Phillips v Strasser (No 2)
[2023] FedCFamC2G 151
Federal Circuit and Family Court of Australia
(DIVISION 2)
Phillips v Strasser (No 2) [2023] FedCFamC2G 151
File number: MLG 3375 of 2021 Judgment of: JUDGE FORBES Date of judgment: 10 March 2023 Catchwords: PRACTICE AND PROCEDURE – Fair Work – application for leave to file amended pleading – contract of employment – claims relating to underpayments and leave entitlements over 40 year period – where statutory, contractual and equitable remedies sought – whether pleading identifies reasonable causes of action – consideration of statutory limitation periods – whether pleading amenable to being struck out – whether flaws in pleading capable of being cured Legislation: Fair Work Act 2009 (Cth), s 45, 46, 47, 323, 544, 545, 570
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021, r 1.04, 1.06
Federal Court Rules 2011, r 16.21
Limitations of Actions Act 1958 (Vic), s 5
Religious and Successory Trusts Act 1958 (Vic), Part II
Workplace Relations Act 1996 (Cth)
Cases cited: Abela v Minister for Home Affairs [2021] FCA 96
Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (1994) 217 226
Australian Building and Construction Commissioner v Hall [2018] FCAFC 83; 2018) 261 FCR 347
Chandrasekaran v Commonwealth of Australia (No 3) [2020] FCA 1629
Construction, Forestry, Mining and Energy union v BHP Coal Pty Ltd [2015] FCAFC 25; (2015) 230 FCR 298
Devaynes v Noble (1816) 35 ER 781
Fair Work Ombudsman v Eastern Colour Pty Ltd (2011) 209 IR 263
Gerace v Auzhair Supplies Pty Ltd (2014) 87 NSWLR 435
H 1976 Nominees Pty Ltd v Galli (1979) 40 FLR 242
Phillips v Strasser [2022] FedCFamC2G 410
Richens v Commonwealth of Australia (as represented by the Commissioner of the Australian Federal Police) [2018] FCA 1276
Saxena v PPF Asset Management Ltd [2011] FCA 395
Shelton v National Roads and Motorists Association Ltd [2004] FCA 1393
Trade Practices Commission v Pioneer Concrete (Qld) Pty Ltd (1994) 52 FCR 164
Transport Workers Union of Australia v Coles Supermarkets Australia Pty Ltd (2014) 284 FLR 238
Trustee for the MTGI Trust v Johnston (No 2) [2016] FCAFC 190
Wride v Schultz [2004] FCAFC 216
Division: Division 2 General Federal Law Number of paragraphs: 115 Date of hearing: 9 December 2022 Place: Melbourne Counsel for the Applicant: Mr I Upjohn CSC, KC with Ms M Hardinge Solicitor for the Applicant: Mann Lawyers Pty Ltd Counsel for the Respondents: Mr J Tracey Solicitor for the Respondents: Perry Maddocks Trollope Lawyers ORDERS
MLG 3375 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MARK FRANCIS PHILLIPS
Applicant
AND: AARON STRASSER
First Respondent
MICHAEL MOSHE FRIEDMAN
Second Respondent
BENYOMIN KLEIN
Third Respondent
order made by:
JUDGE FORBES
DATE OF ORDER:
10 march 2023
THE COURT ORDERS THAT:
1.Leave to file the Proposed Amended Statement of Claim dated 21 October 2022 (PASOC) is refused.
2.The applicant has leave to file and serve any amended statement of claim no later than 28 days after the date of these orders.
3.The matter is otherwise listed for a Directions Hearing on 20 April 2023 at 9.30am to determine the future course of these proceedings.
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
This litigation has been beset with pleading contests. These reasons relate to the most recent.
The applicant’s claim arises from an alleged employment relationship of nearly 40 years standing, during the course of which he has performed work for or on behalf of an unincorporated Jewish congregation, the Congregation Adass Israel Trust. During the course of his work the applicant, Mr Phillips, has performed duties in relation to the ritual slaughter and preparation of animal meat products and the certification and supervision of those practices in accordance with Jewish dietary laws. Those facts appear not to be in contest.
The litigation was commenced by way of an application and statement of claim filed on 23 December 2021. The named respondents are the trustees for the time being of the Congregation Adass Israel Trust. The applicant claims that he has been underpaid wages and denied other entitlements of employment including leave payments and superannuation contributions. He alleges, inter alia, breaches of contract and contraventions of the Fair Work Act 2009 (Cth) (‘the FW Act’) and seeks relief in the nature of damages, compensation and penalties.
The applicant’s original statement of claim was the subject of criticism by the respondents and, following extensive correspondence between the parties’ solicitors, it was superseded by an Amended Statement of Claim filed on 21 April 2022.
The respondents were not satisfied that the Amended Statement of Claim (ASOC) adequately addressed issues raised in correspondence sent by their solicitors. In early May 2022 the respondents filed an interlocutory application seeking that the proceeding be summarily dismissed, alternatively that the ASOC be struck out in whole or in part.
On 27 May 2022 for reasons articulated in Phillips v Strasser [2022] FedCFamC2G 410 (Phillips v Strasser (No. 1)) the Court ordered that the ASOC be struck out and leave was granted to the applicant to file and serve a fresh pleading. My reasons at [4] to [8] set out the broad factual context of the dispute between the parties, so it is unnecessary to rehearse that background again.
However, for the sake of context, it is useful to recall the various bases on which I found the ASOC to be deficient, namely:
(a)the applicant’s employer was not properly identified [reasons [31]];
(b)as an unincorporated trust cannot as a matter of law be the employer, there was no clear allegation of an employment relationship between the applicant and the named respondents [30]-[34];
(c)there was no proper pleading of a contract of employment [30];
(d)it was not clear on the face of the pleading what specific acts and/or omissions of the respondents or any of them constituted contraventions of the FW Act or breaches of contract [32];
(e)the pleading did not adequately identify how the respondents were covered by or had obligations pursuant to any of the three named industrial awards [36];
(f)an accessorial liability allegation[1] against the CEO Mr Strasser was inadequately pleaded, in particular because it did not properly identify the primary contravener [38]-[39];
(g)the applicant sought relief in relation to alleged contraventions of the FW Act which occurred greater than six (6) years before the proceedings were commenced, contrary to s 539 of the FW Act [49]-[56],[64];
(h)the claim in contract sought relief in relation to breaches which occurred before 23 December 2015, there being no pleading of facts which would engage an exception to the six year limitation in s 5 of the Limitations of Actions Act 1958 (Vic) [57]-[59].
[1] Fair Work Act 2009 (Cth), s 550
On 1 July 2022 a new pleading, which I will refer to as a further amended statement of claim (FASOC), was filed. The respondents through their solicitors objected to the new pleading. The applicant then indicated that he would seek to amend the FASOC further, which was a course the respondents sensibly did not oppose. The parties then exchanged correspondence in relation to alleged defects in the FASOC.
Further iterations of the FASOC were served by the applicant, the most recent of which is the Proposed Amended Statement of Claim dated 21 October 2022 (PASOC) which is annexure NAP-1 to the affidavit of his solicitor Nadev Aryeh Prawer affirmed on 25 October 2022.
By an oral application the applicant now seeks leave to file the PASOC, his earlier statement of claim having been struck out by the Court and his second attempt, the FASOC, having now been superseded.
The respondents oppose the application for leave to file the PASOC. For reasons articulated in their written[2] and oral submissions, the respondents submit that the PASOC is so defective that it would not survive a strikeout application and, for that reason, the Court should not exercise its discretion to grant leave for it to be filed.
[2] Respondents’ outline of submissions filed 22 November 2022
While it is for the applicant to prosecute his application for leave to file the PASOC, the Court’s power to strike out pleadings and how that power should be exercised on a strikeout application are relevant to the question of whether that leave should be granted.
Applicable principles
There is no material contest between the parties as to the rules and principles which prescribe the requirements of a proper pleading.
It is common ground that pleadings must disclose a reasonable cause of action against the party against whom the cause of action is brought and must state the material facts necessary to establish that cause of action and the relief sought.
A “reasonable cause of action” is one which has some chance of success if regard is had only to the allegations and the pleadings relied on by the applicant.[3] The parties agree that in order to determine whether leave should be granted to file the PASOC the Court should concern itself only with the allegations contained within the four corners of the proposed pleading.
[3] Wride v Schultz [2004] FCAFC 216 at [25]
The respondents emphasise that a proper pleading must contain those facts that are necessary for formulating a complete cause of action[4]. The respondents are named in their individual capacity and they are each confronted with allegations, inter alia, of quasi-criminal contraventions of the FW Act in respect of which civil penalties are sought. As such the respondents emphasise the importance of the proper articulation of the case they are called upon to meet[5].
[4] H 1976 Nominees Pty Ltd v Galli (1979) 40 FLR 242 at 246
[5] Construction, Forestry, Mining and Energy union v BHP Coal Pty Ltd [2015] FCAFC 25; (2015) 230 FCR 298 at [63]-[65]; Australian Building and Construction Commissioner v Hall [2018] FCAFC 83; 2018) 261 FCR 347 at [50]
The respondents also contend that the Court should consider the current application within the framework set by the combined operation of rule 1.06 and item 14 of Schedule 1 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 and the Federal Court Rules 2011. That combined operation enlivens rule 16.21 of the Federal Court Rules2011 which is concerned with the sufficiency of pleadings[6] and which permits the Court to strike out a pleading on the ground that it, inter alia, contains scandalous material, frivolous or vexatious material, is evasive or ambiguous, is likely to cause prejudice, embarrassment or delay in the proceeding, fails to disclose a reasonable cause of action or is otherwise an abuse of the process of the Court.
[6] Abela v Minister for Home Affairs [2021] FCA 96 at [17]
The proscriptions in rule 16.21 are well known and are the subject of countless interlocutory decisions in courts at all levels. Suffice to say, in its written submissions the respondents remind the Court that a pleading will be embarrassing where it:
(a)“is susceptible to various meanings, or contains inconsistent allegations, or in which alternatives are confusingly intermixed, or in which irrelevant allegations are made that tend to increase expense”[7];
(b)“includes defects resulting in the pleading being unintelligible, ambiguous, vague or too general, so as to embarrass the opposite party who does not know what is alleged against it”[8]; or
(c)includes “allegations … made at such a level of generality that the defendant does not know in advance the case it has to meet”.[9]
[7] Shelton v National Roads and Motorists Association Ltd [2004] FCA 1393 at [18]
[8] Fair Work Ombudsman v Eastern Colour Pty Ltd (2011) 209 IR 263 at [18]
[9] Eastern Colour at [40]
The respondents submit that the PASOC meets all of these definitions and is therefore amenable to being struck out. On that basis, the respondents contend that leave to file the PASOC should not be granted.
While not taking issue with the legal principles articulated above, the applicant contends that if the question of leave to file is approached from the perspective of whether the pleading is amenable to being struck out, the Court should proceed cautiously having regard to the profound consequences of denying a party the right to prosecute his case.
To that end, the applicant submits that the power to strike out a pleading (or to deny a party leave to file) should only be exercised:
“in plain and obvious cases, where no reasonable amendment could cure the alleged defect or deficiency. The power is discretionary and should be employed sparingly and only in a clear case “lest one deprive a party of a case which in justice it ought to be able to bring.”[10]
[10] Chandrasekaran v Commonwealth of Australia (No 3) [2020] FCA 1629 at [110] citing Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (1994) 217 226 at [236] and Trade Practices Commission v Pioneer Concrete (Qld) Pty Ltd (1994) 52 FCR 164 at 175
In other words, while acknowledging that the Court has the discretion to grant leave to file the claim in whole or in part (or indeed strike out a pleading in whole or in part), the applicant urges the Court not to strike out the PASOC or parts of the PASOC where it pleads a viable cause of action, albeit defectively. The applicant asserts that alleged defects can be addressed by further amendment, including by the provision of particulars.
Although neither party expressly addressed the Court on this point, I would add a further matter which is relevant to the Court’s consideration of the application. While pleadings are commonly ordered in general federal law proceedings in this Court, the Court is not a court of strict pleadings. In exercising its discretion the Court must always be mindful that the overarching purpose of civil practice and procedure is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible[11]. This includes a requirement that the parties assist the Court by avoiding undue delay, expense and technicality[12].
[11] s 190 Federal Circuit and Family Court of Australia Act 2021 (Cth), see also rule 1.04 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021
[12] Rule 1.04(2)
The application for leave to file the PASOC was heard on 9 December 2022. Prior to the hearing each party filed written outlines of submissions, which I have read. At the hearing Mr Upjohn KC appeared with Ms Hardinge for the applicants and Mr Tracey for the respondents.
The Proposed Amended Statement of Claim (PASOC)
The ASOC which was struck out for the reasons set out in Phillips v Strasser (No.1) has been overhauled in some respects but not others. Some claims have been reformulated or particularised and new claims have been added. The PASOC is presented as a new pleading and should be considered as such, consistent with the parties’ submission that it should be evaluated within the four corners of the document.
As mentioned, the applicant’s claim relates to a long period of employment within or on behalf of the Adass community. Whilst the applicant has worked in a business or businesses operated by the Congregation Trust and has been remunerated for his work by the unincorporated entity, the precise legal identity of his employer has not been disclosed or admitted by the respondents, each of whom is a current trustee of the Adass Israel Congregation Trust. In the PASOC the applicant claims relief against the named respondents[13] for alleged contraventions of the FW Act, breaches of contract and an unpaid debt. The applicant also seeks equitable relief in respect of a misrepresentation made to him in 2001[14] and in respect of a constructive trust which is said to arise from an ongoing fraud visited upon him by reason of an unlawful pay arrangement introduced by a predecessor trustee of Adass in or about 2001[15]. The alleged unlawful pay arrangement involved Mr Phillips being paid a reduced salary which was part in cash or cheque (in respect of which superannuation contributions were made) plus a sum deposited to a credit card for his use (in respect of which superannuation was not paid)[16].
[13] If leave to file is granted, the applicant will amend the pleading to name another respondent, Mr Koppel, who is also a current trustee of Adass.
[14] PASOC paras [24]-[26]
[15] PASOC paras [34]-[36]
[16] Described in para [10] of the PASOC
The operation of statutory time limits looms large in this proceeding and underpins some of the objections raised by the respondents to the PASOC in its current form. If leave to file the PASOC is granted in one form or another, it is anticipated that the claim will be met with statutory defences.
It should suffice at this stage to note that the applicant acknowledges that his claims under the FW Act are statute-barred[17] for any period of employment prior to 23 December 2015. However, in respect of his claim in contract, the applicant contends that the six (6) year time limit in s 5 of the Limitation of Actions Act 1958 (Vic)[18] does not preclude him from pursuing relief in relation to an outstanding debt which has not been discharged or from pursuing proprietary claims founded upon a constructive trust arising from the terms of a contract which was illegal or void against public policy. Moreover, the applicant contends that the limitation period cannot preclude him from pursuing a claim of equitable estoppel which arises from his reliance upon a representation made to him in 2001 about the purported benefit of the unlawful pay arrangement.
[17] Fair Work Act 2009 (Cth), s 544; see also Phillips v Strasser (No. 1) at [49]-[56]
[18] which applies by reason of s 79 of the Judiciary Act 1903 (Cth)
I will discuss the relevance of the statutory time limits as necessary throughout the reasons which follow. I now turn to the specifics of the applicant’s PASOC and the parties’ respective contentions. For convenience I will use the headings used in the PASOC.
Parties
At paragraph 1(a) the applicant alleges that he is an employee of the named respondents in their capacity as trustees of the ‘Congregation Adass Israel’ Trust. The plea asserts employment and the capacity in which the respondents are alleged to employ the applicant. It defines the Trust for the purpose of the pleading i.e. “Adass”. I see no reason why the respondents cannot plead to the allegation that the applicant is employed by them in their capacity as trustees of Adass.
The allegation that the applicant has, since 1984 or alternatively 2000, been employed by the ‘trustees from time to time of Adass’ is also tenable. It is an allegation of historical fact and it is a necessary pleading of context. It is not inconsistent with the allegation in para 1(a) that the applicant is currently an employee of the respondents who are the current trustees of Adass. It is also an allegation which recognises that the trust itself is incapable of employment. Again, I see no reason why the respondents cannot plead to this allegation to the extent they can do so within their own knowledge.
The allegation at paragraph 1(c) that the applicant has at all material times been employed in the Business (as described in paragraph 3) is a material fact. So too are the allegations that the applicant, at various times during the period of his employment by various trustees of Adass, has been an ‘employee’ for the purposes of various federal and state employment legislation. It may be that the respondents can only plead to some allegations or neither admit nor deny because they do not know, but they can nonetheless plead.
Paragraph 2(a) operates as the counterpart to paragraph 1(a). It pleads that the respondents are the employers of the applicant in their capacity as trustees of Adass. The particulars identify the current trustees as including Benjamin Koppel. Mr Koppel is not presently a party to the litigation but the respondents have informed the Court that they will not object to him being joined as a fourth respondent if leave is granted to file the PASOC.
Paragraph 2(a) implicitly asserts the existence of a contractual relationship but it does not expressly plead the making of a contract of employment or the terms of the contract. It is a pleading in the present tense and it does not inform the respondents from when or for how long they are alleged to have employed the applicant. In that respect, paragraph 2(a) is somewhat vague, although it can be readily inferred from the particulars that the applicant contends that the respondents have employed the applicant for as long as they have been on the trustee register.
Other allegations in the PASOC also inform the applicant’s assertion that the respondents employ him in their capacity as trustees of Adass. The allegations that the respondents are the owners of the Business (as the trustees of the trust which is registered pursuant to Part II of the Religious and Successory Trusts Act 1958 (Vic)), that the applicant has at all material times worked in the Business and that the respondents are a national system “employer” within the meaning of s 14 of the FW Act are a sufficient basis for a common-law employment relationship to be alleged against and understood by the respondents.
Moreover, in the course of submissions senior counsel for the applicant took the Court to payroll advice forms and payslips issued by Congregation Adass Israel Shul or Congregation Adass Israel 2019 (which both cite the ABN 21 281 129 319)[19] which on their face appear to evidence that the applicant was paid “wages” and other amounts for various periods from July 2016 to October 2022. Other documents relied upon by the applicant to establish a connection between the respondents and the Trust include a title search for the property address which appears on the payslips (12-24 Glen Eira Avenue) which reveals that it is owned by the “Trustees of Congregation Adass Israel Trust” and an Australian Charities and Not-for-profits Commission (ACNC) which describes Congregation Adass Israel as a registered Trust and identifies the respondents as trustees[20].
[19] Dr Nadav Aryeh Prawer affirmed 5 December 2022, annexures NAP-2, NAP-3
[20] Prawer affidavit at [14]-[18] and annexures NAP-4, NAP-5.
In my view, the allegation at paragraph 2(a) is not so vague or uncertain that it is liable to being struck out. I see no reason why the respondents cannot plead to it and to qualify their defence if they consider that necessary.
Paragraph 2(b) is expressed as a further or an alternative plea, which gives rise to confusion. It goes to the contractual relationship between the applicant and the alleged employers. By paragraph 2(b) the applicant alleges that the respondents are the “ultimate transferees” of the Employment Contract either by operation of Part 2-8 of the FW Act (as described in paragraph 4) or as successors or transmittees of the business within the meaning of the common law and the Workplace Relations Act 1996 (Cth) (as described in paragraph 4(b)). I anticipate that the thrust of the allegation is that the respondents (as the current trustees) are said to be party to and/or bound by an Employment Contract which was made in 1984 between the applicant and the then trustees of Adass (as described in paragraphs 6 and 7), a contract has subsequently been varied from time to time thereafter (as described in paragraphs 8, 9 and 10).
Conceptually, the notion that trustees of a trust, acting in the best interest of the trust, may hold and administer a contract for the benefit of the trust during their incumbency as trustees, is not legally untenable. The continued performance of work by the applicant for the Business of the trust and the payment to him by the trust for the work performed, notwithstanding the change in the composition of the trustees from time to time, might support an allegation that the one contract of employment has either been transferred or novated from one set of trustees to their successors or that a series of contracts with different trustee employers has been made, each contract being on the basis of the immediately preceding terms and conditions. But the applicant needs to spell out what he alleges.
Notwithstanding my guess as to the intent of paragraph 2(b), I consider it is confusing, ambiguous and likely to prejudice the hearing of the matter. The paragraph when read with the paragraphs to which it refers is confusing because, inter alia, it conflates a number of concepts. On its face it pleads transfer of a defined Employment Contract. Yet paragraph 4 refers to the transfer of Business and the statutory consequences of that. Moreover, paragraphs 4 and 4(b) also speak to the transfer of the applicant’s employment. The transfer of a business, the transfer of employment and the transfer of a contract may each have distinct and different legal consequences for the so-called “ultimate transferee”. The distinction between these concepts is important and while I think I understand what paragraph 2(b) is aimed at, I am confused by it and expect the respondents will be as well.
In my view paragraph 2(b) in its current form is amenable to being struck out but it is not beyond amendment. The drafter would avoid confusion by simply stating the material fact the applicant intends to prove and by providing the particulars which will put the respondents on notice as to how that fact will be made good.
Paragraphs 2(c)-(e) do not present any pleading difficulty.
Business
Paragraph 3 pleads a material fact. I see no reason why the respondents cannot plead to it, within the scope of their knowledge.
Transfer of Business
Paragraphs 4 and 5 appear designed to put the respondents on notice as to how it is alleged that they are parties to or bound by an employment contract of some sorts. However, as discussed above in relation to paragraph 2(b), I do not consider that design has been achieved.
A central thesis of the applicant’s claim, as it is advanced from the bar table, is that the respondents are his current employer (in their capacity as the current trustees of Adass) and that they are liable for underpayments and entitlements arising from, inter alia, breaches of a contract or contracts made between the applicant and predecessor trustees. However, in my view the various matters alleged at paragraphs 4 and 5 serve to confuse rather than advance that thesis.
Paragraph 4(a) pleads that upon the retirement of trustees of Adass, the Business of the trust is deemed by legislative force to have been transferred to the successor trustees and that by reason of that transfer of Business the employment of the applicant (and his then accrued entitlements) also transferred to the successor trustees. Paragraph 4(b) adds the further allegation that each successor trustee became a successor or transmittee of the business as a consequence of which a transfer occurred within the meaning of the common law and the Workplace Relations Act 1996.
Paragraph 5 pleads in the alternative, that the transfer of the applicant’s employment is implied at common law or alternatively acted as a novation of contract with each retirement and appointment of a new trustee. Again, paragraph 5 is confusing because it conflates the concepts of a transfer of business, a transfer of employment and novation of contract. These are not synonymous and lack of clarity is liable to mislead a respondent as to the case it is required to answer.
Furthermore, paragraph 5 asserts that the applicant’s employment has transferred (it does not state to whom, but presumably the respondents) by implication at common law. In my view, the implication is not so obvious as to go without saying, so the material facts which give rise to such an implication should be pleaded. The allegation of novation of contract is similarly vague and in the absence of particulars, cannot be properly understood. The basis for the alleged novation, identifying the contract novated, should be pleaded.
Moreover, not only should the factual and/or legal basis for the “transfer of employment” or novation of contract be properly pleaded, it is necessary also to plead the effect of the transfer in terms of the alleged legal relationship between the applicant and the respondents. In other words, even if a transfer of employment is established, how does that engage the current trustees in terms of contractual obligations vis a vis the applicant? For example, the respondents would expect to see and be entitled to meet a plea along the lines of “By reason of the transfer/novation etc. of the applicant’s employment to the respondents in their capacity as trustees of Adass, the respondents are liable/bound/obliged etc…….”. In the absence of such an allegation, the causes of action are not complete.
The difficulty with paragraphs 2(b), 4 and 5 is that they do not directly grapple with the respondents’ principal complaint, namely the failure of the PASOC to plead, clearly and specifically, the contract to which the applicant and one or more of the respondents are party and the terms of that contract and its usual particulars.
In my view paragraphs 4 and 5 do not travel anywhere in the absence of a clear and concise pleading of a contract binding the applicant and respondents. Those paragraphs are amenable to being struck out and weigh against leave being granted to file the PASOC.
Contract
Paragraphs 6 to 10 allege the creation of a contract of employment in September 1984, the parties to that contract (namely the applicant and the then trustees of Adass), the essential terms of the contract (express and implied) and variations to the contract (whether by agreement or by conduct) made in 1986, 1988 and 2001. In my view these paragraphs are not objectionable and form part of the historical narrative. However, and critically, none of these paragraphs directly engage the respondents. That engagement must be found elsewhere in the pleading.
Breach of Contract
In light of the forgoing paragraphs, paragraph 11 is deficient.
Paragraph 11 alleges breaches of the Employment Contract (as defined in paragraph 6 and as varied) and pleads as material facts that the applicant has not received wages and various other entitlements. The paragraph pleads the effect of breaches in generalised terms. However, nowhere is there to be found any pleading which articulates, as against any of the named respondents, the contract to which they are a party or the specific contractual obligations they are bound to discharge in their employment of the applicant. Nor does the pleading set out the alleged conduct of the respondents, whether in the nature of act or omission, which gives rise to the cause of action in contract.
Paragraph 11 does not in my view engage the respondents. A general pleading that the applicant did not get something to which he believes he was entitled does not put the respondents on notice as to the legal source of their obligation or the conduct which constituted their alleged breach. The pleading does not plead breaches of contract by the respondent by reference to specific terms of a contract binding them as employer. One would ordinarily expect a contractual claim to be pleaded by pointing to what the respondents had failed to do (particularised as to timing and quantum by reference to a relevant term of the applicant’s contractual entitlement), rather than by reference to what the applicant claims he did not get.
As I observed in relation to paragraphs 4 and 5, there remains confusion as to the contract alleged between the applicant and the respondents. Paragraph 11 only compounds that confusion and it cannot survive in its current form.
Fair Work Act
The FW Act claims set out at paragraphs 12 to 18 suffer a number of deficiencies, although not to the extent contended for by the respondents.
At paragraph 12 of the PASOC the applicant contends that he was covered by one of three awards, either the Meat Industry Award 2010, the Poultry Processing Award 2010 or the Miscellaneous Award 2010, each award expressed to be an alternative to the other. The particulars to paragraph 12 in my view adequately explain how each of these awards are alleged to cover the work performed by the applicant (particularly when read with the description of the Business in paragraph 3 and the description of the applicant’s duties in paragraphs 7 and 8).
However, the paragraphs do not engage the respondents. Although it is alleged that these awards covered the applicant, there is no express pleading that any of these awards applies to the respondents in respect of the applicant’s employment. There can be no contravention of a modern award unless it applies and imposes obligations on an employer and gives entitlements to an employee. A modern award does not impose obligations on a person, and a person does not contravene a term of a modern award, unless the award applies to the person (s 46(1) FW Act). Conversely, a modern award does not give a person an entitlement unless the award applies to the person (s 46(2) FW Act). Section 47 of the FW Act deals with how and when a modern award applies to an employee, and/or employer.
In order to complete a cause of action in relation to alleged breaches of awards, the applicant must plead (and particularise) the material facts which support the contention that a relevant award applies to a respondent and plead the relevant obligations which are imposed on the respondent by reason of that award applying. Paragraph 12 does neither.
I agree with the applicant that the determination of which award (if any) applies will be a matter for trial, to be determined on the evidence having regard to the “major and substantial employment” of the employee or the “principal purpose” or “primary function” of the employee[21]. However, that question does not arise in the absence of a plea which properly engages the respondents.
[21]Transport Workers Union of Australia v Coles Supermarkets Australia Pty Ltd (2014) 284 FLR 238 at [127]-[133]
Breaches of Fair Work Act
Paragraphs 13 to 18 and 23 of the PASOC allege that the applicant has been underpaid in breach of award terms, contrary to s 45 of the FW Act and underpaid contrary to s 323 of the FW Act. The respondents contend that these paragraphs are amenable to being struck out. I agree.
Paragraphs 13 to 18 of the PASOC assert various contraventions of the FW Act by “the trustees from time to time”. This language is ambiguous, confusing and problematic. It is capable of different meanings.
The phrase “trustees from time to time” could be read as a reference to the various trustees who from time to time have been trustees of the Adass Trust, including the respondents who are the current incumbents. Alternatively, it could be read to be a reference to the respondents only and an allegation that they have from time to time contravened the award or other provisions of the FW Act.
If it is intended to be the former, that is a reference to those who have held office of trustees of the Adass trust at various times, then paragraphs 13 to 18 do not directly engage with the respondents, leaving them to speculate as to what breaches are alleged against them. To make out a cause of action the claim must plead acts or omissions of the respondents which constitute the relevant contraventions, or, if it is contended the respondents are somehow liable for the acts and omissions of their predecessors, then how so?
Paragraph 13(a) requires the respondents to plead to the allegation that they or perhaps other trustees have failed to pay the applicant the “minimum applicable rates of pay”. That expression is not defined and is ambiguous. The particulars to paragraph 13(a) direct the respondents to Schedule C which purports to set out the hourly base, overtime and public holiday wage rates applicable for level 4 and level 5 classifications under each of the Meat Industry Award, Poultry Award and Miscellaneous Award for the years 2010 to 2020 and Schedules D and E which sets out a table of calculations which alleges an underpayment based on the wage rates applicable to level 4 of the Meat Award only. However, those particulars do not enable the respondents to plead to the allegation that they (or perhaps their predecessor trustees) had failed to pay the “minimum applicable rates of pay”. Other than in the most general terms, the particulars do not inform the respondents as to when these contraventions are alleged to have taken place. In my view the pleading is so vague and confusing that the respondents are left to speculate as to what is alleged against them.
Similar issues arise in relation to the allegations at paragraph 13(b) in relation to superannuation, paragraph 13(c) in relation to overtime and penalty rates and paragraph 13(d) in relation to “applicable allowances”. In each case, the applicant pleads that the “trustees from time to time have contravened the terms of the Awards” by asserting a failure on the part of the trustees to pay “applicable” amounts. The pleading then requires the respondents to delve into the schedules attached to the PASOC to work out what it is that applicant is endeavouring to allege against them.
Broadly speaking, the difficulties arise from the fact that the PASOC does not contain a positive and clear allegation of the obligations imposed upon the respondents by reason of the application of the awards. If the relevant obligations had been clearly spelt out, by reference to each of the relevant awards (appropriately pleaded as alternatives), the allegation that the respondents had failed to discharge those obligations might be more readily comprehensible.
In my opinion the respondents also raise a further valid criticism of the particulars, in tables in the Schedules to the PASOC, which set out award underpayment calculations going back to the year 2010. Having regard to s 544 of the FW Act, the Court can only make orders and grant relief in respect of claims which do not exceed 6 years prior to the commencement of proceedings. Particulars of pleadings which go back before 23 December 2015 are not particulars of a material fact and are irrelevant and liable to confuse.
The respondents submit, quite appropriately, that where contraventions of civil remedy provisions are alleged and where civil penalties are sought against them, they are entitled to be put squarely on notice as to the case against them. This requires, at the very least, that the applicant clearly allege the source of the asserted statutory obligation and the details of each alleged contravention. The proposed pleading is deficient in that regard.
Paragraphs 14 to 17 are ambiguous and confusing and amenable to be struck out insofar as each alleges contraventions by “the trustees from time to time” and contraventions of the FW Act which are outside the time limit prescribed by s 544 of the FW Act.
I agree with the respondents that deficiencies in the pleading cannot be cured by the general language, now to be found in paragraph C of the prayer for relief, for “An order for compensation from 23 December 2015 pursuant to s 545 of the FWA”. If the relief is to be so confined, pleadings of contraventions and tables of particulars which extend back to 2010 are irrelevant and only serve to confuse the respondents and the Court.
Paragraph 18 states a legal proposition and the respondents can plead to it.
Superannuation
Paragraphs 19 to 22 are also problematic due to the inconsistent use of language and the failure of the allegations to directly engage with the respondents.
Paragraphs 19 and 20 assert that “Adass” had contractual and statutory obligations to make superannuation contributions for the benefit of the applicant. “Adass” is defined in paragraph 1 of the PASOC as the “Congregation Adass Israel Trust”, the unincorporated association which the parties agree is not a juridical entity. No allegation is made which engages the respondents in respect of those obligations.
At paragraph 21 the applicant pleads that he has not been paid superannuation on 50% of his wages as required by the terms of the 1984 employment contract. In the context of paragraph 19, this allegation implies a breach of contract by Adass, but it does not make any allegation against the respondents.
Similarly, paragraph 22 asserts that the applicant has not received superannuation contributions on his wages as prescribed by relevant legislation, but no allegation is directed to the respondents. In the context of paragraphs 19 and 20 it is not clear what the applicant is alleging, against whom it is alleged or how it engages the respondents.
Paragraph 23 suffers the same ambiguity and statutory time bar by which the respondents seek to which impugn paragraphs 13 to 17. The allegation that the “trustees from time to time” have contravened s 323 of the FW Act by not paying the applicant in full the amounts payable in respect of the performance of work is uncertain. The particulars refer to deductions made from the applicant’s pay since 2001, a period which sits well beyond the six year limitation period. Paragraph 23 is a substantive allegation of contravention in respect of which the applicant seeks the imposition of civil penalties against the respondents. Notwithstanding, there is nothing in this allegation which comes close to informing the respondents about the case they are to meet. This paragraph is amenable to being struck out.
Equitable estoppel
Paragraphs 24 to 26 of the PASOC relate to an alleged representation made to the applicant in or around early 2001 by the then Honorary Treasurer of Adass, Joseph Heimlich. The representation was allegedly made in the context of a discussion about changes to the applicant’s remuneration, whereby it was proposed that 50% of his future wages would be paid to him in cash or cheque each fortnight and the other 50% would be applied to a credit card, with superannuation contributions to be paid in respect of the cash component only. In the course of that discussion Mr Heimlich is alleged to have told the applicant words to the effect “you will be better off, we will be better off, and we will all be better off” (the Representation).
The applicant asserts that the Representation was made by Mr Heimlich on behalf of Adass, that he relied on it and then continued to work for Adass believing he would be better off, but in doing so he suffered detriment (because from 2001 superannuation was only paid on the cash component of his salary).
The respondents contend that paragraphs [24] to [26] are amenable to be struck out for several reasons. First, the respondents contend that a claim of estoppel by alleged misrepresentation can only be made in respect of conduct by a named respondent. Secondly, they submit that such a claim can only be made in respect of conduct which occurred within the six-year limitation period commencing on 23 December 2015. Thirdly, they contend that the allegation is not even pleaded in the form of a material fact.
The applicant’s submissions address two of these concerns. The applicant submits and I accept that the Representation has been properly pleaded as material fact. The “Representation” is a defined term and is referable to the particulars at paragraph 10(c). It is in my opinion sufficiently stated for the respondents to know what the applicant is referring to and for the respondents to readily comprehend paragraph 24.
As to the limitation period, the applicant says that the respondent’s submission is misconceived because equity will not apply a statutory bar where reliance on it would be unconscionable in the circumstances. Citing Meagher JA of the New South Wales Court of Appeal in Gerace v Auzhair Supplies Pty Ltd (2014) 87 NSWLR 435, the applicant submits that equity may decline to permit a defendant to rely upon a statutory bar where there has been fraudulent conduct or active concealment of a right of action or where there is “a consciousness on the part of the defendant that what is being done is wrong or that to take advantage of a particular situation involves wrongdoing”[22].
[22] Gerace v Auzhair Supplies Pty Ltd (2014) 87 NSWLR 435 at [70]
While I accept the correctness of that proposition, if the statutory bar is to be circumvented paragraphs 24 to 26 should (but do not) plead fraudulent conduct or active concealment or a consciousness on the part of the respondents that they have taken advantage of a particular situation involving wrongdoing.
But more to the point, the equitable estoppel claim does not identify any conduct of any of the respondents which gives rise to a cause of action. The claim in equitable estoppel does not assert a connection between the current respondents and the Representation made by Mr Heimlich in or around 2001. True it is that paragraph 24 asserts that the Representation was made by Mr Heimlich “on behalf of Adass”, but that in and of itself does not put the respondents on notice as to how the representation gives rise to an equitable remedy against them. The pleading does not allege that the current named respondents are bound by the Representation nor does it plead the basis of any relief sought against them. In their current form paragraphs 24 to 26 of the PASOC do not plead a complete cause of action against the respondents and for that reason they are amenable to being struck out.
Leave Entitlements
Paragraphs 27 and 30 deal with the issue of the applicant’s leave entitlements, however those paragraphs fall short of pleading a complete cause of action.
Paragraph 27 is confusing. It cross-references to paragraph 15 (an allegation that the trustees of Adass from time to time in breach of the FW Act have not made or kept appropriate records), paragraph 16 (an allegation that the trustees of Adass from time to time in breach of the FW Act have made or kept records which are misleading) and paragraph 17 (an allegation that the trustees of Adass from time to time in breach of the FW Act failed to provide payslips to the applicant) and then asserts that since September 1984 the applicant has taken 186 days of annual leave. As discussed earlier, paragraphs 15, 16 and 17 suffer from their own difficulties and their relevance to a plea that the applicant has taken a certain number of days’ annual leave since September 1984 is entirely unclear. It is difficult to see how the respondents could plead to the paragraph.
Paragraphs 28 and 29 are similarly confusing and make no allegation to which the respondents can plead. At paragraph 28 the applicant alleges that during his employment he worked on public holidays. But this allegation is confused by its connection back to paragraphs 15 to 17 and its reference to paragraph 24 (which deals with the Representation made by Mr Heimlich in or around 2001). Paragraph 29 alleges that the applicant did not take any long service leave during his employment, but again it is confused by its references to paragraphs 15 to 17 and 24.
The allegation at paragraph 30 that “The applicant has requested that the respondents indicate the amount of such personal, annual and long service leave accrued to him and the respondents have failed, neglected and/or refused to so indicate” does not give rise to a cause of action or, if it does, the cause of action is not properly identified. I note that the applicant seeks a declaration as to the quantum of superannuation, and personal, annual and long service leave, owing to him but the basis for this relief remains unclear.
Money paid to the applicant
At paragraph 31 the applicant alleges that at all material times since at least 23 December 2015 (being the date which is 6 years prior to the issue of the proceedings) the respondents have been in debt to the applicant.
The plea of a debt owed to the applicant by the respondents is not particularised, a deficiency which gives rise to legitimate concern on their part. The applicant does not plead the material facts giving rise to the assertion of debt. Paragraph 31 is a bare plea of debt which, in the absence of particulars, is confusing and uncertain. The pleading does not identify the nature or quantum of the debt or its legal and factual source nor how that debt attaches to the respondents. It may be that particulars can cure these deficiencies but the respondents should not be required to plead to the allegation in its current form.
I accept the applicant’s submission that his ability to provide particulars may be compromised by the absence of pay slips and other pay records and an alleged failure by the respondents to respond to requests for relevant records and information. That difficulty may excuse the applicant from precise quantification of the debt, but not from the requirement to plead the material facts necessary to support the assertion that a debt exists.
Paragraph 32 in its current form is also confusing and incomplete. The allegation is that money paid to the applicant was not paid with reference to specific accruals of wages. The “Money” referred to in the paragraph is not defined or identifiable, nor does the paragraph identify by whom that Money was paid. Is it a reference to any money paid to the applicant by the respondents or any money paid by any of the trustees for the time being of Adass?
Paragraph 33 then contends that all monies paid “by Adass” to the applicant are payments that are presumed to have been applied against “the oldest debt owing to the applicant by Adass”. The premise of this paragraph is that there are debts owing to the applicant “by Adass” (cf. para 31 which asserts a debt owed by the respondents). The implication is that by reason of the process described in paragraph 33, namely all payments made to the applicant being applied to the oldest debt, a debt existed as at 23 December 2015 for which the respondents are liable. What is not clearly pleaded is how the respondents are said to be liable for the debt owed by Adass.
The applicant submits that the foundation for the debt claim is the “first in, first out” rule established in Clayton’s Case[23] whereby, in the absence of a contrary intention, payments are presumed to be appropriated to debts in the order in which the debts are incurred. The application of this rule in an Australian employment law context is novel but that is a matter for trial.
[23] Devaynes v Noble (1816) 35 ER 781
The Court is to determine this application within the four corners of the pleading. The detail of counsel’s written and oral submissions made in support of the debt claim are not reflected in the pleading, which in its current form is deficient.
Illegality, fraud on the revenue and propriety consequences
Paragraphs 34 to 36 of the PASOC contend that the pay arrangements which attended the applicant’s employment were illegal against public policy and/or frauds on the applicant as employee and on the revenue.
These paragraphs set up a complex and serious claim of apparent fraud giving rise to a constructive trust. The claim appears to centre on the alleged illegality of or the fraudulent conduct which resulted in the making of the so-called Net Wage Only term (i.e. the arrangement whereby the applicant’s remuneration would be calculated and paid to him on a net basis as described in paragraph 22) and the 2001 Changes (the arrangement whereby payments to the applicant were split between a wages component and a credit card component).
Paragraph 34 makes the bare assertion that the Net Wage Only term and the 2001 Changes were illegal and/or fraudulent. The particulars to paragraph 34 explain what were schemes designed to minimise the total payment cost to the respondents, and their predecessor trustees, of employing the applicant whilst depriving him of certain benefits and depriving the revenue of income tax. The particulars describe the 2001 Changes as being false and designed to evade the incidence of fringe benefits tax on the respondents and their predecessors as employers. In the particulars the applicant alleges that the knowledge and intent of the respondents in respect of the fraud is imputed to them by reason of the knowledge of Joel Friedman (a senior member of the Congregation) “as set out in the particulars to paragraph 1(b)”, the knowledge of Joseph Heimlich “as set out in paragraph 10” and the knowledge of the (proposed) fourth respondent (Mr Koppel, who has been a trustee of Adass since 1992).
By paragraph 35, the applicant pleads that by reason of the said illegality and frauds, the “trustees from time to time” hold the Adass assets on constructive trust for the applicant in respect of the savings they have wrongfully made by not paying him a gross salary and by not paying superannuation on the half of the gross salary, which was wrongly treated as an exempt fringe benefit. By paragraph 36, the applicant alleges that the respondents are therefore liable to account to the applicant as beneficiary of the said constructive trust for the said savings and any accretions thereto.
The applicant’s counsel explains in written and oral submissions that the claim is properly made against the current trustees as they are the custodians of the Adass trust property. The case at trial will be that the trust property which vested in the respondents when they came to office as trustees in 2016 (or in 1992 in the case of the proposed fourth respondent, Mr Koppel) was already impressed with a constructive trust arising from the illegal or fraudulent conduct of their predecessors. It is submitted that the fraudulent conduct of former trustees in the conduct of the trust business binds successor trustees in the same way that the act of one partner binds his/her fellow partners[24]. The applicant proposes to establish that even if initially ignorant of this conduct, the respondents have nonetheless continued the wrongdoing first unconsciously but, since at least 26 January 2021, with notice[25]. The applicant’s case at trial will be that any ill-gotten gains are held on constructive trust for him as the victim of the fraud.
[24] Applicant’s written submissions at [38]
[25] Applicant’s written submissions at [35]
The respondents object to the form of pleading such a serious allegation. First, they object to a pleading which is based on alleged conduct, not of the respondents, but of other persons. Secondly, insofar as the allegations of fraud or illegality are directly or indirectly aimed at the respondents or they are alleged to be complicit in same, the respondents say that the elements of the alleged fraud and their knowledge thereof should be squarely and fairly pleaded as material facts and not buried in particulars. Thirdly, they contend that the claim is apparently based on an alleged fraud to which the applicant was himself a party and beneficiary. Finally, the respondents submit that the claim is time-barred insofar as it is based on alleged conduct which pre-dates 23 December 2015.
The claim is complex, based on very serious allegations and in an employment case unusual, but on the basis of written and oral submissions I do not regard it as untenable. However, notwithstanding the eloquence of counsel’s explanation as to how the claim will be advanced at trial, the pleading does not do the job of putting the respondents on notice of the case they are to defend.
Statutory limitations and any alleged involvement of the applicant in the conduct are matters for a defence. But it is the pleading of the fraud and illegality and the respondents’ alleged involvement, complicity, knowledge or accountability which gives rise to legitimate objection.
In my view the respondents are correct to require that the elements of the alleged fraud and their knowledge thereof should be squarely and fairly pleaded as material facts. If it is to be alleged that the conduct of others in the conduct of the Adass business is binding on current trustees, that should be pleaded and particularised. As I have remarked frequently in these reasons, the pleading must engage the respondents directly and unambiguously. The use of language such as “the trustees from time to time” (e.g. in para 35) which depending on context might or might not include the respondents only tends to confuse matters.
Conclusion
The PASOC suffers from numerous and significant pleading deficiencies. If the PASOC were filed and objections raised I would find that numerous paragraphs would be amenable to being struck out for the reasons I have given.
It is not appropriate for leave to be given to file a defective pleading unless it can be cured by simple amendment or the provision of further particulars. The PASOC is not of that ilk. It is a complex pleading which cannot go forward in its current form. The application for leave to file the PASOC is refused.
While I am not prepared to grant leave for the PASOC to be filed, I am of the view that the applicant should be afforded a further opportunity to craft an acceptable statement of claim. The deficiencies in the pleading should not deprive the applicant an opportunity to bring a case. While at a high level some of the claims advanced by the applicant appear novel or ambitious, I do not presently regard any of them as being unarguable if pleaded correctly and in a manner which affords the respondents an opportunity to plead a defence.
It is regrettable that this litigation remains caught in a vacuum of pleading contests. The situation in which the applicant finds himself is possibly not all of his own making and I accept that his inability to particularise some matters may be due to the absence or inaccessibility of relevant records. It is the expectation of the Court, consistent with the overarching objective of civil procedure and practice, that the respondents will provide documents and offer concessions where reasonable requests are made.
However, while I am not unsympathetic to the applicant’s conundrum, the respondents are entitled to know how the case is put against them. It remains for the applicant to plead his case in a manner which does not give rise to embarrassment. The respondents are entitled to demand precision in a case which alleges fraud or seeks the imposition of civil penalties for alleged contraventions of the FW Act. Any future pleading must be precise in its language and internally coherent.
The applicant should file and serve any amended statement of claim no later than 28 days after the publication of my orders. A directions hearing will then be held shortly thereafter to determine the future course of these proceedings.
Costs
The respondents seek their costs of the application. The respondents have been successful in opposing the application for leave to file the PASOC. The respondents submit that the applicant engaged in an unreasonable act or omission, within the meaning of s 570(2)(b) of the FW Act, by failing to prepare a pleading which does not address the deficiencies which had been clearly raised in correspondence between the parties’ solicitors. It is submitted that the applicant’s act or omission has caused the respondents to incur the costs of opposing the application for leave.
There is some merit in the respondents’ submission. This is the second occasion on which the respondents have successfully opposed the applicant’s statement of claim. I accept that the respondents’ solicitors telegraphed their objections in an attempt to avoid ongoing interlocutory contests.
The Court’s power to award costs to a party in a FW Act matter is framed by the policy considerations which underpin a system which does not unduly discourage litigants from accessing justice. The policy behind s 570 is to ensure that the spectre of costs being awarded against an unsuccessful litigant does not loom so large in the mind of potential applicants that those with genuine grievances and arguable evidentiary and legal bases for them are put off commencing or continuing proceedings[26]. For that reason, the threshold set by s 570(2) is high and the Court’s discretion to award costs is to be exercised with caution and in a clear case[27], in part to avoid discouraging parties from completely and robustly pursuing claims or in equally robustly pursuing their defence of such claims[28].
[26] Trustee for the MTGI Trust v Johnston (No 2) [2016] FCAFC 190 at [8]
[27] Saxena v PPF Asset Management Ltd [2011] FCA 395 at [5]-[6]
[28] Richens v Commonwealth of Australia (as represented by the Commissioner of the Australian Federal Police) [2018] FCA 1276 at [23] per Mortimer J
The controversy between the parties in this case, even on the face of a flawed pleading, sits against a lengthy and unique background narrative. It is a controversy which by its nature is burdened with factual and legal complexity which is conducive to the very pleading disputes which have unfolded. In the context of this litigation I do not regard the applicant’s conduct on this occasion as so unreasonable as to warrant an order for costs.
I certify that the preceding one hundred and fifteen (115) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Forbes. Associate:
Dated: 10 March 2023
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