The history of the proceeding
9 The proceeding was commenced on 22 June 2018. All three respondents filed defences, FTM and Mr Elvin on 20 July 2018, Mr Puerto on 20 August 2018. In their defences, Mr Elvin and Mr Puerto raised the privilege against exposure to penalties (penalty privilege).
10 Thereafter the litigation has had a rocky history.
11 First, the respondents made an unsuccessful application to the former docket judge for a separate trial of a question: Fair Work Ombudsman v Foot & Thai Massage Pty Ltd [2018] FCA 1584.
12 Second, Mr Elvin, who had been legally represented at the time his defence was filed, and for some time that included both a law firm and a very experienced and competent junior counsel, became unrepresented when, on 7 February 2019, his lawyer filed a notice of ceasing to act. At the same time the lawyer who had been acting for Mr Puerto also filed a notice of ceasing to act. Six months later, Mr Elvin appointed a new lawyer to represent him and, on 13 August 2019, the new lawyer filed an address for service. A little over two weeks later, FTM's lawyer filed a notice of ceasing to act.
13 Third, five weeks before the hearing was due to start, FTM appointed an external administrator and resolved to wind up the company. The Ombudsman applied for, and was granted, leave to proceed against it: Fair Work Ombudsman v Foot & Thai Massage Pty Ltd (in liquidation) [2019] FCA 1601.
14 Fourth, on 17 October 2019, four days before the trial was due to start, Mr Elvin's new lawyer filed a notice of ceasing to act.
15 The trial began on 21 October 2019. All the Ombudsman's affidavits were read and all of the employee witnesses were cross-examined.
16 The Federal Court Rules 2011 (Cth) (FCR) require that a party pleading to an allegation of fact in another party's pleading must specifically admit or deny every allegation of fact in the pleading and provide that allegations that are not specifically denied are taken to be admitted (r 16.07). They also relevantly require that, in a defence, a party expressly plead a matter of fact or law that raises an issue not arising out of the earlier pleading or, if not expressly pleaded, might take another party by surprise if pleaded later (r 16.08). The effect of raising the penalty privilege in their defence was that Mr Elvin and Mr Puerto were relieved of the need to comply with the pleading rules if those rules would override the privilege: A & L Silvestri Pty Ltd (ACN 052 514 799) v Construction, Forestry, Mining and Energy Union [2005] FCA 1658; 226 ALR 247 (Gyles J). Once the moving party's case concludes and the other party chooses to run a positive case, however, an amended defence should be filed outlining that case: Australian Securities and Investments Commission v Mining Projects Group Limited (2007) 164 FCR 32 at [17] (Finkelstein J). Of course, it is open to a respondent at any time to waive the privilege.
17 On 25 October 2019, after the testimony of the last of the Ombudsman's witnesses, the Court made orders, amongst other things, requiring that:
(1) the respondents file and serve any amended defence by 20 December 2019;
(2) the applicant file and serve a reply to any amended defence by 17 January 2020;
(3) the respondents file and serve any evidence on liability, in affidavit form, by 14 February 2020;
(4) the applicant file and serve any evidence in reply by 6 March 2020;
(5) the respondents file and serve any submissions on liability by 27 March 2020; and
(6) the matter be adjourned for further hearing commencing 1 April 2020, with an estimate of five days.
18 The parties were also granted liberty to apply on two days' notice.
19 The orders were made in the presence of Mr Elvin and the lengthy periods for which they provided to enable him to file an amended defence and put on his evidence were designed to meet his convenience.
20 On 18 November 2019 the orders were varied and the time within which the respondents were to file any amended defences was extended to 23 December 2019.
21 On 20 December 2019 Ms Thirukumar emailed Mr Elvin, attaching a copy of the orders made on 25 October 2019, referring to the extension of time granted on 18 November 2019, and reminding Mr Elvin that he had until 23 December 2019 to file any amended defence.
22 Mr Elvin promptly replied:
I have unfortunately been unable to complete my submission by the due date. I apologise for the delay. There is no excuse however locating witnesses and details from that period has been difficult. I also could not afford legal representation to assist in this matter to avoid wasting the courts time with irrelevant issues. I have managed to find a retired solicitor but he was unable to review in time as he has other commitments. I would like ask for another 2 weeks if possible. Again I apologise to all parties involved and I hope her honour can understand my situation and allow some extra time.
23 He made no mention in this email of any anxiety or depression, difficulties with concentration or lapses of memory. He said nothing about having been prescribed anti-depressants. He made no application to the Court for leave to further extend the period for filing and serving the documents. And he did not file or serve the documents.
24 The matter returned to court on 4 February 2020, on the Ombudsman's application. Neither Mr Elvin nor Mr Puerto appeared, although they had both been notified of the date. No explanation was given for their absence.
25 On that occasion the Ombudsman read an affidavit from Ms Thirukumar affirmed on 3 February 2020. That disclosed some of the information to which I have already referred and the following additional information.
26 Ms Thirukumar replied to Mr Elvin's email of 20 December 2019, copying in Mr Puerto. She advised that she consented to an extension of two weeks (until 6 January 2020) for the respondents to file any amended defence, provided that the Ombudsman was given an extension of one week to file any reply. She attached a signed proposed minute of order to this effect. She received no reply to her email.
27 On 10 January 2020 Ms Thirukumar emailed Mr Elvin and Mr Puerto again, referring to her previous email, seeking "an update" by noon on 13 January 2020 as to whether they would be filing any amended defences. She said in her email that, unless she heard from them by that time, she would contact the Court to request that the matter be listed for a case management hearing at the Court's earliest convenience. She received no reply to this email either.
28 On 14 January 2020 Ms Thirukumar emailed the Court, requesting that the matter be relisted to address the issue. She copied in Mr Elvin and Mr Puerto. This email also appears to have generated no response from either of them.
29 On 22 January 2020 Ms Thirukumar sent another email to Mr Elvin and Mr Puerto seeking an update on whether they intend to file an amended defence. Neither replied.
30 On 28 January 2020 Ms Thirukumar sent a further email to the two men, seeking the same information. Again, she received no reply.
31 Annexed to Ms Thirukumar's affidavit was a proposed minute of order, seeking that the relevant orders made by the Court on 25 October 2019 be vacated, requiring the Ombudsman to file and serve an amended outline of submissions by 6 March 2020 and the respondents to file and serve any submissions on liability by 27 March 2020, and revising the estimate for the hearing from five days to three. When the matter came before the Court on 4 February 2020, however, the Ombudsman was disposed to give the respondents a further opportunity. On her application, I made orders to the following effect:
(1) that the respondents file and serve any amended defence by 14 February 2020;
(2) that, if no amended defence were filed within this time, none could be filed without the leave of the Court;
(3) that the applicant file and serve any reply by 21 February 2020;
(4) that the respondents file and serve any evidence on liability (in affidavit form) by 28 February 2020;
(5) that, if no such evidence were filed within this time, none could be filed without the leave of the Court;
(6) that the applicant file and serve any evidence in reply, together with an amended outline of submissions, by 20 March 2020; and
(7) that the respondents file and serve an outline of their submissions, if any, on liability by 27 March 2020.
32 Ms Thirukumar's second affidavit, affirmed on 5 March 2020, and read at the hearing on 6 March 2020, set out what transpired thereafter.
33 On 6 February 2020 Ms Thirukumar emailed Mr Elvin and Mr Puerto, informing them of the orders made two days earlier and attaching a copy of those orders.
34 On 10 February 2020 Ms Thirukumar wrote to Mr Elvin and to Mr Puerto, by mail and email, referring to the orders of 4 February 2020, explaining the significance of those orders, mentioning their history of non-compliance with court orders and their failure to attend the case management hearing, informing them of the Court's powers in the circumstances to strike out their defences, disallow or reject any evidence they may wish to file, and enter judgment against them.
35 On 12 February 2020 Mr Puerto replied, thanking Ms Thirukumar for sending the letter by post, explaining that his email address had been inaccessible since December and giving her his new email address and mobile phone number. But there was no reply from Mr Elvin. On 14 February 2020 Ms Thirukumar forwarded all correspondence from 1 December 2019 to Mr Puerto. He replied the same day advising that he intended to maintain his current defence.
36 It was not until 28 February 2020 that the Ombudsman heard from Mr Elvin. On that day he emailed Ms Thirukumar, acknowledging the terms of the orders made on 4 February 2020, foreshadowing his interlocutory application and proposing that they agree on a timetable to permit him to file an amended defence and any evidence on liability. At that point he did not disclose his reasons for not complying with the previous orders.
37 Ms Thirukumar replied on 2 March 2020. She explained that, since he had not informed the Ombudsman of his reasons for not complying with the previous orders, the Ombudsman was not in a position to agree to his proposal. She also indicated that, if he were to make an application for leave at this point, the Ombudsman was likely to be significantly prejudiced. Besides detailing Mr Elvin's history of non-compliance, she advised that his proposed timetable would give the Ombudsman insufficient time to prepare and file a reply, prepare and file any evidence in reply, prepare for cross-examination of any witnesses, and prepare submissions. She told him that any departure from the current timetable would affect the Ombudsman's ability to present her case as a number of her witnesses were on bridging visas. She referred to the amounts of compensation she was seeking for the former employees of FTM and the extensive period of time during which the money has been outstanding. She also noted the potential prejudice to the creditors of FTM if the resolution of the proceeding were to be delayed. Finally, Ms Thirukumar said that the Ombudsman was unable to assess the precise extent of the prejudice she would suffer, so she asked him to advise her as soon as possible of the number and names of the witnesses from whom he intended to adduce evidence and an outline or description of their evidence.
38 Mr Elvin replied the following day. He said that he did not file an amended defence by 14 February 2020 and his evidence by 28 February 2020 for the reasons later set out in the affidavit in support of his interlocutory application. He invited the Ombudsman to reconsider her position. But he did not respond to Ms Thirukumar's request that he provide her with the number and names of his witnesses or an outline or description of their evidence. He merely wrote:
For your information the issues l intend to address in my amended defence and affidavit evidence relate to three separate things. These are, the allegations against me of locking up and restricting the freedom of my employees, the record keeping for my business and, the alleged underpayments. I intend to file an affidavit covering these points and, affidavits from my mother and father and one previous employee. These affidavits will be relatively brief and only cover matters these people have direct knowledge about.
39 Ms Thirukumar's third affidavit, affirmed on 10 March 2020, detailed the sequence of events after the hearing on 6 March 2020.
40 At 3:36PM that day Mr Elvin emailed to Ms Thirukumar an amended defence, but it was incomplete. At 5:56PM Ms Thirukumar wrote back to him pointing out that it failed to address a substantial number of paragraphs in the Ombudsman's Further Amended Statement of Claim, which she identified. She indicated that she would not object to Mr Elvin providing a version of his amended defence that included his position on those additional paragraphs at the same time he provided his outlines of evidence, although she added that ultimately this was a matter for the Court. She noted that if he did not plead to the additional paragraphs, the allegations in those paragraphs would be deemed to be admitted, drawing his attention to r 16.07(2).
41 At 11:22AM, on Monday, 9 March 2020, Mr Elvin emailed another amended defence to Ms Thirukumar. He offered no explanation for the delay. Nor had he approached the Court for an extension of time.
42 In the meantime, on 8 March 2020, Mr Elvin emailed to Ms Thirukumar attaching draft affidavits from him and Ms Palma Yu. Neither of the documents was signed by the designated deponent and no signed statement was served from any proposed witness. As he pointed out in his covering letter, the affidavits were incomplete, but he claimed they would provide "a fair idea" of the evidence he intended to file. In the covering letter, he said that he also intended to file affidavits from his father and mother addressing aspects of the evidence given by the Ombudsman's witnesses in their affidavits. He also foreshadowed an intention to file an affidavit from one Bruno Gareffa, who, he said, was a long-standing customer of FTM. He said that his evidence would "include him being told by employees of [FTM that] they were going to leave to start a new massage business nearby". Mr Elvin added that he intended to draft a chronology to annex to his affidavit "to ensure that there is no confusion by the Court about relevant dates" and to prepare a "photo booklet" to assist the Court. He said that he would need to "briefly recall" all the Ombudsman's witnesses so he could put his primary defence and allegations to them, namely that they had all lied. He invited the Ombudsman to consent to his application.
43 The draft amended defence makes a number of admissions but denies all allegations of wrongdoing.
44 In its present form, a good deal of Mr Elvin's draft affidavit would be inadmissible. It is a mixture of evidence, accusations, and submissions.
45 In his draft affidavit Mr Elvin discloses that he is tertiary educated, that he studied economics at the Australian National University in order to become a businessman, an ambition he purportedly achieved. He provides a history of the establishment of FTM and presents an account of the recruitment process and the living and working conditions of the relevant employees which starkly contrasts with the evidence they gave. He alleges that their evidence was false and given for an ulterior purpose. He claims that he dismissed two of the employees who had entered into a personal relationship and that, from the time of their dismissal, they embarked on "a deliberate plan" to destroy FTM for personal gain. He also claims that they persuaded the other five employees to conspire with them to lie about their employment with FTM.
46 Mr Elvin referred in his draft affidavit to an investigation by the Australian Federal Police in 2016, which he claimed, in effect, exonerated him and FTM. He stated that copies of statements taken by the police are annexed, but no such documents were annexed to the draft affidavit.
47 Mr Elvin then answered the evidence given by one of the dismissed employees, Bartolome Durado, and started, but did not finish, answering the evidence given by another, Delo Be Isugan. There followed place-markers for responses to various parts of the affidavits of all the other witnesses including the Ombudsman's employees, who were not previously required for cross-examination.
48 The draft affidavit of Palma Yu broadly corroborates Mr Elvin. It implicates a third party in the alleged conspiracy. But it, too, was incomplete.
49 In his submissions Mr Elvin said that he intends to apply for a subpoena to issue to the Australian Federal Police so that he can put in evidence an unredacted copy of a police report and "witness interview statements".