Ting v Superstop Auto Parts Pty Ltd
[2019] FCCA 3853
•12 December 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| TING v SUPERSTOP AUTO PARTS PTY LTD & ORS | [2019] FCCA 3853 |
| Catchwords: INDUSTRIAL LAW – Fair Work – application for summary dismissal – application to strike out statement of claim – where the statement of claim is wholly deficient – statement of claim struck out – procedural orders made to rectify claim – costs order made. |
| Legislation: Fair Work Act 2009, ss.325, 340, 343, 344, 345, 535, 544, 545, 550, 570(2)(b) Federal Court Rules 2011 r. 16.21 Social Security (Administration) Act 1999 |
| Cases cited: Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd [1994] FCA 1463 |
| Applicant: | KRIS LYNN TING |
| First Respondent: | SUPERSTOP AUTO PARTS PTY LTD |
| Second Respondent: | STEVEN PAUL KRETI |
| Third Respondent: | VICTOR MAKRIEVSKI |
| Fourth Respondent: | VIVIENNE LEE MAKRIEVSKI |
| File Number: | MLG 1611 of 2019 |
| Judgment of: | Judge Blake |
| Hearing date: | 12 December 2019 |
| Date of Last Submission: | 12 December 2019 |
| Delivered at: | Melbourne |
| Delivered on: | 12 December 2019 |
REPRESENTATION
| Advocate for the Applicant: | Mr Lim |
| Solicitors for the Applicant: | L & T Associates |
| Counsel for the Respondents: | Ms Sweet |
| Solicitors for the Respondents: | Carter Newell Lawyers |
ORDERS
The matter be adjourned to 24 March 2020 at 10am for Directions.
The further amended statement of claim filed on 15 August 2019 be struck out in its entirety.
The Applicant have leave to file and serve a further further amended statement of claim by 4pm on 16 January 2020.
The Respondents file and serve a Defence to the further further amended statement of claim by 4pm on 16 February 2020.
The Applicant pay the Respondents’ costs of today and costs in connection with the bringing of the strike out application before the Court today.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1611 of 2018
| KRIS LYNN TING |
Applicant
And
| SUPERSTOP AUTO PARTS PTY LTD |
First Respondent
And
| STEVEN PAUL KRETI |
Second Respondent
And
| VICTOR MAKRIEVSKI |
Third Respondent
And
| VIVIENNE LEE MAKRIEVSKI |
Fourth Respondent
REASONS FOR JUDGMENT
(Delivered ex tempore)
This is an application brought by the Respondents to summarily dismiss the proceeding pursuant to Rule 13.10 of the Federal Circuit Court Rules 2001 (‘FCCRules’), or, alternatively, to strike out the Applicant’s statement of claim pursuant to rule 16.21 of the Federal Court Rules 2011 (‘Federal Court Rules’).
By way of background, the applicant commenced the proceeding in this Court by filing an application and statement of claim on 23 May 2019. On 19 June 2019 the applicant filed an amended statement of claim.
On 19 July 2019, the respondents filed an application in a case seeking to strike out the statement of claim on the basis that it failed to disclose a reasonable cause of action, or is likely to cause prejudice or embarrassment or delay in the proceeding, or is otherwise an abuse of process. That application was supported by affidavit material.
On 23 July 2019, the Court made orders that the applicant have leave to file a further amended statement of claim on or before 15 August 2019. The matter was otherwise adjourned.
On 15 August 2019, the applicant filed a further amended statement of claim (‘further amended statement of claim’), which is the subject of the present controversy.
On 22 August 2019, I made orders listing the matter for hearing of the respondents’ strike out application. I made procedural orders relating to the filing of submissions and material.
Subsequently, on 29 August 2019, the respondents filed an interlocutory application. That is the application presently before the Court. The application seeks that the claim be dismissed under Rule 13.10 of the FCC Rules because the claim has no reasonable prospect of success. Alternatively, an order is sought pursuant to Rule 16.21 of the Federal Court Rules that the further amended statement of claim be struck out on the grounds that the pleading fails to disclose a reasonable cause of action, is likely to cause prejudice, embarrassment or delay, and is otherwise an abuse of process.
Both parties filed written submissions prior to today’s hearing. In addition, the respondents filed an affidavit of Michelle Christmas, solicitor, on 11 December 2019. The tendering of that affidavit was opposed by the applicant.
Ultimately, what was sought by the respondents was to rely on two exhibits to that affidavit. The first exhibit was an email from July of this year, which evidenced that the applicant was aware of the issues relating to the operation of section 544 of the Fair Work Act 2009 (‘Act’). The second document was a letter of 11 December 2019 in which the respondents identified not just the issue with respect to section 544, but also the provisions of the Act which stipulate that a person cannot, relevantly for the purposes of this proceeding, pursue a general protections claim in respect of dismissal when an unfair dismissal claim has already been brought. For the reasons that I have just referred to, I admitted both of those documents into evidence and have had regard to them.
The applicant’s lawyer claimed to be surprised by both the raising of section 544 of the Act and by the point taken that the respondents objected to the general protections claim on the basis of the provisions of the Act. Having heard from the parties, I adjourned the matter for some hours to enable the applicant’s solicitor to prepare for and then address those matters. I was of the view that this was sufficient time to allow. The applicant is represented by a lawyer and the provisions are straightforward.
I further instructed Counsel for the respondents to explain the provisions to the applicant’s solicitor. The matter then resumed before me this afternoon. It is pertinent to observe as part of this background that the applicant has at all times been represented by an Australian lawyer. Notwithstanding that this is not a Court of pleadings, the applicant through her legal representative elected to commence the proceedings by way of filing a statement of claim. The rules of this Court do not contain rules for pleadings, but this Court may have regard, in such a situation, to the Federal Court Rules in respect of pleadings. That is what I have done.
The principles that govern the exercise of the Court’s discretion to summarily dismiss a claim or strike out a pleading are well settled. I will refer in a moment to the particular statements of Beaumont J in Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd [1994] FCA 1463 (‘Allstate’). Though the nature of the tests and the approach to be taken have been set out in a number other decisions, including National Mutual Property Services (Australia) v Citibank Savings Ltd (1995) 132 ALR 514. For examples of the approach taken in this Court, which largely adopt the authorities above, see Ellis v Wadjemup Trading (No.3) [2018] FCCA 3075, and Shreea v Ezy Mart Pty Ltd & Anor [2019] FCCA 3050.
In Allstate, Beaumont J quoted with approval a summary of the general principles distilled in Lonrho Plc v Tebbit [1991] 4 All ER 973, namely that:
‘1. A reasonable cause of action means one with some chance of success if regard be had only to the allegations in the pleading relied upon by the claimant; in such a case, the claim cannot be struck out.’
2. The mere fact that the case appears to be a weak one is not of itself sufficient to justify the striking out of the action.
3. Normally the power to strike out should be exercised only in plain and obvious cases, where no reasonable amendment could cure the alleged defect.
4. It goes without saying that if a substantial case is involved in the claim, the power to strike out cannot be exercised.
5. Where a point of law has to be decided, and the judge is satisfied that this can be done by him appropriately, thereby avoiding necessity of, and expense in going to trial, he is entitled to determine the point.’
(Citations omitted)
Insofar as we are concerned with Rule 16.21(e) of the Federal Court Rules, in King v Patrick Projects Pty Ltd [2016] FCA 1110, the Court stated that:
‘Such relief is discretionary. The Court should employ it sparingly. An application to succeed on this ground involves establishing that the applicant’s case is so untenable that it cannot possibly succeed. It is not enough to demonstrate merely that the claim is a weak one. It must be shown that the claim is hopeless and would have no chance at success if the action were to proceed to a hearing. A matter will have no real prospect of success where there is a fanciful, rather than a realistic, prospect of success.’
(Citations omitted)
The respondents submitted that the test could succinctly be described as this: that the power to strike out should be exercised in plain and obvious cases when the pleadings disclose no reasonable cause of action. To that I would add that it is a serious matter to strike out a claim and it is a power that should be exercised sparingly.
I turn to deal with the claims in this case, having set out those principles. It needs to be said at the outset that the further amended statement of claim is not at all clear. The principal claim advanced appears to be a claim under section 325 of the Act. Section 325 is a section concerned with unreasonable requirements to spend or pay an amount of money. The section relevantly makes it an offence for an employer to require an employee to spend or pay to an employer or another person an amount of the employee’s money for the whole or part of an amount payable to the employee in relation to their performance or work.
The applicant alleges that she was required to purchase shares of the first respondent in January to April 2012. The details of this, as best can be ascertained from the further amended statement of claim, are set out within it at paragraphs 10 and 12. It appears that in fact the applicant obtained a bank loan of around $150,000 in order to purchase the shares. As best as I can understand the claim, which is very difficult, I gather the applicant says at least two things. First, the payment of $150,000 that was given to the respondents to purchase the shares is a breach of section 325 of the Act. Second, the repayments of the loan made by the applicant to the financial institution from which she obtained the loan are a breach of section 325 of the Act. The applicant characterises these as continuing breaches.
Section 325 was introduced into legislation in 2009. The original form in which it was introduced remained in legislation until 2017. In 2017 it was amended and broadened.
The operation of section 325 (prior to the 2017 amendments) has received limited consideration from superior courts. The most relevant consideration of it has been the decision of Bromberg J in Australian Education Union v Victoria (Department of Education and Early Childhood Development) [2015] FCA 1196. That decision traces, among other things, the history of the provisions and the provisions similar to the present one.
Two matters stand out from his Honour’s decision. The first is that section 325, in its original form, was directed towards prohibiting employers from directly or indirectly requiring an employee to spend any part of their salary or wages. So much is apparent from paragraphs [339] – [340] of his Honour’s reasons. The second aspect of the decision relates to his Honour’s consideration of what it means to require an employee to spend part of their wage or salary. His Honour accepted, and I agree, that the provision is one of broad import.
There are several difficulties with the way this claim in this matter is pleaded in respect of section 325. First, it does not plead the material facts that give rise to how the applicant was required to spend the amount or pay the money. The material facts as to how the applicant was required to spend the money need to be set out. It seems to me that this could be a basis for striking out the claim under section 325. However, it is also a matter that is manifestly capable of being fixed.
Secondly and perhaps more importantly, it seems to me that the claim in respect of payment to the employer of the $150,000, while it might be caught by the terms of section 325, runs into another difficulty. That difficulty is section 544 of the Act, which relevantly prevents a person from applying for a contravention of a civil penalty provision within six years after the date on which the contravention occurred. This would seem to be a complete bar to any claim brought under section 325, that the payment to the respondents in 2012 was a breach of the Act. This claim was commenced in May 2019. The relevant conduct on the applicant’s presently pleaded case is that the payment occurred some time from December 2011 to January 2012.
Third, insofar as there is a claim that the loan repayments to the bank fall foul of section 325, which the applicant characterises as the continuing breach, I accept that section 544 may not provide a complete defence to the respondents. Clearly in respect of payments occurring within six years from the date of the commencement of the application, the applicant may pursue contraventions of section 325. The difficulty for the applicant, however, is that if she wishes to pursue that aspect of the claim, it is conduct that does not appear to be caught by the section. This is because the section only prohibits payments where, inter alia, those payments are directly or indirectly for the benefit of the employer or a related party of the employer.
A subset of the claims made under section 325 is that the respondents made misrepresentations, exercised undue influence or acted unconscionably. This appears to be an attempt by the applicant to plead these causes of action in the alternative to the claim under section 325. At the hearing, the applicant appeared to state that, in fact, these were standalone causes of action not connected to 325. If that is the case, it is certainly not clear on the further amended statement of claim. If these are separate causes of action, they need to be pleaded separately and, where necessary, alternatively. It is difficult to see how particular conduct could be a misrepresentation or undue influence on the one hand, and a requirement for the purposes of section 325 on the other. Yet that is what the pleading in its present form appears to countenance.
There are then the difficulties with each of the misrepresentation, undue influence and unconscionable conduct claims as presently pleaded. What follows is not a comprehensive analysis of all the deficiencies. It is merely an example of where some of the deficiencies lie.
In respect of the misrepresentation claim, the misrepresentations and the circumstances surrounding them are not pled. The statutory provision relied on, if one is in fact relied on, is not identified.
In respect of the undue influence claim, the facts giving rise to the undue influence are not pleaded. The highest the pleading gets is that it was a ‘natural and probable feature’ of the employment relationship that led to the creation of the undue influence. The statutory provisions, to the extent they are relied on, are not identified.
In respect of the unconscionable conduct claim, the special disadvantage is not pleaded. The highest the pleading gets is to assert the applicant had a love and loyalty to the respondents. That of itself is insufficient. There are also assertions the applicant was conscientiously exploited, but how that is said to be the case is not clear, either.
There are then the claims under sections 340, 343, 344 and 345 of the Act. These claims in their present form are all unclear, rolled up and highly problematic. I will not attempt here and now to go through each and every one of them. But as an example of how those are pleaded, one need look no further than paragraph 15 of the further amended statement of claim. I do not read it out into the transcript, but rely on it.
When looked at, other problems with the pleading become immediately apparent. Again, to illustrate by way of example, and not comprehensively, no material facts are pleaded. The workplace right for the purposes of section 340 is not identified. Contrary to existing Full Federal Court authority, there is no pleading in relation to negation of choice or the use of illegitimate and unconscionable means for the purposes of the coercion pleading in section 343. The material facts giving rise to the undue influence and misrepresentations are not pleaded. To the extent the applicant intended to rely on what was pleaded earlier in relation to those matters, I point to the deficiencies I have identified in respect of same.
I pause here to comment that the applicant in these paragraphs is alleging breaches of civil penalty provisions of the Act. It is trite to say that a respondent faced with such a claim is entitled to squarely understand the case against it.
There is then the matter of the applicant’s termination of employment. I understood during the course of the hearing that the applicant will abandon that claim and I therefore give it no further consideration.
There are then a number of other apparent claims that are advanced in the further amended statement of claim. There is a claim in paragraph 13 for breach of the ‘Clerk Award’. No material facts are pleaded, although maybe this claim has dissipated with the termination claim. There are claims that the respondents breached section 535 of the Act and the relevant regulations by refusing requests to inspect pay records. No material facts are pleaded, including no pleading of the relevant requests. There are alleged breaches of the Social Security (Administration) Act 1999 that constitute nothing more in the document than bare assertions. The respondents took me to the relevant provisions. They appear to be criminal in nature and it is not immediately apparent to me how those breaches, if alleged, could be handled in this Court.
There are claims that the individual respondents were involved in the relevant contraventions, in breach of, or pursuant to section 550 of, the Act. However, the material facts are not pleaded. There are references to a breach of section 557K of the Act. I am unable to discern any such section.
In my view, the pleading as it is currently framed is wholly deficient. In addition to the specific matters that I have mentioned above I would add the following. There is a real absence throughout the document of the pleading of material facts. What has largely been pleaded are legal conclusions and bare assertions. Many of these are rolled up in such a way as to make it difficult to understand. And when combined with the other deficiencies I have pointed to, it is unclear what case the respondents have to meet. I make those comments as a matter of substance. I have not sought to run a close grammatical eye over the documents. I am concerned that the substance of the case is not apparent to the respondents.
It seems to me that while the applicant has chosen to proceed by way of pleadings, she has had no regard to the relevant rules. It has to be remembered that the applicant has been legally represented at all times and elected to run its case on the pleadings. The absence of compliance with the Federal Court Rules on pleadings, which apply in a case such as this, is a very serious matter and is very seriously prejudicial to the respondents’ ability to meet the case against them.
Having said all of that, the critical issue is whether I should exercise my discretion to summarily strike out or dismiss the proceeding with no leave to re-plead. It is accepted that the respondents have a high bar to meet. In my view this case comes very close to one where I ought to order and exercise my discretion to strike out the entirety of the claim, particularly given the applicant has been represented by an Australian lawyer at all times.
I am, however, persuaded that I should not exercise this discretion on this occasion, principally for two reasons. First, while there has been correspondence between the parties, it does not appear that at any stage the respondents wrote to the applicant and put her squarely on notice of the deficiencies in the pleadings. The respondents did write to the applicant and assert in general terms that the pleading was deficient. That, in my view, was not sufficient. The applicant had demonstrated a willingness to amend the pleadings. More might have been done and this situation avoided, had the respondent squarely put the applicant on notice of the issues. In saying this, I wish to make clear that the Court does not require a party to effectively rewrite or fix pleadings of another party. This is a case, however, where more needed to be done than simply writing to the applicant and saying, effectively, that the pleading was generally deficient or did not comply with the rules.
Second, it is a serious matter to deprive a litigant completely of her right to pursue a claim. The test is a high one. Here I am very deeply concerned about the standard of the claim document and the pleadings and the fact that it was prepared by a person who, on the material before me, is a lawyer. Many of the issues, it seems to me, ought to have been identified by a lawyer and addressed very early in the piece. A paying client is entitled to that much. I am reluctant at first instance to deprive a litigant of the rights to pursue a claim because of what appears to be very significant errors or misunderstandings of a lawyer.
Having said that, I make the following observations. It seems to me that the claims under section 325 as pleaded are hopeless. Likewise it seems that any claim in connection with the applicant’s termination of employment is hopeless, though I understand the applicant to have disregarded that claim. Any claim brought in respect of a civil penalty proceeding where the conduct occurred more than six years prior is also hopeless. The Social Security claim appears to be hopeless.
There may well be, somewhere in this document, aspects of other claims that are capable of being fixed and properly pleaded. For the reasons that I have averted to, the applicant deserves an opportunity to do that. It is likely to take a lot of work to do that and even then the claims may not emerge. I have attempted to strike a balance and provide some leniency to the applicant, given what I consider to be are largely errors of her legal representative. I would emphasise to the applicant, however, that if the issues with this pleading are not fixed and if the respondents subsequently bring a claim, properly based, to strike out her claim, then the applicant ought not to expect the same degree of leniency from this Court which it has extended on this occasion.
The respondents have made an application for costs, relying on section 570(2)(b) of the Act. This application is for their costs of today in connection with the bringing of this application to strike out. There is a high threshold to meet in order to obtain a costs order under the Act. Such has been emphasised on numerous occasions, most notably by Pagone J in CFMEU v Corinthian Industries (Australia) Pty Ltd (No 2) [2014] FCA 351. There have also been statements by other judges of the Federal Court that the power is to be exercised cautiously and the case for its exercise should be clear.
I have considered the submissions of Counsel for the respondents. I am satisfied that there is a case for a costs order in this matter for the following reasons. It is patently clear, given my reasons for decision, but also in light of what occurred on transcript, that while the applicant elected to commence this case by way of pleading, the applicant did not have any regard at all to the rules of pleadings and did not even seem to be aware that they needed to meet them. That fact has caused the dispute today.
To that I would add two other matters. There was clearly, on any view, an issue as to whether the time limit in section 544 applied at least to the initial payment of the $150,000 in January 2012. It was also clearly an issue and a bar to the applicant pursuing a termination of employment claim under the general protections provisions, having pursued an unfair dismissal matter. Both of those matters are matters which the applicant should clearly have known about. The concession during the course of today in relation to the general protections issue confirms that, but it did not save the time, cost or expense of the hearing.
In summary, I am satisfied that there are, or were unreasonable acts or omissions, that caused costly expense in this matter. It is appropriate that I make a costs order.
I certify that the preceding forty-five (45) paragraphs are a true copy of the reasons for judgment of Judge Blake
Associate:
Date: 7 February 2020
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