The Director of the Fair Work Building Industry Inspectorate v Linkhill Pty Ltd (No.3)
[2013] FMCA 165
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| THE DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE v LINKHILL PTY LTD (No.3) | [2013] FMCA 165 |
| INDUSTRIAL LAW – Proceedings for civil penalties for alleged breaches for WR Act and FW Act – allegations of sham contracting. PRACTICE & PROCEDURE – Application in a case –application to withdraw admissions and file further amended defence and affidavits. |
| Workplace Relations Act 1996 (Cth) s.900 Fair Work Act 2009 (Cth) s.357 |
| Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 Andrews v Australia and New Zealand Banking Group Ltd [2011] FCA 388 |
| Applicant: | THE DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE |
| Respondent: | LINKHILL PTY LTD |
| File Number: | (P)MLG 1514 of 2011 |
| Judgment of: | O’Sullivan FM |
| Hearing date: | 1 March 2013 |
| Date of Last Submission: | 1 March 2013 |
| Delivered at: | Melbourne |
| Delivered on: | 12 March 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr S. Moore |
| Solicitors for the Applicant: | Clayton Utz |
| Counsel for the Respondent: | Ms S. Bingham |
| Solicitors for the Respondent: | At Work Law |
ORDERS
The application in a case filed 28 February 2013 be dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
(P)MLG 1514 of 2011
| THE DIRECTOR OF THE FAIR WORK BUILDING INDUSTRY INSPECTORATE |
Applicant
And
| LINKHILL PTY LTD |
Respondent
REASONS FOR JUDGMENT
Introduction
Before the Court is an application in a case filed on 28 February 2013.
The substantive proceedings started in October 2011. By an amended statement of claim filed 11 December 2012 the Director of the Fair Work Building Industry Inspectorate (“the applicant”) alleges Linkhill Pty Ltd (“the respondent”) contravened various provisions of the Workplace Relations Act 1996 (Cth) (“the WR Act”) and the Fair Work Act 2009 (Cth) (“the FW Act”). The respondent filed an amended defence on 21 December 2012 joining issue with many of those allegations.
Pursuant to orders made in June 2012 the proceedings were fixed for trial commencing 25 February 2013.
On day 3 of the trial Ms Bingham, Counsel for the respondent foreshadowed the application in a case which was filed later that day. In that application the respondent sought inter alia leave to withdraw admissions and to file a further amended defence and other affidavit material.
Given the possible consequential effect on the trial, of the orders sought, and by agreement between the parties, the respondent’s application in a case was heard on 1 March 2013 and the Court reserved its decision.
Background
The applicant filed a statement of claim on 20 October 2011. By its defence filed 20 December 2011 the respondent admitted inter alia:
a)at all relevant times it operated a business from premises at 401 Collins Street, Melbourne, Victoria which included from about November 2006, the renovation and refurbishment of the building at 384-386 Flinders Lane, Melbourne, Victoria (“the renovation works”);
b)the 10 workers in relation to whom the proceedings were brought were engaged by Linkhill to perform and did perform the renovation works; and
c)the work was building work within the meaning of the Building and Construction Industry Improvement Act 2005 (Cth).
There were orders and directions made on 5 March 2012 and again on 5 June 2012. By orders made that day the proceedings were fixed for trial commencing on 25 February 2013 and the respondent filed an amended defence on 20 June 2012. There were further orders and directions made on 11 July 2012, 19 July 2012 and 31 August 2012 all by consent.
As a result of the orders made on 6 December 2012 by consent the applicant filed an amended statement of claim on 11 December 2012 and the respondent a further amended defence on 21 December 2012.
By this time, the standing and ability of the applicant to bring the proceedings was not controversial as (apparently) were the matters referred to above.[1]
[1] see inter alia paragraph 1, 2(d), 3(a) and 3(b) of further amended defence filed 21 December 2012
In the lead up to the trial the parties who at the relevant times were legally represented agreed to further orders to expedite the trial over the week commencing 25 February 2013.[2]
[2] see orders 6 February 2013 and 21 February 2013
Due to the illness of the applicant’s Counsel, the first day of the trial was adjourned. On 26 February 2013 and after the applicant had opened its case, an oral application for an adjournment by the respondent was refused for the reasons given ex tempore and the hearing of the evidence of the applicant’s witnesses commenced.
Between 26 February 2013 and 28 February 2013 the applicant’s witnesses gave evidence and were cross examined.
On the morning of 28 February 2013, which was the third day of the trial the respondent raised the issue(s) which ultimately resulted in the application in a case filed later that day being dealt with on 1 March 2013.
Application in a case
The orders sought by the respondent in the application in a case were:
“1.The Respondent be granted leave to file and serve a further amended defence in the form annexed as exhibit 1to the affidavit of James Yeatman sworn 28 February 2013.
2.Further is so far as is necessary leave be granted to withdraw admissions contained in the Amended Defence at paragraphs 2d, 3a and 3b.
3.The Respondent be granted leave to file and serve the affidavits of:
(a)Michele Levine affirmed 27 February 2013.
(b)James Andrew Wallace sworn 27 February 2013
(c) Further Affidavit of Gary Morgan sworn 28 February 2013.
being exhibits 2, 3 and 4 respectively to the affidavit of James Yeatman sworn 28 February 2013.
4.The Respondent pay the Applicant’s costs of this application on a party by party basis.”[3]
[3] Exhibit R1
For the purposes of the of the application in a case, the respondent relied on the:
a)affidavit of its solicitor Mr Yeatman;[4] and
b)written submissions filed on 1 March 2013.[5]
[4] Exhibit R2
[5] Exhibit R3
Exhibited to Mr Yeatman’s affidavit were a proposed further amended defence[6], a further affidavit from Mr Morgan[7] and affidavits from Ms Levine[8] and Mr Wallace[9].
[6] See JY-1 to Exhibit R2
[7] See JY-2 to Exhibit R2
[8] See JY-3 to Exhibit R2
[9] See JY-4 to Exhibit R2
In his affidavit sworn 28 February 2013 the respondent’s solicitor deposed:
“1.I am principal of At Work Law, and am retained to advise and brief the respondent in this matter.
2.Without waiving legal professional privilege, I have been instructed by Gary Morgan in this matter. Since this proceeding was first foreshadowed, Mr Morgan has provided me with a lot of information about the facts and circumstances giving rise to the matters in dispute in this proceeding.
3.I when the proceeding was commenced, Mr J R M Tracey, barrister, to draw and settle the respondent’s pleadings and to advise. Mr Tracey has also be provided with information about the facts and circumstances giving rise to the matters in dispute in this proceeding by Mr Morgan and others at the respondent Mr Tracey was not formally retained in this matter thereafter.
4.Without waiving legal professional privilege, Mr Morgan appears to have an almost expert knowledge about the facts and circumstances, and also has a strong view about how the respondent’s defence should have been handled.
5.Michele Levine is Chief Executive Officer of Roy Morgan Research Limited. She is not a director or officer of the respondent, she has not had a significant role in the any aspects of the conduct of the respondent’s defence of this proceeding until the past few days.
6.At the time I took Mr Morgan’s statement in late January 2013, Mr Morgan mentioned for the first time to me that Ms Levine, in fact, owned the premises at 384-386 Flinders Lane, Melbourne. Up until this time I had believed that the building was owned by one of Mr Morgan’s corporate entities, given that during our discussions about the works at the premises Mr Morgan correctly informed me that work was occurring on behalf of his corporate entities. Such statement is correct because work conducted in the basement and on the ground level, first level and third level of 384-386 Flinders Lane, was being conducted in tenancies entities associated with Mr Morgan had leased. The affidavit was filed late with the knowledge and consent of the applicant because of Mr Morgan was unavailable to finalise the document.
7.As a result of having worked for Mr Morgan for a number of years, I was aware that Mr Morgan’s entities had at some stage had owned the premises at 384-386 Flinders Lane, and I was not aware that the property had been sold to Ms Levine.
8.Due to Mr Morgan and Ms Levine being out of Victoria (in outback Western Australia) between 28 January and 1 February 2013 on business, there was little opportunity to pursue the issue of Ms Levine’s ownership of 384-386 Flinders Lane, Melbourne, and the implications this might have for the respondent’s defence of the matter, prior to filing Mr Morgan’s affidavit. To the extent I was aware of the information, this was included in Mr Morgan’s affidavit, so that the applicant would be aware of this issue.
9.When Mr Morgan and Ms Levine were back in Melbourne (early February) I set about finding out more information about Ms Levine’s ownership of the property, the nature of the works she had performed, and how she dealt with Linkhill. This did not just involve obtaining information, but also locating and reviewing supporting documentation.
10.In my professional opinion, this information was a significant new development in this case, and one that could potentially provide a further important defence to the respondent. I appeared to me that Mr Morgan did not, until that time, turned his mind to the potential significance of this information about the contractors doing a significant amount of work for Ms Levine and other associated entities.
11.By this time it was already the case that any subsequent evidence from the respondent would require the leave of the Court, and I would need to prepare, check and settle an affidavit for Ms Levine that might or might not be able to be used in the proceeding. I nevertheless prepared an affidavit of Michele Levine.
12.In view of Mr Morgan’s strong opinion about how the respondent’s defence should be conducted, he had been reluctant to brief Counsel to appear at the hearing of this proceeding leading up to the scheduled first day of hearing. I was therefore preparing to conduct the defence of the proceeding myself, if it turned out that the hearing commenced on Monday, 25 February 2013 as scheduled.
13.In the day or so before the hearing of this proceeding was scheduled to commence, Mr Morgan subsequently obtained some separate oral legal advice, from Senior Counsel, to which I was not privy. Following this advice, on Friday, 22 February 2013 I was instructed to brief Counsel to appear at this hearing.
14.I then spent several hours seeking to identify Counsel who was available to accept a brief for a five day hearing commencing the following Monday. This did not prove easy but I eventually managed to find Simone Bingham, who accepted my oral brief.
15.At the time I was informed by her clerk that Ms Bingham was prepared to accept the brief, I was in Sunbury, Victoria. I arranged to return to Melbourne later that evening at around 8.00pm or possibly a bit later to deliver the relevant documents to Ms Bingham and to discuss the case with her.
16.I was told by Ms Bingham, and believed, that she spent the weekend of 23 and 24 February 2013 preparing cross examination. The discussions or communications I had with Ms Bingham that weekend were consistent with her doing this. I am also aware that Ms Bingham undertook a thorough examination of the pleadings as I saw her summary.
17.I spoke to Ms Bingham about the information I had received about Ms Levine and Ms Bingham, quite correctly in my opinion, sought to deal with the information that was on the Court file rather than yet to be filed, given the extremely short time she had to prepare.
18.On Tuesday 26 February 2013, Ms Bingham advised me that the information in Mr Morgan’s affidavit about Ms Levine engaging the contractors was inconsistent with the defence we had filed, and that if we were to include this material, we would need to both seek to amend the defence and adduce appropriate evidence. As Ms Bingham was tied up with the hearing of the matter, she recommended that we engage additional Counsel to draw potential amendments to the defence, and take an affidavit from Ms Levine.
19.I set about trying to identify suitable Counsel who was able to commence work immediately to assist us to prepare the further documentation.
20.Mr Adam Rollnik accepted the brief and commenced work at approximately 1.30pm on Tuesday 27 February. This included reading the pleadings interviewing Ms Levine and redrafting her affidavit. It also involved Mr Rollnik interviewing Jim Wallace and forming the view that the respondent required an affidavit from him as well as interviewing Mr Morgan and obtaining a further affidavit from him and locating the necessary documents to be exhibited to the affidavits
21.Ms Bingham, Mr Rollnik and myself then spent considerable time preparing the necessary materials while the hearing was underway.
22.In my view much of the material had almost been finalised last night, and was to be settled and provided to the applicant. I was going to scan copies, make copies and distribute by email.
23.As a result of a lightning strike in the Gisborne area on Thursday, 14 February 2013, that damaged the Telstra switchboard in the area, my home had not been able to access internet or email. I have complained about this to Telstra on numerous occasions as it was massively disruptive for my being able to work at home after hours. I was assured by Telstra that the problem was significant but would be repaired before Wednesday, 27 February 2013.
24.In fact, last night, 27 February 2013, I was still not able to get internet or telephone service, and was not able to be connected to Telstra to inquire as to the status of the service, or when it would be fixed.
25.As a result, I did not get the opportunity to finalise the documents until I came in to Melbourne this morning.
…”
The applicant, who opposed the orders sought by the respondent in the application in a case, relied on its written submissions.[10]
[10] Exhibit A28
Submissions on the application in a case
The respondent’s written submissions were:
“1.The respondent by its application dated 28 February 2013 seeks the following orders:
(a)That it be granted leave to file and serve a further amended defence in the form annexed as Exhibit 1 to the affidavit of James Yeatman sworn 28 February 2013.
(b)Further that insofar as it is necessary leave be granted to withdraw admissions contained the amended defence at paragraphs 2(d), 3(a) and 3(b).
(c)That it be granted leave to file and serve the affidavits of:
(a) Michelle Levine sworn 27 February 2013;
(b) Andrew James Wallace sworn 27 February 2013;
(c) The further affidavit of Gary Morgan sworn 28 February 2013.
2.On 6 December 2012, by consent his Honour Federal Magistrate O’Sullivan made among others, the following orders:
(2)the applicant have leave to file the amended application and amended statement of claim annexed and marked “ACD-1” to the affidavit of Alison Claire Davis sworn 5 December;
(3)the respondent file and serve an amended defence on or before 21 December 2012;
(4)the applicant file and serve any reply on or before 18 January 2013;
(5)the respondent file and serve any affidavits upon which it proposes to rely at trial on or before 4 February 2013;
(6)the applicant file and serve any affidavits in reply upon which it proposes to rely at trial on or before 12 February 2013.
3.On 11 December 2012 the applicant filed its amended statement of claim and amended application.
4.On 21 December 2012 in accordance with the orders the respondent filed and served an amended defence in this proceeding.
5.On 6 February the respondent filed with the indulgence, of the applicant the first affidavit of Gary Morgan.
6.On 25 February 2013 the proceeding were adjourned for 1 day by consent by reason of the indisposition of the applicant’s Counsel. An application for an adjournment of 5 days was sought by the respondent due to the uncertainty ability to proceed the next day.
7.On 26 February 2013 at the commencement of the proceedings the applicant sought to further amend his statement of claim. Those amendments were consented to by the respondent and leave was granted.
8.On 26 February 2013 the respondent sought an adjournment of these proceedings to allow it to consider a potential amendment to its defence. This application was made immediately after the applicant opened its case and before any witnesses were called. The application for the adjournment was opposed and dismissed.
9.Between 26 February 2013 and the morning of 28 February 2013 the applicant called 7 of 9 witnesses available to give evidence. Each witness was cross examined.
10.On the evening of 27 February 2013 the applicant was informed that the respondent would seek leave to:
(a)amend its defence; and
(b)file and serve an affidavit of Michelle Levine, an affidavit of James Wallace and a further affidavit of Gary Morgan.
11.This issue was bought to the Court’s attention at the commencement of the proceedings on Thursday 28 February 2013.
12.In accordance with the orders of his Honour Federal Magistrate O’Sullivan made by consent the respondent provided to the applicant copies of the proposed affidavit material, a notice to produce documents by midday of 28 February.
13.An application in a case together with supporting affidavit was filed at approximately 3:00pm on 28 February 2013.
14.The application for leave was listed to be heard by his Honour at 10.00am Friday 1 March 2013.
Leave to amend
15.Part 7 Division 1 rule 7.01 of the Federal Magistrate Court Rules provides:
(1)At any stage in the proceeding, the Court or a Registrar may allow or direct a party to amend a document (other than an affidavit) in the way and on the conditions the Court or the Registrar thinks fit.
(2)Subject to rule 7.03, the Court or a Registrar may allow an amendment even if the effect would be to include a cause of action arising after the proceedings started.
16.The proposed substantive amendments to the respondent’s defence are found at 2d. , 3a, 3b, 3f and 181A.
17.Each of the amendment reflect accurately the material facts with respect to these proceedings including the ownership of the premise at 384 – 386 Flinders Lane, on who’s behalf the renovation work was performed, the dates of the commencement of the “renovation work” as described in the applicant in its pleadings.
18.The applicant has raised issue with the affidavit material in that it does not reflect the pleaded defence. The amendments proposed, it is submitted are consistent with the defences as pleaded.
19.The matters which a Court should consider when exercising its discretion as to whether an amendment is appropriate have been dealt with by the High Court in Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175 (AON). The principles contained in AON have been conveniently extracted by his Honour Federal Magistrate Lucev in Welsh v Allblend Holdings Pty Ltd [2010] FMCA 281 at [41] in the following terms (footnotes omitted):
a)the nature and importance of amendment to the party seeking amendment, including that where a discretion is sought to be exercised in favour of one party and to the disadvantage of another, an explanation will be called for, and the party will need to show that their application is brought in good faith and bring the circumstances giving rise to the amendment to a Court’s attention so that they may be weighed against the effects of any delay and the objects of rules governing a Court’s practice and procedure; and
b)whether there has been substantial delay;
c)case management concerns;
d)the parties’ right to invoke the jurisdiction and the powers of the Court in order to seek a resolution of their dispute, and that the parties must have sufficient opportunity to identify the issues they seek to agitate;
e)whether the new issues sought to be introduced are part of a common substratum of fact and part of a “single justifiable controversy;
f)wasted costs, and whether costs are sufficient to compensate for any prejudice that will be suffered if the amendment is granted; and
g)the strain the litigation imposes upon litigants.
Nature and Importance
20.The nature of the amendment is of importance to the respondent. If is it was not of weighty importance, considering the stage of the proceeding an application would not have been made.
21.The facts underpinning the amendments were to some extent flagged in the affidavit of Gary Morgan filed 6 February 2013. Which obviously alerted the applicant to the issues associated with the ownership of 384 – 386 Flinders Lane as it undertook title searches to ascertain that ownership.[11] An affidavit of Ms Levine was provided (but was not filed) to the applicant on 21 February 2013. The applicant’s affidavits in reply answered the matters dealt with in the material in the affidavits of Mr Morgan and Ms Levine. It must be said that the matters associated with the amendments were alluded to but not elucidated but have been in the proposed additional affidavit material.
[11] Exhibit A23
22.The amendments proposed have the following effects on the respondent’s defence and the issues which the Court should determine for example:
(a)the timeframe in which it the “renovation work” at Flinders Lane was undertaken the extent to which the respondent can be held liable for such breaches and the consequential quantum if the allegations are proven;
(b)the nature of the work performed at Flinders Lane between 2006 and 2010 and whether it falls within the application of the relevant awards and whether that work was engaged in on a full time basis. This will also have an effect on the quantum extent of the respondent’s liability if the allegations are proven;
(c)Whether the renovation work performed was for the benefit of Linkhill or Ms Levine;
(d)Whether the true nature of the engagement of the workers at Flinders Lane was a contract for services due to the use of Linkhill as the entity to supply Ms Levine with the resources that she required to undertake the renovation work.
23.The proposed amendments are consistent with the respondent’s defence that the workers have always been engaged as contractors rather than employees.
24.The explanation for the delay in bring these matters to the Court’s attention is set out in the affidavit on Mr James Yeatman sworn 28 February 2012. In particular the Court’s attention is drawn to paragraph 5, 7 ,11, 13,15, 16, 18 20, and 21.
Substantial Delay
25.It is accepted that these proceeding have been on foot for a considerable period of time.
26.The respondent’s amended defence filed 21 December 2012 was responsive to the Amended Statement of Claim filed by the applicant on 11 December 2012.
27.The matters that formed the substance of the amendments came to the attention of the solicitor for the respondent in the first week of February. The matters were dealt with by way of affidavit.
28.Upon being advised that there would be a necessity to amend the defence it light of the fact the respondent took immediate steps to obtain the information and that would fully substantiate the need an amendment to the defence. All of this activity took place within 48 hours of the issue being identified by Counsel.
Case Management Concerns
29.The respondent acknowledges the case management concerns and the objects of this Court as set out in Rule 1.03.
30.It is submitted that a just resolution is the paramount concern for the Court but case management principles “should not detract from a proper opportunity being given to the parties to plead their case.[12] Nor should the case management rules require that every application for amendment should be refused because it involves some waste or cost or degree of delay.[13]
[12] AON [98]
[13] AON [102]
Resolution of the dispute
31.In this regard the respondent refers the Court to s14 of the Magistrates Court Act which provides:
‘14.Determination of matter completely and finally In every matter before the Federal Magistrates Court, the Federal Magistrates Court must grant, either:
(a) absolutely; or
(b) on such terms and conditions as the Federal Magistrates Court thinks just;
all remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward by him or her in the matter, so that, as far as possible:
(c) all matters in controversy between the parties may be completely and finally determined; and
(d) all multiplicity of proceedings concerning any of those matters may be avoided.
32.It is submitted that that in light of the fact that these are civil penalty proceedings and with respect to sham contracting a matter that attracts a reverse onus leave to amend and file and serve the affidavits be granted upon the exercise of the Court’s discretion.
Substratum of the Controversy
33.The amendments form part of the same substratum of fact and the single judiciable controversy that the Court is required to determine.
Cost and Prejudice
34.These proceedings are matters under industrial legislation upon which the starting position associated with costs is that each party bears its own. It is conceded that even in these circumstances the respondent would be liable for costs pursuant to s570(2) as the application would constitute an “act or omission”.
35.The applicant is a model litigant and is the only party to the proceeding. Witnesses have been cross examined by the respondent, two witnesses for the applicant remain to be called. Two days in March were held in reserve to complete evidence. One day of hearing has been lost at no fault of the respondent. The respondent at this point will call is one witness and depending upon the Court position on the admission of the further evidence an further two witnesses.
36.The delay occasion by the proposed amendment and additional affidavit material will be minor particularly in circumstances where both parties contemplate full written submissions.
Leave to withdraw admissions
37.The principles with respect to leave to withdraw submissions include:
(a)The general rule is that all amendments should be permitted and that includes an amendment to a defence, unless the amendment will cause prejudice to the other party which cannot be overcome in some way.
(b)No amendment would be allowed if it raised a false issue or did not raise an arguable defence.
(c)The issue is one of justice between the parties ensuring that the real matters in controversy are decided.
(d)The trial is the proper place to determine all claims and defences and it is not appropriate, except in a clear case on a summary application to amend, to exhaustively investigate the facts and the law.
(e)The burden of proof or persuasion may be crucial on an application where there are disputed facts.
(f)It is not the law that a defendant is not permitted to resile from an admission unless it was shown the admission was made inadvertently or through error; justice is the determinant.
(g)It is unnecessary to show that there was some error or mistake which led to the form of the pleading and that there is a reasonable explanation for having made the admission, before a party may seek to withdraw the admission. A Court usually requires some explanation for the change in approach, but the absence of same or whether it was an adequate or inadequate explanation can hardly determine the outcome of the application in the face of compelling reasons of justice.
38.Admissions have not be withdrawn but rather qualified. It is still conceded that the renovation works at the Flinders Lane site took place. This is a key platform of the applicant’s case. It is submitted the amendments are supported by the documentary attached to the proposed affidavits and consistent with the evidence before the Court namely the title search of pertaining to the Flinders Lane property and the response contained in the reply affidavits. Further these matters go to the real issues between the parties.
39.The respondent relies upon the Affidavit of Mr Yeatman sworn 28 February 2013.
Leave to file affidavit material out of time
40.The affidavits which the respondent seeks leave to file go to the issues that are contemplated by the amendments and exhibit documentary evidence that supports the respondent’s claims. It is noted that no discovery was undertaken in these proceeding.
41.It is submitted that it is the interests of justice and fairness in allowing the respondent to properly defend these proceedings the requisite leave to file the material should be granted.
Conclusion
42.The respondent seeks the leave of the Court to file and serve the Further Amended Defence and Affidavits exhibited to the Affidavit of James Yeatman dated 28 February 2012.”
In submissions before the Court Counsel for the respondent referred to a number of decisions including Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 and placed particular emphasis on the following quote:
“The objectives stated in r.21 do not require that every application for amendment should be refused because it involves the waste of some costs and some degree of delay as it inevitably will. Factors such as the nature and compliance of the amendment to the party applying cannot be overlooked.”
The respondent also asked the Court to consider and take the approach in Murran Investments Pty Ltd v Aromatic Beauty Products Pty Ltd [2000] FCA 1732 and Celestino v Celestino (unreported, Full Court of the Federal Court of Australia, 16 August 1990) when considering its application and what was said to be the contention that certain of the admissions were factually wrong.
The applicant in its outline of submissions contended:
“1.Save that the Applicant does not oppose the making of the amendments contained in paragraphs 1A-1E[14] of the proposed Further Amended Defence dated 28 February 2013 (the proposed Defence), the Applicant opposes the orders sought in paragraphs 1-3 of the Respondent’s Application dated 28 February 2013 (the Application).
[14]The version of the Defence annexed to the Affidavit of James Yeatman dated 28 February 2013 does not contain a pleading to paragraph 1E of the Applicant’s Further Amended Statement of Claim (the SOC). It is assumed this is an inadvertent omission as such a paragraph (admitting the allegation in paragraph 1E of the SOC) was contained in the versions of the Defence provided by Counsel for the Respondent.
2.Given that their contents are wholly or substantially outside of the Respondent’s case as presently pleaded, leave to file and serve the affidavits referred to in order 3 of the Application is dependent on the making of orders 1 and 2 in the Application.
3.The proposed Defence does not accurately highlight the amendments now proposed by the Respondent.
a)Paragraph 3(a): the word “also” on line 3 is additional, but not underlined, as are the words “at the ultimate direction of, and for the benefit of, Michele Levine”.
b)Many of the underlined paragraphs form part of the Respondent’s current pleading for which leave has already been given. The further amendments for which leave is now sought are limited to paragraphs 1A-1E, 2(d), 3 and 181A.
4.In summary, the Court should refuse the application for leave to amend for the following reasons:
a)The proposed amendments necessitate the withdrawal of admissions made by the Respondent and no proper basis for their withdrawal has been advanced.
b)The allowance of the amendments would be unjust to the Applicant and would likely cause delay in the dispatch of the Court’s business.
c)The application to amend is unduly late for reasons solely of the Respondent’s own making and for which no satisfactory explanation is provided.
d)The proposed amendments would be futile as they do not disclose any arguable defence to the Applicant’s claims.
Withdrawal of admissions
5.The amendments proposed by the Respondent necessitate the withdrawal of admissions formally made by it in three respects:
a)The amendments proposed in paragraph 2(d) would result in the withdrawal of the admission that, at all relevant times, the business operated by the Respondent “included, from about November 2006, the renovation and refurbishment of the building at 384-386 Flinders Lane, Melbourne, Victoria” (defined as “the Renovation Works”).
b)The amendments proposed in paragraph 3(a) would result in the withdrawal of the admission that the 10 workers to whom the proceeding relates (the workers) “were engaged by it to perform, and did perform renovation and refurbishment workers on the building at 384-386 Flinders Lane, Melbourne, in the State of Victoria” (also defined as “the Renovation Works”).
i) The effect of the above admissions, which have always comprised part of the Respondent’s Defence, is that there has been no controversy between the parties that, at all relevant times, the Respondent’s business included the renovation and refurbishment works at 386 Flinders Lane and that the workers were engaged by it and did work in that business. The Applicant has prepared for, opened and conducted its case on this basis.
c)The amendments proposed in paragraph 3(b) would result in the withdrawal of the admission that the work performed by the Workers was “building work” within the meaning of the BCII Act. That issue has never been in dispute in the proceeding.
6.Leave is required to withdraw an admission: r 22.06 Federal Court Rules; see also r 15.31(3) FMC Rules. The Full Court of the Federal Court has stated that “to withdraw an admission … a Court will require an explanation for the making of the admission. The explanation must be a sensible one based on evidence of a solid and substantial character”. Additionally, “even where sufficient explanation for the erroneous or mistaken making of an admission is provided, the admission may only be withdrawn where no injustice will be occasioned thereby to the other party”: see Celestino v Celestino [1990] FCA 299.
7.The affidavit material filed by the Respondent relates to Mr Yeatman’s late discovery of Ms Levine’s ownership of 384-386 Flinders Lane. It entirely fails to offer any explanation for the making of the admissions now sought to be withdrawn that, at all relevant times, the Respondent’s business included the renovation and refurbishment works at 386 Flinders Lane and that the workers were engaged by it and did work in that business. As to injustice to the Applicant, see below.
8.There is likewise no explanation advanced as to the making of the admission now sought to be withdrawn that the work performed by the Workers was “building work” within the meaning of the BCII Act.
Allowance of the amendments unjust to the Applicant and will likely delay Court’s business
9.In Aon Risk Services Australia Ltd v ANU (2009) 239 CLR 175, the plurality stated (at [102], emphasis added):
It is the extent of the delay and the costs associated with it, together with the prejudice which might reasonably be assumed to follow and that which is shown, which are to be weighed against the grant of permission to a party to alter its case. Much may depend upon the point the litigation has reached relative to a trial when the application to amend is made. There may be cases where it may properly be concluded that a party has had sufficient opportunity to plead their case and that it is too late for a further amendment, having regard to the other party and other litigants awaiting trial dates. Rule 21 makes it plain that the extent and the effect of delay and costs are to be regarded as important considerations in the exercise of the Court’s discretion. Invariably the exercise of that discretion will require an explanation to be given where there is delay in applying for amendment.
And at [112] (original emphasis):
A party has the right to bring proceedings. Parties have choices as to what claims are to be made and how they are to be framed. But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced. That is why, in seeking the just resolution of the dispute, reference is made to parties having a sufficient opportunity to identify the issues they seek to agitate.
10.The Applicant will be prejudiced in the following ways if leave to amend is granted:
a)The Applicant would have prepared for and conducted its case to date differently if the issues now sought to be pleaded had previously been raised.
i) First, it would have made inquiries with witnesses and likely adduced evidence from them about the location(s) at which they worked at different times and the details about their work and duties at those times and locations. None of those matters are in issue in the pleadings in the current form. Further, if leave is granted, the Respondent will benefit from a forensic advantage in having cross examined some of the Applicant’s witnesses with these matters in mind.
ii) Secondly, it would have examined in detail through interlocutory processes and inquiries the various corporate and financial relationships between the various Roy Morgan Group entities now raised in the proposed Defence and addressed in the affidavit material.
b)Any capacity to redress the prejudice outlined above will inevitably result in delay, inconvenience and additional cost. In particular, witnesses may need to be recalled and the Applicant would likely seek the production by different entities and persons of various documents relevant to the new controversies sought to be raised by the Respondent.
c)The above delay will inevitably produce the interests of other litigants in obtaining a timely resolution of their disputes.
Application unduly late and without sufficient explanation
11.On any measure, the making of the present application on day 3 of the trial is unduly late and offensive to the importance of expedition and timeliness in the making of applications to amend.
12.No satisfactory explanation for this delay has been provided:
a)The Respondent’s case is that its moving mind, Mr Morgan, failed to tell his instructors of Ms Levine’s ownership of 386 Flinders Lane until late January 2013. That failure, combined with Ms Levine’s failure as CEO of the Roy Morgan Research Ltd to inform the Respondent’s instructors of this fact, in circumstances where the instructors have been retained and Counsel briefed since the litigation commenced, merely confirms the indifference with which those persons have approached the litigation and does not constitute a satisfactory or sufficient reason for the delay. The Respondent’s case appears to be that the Applicant, the Court and other litigants should bear the adverse consequence for the inadvertence or neglect of its moving mind and CEO.
b)Even on the Respondent’s case however, no satisfactory explanation for delay emerges. Mr Yeatman became aware of Ms Levine’s ownership of 386 Flinders Lane in late January 2013. He does not explain why no application to amend was made in the period between early February 2013 (when Ms Levine and Mr Morgan returned to Melbourne) and the start of the trial.
c)Further, Mr Yeatman does not explain why, in light of what he became aware of in late January 2013, he did not instruct Counsel to prepare an application to amend on Monday 25 February when the hearing was adjourned.
d)By Tuesday 27 February 2013, the Respondent had engaged two Counsel and Ms Bingham had advised Mr Yeatman of the need to amend. Despite this, no application was made until two days later during which time the Applicant proceeded to adduce evidence on the basis of the case as presently pleaded.
Futility of amendments
13.The proposed amendments would be futile as they do not disclose any arguable defence to the Applicant’s claims.
14.First, there is no pleading as to how the withdrawal of the admission that the work performed by the workers was “building work” establishes a defence. The relevance of that allegation for the purposes of the SOC is that it goes to the Applicant’s standing. The Respondent has however admitted that the Applicant has standing to bring the application (Defence para 1E).
15.Secondly, as to the remaining proposed amendments, there is no pleading as to how those matters operate so as to establish a defence to the allegations made against the Respondent. Insofar as reliance is placed on para 181A, that paragraph does not articulate how the matters there pleaded are relevant to the defence. Moreover, even if the matters alleged in paragraph 181A were admitted or proved, they would not establish that the workers were independent contractors as asserted by the Respondent. Those matters are not inconsistent with the existence of contracts of employment.
16.The Applicant seeks that the Applicant pay its costs of and associated with the Application.”
In submissions before the Court Counsel for the applicant forensically identified by reference to the current (and proposed amendments to the) defence why:
a)the application to withdraw the admissions by the respondent should be refused;
b)granting the respondent leave to withdrawn admissions and amend its defence would be unjust;
c)the respondent’s application in a case was unduly late and this was its own fault; and
d)the leave sought by the respondent would in any event be futile.
In submissions before the Court Counsel for the applicant urged the Court to adopt the principles set out in Celestino[15]. Counsel for the applicant placed particular emphasis on the following extract from Celestino:
“The statement of principle assumes that an error or mistake by or on behalf of the party seeking the amendment has been demonstrated. Where the proposed change involves the withdrawal of an admission, a further matter arises for consideration. In Langdale and Anor v Danby (1982) 1 WLR 1123 Lord Bridge of Harwich, speaking for he House of Lords, said at 1134 that in the absence of clear evidence to the contrary, a Court is entitled to assume that Counsel who makes an admission in the course of the conduct of a trial, has satisfied himself that the admission was, on his client’s version of the facts, a proper admission to make. In our opinion a Court, and other parties to litigation, are similarly entitled to make that assumption about admissions made by solicitors on their client’s behalf in the course of litigation whether in pleadings or in correspondence. For this reason, where leave to withdraw an admission is sought, a Court will require an explanation for the making of admission. The explanation must be a sensible one based on evidence of a solid and substantial character Langdale v Danby at 1134; Hollis v Burton (1892) 3 Ch 226; and Cumper v Pothecary (1941) 2 KB at 70.
In the present case the only explanation proffered on behalf of the appellant when his Honour was first asked to rule on the application was that the report of accident given originally to the insurer apparently contained a story which differed in material aspects from that given by the respondent. But as his Honour pointed out, there was reason for the insurer to be on notice about this even before liability was admitted. Neither explanation nor evidence was offered to the Court as to what notice about this even before liability was admitted. Neither explanation nor evidence was offered to the Court as to what enquiries had been made before liability was admitted, or as to what enquiries were made by the insurer after its suspicions were raised, as they apparently were, in relation to the claim by Giuseppe Celestino. In my view, although the analogy with the admission of fresh evidence was imperfect, the trial judge was correct to reject that application on the ground that no sufficient explanation had been given about the circumstances which led to the making the admission, and the very late decision to seek to withdraw it.
There is however a further ground on which we think his Honour’s decision should be supported. Even where sufficient explanation for the erroneous or mistaken making of an admission is provided, the admission may only be withdrawn where no injustice will be occasioned thereby to the other party. If the only hardship to the other party is delay or cost in the proceedings, that hardship will ordinarily be met by an order for costs. But if the other party has in good faith relied on the admission to his detriment so as to give rise to an estoppel the Court will not permit the admission to be withdraw: H. Clark (Doncaster) Ltd v Wilkinson (1965) 1 Ch 694, Langdale and Anor v Danby at 1135-1136, Clough and Rogers v Frog. In the present case the trial judge held, correctly in our view, that the material before him provided no basis for alleging fraud going to the respondent’s version of the accident. In argument before this Court Counsel for the appellant disclaimed any allegation of fraud. In the absence of fraud, it must follow that in consequence of the admission of liability the respondent’s solicitors waived the requirement for the appellant to answer the interrogatories concerning the circumstances of the accident. Presumably the solicitors also put aside any further steps to marshal together evidence to provide the respondent’s case on liability. In our opinion, in the absence of any evidence suggesting to the contrary from the appellant, the Court is entitled to assume that the respondent would suffer prejudice in the proof his case if after a period of almost five and a half years the admission of liability were withdrawn. The interval between the happening of the accident and the withdrawal of admission (if leave had been granted on 26 May 1988) would have exceeded eight years. In this time it could be expected that the memories of witnesses and the parties would have faded, and lines of enquiry would have become cold. Although prejudice in particular respects may not be apparent on the information before the Court, the delay would have been so long that in the circumstances of this case the probability of prejudice, although unidentified, should be assumed: see Allen v Sir Alfred McAlpine and Sons Ltd (1968) 1 All ER 543 at 556 per Diplock LJ.”
[15] ibid
The applicant submitted that were the Court to grant the respondent’s application for leave to withdraw the admissions and to file another further amended defence, this would allow the withdrawal of three central admissions (made as long ago as December 2011) fundamental to the running of the case. It was submitted the applicant had prepared its case on the basis of these admissions, opened its case on this basis and led evidence on this basis.
It was submitted the respondent’s submissions in support of its application in a case sought to ‘gloss over’ and completely failed to appreciate how the proceedings to date had been conducted. Moreover it was submitted the absence of evidence constituting a good and sufficient explanation for why leave to withdraw should be granted was fatal to the respondent’s application.
It was also submitted in light of the application being unduly late, where no satisfactory explanation was given for this and there was prejudice that would flow to the applicant were leave granted the respondent’s application should be refused. It was submitted that the respondent’s application in a case simply confirmed (what the applicant submitted was) the ‘indifference’ with which the respondent approached the substantive proceedings.
Approach to issues in the application in a case
Given the issues raised in submissions the parties were referred to the decision of Lucev FM in Swevenings Pty Ltd v Ferguson Consolidated Holdings Pty Ltd & Anor (No.4) [2009] FMCA 291 (“Ferguson”).
In that case His Honour was dealing with an application to withdraw an admission along with an application to file a substituted defence. In considering that matter his Honour referred to many of the authorities relied on by the parties in this case including Celestino v Celestino (unreported, Full Court of Federal Court of Australia, 16 August 1990), Murran Investments Pty Ltd v Aromatic Beauty Products Pty Ltd [2000] FCA 1732 and Deangrove Pty Ltd (Receivers and Mangers Appointed) v Commonwealth Bank of Australia [2003] FCA 268.
After noting one of the relevant Federal Court Rules His Honour said:
“25.Before an admission can be withdrawn the Court must be satisfied that:
(a)an error or mistake by or on behalf of the party seeking to withdraw the admission has been demonstrated;
(b)there is a sensible explanation for the making of the admission, and that explanation has been provided, based on evidence of a solid and substantial character; and
(c)no injustice will be occasioned to the other party by the withdrawal of the admission, other than hardship by delay or costs which can be accommodated by an appropriate order for costs.[16]
[16] Murran Investments Pty Ltd v Aromatic Beauty Products Pty Ltd (2000) 191 ALR 579 at 589 per Mansfield J; [2000] FCA 1732 at para.44 per Mansfield J (“Murran Investments”), referring to Celestino v Celestino (unreported, Full Court of Federal Court of Australia, Spender, Miles and von Doussa JJ, 16 August 1990) at pages 8-10.
26.In Murran Investments the second applicant swore two affidavits asserting the relevant admission had been made in error and seeking to explain how the admission came to be made in error.[17] The Federal Court found that:
[17] Murran Investments ALR at 589 per Mansfield J; FCA at para.47 per Mansfield J.
(a)the applicants had established that the factual allegations had been made in error on the basis of a misunderstanding by the second applicant as to the performance of the franchise business;
(b)the misunderstanding was explained by the second applicant’s limited role in the business prior to her husband’s sudden death.[18]
[18] Murran Investments ALR at 590-591 per Mansfield J; FCA at para.51 per Mansfield J.
27.Moreover, in Murran Investments the Federal Court found that there was no particular injustice to the respondents if the admission was withdrawn.[19] In that case pleadings were not closed and there was no suggestion that the matter was anywhere near to going to hearing.[20]
[19] Murran Investments ALR at 590-591 per Mansfield J; FCA at para.51 per Mansfield J.
[20] Murran Investments ALR at 581-584 per Mansfield J; FCA at paras.3-20 per Mansfield J.
28.In Deangrove Pty Ltd (Receivers and Managers appointed) v Commonwealth Bank of Australia[21] it was sought, after three days of hearing, to withdraw an admission that a director had executed a guarantee of the company’s obligations under a bill discount facility provided by the respondent bank. The withdrawal arose because the director did not recognise the signature on the guarantee when it was put to him in cross-examination, and ultimately he denied that the signature purporting to be his on the guarantee was in fact his signature.[22]
[21] [2003] FCA 268 (“Deangrove”).
[22] Deangrove at paras. 3 and 5-19 per Sackville J.
29.In Deangrove the Federal Court comprehensively canvassed the principles relating to the withdrawal of an admission in the following paragraphs, which this Court, with respect, adopts:
29 The principles relating to the circumstances in which a party should be given leave to withdraw an admission were addressed by Rogers CJ Comm D in Coopers Brewery Ltd v Panfida Foods Ltd [1992] 26 NSWLR 738. In that case, admissions were made by the defendant's legal representatives after consent orders were made requiring the defendant either to admit certain matters or to serve an expert's report in support of a denial of those matters. Rogers CJ rejected (at 746) the approach taken in H Clark (Doncaster) Ltd v Wilkinson [1965] Ch 694, as the product of "another age and ... other circumstances". In Clark v Wilkinson, Lord Denning MR had said this (at 703):
"An admission made by Counsel in the course of proceedings can be withdrawn unless the circumstances are such as to give rise to an estoppel. If the other party has acted to his prejudice on the faith of it, it may not be allowed to be withdrawn... But otherwise an admission can be withdrawn. For example, an admission is often made by error in a pleading. It can be withdrawn if the other party has not been prejudiced, or, indeed, if any prejudice can be cured by compensation in costs."
Rogers CJ, by contrast, said (at 750) that an admission made by Counsel in the proceedings
“should not be permitted easily to be withdrawn so as to make the procedure [requiring a party, in certain circumstances, to make admissions] meaningless”.
On the other hand, his Honour recognised a countervailing policy, namely that parties should not be discouraged from making admissions out of fear that, once give, the admissions cannot be withdrawn.
30 Later cases have given weight to the observations made by Rogers CJ in Coopers Brewery v Panfida. In Ridolfi v Rigato Farms Pty Ltd [2000] 2 Qd R 455, for example, the Queensland Court of Appeal upheld the refusal of the trial judge to allow the defendant in a personal injuries case to withdraw admissions deemed to have been made by reason of a failure to dispute a notice to admit facts. de Jersey CJ, with whom McPherson JA and Williams J agreed, observed (at 459) that:
“There is no principle that admissions made, or deemed to have been made, may always be withdrawn `for the asking', subject to payment of costs. The discretion is broad and unfettered, as exemplified by [Coopers Brewery v Panfida]”.
Williams J noted that Counsel had referred to the passage of Bowen LJ in Cropper v Smith. His Honour said (at 460):
“That statement, while made over 100 years ago, is still relevant, and it encapsulates a principle which a judge must always take into consideration in determining whether or not it is appropriate, for example, to allow a party to withdraw an admission. Essentially it is no more than a recognition that Courts will, so far as possible, ensure that a party has a fair trial. But, for example, where the detriment or prejudiced is self-induced, the party may not be entitled to relief”.
Williams J went on to endorse the comment of Rogers CJ that the approach of Lord Denning in Clark v Wilkinson was the product of another age.
31 In Drabsch v Switzerland General Insurance Co Ltd, unreported, 16 October 1996, Supreme Court of New South Wales, Santow J in the context of an appeal from orders made on an application for leave to withdraw admissions in pleadings, summarised the relevant principles as follows:
"1. Where a party under no apparent disability makes a clear and distinct admission which is accepted by its opponent and acted upon, for reasons of policy and the due conduct of the business of the Court, an application to withdraw the admission, especially at appeal, should not be freely granted ... .
2. The question is one for the reviewing judge to consider in the context of each particular appeal, with the general guidelines being that the person seeking on a review to withdraw a concession made should provide some good reason why the judge should disturb what was previously common ground or conceded... .
3. Where a Court is satisfied that admissions have been made after consideration and advice such as from the parties' expert and after full opportunity to consider its case and whether the admission should be made, admissions so made with deliberateness and formality would ordinarily not be permitted to be withdrawn ... .
4. It will usually be appropriate to grant leave to withdraw an admission where it is shown that the admission is contrary to the actual facts. Leave may also be appropriate where circumstances show that the admission was made inadvertently or without due consideration of material matters. Irrespective of whether the admission has or has not been formally made, leave may be refused if the other party has changed its position in reliance upon the admission... .
5. Following Cohen v McWilliam & Anor [1995] 38 NSWLR 476, a Court is not obliged to give decisive weight to Court efficiency, such that a party who wishes to defend its claim is entitled to a hearing on the merits, with costs orders being available as a means of compensating the other party for any costs thereby unnecessarily incurred or not fairly visited on the other party”.
32 Some care must be taken in applying the principle stated in Coopers Brewery v Panfida. Rogers CJ clearly gave great weight to efficient case management and the importance of avoiding disruption to Court lists. His Honour may also have been influenced by the fact that the admission was made in response to a consent order in the proceedings. Since Coopers Brewery v Panfida was decided, the High Court, in Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146, has reaffirmed the principle stated by Bowen LJ in Cropper v Smith as applied in Clough and Rogers v Frog. In that case, the majority (Dawson, Gaudron and McHugh JJ) observed (at 154) that:
“Case management is not an end in itself. It is an important and useful aid for ensuring the prompt and efficient disposal of litigation. But it ought always to be borne in mind, even in changing times, that the ultimate aim of a Court is the attainment of justice and no principle of case management can be allowed to supplant that aim.”
Later, their Honours said (at 155):
“Case management, involving as it does the efficiency of the procedures of the Court, was in this case a relevant consideration. But it should not have been allowed to prevail over the injustice of shutting the applicants out from raising an arguable defence, thus precluding the determination of an issue between the parties.”
33 In Hanave Pty Ltd v LFOT Pty Ltd [1997] FCA 218, Moore J took account of the observations in Queensland v J L Holdings in granting leave to an applicant "at the concluding stages of...protracted litigation" to withdraw a concession made on its behalf by Counsel. The concession concerned the scope of a representation pleaded in the statement of claim. His Honour granted leave for the applicant to adopt a broader construction of the pleadings, notwithstanding that an adjournment was apparently required in order to allow the respondents to adduce further evidence required by the expansion of the issues in the case.
34 It seems to me that, having regard to the reasoning in Queensland v J L Holdings, questions of case management (in the sense of efficient Court administration and use of Court time), although not irrelevant, should not play a decisive or paramount role in determining whether or not to grant leave to a party to withdraw an admission. I do not, however, read the High Court's decision as entitling a party to raise a fresh issue in litigation at any time of its choosing, regardless of the basis on which the litigation has been conducted or the stage the proceedings have reached. It must be remembered that in Queensland v J L Holdings, the application to amend the pleadings was made six months prior to the scheduled date of the trial and, according to the majority, the amendment raised no complex factual issues. The High Court was not concerned with an application in the course of a hearing to withdraw an admission made on a factual question within the knowledge of the party making the admission.
35 Consistent with what was said by Santow J in Drabsch v Switzerland Insurance, a party who makes a clear and distinct admission on a factual question, which is accepted and acted upon by the opponent, should not be permitted freely to withdraw that admission. Whether or not it is appropriate to grant leave will depend upon the particular circumstances of the case and an assessment of the interests of justice. The relevant circumstances include the nature of the admission, how it came to be made (for example, whether it was made deliberately or inadvertently), when and why the party seeks to withdraw the admission and the impact of any withdrawal on the other parties to the litigation.[23]’
[23] Deangrove at paras.29-35 per Sackville J.
30.In refusing leave to withdraw the admission the Federal Court in Deangrove had regard to the following considerations:
a)that a grant of leave would open up fresh issues which would need to be determined at hearing;[24]
[24] Deangrove at paras.40-41 per Sackville J.
b)that an adjournment of the hearing (which had already run for three days) would be necessary;[25]
[25] Deangrove at para.42 per Sackville J.
c)that it was not the first time that the proceedings had had to be adjourned or vacated, and that the “lamentable history of the litigation” was “virtually wholly attributable” to the party seeking to withdraw the admission;[26]
[26] Deangrove at para.43 per Sackville J.
d)that another delay would work unfairness to the respondent bank, notwithstanding that it was well resourced and because of the prospect of further and possibly irrecoverable costs;[27]
[27] Deangrove at para.44 per Sackville J.
e)the history of the litigation, and having regard to that history, that there “must come a point at which the interests of justice demand that a party to litigation take responsibility for his own conduct”;[28] and
[28] Deangrove at para.44 per Sackville J.
f)that no satisfactory explanation of the making of the admission had been made, especially in circumstances where the director had sworn on three separate occasions that he had signed as guarantor.[29]
[29] Deangrove at para.45 per Sackville J.
31.The principles and considerations referred to above need to be applied in the context of the Federal Magistrates Act 1999 (Cth)[30] and the Federal Magistrates Court Rules 2001 (Cth),[31] which, as this Court has observed in Goodall v Nationwide News Pty Ltd:
Reading together the objects of the FM Act in s.3, the mode of operation in s.42, and having regard to the objects of the FMC Rules in r.1.03, it is apparent that the Court is intended to operate in a manner:
(a)as informal as possible in the exercise of judicial power;
(b)which is not protracted in its proceedings;
(c)which resolves proceedings justly, efficiently and economically;
(d)uses streamlined procedures; and
(e)avoids undue delay, expense and technicality,[32]
[30] “FM Act”.
[31] “FMC Rules”.
[32] [2007] FMCA 218 at para.21 per Lucev FM.
noting that:
a)the expressions of principle by the High Court concerning case management and the requirement to do justice between the parties set out in Queensland v JL Holdings Pty Ltd[33] pre-date the passage of the FM Act and FMC Rules and therefore it is possible that Parliament intended that this Court place more significance on questions of case management;
b)but also taking into consideration that the resolution of proceedings “justly, efficiently and economically” still puts the requirement to be just first and foremost.[34]”
[33] (1997) 189 CLR 146 (“JL Holdings”).
[34] Hill End Gold Ltd v First Tiffany Resource Group Corporation [2008] NSWSC 866 at para.63 per Brereton J.
Given that in the decision of Ferguson His Honour referred to and applied the authorities referred to by the parties (and as neither party suggested it was inappropriate to do so) I will follow the approach set out by His Honour to the respondent’s application in a case.[35]
[35] The authorities relied on by the respondent pre-dated Aon and/or could be distinguished (i.e. Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No.4) [2006] FCA 1552) from the facts in this case where application was made on day 3 of the trial and after evidence had opened
Consideration
In the context of penalty proceedings in Australian Securities and Investments Commission v Mining Projects Group Limited [2007] FCA 1620 Finkelstein J said:
“3.The primary object of a defence is to inform the plaintiff what parts of the statement of claim are admitted, what parts are denied and on what grounds and facts the defendant intends to rely to defeat the claim, The defence should contain, in summary form, the material facts upon which the defendant will base his defence but not the evidence by which those facts are to be provided. Taken together, the statement of claim and defence define the issues to be tried and enable the parties to know what evidence they must call. A properly pleaded case will ensure an efficient trial that brings into focus the precise issues that are in dispute and will prevent the injustice that comes about when a party is taken by surprise.”
These proceedings have proceeded upon the pleadings since the applicant filed its statement of claim in October 2011. The respondent has had the opportunity to file a defence in December 2011, an amended defence in June 2012 and a further amended defence in December 2012. The amended statement of claim runs to
179 paragraphs and the further amended defence to 182 paragraphs.
In the period leading up to the commencement of the trial on
25 February 2013 the respondent had at all times been legally represented and had even in the days before the trial entered into consent orders with the applicant in relation to the conduct of same.
In both its written submissions and in submissions before the Court the respondent made reference to the FMC Rules which allow for amendments to pleadings and the contention that the withdrawals sought were either more of a qualification and/or were directed to achieving a “just resolution” of the “real” controversy between the parties.
Counsel for the respondent conceded there had been substantial delay in seeking the orders contained in the application in a case but submitted to deny the respondent the leave sought would cause prejudice and injustice to her client. However Counsel for the respondent properly acknowledged the case management considerations told against her client’s application and the respondent has averted to meeting an order for costs in the event the matter was adjourned.
In Deangrove the Court referred to Queensland v JL Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146, which has now been overtaken by the High Court decision in Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175. I accept the submissions made by the applicant as to the importance to be placed on case management in the context of this matter and the issues of prejudice.
Even if the Court accepts for present purposes there is a mistake or error and notwithstanding the submissions made on behalf of the respondent (that sought to couch the amendments sought as a qualification to admissions made) as the applicant said in submissions the amendments proposed by the respondent necessitate the withdrawal of admissions made by the respondent in three respects.
a)the amendments proposed in paragraph 2(d) would result in the withdrawal of the admission that, at all relevant times, the business operated by the respondent “included, from about November 2006, the renovation and refurbishment of the building at 384-386 Flinders Lane, Melbourne, Victoria” (defined as “the Renovation Works”).
b)the amendments proposed in paragraph 3(a) would result in the withdrawal of the admission that the 10 workers to whom the proceedings relates (the workers) “were engaged by it to perform, and did perform renovation and refurbishment workers on the building at 384-386 Flinders Lane, Melbourne, in the States of Victoria” (also defined as “the Renovation Works”).
c)the amendments proposed in paragraph 3(b) would result in the withdrawal of the admission that the work performed by the Workers was “building work” within the meaning of the BCII Act. That issue has never been in dispute in the proceeding.
I accept the applicant’s submission that the effect of the above admissions, which have always comprised part of the respondent’s defence, is that to date there has been no controversy between the parties that, at all relevant times, the respondent’s business included the renovation and refurbishment works at 386 Flinders Lane and that the workers were engaged by it and did work in that business. The applicant has prepared for, opened and conducted its case on this basis.
The application made by the respondent would open up fresh issues in these proceedings[36] which have been hitherto agreed and the proceedings have on foot since 2011 and are part heard. In this case I am not satisfied there is evidence the respondent was under any apparent disability at the time the admissions (on each occasion) were made. The respondent who was represented has made a clear and distinct admission(s) in the various iterations of its defence which have been accepted by the applicant and acted upon.
[36] see for e.g. para 10 of applicant’s submissions
Given the respondent has at all times been represented by the same solicitor and the number of iterations the current defence has been through it is difficult to accept the stated reasons for the respondent’s application. Despite the evidence of the respondent’s solicitor there is nothing to dispel the conclusion that the admissions made (as early as 2011 and again in 2012) by the respondent were made after consideration and advice whilst it has at all times been represented by the same solicitor and after every opportunity for the respondent to consider its case and file three iterations of its defence. There is not sufficient evidence to suggest the admissions were made inadvertently or without due consideration of material matters. There is also the issue that the applicant has changed its position in reliance upon the admissions.
Given the focus of the submissions on behalf of the respondent in support of the orders sought in the application in a case on them being to ensure there was a “just resolution” of the proceedings between the parties it is important to say something about that submission and to do so in light of the FMC Rules and the FM Act. In Andrews v Australia and New Zealand Banking Group Ltd [2011] FCA 388 Gordon J said, (in considering a strike out application in the context of s.37 of the Federal Court of Australia Act 1976) that:
“26.Of course “case management principles should not supplant the objective of doing justice between the parties according to the law”: Aon at [29], [30] and [57]. However, the High Court stated that “waste of public resources and undue delay, with the concomitant strain and uncertainty imposed on litigants” together with the potential for loss of public confidence in the legal system, were factors able to be taken into account in the exercise of interlocutory discretions: Aon at [30] and at [57] …
27.The High Court in Aon then went further – their Honours acknowledged that it may be necessary in an appropriate case to make a decision which may produce a sense of injustice, for the sake of doing justice to the opponent or to other litigants: Aon at [94].”
As is clear from the decision in Ferguson these observations, albeit in the context of the Federal Court Act, apply equally to proceedings in the context of the FM Act and FMC Rules. In the present case what is particularly relevant, in my view, is that the admissions which the respondent wishes to resile from have been acted upon by the applicant. As was noted by Counsel for the applicant in submissions before the Court (opposing the respondent’s application in a case) the applicant has at all relevant times since the respondent filed its defence (along with each subsequent iteration to date) proceeded on the basis that inter alia the matters pleaded in paragraphs 2(g), 3(a) and (3(b) of the amended statement of claim had been admitted as set out in the further amended defence[37] and accordingly the applicant would not be put to proof on those matters.
[37] See para 2(d), 3(a) and 3(b) of further amended defence filed 21 December 2012
Notwithstanding the affidavit of its solicitor the absence of evidence of a solid and substantial character from the respondent as to the events that occurred at the time the admissions were made and re-made is significant. It has not been demonstrated there is a sensible explanation for the making of the admissions, or that the explanation that has been provided is based on evidence of a solid and substantial character.
The situation confronting the respondent would appear to be of its own making where the detriment is “self induced”[38] and where it has already had every opportunity to identify the issues it seeks to agitate.[39]
The application made by the respondent would work an injustice on the applicant (who has changed its position in reliance on the admissions) and would be one for which costs (to the extent they are available in proceedings under the WR or FW Act) would not be sufficient compensation and would be likely to further delay the proceedings.
[38] See decisions referred to at para 29 in Ferguson
[39] See Aon at para 112
Given this when the Court takes into account the timing of the respondent’s application in a case, the lack of a proper explanation, that the applicant has acted on the admissions made, the prejudice which I accept would flow[40] were the orders sought by the respondent granted particularly as to costs and delay to the proceedings, in all the circumstances (including the prior history of the matter) I am not satisfied I should exercise my discretion to allow the respondent to withdraw the admissions. [41]
[40] See para 10 of exhibit A28
[41] As I understood the respondent’s submissions this conclusion would obviate the need to file the foreshadowed further ‘further amended defence’.
I also accept the applicant’s submission that given that their contents are wholly or substantially outside of the respondent’s case as presently pleaded, the lack of compliance with the orders and directions for trial, and the possible prejudice to the applicant that leave to file and serve the affidavits referred to in order 3 of the application in a case should also be refused.
Conclusion
In Deangrove at paragraph 44, Sackville J said:
“There must come a point at which the interests of justice demand that a party to litigation takes responsibility for his own conduct.”
In the circumstances set out above, applying the relevant discretionary considerations (consistent with the principles set out in Ferguson including that of Sackville J in Deangrove) indicates that the interests of justice tell against the orders sought by the respondent in the application in a case filed 28 February 2013 being granted. For the reasons set out above the appropriate order is that the application in a case be dismissed[42]. I will hear the parties as to the appropriate order as to costs and any consequential or further procedural orders.
[42] Save as to the amendment agreed to between Counsel on 1 March 2013
I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of O’Sullivan FM
Date: 12 March 2013
9