Welsh v Allblend Holdings Pty Ltd
[2010] FMCA 281
•23 April 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| WELSH v ALLBLEND HOLDINGS PTY LTD | [2010] FMCA 281 |
| COURTS AND JUDGES – Federal Magistrates Court – jurisdiction – power to make orders in relation to matter in which Federal Magistrates Court has jurisdiction – whether associated jurisdiction in respect of matters subject of proposed cross-claim. PRACTICE AND PROCEDURE – Application for leave to amend response and defence and institute cross-claim – factors for consideration – nature and importance of amendment – circumstances giving rise to amendment – delay and explanation – case management – costs and prejudice. |
| Acts Interpretation Act 1901 (Cth), s.15C Constitution, ss.75, 76, 77 Corporations Act 2001 (Cth), ss.58AA, 180, 181, 182, 1317H Fair Work Act 2009 (Cth), s.570(2)(a) Federal Court of Australia Act 1976 (Cth), s.22 Federal Magistrates Act 1999 (Cth), ss.3, 10, 10A(4) and (5), 13(3)(a), 14, 18, 42, 45, 76 Federal Magistrates Court Rules 2001 (Cth), rr.1.03, 7.01(1), 10.01(3)(j), 11.02(2), 28.01, 28.03, 28.04 Human Rights and Equal Opportunity Commission Act 1986 (Cth), s.46PO Native Title Act 1993 (Cth), s.81 Trade Practices Act 1974 (Cth), ss.51AB, 52 Workplace Relations Act 1996 (Cth), ss.232, 235, 661(2) & (4), 666, 719, 723, 824 |
| Abrahams v Qantas Airways Ltd (2007) 210 FLR 314; [2007] FMCA 639 Fox v Robinson & Anor [2003] FMCA 107 Goldman Sachs JBWere Services Pty Ltd v Nikolich (2007) 163 FCR 62; [2007] FCAFC 120 In Re the Judiciary Act 1903-1920 and In Re the Navigation Act 1912-1920 (1921) 29 CLR 257 McLeish v Faure (1979) 40 FLR 462 Re Wakim; Ex parte McNally and Another (1999) 198 CLR 511; [1999] HCA 27 St George Bank Ltd v MJK Pty Ltd [1999] FCA 1752 Taylor v CGU Insurance Limited (2005) 193 FLR 120; [2005] FMCA 1073 The State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146 Trainor v BMW Melbourne Pty Ltd and Others [2003] FMCA 7 |
| Allsop J, “Federal Jurisdiction and the Jurisdiction of the Federal Court of Australia in 2002” (2002) 23 Aust Bar Review 29, J, “An Introduction to the Jurisdiction of the Federal Court of Australia”, (October 2007) |
| Applicant: | PENELOPE JANE WELSH |
| Respondent: | ALLBLEND HOLDINGS PTY LTD |
| File Number: | PEG 176 of 2009 |
| Judgment of: | Lucev FM |
| Hearing date: | 2 February 2010 |
| Date of Last Submission: | 2 February 2010 |
| Delivered at: | Perth |
| Delivered on: | 23 April 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr M.W. Fatharly |
| Solicitors for the Applicant: | Kott Gunning |
| Counsel for the Respondent: | Mr D. Howlett |
| Solicitors for the Respondent: | Taylor Smart |
ORDERS
That the Respondent have leave to amend its:
(a)Response; and
(b)Defence
in the form of the Minute of Amended Response and Amended Defence and Cross-Claim filed on 10 December 2009, which is to stand as the Amended Response and Amended Defence and Cross-Claim.
The Applicant become the Applicant, and First Respondent by Cross-Claim.
The Respondent become the Respondent, and Applicant by Cross-Claim.
2B Wizards Pty Ltd become the Second Respondent by Cross-Claim.
The matter be adjourned to a further directions hearing at 12.00pm on 29 April 2010.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 176 of 2009
| PENELOPE JANE WELSH |
Applicant
And
| ALLBLEND HOLDINGS PTY LTD |
Respondent
REASONS FOR JUDGMENT
Application
By statement of claim filed on 25 September 2009 the applicant, Ms Welsh, seeks payment of the sum of $21,738.52, the imposition of a penalty on the respondent pursuant to s.719 of the Workplace Relations Act 1996 (Cth)[1] and the payment of interest under s.723 of the WR Act from 11 June 2009 to the date of payment or judgment.[2]
[1] “WR Act”.
[2] “Application”.
The sum claimed is said to be monies payable at the time of Ms Welsh’s termination by the respondent, Allblend Holdings Pty Ltd,[3] for:
a)annual leave accrued under s.232 of the WR Act; and
b)notice under s.661(2) of the WR Act.
[3] “Allblend Holdings”.
Allblend Holdings, by a defence filed on 23 November 2009, claim that Ms Welsh:
a)is not entitled to payment in lieu of notice as she was summarily dismissed; and
b)had used her accrued annual leave entitlements in their entirety in the course of her employment with Allblend Holdings and had no entitlements remaining at the date of termination.
Mediation of the matter by a Registrar of this Court in November and December 2009 was unsuccessful.
Interim Application
Amending response and defence and instituting a cross-claim
By an interim application filed on 10 December 2009[4] Allblend Holdings seeks to amend its response and defence, and to institute a cross-claim against the applicant and a second respondent, 2B Wizards Pty Ltd,[5] for orders:
a)that Ms Welsh and 2B Wizards pay to Allblend Holdings the sum of $4,042.50 being the sum invoiced and paid by MYO Australia in relation to a course[6] run for MYO Australia by Ms Welsh and 2B Wizards;
b)that Ms Welsh pay to Allblend Holdings the sum of $28,535.20 being payment for 53 days on which Ms Welsh allegedly absented herself from the performance of her duties without the knowledge or consent of Allblend Holdings;
c)in the alternative to (a) and (b) above, payment of damages by Ms Welsh and 2B Wizards;
d)for an accounting as constructive trustee as against Ms Welsh and 2B Wizards;
e)for a compensation order against Ms Welsh and 2B Wizards under s.1317H of the Corporations Act 2001 (Cth);[7]
f)for payment of interest under s.76 of the Federal Magistrates Act 1999 (Cth)[8] by Ms Welsh and 2B Wizards from 24 May 2008 to the date of payment or judgment; and
g)for costs.
[4] “Interim Application”.
[5] “2B Wizards”.
[6] “MYO Course”.
[7] “Corporations Act”.
[8] “FM Act”.
Ms Welsh opposes the grant of leave to file an amended response and amended defence and to institute a cross-claim.
Affidavit in support of Interim Application
The Interim Application is supported by an affidavit sworn by Peter Albert Nevin, a partner in the firm of Taylor Smart.[9] Mr Nevin has the conduct of the case on behalf of Allblend Holdings. The essence of that affidavit is that:
[9] Affidavit of PA Nevin, sworn 10 December 2009 (“Mr Nevin’s Affidavit”).
a)Counsel was engaged on 19 November 2009 in preparation for the mediation;
b)the response and defence filed on 23 November 2009 were prepared by Mr Nevin and were not reviewed by Counsel prior to being filed;
c)Allblend Holdings was aware when the response and defence were filed on 23 November 2009 that Ms Welsh was in control of 2B Wizards and had provided services to 2B Wizards in May 2008 at the same time as she was employed by Allblend Holdings, and those matters formed the basis of the plea at paragraph 5 of the defence which alleged that Ms Welsh was dismissed summarily for misconduct (the defence pleading that the summary dismissal for misconduct was by reason of:
i)acting as a director of 2B Wizards in competition with Allblend Holdings;
ii)providing personal services to 2B Wizards;
iii)causing or directing 2B Wizards to provide training services in competition with Allblend Holdings;
iv)directing clients to 2B Wizards for the provision of training services in preference to Allblend Holdings; and
v)utilising the training facilities of Allblend Holdings for the benefit of 2B Wizards;
and that summary dismissal for serious misconduct was also warranted by reason of a breach of the terms of Ms Welsh’s contract of employment, and, further, a breach of her duty of good faith and fiduciary obligations owed to Allblend Holdings);
d)Counsel subsequently reviewed the matter and recommended that a cross-claim be commenced against Ms Welsh and that 2B Wizards be joined as a respondent to that cross-claim;
e)as mediation was imminent, instructions were not sought to make the Interim Application to amend the response and defence and to institute a cross-claim prior to mediation as Mr Nevin considered that it was appropriate in all the circumstances to await the outcome of mediation before doing so;
f)mediation took place in the case on 30 November and 7 December 2009, and was finalised, without success; and
g)the interim application was filed on 10 December 2009.
Issues
The issues in these proceedings are whether:
a)the Court has associated jurisdiction to deal with the new causes of action raised in the amended response and amended defence and proposed cross-claim; and
b)leave ought to be granted to file the amended response and amended defence and to institute the cross-claim.
Jurisdiction
The Constitution and jurisdiction of this Court
Sections 75–77 of the Constitution provide as follows:
75 Original jurisdiction of High Court
In all matters:
(i)arising under any treaty;
(ii)affecting consuls or other representatives of other countries;
(iii)in which the Commonwealth, or a person suing or being sued on behalf of the Commonwealth, is a party;
(iv)between States, or between residents of different States, or between a State and a resident of another State;
(v)in which a writ of Mandamus or prohibition or an injunction is sought against an officer of the Commonwealth;
the High Court shall have original jurisdiction.
76 Additional original jurisdiction
The Parliament may make laws conferring original jurisdiction on the High Court in any matter:
(i) arising under this Constitution, or involving its interpretation;
(ii) arising under any laws made by the Parliament;
(iii) of Admiralty and maritime jurisdiction;
(iv) relating to the same subject-matter claimed under the laws of different States.
77 Power to define jurisdiction
With respect to any of the matters mentioned in the last two sections the Parliament may make laws:
(i) defining the jurisdiction of any federal court other than the High Court;
(ii) defining the extent to which the jurisdiction of any federal court shall be exclusive of that which belongs to or is invested in the courts of the States;
(iii) investing any court of a State with federal jurisdiction.
Under s.77(i) of the Constitution the Parliament has made laws defining the jurisdiction of this Court generally.
Section 10 of the FM Act provides as follows:
(1)The Federal Magistrates Court has such original jurisdiction as is vested in it by laws made by the Parliament:
(a)by express provision; or
(b)by the application of section 15C of the Acts Interpretation Act 1901 to a provision that, whether expressly or by implication, authorises a civil proceeding to be instituted in the Federal Magistrates Court in relation to a matter.
(2)The original jurisdiction of the Federal Magistrates Court includes any jurisdiction vested in it to hear and determine appeals from decisions of persons, authorities or tribunals other than courts.
(3)The process of the Federal Magistrates Court runs, and the judgments of the Federal Magistrates Court have effect and may be executed, throughout Australia.
Section 15C of the Acts Interpretation Act 1901 (Cth) provides as follows:
Where a provision of an Act, whether expressly or by implication, authorizes a civil or criminal proceeding to be instituted in a particular court in relation to a matter:
(a)that provision shall be deemed to vest that court with jurisdiction in that matter;
(b)except so far as the contrary intention appears, the jurisdiction so vested is not limited by any limits to which any other jurisdiction of the court may be subject; and
(c)in the case of a court of a Territory, that provision shall be construed as providing that the jurisdiction is vested so far only as the Constitution permits.
To the extent that the Constitution permits, jurisdiction is conferred on this Court in respect of matters not otherwise within its jurisdiction that are associated with matters in which the jurisdiction of the Court is invoked.[10] As a court of record and a court of law and equity, the Court has a full suite of available remedies including injunctions, orders for restitution, awards of equitable damages and declarations. Section 14 of the FM Act requires the Court to resolve all matters within jurisdiction in proceedings before the Court. Thus, provided that the Court has jurisdiction in a matter, it can deal with and make orders with respect to all matters associated with the matter within jurisdiction. If there is no matter within jurisdiction, associated jurisdiction under s.18 of the FM Act cannot be invoked.[11]
[10] FM Act, s.18.
[11] Taylor v CGU Insurance Limited (2005) 193 FLR 120; [2005] FMCA 1073; followed in Hughes v Mainrange Corporation (No. 2) (2009) 190 IR 351 at 355 per Lucev FM; [2009] FMCA 1044 at para.16 per Lucev FM (“Mainrange Corporation (No. 2)”). Generally, see Justice Allsop’s erudite article, “Federal Jurisdiction and the Jurisdiction of the Federal Court of Australia in 2002” (2002) 23 Aust Bar Review 29 (an updated version is available on the Federal Court website at and Justice Allsop “An Introduction to the Jurisdiction of the Federal Court of Australia”, (October 2007).
Associated jurisdiction – generally
Matters are associated if there is a common substratum of fact between the original matter within jurisdiction and the associated matter, and, if that is so, the associated jurisdiction of this Court may be invoked.[12]
[12] Philip Morris Inc v Adam P. Brown Male Fashions Pty Ltd (1981) 148 CLR 457 at 512 per Mason J (“Philip Morris”); Smith & Ors v Marapikurrinya Pty Ltd & Ors [2010] FMCA 5 (jurisdiction to deal with misrepresentations related to aboriginal heritage matters as associated with Trade Practices Act 1974 (Cth) (“TP Act”) claims, but no jurisdiction to deal with matters under the Native Title Act 1993 (Cth) (“NT Act”) which were within the exclusive jurisdiction of the Federal Court under s.81 of the NT Act).
The nature of the associated jurisdiction of the Court was dealt with by the Federal Court in New South Wales Department of Housing v Moskalev.[13] At first instance in this Court an application under s.46PO of the Human Rights and Equal Opportunity Commission Act 1986 (Cth) claiming discrimination in the provision of accommodation was dismissed, but notwithstanding the dismissal, the Court ordered the Department of Housing to reassess eligibility for priority housing under the Department of Housing Priority Housing Philosophy. The issue for the Federal Court was whether this Court’s order for reassessment of priority was beyond power.[14] Ultimately, the answer to the issue depended upon whether the ability to make the order sought to be impugned was within this Court’s associated jurisdiction under s.18 of the FM Act.[15]
[13] (2007) 158 FCR 206; [2007] FCA 353 (“Moskalev”).
[14] Moskalev FCR at 207 per Cowdroy J; FCA at para.3 per Cowdroy J.
[15] Moskalev FCR at 211 per Cowdroy J; FCA at para.25 per Cowdroy J.
In Moskalev the Federal Court set out the law concerning this Court’s associated jurisdiction as follows:
“In Philip Morris Incorporated and Another v Adam P Brown Male Fashions Proprietary Limited; United States Surgical Corporation v Hospital Products International Proprietary Limited and Others (1981) 148 CLR 457 at 474, Barwick CJ said of the application of s.32 of the Federal Court Act:
‘Thus, there may be circumstances in which the matter does not in substance itself attract federal jurisdiction, though that which attracts federal jurisdiction must in some way relate to the matter. Once federal jurisdiction is attracted, it is not lost because the claim or assertion which attracted it has not been substantiated or has been displaced by some countervailing fact. Once attracted, by whatever path attracted, the jurisdiction persists to enable the Court to resolve the matter.’
Since s.18 of the FMA is in virtually identical terms to s.32 of the Federal Court Act, his Honour’s observations are pertinent to the associated jurisdiction of the FMC.
There are however, limits to the type of matter which can properly be described as ‘associated’ with the jurisdiction of a federal court. Barwick CJ expressed the following caution at 474:
‘But the jurisdiction will not extend to any other matter, though that other matter might in some sense be an allied or associated matter. To be outside the accrued jurisdiction, however, the other matter must be separate and disparate from the matter in relation to or in connexion with which federal jurisdiction has been attracted.’
Gibbs J (as he then was) said of the extent of the jurisdiction of the Court to deal with matters, other than federal claims at 499:
‘The cases to which I have referred show that if a party claims relief on two different legal grounds, but the facts on which the relief is sought on each ground are identical, and the relief sought on each ground is the same in substance if not in form, there is only one matter for determination.’
Gibbs J made similar observations in Fencott and Others v Muller and Another (1983) 152 CLR 570 at 591:
‘It is now established by Philip Morris v. Brown that once a federal court is invested with jurisdiction with respect to a matter, it may determine all the questions which form part of that matter, even though they are questions which it would have no jurisdiction to entertain if they arose in separate proceedings.’
At 593 his Honour continued:
‘The question whether one claim is inseverable from another, so that both are part of one matter, is a question of fact and degree. The Constitution, however, makes it clear that the attached claim must be part of the matter that attracts jurisdiction; closeness of association is not enough.’
In Re Wakim; Ex parte McNally and Another; Re Wakim; Ex parte Darvall; Re Brown and Others; Ex parte Amann and Another; Spinks and Others v Prentice (1999) 198 CLR 511 at 585 Gummow and Hayne JJ said of the associated jurisdiction:
‘So, too, there is but one matter where different claims are so related that the determination of one is essential to the determination of the other (377), as, for example, in the case of third party proceedings or where there are alternative claims for the same damage and the determination of one will either render the other otiose or necessitate its determination. Conversely, claims which are "completely disparate" (378), "completely separate and distinct" (379) or "distinct and unrelated’ (380) are not part of the same matter.’
These authorities confirm that to enliven the associated jurisdiction of a court invested with federal jurisdiction, the facts must be common to each matter and the relief sought must be substantially the same.
Section 18 of the FMA provides a source of jurisdiction in associated ‘matters’. A ‘matter’ must be a justiciable dispute and not merely a legal proceeding. In In Re the Judiciary Act 1903-1920 and In Re The Navigation Act 1912-1920 (1921) 29 CLR 257 at 265 the majority, having considered an argument that the word ‘matter’ in s 76 of the Constitution referred only to a legal proceeding, said:
‘We do not accept this contention; we do not think that the word " matter" in sec. 76 means a legal proceedings, but rather the subject matter for determination in a legal proceedings. In our opinion there can be no matter within the meaning of the section unless there is some immediate right, duty or liability to be established by the determination of the Court.’[16]
See also: The Queen v Kirby and Others; Ex parte Boilermakers’ Society of Australia (1956) 94 CLR 254 at 272-274; The Queen v The Trade Practices Tribunal and Others; Ex parte Tasmanian Breweries Proprietary Limited (1970) 123 CLR 361 per Kitto J at 374; Re Wakim; Ex parte McNally 198 CLR [10].
Two observations may be made. First, the facts and evidence relating to the claim of the Moskalevs’ alleging discrimination are different to those relating to the administrative review of the Department’s decision pursuant to its Priority Housing Policy and are not ‘inseverable’ (see: Gibbs J in Fencott v Muller 152 CLR 593). The Court accepts the submission of the Department that there was no requirement for it to adduce evidence of its procedures relating to the operation of the Housing Appeals Committee in view of the only matter before Driver FM, namely the claim of discrimination. The order requires the Department to undertake a merits review of its determination in relation to the Moskalevs’ application for priority housing when such question did not arise either as a federal or as an associated matter.
Second, the request of the Moskalevs’ to be placed on the priority housing list did not constitute a separate ‘matter’ for the exercise of the Court’s jurisdiction. The claim for such order was ancillary to the claim of discrimination under the HREOC Act. Accordingly s 18 of the FMA cannot be used as a source of jurisdiction to justify the order.” [17]
[16] The preceding quote is an accurate quote of the text of Moskalev FCR at 212 per Cowdroy J; FCA at para.31 per Cowdroy J. However, the original text of In Re the Judiciary Act 1903-1920 and In Re the Navigation Act 1912-1920 (1921) 29 CLR 257 at 265 has “proceeding” rather than “proceedings” in both places where it appears in the preceding quote.
[17] Moskalev FCR at 211-213 per Cowdroy J; FCA at paras.26-33 per Cowdroy J.
In Re Wakim ex parte McNally and Another it was said:
“What is a single controversy “depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct in relationships”. There is but a single matter if different claims arise out of a “common transactions and facts” or a “common substratum of facts”, notwithstanding that the facts upon which the claims depend “do not wholly co-incide”.
…
Often, the conclusion that, if proceedings were tried in different Courts, there could be conflicting findings made on one or more issues common to the two proceedings will indicate that there is a single matter. By contrast, if the several proceedings could not have been joined in one proceeding, it is difficult to see that they could be said to constitute a single matter.” [18]
[18] (1999) 198 CLR 511 at 585 per Gummow and Hayne JJ; [1999] HCA 27 at pars.140-141 per Gummow and Hayne JJ (“Re Wakim”).
In Trainor v BMW Melbourne Pty Ltd and Others[19] this Court applied the passage cited from Re Wakim immediately above to hold that a claim under s.51AB of the TP Act alleging unconscionable conduct was part of a single controversy which included a claim under s.52 of the TP Act which alleged misleading and deceptive conduct.
[19] [2003] FMCA 7.
In Fox v Robinson & Anor,[20] this Court considered s.18 of the FM Act and said as follows:
Section 18 of the FM Act is almost identical to s.32(1) of the Federal Court of Australia Act 1976. That section was considered by the High Court in Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457. In that case Mason J stated in relation to that section which applied to the Federal Court the following:
“Plainly it was intended to vest a jurisdiction in the Federal Court to hear and determine matters not otherwise within its jurisdiction, matters that are ‘associated’ with matters in which the jurisdiction of the Court is invoked. The expression ‘To the extent that the Constitution permits’ suggests that s 32 is directed, not merely to jurisdiction to hear and determine matters arising under federal laws not otherwise vested in the Federal Court, but also to jurisdiction arising under State or other non-federal laws. Problems of constitutional validity arise in relation to the latter, but not in relation to the former. The opening words of s.32(1) would serve no purpose at all if the sub-section was exclusively directed to matters arising under federal laws.”
[20] [2003] FMCA 107 (“Fox”).
In the Philip Morris case Mason J further states at p 512,
“Likewise, it may appear that the attached claim and the federal claim so depend on common transactions and facts that they arise out of a common substratum of facts. In instances of this kind a court which exercises federal jurisdiction will have jurisdiction to determine the attached claim as an element in the exercise of its federal jurisdiction”.[21]
[21] Fox at paras.33-34 per McInnis FM.
In Fox the Court held that a claim for breach of contract was a claim within the associated jurisdiction in a matter also alleging breach of s.52 of the TP Act.[22]
[22] Fox at para.40 per McInnis FM.
Associated jurisdiction – in this case
In this case, the resolution of whether Ms Welsh should have been summarily dismissed for alleged conduct alleged to be in breach of her contract of employment is essential to the determination of whether the requirement to give notice under s.661(2) was made null and void, thereby obviating any obligations Allblend Holdings had to Ms Welsh under s.661(2). Likewise, the issue of whether Ms Welsh absented herself from her duties at Allblend Holdings on 53 days, may be determinative of whether all annual leave accrued pursuant to s.232 of the WR Act has effectively been paid out. The same alleged conduct of Ms Welsh, both in relation to her dismissal and her alleged absences, are relevant to Allblend Holdings’ claims for payment of specific sums and damages in relation to Ms Welsh’s conduct personally and as a director of 2B Wizards. The determination of each claim is inter-related, and it can be anticipated that the facts and evidence relied on will be identical, and if not identical, then substantially similar.
The proposed amended response and amended defence and cross-claim also seek to have a compensation order made under s.1317H of the Corporations Act against Ms Welsh and 2B Wizards. Section 1317H of the Corporations Act provides that:
Compensation for damage suffered
(1)A Court may order a person to compensate a corporation or registered scheme for damage suffered by the corporation or scheme if:
(a) the person has contravened a corporation/scheme civil penalty provision in relation to the corporation or scheme; and
(b) the damage resulted from the contravention.
The order must specify the amount of the compensation.
Note: An order may be made under this subsection whether or not a declaration of contravention has been made under section 1317E.
Damage includes profits
(2)In determining the damage suffered by the corporation or scheme for the purposes of making a compensation order, include profits made by any person resulting from the contravention or the offence.
Damage includes diminution of value of scheme property
(3)…
(4)…
Recovery of damage
(5)A compensation order may be enforced as if it were a judgment of the Court.
This Court must determine whether or not it has associated jurisdiction which allows it to make an order under s.1317H of the Corporations Act.
Section 58AA of the Corporations Act provides as follows:
(1) Subject to subsection (2), in this Act:
court means any court.
Court means any of the following courts:
(a) the Federal Court;
(b) the Supreme Court of a State or Territory;
(c) the Family Court of Australia;
(d)a court to which section 41 of the Family Law Act 1975 applies because of a Proclamation made under subsection 41(2) of that Act.
(2)Except where there is a clear expression of a contrary intention (for example, by use of the expression “the Court”), proceedings in relation to a matter under this Act may, subject to Part 9.7, be brought in any court.
The use of the phrase “A Court” in s.1317H(1) of the Corporations Act means that this Court does not have express jurisdiction to make orders under s.1317H of the Corporations Act. Whilst this Court has not been made a court in which an application can be brought for a compensation order under s.1317H of the Corporations Act in express terms, there is no exclusive jurisdiction barrier under the Corporations Act placed in the path of reliance upon this Court’s associated jurisdiction. The Court may therefore exercise associated jurisdiction to determine an application for a compensation order under s.1317H of the Corporations Act if it determines that the matter otherwise attracts associated jurisdiction by reason of it being based on transactions and a substratum of facts common to the federal claim within jurisdiction, that is the WR Act claim.
The alleged contraventions of the Corporations Act relate to the duties that Allblend Holdings says that Ms Welsh owed Allblend Holdings as an officer under ss.180, 181 and 182 of the Corporations Act. Sections 180, 181 and 182 of the Corporations Act essentially provide that an officer must:
a)act with reasonable care and diligence;
b)act in good faith and in the best interests of the corporation of which they are an officer;
c)act for proper purposes; and
d)not improperly use their position to gain an advantage for any person (including the officer) or to cause detriment to the corporation,
in the exercise of the powers and the discharge of duties as an officer of the corporation. In this case, the facts and circumstances which Allblend Holdings says gave rise to the right to summarily dismiss Ms Welsh, and therefore to deprive her of the annual leave and payment in lieu of notice which form her WR Act claim, are the same circumstances and facts relied upon as the basis for the claim for a compensation order under s.1317H of the Corporations Act. Likewise, with respect to the allegation that Ms Welsh was in breach of her fiduciary duties as an officer of Allblend Holdings. It follows therefore that the claim for a compensation order under s.1317H of the Corporations Act and the claim with respect to breach of fiduciary duty are within the associated jurisdiction of this Court.
In the proposed amended response and amended defence and cross-claim, Allblend Holdings pleads that Ms Welsh owed it a duty of care as employee to exercise reasonable care and skill in the performance of her work, and that she has breached this duty in the same way as she has breached her director’s duties under the Corporations Act. As with the Corporations Act and fiduciary duty claims by Allblend Holdings, the allegation of negligence is based on the same circumstances and facts as Allblend Holdings relies upon for its claim that it was entitled to summarily dismiss Ms Welsh, and therefore deprive her of her entitlement to annual leave and payment in lieu of notice. It follows therefore that the negligence claim is also within the associated jurisdiction of the Court.
The cross-claim against 2B Wizards is also within the associated jurisdiction, it being alleged that 2B Wizards was at all times aware of Ms Welsh’s conduct by reason of her being a director and majority shareholder of 2B Wizards. The cross-claim against 2B Wizards is therefore based on transactions and a substratum of facts common to Ms Welsh’s WR Act claim, and is therefore within the associated jurisdiction of this Court.
Associated jurisdiction – conclusion
This case is a WR Act case, with associated jurisdiction invoked. All the claims should be regarded as arising in the one matter. All the claims are within the jurisdiction or associated jurisdiction of this Court.
Amendment of the pleadings
It is not in dispute that the Court may allow or direct a party to amend a pleading in the way and on the conditions the Court thinks fit.[23]
[23] Federal Magistrates Court Rules 2001 (Cth), r.7.01(1) (“FMC Rules”).
Making a cross-claim
A respondent may make a cross-claim against an applicant instead of bringing a separate proceeding.[24] A respondent may make a cross-claim against a person other than the applicant if the applicant is also made a party to the cross-claim, and either:
a)the respondent alleges that the other person is liable with the applicant for the subject matter of the cross-claim; or
b)the respondent claims against the other person relief relating to or connected with the subject matter of the original proceedings.[25]
[24] FMC Rules, r.28.01.
[25] FMC Rules, r.28.03.
A cross-claim must be included in a respondent’s response.[26]
[26] FMC Rules, r.28.04.
A party may not include a person as a party after the first court date without leave of the Court.[27]
[27] FMC Rules, r.11.02(2).
In all but exceptional circumstances actions and cross-claims will be heard together.[28]
[28] Standen v GH Varley Pty Ltd [1956] SR (NSW) 346; Australian Iron & Steel Pty Ltd & Anor v Jumbo Scheepvaart Maatschappij (Curacao) NV & Ors (1988) 14 NSWLR 507 at 521 per Yeldham J.
The proposed Amended Response and Amended Defence and Cross-Claim
Allblend Holdings seeks to make a case in the following terms in the proposed amended response and amended defence and cross-claim:
a)that Ms Welsh used her annual leave entitlements in their entirety in the course of her employment;
b)that Allblend Holdings has validly terminated Ms Welsh’s employment summarily for serious misconduct, namely, breach of:
i)contract;
ii)the duty of good faith owed to Allblend Holdings; and
iii)the fiduciary duty owed to Allblend Holdings;
c)consequently, Ms Welsh is not entitled to payment in lieu of notice;
d)Ms Welsh has breached:
i)the fiduciary duty owed by her to Allblend Holdings;
ii)the duties owed by her to Allblend Holdings under the Corporations Act; and
iii)the duty of care owed by her to Allblend Holdings;
e)2B Wizards has knowingly received the proceeds of Ms Welsh’s breaches; and
f)Allblend Holdings has suffered loss and damage by overpaying Ms Welsh.
Separate proceedings
Allblend Holdings argues that it has a valid claim against Ms Welsh and if leave is not granted to permit the proposed cross-claim then Allblend Holdings can bring its own claim against Ms Welsh.
Allblend Holdings say that it has sought leave to institute the proposed cross-claim instead of a separate proceeding because:
a)it is permitted to do so by the FMC Rules;
b)it is consistent with the nature and object of proceedings in the Court;
c)it will be more streamlined to do so; and
d)such a course will be more likely to minimise cost and inconvenience.
Allblend Holdings’ contentions
Allblend Holdings argues that:
a)the proposed amendments have been brought promptly upon the conclusion of mediation, meaning that there has not been any or any substantial delay in bringing the application for leave to amend;
b)the proposed cross-claim does not remove the initial response and defence but rather extends them;
c)it will suffer injustice if it cannot proceed with the proposed cross-claim;
d)Ms Welsh will not suffer any injustice if leave to amend is granted to incorporate the proposed cross-claim, but if the applicant does suffer any injustice, it does not outweigh the injustice that would be occasioned to Allblend Holdings were it required to prosecute a separate action for the matters the subject of the proposed cross-claim;
e)its actions are permitted by the FMC Rules;
f)the intention is consistent with the objects and nature of this Court’s proceedings;
g)the process will be more streamlined;
h)it will be more likely to minimise cost and inconvenience;
i)it is not a late or deliberate tactical challenge;[29]
j)there has been no waste of public resources;
k)it did not persist in a limited approach up to hearing;[30]
l)it was not a last minute amendment before hearing;
m)it was not an abuse of process or misuse of the procedures of the Court; and
n)it is seeking to avoid a multiplicity of proceedings.[31]
[29] Transcript at p.7.
[30] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at 192 per French CJ; [2009] HCA 27 at para.31 per French CJ (“Aon”); Transcript at p.7.
[31] Transcript at p.13.
Further, Allblend Holdings argues it has an adequate explanation for the delay,[32] as set out in the Affidavit of Mr Nevin, in that Counsel:
a)had not reviewed the pleadings prior to filing; and
b)first reviewed the pleadings after they were filed and prior to the mediation and recommended that a cross-claim be commenced against Ms Welsh, and that 2B Wizards be joined as a respondent to that cross-claim,
but given that mediation was imminent Mr Nevin did not seek instructions to make an application to amend the response at that time, but rather decided to await the outcome of the mediation before doing so.
[32] Aon CLR at 216 per Gummow, Hayne, Crennan, Kiefel and Bell JJ; HCA at para.106 per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
Ms Welsh’s contentions
Ms Welsh contends that Allblend Holdings should not be granted leave to file its amended pleadings for the following reasons:
a)costs, because:
i)taking the claim out of the no cost jurisdiction of the Fair Work Division and combining it with matters arising in the General Division will increase costs; and
ii)of the extensive additional cost Ms Welsh will incur in defending the new allegations;
b)the inappropriateness of the cross-claim seeking to offset guaranteed statutory entitlements under the WR Act with damages claims for alleged breaches of duty;
c)delay:
i)by reason of Allblend Holdings not seeking to file the documents until after two mediations had occurred and the matter had been listed for hearing, and thereby denying Ms Welsh the opportunity to mediate the further issues;
ii)in having to vacate the 2 February 2010 hearing date, thereby delaying the bringing of the matter to hearing, and also increasing the time the hearing will take by reason of the new allegations; and
iii)in that the amended pleadings indicate the likelihood for necessity of discovery and interrogatories, in relation to which no application has yet been made;
d)prejudice:
i)in having a further delay until the final hearing;
ii)in not having the opportunity to mediate the proposed new issues at the two prior mediations; and
iii)in having an increased final hearing time in order to address the new allegations made;
e)the lack of reasonableness of the application;
f)that Allblend Holdings is seeking a significant indulgence, substantial new grounds and joinder of a new party;
g)that Allblend Holdings should have appreciated the matters at a far earlier stage;
h)the amendments serve only to frustrate the original claim and increase Ms Welsh’s costs;
i)because numerous new serious allegations have been introduced;
j)because Allblend Holdings could commence a separate claim; and
k)because Allblend Holdings knew of the existence of 2B Wizards at the time of filing the original pleading but failed to name or join it as a party then.
Consideration
A party is not simply entitled to leave to amend on raising an arguable claim, subject to payment of costs by way of compensation.[33] The Court must take into account the following factors when deciding whether or not to grant leave to amend pleadings:
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,[34] 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,[35] and that the parties must have sufficient opportunity to identify the issues they seek to agitate;[36]
e)whether the new issues sought to be introduced are part of a common substratum of fact and part of a “single justiciable controversy”;[37]
f)wasted costs, and whether costs are sufficient to compensate for any prejudice that will be suffered if the amendment is granted;[38] and
g)the strain the litigation imposes upon litigants.[39]
[33] Aon CLR at 217 per Gummow, Hayne, Crennan, Kiefel and Bell JJ; HCA at para.111 per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
[34] Aon CLR at 215 per Gummow, Hayne, Crennan, Kiefel and Bell JJ; HCA at para.103 per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
[35] Aon CLR at 212-213 per Gummow, Hayne, Crennan, Kiefel and Bell JJ; HCA at para.96 per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
[36] Aon CLR at 214-215 and 217 per Gummow, Hayne, Crennan, Kiefel and Bell JJ; HCA at paras.102 and 112 per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
[37] Fox v Robinson(No. 1) [2005] FMCA 1310.
[38] Aon CLR at 213 per Gummow, Hayne, Crennan, Kiefel and Bell JJ; HCA at para.98 per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
[39] Aon CLR at 214 per Gummow, Hayne, Crennan, Kiefel and Bell JJ; HCA at para.100 per Gummow, Hayne, Crennan, Kiefel and Bell JJ.
Nature and importance of the amendment and circumstances giving rise to amendment
The proposed amendments are significant. They put a different complexion upon these proceedings. The proceedings presently are a seemingly simple claim of non-payment of:
a)annual leave; and
b)payment in lieu of notice,
in respect of which Allblend Holdings alleges it was entitled to summarily dismiss Ms Welsh and that Ms Welsh had utilised her annual leave entitlements.
The proposed amendments introduce significant new legal defences to the claim, particularly those based on alleged breaches of the Corporations Act, fiduciary duty and negligence. The proposed amendments also add a new party, 2B Wizards. The proposed amendments, if made out, will probably result in Ms Welsh or 2B Wizards incurring a liability to pay Allblend Holdings in an amount greater than that presently claimed by Ms Welsh. And, in that regard, the nature of the proposed amendments is fundamental, and important to Allblend Holdings, for not only would it meet the case asserted by Ms Welsh, it would, if successful, result in her (and 2B Wizards) being liable to Allblend Holdings. However, the nature of the legal remedies now sought by Allblend Holdings, far reaching as they are by comparison to the claim made by Ms Welsh and the defence originally filed by Allblend Holdings, tend to obscure the fact that in order to make out the defence originally filed, and the amended defence and cross-claim Allblend Holdings would essentially have been seeking to prove the same facts to establish that:
a)it had the right to summarily dismiss Ms Welsh, and that she therefore had no entitlement to payment in lieu of notice; and
b)she had utilised all of her annual leave, and therefore had no entitlement to accrued pro-rata annual leave.
Thus, whilst the proposed amendments are now pleaded by Allblend Holdings with far greater particularity and significantly alter the legal remedies claimed by Allblend Holdings, the underlying substratum of facts remains essentially the same.
The circumstances giving rise to the amendment are far from the class of worst cases. Allblend Holdings could have filed the Interim Application prior to or during the mediation (there were two mediation events, spread over a week) but made a judgment, through its solicitors not to do so. Had Allblend Holdings filed the Interim Application earlier some time and money may have been saved, and it may also be possible that the matter might have been mediated to settlement. The view that Allblend Holdings’ solicitors took concerning not raising the proposed amendments prior to mediation was probably wrong,[40] but understandable insofar as it was decided to await the outcome of mediation before seeking to take instructions to make the application with respect to the proposed amendments. There is no evidence that the course of action adopted by Allblend Holdings was done for any tactical advantage.
[40] And might neatly be contrasted with the approach adopted in Ginger Roger Pty Ltd v Parrella Enterprises Pty Ltd (No. 2) [2010] FCA 128 at para.15 per Collier J, where the amending party gave notice of the intention to seek leave to amend and provided a copy of proposed amendments prior to the mediation.
The proceedings are in a very different sphere to those dealt with by the High Court in Aon, where the proposed amendments would effectively have had the parties starting anew after three days of a four week trial of a proceeding that had been on foot for two years. In this case, at the time of the mediation the proceedings had been on foot for approximately ten weeks. And, although they had been listed for hearing, that hearing would have been less than four and a half months after the application was filed, and had therefore been brought on relatively quickly, even for a claim in this Court and of this nature.
The proposed amendments seek to introduce claims that Ms Welsh might have anticipated, those claims having been adverted to in the defence previously filed.[41] Once Counsel had had an opportunity to review the pleadings the claims could, in all the circumstances, hardly be said to be surprising.
[41] At paras.2, 5 and 6.
Delay and explanation
The Interim Application was made:
a)immediately upon completion of mediation;
b)after the matter had been listed for a final hearing; and
c)almost two months prior to the hearing date.
Delay must be considered in context. As indicated above the mediation had occurred approximately ten weeks after the application was filed on 25 September 2009. At the first directions hearing on 26 October 2009 directions were made for the filing of a defence and a reply, and for the matter to be referred for mediation, and if mediation was unsuccessful a hearing on 2 February 2010. Thus, within four and a half months of the application being filed it was due to be heard. In any event, and even in this Court for a claim of this nature, that is a hearing brought on relatively quickly.
The Court cannot say that the Interim Application was made too late in the proceedings and that Allblend Holdings had had a sufficient opportunity to plead its case. On the contrary, whilst the Interim Application could have been made prior to mediation going ahead, or during the mediation, the timing of the Interim Application is not such as to prejudice Ms Welsh so much that that prejudice cannot be rectified by:
a)an opportunity to file a reply and defence to cross-claim; and
b)the possibility of an award of costs under s.824 of the WR Act.
The reason for the delay in seeking leave to file the amended pleadings has been adequately explained: Mr Nevin thought it a more judicious approach to await the outcome of the mediation prior to making an application in a case to amend the pleadings, given that it might not have been necessary had the matter settled at mediation. If that had come to pass there would no doubt have been costs savings for Allblend Holdings by reason of it not having to file and serve its amended response and amended defence and cross-claim. That occurred in circumstances where Counsel was engaged just prior to the defence being filed by the solicitors and without it being reviewed by Counsel. Upon review Counsel recommended amendments and the institution of a cross-claim.
The explanation provided satisfies the Court that the Interim Application has been made in good faith.
The final hearing has been adjourned, with the original date for the final hearing being utilised for the interlocutory hearing. To that extent although there has been delay, there has not been a complete or significant waste of time or resources.
The Court considers that the extent and effects of the delay are not significant, and that Allblend Holdings’ explanation is adequate.
Case Management concerns, invoking the jurisdiction and resolution of the dispute
The Court must consider its case management principles as outlined in ss.3 and 42 of the FM Act, and in r.1.03 of the FMC Rules. In that regard the Court has previously observed:
31. The principles and considerations referred to above need to be applied in the context of the Federal Magistrates Act 1999 (Cth) and the Federal Magistrates Court Rules 2001 (Cth), 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,
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[42] 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.
[42] (1997) 189 CLR 146.
The Court must endeavour to ensure that the proceedings are not protracted and that they are resolved in a just, efficient and economical manner. These objects were achieved by the listing of the matter for a final hearing within four and a half months of the application being filed. Will they be prejudiced by any delay? If the proposed amendments were to be allowed, and allowing for the further mediation and any necessary interlocutory processes, the matter could still be listed in July or August 2010, that is within 10 to 11 months of the application having been filed. In all the circumstances, that is not a delay of a magnitude which would be contrary to the Court’s objects and rules.
In relation to interlocutory processes those processes ought not impede a hearing of the matter by July or August 2010. Ms Welsh raises a concern about discovery and interrogatories. Discovery is not ordinarily, or least usually, granted in this Court.[44] If discovery is to be ordered it is more likely to be limited to particular documents or categories of documents.[45] As to interrogatories, whilst the Court has the power to order interrogatories,[46] it is “a power which is rarely used.”[47] That does not of course preclude the ordering of interrogatories in a proper case.
[44] Abrahams v Qantas Airways Ltd (2007) 210 FLR 314 at 317 and 321 per Lucev FM; [2007] FMCA 639 at paras.11 and 25 per Lucev FM; followed in Doukidis v Williamson (2008) 6 ABC(NS) 717 at 725-727 per Lucev FM; [2008] FMCA 1352 at paras.36-41 per Lucev FM (“Doukidis”).
[45] Moussalli v Western Power (2009) 185 IR 241 at 244 per Lucev FM; [2009] FMCA 720 at para.11 per Lucev FM; and see the approach adopted by the parties in Sherwood Overseas Co Pty Ltd v Jaymac International Pty Ltd (No. 2) [2008] FMCA 690 at paras.7-8 per Lucev FM.
[46] FM Act, s.45 and FMC Rules, r.10.01(3)(j).
[47] Doukidis ABC(NS) at 728 per Lucev FM; FMCA at para.48 per Lucev FM.
Consideration of this issue also requires the Court to consider s.14 of the FM Act which provides as follows:
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.[48]
[48] Similar legislative provisions appear in various legislation, but most relevantly s.22 of the Federal Court of Australia Act 1976 (Cth).
Section 14 of the FM Act should be construed liberally having regard to its nature and purposes.[49] In McLeish the Full Court of the Federal Court observed as follows:
We consider first s. 22. In our opinion that section should be construed liberally in order to achieve the object of the Act in attempting to prevent the necessity of a multiplicity of legal proceedings to be entered into by a party seeking relief. Our view is supported by the opinions expressed in Roberts v. Gippsland Agricultural and Earth Moving Contracting Co. Pty. Ltd. [1956] V.L.R. 555. In that case Smith J. as a member of a Full Court, considered a section in the Victorian Supreme Court Act being the equivalent of s. 22 of the Federal Court of Australia Act. For present purposes it is sufficient to quote the following extract: "In Salt v. Cooper (1880) 16 Ch. D. 544, the view was expressed that this provision is not confined to the original claim made in a cause but applies to any claim relating to the matter in dispute in the cause which is in fact brought forward therein. But on the other hand the provision has sometimes been construed in a restricted sense: compare Edwards on Compromises, p. 189. The critical question would appear to be what meaning is to be given to the expression `properly brought forward'. And I consider that, having regard to the nature and purpose of the provision, that expression should be construed liberally, so that its operation may not be unnecessarily restricted by reference to rules of mere practice and procedure which operated in the old Courts.[50]
[49] McLeish v Faure (1979) 40 FLR 462 (“McLeish”).
[50] McLeish at 472 per J B Sweeney, Evatt and Northrop JJ.
It is necessary for the Court to balance the objectives of s.14 of the FM Act by considering whether allowing leave to include a cross-claim will cause injustice out of proportion to the injustice that might be occasioned if the application for leave to institute the cross-claim is denied.[51]
[51] St George Bank Ltd v MJK Pty Ltd [1999] FCA 1752 at para.25 per O’Loughlin J.
Matters such as have arisen in the proposed amendments must be contemplated when commencing a proceeding, and the implications arising if a counter-claim is raised. As has already been observed, the claims now made in the proposed amendments would hardly be surprising following a review of the pleadings by Counsel.
The proposed party to be joined, 2B Wizards, has a close connection to the original application as the applicant is the sole director and secretary of 2B Wizards, and the allegations are that the third party benefitted from the applicant’s misconduct against the respondent.[52] Again, that might have been expected and is hardly surprising.
[52] Mr Nevin’s Affidavit, Annexure A.
There has been no criticism of the exact terms of the amended pleadings by Ms Welsh.
The Court takes into account the fact that if the amended pleadings were not allowed, the matters may well be brought in a claim in the Federal Court or the State Supreme Court, in which case the parties will most likely incur more expense, the litigation will inevitably be more protracted, and not dealt with in one proceeding as it can be in this Court.
In all the circumstances, case management considerations do not preclude leave being granted for filing the proposed amendments.
Costs and prejudice
The most significant prejudice claimed by Ms Welsh arises by reason of the fact that Parliament has chosen to make court actions under the WR Act no costs proceedings, whilst maintaining the right of a party to bring, in the associated jurisdiction:
a)matters that would ordinarily be costs matters; and
b)matters covering a broader spectrum of factual and legal issues, which may thereby increase the length, complexity and costs of the proceedings.
An award of costs to Ms Welsh under s.824 of the WR Act could overcome any possible prejudicial effects of costs thrown away thus far. Section 824 limits the award of costs not only in respect of a claim brought in reliance upon the WR Act but also in respect of other claims joined in the same proceeding, including claims in the accrued jurisdiction of the Court.[53] In Bognar v Merck Sharp & Dohme,[54] this Court accepted, citing Nikolich, that the cost exclusionary provision in s.666 of the WR Act should also apply to claims in the Court’s accrued jurisdiction.[55]
[53] Goldman Sachs JBWere Services Pty Ltd v Nikolich (2007) 163 FCR 62 at 64 per Marshall J; [2007] FCAFC 120 at para.86 per Marshall J.
[54] [2008] FMCA 749 (“Bognar”).
[55] Bognar at para.42 per FM O’Sullivan. See also paras.12-18 of Bognar for a discussion of the Federal Court authorities in this regard.
If the matters remain in the Fair Work Division of the Court, and hence remain subject to the costs provisions in s.824 of the WR Act, there may well be costs prejudice to Ms Welsh by reason of the further matters the subject of the proposed amendments requiring additional work and research, particularly in relation to pleadings and legal submissions. To some extent that is however balanced by the fact that the substratum of relevant facts remains essentially the same. However, the intention of Parliament, as the case law makes clear, is that actions under the WR Act do not generally attract costs, and that extends to matters being brought in under the associated jurisdiction. That is a matter litigants must consider, and run the risk of, in making WR Act claims. Moreover, it is a matter, and a risk, which affects both parties.
Allblend Holdings did not put Ms Welsh on notice of these amended pleadings prior to or during the mediation. Although it is not necessary to decide that issue presently, the question arises as to whether that may amount to an unreasonable act or omission under s.824 of the WR Act and, if so, whether some costs may be recoverable by Ms Welsh: for example, those costs thrown away in the unsuccessful mediation.[56] The issue is certainly arguable.
[56] For an example of a case involving an unreasonable act giving rise to costs (albeit under the provisions of s.570(2)(a) of the Fair Work Act 2009 (Cth)), see Mainrange Corporation (No. 2) IR at 355-356 per Lucev FM; FMCA at paras.18-24 per Lucev FM.
More generally, there is no evidence going to the strain of the litigation or increased costs on Ms Welsh. In any event, so far as the strain of litigation is concerned, this case, for reasons set out above, is one which will still be able to be dealt with and determined within:
a)a reasonable time frame, and
b)the streamlined procedures of this Court.
Indeed, to deny leave to amend might force Ms Welsh into far more costly and protracted litigation in another court or courts.
Conclusion – merit of application
Ms Welsh’s arguments concerning delay, increase in complexity and increase in costs, are all natural consequences and logical corollaries of what are, in this case, foreseeable and unsurprising amendments to pleadings. In any event, the delay is minimal and adequately explained.
This claim was commenced in the Fair Work Division as a claim for unpaid accrued annual leave pursuant to s.235 of the WR Act, and payment in lieu of notice on termination of employment pursuant to s.661(4) of the WR Act. Allblend Holdings has raised issues that invoke the statutory associated jurisdiction of this Court. Having regard to ss.14 and 18 of the FM Act the Court cannot simply ignore these matters and watch the other claims be brought elsewhere, in another jurisdiction, when the issues raised are commonly linked, and give rise to a single justiciable controversy, the determination of the outcomes of which are inextricably linked and will directly impact on the ultimate outcome of the proceedings.
The Court finds that the prejudice that would be caused to Ms Welsh by prosecution of the proposed amendments does not outweigh the prejudice to Allblend Holdings if the application to amend was not granted, and it was required to prosecute a separate action for those matters. In finding this, the Court has taken into account the public interest, reduction in multiplicity of proceedings, and minimisation of further costs to be incurred by both parties.
The Court considers that the just and final resolution of proceedings requires that the Interim Application be upheld.
Direction for matter to be heard in the Fair Work Division
At hearing a question arose as to whether it was necessary for a direction to be made by the Chief Federal Magistrate allocating this matter to either the Fair Work Division or the General Division of the Court,[57] it being argued, by Ms Welsh, that the matters in the associated jurisdiction of the Court were matters within the General Division jurisdiction of the Court,[58] and therefore such a direction was required. The Court is still considering this discrete issue and Reasons for Judgment in relation to it will be published from Chambers[59] at a later date.
[57] FM Act, s.10A(5).
[58] FM Act, s.10A(4).
[59] FM Act, s.13(3)(a).
Conclusion and Orders
The Court having taken into account all the circumstances, has concluded that leave will be granted to the respondent to file its amended response and amended defence and cross-claim.
The Court will hear the parties as to costs.
I certify that the preceding seventy-six (76) paragraphs are a true copy of the reasons for judgment of Lucev FM
Associate: S. Gough
Date: 23 April 2010
[43] Swevenings Pty Ltd v Ferguson Consolidated Holdings Pty Ltd & Anor (No 4) [2009] FMCA 291 (“Swevenings (No.4)”) at para.31 per Lucev FM.
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