition and I have taken those into account and noted the context in which they were made.
Indeed a key element of the Applicants’ submission is that joinder of A&JTM and Micallef
is simply not necessary for the Respondents to conduct their defence nor necessary for the complete adjudication of the Respondents’ cross-claims against the Applicants. In short compass, the Applicants contend that the litigation between the current parties on the current pleadings can be effectively conducted and that all matters between those parties can
be determined without the need to involve others. The Applicants submit that the effectual and complete adjudication upon all matters in dispute between the current parties does not require the Court to consider whether any contraventions of law by the Respondents should be the subject of contribution or indemnity by third parties.
Thirdly, the Applicants submit that if “additional, unwanted respondents” are added there will be further complication and delay of the trial of the proceeding and inconvenience and expense of having to manage this increased complexity and delay. It is submitted that increased cost, expense and delay should not be visited upon the Applicants when the joinder will only serve the Respondents proposed cross-claims against the proposed joinder parties. The Applicants contend that the joinder will introduce a third set of legal representatives and will require the Applicants to fund a fortnight-long trial and expend fees reviewing additional pleadings, submissions, witness examinations, evidence and other material. The Applicants also speculate that the Respondents’ proposed cross-claims may become more factually complex and time-consuming than the Applicants’ primary case against the Respondents’. Applicants’ counsel submits that the potential cost implications for her clients would be “crushing” and that they may not be able to afford to proceed with their litigation for basic industrial entitlements. Relying upon affidavits filed by the Applicants, it is submitted that two of them may have to sell their homes to continue to fund the litigation.
It is also submitted that a grant of leave to allow the joinder application would frustrate the overarching purpose of the Federal Circuit and Family Court of Australia Act 2021 (Cth) and the Rules. In this context, it is again submitted that joinder will make the proceedings longer, more complicated, more expensive and less efficient as well as cause other inconveniences. Counsel submits that it would be a ruinous frustration of the Act, the Rules and civil justice
if the Applicants were forced to discontinue the proceeding as a result of the joinder.
Fourthly, the Applicants’ written submission also alleges that the joinder application has been made (at least in part) for an improper purpose. This assertion is said to find support in the Applicants’ affidavits sworn on 8 November 2021.
In the context of this submission of “improper purpose”, the Applicants affidavits reveal
an important interconnection and intersection of relationships. The affidavits depose that Micallef is in a relationship with the mother of two of the Applicants, Charlotte Hyne and Christopher Hyne. Moreover, it is said that Micallef is a father figure and mentor to them and that he is also a friend of the Third Applicant, Emmanuel Leondakis.
Against that background, counsel submits that it would be unfair to force unwanted respondents on the Applicants when the effect of joinder would be to force Charlotte Hyne and Christopher Hyne into litigation against the person that they care about deeply and regard as family and Emmanuel Leondakis into litigation against his friend. It is submitted that the joinder application is a means by which David MacKay is seeking to weaponise the Applicants’ pursuit of their legal rights. The Applicants contend that the Court’s approval of the joinder application would cause them to be burdened with the guilt and fear that any success by them in their proceeding against the Respondents may come at too great cost to make the ordeal
of the litigation worthwhile.
Seeking to further reinforce their submission regarding improper purpose, the Applicants submit that MacKay and Micallef are engaged in separate legal proceedings in the Victorian Civil and Administrative Tribunal (“VCAT”) and contend that the joinder application has been made (at least in part) as an attempt by the Respondents to hurt A&JTM and Micallef
in a separate legal forum.
Next, the Applicants submit that the Respondents’ proposed cross-claims against the proposed joinder parties do not arise out of the same questions of law or fact as the current proceedings. It is submitted that the joinder application involves a commercial dispute between the Respondents and the proposed joinder parties and that these are unrelated disputes which involve new and distinct causes of action.
Finally, the Applicants say that there is a fundamental difference between the Respondents’ joinder application under r 11 and what one would otherwise comprehend as a “third-party notice”. It is submitted that the joinder application will involve the proposed joinder parties becoming Respondents against the Applicants. By contrast, if the proposed joinder parties become parties to a third-party cross-claim pursuant to r 24.03 then they will become parties to the action with the same rights in respect of the statement of cross-claim and otherwise
as if sued by the Respondents in the ordinary way. The gravamen of this submission seems
to be that the Respondents have followed the wrong process in seeking joinder pursuant
to r 11.02 and that if they had wanted to bring the joinder parties into the litigation, they should have followed the r 24 process for third party cross-claims.
Proposed joinder parties also oppose the application
There are essentially three limbs to the proposed joinder parties’ opposition to the application.
First, it is submitted that the Respondents’ proposed Amended Statement of Cross-claim does not raise a sufficiently arguable case to justify the joinder. It is submitted that the Court should not merely question whether a prima facie case is raised, but whether a sufficiently arguable case exists which has prospects of success.
Secondly, and relatedly, it is submitted that joinder is not necessary to completely and finally determine all matters in dispute in the proceeding.
Thirdly, it is submitted that the circumstances of the current litigation, case management considerations weigh heavily against the joinder application.
As to the first and second submissions, the proposed joinder parties submit that paragraphs 20A, 22, 23 and 24 and 25 of the Respondents’ PASCC are neither arguable nor necessary.
It is submitted that paragraph 20A pleads breaches by the proposed joinder parties of the Corporations Act 2011 (Cth) (“Corporations Act”) and of implied contractual duties between Concourse Golf and the proposed parties and that these allegations are completely divorced from the dispute between the current litigants. It is further submitted that the proposed paragraph is not arguable because this Court does not have jurisdiction under the Corporations Act to hear the claim and it is said that the pleading is deficient in numerous other respects
for lack of particulars.
Similarly, paragraph 22, which pleads inducement of breach of contract by the joinder parties, is said to bear no relationship to the matters alleged between the current litigants and
is therefore not necessary. Further, again, it is submitted that there is no arguable case because the pleading is fundamentally deficient and fails to make out the elements of the cause of action.
Paragraphs 23 and 24 of the PASCC are said to be unarguable because the Respondents
are endeavouring to sheet to the proposed joinder parties the contractual duty to pay damages for contraventions of the FW Act as well as the liability to pay any pecuniary penalty that may be imposed upon the Respondents under s 546 of that Act. Among other things, it is submitted that the pleading is misconceived and that there is no power within the Court to impose
a pecuniary penalty upon a third party in respect of the conduct of a respondent against whom an applicant seeks relief.
Paragraph 25 of the PASCC is impugned as a bare assertion which is devoid of any other necessary elements to make out a viable cause of action.
In terms of the case management considerations which weigh against the Respondents application, the joinder parties’ submissions generally align with those made by the Applicants. The proposed joinder parties submit that there has been unexplained delay and that the joinder could have occurred in July 2021 when the Respondents filed their statement of cross-claim. They also submit that the case between the current litigants is well advanced and that the pleadings are complex enough. They argue that the addition of two new parties will only add to complexity and will result in prejudice to the Applicants. It is also submitted that there
is no real risk of multiplicity of proceedings and that the proposed joinder will not contribute toward the Court’s overarching purpose of facilitating a quick, inexpensive and efficient resolution of the dispute between the current litigants.
CONSIDERATION
As previously mentioned, I have carefully read and considered the written submissions and where appropriate the authorities to which I have been referred by counsel.
Procedural issues
In their application filed on 1 November 2021 the Respondents seek leave to join A&JTM
and Micallef pursuant to r 11.02 and seek leave to file an amended pleading pursuant to r 7.01.
Seizing upon counsel for the Respondents’ description of the application being akin to a third-party notice, the Applicants object to the procedural pathway which has been taken by the Respondents to seek joinder. Applicants’ counsel contends that the joinder application should be dismissed because, among other things, it “is not the appropriate form of civil procedure” as any cross-claim by the Respondents against A&JTM and Micallef should have been initiated pursuant to the cross-claim process prescribed in r 24.
I am not persuaded by this submission because I am satisfied that rr 11 and 24 can operate harmoniously and the Respondents’ application for joinder (howsoever it might be described) would be justified whichever procedural course had been followed. Furthermore, this Court will be guided by the overarching purpose of the Rules, as provided in s 190 of the FCFCA Act[8] and the Court can dispense with strict compliance with the Court’s Rules at any time[9].
[8] Rule 1.04
[9] Rule 1.07(1)
Nonetheless, the point having been raised, it may be useful to plot the different pathways
to explain why the two procedures can ultimately meet at the same point. As Judge Lucev observed in Lukies v S2V Consulting Pty Ltd (2018) 333 FLR 226 at [18] “…the issue of what rule applies in relation to joinder of a party is not one which has admitted of a consistent answer in proceedings before his Court”.
Rule 11.01(1) of the Court’s Rules requires a person whose participation is necessary for the Court to completely and finally determine all matters in dispute in a proceeding to be included as a party to the proceeding. This is a mandatory requirement and appears to be principally directed at the commencement of proceedings. By r 11.01(2) the Court may require a person to be included as a party and by r 11.01(3) where a person required to be included
as an applicant does not consent to being so included, they may be included as a respondent. The gravamen of this sub-rule is that all persons whose participation is necessary to completely and finally determine a dispute should be parties to the proceeding from the outset.
Rule 11.02(1) provides the mechanism whereby any party to a proceeding may include another person as a party. The process would appear to expressly allow joinder by naming a person
as a party in an application, response or reply and by serving on that other person a copy of the application, response or reply and all other relevant documents filed in the proceeding. It would appear that by that process alone the other person will become a party to the proceeding. However, relevantly, r 11.02(2) provides that the process in r 11.02(1) may not be pursued after the first court date, unless the court gives leave.
Rule 11.03 provides that a person may apply to the Court to be included as a party
to a proceeding and r 11.04 provides that a party may apply to the Court to be removed.
Rule 11.05 authorises the Court to order a party to notify another person of the proceeding
and any application of the person to be included as a party.
The application in the current proceeding is an application for leave pursuant to r 11.02(2)
to join a party after the first Court date. It seems to me to be a perfectly conventional application in that respect.
Rule 24 sets out a procedure for the making of cross-claims and sets out the manner in which such cross-claims will be conducted.
Rule 24.01 permits a respondent to make a cross-claim against an applicant instead of bringing a separate proceeding. Rule 24.02 provides that a cross-claim may be made in relation
to a matter arising after the start of the proceeding. Neither of those sub-rules is controversial.
Cross-claims as between a respondent and a person other than the applicant (as is the case here) is governed by r 24.03 which sets out the mechanism by which a respondent may make such
a cross-claim.
Pursuant to sub-r 24.03(1) a respondent arguably enjoys a right to initiate a cross-claim against a third party (whether or not that person is a party to the substantive proceeding)
if either the respondent alleges that the other person is liable with the Applicant for the subject matter of the cross-claim[10] or the respondent claims against the other person relief relating
to or connected with the subject matter of the original proceeding[11]. It does not appear that any leave is required to initiate a cross-claim in those circumstances.
[10] Rule 24.03(1)(b)(i)
[11] Rule 24.03(1)(b)(ii)
Sub-rule 24.03(2) requires the respondent who makes a cross-claim against a non-party,
to serve the response and cross-claim and the applicant’s application on that person. Importantly, sub-r 24.03(3) goes on to provide that the person who is not a party to the original proceeding but is included as a respondent to the cross-claim then becomes a party
to the proceeding on being served with the response and cross-claim. The procedure is then completed by sub-r 24.03(4) which has the effect of identifying the new party
as a respondent for the purposes of the Rules.
I note, however, r 24.04 provides that a cross-claim must be included in the respondent’s response. This suggests that a respondent who seeks to bring a cross-claim against a third party after the filing of the respondent’s response cannot do so as of right and will require the Court’s leave to do so. It logically follows that leave should be sought because other amendments would also need to be made to the existing pleadings.
That seems to be the case here. The Respondents probably could have availed themselves
of the cross-claims procedure in r 24 to join A&JTM and Micallef at the time they filed their response to the applicants’ claim response. If they had done so in the terms they now seek, there would have been little room for objection. However, that is not what happened. Although the Respondents named the joinder parties in the response and foreshadowed their joinder
at the time, when it came to filing their Defence only a cross-claim against the Applicants’ was made.
What the Court is now confronted with is an application by the Respondents for leave to do something which they could have done as of right at the time of filing their Defence. It seems to me that r 11.02 is an appropriate vehicle for such leave to be sought because a cross-claim against a non-party, after the filing of a response, will require joinder. I do not agree with the Applicants’ submission that the Respondents have adopted inappropriate civil procedure.
I now turn to the matters which should inform the exercise of my discretion.
As the joinder parties point out in their written submission, the applicable principles governing an application for joinder pursuant to r 11 were extensively surveyed by Judge Lucev in Lukies. The following principles can be derived from his Honour’s analysis of the relevant authorities:
(a)Whether or not to grant leave is a matter within the discretion of the court having regard to all the circumstances of the case. The discretion to join a new party is “a wide one”[12];
[12] Apotex Pty Ltd (ACN 096 916 148) v Les Laboratoires Servier and Others (No 4) (2010) 89 IPR 274; [2010] FCA 1202 at [8])
(b)In exercising discretion it is relevant to have regard to the objects of the FCC Act including that the court is intended to operate in as informal a manner as possible in the exercise of judicial power, that it is not to be protracted in its proceedings, that it is to resolve proceedings justly, efficiently and economically using streamlined procedures and that it is to avoid undue delay, expense and technicality[13];
[13] Swevenings Pty Ltd v Ferguson Consolidated Holdings Pty Ltd & Anor (No.4) [2009] FMCA 291 per Lucev FM at [31]
(c)Rules 11.01 and 11.02 provide separate bases for a party to be joined to proceedings in this Court. It is therefore necessary when considering an application for joinder in this Court to determine if the application is made on the basis of r.11.01 or r.11.02 or both rr.11.01 and 11.02. It is necessary to do so because different tests apply for joinder under r.11.01 and r.11.02;
(d)
In considering r.11.01(1) it is necessary to consider whether a person’s participation
is “necessary for the Court to completely and finally determine all matters in dispute in a proceeding”;[14]
(e)However, under r.11.02(1) of the Rules a party may include another party to a proceeding in certain circumstances, notwithstanding that they may not be a necessary party[15];
(f)The phrase “all matters in dispute” has been held to be one of wide import and one not to be narrowly construed[16] and the expression is not limited to matters arising on the existing pleadings[17];
(g)Questions involved in an existing action include questions arising out of the transaction or series of transactions on which the cause of action was based. These would include the question whether, if the original defendant is not liable to compensate the plaintiff for damage suffered by him, some other person proposed to be added may be considered liable in the circumstances[18];
(h)An applicant for joinder must demonstrate a case which is “arguable”, not a prima facie case[19]; and
(i)The exercise of the Courts discretion under Rule 11.02 might also be influenced
by other factors, particularly issues such as case management and delay.[14] Lukies at [58]; also Benjamin v Endeavour Industries Pty Ltd [2012] FMCA 488 per Jarret FM
[15] Endeavour Industries at [13], Fair Work Ombudsman v Northcoast Security Services Group Pty Ltd & Anor [2016] FCCA 2499 per Manousaridis at [8]
[16] Fina Research SA v Halliburton Energy Services Inc [2002] FCA 1281 at [5] per Moore J.
[17] Lukies at [67]
[18] Birtles v Commonwealth [1960] VLR 247 per Adam J as cited in John Holland Pty Ltd v Comcare (2009) 190 IR 165 at [21]
[19] Wayne & Dillon & Anor [2008] FamCAFC 204 at [17] per Warwick J; Northcoast Securities Services at [11]
Common issues of fact and law
I accept that there are substantial issues of fact and law which are common to the proceeding between the Applicants and the Respondents and the proposed cross-claim between the Respondents and the joinder parties. On the basis of the pleadings and proposed pleadings,
I am satisfied that the joinder parties have a degree of involvement in the events at the foundation of the litigation between the Applicants and Respondents, sufficient to warrant joinder on the basis that there would be overlap if there were separate proceedings. Separately proceedings would also involve a significant risk of conflicting decisions, and that should
be avoided.Delay
I do not accept that the proposed joinder has been attended by unexplained delay or that the Respondents are motivated by an improper purpose.
The solicitor currently representing the Respondents deposes in an affidavit dated 7 October 2021 that the Respondents’ former solicitors wrote to the Applicants’ solicitors on or around
1 October 2020 stating in detail how the Respondents believed that A&JTM and Micallef were responsible for engaging each of the Applicants.
When the Applicants commenced their proceeding in March 2021, neither A&JTM
nor Micallef were named as Respondents. In their Response filed on 21 April 2021, the Respondents clearly foreshadowed that they intended to file a comprehensive defence to the Statement of Claim and, crucially, also foreshadowed that they would seek interlocutory/case management orders that A&JTM and Micallef to be joined to the proceedings. Perhaps it did not occur to the Respondents that it might have been open to them to cross-claim against
the proposed joinder as of right.
In any event, I am satisfied by the explanation proffered by the Respondents’ solicitor for any alleged delay in making this application. I am satisfied that from the commencement of these proceedings, and indeed for months beforehand, the Respondents have been agitating that A&JTM and Micallef should be parties to these proceedings. The Respondents initially sought the consent of the Applicants for joinder in early May 2021, but the Applicants opposed on the basis that it would cause them unnecessary costs. Then, in mid May 2021, while the Respondents’ solicitors consented to orders which did not press for joinder, the Applicants’ solicitors were put on notice that the Respondent’s would file an interlocutory application
to join A&JTM and Micallef if the proceeding did not resolve at mediation.
It is not insignificant that at about this time, a firm of solicitors representing the proposed joinder parties contacted the Respondents’ solicitors and advised that they had instructions
to accept service on behalf of their clients.
It is now a matter of record that a mediation occurred between the Applicants and Respondents on 30 July 2021. The matter did not resolve at mediation and the Respondents now move
for joinder, as they foreshadowed they would do.
Alleged improper purpose
That background is also relevant to the Applicants’ claim that the Respondents are motivated by an improper purpose. On the material presently before me, I do not accept that submission.
First, as set out above, the proposed joinder of A&JTM and Micallef is no recent invention. Their names have been associated with the dispute between the Applicants and the Respondents from the proverbial get-go. It seems to me that the Respondents have consistently maintained a view that the proposed joinder parties are integral to the dispute and that Applicants’ claim cannot be finally and completely determined without their involvement. That is not to say that the cross-claims are strong or will ultimately succeed, but I do not accept that the Respondents are motivated by an improper purpose in seeking to prosecute their cross-claim.
Secondly, on material before me, I reject the Applicants contention that the proposed joinder has been improperly motivated by separate legal proceedings between David MacKay and Anthony Micallef in the Victorian Civil and Administrative Tribunal and an intention on the part of the Respondents to hurt the proposed joinder parties in that separate forum. Mr MacKay deposes that he has absolutely no knowledge of any such proceedings and that he has undertaken a search to ascertain whether he is a party to proceedings initiated by Mr Micallef. Written submissions filed on behalf of the proposed joinder parties make no reference to the existence of any VCAT litigation and lend no weight at all to the Applicants contention. Given the asserted very close relationship between Micallef and the Applicants, I find this significant. Furthermore, the proposed joinder has been foreshadowed by the Respondents for months and it makes no sense that the joinder would be retribution for a VCAT proceeding which has not and never may be commenced.
Nor am I persuaded, on the material before me, that the Respondents are seeking to weaponise the joinder application as a means of driving a wedge between the Applicants and Micallef.
I acknowledge that joinder may give rise to awkwardness in the personal relationship between them, but that is not a proper basis for a party to be excluded where by any other measure joinder is necessary to completely and finally determine all matters in dispute in the proceeding.
If anything the evidence of the Applicants about their close personal and working relationship with Micallef only serves to reinforce my view that the issues in dispute between
the Applicants, Respondents and proposed joinder parties are interconnected, share many common facts and are best determined conclusively in the one proceeding.
Complexity, delay and additional cost
As to the submission that joinder will result in additional complexity, delay and cost, I am not satisfied that the concerns of the Applicants outweigh the case management considerations which I believe weigh heavily in favour of joinder.
The current application before the Court is already very complex, as evidenced by the pleadings. The statement of claim traverses an extremely wide range of allegations, many
of which are pleaded in the alternative. Establishing the lawful status of the contractual relationship, if any, between the Applicants and the Respondents is an issue which lies at the very heart of this litigation. No doubt that will be the subject of significant evidence from the Applicants and the Respondents and, on the material presently before me, it seems almost inconceivable that the proposed joinder parties will not figure in that evidence to some (probably significant) degree.
I accept that joinder may add to the length of what I already predict will be a lengthy trial.
I accept that joinder will add to the legal issues which will have to be determined by the Court, although I anticipate that those additional issues will most likely be fought out between the Respondents and joinder parties and not greatly add to the Applicants’ burden. There is also
a possibility that joinder may add some delay to the final determination of this matter, but I note that no trial date has yet been listed and in this Court it is likely to be many months before a lengthy trial can be accommodated. I see no reason why good case management and cooperation between the parties cannot bring the matter to trial in an orderly fashion as soon
as the Court can hear it.
I note the Applicants’ concerns that the addition of further parties to the litigation may result in costs which they describe as “crushing” and that two of the Applicants speculate they may have to sell homes to fund their litigation. I do not ignore that evidence, but I am not inclined to the view that joinder of the additional parties will of itself have that impact. Even in its current form this litigation is already extremely complicated, will be very costly and will be burdensome for all concerned. The Applicants commenced these proceedings knowing of the very real possibility that the Respondents might sheet responsibility for the claims upon the proposed joinder parties. I doubt it has come as any surprise to the Applicants that the Respondents have chosen to defend the claims in the manner they have. Nor should it really come as any surprise that the Respondents seek some form of contribution or indemnity from A&JTM and/or Micallef.
Granting leave to join a further Respondent will no doubt incur some further costs in these proceedings and it is relevant to observe that generally speaking proceedings of this type
are “no costs” proceedings because of the provisions of s 570 of the FW Act. But, whilst further costs might be incurred in these proceedings as a result of any joinder, if A& JTM and Micallef are not joined there may be additional costs in other separate proceedings which might be brought by the Respondents.Whether the proposed cross-claims are arguable
As stated above the Applicants and the proposed joinder parties oppose the joinder on the basis that the Respondents’ proposed cross-claims are neither arguable nor necessary to completely and finally determine all matters in dispute in the proceeding. The proposed joinder parties submit that paragraphs 20A and 22 to 25 are not arguable, misconceived or do not make out
a cause of action.
I do not accept that the proposed paragraph 20A is unarguable or completely divorced from the dispute between the current litigants. The pleading is confusing and deserving of further particulars but, as I apprehend it, the Respondents contend that each of the proposed joinder parties, as independent contractors of the Respondents, breached their implied contractual duties not to act against the Respondents’ interests or misuse their confidential information
(as pleaded at paragraph 18(a) and (b)). The pleading relates to conduct arising out of the establishment of the “Stinger Golf Products Business” and it must be read in light of the preceding paragraph 20 which similarly alleges breaches by the Applicants (First, Second and Third Cross Respondents) in respect of their conduct in assisting Micallef and A & JTM
in establishing that business.
I accept the joinder parties’ submission that on the current state of authority[20] a claim
for compensation pursuant to s 1317H of the Corporations Act cannot be pursued in this Court. Section 1317H appears to confer exclusive jurisdiction in respect of civil proceedings under the Corporations Act upon a “Court” as defined by s 58AA of that Act. This Court is not such a “Court” and therefore I would have no jurisdiction to grant relief sought pursuant to that Act.
[20] Brant v BLK International Pty Ltd [2021] FCCA 688 at [58] per Judge Jarrett
However, it seems to me that the joinder parties’ submission about paragraph 20A and any engagement with the Corporations Act is misplaced. The proposed paragraph 20A is only tethered to the duties pleaded at paragraph 18 and, unless I am mistaken, the Respondents
do not seek relief against the proposed joinder parties for any breach of the civil penalty provisions of the Corporations Act[21].
[21] see prayer for relief in the Proposed Amended Statement of Counterclaim
I accept that the pleading could be better particularised and that this is something which may be taken up by the joinder parties’ solicitors. But for the purposes of deciding the joinder question, I am satisfied that the allegation in paragraph 20A is arguable and properly within the realm of the broader dispute and the jurisdiction of this Court.
From a case management point of view, I consider it more efficient and desirable to determine that issue in the current proceeding, rather than it be the subject of a separate proceeding which will invariably involve the same parties.
I see paragraph 22 of the PASCC in a similar light. I do not accept that the underlying cause of action is unarguable or that it bears no relationship to the matters alleged between the current litigants. I again accept that the pleading lacks particulars and this is something which ought to be corrected. However, the parameters of the dispute as I have been able to glean from all the filed pleadings are certainly broad enough to embrace the allegation that the joinder parties induced the Applicants to breach their contracts with the Respondents (if indeed such contracts exist) by offering them a financial incentive or directorship to do so. Again, from a case management point of view, I consider it most efficient and desirable to determine that issue
in the current proceeding.
The joinder parties seek to impugn paragraphs 23 and 24. As I construe the pleading in its current form, the Respondents are seeking to bring in the proposed joinder parties as further accessories to any contravention of the FW Act for which the Respondents might be found
to be liable and, by doing so, seek that those accessories contribute to any compensation
or penalties which the Respondents might be ordered to pay the Applicants.
In my view the proposed pleading is ambitious insofar as it claims that the joinder parties should contribute to compensation. Insofar as it claims that the joinder parties should contribute in respect of penalties, I consider the pleading unarguable. If a pleading attack were brought upon paragraph 24, it is likely that I would strike out that part of it which seeks
an indemnification or contribution toward penalties because, as the joinder parties rightly submit, Concourse Golf cannot hand this off to a third-party. However, in the context of the pleaded controversy, the allegation that the joinder parties were involved as accessories in any contraventions by the Respondents and that they should contribute in respect of compensation which may be ordered against the Respondents’ is not so unarguable that should be struck out.
This particular aspect of the proposed counterclaim so inextricably intertwined with the primary litigation between the Applicants and Respondents that, from a case management point of view, it should be determined in the context of the current proceeding.
For completeness, I will mention paragraph 25 of the proposed Amended Statement
of Counterclaim. The joinder parties contend that the paragraph makes a bare assertion and does not make out a cause of action. I agree. On the face of it the proposed paragraph 25 goes nowhere and is liable to be struck out unless it forms the basis of a pleaded cause of action.
CONCLUSION
I am persuaded that leave should be granted pursuant to r 11.02(2) for the Respondents to join A&JTM and Mr Micallef as parties to the proceeding.
I am comfortably satisfied that as a matter of proper case management and discharge of the Court’s obligation to ensure the timely, efficient and cost-effective resolution of disputes, there is a compelling case for leave to be granted.
Rule 7.01 relevantly provides that at any stage in a proceeding, the court may allow a party
to amend a document in the way and on the conditions the court thinks fit.Having determined that the application for joinder should be granted, it follows, for substantially the same reasons, that the Respondents should be permitted to amend their Notice of Cross-claim and their Statement of Cross-claim to give effect to that joinder. Doing so will ensure that the real questions in controversy between the parties can be decided.
Although the paragraphs of the proposed pleading are sufficiently pleaded for me to be satisfied that the Respondents have an arguable case and that joinder should be allowed, I am somewhat sympathetic to the joinder parties’ complaint that the proposed pleading is lacking in the necessary particulars to make out clear causes of action.
Accordingly, I will make orders which require the Respondents to file a properly particularised Notice of cross-claim and Amended Statement of Cross-claim and, if further particulars
are sought and are not forthcoming from the Respondents, I will look favourably upon any application for an order for further particulars.
The time for filing and serving a properly particularised Amended Notice of Cross-claim and Amended Statement of Cross-claim can be subject of orders to be made at the next directions hearing. I would hope that in light of this joinder ruling, the parties’ counsel can confer and agree upon a set of procedural orders which will prepare this matter for trial in an efficient and orderly fashion.
I will reserve the costs of this application.
I certify that the preceding one hundred and eighteen (118) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Forbes. Dated: 29 November 2021
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