Fair Work Ombudsman v Doll House Training Pty Ltd

INTRODUCTION 1 These reasons deal with: (1) an application by the respondent (Doll House) for dispensation from compliance with r 4.01(2) of the Federal Court Rules 2011 (Cth), so that it may be represented in this proceeding by its director Ms Heidi Meuwissen; and (2) an application by the applicant (Ombudsman) to amend her Statement of Claim.

BACKGROUND 2 In light of the submissions made by the parties and considered below, it is necessary to set out in some detail the history of this proceeding. 3 On 31 May 2021, the Ombudsman commenced the proceeding against Doll House by filing an Originating Application and Statement of Claim. The Ombudsman alleged that Doll House had contravened: (1) s 357 of the Fair Work Act 2009 (Cth) (FW Act), by representing to each of three workers that the contracts of employment under which they were, or would be employed, were contracts for services under which the workers performed or would perform work as an independent contractor; (2) s 358 of the FW Act, by dismissing (or alternatively threatening to dismiss) each of the workers from their employment to engage them as independent contractors to perform the same, or substantially the same, work under a contract for services; (3) s 323 of the FW Act, by failing to pay each of the workers amounts payable in relation to the performance of work in full, at least monthly; and (4) s 712 of the FW Act, by failing to comply with a Notice to Produce Records or Documents. 4 On 25 June 2021, Doll House filed a Notice of Address for Service. That Notice provided the address details for Mr Stephen Arulogun, a director of Doll House. 5 On 28 June 2021, Perram J made orders, by consent, for the filing and service of Doll House's Defence and any Reply by the Ombudsman. His Honour also ordered, by consent, that Doll House file and serve an application for dispensation from compliance with r 4.01(2). An application was subsequently filed but appears to have been overtaken by the filing, on 31 August 2021 by Mr Nathaniel Delaney of ACLG Lawyers, of a Notice of Acting - Appointment of Lawyer, which indicated that Doll House had appointed Mr Delaney to represent it in the proceeding. 6 On 24 August 2021, Perram J made orders, by consent, extending the time for the filing and service of Doll House's Defence and any Reply and listing the proceeding for mediation on 14 September 2021. 7 On 6 September 2021, Perram J made orders, by consent, further extending the time for the filing and service of Doll House's Defence and any Reply; an order vacating the mediation on 14 September 2021; and an order for the proceeding to be listed for a mediation on a date to be fixed. 8 On 18 September 2021, Doll House filed its Defence. By that Defence, Doll House admitted to having contravened ss 358 and 712 of the FW Act; and to having contravened s 323 of the FW Act, but not to the extent alleged by the Ombudsman. 9 Doll House denied having contravened s 357(1) of the FW Act. As part of that denial, Doll House relies upon s 357(2) of the FW Act which provides that s 357(1) does not apply if the employer proves that, when the representation was made, it did not know and was not reckless as to whether the contract was a contract of employment rather than a contract for services. In doing so, Doll House pleads that it lacked the requisite knowledge and recklessness because of the conduct of Ms Meuwissen, in particular as a result of research undertaken by Ms Meuwissen and accounting advice that she received. 10 On 21 September 2021, Perram J made orders, by consent, further extending the time for the filing of Doll House's Defence (retrospectively) and any Reply; and listing the matter for mediation on 11 October 2021. 11 The mediation was unsuccessful and on 1 December 2021, I made orders, by consent, for the preparation of the matter for hearing including, relevantly, orders for the filing and service of affidavit evidence on the question of liability. Pursuant to those orders, the Ombudsman was to serve her evidence by 4 March 2022; Doll House was to file and serve its evidence by 1 April 2022; and the Ombudsman was to file and serve any evidence in reply by 22 April 2022. 12 On 9 February 2022, the High Court of Australia handed down judgments in Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1; (2022) 398 ALR 404 and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2; (2022) 398 ALR 603. 13 On 1 March 2022, Mr Delaney filed a Notice of Ceasing to Act which indicated that he had ceased to act for Doll House because his retainer had been terminated. 14 On 16 March 2022, in response to an indication from the Ombudsman that she wished to amend her Statement of Claim in the light of Personnel Contracting and Jamsek and an indication from Ms Meuwissen that Doll House wished to seek leave to have her represent it in the proceeding, I made orders vacating the orders made on 1 December 2021 for the filing of affidavit evidence. I also ordered that the foreshadowed applications each be filed by 13 April 2022 together with evidence in support thereof, and listed the proceeding for further case management on 27 April 2022. 15 On 13 April 2022, the Ombudsman filed her Interlocutory Application for leave to amend the Statement of Claim and an affidavit of Ms Rebecca Piechocki, Principal Lawyer at the Office of the Ombudsman, in support of that application. Doll House did not file its foreshadowed application for dispensation from compliance with r 4.01(2) within the time directed (and did not do so until 17 May 2022). 16 On 27 April 2022, I conducted a further case management hearing. Doll House did not appear. I listed the Ombudsman's amendment application for hearing on 18 May 2022 and extended to 11 May 2022 the date by which Doll House was to file its application. 17 On 11 May 2022, Doll House sought a further two weeks in which to file its application. The Ombudsman consented to an extension of time until 16 May 2022 and I made an order extending until 16 May 2022, the time for Doll House to file its application. 18 On 17 May 2022, the Court received from Ms Meuwissen an Interlocutory Application seeking the following orders including (without alteration): 1. Representation of the Respondent in current proceedings, by sole director Heidi Vieira Vanjek 2. Dismissal of The firework Ombudsman revision of Statement of claim 3. Evidence provided within 1 business day against Dollhouse Training Pty Ltd or the application for Strike out of current statement of claim based on no evidence provided 2 years post claim and litigation with sufficient opportunities and orders made requesting. (I interpolate that Heidi Vieira Vanjek is Ms Meuwissen.) 19 That application was not accompanied by any affidavit evidence. However, attached to the application were four pages of text which may be described as a mixture of evidence and submissions. 20 On 18 May 2022, shortly prior to the hearing of the applications, the Court received from Ms Meuwissen a further version of Doll House's Interlocutory Application, seeking the following orders (without alteration): 1. Representation of the Respondent in current proceedings, by sole director Heidi Vieira Vanjek 2. Dismissal of The Fairwork Ombudsman revision of Statement of Claim 3. AND/OR Form 31, application notice of Cross Claim submitted by Friday 20th May 2022 by respondent 4. Applicant to reply defence by Tuesday 24th May 2022 5. Case listed for Case Management hearing on Thursday 26th may 2022 or at a time convenient for the court 6. Evidence provided within 1 business day against Dollhouse Training Pty Ltd or the application for Strike out of current statement of claim based on no evidence provided 2 years post claim and litigation with sufficient opportunities and orders made requesting.

DOLL HOUSE'S APPLICATION FOR DISPENSATION FROM THE OPERATION OF RULE 4.01(2) 21 Against that background, I turn to Doll House's application for dispensation from compliance with r 4.01(2).

Legal Framework 22 Rule 4.01(2) of the Rules provides: 4.01 Proceeding by lawyer or in person … (2) A corporation must not proceed in the Court other than by a lawyer. 23 Rules 1.32 to 1.35 of the Rules provide: 1.32 Court may make any order it considers appropriate in the interests of justice The Court may make any order that the Court considers appropriate in the interests of justice. 1.33 Orders may be subject to conditions The Court may make an order subject to any conditions the Court considers appropriate. 1.34 Dispensing with compliance with Rules The Court may dispense with compliance with any of these Rules, either before or after the occasion for compliance arises. 1.35 Orders inconsistent with Rules The Court may make an order that is inconsistent with these Rules and in that event the order will prevail. 24 A convenient summary of the rationale for r 4.01(2), and of the principles informing the exercise of the discretion in r 1.34, was set out by Derrington J in Francis (Trustee) v Oculus Accounting Pty Ltd [2021] FCA 448 at [35]-[47]: 35. Rule 4.01(2) of the Rules provides that "[a] corporation must not proceed in the Court other than by a lawyer". It was not in dispute that this rule applies absent the dispensation sought. 36. The rationale for the imposition of like requirements in other courts and the need for a company to obtain leave to be represented other than by a lawyer has been examined at length previously: see e.g. Pharm-a-Care Laboratories Pty Ltd v Commonwealth of Australia (No 12) [2012] FCA 289 (Pharm-a-Care) at [9] - [14]; Bay Marine Pty Ltd v Clayton Country Properties Pty Ltd (1986) 8 NSWLR 104 (Bay Marine) at 105 - 106. The key reasons include: (1) The importance of ensuring that those who represent a corporation are authorised to do so and may thereby be subjected to orders of the court, in particular in relation to costs: Bay Marine at 105 - 106 (Kirby P) and at 110 (Samuels JA). (2) The aim of "ensuring that the officer seeking to represent the company truly represents the interests of the company and not his own": Re G J Mannix Ltd [1984] 1 NZLR 309 (Mannix) at 315. (3) The courts require properly qualified assistance in the pursuit of the administration of justice: Mannix at 314. A person is generally unsuitable to speak for a company unless he or she has been accorded recognition by admission to practise: Hubbard Association of Scientologists International v Anderson [1972] VR 340 at 343 - 344. 37. A discretionary power to permit an individual to represent a company is conferred by the rules of most superior and inferior courts. In this Court, r 1.34 confers a general discretion to dispense with compliance with any of the Rules. 38. Practically speaking, an application for a dispensation in respect of r 4.01(2) is usually agitated by the individual seeking to represent the corporation, though formally it is an application by the corporation. It must, at the very least, be shown that the individual seeking to represent the company is authorised to bring the application and to represent it in the proceedings. 39. The authorities identify that it is necessary to show that there is a "sufficient reason" why the company should be permitted to be represented other than by a lawyer in light of all "relevant considerations": Pharm-a-Care at [9] - [12]; Molnar Engineering Pty Ltd v Burns (1984) 3 FCR 68 at 73 - 75. The company seeking a dispensation carries the onus of establishing that there is such a reason. 40. In this Court, it is not necessary to meet a "threshold requirement of special or exceptional circumstances": Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241 (Termi-Mesh) at [12]; Checked-Out Pty Ltd v Eagle Eye Inspections Pty Ltd [2002] FCA 1002 (Checked-Out) at [9]. But what is a "sufficient reason"? 41. In Damjanovic v Maley (2002) 55 NSWLR 149, Stein J (with whom Mason P and Sheller JA agreed) considered the principles that apply in relation to an application by an unqualified person for leave to represent another individual. His Honour identified the "guiding principle" for the exercise of the equivalent discretion as follows (at [83]): What runs through all of the authorities as the guiding principle in the exercise of the discretion is the public interest in the attainment of the ends of justice. The public has an interest in the effective, efficient and expeditious disposal of litigation in the courts. As a general rule this can best be achieved by parties employing qualified lawyers. 42. The same "guiding principle" applies in respect of the discretion presently being considered: it is necessary for the company to show that there is a sufficient reason why it is in the interests of justice that it be permitted to be represented other than by a lawyer, in light of all relevant considerations. 43. The Court's discretion pursuant to r 1.34 is unconfined: Flightdeck Geelong Pty Ltd v All Options Pty Ltd [2020] FCAFC 138 (Flightdeck Geelong) at [166]. The authorities identify a number of considerations that may be relevant: Basetec Services Pty Ltd v CPB Contractors Pty Ltd (formerly Leighton Contractors Pty Ltd) [2017] FCA 510 (Basetec) at [8]; Worldwide Enterprises Pty Ltd v Silberman [2009] VSC 165 at [20]; Deputy Commissioner of Taxation v Compumark Pty Ltd [2012] FCA 583 at [20]; Flightdeck Geelong at [116]. 44. In Basetec, White J set out a non-exhaustive list of considerations relevant to the exercise of the discretion to dispense with the requirement in r 4.01(2) (at [8]): (a) the financial capacity of the company and those standing behind it and whether a lack of financial capacity would inhibit a company from obtaining legal representation: Deputy Commissioner of Taxation v Compumark Pty Ltd [2012] FCA 583 at [19]-[20]; TermiMesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241 at [13]; Worldwide Enterprises Pty Ltd v Silberman [2009] VSC 165 at [20]; (b) the factual complexities of the case and the capacity of the proposed representative to conduct it effectively having regard to the skills, training, qualifications and experience of that representative: Damjanovic v Maley (2002) 55 NSWLR 149 at [77]; Compumark at [19], TermiMesh at [13]; (c) the overarching purpose of the civil practice and procedure provisions specified in s 37M of the Federal Court of Australia Act 1976 (Cth) (the FCA Act) and the effect on the achievement of that purpose if the company proceeds with, or without, legal representation: Australian Competition and Consumer Commission v Adata (Vic) Pty Ltd (No 2) [2015] FCA 272; Compumark at [20]; Silberman at [20]; (d) the ability of the proposed representative to exercise the objectivity expected of a legal practitioner: Pacific Air Freighters (Qld) Pty Ltd v Toller [2000] FCA 0343; (2000) 171 ALR 519 at [11]; (e) whether a lack of available disciplinary measures in relation to the persons seeking to represent the company will affect the administration of justice: Compumark at [20]; Damjanovic at [76]; (f) the manner in which the case has progressed to date and the manner in which it may progress without the party having legal representation: Compumark at [20]; Silberman at [20]; (g) when the company in question is a respondent, a more liberal approach to the exercise of the discretion may be warranted: TermiMesh at [14]. 45. It is also relevant on an application of this nature to consider whether the person seeking to represent the corporation is likely to be a principal witness at trial, particularly if their credit may be in issue: Act General Cleaning Co Pty Ltd v Con Naoum [1996] FCA 1560 at [23]; Bay Marine at 113. The presentation and management of litigation may be practically unworkable without the assistance of solicitors and counsel where the representative is also a principal witness: Checked-Out at [12]-[13]; AA Shi Pty Ltd v Avbar Pty Ltd (No 4) [2010] FCA 878 at [33]. 46. The first consideration identified in Basetec has particular significance in this application. A lack of financial capacity of the company and of those standing behind it to afford legal representation would tend to weigh in favour of granting a dispensation. Even if that is shown, it is necessary to weigh that against all other relevant circumstances, including the capacity of the proposed representative to effectively represent the company in the proceeding: see e.g. ACCC v Dataline.net.au Pty Ltd [2004] FCA 1361 at [4]. 47. Furthermore, it is clear that establishing the impecuniosity of the company alone is insufficient: Termi-Mesh at [13]. It is necessary to also consider the financial capacity of those standing behind the company to fund its representation in the litigation. It is unlikely to be in the interests of justice to grant the indulgence sought where those who stand to benefit from it being granted can, themselves, afford to fund the company's representation in the litigation: Termi-Mesh at [14].

Doll House's evidence and submissions 25 As noted above, Doll House did not file any affidavit evidence, but attached to its Interlocutory Application (as amended) four pages of text which may be described as a mixture of evidence and submissions. Those pages, subject to one exception, were treated as evidence and submissions (as appropriate) on this application (and on the Ombudsman's application to amend the Statement of Claim considered below). The exception is the evidence contained therein as to what occurred at the mediation. The Ombudsman objected to that evidence and Ms Meuwissen did not press reliance upon it. 26 The essence of Doll House's evidence and submissions in so far as is relevant to this application is that: (1) Ms Meuwissen is an experienced and capable business woman holding a "Bachelor in business management (majoring management), diploma business management, diploma fine art …" and who is presently studying a "Masters in Business management"; (2) Ms Meuwissen has paid close attention to the processes involved when working with Doll House's legal team in this proceeding and has a solid understanding of the system and this case in particular; (3) Ms Meuwissen is able to articulate key points in Doll House's case. She also wishes to have the opportunity to explain how Doll House and she have been treated poorly by the Ombudsman; (4) Ms Meuwissen has represented herself in a proceeding involving freezing orders and achieved a resolution within eight days of the commencement of that proceeding; (5) Ms Meuwissen has read the complete "Fairwork Code" and continues to educate herself; (6) legal fees of $80,000 have been incurred in defence of this proceeding; and (7) Doll House intends, when it has sufficient funds, to seek legal representation but at this stage Ms Meuwissen is the best person to represent Doll House.

The Ombudsman's evidence and submissions 27 The Ombudsman did not adduce any evidence on Doll House's application. 28 The Ombudsman did not object to Doll House being represented by Ms Meuwissen on the hearing of the Ombudsman's application to amend the Statement of Claim. However, the Ombudsman otherwise objected to Doll House being represented by Ms Meuwissen in the proceeding for the following reasons: (1) the matter is one of some complexity, involving questions of legal characterisation of the relationship between Doll House and the workers and whether those persons were employees; (2) her conduct on this application demonstrates that she is not a suitable representative for Doll House in this proceeding and in particular her conduct in: (a) seeking orders in this application for evidence to be filed within one day lest the Statement of Claim be struck out; (b) conflating evidence and submissions and including evidence of without prejudice discussions at the mediation; (c) making conclusionary assertions as to the contents of documents without annexing such documents; (d) including evidence irrelevant to the application; and (e) acting on a misconception that the proceeding includes not only a claim against Doll House but also a claim against her for accessorial liability.

Consideration 29 At the conclusion of the hearing of Doll House's application, I granted leave to Ms Meuwissen to represent Doll House for the purposes of the Ombudsman's application to amend the Statement of Claim and otherwise reserved my decision on Doll House's application for dispensation from compliance with r 4.01(2). 30 For the reasons set out below, Doll House's application should be refused. 31 I am satisfied that Ms Meuwissen, as the sole director of Doll House, is authorised by Doll House to bring the application. It is also apparent that Ms Meuwissen has considerable business experience and some familiarity with legal proceedings. However, I am not satisfied that Doll House should be represented by her, for the following reasons. 32 First, this is a proceeding, as the Ombudsman submitted, of some complexity. I am not satisfied that Ms Meuwissen, despite her business experience and experience gained in this proceeding, has the skills necessary to effectively and efficiently represent Doll House. This would likely have a concomitant effect upon the conduct of any hearing as quickly, inexpensively and efficiently as possible (see s 37M of the Federal Court of Australia Act 1976 (Cth)). 33 Secondly, it is apparent from the pleadings that Ms Meuwissen will most likely be a material witness at any hearing and there is a very real possibility that the veracity of her evidence will be in issue. As noted at [9] above, Doll House's defence of the allegations that it contravened s 357(1) of the FW Act depends at least in part upon proof that Doll House, via Ms Meuwissen's research and receipt of accounting advice, did not know, and was not reckless as to whether, the contracts with the workers were contracts of employment rather than contracts for services. 34 Thirdly, it is apparent, particularly from her status as a likely witness and her expressed unhappiness with the conduct of the Ombudsman in connection with this proceeding, that Ms Meuwissen lacks the objectivity that would be expected of a legal practitioner. 35 Fourthly, there is no cogent evidence of the financial position of Doll House which would suggest that it cannot afford legal representation. No financial statements have been tendered. There is also no evidence as to the financial position of those who stand behind Doll House. In particular, there is no cogent evidence as to Ms Meuwissen's financial position. 36 Finally, I take into account that the discretion might be exercised more liberally where, as here, dispensation is sought by a respondent rather than an applicant. Nevertheless, the factors set out above lead me to the conclusion that leave should be refused.

the application to amend the statement of claim 37 I turn now to the Ombudsman's application to amend the Statement of Claim.

Legal Framework 38 As the pleadings have closed, the Ombudsman requires leave to amend her Statement of Claim: r 16.51. 39 The Court's discretion to allow an amendment is broad, but is to be exercised in a manner which best promotes the overarching purpose of facilitating the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible: s 37M(1) of the Act; Cement Australia Pty Ltd v Australian Competition and Consumer Commission [2010] FCAFC 101; (2010) 187 FCR 261 at [43]; Tamaya Resources Ltd (in liq) v Deloitte Touche Tohmatsu (A Firm) [2016] FCAFC 2; (2016) 332 ALR 199 at [122]-[124]. The exercise of the discretion is informed by the principles enunciated by the High Court of Australia in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175: Tamaya Resources at [125]. 40 In the first instance decision Tamaya Resources Limited (in liq) v Deloitte Touche Tohmatsu (A Firm), in the matter of Tamaya Resources Limited (in liq) [2015] FCA 1098, Gleeson J at [127] set out a series of factors identified in Aon and relevant to the exercise of the Court's discretion. The weight to be given to the considerations identified in Aon, individually and in combination, and the outcome of the balancing process, vary depending on the facts in the individual case: Cement Australia at [51].

Ombudsman's evidence and submissions 41 As noted above, the Ombudsman's application is supported by an affidavit of Ms Piechocki. 42 The essence of Ms Piechocki's evidence and the Ombudsman's submissions is as follows: (1) for the purposes of the alleged contraventions of ss 357, 358 and 323 of the FW Act, the Ombudsman alleges that the three workers the subject of the claim were properly characterised as employees at all times based on all of the relevant circumstances, including pre and post-contractual conduct, under the 'totality of relationship' test as applied by the High Court in Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21; (2) on 9 February 2022, the High Court of Australia handed down judgments in Personnel Contracting and Jamsek by which it determined that where the terms of the parties' relationship are comprehensively committed to a written contract (which contract has not been challenged as a sham, or varied, waived or the subject of an estoppel), the characterisation of their relationship as one of employment or otherwise proceeds by reference to the rights and obligations of the parties under that written contract; (3) the proposed amendments are in response to those recent judgments and are important to the determination of the case and the resolution of the issues in dispute between the parties. In particular, the Ombudsman wishes to properly plead the express and oral terms of the contracts between Doll House and the workers and to make consequential amendments; (4) the amendments will give Doll House fair notice of the Ombudsman's claims, as is required by r 16.02 of the Rules; (5) the proceeding is at an early stage, with evidence yet to be filed and no hearing dates listed; (6) Doll House would not be prejudiced because it would be able to file a Defence to the Amended Statement of Claim and lead any evidence it wishes to rely upon at trial; and (7) the Ombudsman has acted reasonably promptly to notify Doll House and the Court of its intention to seek to amend the Statement of Claim to enable the parties and the Court to determine the real issues in dispute more efficiently.

Doll House's evidence and submissions 43 As noted above, the evidence and submissions in the text attached to Doll House's Interlocutory Application were also received on this application. 44 The essence of Doll House's evidence and submissions concerns delay and in particular that the proceeding has been on foot for almost one year and the Ombudsman has yet to serve her evidence.

Consideration 45 For the reasons submitted by the Ombudsman, leave should be granted to make the proposed amendments. 46 I have taken into account Doll House's submission that the amendments should not be allowed because the proceeding is almost one year old and no evidence has yet been filed. I do not regard this as a reason to deny the Ombudsman leave to amend. In particular, I do not consider the Ombudsman to have been the cause of the delay, in circumstances where: (1) the orders made by the Court on 28 June 2021, 24 August 2021, 6 September 2021 and 21 September 2021 were all made by consent. Those orders included extensions of time for Doll House to file its Defence and for the parties to participate in a mediation; and (2) the catalyst for the amendments was the delivery of the judgments in Personnel Contracting and Jamsek, on 9 February 2022. The delivery of these judgments was a matter beyond the control of the Ombudsman. The Ombudsman acted promptly thereafter in seeking the proposed amendments.

CONCLUSION 47 For the reasons set out above, Doll House's application for dispensation from r 4.01(2) should be refused, and the Ombudsman's amendment application should be allowed. 48 I have considered the competing timetabling orders provided by the parties and will make the orders sought by the Ombudsman but with a shorter period for the filing of the Ombudsman's evidence than was sought by the Ombudsman. 49 Doll House sought an order that it file a cross-claim. Leave is required to file a cross-claim at this stage of the proceeding. The nature of the cross-claim has not been articulated (beyond, perhaps, general suggestions that the Ombudsman has behaved improperly in her conduct of this proceeding). Given the need for leave and the absence of identification of a proposed cause of action, I do not propose to make an order for the filing of a cross-claim. If, properly advised, Doll House wishes to seek leave to file a cross-claim it may file such an application and it will be dealt with on its merits. I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Goodman.