Seyer v Gatwood Management Pty Ltd (No 5)
[2023] FedCFamC2G 654
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Seyer v Gatwood Management Pty Ltd (No 5) [2023] FedCFamC2G 654
File number: SYG 515 of 2022 Judgment of: JUDGE D HUMPHREYS Date of judgment: 17 April 2023 Catchwords: INDUSTRIAL LAW – Fair Work – orders sought for a litigation guardian to be appointed – orders sought for second respondent’s legal representatives to withdraw from the proceedings – the application is refused Legislation: Fair Work Act 2009 (Cth) ss 117(1), 117(2), 92
Federal Circuit Family Court of Australia Act 2021 (Cth) ss 5, 190, 191
Corporations Act 2001 (Cth) s 436A
Federal Circuit and Family Court of Australia Division 2 General Federal Law Rules 1994 (Cth) r 1.04, 9.03, 11.07, 11.10
Cases cited: AON Risk Services Australia Ltd v Australian National University [2009] 239 CLR 175
Burnett v Browne (No 2) [2021] FCA 373
Masterman-Lister v Brutton & Co [2003] 1 WLR 1511
Secretary, Department of Health & Southern Cross Directories Pty Limited [2021] FCA 1592
Vishniakov v Lay (2019) 58 VR 375
Division: Division 2 General Federal Law Number of paragraphs: 46 Date of last submission/s: 17 April 2023 Date of hearing: 17 April 2023 Place: Parramatta Counsel for the Applicant: Ms Doust Solicitor for the Applicant: AEN Legal Counsel for the Respondents: Mr Watts Solicitor for the Respondents: Piper Alderman ORDERS
SYG 515 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: KARL SEYER
Applicant
AND: GATWOOD MANAGEMENT PTY LTD ABN 59 147 501 835
First Respondent
RABI MALASS
Second Respondent
order made by:
JUDGE D HUMPHREYS
DATE OF ORDER:
17 APRIL 2023
THE COURT ORDERS THAT:
1.The application for a Litigation Guardian to be appointed for the second respondent be refused.
2.The application for adjournment of the Final Hearing be refused.
3.The application for leave for the second respondent’s legal representative to withdraw from the proceedings be refused.
4.Costs be reserved.
THE COURT NOTES THAT:
5.The second respondent’s legal representative may be granted leave to withdraw from the proceedings following the giving of the second respondent’s evidence.
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
(As revised from the transcript)
JUDGE D HUMPHREYS
INTRODUCTION
This judgment concerns an interlocutory application which has been made in the proceedings which seeks, in essence, three matters: first of all, that a Litigation Guardian be appointed for the second respondent, Mr Rabi Malass; secondly, that the hearing which is listed to commence on 19 April, some two days hence, be adjourned to a date to be fixed; and thirdly, that the Solicitor who is currently instructed in the matter, Mr Joseph Murphy of Piper Alderman, be allowed leave to withdraw from the proceedings, notwithstanding that they are within seven days of the hearing date.
The substantive matter concerns an application by Mr Seyer for remedies under the Fair Work Act 2009 (Cth) (“the Act”), which are set out in a statement of - an amended Statement of Claim that was filed on 6 April 2022.
Mr Malass was the Director of Gatwood Management Pty Limited, which employed Mr Seyer in relation to his role, as an Estimator. The orders sought, are that there were contraventions of ss 117(1), 117(2), and 92 of the Act that relate to termination of employment without written notice being given, failure to pay or provide a minimum period of notice and failure to pay accrued leave on time at termination.
There are further allegations of a contravention of failing to provide payslips, and the outcomes sought by Mr Seyer, include the payment of compensation together with the imposition of pecuniary penalties. The Court notes at this particular point of time that Gatwood Management Pty Limited has been placed in administration. As a result, the matter will proceed, if it is to proceed, in relation to Mr Malass only, in his capacity as a Director and on the basis of his involvement in the alleged breaches.
The matter has had an unfortunate history in that it is set down for a special fixture. That means that it is the only matter listed for that day. The consequence of an adjournment would be that, first of all, there would be consequences to the applicant in that he would lose his hearing date.
It is the unfortunate situation that in this Court, there is far more work than we can deal with in a reasonable period of time. There are some 16,000 migration applications currently before the Court. It is a situation also whereby, in relation to migration matters, the applicants in such matters have no particular interest in having their matters brought on at an early point of time, and indeed, they are quite happy for them to go on for a considerable period of time because that extends the period of time that they would stay in Australia if it was a situation whereby the Court found against them.
The Court is of a view that ordinary Australians who have Fair Work matters should have the matters dealt with promptly, and indeed the Court tends to give such matters priority over migration matters in order for that to occur. Notwithstanding that, when this matter commenced, it has now taken one year to be in a situation whereby it was ready for a hearing.
The Originating Application having been filed on 6 April 2022. The preparation of the matter for hearing has been less than satisfactory. At page 175 of the Court Book, which is an Affidavit of Mr Malass sworn on 15 March 2023, at paragraph 91, he sets out in some detail the failures and defaults that have occurred in relation to the proceeding.
These include;
a) a failure of the first and second respondents to appear at a Directions Hearing on 20 May 2022,
b) a failure of the first respondent, that being Gatwood, to appear at a hearing before a registrar in relation to objections to subpoenas on 8 February 2023,
c) a failure by the first and second respondents to file Notices of Address for Service upon the withdrawal of the previous Solicitors,
d) a failure by the first and second respondents to file any Affidavit upon which they propose to rely by 24 February 2023,
e) a failure of the first and second respondents to appear before the Court at a Directions Hearing on 3 March 2023, and
f) a failure to provide a proof of debt.
It is interesting to note that in an email sent by Mr Malass to Mr Seyer which is at Court book page 135, the email being of Sunday 26 September 2021, Mr Seyer ended his email with the following:
This is going to be a big deal for me, and what you’ve said to me and how you sent messages, I will make sure everyone understands the next time someone decides to do something like this to me, it will cost them a lot of time and money to move away from all of this.
One could take that – and there’s a reasonable inference – to suggest that Mr Malass has been taking every opportunity to delay, to filibuster, to obfuscate and to otherwise inhibit the preparation of this matter for hearing, which has been evidenced by the failure to comply with Court directions and the application itself which the Court is hearing today.
It is convenient for the Court to deal firstly, with the application for the appointment of a Litigation Guardian. A Litigation Guardian is dealt with in the Federal Circuit and Family Court of Australia Division 2 General Federal Law Rules 1994 (Cth) (“the Rules”) at r 11.07, which is headed: Person who needs a Litigation Guardian. For the purpose of these rules:
…a person needs a Litigation Guardian in relation to a proceeding if the person does not understand the nature and possible consequences of the proceeding or is not capable of adequately conducting, or giving adequate instruction for the conduct of, the proceeding. Unless the Court otherwise orders, a minor in a proceeding is taken to need a Litigation Guardian in relation to the proceeding.
At r 11.10 of the Rules:
The Court may, at the request of a party or of its own initiative, appoint or remove a Litigation Guardian.
Whilst the request has been made of the Court to appoint a Litigation Guardian, no substantive person has been put forward who would act as a Litigation Guardian in the proceedings. Of necessity, then, if the Court were to order the appointment of a Litigation Guardian, the practical effect of that would be that the proceedings would need to be adjourned.
In relation to the relevant case law in relation to the appointment of a Litigation Guardian, the Court has been taken to Burnett v Browne (No 2) [2021] FCA 373 which is a judgment of O’Callaghan J. At [3], O’Callaghan J quoted with approval, a decision of Derham J in Vishniakov v Lay (2019) 58 VR 375, which sets out a number of propositions which I will not repeat in totality but I will excerpt from them. They are as follows:
a) There is a presumption that everybody of full age has the mental capacity to manage their own affairs, including the commencement and defence of legal proceedings. The burden of proving the contrary rests with those asserting incapacity.
c) The authority of a lawyer to represent a client depends on the client having a requisite mental capacity. A lawyer has a duty of care not to coerce a client into a settlement or take action on instructions from a client to settle a case when they know or should know that the client lacked the mental capacity to give instructions, or could not be reasonably satisfied the client had that capacity.
d) The commencement of proceedings on behalf of a client implies that Solicitor, as an Officer of the Court, is reasonably satisfied that the client has that capacity. It is therefore the Solicitor’s responsibility to be satisfied the client has the mental capacity to participate in the proceeding and instruct. If the issue cannot be resolved to the reasonable satisfaction of the Solicitor, they must raise the issue with the Court. It is the Court which has the final responsibility to determine the issue.
i) An application for the appointment of a Litigation Guardian for a person is very serious, because it deprives a person of their fundamental civil rights under the common law, most especially the ‘right to sue or defend in his or her own name and compromise in litigation without the approval of a Court’: see Masterman-Lister v Brutton & Co [2003] 1 WLR 1511, 1520 at [17].
j) There is no universal test for determining whether or not a person is capable of managing his or her affairs. Lack of capacity is usually denoted by a person’s inability to understand the nature of an event or transaction when it is explained.
k) The words “in relation to the proceeding” in r 15.01, are important because they focus on the person’s ability to bring or defend a particular proceeding rather than on whether the person is able to manage his or her affairs generally or in relation to some other transaction.
l) The question of incapacity in relation to litigation must be examined against the facts and subject matter of the particular litigation, the number and complexity of the issues involved, the identity, number and interests of other parties, particularly opposing parties. A person can have requisite capacity for one proceeding and lack it for another.
q) The means by which the Court will determine whether a Litigation Guardian should be appointed, varies from case to case. It is prudent but not essential that the decision whether a party lacks the relevant capacity be based on a medical assessment or the assessment of another appropriately qualified expert. However, the Court is entitled to rely on its own observation to make an assessment about the capacity of a party or rely on other evidence, including the assessments of legal practitioners. This is so, particularly where:
i.There is no medical evidence available or a party refuses to submit to an expert assessment and,
ii.the lack of capacity is so clear that medical evidence is not called for.
At paragraph 41 of the same decision, it was stated:
[41] In an application such as this, the issue of whether an applicant is currently capable of managing their own affairs in a particular proceeding is not to be equated with their ability to make prudent decisions, nor does it follow, merely because an applicant lacks insight to reflect or is fixated or obsessed with the litigation, that they are, without more, incapable of managing their own affairs in the proceeding.
Secretary, Department of Health & Southern Cross Directories Pty Limited [2021] FCA 1592 at [21] states that, in the absence of medical opinion, the Court needs to look at what other evidence it has before it that an applicant is incapable of managing their own affairs, noting that a person under a legal disability means - is a person who, because of mental disability or illness, is not capable of managing the person’s own affairs in a proceeding, and, of course, there being a presumption that a person is competent unless proved otherwise.
In terms of the evidence that is before the Court, there is no medical evidence. The only evidence that is before the Court is an Affidavit of the applicant’s Solicitor, Mr Joseph Murphy. Mr Murphy asserts, based on his experience, that he had difficulties in taking instructions from Mr Malass. He observed that Mr Malass became emotional. At one stage, he broke down in tears. He states:
“We were unable to gain instructions from him.”
At paragraph 23 of his Affidavit, Mr Murphy stated:
I do not consider Mr Malass will be competent on 19 and 20 April 2023 to provide me with instructions to conduct the substantive hearing. The above circumstances present real difficulties in continuing to act for Mr Malass. I would prefer to remain involved with the matter with a view primarily to seeing if the patter can be resolved but otherwise to assist the Court generally. The application in the proceeding proposes as one option that steps should be taken to identify a Litigation Guardian, that that would assist him in relation to instructions. It won’t resolve the fitness to give evidence.
Mr Murphy says that because he is not a medical practitioner, he can express no view about that. Attached to his Affidavit, there are various emails that went backwards and forwards in relation to the obtaining of evidence.
Essentially, what the Court is left with, in terms of the evidence that is before it, is the opinion from Mr Murphy who is not a medical practitioner. As against that, there is evidence before the Court first of all that, the applicant was able to, as late as 23 March 2023, provide detailed instructions as to his version of events which included the explanations as to why there was no compliance with the Court orders. The Court has also been taken to a report by O’Brien Palmer, insolvency and business advisor, as the administrator of that company which is contained at page 276 of the Court Book.
That report is dated 3 April 2023. It records that apparently on 7 March 2023, Mr Malass was able to appoint Daniel Frisken as Administrator of the company pursuant to s 436A(1) of the Corporations Act 2001 (Cth) (“the Corporations Act”) apparently without any difficulties. The Court also refers to a report prepared by the administrators which is dated 3 April 2023. At paragraph 6.4 of that, it records:
As advised above, the Director was issued with a Director penalty notice by the ATO in which the Director became personally liable for the company’s requirements and GST liabilities in the combines amount of $817,048.00. It is my understanding the Director will pay this amount in full as well as contributions proposed under the DOCA.
To the Courts way of thinking, that is significant evidence that the second respondent, Mr Malass, is capable of making decisions in relation to the litigation that is currently before the Court, given that there is no medical evidence, surprisingly, from the applicant’s treating practitioner as to his competency, nor is there any evidence from his treating Psychiatrist. The Court having rejected a proposed tender of evidence from his Psychologist, is in a situation where it does not believe that it can be satisfied as to the relevant standard that the applicant is incapable of instructing his solicitors in this particular litigation. While the Court is cognisant of the concerns that Mr Murphy has, the Court believes that they can be appropriately overcome.
The second respondent’s evidence-in-chief is already before the Court and appropriate care can be taken in relation to giving him appropriate breaks during any cross-examination together with ensuring that, perhaps, he is treated carefully, to ensure that any distress that may be occasioned to him as a result of giving evidence can be minimised. Having said that, it must be noted that litigation is of its own case and cause stressful. Any person who gives evidence will likely be put under stress and that is normal. That of itself does not provide an excuse for a Litigation Guardian to be appointed. In the Court’s view, there is simply insufficient evidence, noting the presumption, noting the lack of evidence before the Court, other than Mr Murphy, for a Litigation Guardian to be appointed, and the Court refuses that application.
The next matter is whether or not the Court should adjourn the proceedings. The proceedings were set down for hearing on a tentative basis late in 2022. Those dates were confirmed at an earlier hearing this year. It was a situation whereby if the hearing dates were lost, it is likely that the matter will not get another hearing date until probably the end of the year. The Court has been taken to the decision of the Full Federal Court of Australia in Luck v Chief Executive Officer of Centrelink [2015] FCAFC 75. At [42] of that judgment which is of Collier, Griffiths and Mortimer JJ, the following is set out.
[42] In considering an application for an adjournment, issues particular to the parties and the circumstances of the case must be considered. The Court must also determine how a grant or refusal of adjournment will promote the overarching purpose of the civil practise and procedure provision governing the exercise of its jurisdiction, here in the appellate jurisdiction, including the objectives of section 37M(2) of the Federal Court of Australia Act to which we referred to earlier in summary form.
The Court notes that in terms of the Court and the provisions that it is required to adhere to, these are set out in s 191 of a Federal Circuit Family Court of Australia Act 2021 (Division 2) (Cth) (the FCFCOA Act”) which says:
(1) The parties to a civil proceeding before the Federal Circuit and Family Court of Australia (Division 2) must conduct the proceeding, including negotiations, for the settlement of the dispute to which the proceeding relates in a way that is consistent with the overarching purpose.
The overarching purpose is set out, in s 5 of the FCFCOA Act which reads as follows:
The objects of this Act are to ensure (A) to ensure that justice is delivered by the Federal Courts effectively and efficiently and (B) to provide for just outcomes and, in particular, in family law child assault proceedings.
The Court is asked to make sure that it deals with matters efficiently and effectively. Further, it is elaborated in r 1.04 of the Rules that the overarching purpose of the Rules as provided in
s 190 of the FCFCOA Act is to facilitate the just resolution of disputes according to law and as quickly, inexpensively, and efficiently as possible. The matter has been set down for some time. On behalf of Mr Malass, it is put to the Court that it should adjourn the proceedings to enable him to become in a better state of health and be able to properly instruct his Solicitor. It is said to the Court that in terms of the effects that might be occasioned to the applicant that if compensation is ordered, that can be addressed by the way of interest.
That makes no concession in relation to the efficient disposition of the matter in relation to if the Court was to find that there indeed were breaches to the payment of penalties. It also makes no concession in relation to the inherent cost that will be occasioned to the applicant through the proceedings being adjourned and the necessity for further preparation to be done and perhaps even further orders to be sought and together with directions. In the Court’s view, the Court has got to look at not just whether or not it is just for the second respondent, but whether or not it is just for the applicant. In AON Risk Services Australia Ltd v Australian National University [2009] 239 CLR 175 (“AON”), the plurality of the High Court recognised four matters which should, in the circumstances of a particular case, be taken account by a Court when exercising its discretion whether to grant an adjournment so as to allow for substantial amendments of the Statement of Claim.
In the Court’s view, that is similar to a situation here where the application for the hearing to be adjourned. They include the explanation for the adjournments sought, the parties’ choices to date in the litigation and the consequences of those choices, the detriment of the parties, and the detriment to other litigants. At AON, French CJ referred to the broader discretions that work in considering an adjournment application. At paragraph 5 where he said:
[5] In the proper exercise of the primary judge's discretion, the applications for adjournment and amendment were not to be considered solely by reference to whether any prejudice to Aon could be compensated by costs. Both the primary judge and the Court of Appeal should have taken into account that, whatever costs are ordered, there is an irreparable element of unfair prejudice in unnecessarily delaying proceedings. Moreover, the time of the court is a publicly funded resource. Inefficiencies in the use of that resource, arising from the vacation or adjournment of trials, are to be taken into account. So too is the need to maintain public confidence in the judicial system. Given its nature, the circumstances in which it was sought, and the lack of a satisfactory explanation for seeking it, the amendment to ANU's statement of claim should not have been allowed. The discretion of the primary judge miscarried.
Similar views were expressed at paragraph 93 of that decision. As the Court has indicated, there is no medical evidence before it that the applicant is in any way significantly unable to instruct his Solicitors and participate in the hearing. That being the case his evidence is on by way of Affidavit and he can seek some orders that might restrict cross-examination and the Court can take account of those. There is nothing before the Court which suggests that he is simply unable to give evidence and be subject to cross-examination. There is the opinion of Mr Murphy his Solicitor, but whilst the Court takes that into account, the Court does not believe that it can favour it over the lack of any substantive medical evidence that is before it.
Whilst this matter has not been before the Court for a particularly long period of time and there has not been a previous adjournment sought, the Court notes that the application for an adjournment was made at the 11th hour, that being on the Friday before the substantive hearing was to commence on the following Wednesday. There is some explanations sought to be given, that the applicant was unrepresented, that he managed to obtain fresh representation, and that it was on the basis of that representation that a view was taken that he had issues in providing proper instructions. Whilst it is not a long period of time compared to others, the situation is that if the Court adjourns this matter, it is not going to get a hearing until the end of the year. That is the reality. There will be significant cost to the applicant.
Further, it’s a situation whereby the Court, at this very late notice, would be most unlikely to be able to obtain additional work to fill in those two days – it is a special fixture hearing. It is not like in some cases where there are reserved matters listed. It is the only matter listed for those two days. Effectively, those two days would be lost. The Court is in a fortunate situation where it is almost up-to-date with judgments and there are no judgments that can be written to fill in those two days.
The Court is mindful that, the impact is not just on this applicant, but it is also on other applicants before the Court if it were to adjourn the matter, that their claims would be necessarily pushed back.
When the Court looks at the complexity of the litigation, it is relatively confined. There are only, it appears, to be two witnesses, that is, the applicant and, indeed, Mr Malass. The Court in the situation whereby it can take account of particular difficulties if they are put to me in relation to Mr Malass in considering whether or not I weigh his evidence, and I see that he will not be unduly prejudiced by being forced to go on.
The Court does not see how the impact of the litigation on the wellbeing of Mr Malass can outweigh the other considerations that I have before me about the need for this litigation to be taken to its conclusion, at least in relation to liability, noting, of course, that the applicant, Mr Seyer, in this matter, has a legitimate interest in having his litigation come to a conclusion, and that is in circumstances where, from what the Court can see at this particular moment in time, all necessary steps have been taken for the matter to be heard to conclusion, and that all relevant evidence is before me.
In the Court’s view, weighing up all of the circumstances, the need for the Court to be efficient while being just, it is not convinced that an application for an adjournment would be so unjust in relation to the respondent as to outweigh the need for this matter to be brought on for hearing and to be finalised insofar as it can on liability.
The Court has taken account of the evidence that is before it, so far as the medical evidence. The Court is satisfied that the particular litigation is not so complex that Mr Malass is incapable of giving some instructions, noting that as late as, apparently, earlier this month and late last month, he was more than capable of giving instructions in relation to complex matter. In the Court’s view, the application for an adjournment should be refused.
The last matter, is whether or not the Court should allow for the Solicitor in the matter, Mr Murphy, to be allowed to withdraw from the proceedings. The rules in relation to the withdrawal of Solicitors are set out in r 9.03 of the Rules. They state that:
A lawyer for a party may withdraw from the record by filing a notice of withdrawal in accordance with the approved form and having served the notice on each other party. However, a lawyer may not file or serve a notice of withdrawal without leave of the court unless the lawyer has, not less than seven days before filing the notice, served a notice with intention to withdraw on a party for whom the lawyer is acting.
Interestingly, in his Affidavit, which is exhibit 1 before the Court, at paragraph 24, Mr Murphy says as follows, whilst making some comments that the above circumstances would present real difficulties in continuing to act for Mr Malass, he goes on to state:
“However, I would prefer to remain involved in the matter with a view primarily to seeing if the matter can be resolved, but otherwise, to assist the Court generally.”
In the Court’s view, noting that concession, leave for him to withdraw, should be refused. Mr Murphy can continue to be before the Court. The fact of the matter is, as a solicitor, when you take on matters, there is an obligation to see those matters through. There are limited means by which one can withdraw from a matter. In certain circumstances, it may well result in a Solicitor not being paid for the work that they do, but to assist the Court, they will have to remain in the matter.
Given Mr Murphy’s concession that he would prefer to remain in the matter, noting that the Court is satisfied that he can obtain proper instructions because, notwithstanding his view, and it was put to me that Mr Malass doesn't have to give complete instructions and, in fact, Mr Murphy may even reject instructions that are given. What that will do, is enable the Court to have the benefit of the applicant being cross-examined and his evidence to be tested.
That is important to assist the Court in being able to come to a just outcome. It may well be that, after that takes place, the Court may allow Mr Murphy to withdraw. The Court notes that, but it seems that it would be unfair in relation to Mr Malass, to at least not have the opportunity for Mr Sayers’ evidence to be cross-examined, and then the Court can deal with it from there. The issues in this case are relatively simple, that is why it’s only listed for two days. So the application to withdraw is refused.
Mr Murphy should have been aware of the fact that there are issues in the matter. Had he been aware, he should have chosen, as a Solicitor can, not to accept the instructions. One can assist, one can explore a case, but you are under a professional responsibility, once you are in it, to only withdraw under proper circumstances. It is different for Counsel. They have a situation whereby they have to accept a brief if they’re available.
Mr Murphy is not. As a solicitor, he is free to choose to accept or reject briefs. Having accepted the brief in circumstances where it was clear, to use the euphemism it was a bit of a hospital pass, he went into the matter with open eyes. If that results in him incurring some expense for this he will have no opportunity to recover, then my answer to that is, so be it. The application is refused.
The matter will commence at 10:00 am on Wednesday morning.
I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment of Judge D Humphreys Associate:
Dated: 24 July 2023
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