Kelly v Atanaskovic Hartnell Corporate Services Pty Ltd

[2021] FCCA 552

FEDERAL CIRCUIT COURT OF AUSTRALIA

Kelly v Atanaskovic Hartnell Corporate Services Pty Limited [2021] FCCA 552

File number(s):

SYG 1194 of 2017

Judgment of:

JUDGE DRIVER

Date of judgment:

11 March 2021

Catchwords:

PRACTICE AND PROCEDURE – application in a case for leave to amend a pleading – application late in time when evidence is closed and the trial effectively completed – observations bearing upon the pleading amendments sought – application in a case dismissed.  

Legislation:

Fair Work Act 2009 (Cth)

Cases cited:

Aon Risk Services v  Australian National University [2009] HCA 27

Kalayzich v Santa Sabina College & Anor [2020] FCCA 11

Roberts‑Smith v Fairfax Media Publications (No  5) [2020] FCA 1067

Number of paragraphs:

16

Date of hearing:

11 March 2021

Place:

Sydney

Counsel for the Applicant:

Mr M Elliott SC, with Mr J Willis

Solicitors for the Applicant:

Harmers Workplace Lawyers

Counsel for the Respondents:

Mr P Zappia QC

Solicitors for the Respondents:

Atanaskovic Hartnell

ORDERS

SYG 1194 of 2017

BETWEEN:

ELIZABETH KELLY

Applicant

AND:

ATANASKOVIC HARTNELL CORPORATE SERVICES PTY LIMITED
ACN 062 993 159

First Respondent

J L ATANASKOVIC & A G HARTNELL TRADING AS ATANASKOVIC HARTNELL
ABN 54 312 669 404

Second Respondent

JOHN ATANASKOVIC (and others named in the Schedule)

Third Respondent

ORDER MADE BY:	JUDGE DRIVER
DATE OF ORDER:	11 MARCH 2021

INTERLOCUTORY ORDERS:

1.The Application in a Case filed on 13 November 2020 is dismissed.

2.Costs of the Application in a Case are reserved.

REASONS FOR JUDGMENT
(revised from transcript)

JUDGE DRIVER:

1. I have before me an Application in a Case filed on 13 November 2020 in which the applicant, Ms Kelly, seeks leave to file a second further amended statement of claim, which is annexure CN1 to the affidavit of Christopher Nowland, dated 12 November 2020.  Mr Nowland’s affidavit was received into evidence together with a later affidavit, filed on 16 November 2020.

2. The Application in a Case is opposed by the respondents and, by way of evidence, they rely upon the affidavit of Paul Springthorpe, made on 10 December 2020.  The exhibit to Mr Springthorpe’s affidavit is also the proposed second further amended statement of claim.  I also have the benefit of both written and oral submissions by counsel for the parties on the issues arising on the Application in a Case.[1]

   [1] The legal principles to be applied in dealing with the Application in a Case, and the procedural history of the proceedings are dealt with at length in those submissions and do not need to be reproduced here.

3. The Federal Circuit Court is not generally a court of pleadings.  Most of the work of the Court is conducted without pleadings on the basis of affidavit evidence.  However, in more substantial cases, particularly those where damages are claimed, pleadings are commonly employed.  The Court, and I include myself in this, generally takes a reasonably liberal attitude to the drafting of pleadings.  It is not unusual for pleadings to be amended several times at the interlocutory stage, leading up to a trial.  It is unusual, in my experience, for a pleading to be sought to be amended following a trial, when the evidence has closed.

4. Indeed, this is the first case I can recall before me in which that application has been made.  That is not to say that an amendment cannot be made in circumstances such as the present, but, in my view, where the proposal for amendment is made late in the day the Court should pay due respect to the authority of the High Court’s decision in Aon Risk Services v  Australian National University[2] and the explanation of the principles in that case by Besanko J in Roberts‑Smith v Fairfax Media Publications (No  5).[3]

   [2] [2009] HCA 27

   [3] [2020] FCA 1067

5. In the present case, the claim by Ms Kelly has a number of components to it.  The first component is a claim for what are described as statutory entitlements.  The proposed amendments deal in part with that aspect of the claim.  In my view, and I am cautious here not to make any inappropriate preliminary observations on the strength of the claim, the claim for statutory entitlements is just that, and I would not have thought it was necessary for Ms Kelly to establish a workplace right which led to a detriment for a prohibited reason in order to secure those statutory entitlements.

6. As I understand the case, the only reason why those claimed entitlements have not been paid is the assertion of an offsetting claim.  If that is wrong, then I would be inclined to make an order now requiring payment of those statutory entitlements.  However, as the case has been put and as the evidence discloses, the respondents consider that they should not be required to pay the statutory entitlements because of the asserted offsetting claim.  I am not convinced that the amendments to the statement of claim proposed in this regard advance the argument on that part of Ms Kelly’s claim.

7. Another part, and perhaps an important part, of Ms Kelly’s claim relates to alleged adverse action for a prohibited reason, in respect of which she claims compensation.  There are, as has been pointed out, seven respondents in the proceedings, and it has been pressed upon me that the case always carried within it the proposition that both the first respondent (service company) and the individual respondents are said to be liable to pay compensation, either as principals or as accessories.

8. To the extent that the amendments now proposed are considered unnecessary, but are put forward on a precautionary basis, then, in my view, the leave sought is not required.  The Court has, as I have noted, taken a liberal attitude to the drafting of pleadings, and I have myself had cause to express some frustration with demands for different pleadings on the basis of perceived technical defects.[4]  To the extent that the respondents see the present application as one potentially depriving them of technical drafting objections, that expectation may well be disappointed even if the Application in a Case fails.

   [4] Kalayzich v Santa Sabina College & Anor [2020] FCCA 11

9. To the extent that the proposed amendments are necessary in order to make good the claim for compensation because of adverse action, then the amendments should have been made earlier.  Ms Kelly also seeks, or potentially seeks, penalties under the Fair Work Act 2009 (Cth). It is not my intention that the submissions to be sought from the parties or my judgment will deal, at this stage, with any question of penalties. It will be necessary first for the Court to find liability and to allocate responsibility for that liability.

10. There would then need to be further proceedings to deal with any question of penalties against someone.  That would, in my view, be an opportunity, if necessary, to revisit the statement of claim to consider whether any amendments should be permitted in advance of a further hearing in which additional evidence would be taken. 

11. The proposed amendments deal with questions of whether Mr Atanaskovic acted on behalf of the service company and whether he was a shadow director of that company.  The existing pleading leaves the matter at a more general level which, to my mind, is more consistent with the evidence which has been received.  I have an open mind whether it can be argued that Mr Atanaskovic was a shadow director or was in some way acting on behalf of the service company, or by force of will overbore those who performed functions for the service company, or simply took actions as part of running a small business in which the division between the service company and the second respondent (legal practice) and the individuals within it was not treated with particular importance.

12. There are amendments proposed to the statement of claim which would simply deal with the identity of the service company as Ms Kelly’s employer and make appropriate references to it.  Those amendments are, in my view, not required, as it is clear that the service company was Ms Kelly’s employer, and the case can proceed with that fact as reasonably established. 

13. The conclusion I come to is that the application for leave should be refused.  Apart from the factors I have already mentioned, I am concerned that if the amendments were made unfairness, or a perception of unfairness, might follow.  That unfairness, or the perception of it, could only be met by the reopening of the case and giving an opportunity to lead additional evidence.  That would be wholly inappropriate in a case which has already been significantly protracted, both because of the way in which it has been conducted and the impact of public health restrictions during the COVID‑19 pandemic.  We are at the point now where the applicant’s post hearing submissions are due, and it would be extremely regrettable if the introduction of further amendments to the pleadings caused the case to be further delayed. 

14. I will, therefore, order that the Application in a Case be dismissed. 

15. It would commonly be appropriate to order that the applicant on the Application in a Case pay the respondents’ costs.  In the present case, I am minded to reserve costs because of the uncertainty of the implications of the refusal of leave.

16. It is possible that, notwithstanding the refusal of leave, Ms Kelly might be successful, in whole or part, against some or other of the respondents.  In that event, the proposed amendments to the statement of claim may not have particular significance.  In the event, however, that she is unsuccessful, the proposed amendments that were refused may have significance, and it would be appropriate at the end of the proceedings to consider the issue of costs then.  I will, therefore, reserve costs of the Application in a Case.

I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Driver.

Associate:

Dated:       22 March 2021

SCHEDULE OF PARTIES

SYG 1194 of 2017
Respondents
Fourth Respondent:	ANTHONY HARTNELL
Fifth Respondent:	JEREMY KRIEWALDT
Sixth Respondent:	MICHAEL SOPHOCLES
Seventh Respondent:	JON SKENE