Pruessner v Caelli Constructions (Vic) Pty Ltd (No 2)

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FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Pruessner v Caelli Constructions (Vic) Pty Ltd (No 2) [2022] FedCFamC2G 697

File number(s): MLG 4184 of 2020
Judgment of: JUDGE FORBES
Date of judgment: 29 August 2022 
Catchwords: INDUSTRIAL LAW – FAIR WORK – Application for costs under s 570(2) Fair Work Act 2009 (Cth) – whether substantive application instituted without reasonable cause – whether rejection of Calderbank offer unreasonable act – application for costs dismissed
Legislation: Fair Work Act 2009 (Cth), s 570
Cases cited:

Australian Securities and Investment Commission v Mitchell (No 4) [2021] FCA 1387

Calderbank v Calderbank [1975] 3 All ER 333

Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574, 582 

Construction, Forestry, Maritime,  Mining  and Energy  Union v  Personnel Contracting Pty Ltd   [ 2022]  HCA  1

McDonald v Parnell Laboratories (Aust) (No 2) (2007) FCR 591

Melbourne Stadiums Ltd v Sautner (2016) 229 FCR 221; [2015] FCAFC 20 at [166]

PIA Mortgage Services Pty Ltd v King(No 2)[2020] FCAFC 53

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

Stratton Finance Pty Ltd v Webb [2014] FCAFC 110

Trustee for the MTGI Trust v Johnston (No 2) [2016] FCAFC 190

ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2

Division: Division 2 General Federal Law
Number of paragraphs: 79
Date of hearing: 6 May 2022
Place: Melbourne
Counsel for the Applicant: Mr Howard
Solicitor for the Applicant: Holding Redlich
Counsel for the Respondent: Mr Fetter
Solicitor for the Respondent: Davies Lawyers

ORDERS

MLG 4184 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:

PETER PRUESSNER

Applicant
AND:

CAELLI CONSTRUCTIONS (VIC) PTY LTD

Respondent

ORDER MADE BY:

JUDGE FORBES

DATE OF ORDER:

29 AUGUST 2022

THE COURT ORDERS THAT:

1.The Respondent’s Application in a Proceeding dated 1 April 2022 seeking that its costs of the proceeding be paid by the Applicant (the Costs application) is dismissed.

2.The parties are to bear their own costs of the proceeding, including the costs application.

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

  1. On 25 March 2022 his Honour Judge McNab (as he then was) dismissed an application by the applicant, Mr Peter Pruessner, who had made various claims against the respondent, Caelli Constructions (Vic) Pty Ltd (CC), which were dependent upon a finding that


    Mr Pruessner had been employed by CC from about August 2012 until about 15 July 2020.

  2. As…

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Details
Case
[2022] FedCFamC2G 697
Decision Date

CaseChat Overview and Summary

In the case of Pruessner v Caelli Constructions (Vic) Pty Ltd (No 2), the applicant, Mr Pruessner, brought claims for unpaid superannuation, long service leave, redundancy payments, and notice of termination against CC, contending that an oral employment contract was formed in August 2012. CC denied the existence of such a contract, arguing that Mr Pruessner was an independent contractor through his company, Pruessner Holdings Pty Ltd (PH). The primary judge found that while there was a business relationship between PH and CC, no employment contract was established between Mr Pruessner and CC. Instead, the relationship was one of contractor and client, with PH providing services to CC. The decision hinged on the interpretation of the nature of the working relationship and the applicability of the "totality of relationship" approach in determining employment status.

The central legal issue was whether the applicant's claims should be dismissed due to the absence of an employment contract, focusing on the distinction between an employee and an independent contractor. The applicant argued that the totality of the working relationship and the exclusive performance of work for CC should lead to the conclusion that he was an employee. However, the court, following High Court decisions in ZG Operations Australia Pty Ltd v Jamsek and Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting, held that the "totality of relationship" approach was not determinative in the absence of an explicit agreement that Mr Pruessner would be employed by CC. The court found that the business relationship between PH and CC, as evidenced by invoicing and tax filings, supported the conclusion that Mr Pruessner was not an employee of CC.

The court concluded that the applicant's claims were not without reasonable cause or frivolous, despite the defence's success at trial. The applicant's reliance on the "totality of relationship" approach was considered arguable, and the court emphasized the importance of access to justice for those with genuine grievances. The court found no grounds to order the applicant to pay the respondent's costs, as the proceeding was not initiated without reasonable cause. Each party was ordered to bear their own costs.

No order was made as to costs between the parties.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Having considered the parties’ written submissions and having heard oral submissions from trial counsel on 6 May 2022, I have decided that no order for costs should be made and that the parties should bear their own costs of the proceeding. My reasons are set out below.BACKGROUND In the substantive proceeding, the applicant made various claims against CC for employment-related payments and entitlements, including unpaid superannuation, unpaid long service leave, redundancy payments and payments in respect of notice of termination. One way or another, all the claims were incidents of a purported employment relationship between the two parties. It was alleged that an oral employment contract was made in August 2012 when Mr Pruessner was asked by Mr Paul Caelli to work at CC as a full-time formwork supervisor. CC denied such an employment contract was made or that a relationship of employment was established by the parties’ conduct over subsequent years. In his reasons for judgement, his Honour found that the evidence did not support a finding of any agreement as at August 2012 that Mr Pruessner would work as an employee of CC[1]. Rather, the Court found that Pruessner Holdings Pty Ltd (PH), a company owned and controlled by the applicant, had agreed to supply services to CC, with that agreement having been made between Mr Pruessner as a director and shareholder of PH and Mr Paul Caelli on behalf of CC[2]. The Court found that a business was being conducted by PH[3] evidenced by, inter alia:(a)the rendering of invoices to CC by PH;(b)the filing of tax returns by PH which accounted for the income received based on the invoices rendered by PH to CC; and(c)that PH paid superannuation contributions on behalf of the applicant in a number of years. [1] reasons for judgement [35], [45][2] reasons at [34][3] reasons at [37], [43] His Honour observed that much of the evidence of the applicant was directed at seeking to persuade the Court that it should look past the structures established to supply labour and the rendering of invoices by PH. The applicant contended that the Court should instead focus on the totality and all other features of the performance of work by the applicant and that this would support a finding that the applicant was in fact an employee of CC. However, the “totality” approach contended for by the applicant did not find favour with his Honour who considered himself bound to follow[4] the approach taken by the High Court in ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2 (Jamsek) and Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [ 2022] HCA 1 (Personnel Contracting) . It is to be noted that both Jamsek and Personnel Contracting were decided after the case was argued at trial in November 2021.[4] reasons at [42]-[49] Although the Court acknowledged that there were matters that may point to an employment relationship, in particular in the way that work was performed by the applicant and that he worked exclusively at CC for the period, it was clear that no agreement was made that the applicant would be employed by CC. Moreover, the parties at all times proceeded on the basis that the applicant was not an employee of CC because it was agreed that PH would render invoices which accounted for the applicant’s labour[5]. The evidence supported a finding that the applicant was at all material times working for PH, whether providing services as a director for which he received director’s fees or as an employee for which he received wages[6].[5] reasons at [50][6] reasons at [58]

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Finally, and it is unnecessary to rehearse this submission again, but the applicant maintains that he objectively had good reason to consider that he had a reasonable to strong case on the law as it stood at the time.CONSIDERATION Despite the overwhelming success of its defence at trial, the respondent has not persuaded me that the applicant should be ordered to pay its costs of the proceeding. I do not find that the proceeding was commenced without reasonable cause. The test of course is not whether the applicant wins or loses his case but rather whether there was a proper legal basis to support a case which was arguable and with some prospect of success. The ultimate failure of the proceeding is not determinative. I accept that parties should be closely held to their pleading, particularly in matters which carry the sanction of civil penalties. However, on a fair reading of the Statement of Claim and having regard to how the evidence was prepared and the case was run and closed at trial, it would have been apparent to the respondent that the applicant was relying upon a “totality of relationship” or “indicia” thesis and that the pleaded interaction between Mr Pruessner and Paul Caelli in August 2012 was but a piece of the jigsaw. On my assessment and having regard to the observations of his Honour Judge McNab, the case was never premised on a single conversation or the label attached to the relationship in that conversation. The question of whether the applicant instituted proceedings without reasonable cause is to be considered at the time the proceedings were instituted. I accept the applicant’s submission that at the relevant time, in the absence of a written contract, it was open to rely on appellate authority to support the “indicia” approach as a means of determining the ultimate question. True it is that the granting of special leave in Jamsek and Personnel Contracting should have alerted the applicant and his lawyers to the risk that that approach might ultimately be proven incorrect, but the presence of that risk is insufficient to characterise the claim as being without reasonable cause. Things might have turned out differently in the High Court and the respondent might not have enjoyed such an emphatic victory. I should also add that the indicia approach has not been completely consigned to the annuls of history and that it may still serve to inform the character of an ambiguous relationship in the absence of a written contract. I am cognisant of the policy underpinnings of s 570 including that access to justice should be available to those with a genuine grievance and an arguable evidentiary and legal basis for their claim. Costs do not follow the event in FW Act matters and a party can only be ordered to pay the costs of another where the Court is satisfied as to one or more of the criterion in s 570(2). I am not satisfied that the application was initiated without reasonable cause. Accordingly, the Court’s power to award costs for that reason is not enlivened.