Kim v Naum BBQ Pty Ltd
[2024] FedCFamC2G 1418
•19 December 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Kim v Naum BBQ Pty Ltd [2024] FedCFamC2G 1418
File number: MLG 289 of 2023 Judgment of: JUDGE SYMONS Date of judgment: 19 December 2024 Catchwords: INDUSTRIAL LAW – application in proceeding for relief in the nature of an anti-suit injunction – where first and second applicants commenced proceeding in this Court alleging breaches of the Fair Work Act 2009 (Cth) in connection with their employment by the first respondent in a Korean restaurant – where first applicant later commenced proceeding in the County Court of Victoria against the second respondent alleging breaches of a business and loan agreement relating to the establishment and operation of the Korean restaurant – whether Court has power to make orders that would restrain the first applicant from taking steps in the County Court proceeding – whether the two proceedings concern the same justiciable controversy – whether, in circumstances where the County Court proceeding is listed for trial imminently, it would be in the interests of justice to grant injunction – application in proceeding dismissed Legislation: Fair Work Act 2009 (Cth), s 566
Federal Circuit and Family Court of Australia Act 2021 (Cth), ss 10, 140
Fair Work Regulations 2009 (Cth)Cases cited: Beattie v Digga Excavations and Demolition Pty Ltd [2023] FedCFamC2G 337
Fencott v Muller (1983) 152 CLR 570; [1983] HCA 12
Mackellar Mining Equipment Pty Ltd v Thornton (2018) 341 FLR 226; [2018] QSC 186Pegasus Leasing Limited v Cadoroll Pty Limited (1996) 59 FCR 152; [1996] FCA 64
Verity Shipping SA v NA Nvnorexa [2008] EWHC 213 (Comm); [2008] 1 Lloyd’s Rep 652
Division: Division 2 General Federal Law Number of paragraphs: 42 Date of last submissions: 12 December 2024 Date of hearing: 12 December 2024 Place: Melbourne Solicitor advocate for the Applicants Mr A Jenshel, Mann Lawyers Counsel for the Respondents Mr J Fetter Solicitor for the Respondents Murati Lawyers ORDERS
MLG 289 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: JUNGHUN KIM
First Applicant
JIHYUN KYE
Second Applicant
AND: NAUM BBQ PTY LTD (ACN 628 027 850)
First Respondent
BYOUNGHWA LEE
Second Respondent
ORDER MADE BY:
JUDGE SYMONS
DATE OF ORDER:
19 DECEMBER 2024
THE COURT ORDERS THAT:
1.The respondents’ application in a proceeding filed 22 November 2024 be dismissed.
2.Costs 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 SYMONS:
INTRODUCTION
On 23 February 2023, Mr Junghun Kim (first applicant) and Ms Jihyun Kye (second applicant) filed an application and statement of claim in this Court against the first and second respondents, Naum BBQ Pty Ltd and Mr Byounghwa Lee, respectively (FCFCOA proceeding).
The application was filed in the Fair Work jurisdiction and contained allegations that both applicants were at relevant times employees of the first respondent and in this capacity had been denied entitlements, including notice or payment in lieu, payment for overtime and public holiday hours worked, accrued annual leave and loading and superannuation contributions. The statement of claim (as amended on 7 May 2023) also alleged that the first respondent failed to maintain various employee records. The pleaded causes of action involved contraventions of the Fair Work Act 2009 (Cth) (FW Act) and the Fair Work Regulations 2009 (Cth). The applicants seek relief in the form of declarations, pecuniary penalties for the alleged contraventions, and compensation. While the amended statement of claim does not say this explicitly, it is understood that both applicants allege that they were employed by the first respondent to perform work in a Korean restaurant and as such were covered by the Restaurant Industry Award.
On 7 July 2023, the first applicant commenced a proceeding in the County Court of Victoria against the second respondent (CCV proceeding). By his statement of claim, Mr Kim alleges that he suffered financial loss relating to an agreement entered into with Mr Lee to create a new Korean restaurant business and a related loan agreement executed between the parties to fund costs associated with the proposed business.
By an application in a proceeding foreshadowed at a mention held on 10 October 2024 and filed on 22 November 2024, the respondents seek orders which they submit would have the effect of consolidating the FCFCOA proceeding and the CCV proceeding. However, it is clear from the terms of the first order that they seek – namely, that the first applicant be restrained from proceeding further in the CCV proceeding – that they seek relief in the nature of an anti-suit injunction. The applicants strongly resist the making of such an order and insist that the CCV proceeding, which is listed for trial commencing on 4 February 2025, continue without restriction.
I heard this application on 12 December 2024 on which occasion the applicants were represented by solicitor advocate, Mr Jenshel and the respondents by Mr Fetter of counsel.
The respondents relied on the following documents:
·An affidavit of solicitor for the respondents, Lirim Murati, dated 22 November 2024 (Murati affidavit);
·Respondents’ submissions filed 22 November 2024;
·The application in a proceeding filed on 22 November 2024.
In opposing the application, the applicants relied on:
·An affidavit of solicitor for the applicants, Tommy Hong, dated 6 December 2024 (Hong affidavit);
·Applicants’ submissions filed 6 December 2024.
THE CASE FOR AN ANTI-SUIT INJUNCTION
The respondents submit that this Court’s jurisdiction to grant relief in the nature of an anti-suit injunction is engaged in the following circumstances.
First, the Court undoubtedly has power to grant an anti-suit injunction. This reflects the power of the Court to make orders of such kinds, including interlocutory orders, as the Court considers appropriate, in relation to matters in which it has jurisdiction: s 140(1) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (FCFCOA Act). The Court also has an equitable jurisdiction to grant an injunction in the nature of an anti-suit injunction: s 10(1)(b) of the FCFCOA Act.
Second, since there is a “single matter”, this Court has always had jurisdiction over the whole matter, and it follows that it was an abuse of this Court’s jurisdiction for Mr Kim to seek to litigate part of the matter in another place.
The second contention requires some unravelling. The respondents rely on s 566 of the FW Act – which confers jurisdiction on this Court in relation to any civil “matter” arising under the FW Act – and the concept of accrued jurisdiction as it applies to this Court and as given content (in terms of a legal test) by the High Court of Australia in Fencott v Muller (1983) 152 CLR 570.
During the hearing, Mr Fetter emphasised the following paragraphs (28, 30 and 34) of the joint judgment of Mason, Murphy, Brennan and Deane JJ:
28. It follows also that, though the facts upon which a non-federal claim arises do not wholly coincide with the facts upon which a federal claim arises, it is nevertheless possible that both may be aspects of a single matter arising under a federal law. Mason J in Philip Morris, following what was said in Moorgate Tobacco, gave an indication of a non-federal claim which would not be severable:
“Likewise, it may appear that the attached claim and the federal claim so depend on common transactions and facts that they arise out of a common substratum of facts. In instances of this kind a court which exercises federal jurisdiction will have jurisdiction to determine the attached claim as an element in the exercise of its federal jurisdiction”.
…
30.…What is and what is not part of the one controversy depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships. The scope of a controversy which constitutes a matter is not ascertained merely by reference to the proceedings which a party may institute, but may be illuminated by the conduct of those proceedings and especially by the pleadings in which the issues in controversy are defined and the claims for relief are set out. But in the end, it is a matter of impression and of practical judgment whether a non-federal claim and a federal claim joined in a proceeding are within the scope of one controversy and thus within the ambit of a matter.
…
34.…the question…is whether the claim under the relevant federal law is a substantial part of a controversy the whole of which would be appropriately and conveniently determined by the court vested with jurisdiction in matters arising under that law…
The respondents submitted that the pleadings exchanged in the FCFCOA proceeding and the CCV proceeding established that there was a single controversy that could conveniently and appropriately be determined in this Court.
The analysis was to the following effect.
The FCFCOA proceeding is an employee entitlements claim that is being met by allegations raised in the respondents’ cross-claim, the most recent iteration being that filed on 5 June 2023, that the applicants misappropriated funds belonging to the first respondent contrary to equitable, fiduciary and statutory duties owed by them in connection with their management of the first respondent and the first respondent’s Korean BBQ restaurant.
The CCV proceeding, that was commenced only one month after the respondents filed their cross-claim, introduced an allegation that Mr Lee had breached an initial agreement between himself and Mr Kim regarding the funding of the Korean restaurant. Mr Kim alleged that he had made various loans and contributions to the restaurant business that had not been honoured by Mr Lee.
The respondents submitted that it was clear that there is a “single matter”, described as a dispute over the parties’ rights and obligations flowing from the failed restaurant venture.
To illustrate this point, the respondents prepared a draft third defence in the FCFCOA proceeding which they served on the applicants and produced as an annexure to the Murati affidavit.[1] The respondents explained that the third defence was intended to provide a complete response to the matters alleged by the applicants in the FCFCOA proceeding, as well as the matters alleged by Mr Kim against Mr Lee in the CCV proceeding. The respondents sought orders that would permit them to file this document in the FCFCOA proceeding and for the applicants, as an anterior step, to file a document entitled Third Statement of Claim, containing the text of the current Amended Statement of Claim filed in this Court, but annexing the Statement of Claim in the CCV Proceeding.
[1] Annexure LM-6.
In a section of the draft third defence titled “Background”, the following matters were identified, which the respondents contend neatly encapsulate the factual substratum common to both proceedings:
A. In or about 2018, the First Applicant (Mr Kim) and the First Respondent (Mr Lee) agreed that:
a)they would set up a Korean restaurant together in Melbourne;
b)they would make equal financial contributions to the cost of setting up the restaurant;
c)Mr Kim would manage all aspects of the business;
d)Mr Lee would sponsor Mr Kim’s permanent residency visa;
e)the running costs of the business would be paid out of the earnings of the business; and
f)any profits would be split fairly between the pair.
The respondents submitted that in circumstances where the whole of the controversy could have been pleaded out by the applicants in the FCFCOA proceeding, it was an abuse of process to commence parallel proceedings in the County Court. It was self-evident that the subject matter of both proceedings related to common transactions and facts and the fall out of the transactions and relationships that had formed in connection with the restaurant business.
The respondents submitted that the interconnectedness of the two proceedings gives rise to a real prospect of inconsistent judgments and factual findings which creates foreseeable challenges for enforcement as well as the potential for costly appeals.
The respondents acknowledged that there was an element of delay in the bringing of their application but sought to explain it on the basis that it was only at or around the time that present counsel had been briefed, that the respondents understood for the first time that “consolidation” of the proceeding was a course they could pursue. The respondents submitted that in any case, the work done in the Country Court would not be wasted as it would transpose, to the extent necessary and practicable, to the extant FCFCOA proceeding.
The respondents submitted that the maintenance of the CCV proceeding would cause prejudice to both parties, as their costs would invariably be higher if they were required to litigate in two forums at once. The respondents also identified as a relevant prejudice an expense to the administration of justice because taxpayers would effectively be funding two proceedings.
THE CASE AGAINST AN ANTI-SUIT INJUNCTION
The applicants accept that the Court has the power to grant relief in the nature of an anti-suit injunction, but resist the orders sought by the respondents on principally two bases. The first being that the CCV proceeding is distinct in nature to the FCFCOA proceeding so that a “single matter” analysis is not available. The second, which appeals to the discretionary character of the anti-suit injunction, is that the delay (described by Mr Jenshel as “perverse”) in bringing this application militates against the granting of relief.
As to the first point, the applicants submit that an evaluation of the pleadings exchanged in the different proceedings, reveals that they concern distinct and different facts. The FCFCOA proceeding is said to be wholly related and limited to the applicants’ employment-related matters with the respondents. The CCV proceeding, on the other hand, is said to relate to Mr Kim’s claims arising from a business venture agreement and loan agreement related to the establishment and operation of a Korean restaurant business. The applicants place some significance on the fact that the first respondent is not a party to this proceeding and the contention that it will be disposed of entirely without reference to the FW Act. On this analysis, there is no substantial overlap in terms of the controversy that is pleaded in the CCV proceeding.
As to the second point, the applicants submit that delay should operate decisively in this case to deny the respondents the relief that they seek. In support of this argument, the applicants note the following about the CCV proceeding, none of which was controverted by the respondents:
·The trial is scheduled to commence on 4 February 2025 on an estimate of four days;
·The trial date was set on 15 November 2023 (more than twelve months ago);
·The pleadings, including answers to further and better particulars, closed in March 2024 (about nine months ago);
·A vast amount of discovery has been exchanged;
·Counsel has been briefed to appear at trial on behalf of Mr Kim;
·The setting down for trial fee has been paid.
The applicants submit that the combination of these matters, and especially the start date of the trial, mean that the CCV proceeding is “too far advanced” for it to be stymied in its tracks. Orders directed at such a result would be oppressive to the applicants and would constitute an abuse of process.
The concept of a matter being too far advanced to support an anti-suit injunction was referred to in Verity Shipping SA v NA Nvnorexa & Ors [2008] EWHC 213 (Comm) where at [37] Justice Teare observed:
In The Angelic Grace [1995] 1 Lloyd’s Rep 87 at p 96 Millet LJ said that the English Court need feel no diffidence in granting an anti-suit injunction “provided that it is sought promptly and before the foreign proceedings are too far advanced”. The importance of proceeding without delay was emphasised by Mance J in Toepfer v Molino Boschi [1996] 1 Lloyd’s Rep 510. That was perhaps an extreme case where there had been a delay of seven years in seeking an anti-suit injunction during which time the parties had exchanged exhaustive memoranda under Italian law and procedure regarding jurisdiction, arbitration and the merits. But Mance J’s comments illustrate that a party who wishes to enforce a jurisdiction clause should apply promptly once he is aware of a breach of the arbitration clause:
The principle that an application for an anti-suit injunction should be made promptly and before the proceedings to be restrained are too far advanced has been applied in Australia: refer Mackellar Mining Equipment Pty Ltd v Thornton [2018] QSC 186 at [134]
The applicants submit that the delay in making this present application is aggravated by conduct engaged in by Mr Lee, and those who acted for him, that propelled the CCV proceeding forward to trial. It is said, in particular, that Mr Lee insisted on programming the CCV proceeding all the way through to trial, despite the applicants’ suggestion to wait until the pleadings issue with his defence was finalised.[2] The applicants also note that Mr Lee substantially amended his defence and was ordered to pay Mr Kim’s costs of and incidental to the summons filed on 28 September 2023 and thrown away by his amended defence.
[2] The applicants rely on the correspondence at annexure TH-7 to the Hong affidavit
The applicants are sceptical of the suggestion that a consolidation of the proceedings would lead to costs savings for the parties. The evidence before the Court is that they have incurred costs already in the CCV proceeding in the vicinity of $66,315.[3] The applicants are critical of the machinery provisions proposed by the respondents to “uplift” pleadings from the County Court to this Court and submit that in circumstances where pleadings are still open in this Court and the applicants are yet to file a defence to the respondents’ cross-claim, it is inconceivable that the parties would be in a position to run a trial in the first half of 2025.
[3] Hong affidavit at [4].
The applicants submit that it cannot be in the interests of justice in these circumstances to subordinate the CCV proceeding to the proceedings in this Court.
CONSIDERATION
Legal principles
An application of a similar kind to that now before the Court was considered in Beattie v Digga Excavations and Demolition Pty Ltd [2023] FedCFamC2G 337. At [22]-[24] Judge Mansini helpfully summarised the principles applying to the grant of an anti-suit injunction, which I reproduce below and adopt:
22. A statutory anti-suit injunction lies to protect the administration of justice and the Court’s own processes, the Court gaining exclusive right to control the proceeding once a claim is brought before it: CSR Limited v Cigna Insurance Australia Ltd (1997) 189 CLR 345 and Pioneer Concrete (Vic) Pty Ltd v Trade Practices Commission (1982) 152 CLR 460. Such remedy in the equitable jurisdiction also lies to restrain the vexatious, oppressive, unconscionable or unconscientious exercise of legal rights and conduct which tends to interfere with due process of the court: National Mutual Holdings Pty Ltd v Sentry Corporation (1989) 22 FCR 209.
23. It is established on the authorities that the interests of justice are the paramount consideration: Pegasus Leasing Limited v Cadoroll Pty Limited (1996) 59 FCR 152 at [156]:
Foreign proceedings may be restrained, not only when they are vexatious, in the sense of frivolous or useless, but also where they are oppressive. However, vexation or oppression should not be regarded as the only grounds on which the jurisdiction is to be exercised. See Societe Nationale Industrielle Aerospatiale v Lee Kui Jak [1987] AC 871 at 894…The fundamental requirement is that an injunction will be granted only where the interests of justice so require.
24. In the context of an application for an anti-suit injunction, the focus is on the “foreign” proceedings, and whether those proceedings are vexatious or oppressive from the forum perspective. More precisely, the focus is on the conduct of the party pursuing the foreign proceedings, and the impact on the other litigant: Allstate Life Insurance Co v ANZ Banking Group Ltd (No 2) (1996) 64 FCR 44 at [52].
Disposition
I am not persuaded that it is in the interests of justice to make orders that would restrain Mr Kim from proceeding further in the CCV proceeding.
As I observed during the hearing of the application in a proceeding, the commencement of the trial of the CCV proceeding is imminent. It is the case that aside from the preparation of a court book, there are no extant procedural steps to be taken. I am instructed that counsel for Mr Kim has commenced their preparations for trial.
The FCFCOA proceeding, on the other hand, is at a more embryonic stage, reflecting various applications made and resisted since the matter commenced and amendments to pleadings. Indeed, pleadings have not yet closed, and further amendments are foreshadowed. The case in this forum has not yet crystallised.
In Pegasus Leasing Limited v Cadoroll Pty Limited (1996) 59 FCR 152, the Full Federal Court (Lee and Tamberlin JJ) observed at 157 that:
It must be borne in mind that although an anti-suit injunction, such as the present, only acts in personam against the parties it is, in substance and effect, an interference with the process of another court and this must be weighed in the balance. See Laker at 95 and Metall and Rohstoff AG v ACLI Metals (London) Ltd [1984] 1 Lloyds Rep 598 at 613.
There is no justification in this case for interference with the process of the County Court where the CCV proceeding is moments from starting and where the FCFCOA proceeding has not yet been programmed for trial and would not be allocated a trial date until at least the fourth quarter of 2025.
I wish to record that had an application been made at an earlier point in time the outcome might well have been different. This is because I accept the submissions made on behalf of the respondents going to the jurisdiction of the Court to hear all the matters raised in the FCFCOA and the CCV proceedings.
I consider that the lens applied by the applicants to the character of the CCV proceeding is too narrow insofar as it focuses on the nature of the relief sought in that proceeding and the likelihood that it would not engage with the FW Act or require the resolution of issues relating to any employment relationship between Mr Kim and the first respondent (or, for that matter, Ms Kye and the first respondent).
While I acknowledge the applicants’ contention that the analysis applied by the respondents operates at a level of generality and does not descend to the particulars of the pleadings in each case, I consider that such an approach is consistent with authority that conceptualises a “matter” in a broad sense and authorises the exercise of impression and practical judgment in determining whether parallel claims are within the scope of a single controversy. Here, there is obvious overlap between the transactions and facts that underscore the claims and defences made in the separate proceedings. They all emanate from the parties’ joint involvement in the establishment and operation of a Korean restaurant. The fact that different legal consequences attend these arrangements (or have at least been pleaded to do so) does not in my opinion detract from the conclusion that the two proceedings are part of the same justiciable controversy.
I will order that the application in a proceeding filed on 22 November 2024 be dismissed and reserve the question of costs. I will otherwise hear the parties on the question of what further programming orders should be made in the FCFCOA proceeding.
I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Symons. Associate:
Dated: 19 December 2024
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