Shorey v One Key Resources Pty Ltd

Case [2024] FCA 749

FEDERAL COURT OF AUSTRALIA

Shorey v One Key Resources Pty Ltd [2024] FCA 749

File number(s): NSD 448 of 2020
Judgment of: MURPHY J
Date of judgment: 9 July 2024
Catchwords: REPRESENTATIVE PROCEEDINGS - Practice and Procedure - application under s 33V of the Federal Court of Australia Act 1976 (Cth) for approval to discontinue representative proceeding - relevant principles regarding approval to discontinue - order under s 33V(1) and 33ZF that the limitation period starts to run again – discontinuance approved
Legislation:

Fair Work Act 2009 (Cth) ss 15A, 545A

Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 (Cth)

Federal Court of Australia Act 1976 (Cth) ss 33V, 33ZE, 33ZF

Federal Court Rules 2011 (Cth) r 26.12

Cases cited:

Turner v TESA Mining (NSW) Pty Ltd (No 2) [2022] FCA 435; 314 IR 214

WorkPac Pty Ltd v Rossato [2020] FCAFC 84; 278 FCR 179

WorkPac Pty Ltd v Rossato [2021] HCA 23; 271 CLR 456

WorkPac Pty Ltd v Skene [2018] FCAFC 131; 264 FCR 536

Division: Fair Work Division
Registry: New South Wales
National Practice Area: Employment and Industrial Relations
Number of paragraphs: 62
Date of hearing: Determined on the papers
Solicitor for the Applicant: Adero Law
Solicitor for the Respondents: Ashurst Australia

ORDERS

NSD 448 of 2020
BETWEEN:

JOSEPH SHOREY

Applicant
AND:

ONE KEY RESOURCES PTY LTD (ABN 30 141 650 259)

First Respondent

ONE KEY HOLDINGS PTY LTD (ABN 42 150 149 643)

Second Respondent

ORDER MADE BY:

MURPHY J

DATE OF ORDER:

9 JULY 2024

THE COURT ORDERS THAT:

1.Order 1 made on 3 October 2023 be varied so that paragraphs 7, and 59 to 68 of the Affidavit of Rory Michael Markham affirmed 23 August 2023 are no longer to be treated as confidential, and may therefore be accessed by the public.  For the avoidance of doubt, exhibit RMM-5 to that affidavit shall continue to be treated as confidential.

2.Discontinuance of the proceeding be approved pursuant to s 33V(1) of the Federal Court of Australia Act 1976 (Cth) (the FCA). The Applicant has leave to discontinue the proceeding by filing a notice of discontinuance, forthwith.

3.Pursuant to ss 33V and 33ZF of the FCA any limitation period that applies to the claim of the Applicant and any group member, to which the proceeding relates, shall begin to run again from a date 60 days after filing of a notice of discontinuance.

4.There be no order as to costs of the interlocutory application for approval of the discontinuance.

5.There be no order as to costs in the proceeding.

6.Any existing orders as to costs are vacated.

THE COURT DECLARES THAT:

7.Order 2 does not affect any rights of the Applicant or any group member in the proceeding to pursue the claims that are the subject of this proceeding in another proceeding.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

MURPHY J

  1. By an…

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AGLC
Shorey v One Key Resources Pty Ltd [2024] FCA 749
Case
[2024] FCA 749
Decision Date

CaseChat Overview and Summary

The applicant, Mr Shorey, an employee of One Key Workforce, sought approval to discontinue a representative proceeding against One Key Resources and One Key Holdings. The proceeding was brought on behalf of other employees who were employed by One Key Workforce and contracted out to One Key Resources. The key legal issues involved the appropriateness of discontinuing the proceeding without a settlement, the impact of discontinuance on limitation periods, and the effect of discontinuance on the rights of group members. The court had to determine whether discontinuance was fair, reasonable, and not adverse to the interests of group members and whether the limitation periods for group members’ claims should commence to run again from the date of discontinuance.

The court considered several factors in reaching its decision. Firstly, it noted that the decision to discontinue the proceeding was made in the context of changes in the legal landscape, including retrospective amendments to the Fair Work Act 2009 (Cth) and the decision in Rossato HC, which had altered the legal basis for some of the claims. However, the court found that this did not necessarily render the claims unarguable. The court also considered the opinion of Mr Borg, Special Counsel with Adero Law, who provided a thorough analysis of the prospects of success and the practical likelihood of recovery. Although the court was not entirely persuaded by all aspects of Mr Borg's analysis, it found his opinion supported the approval of discontinuance. Additionally, the court acknowledged that the proceeding was no longer commercially viable due to the availability of other mechanisms for redress, such as the Fair Entitlements Guarantee Act 2012 (Cth). Given these considerations, the court concluded that discontinuance was not unfair, unreasonable, or adverse to the interests of group members. It approved the discontinuance and ordered that any limitation periods applicable to the claims would commence to run again 60 days after the filing of a notice of discontinuance. This decision ensures that group members have sufficient time to obtain legal advice and commence their own proceedings if they wish to do so.

The final orders of the court were to vary the confidentiality orders, approve the discontinuance of the proceeding, order that any limitation periods for the claims would commence to run again 60 days after the filing of a notice of discontinuance, vacate any existing orders as to costs, and declare that the discontinuance does not affect the rights of the applicant or any group member to pursue the claims in another proceeding.

Orders

Orders of the court

1. Order 1 made on 3 October 2023 be varied so that paragraphs 7, and 59 to 68 of the Affidavit of Rory Michael Markham affirmed 23 August 2023 are no longer to be treated as confidential, and may therefore be accessed by the public. For the avoidance of doubt, exhibit RMM-5 to that affidavit shall continue to be treated as confidential.

2. Discontinuance of the proceeding be approved pursuant to s 33V(1) of the Federal Court of Australia Act 1976 (Cth) (the FCA). The Applicant has leave to discontinue the proceeding by filing a notice of discontinuance, forthwith.

3. Pursuant to ss 33V and 33ZF of the FCA any limitation period that applies to the claim of the Applicant and any group member, to which the proceeding relates, shall begin to run again from a date 60 days after filing of a notice of discontinuance.

4. There be no order as to costs of the interlocutory application for approval of the discontinuance.

5. There be no order as to costs in the proceeding.

6. Any existing orders as to costs are vacated.

THE COURT DECLARES THAT:

7. Order 2 does not affect any rights of the Applicant or any group member in the proceeding to pursue the claims that are the subject of this proceeding in another proceeding.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

In the circumstances of this case too it is appropriate to order that any limitation periods that apply to the claims of the applicant and any group member, to which the proceeding relates, shall begin to run again from a date 60 days after filing of a notice of discontinuance. Otherwise the respondents will, or at least may, be exposed to group members’ claims in perpetuity. The suspension of the limitation period under s 33ZE(1) will continue for a further 60 days, so as to allow group members sufficient time to obtain legal advice and commence their own proceeding should they wish to do so, and then any applicable limitation periods will commence to run again.BACKGROUNDThe parties The applicant was an employee of One Key Workforce, a company formerly known as RECS (Qld) Pty Ltd, which is not a respondent to the proceeding. One Key Workforce was part of a group of companies (collectively, the One Key Group), two of which companies are the respondents to the proceeding. It was placed into liquidation on 28 September 2018. The first respondent, One Key Resources, is a company holding contracts with mine operators for the on-hire of casual employees in black coal mines in New South Wales. The second respondent, One Key Holdings, is a company created during the acquisition of the One Key Group by its ultimate owner, Fircroft Engineering Services Holdings Limited. At least until 2021, One Key Holdings held 100% of the shares in both One Key Workforce and One Key Resources. Mr Shorey’s employment It is alleged that:(a)from June 2016 to June 2019, Mr Shorey was employed by One Key Workforce and was contracted out to One Key Resources; who in turn supplied him to unrelated companies in black coal mines to work in the black coal mining industry as an underground operator;(b)he was employed by One Key Workforce under an employment contract which identified his position and the terms and conditions of his employment, including that he would be contracted to “host clients” under a document titled "Details of Assignment - Casual", which expressly provided that his employment "will be on a casual basis". The Details of Assignment further provided that either party may terminate the employment relationship at any time, requesting only one hour's notice from Mr Shorey should he wish to terminate his employment; (c)Mr Shorey in fact worked a consistent 35-hour roster pattern, provided to him more than a year in advance, as directed by “host clients” of One Key Resources; and(d)during his employment with One Key Workforce he was paid the rates of pay and afforded the terms of conditions of a casual employee pursuant to the terms of the RECS (Qld) Pty Ltd Enterprise Agreement 2015 (the RECS Agreement), which applied to One Key Workforce and its employees who would otherwise be covered by the Award, or other relevant awards. Casual employees under the Award Clause 10.1 of the Award (which would have applied absent the RECS Agreement) provided that:An employer may employ an employee in any classification included in this award in any of the following types of employment:(a) full-time;(b) part-time; or(c) in the case of classifications in Schedule B-Staff Employees, casual.

Evidence

Evidence Before The Court

For the reasons I explain, I am satisfied that it is appropriate to approve the discontinuance of the proceeding.THE EVIDENCE The applicant relies on:(a)two affidavits of Rory Markham, a principal of Adero Law, the solicitors for the applicant, sworn on 23 August 2023 and 29 April 2024 respectively (the first and second Markham affidavits);(b)an affidavit of Anvesh Bulusu, a solicitor employed by Adero Law, affirmed 3 May 2023;(c)an affidavit of Patrick Lawler, a solicitor employed by Ashurst Australia, affirmed 2 November 2023;(d)an affidavit of Ashley Borg, a solicitor employed by Adero Law, dated 8 December 2023. On 3 October 2023 I made interim confidentiality orders in relation to certain paragraphs of the first Markham affidavit. While preparing these reasons I came to the conclusion that there is insufficient information outside that contained in the confidential part of that affidavit to properly explain my reasons for approving the discontinuance. I have varied those confidentiality orders.THE RELEVANT PRINCIPLES I set out the relevant principles for a discontinuance application of this type in Turner v TESA Mining (NSW) Pty Ltd (No 2) [2022] FCA 435; 314 IR 214 (Turner v TESA) at [6]-[31], which I recently summarised in Hill v Skilled Workforce Solutions (NSW) Pty Ltd [2024] FCA 603 at [5]-[7] as follows:[5] …(a)the Court’s task in considering whether to approve a discontinuance is different to its task in approving a settlement under section 33V of the Act. The proposed discontinuance is a unilateral act of an applicant, which (subject to cost consequences) puts the applicant in the same position as if the proceeding had not been commenced, and it has different consequences to a settlement. As there is no agreement by which the proceeding is compromised, there can be no merger of the applicant’s rights in the proceeding. As there is no judicial determination, there can be no res judicata or issue estoppel; (b)in the circumstances of the present application, where the practical effect of discontinuance will be to return group members to the position they are in before the commencement of the class action, the applicable test for approval to discontinue a representative proceeding is whether the Court is satisfied that discontinuance would not be unfair or unreasonable or adverse to the interests of group members: see Turner v TESA at [6]-[10]; Rota v Fire Rescue Victoria [2024] FCA 424 (Anderson J); and(c) in circumstances where group members are aware of the proceeding it would be inappropriate to approve discontinuance without giving notice to group members who may be affected by that decision: Turner v TESA at [32]-[35]. Here, the group members were given notice of the application for discontinuance.[6] In relation to the limitation periods applicable to group members’ claims in the proceeding (which are suspended by operation of s 33ZE(1) of the FCA), they do not commence to run again from the date of discontinuance, as discontinuance does not constitute a “determination” for the purpose of s 33ZE(2): c.f. Rota. In the circumstances of this case it is appropriate to make an order pursuant to ss 33V and 33ZF that the limitation periods for group members’ claims commence to run again from 60 days after the date on which a notice of discontinuance is filed. [7] Section 33V(1) requires that the Court approve the discontinuance of class proceedings, which implicitly imposes a condition that the discontinuance be just. Section 33ZF empowers the Court to make any order the Court thinks appropriate or necessary to ensure justice is done in the proceeding. And the Court may order a discontinuance subject to a term or condition: Note 2 of r 26.12 of the Federal Court Rules 2011 (Cth); see e.g. O’Neill v Mann [2000] FCA 1680 at [11] (Finn J). An order that provides that the limitation period commences to run again from 60 days after discontinuance, is “just” because it provides group members an opportunity to protect their rights by bringing their own proceedings, and because it protects the respondent from exposure to the risk of group members’ claims in perpetuity: see Turner v TESA at [11]-[31].

Decision

Reasons for decision

The Applicant made an interlocutory application for preliminary discovery from a prospective respondent, One Key Workforce, for management liability insurance policies and any other insurance policy held by or for the benefit of One Key Workforce. In Shorey v One Key Workforce Pty Ltd (in liq) [2020] FCA 1750 (Insurance Policy Decision) at [46]-[50], I held that One Key Resources, not One Key Workforce, was the relevant policyholder in respect of the insurance documents that the applicant sought. I found that One Key Workforce was not a subsidiary of One Key Resources, and that the insurance policies did not cover claims against One Key Workforce. I declined to order the discovery of One Key Resources’ insurance policy to Mr Shorey. Mr Markham deposed that following the Insurance Policy Decision, Adero Law did not have the ability to satisfy the pre-conditions of the LFA, and the Funder terminated the LFA in December 2020. Mr Markham said that he considers that there is no other available source of litigation funding in respect of the proceeding. He also said that Adero Law is not willing to act in the proceeding on a No Win - No Fee basis. Fourth, that the liquidator of One Key Workforce had advanced or explored claims in connection with the inter-relationship between the directors, the related corporations and the One Key Workforce entity. He said that if such claims are determined favourably, group members may be able to prove as priority creditors in respect to that position, and that there is a risk that the class action may be diluting or limiting the ability to obtain an outcome for these group members. Fifth, that the proceeding is not the only mechanism available for group members to seek redress for their losses, and that the availability of those mechanisms reduced the commercial viability of the proceeding. Mr Markham deposed as to the Fair Entitlements Guarantee Act 2012 (Cth) (FEG Act) and said that in respect to certain group members determinations had been made under that Act that One Key Workforce had contravened the FW Act contraventions, and those group members had been paid out their entitlements for accrued annual leave and redundancy pay under the Award. Any such payments would be a complete answer to the entitlements of group members through the proceeding. Mr Bulusu deposed as to how Adero Law had sought but had been unable to ascertain how many group members had made recoveries under the FEG Act. Mr Bulusu stated that the body administering the FEG refused to provide information regarding Mr Shorey absent permission from Mr Shorey himself and that Mr Shorey did not respond to Mr Bulusu’s attempts to contact him to ask him to authorise the release of his FEG documents. In relation to claims in relation to the FEG more generally, Mr Bulusu said that he was informed by the Assistant Director of the FEG Claims Branch that all FEG claims in relation to One Key Workforce had been finalised and claimants had been sent written notice of the decision on their claims.

Ratio Decidendi

Legal Principle Established

Then, by his second affidavit Mr Markham sought to correct Mr Borg’s affidavit. He deposed that Adero Law had in fact received three emails in which group members communicated they objected to the application. He noted that on 21 February 2024, Adero Law wrote to the three individuals that objected to the Application and forwarded a copy of orders made on 20 February 2024. Those orders provided for any objectors to provide to the Court a short statement or outline of submissions and any affidavit that they wished to be taken into account by the Court in determining the application, including to identify the basis of their objection and whether they are prepared to be substituted as the representative. The 20 February 2024 orders also provided that, having regard to the material provided by objectors, the discontinuance application may be determined on the papers. Mr Markham deposed that Adero Law had not received any further correspondence from those group members containing a short statement or submissions in opposition to the discontinuance application. CONSIDERATION Since no objector provided a short statement, outline of submissions or affidavit that they sought be taken into account in opposition to the discontinuance application, I consider it appropriate to determine the application on the papers. I am satisfied that approving the discontinuance of this proceeding is not unfair, unreasonable or adverse to group members’ interests. First, that is because I have had the benefit of the Confidential Opinion of Mr Borg, Special Counsel with Adero Law, dated 23 August 2023, being a confidential exhibit to the first Markham affidavit. I accept Mr Borg has substantial experience in employment law, but he is an employed solicitor with Adero Law and in those circumstances his opinion cannot properly be described as independent. I have informed Mr Markham, the principal of Adero Law, that in future settlement approval applications the firm is required to obtain the opinion of independent counsel. Because Mr Borg’s opinion is confidential I cannot go to the detail of it. It must suffice to note that Mr Borg analyses the likelihood of the applicant and group members being able to establish the respondents’ liability and the practical likelihood of their obtaining relief. While I am not entirely persuaded as to Mr Borg’s analysis of the prospects of success in respect of some of the claims, I was assisted by his discussion in relation to the other claims and in relation to the practical likelihood of recovery. The opinion is thorough, and it supports approval to discontinue the proceeding. Second, while I am not persuaded that Mr Shorey’s case is no longer arguable as a result of the retrospective amendments to the FWA and the decision in Rossato HC, the decision to commence it was made when there was a relatively straightforward argument that the claimants were not casual employees for the purpose of the Award or the FWA, and if they could be shown to be liable for their involvement in One Key Workforce’s breaches, One Key Resources and One Key Holdings were thought either to be solvent or to have insurance. Further, until the Insurance Policy Decision, there was a possibility that One Key Workforce was insured which would no doubt have led to an application to join it is a respondent.