Fair Work Ombudsman v Ecosway Pty Ltd

REASONS FOR JUDGMENT 1 On 2 February 2015, a judge of the Federal Circuit Court (the FCC) ordered that these proceedings be transferred to this Court. The Judge published reasons for his decision: Fair Work Ombudsman v Ecosway Pty Ltd [2015] FCCA 202. 2 The circumstances of the transfer and the continuance of the proceedings in this Court raise matters of concern. They have caused the Court to consider on its own initiative whether the proceedings should be transferred back to the FCC. 3 The Court has completed that consideration by reference to the same materials which were relied upon by the FCC Judge. Neither party wished to adduce further evidence and only the applicant chose to make some short written submissions on the question of re-transfer. 4 The Court's power to order the transfer of proceedings to the FCC on its own initiative is found in s 32AB(2)(b) of the Federal Court of Australia Act 1976 (Cth) (the FCA Act). Section 32AB(6) requires the Court, when considering whether to order the transfer of proceedings to the FCC, to have regard to four matters: (a) any Rules of the Court setting out factors which are to be taken into account by the Court in deciding whether to order the transfer of proceedings; (b) whether proceedings in respect of an associated matter are pending in the FCC; (c) whether the resources of the FCC are sufficient to hear and determine the proceedings; and (d) the interests of the administration of justice. 5 The Court has made rules relating to the transfer of proceedings to the FCC: r 27.11 and r 27.12 of the Federal Court Rules 2011 (Cth). Rule 27.12 states that the parties should, on an application for the transfer of a proceeding, address the following matters: (a) whether the proceeding is likely to involve questions of general importance; (b) whether it would be less expensive and more convenient to the parties if the proceeding were transferred; (c) whether a proceeding would be determined more quickly if transferred; (d) the wishes of the parties. As can be seen, s 32AB(6) identifies some matters which the Court is bound to consider and r 27.12 some matters which the parties should consider. It is not to be supposed however, that s 32AB(6) and r 27.12 state exhaustively the matters which may be relevant to a transfer. 6 Before addressing these matters, it is necessary to set out some detail regarding the proceeding and its transfer to this Court. The following summary is drawn principally from the reasons of the FCC Judge. 7 The proceeding concerns an application by the Fair Work Ombudsman (the FWO) for declarations that a store operator, Ms Wardale, engaged by Ecosway Pty Ltd (Ecosway) between 2010 and 2012 was its employee and that Ecosway had breached a number of statutory and award provisions relating to that employment. The FWO seeks, pursuant to ss 545 and 546 of the Fair Work Act 2009 (Cth) (the FW Act), the imposition of civil penalties as well as an order that Ms Wardale be paid the wages to which she would be entitled as an employee. 8 Ecosway asserts that Ms Wardale was an independent contractor with the consequence that the statutory and award provisions on which the FWO relies were not applicable to her. 9 The arrangements between Ms Wardale and Ecosway are said to be common to arrangements which the latter had, and continues to have, with a number of other persons whom it regards as independent contractors. A finding that Ecosway's relationship with Ms Wardale was that of employer and employee is, accordingly, likely to have an effect on its relationship with all other persons engaged on a similar basis. 10 The proceeding was commenced in the FCC on 2 July 2013. In December 2013, an FCC Judge fixed the matter for a three day trial on 23 July 2014. The trial did not proceed at that time. Instead, on 23 July, senior counsel then appearing for Ecosway sought that the parties be given time to rationalise, cull and index the large volume of documents in the prepared tender bundle. Counsel recognised that this would mean that the trial would not be able to proceed in the three days which the Court had set aside. He also referred to a possible conflict of interest between Ecosway and its former solicitors and to the prospect that the three days set aside for the trial would not be sufficient. The FCC Judge then vacated the trial. Despite the application for time to address the tender bundle having been made by Ecosway, the Judge said that he vacated the trial "upon the Court's own motion". The consequence was that, because of a late application by Ecosway, court time allocated to the proceeding was not used. 11 The FCC then raised with the parties of its own motion a possible transfer of the proceeding to this Court. Senior counsel then appearing for Ecosway said that his client was not applying for a transfer to this Court, saying: I've got instructions on that … We're very content … in this jurisdiction. The FWO did not seek transfer either and accordingly no order to that effect was made. 12 Later on 23 July 2014, the FCC Judge fixed the matter for a 10 day trial between 18 and 29 May 2015. Pre-trial management in the FCC continued. 13 On 27 January 2015, Ecosway applied for the vacation of the May 2015 hearing dates and for the transfer of the proceeding to this Court. The application was made because new counsel for Ecosway considered that transfer was "the more expedient way, from his client's perspective, for the case to be disposed of" (Reasons at [62]). The solicitor's affidavit in support of the application for transfer deposed to the following: (a) the business operations of Ecosway are "novel and unique"; (b) the importance of the determination of Ms Wardale's status to the status of Ecosway's "business owners and store operators" engaged in the various States and Territories of Australia; (c) the prospect of an appeal by whoever is the unsuccessful party at first instance. 14 The FWO took a neutral position in relation to the requested transfer of the proceeding to this Court, although seeking an order that Ecosway pay the additional fees applicable to proceeding in this Court. 15 In deciding on the order of transfer, the FCC Judge referred to a number of matters: he was satisfied that the amount of the monetary claim, as well as the issues arising on the claim, were of a kind which the FCC was required regularly to determine (at [83]-[85]); the task of determining whether Ms Wardale's relationship with Ecosway should be characterised as that of an employee was not "inherently intellectually complex" (at [90]); that it would be more costly for the proceeding to continue in this Court rather than in the FCC (at [101]), although if the proceeding remained in the FCC there would be the possibility of more than one appeal hearing in this Court (at [103]-[105]); that it was likely that the trial scheduled in the FCC would take place earlier than it would in the event of transfer (at [106]); and the lateness of the application by Ecosway (at [107]). 16 Despite those matters, the FCC Judge ordered the transfer, giving the following reasons: (a) the FCC is a busy first instance Court, providing a forum for the quick and speedy resolution of less complex matters, with the more complex matters being appropriately determined in either this Court or the Family Court, at [115]; (b) the allocation of 10 days for the trial was a "significant allocation" of the FCC's resources and would impact on the Court's management of other proceedings, at [117]-[118]. "Judicial resources are scarce [and] the costs of justice are potentially great" with the consequence that "case managers" had "a responsibility to ensure that individual cases are heard by the appropriate Court at the appropriate level of judicial structures", at [120]; (c) the interests of justice warranted the transfer, having regard to the involvement of senior counsel, the estimate of 7-10 days, and the circumstance that the case was of "great moment" to the party seeking transfer, at [123]. Earlier the FCC Judge had said, at [113], that he did not believe himself to be "in a position to blithely over-rule the wishes of Ecosway"; (d) it was in the interests of other "users" of the FCC that the proceedings be transferred, at [124]. 17 The reasons of the FCC Judge do not refer at all to the resources of this Court nor (apart from his acceptance that the scheduled trial in the FCC would likely take place earlier than would a trial in this Court) is it evident that he considered when this Court, having regard to its other responsibilities, would be able to hear the matter. In particular, the FCC Judge did not refer to, nor ensure that effect was given to, the protocol being developed by this Court and the FCC in relation to matters of possible transfer, which provides in particular for consultation between the two Courts before any order for transfer is made. 18 Against that background, I turn to consider the matters arising under s 32AB(6) of the FCA Act and r 27.12 of the Federal Court Rules. 19 I proceed on the basis that the outcome of the proceeding is likely to have an effect extending beyond Ecosway and Ms Wardale. The materials do not indicate how many other persons Ecosway engaged on the same basis as Ms Wardale although previous counsel said that it had 30 similar "centres". Ecosway also argued that there would be other entities who had engaged persons on a basis similar to its arrangement with Ms Wardale who would be affected by the determination of this claim. However, it did not adduce evidence to support that assertion and, as the FCC Judge noted at [98], there is an apparent tension between that submission and Ecosway's submission that its business operation was "novel and unique". Nevertheless, given the potential impact on other persons engaged by Ecosway, I accept that it is appropriate to proceed on the basis that the determination of the proceeding may have an effect extending beyond the present parties and Ms Wardale. 20 As to costs, the FCC Judge accepted at [70] that a seven day trial in this Court would be approximately four times more expensive than a trial of the same length in the FCC. That is because of the higher setting down fee and higher daily hearing fees fixed by regulation in relation to proceedings in this Court. Although the FWO did not oppose the transfer to this Court, she did submit that such a transfer should be conditional upon Ecosway paying the additional cost of a trial in this Court. The FCC Judge appreciated that he did not have the power to make any order with respect to the costs of proceedings in this Court and so did not accede to the FWO's application. It is pertinent that Ecosway did not, as part of its application, undertake to pay the additional costs which the FWO may incur. 21 The circumstance that the proceeding would be much less expensive to the parties if the matter is transferred back to the FCC is a significant matter. That is especially so having regard to the limitations effected by s 570 of the FW Act on the powers of both this Court and the FCC with respect to costs. It may mean that, even if successful, the FWO will have to bear the ultimate burden of the additional cost of a hearing in this Court. The fact that the FWO is funded from the public purse adds to the significance of this consideration. The FCC Judge did not refer to the absence of any undertaking by Ecosway with respect to costs, nor to the additional burden to the public purse which the transfer was likely to involve. 22 The possibility of an additional level of appeal in the event that the trial is heard at first instance in the FCC is not a matter warranting significant weight in relation to the evaluation of expense and convenience. It is common for appeals from the FCC, particularly in matters concerning the characterisation of a person as an employee, to be heard by a Full Court in this Court. Section 25(1AA) of the FCA Act permits that to occur. 23 It is reasonable to conclude that it will be more convenient for the parties if the proceedings are transferred to the FCC. The FCC has already allocated judicial resources to a trial in May 2015 and the parties may be taken to have commenced preparations for that trial. Those preparations will be disrupted if the matter remains in this Court. The convenience to the parties of proceeding in the FCC can also be inferred from the fact that, when the FCC Judge of his own initiative raised the question of possible transfer to this Court in July 2014, both parties sought to have the matter remain in the FCC. As already noted, Ecosway said that it was "very content" to have the matter remain in the FCC. 24 Another aspect bearing on the evaluation of the convenience is the benefit to the parties of having a judge who is already familiar with the matter conduct the trial. It is obvious from the filed material that the documents to be considered at the trial may be substantial. It is apparent from the Judge's reasons that he already has some familiarity with the material. It should be much more convenient to the parties for a judge familiar with the matter arising from his pre-trial management to continue as the trial judge. In contrast, a judge in this Court will have to familiarise himself or herself with a substantial volume of material. 25 It is unlikely that a trial in this Court could take place until well into the second half of 2015. Quite apart from that consideration, regard must be had to other factors including the distraction of judicial resources in this Court from the more complex matters properly commenced in this Court. 26 In addition to a trial taking place in the FCC earlier than a trial in this Court, it also seems likely that the proceedings would be determined more quickly in the FCC. That follows from the fact that the trial would be heard earlier. It is in the interests of the parties and of the public for these proceedings to be resolved as soon as practical. 27 As to the wishes of the parties, Ecosway chose not to make any additional submission on the question of transfer back to the FCC. It relied on the same matters as those upon which it relied in the FCC. Despite the additional cost implications, the FWO continued to take a neutral position. 28 In my view, little weight can be attached to Ecosway's wishes. It is very pertinent that Ecosway did not make the application before the first attendance in the FCC, which is when an application of this kind should be made: see r 8.02(2) of the Federal Circuit Court Rules 2001. It waited some 18 months before making the application. The FCC Judge did not make any order extending the time within which Ecosway could make its application, and does not appear to have addressed separately the matters bearing on the exercise of the discretion to do so. 29 The requirement that questions of transfer be considered at an early stage serves an obvious purpose. It means that the case management of a proceeding will occur in the Court in which the trial will take place. By that means the advantages of the docket system in each Court may be realised. Those advantages will not be achieved if the proceeding remains in this Court. 30 As well as not making its application before the first directions hearing in the FCC, Ecosway indicated its preferred course in July 2014 when the issue of possible transfer was raised by the FCC Judge. Judicial resources were allocated on the basis of the position for which Ecosway then pressed. 31 In these circumstances, the mere present desire of Ecosway to have the proceedings heard in this Court is a consideration warranting very little weight at all. It seems to turn on little more than the preference of its new counsel. Ecosway should not be permitted to engage in a form of approbation and reprobation. Parties should understand that, on the retention of new solicitors or counsel, case management does not commence afresh. Parties will usually be bound by the directions and arrangements for trial made when the previous solicitors or counsel were retained. That does not mean that there cannot be a variation or revision of trial management orders when appropriate, but it does mean that a proper justification must be shown. The mere fact that new counsel has a different preference will seldom be sufficient. 32 Section 32AB(6)(b) requires the Court to have regard to whether there are proceedings in respect of an associated matter pending in the FCC. I accept that there are no such proceedings and that that is not a factor pointing to transfer. 33 Section 32AB(6)(c) requires the Court to have regard to whether the resources of the FCC are sufficient to hear and determine the proceedings. I consider that this Court can be satisfied that the FCC does have sufficient resources, in particular having regard to the circumstance that the FCC Judge did not point to any inadequacy of the FCC's resources in relation to his exercise of the discretion to order the transfer of the proceedings to this Court. 34 Finally, I turn to the interests of the administration of justice. The first relevant matters affecting those interests are those summarised above. Taken together they point persuasively in favour of an order for transfer to the FCC. Prima facie, the interests of the administration of justice require that a matter properly commenced in the FCC involving issues at a level of complexity appropriate for determination in the FCC, and for which the FCC has already made trial arrangements, should continue in that Court. 35 Conversely, the matters relied upon by the FCC Judge do not, with respect, seem to justify the continuance of the proceedings in this Court. Like the FCC, this Court is also a busy first instance court and, in addition, exercises a considerable appellate jurisdiction. As is the case with the FCC, the allocation of 10 days for a trial is a significant allocation of this Court's resources and, if it is necessary for that length of time to be set aside, will inevitably impact on this Court's management of other proceedings. 36 Given that these are matters which are common to both Courts, it is appropriate to have regard to a principal part of the rationale for the establishment of the Federal Magistrates Court, now the FCC. That rationale is seen in the Second Reading Speech of the Attorney-General in relation to Federal Magistrates Bill 1999: While the Commonwealth judicial structure has served Australia well, the changes that have occurred in Australian society over recent years have led to an increased range of matters coming before the Commonwealth Courts. Many of these matters are not complex and do not need to be dealt with by superior Court judges. Federal and Family Court judges are increasingly tied up dealing with matters that could be dealt with more efficiently at a lower level. The need for a court which can handle less complex federal matters more efficiently and effectively is now pressing. It is appropriate that, on the cusp of the new millennium, this Parliament takes the next step of establishing a new, lower level, Commonwealth court. … The Federal Magistrates [Court] is intended to provide a quicker, cheaper option for litigants and to ease the workload of both the Federal Court and the Family Court. When fully established, it will free up the Federal and Family Courts to focus on the more complex matters that require the attention of a superior court judge. (Emphasis added) 37 It can be seen that the rationale for the establishment of the FCC was very much based on a principle of subsidiarity, namely, the organising principle that matters ought to be handled by the smallest, lowest or less centralised competent authority. A transfer of the proceedings back to the FCC would give effect to this rationale. I add that there is no reason to suppose the rationale stated by the Attorney-General in 1999 does not continue to apply, despite the change in name of the Federal Magistrates Court to Federal Circuit Court. 38 It is appropriate to have regard to s 37M of the FCA Act. That establishes that the overarching purpose of the civil practice and procedure provisions of the Court, including its rules, is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. The overarching purpose includes the objective of the efficient use of the judicial resources available for the purposes of the Court and the efficient disposal of its overall case load. 39 The conduct of proceedings in this Court which were commenced in the FCC Court, have been case managed in that Court, and which may be appropriately continued in that Court is not consistent with that overarching purpose. Further, the interests of the administration of justice are not promoted by the parties not taking advantage of the time which the FCC itself has set aside for their benefit. As King CJ observed in United Motors Retail Limited v Australian Guarantee Corporation Limited (1991) 58 SASR 156 at 160, "the capacity of courts to provide expeditious justice in a place of heavy workloads depends upon the maximum utilisation of the Court's resources". Given the allocation of the FCC's resources to the present parties, neither this Court nor the FCC should readily condone conduct which leads to the resources of a court, once allocated to a matter, not being properly utilised. It is not in the public interest that a second judicial officer should have to familiarise himself or herself with the matter when there is already a judge with an advanced degree of familiarity who is able to conduct the trial. 40 I note that the costs of the vacation of the trial in the FCC in July 2014 were reserved. It is generally undesirable that the costs reserved in one Court should have to be determined in another. 41 All these matters point strongly in favour of an order for transfer. Subject to the matters to be mentioned next, there is very little justification for the matter remaining in this Court. 42 The countervailing considerations are these. First, the public perception of the proper administration of justice would not be enhanced by a transfer of proceedings from the FCC to this Court followed by an almost immediate transfer of the proceedings back to the FCC. Transfers between the Courts should not be conducted in the manner of a tennis match. It is unfortunate that the protocol being developed between the two Courts, which is designed to provide full consideration of all issues arising on a possible transfer and to avoid that potential consequence, was not followed before the order for transfer to this Court was made in this case. 43 Secondly, I am conscious that the particular FCC Judge who ordered the transfer is carrying a heavy workload presently. 44 Thirdly, it seems improbable that there will be a recurrence of transfers to this Court in circumstances like the present. 45 Ultimately, I am persuaded that, despite the strong case for transfer, the discretion to order the transfer of the proceeding back to the FCC should not be exercised in this case. That makes it unnecessary to implement in this case the procedures contemplated by the draft protocol relating to transfer from this Court to the FCC. 46 These are my reasons for not exercising the discretion, on the Court's own initiative, to transfer the proceeding back to the FCC. I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White.