Shorey v One Key Workforce Pty Ltd (in liq)

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FEDERAL COURT OF AUSTRALIA

Shorey v One Key Workforce Pty Ltd (in liq) [2020] FCA 1750

File number: VID 548 of 2020
Judgment of: MURPHY J
Date of judgment: 3 December 2020
Catchwords: PRACTICE AND PROCEDURE – application for discovery from a prospective respondent under r 7.23 of the Federal Court Rules 2011 (Cth) – application for discovery of insurance policies to decide whether to seek leave under s 471B of the Corporations Act2001(Cth) to bring a proceeding against a company in liquidation – application dismissed
Legislation:

Corporations Act 2001 (Cth) s 471B

Evidence Act 1995 (Cth)

Fair Work Act 2009 (Cth) ss 44, 45, 117, 545

Federal Court of Australia Act 1976 (Cth) ss 4, 37M, 37N

Federal Court Rules 2011 (Cth) rr 7.23, 9.05(1)(a), 9.12

Black Coal Mining Industry Award 2010

Cases cited:

Australian Competition and Consumer Commission v April International Marketing Services Australia Pty Ltd (No 7) [2010] FCA 902

Carnegie Corporation Limited v Pursuit Dynamics Plc [2007] FCA 1010; (2007) 162 FCR 375

Construction, Forestry, Mining and Energy Union v One Key Workforce Pty Ltd [2017] FCA 1266, (2017) 270 IR 418

Evans v Davantage Group Pty Ltd (No 2) [2020] FCA 473

Gearhart United Pty Ltd v Omni Oil Technologies (Asia) SDN BHD [2010] FCA 401; (2010) 267 ALR 630

Hooper v Kirella Pty Ltd [1999] FCA 1584; (1999) 96 FCR 1

Hopkins v AECOM Australia Pty Ltd & Others [2012] FCA 1204; 91 ACSR 391

John Holland Services Pty Ltd v Terranora Group Management Pty Ltd [2004] FCA 679

Kirby v Centro Properties Ltd [2009] FCA 695

One Key Workforce Pty Ltd v Construction, Forestry, Mining and Energy Union & Anor [2018] FCAFC 77, (2018) 277 IR 23

Paxus Services Ltd v People Bank Pty Ltd [1990] FCA 500; (1990) 99 ALR 728

Roadshow Films pty Ltd v iiNet Ltd [2011] HCA 54; (2011) 248 CLR 37

Telstra Corporation Limited v Minister for Communications, Information Technology and the Arts [2007] FCA 1331

Telstra Corporation Limited v Minister for Broadband Communications and the Digital Economy [2008] FCAFC 7; (2008) 166 FCR 64

Division: Fair Work Division
Registry: Victoria
National Practice Area: Employment and Industrial Relations
Number of paragraphs: 53
Date of last submissions: 8 October 2020
Date of hearing: Heard on the papers
Counsel for the Prospective Applicant: C W Dowling and S M Kelly
Solicitor for the Prospective Applicant: Adero Law
Counsel for the Intervener: P Herzfeld
Solicitor for the Intervener: Ashurst Australia

ORDERS

VID 548 of 2020
BETWEEN:

JOSEPH SHOREY

Prospective Applicant
AND:

ONE KEY WORKFORCE PTY LTD (IN LIQUIDATION)

Prospective Respondent

ONE KEY RESOURCES PTY LTD

Intervener

ORDER MADE BY:

MURPHY J

DATE OF ORDER:

3 DECEMBER 2020

THE COURT ORDERS THAT:

1.One Key Resources Pty Ltd be granted leave to intervene in the proceeding.

2.The Prospective Applicant’s originating application dated 19 August 2020 be dismissed.

3.No order as to costs.

Note:   Entry of orders is dealt with in Rule 39.32…

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Details
Case
[2020] FCA 1750
Decision Date

CaseChat Overview and Summary

In the case of Shorey v One Key Workforce Pty Ltd (in liq), the applicant, Mr Shorey, sought preliminary discovery of insurance policies from the prospective respondent, One Key Workforce Pty Ltd, which is in liquidation. The applicant intended to use the discovery to inform a potential application under section 471B of the Corporations Act 2001 (Cth) for leave to bring a proceeding against One Key Workforce Pty Ltd. A related company, One Key Resources Pty Ltd (OK Resources), filed an interlocutory application seeking either to be joined as a respondent or to be granted leave to intervene in the preliminary discovery application. OK Resources opposed the discovery application on several grounds.

The court had to decide whether to grant OK Resources leave to intervene in the proceedings and whether to dismiss Mr Shorey's application for preliminary discovery. The court considered the evidence provided by Mr Shorey's solicitor and OK Resources' solicitor, along with extracts from ASIC searches and heavily redacted copies of the insurance policies in question. Due to the level of redaction, the court requested un-redacted copies of the policies to make an informed decision. After reviewing the un-redacted policies, the court concluded that it was appropriate to grant OK Resources leave to intervene and to dismiss Mr Shorey’s application for preliminary discovery.

The court's reasoning was based on the need to protect OK Resources' interests, which would be directly affected by the outcome of the discovery application. The court noted that OK Resources' interests aligned with those of the prospective respondent, One Key Workforce Pty Ltd, and that allowing intervention would not unreasonably interfere with the existing parties' ability to conduct the proceeding. Additionally, the court considered the overarching purpose of civil proceedings under sections 37M and 37N of the Federal Court of Australia Act 1976 (Cth) in making its decision. The court found that granting leave to intervene and dismissing the discovery application was the appropriate course of action.

In conclusion, the court granted One Key Resources Pty Ltd leave to intervene in the proceeding and dismissed Mr Shorey's originating application dated 19 August 2020. No order was made as to costs.

Orders

Orders of the court

1. One Key Resources Pty Ltd be granted leave to intervene in the proceeding.

2. The Prospective Applicant’s originating application dated 19 August 2020 be dismissed.

3. No order as to costs.

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

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

For the reasons I explain it is appropriate to grant leave to OK Resources to intervene, and to dismiss Mr Shorey’s application for preliminary discovery.THE EVIDENCE Mr Shorey relies upon the affidavit of his solicitor, Rory Markham, a Principal of Adero Law sworn 14 August 2020. OK Resources relies upon the affidavit of Ian Humphreys, a partner of Ashurst Australia (Ashurst), the solicitors for OK Resources and another company in the One Key Group, One Key Holdings Pty Ltd (OK Holdings) sworn 21 September 2020. The affidavits of both Mr Humphreys and Mr Markham annex extracts of current and historic ASIC searches in relation to OK Workforce and OK Resources (company searches). Amongst other things, the company searches disclose that:(a)OK Workforce is a wholly owned subsidiary of OK Holdings. The company issued 12 fully paid ordinary shares which are 100% owned by OK Holdings. OK Holdings has been the only shareholder in OK Workforce from 2 November 2015 to date; (b)OK Resources is a wholly owned subsidiary of OK Holdings. The company issued 6,000 shares which are 100% owned by OK Holdings; (c)at no time has OK Resources held any shares in OK Workforce; (d)at no time has OK Workforce held any shares in OK Resources; (e)at all times during which Mr Shorey was an employee of OK Workforce, OK Workforce and OK Resources had substantially the same directors and officers; and(f)the ultimate owner of the One Key Group of companies, including OK Workforce, OK Resources, and OK Holdings is Fircroft Engineering Services Holdings Limited (Fircroft). Fircroft has been the ultimate holding company since 23 May 2016. Mr Humphrey’s affidavit also annexes heavily redacted copies of the Relevant Policies based on which OK Resources makes various submissions in opposition to the application for preliminary discovery. The level of redaction created difficulties in deciding the application, and, having regard to the overarching purpose in civil proceedings in ss 37M and 37N of the Federal Court of Australia Act 1976 (Cth) (the FCA), I requested Ashurst, the solicitors for OK Resources, to provide my chambers with un-redacted copies of the Relevant Policies, on a confidential basis. Having reviewed the un-redacted copies of the Relevant Policies, and without revealing confidential matters, I note that they comprise two “Management Liability” insurance policies in which OK Resources is the policyholder, one covering the period 8 November 2017 to 8 November 2018 and the other covering the period 8 November 2018 to 8 November 2019.OK RESOURCES’ APPLICATION TO INTERVENE OK Resources seeks to be joined as a respondent to the preliminary discovery application or, alternatively, to be granted leave to intervene on the basis that its rights will be directly affected by an order that OK Workforce discover the Relevant Policies. Having regard to the view I have formed, it is convenient to deal with the application as an application for leave to intervene. Rule 9.12 of the Rules provides that a person may apply to the Court for leave to intervene in a proceeding, with such rights, privileges and liabilities as may be determined by the Court. In deciding the application the Court may have regard to whether the intervener’s contribution will be useful and different from the contribution of the parties to the proceeding, whether allowing intervention will unreasonably interfere with the ability of the parties to conduct the proceeding as the parties wish, and any other matter the Court considers relevant. A non-party whose interests would be affected by a decision in a proceeding is entitled to intervene to protect the interest likely to be affected by the operation of the decision: Roadshow Films pty Ltd v iiNet Ltd [2011] HCA 54; (2011) 248 CLR 37 at [2] (French CJ, Gummow, Hayne, Crennan and Kiefel JJ).

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Mr Shorey seeks discovery of the insurance policies on the basis that:(a)he reasonably believes that he has a right to obtain relief in the Court from OK Workforce;(b)after making all reasonable inquiries, he does not have sufficient information to decide whether to start a proceeding to obtain that relief; and(c)he reasonably believes that OK Workforce has the insurance policies set out above in its possession, power or control, and that inspection of those policies would assist him in deciding whether to bring an application under s 471B of the Corporations Act 2001 (Cth) (Corporations Act) for leave to bring a proceeding against OK Workforce. The liquidator of OK Workforce neither consents to nor opposes the application. A related company of the prospective respondent, One Key Resources Pty Ltd (OK Resources) has filed an interlocutory application seeking: (a) to be joined as a respondent to the application pursuant to r 9.05 of the Rules; or (b) a grant of leave to intervene in the application pursuant to r 9.12. OK Resources opposes the application for preliminary discovery on several grounds. For the reasons I explain it is appropriate to grant leave to OK Resources to intervene, and to dismiss Mr Shorey’s application for preliminary discovery.THE EVIDENCE Mr Shorey relies upon the affidavit of his solicitor, Rory Markham, a Principal of Adero Law sworn 14 August 2020. OK Resources relies upon the affidavit of Ian Humphreys, a partner of Ashurst Australia (Ashurst), the solicitors for OK Resources and another company in the One Key Group, One Key Holdings Pty Ltd (OK Holdings) sworn 21 September 2020. The affidavits of both Mr Humphreys and Mr Markham annex extracts of current and historic ASIC searches in relation to OK Workforce and OK Resources (company searches). Amongst other things, the company searches disclose that:(a)OK Workforce is a wholly owned subsidiary of OK Holdings. The company issued 12 fully paid ordinary shares which are 100% owned by OK Holdings. OK Holdings has been the only shareholder in OK Workforce from 2 November 2015 to date; (b)OK Resources is a wholly owned subsidiary of OK Holdings. The company issued 6,000 shares which are 100% owned by OK Holdings; (c)at no time has OK Resources held any shares in OK Workforce; (d)at no time has OK Workforce held any shares in OK Resources; (e)at all times during which Mr Shorey was an employee of OK Workforce, OK Workforce and OK Resources had substantially the same directors and officers; and(f)the ultimate owner of the One Key Group of companies, including OK Workforce, OK Resources, and OK Holdings is Fircroft Engineering Services Holdings Limited (Fircroft). Fircroft has been the ultimate holding company since 23 May 2016. Mr Humphrey’s affidavit also annexes heavily redacted copies of the Relevant Policies based on which OK Resources makes various submissions in opposition to the application for preliminary discovery. The level of redaction created difficulties in deciding the application, and, having regard to the overarching purpose in civil proceedings in ss 37M and 37N of the Federal Court of Australia Act 1976 (Cth) (the FCA), I requested Ashurst, the solicitors for OK Resources, to provide my chambers with un-redacted copies of the Relevant Policies, on a confidential basis.