[2010] FMCA 569

PRACTICE AND PROCEDURE - Amendment to application and statement of claim - whether rule 7.01(1) of the Federal Magistrates Court Rules 2001 (Cth) sufficient - scope of rule 7.01(1) - discretionary power - factors related to exercise of discretion - whether resort to Federal Court Rules required.

INDUSTRIAL LAW - Civil penalty proceedings - application to amend application and statement of claim.

Fair Work Act 2009 (Cth), ss.570(2)(b), 682(1)(a)(ii), (b), (c), (d) and (f), 712(3) and (4)

Federal Magistrates Act 1999 (Cth), ss.3, 13(3)(a), 42

Federal Magistrates Court Rules 2001 (Cth), rr.1.03, 4.05(3), 7.01

Income Tax Assessment Act 1997 (Cth)

Privacy Act 1988 (Cth)

Taxation Administration Act 1953 (Cth)

Workplace Relations Act 1996 (Cth), s.666

Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175; [2009] HCA 27

Attwood v Wangka Maya Pilbara Aboriginal Language Centre (No.2) [2010] FMCA 500

Burford v Clifford [1932] 2 Ch 122

Chatsworth Investments Ltd v Amoco (UK) Ltd [1968] 1 Ch 665

Dairy Containers Ltd v NZI Bank Ltd [1993] 1 NZLR 160

Donnelly v Prentice [2003] FMCA 50

Lydiard Financial Services Pty Ltd v Moran [2006] FMCA 1341

McKellar v Jetstar Airways Pty Ltd [2010] FMCA 242

Moran v Lydiard Financial Services Pty Ltd [2007] FCA 872

Pechiney Plastic Packaging Inc v Cryovac Australia Pty Ltd (2003) 59 IPR 356; [2003] FCA 1261

SZGTE v Minister for Immigration and Multicultural Affairs [2006] FCA 443

SZGTE v Minister for Immigration and Multicultural Affairs & Anor [2006] HCATrans 639

Vijayakumar v Qantas Airways Limited (2009) 233 FLR 369; [2009] FMCA 736

Vijayakumar v Qantas Airways Limited [2009] FCA 1121

(1) The Applicant has leave to file an Amended Application and Amended Statement of Claim in the terms attached to its Application in a Case dated 7 July 2010.

(2) Service of the Amended Application and Amended Statement of Claim be dispensed with.

(3) There be no orders as to costs in respect of the Application in a Case dated 7 July 2010.

(Delivered in Chambers under s.13(3)(a) of the Federal Magistrates Act 1999 (Cth))

1. In this matter the applicant, the Fair Work Ombudsman, by an Application in a Case seeks leave to file an Amended Application and Amended Statement of Claim. Drafts of the Amended Application and Amended Statement of Claim were provided to the solicitors for the first respondent, Nerd Group Australia Pty Ltd[1] and the second respondent, Jack Craig Garber[2] by the Fair Work Ombudsman's solicitors by email on 27 May 2010. The amendments sought have now been consented to by Nerd Group and Mr Garber. There was also consent to orders that:
   1. service of the Amended Application and Amended Statement of Claim be dispensed with; and
   2. costs be in the cause.
2. Although orders in this matter were made by consent on 29 July 2010, and the parties were consequently not required to appear on the hearing listed for the Application in a Case, the Court indicated to the parties that it intended to publish these Reasons for Judgment in relation to the Court's power to amend under r.7.01(1) of the Federal Magistrates Court Rules 2001 (Cth).[3] The Fair Work Ombudsman filed written submissions on the Application in a Case, in accordance with the Court's orders of 2 July 2010. Nerd Group and Mr Garber did not file written submissions in accordance with the Court's orders, but, as indicated above, ultimately consented to the orders sought by the Fair Work Ombudsman.

1. The substantive proceedings were commenced by the Fair Work Ombudsman on 18 March 2010, by the filing of an Application and Statement of Claim alleging a failure by Nerd Group to comply with a notice to produce records or documents issued by the Fair Work Ombudsman on 9 November 2009.[4] The alleged failure is said to be a contravention of s.712(3) of the Fair Work Act 2009 (Cth).[5] It is alleged that Mr Garber is a director of Nerd Group and that he was involved in Nerd Group's contravention.
2. The Fair Work Ombudsman issued the First Notice to Produce in relation to a complaint from Ms Tingka Lin, a former employee of Nerd Group, who alleges non-payment by Nerd Group for hours she worked.
3. Nerd Group and Mr Garber filed a Response on 21 April 2010 in which it is said that Nerd Group had a reasonable excuse under s.712(4) of the FW Act for not complying with the First Notice to Produce, that reasonable excuse being that the Fair Work Ombudsman had failed to produce satisfactory evidence to Nerd Group that providing the information requested in the First Notice to Produce would not constitute a breach of the Privacy Act 1988 (Cth), the Taxation Administration Act 1953 (Cth) and/or the Income Tax Assessment Act 1997 (Cth). The assertion of reasonable excuse is contained in one short paragraph of the Response as a ground of opposition to the Application, and is not particularised to any greater extent than has been set out in this paragraph.
4. Nerd Group and Mr Garber have not yet filed a Defence to the Statement of Claim.

The Application in a Case by the Fair Work Ombudsman

1. On 7 July 2010 the Fair Work Ombudsman filed the Application in a Case seeking leave to file an Amended Application and Amended Statement of Claim in these proceedings. Affidavits in support of the application in a case were filed by Mr Sutherland, a Fair Work Inspector, and Mr Jacobson, the lawyer with conduct of the matter for the Fair Work Ombudsman's solicitors. The Application in a Case relies upon r.7.01(1) of the FMCA Rules. Rule 7.01 of the FMC Rules provides as follows:
   • 7.01 Power to amend
     • (1) At any stage in a proceeding, the Court or a Registrar may allow or direct a party to amend a document (other than an affidavit) in the way and on the conditions the Court or the Registrar thinks fit.
     • (2) Subject to rule 7.03, the Court or a Registrar may allow an amendment even if the effect would be to include a cause of action arising after the proceeding was started.
2. Rule 7.01(2) of the FMCA Rules is also relied on by the Fair Work Ombudsman to the extent that it provides that the Court may allow an amendment even if the effect would be to include a cause of action arising after the proceeding was started. That rule is relevant because the effect of the orders sought by the Fair Work Ombudsman would allow a further cause of action to be added in the proceedings.

Another complaint and another Notice to Produce

1. On 30 March 2010 another Notice to Produce was issued to Nerd Group under s.712(3) of the FW Act in relation to a complaint by another former employee of Nerd Group, Craig Blackie.[6] By the time specified in the Second Notice to Produce, that is 5.00pm on 14 April 2010, it is alleged that Nerd Group had not produced to the Fair Work Ombudsman the documents requested, and had not done so by the time the Application in a Case was filed by the Fair Work Ombudsman on 7 July 2010.[7] The Fair Work Ombudsman therefore alleges that Nerd Group has also failed to comply with the Second Notice to Produce, in contravention of s.712(3) of the FW Act, and that Mr Garber was involved in the Alleged Second Contravention.

The grounds for the application for leave to amend

1. In the Fair Work Ombudsman's helpful Written Submissions the grounds for the application for leave to amend are set out. Although the Court was prepared to grant the consent order signed by the parties granting the Fair Work Ombudsman leave to amend both the Application and Statement of Claim, the Court's reasons for doing so vary from those contended for by the Fair Work Ombudsman. It is because of that variance that these Reasons for Judgment have been prepared.
2. The Fair Work Ombudsman argues that:
   1. rule 7.01 of the FMC Rules largely mirrors the terms of O.13 r.2(7) and (8) of the Federal Court Rules.[8] Order 13 r.2(7) of the FC Rules provides as follows:
      • (7) An amendment may be made even if the effect of the amendment is to add a new claim for relief or foundation in law for a claim for relief (whether by way of substitution for an existing claim for relief or foundation in law or not) if the new claim for relief or foundation in law:
        • (a) arises out of the same facts or substantially the same facts as those already pleaded to support an existing claim for relief by the party applying for leave to make the amendment; or
        • (b) subject to subrule (9), arises, in whole or in part, out of facts or matters that have occurred or arisen since the commencement of the proceeding.
   2. the expression "substantially the same" appearing in O.13 r.2(7) of the FC Rules has received attention in the authorities, as follows:
      1. in Burford v Clifford, where in the English Court of Appeal it was said:
         • "...the words "substantially the same" which appear in both those clauses relate to the facts which have to be examined for the purpose of ascertaining what is the relief or remedy to which the parties are entitled. "Substantially" must have been put in in order to embrace within the rule something which was not exactly a repetition of the relief or remedy or asked for ... where the same facts have to be conned over in order to ascertain the liability and to give some relief to one or other of the parties, in such a case the rule now provides that it is unnecessary to have separate actions and separate proceedings, but that a third party notice may be served."[9]
      2. in Chatsworth Investments Ltd v Amoco (UK) Ltd it was explained that Burford applied to cases where substantially the same facts would have to be gone over to ascertain liabilities arising under different claims;[10]
      3. in the High Court of New Zealand in Dairy Containers Ltd v NZI Bank Ltd it was held that although causes of action in conversion and negligence were different in nature, the question of apportionment should be determined in one proceeding, and thus an issue which was substantially the same in relation to pleas of contributory negligence could conveniently be dealt with at the same time;[11] and
      4. by way of contrast, an amendment under O.13 r.2(7) of the FC Rules will not be allowed where it may involve an examination of complex and detailed circumstances and expert opinions, different in scope and nature to those raised on the application originally, such that it would not be convenient or conducive to the determination of the issues between the parties, or in the interests of the proper administration of justice, to hear them together.[12]
3. The Fair Work Ombudsman argues that the Alleged Second Contravention arises out of the same facts, or substantially the same facts, as those already pleaded in the Statement of Claim, because:

1. the complainants in each case were both employees of Nerd Group; 2. the same Fair Work Inspector issued the First and Second Notice to Produce;

1. both the First and Second Notice to Produce sought the same types of documents;

1. the contraventions alleged both in the Statement of Claim and the Alleged Second Contravention arise out of the same legislative provision, namely s.712(3) of the FW Act, and therefore the same legal principles will apply to both alleged breaches; and 2. it is likely that Nerd Group and Mr Garber will raise the same defence in respect of both allegations.
2. Some support for the position advanced by the Fair Work Ombudsman in these proceedings can be taken from this Court's judgment in McKellar v Jetstar Airways Pty Ltd[13] where, having set out r.7.01 of the FMC Rules, the Court proceeded to say as follows:
   • "In a case such as this where the amendment is to a pleading, then I think there is a strong argument that the Federal Court Rules relating to pleadings would apply given the provision of rule 4.05(3) of the Federal Magistrates Court Rules 2001 which states:
     • "If the statement of claim or points of claim are filed under paragraph (2)(b), a respondent:
     • (a) must file the defence or points of defence instead of an affidavit,
     • (b) may file a cross-claim."
   • And then:
     • "Note: Subsection 43(2) of the Act provides for Rules of Court made under the Family Law Act and Federal Court of Australia Act 1976 to apply, with necessary modifications to the practice and procedure of the Federal Magistrates Court for particular jurisdictions of the Court if the rules are insufficient. Those Rules may be used to direct how pleadings are to be dealt with in the Federal Magistrates Court if sub rules 4.05(2) and (3) apply.""[14]
3. The Court however notes the following:
   1. rule 4.05(3) of the FMC Rules sets out no more than the normal course of pleading in civil proceedings; and
   2. the FC Rules are only to apply if the FMC Rules are "insufficient".
4. The question therefore arises as to whether the FMC Rules are insufficient to deal with the Application in a Case to amend the Application and Statement of Claim under r.7.01(1) of the FMC Rules.

1. The terms of r.7.01(1) of the FMC Rules are set out above.[15] The power given to the Court under r.7.01(1) of the FMC Rules has been described as one which is "extensive",[16] a "general power",[17] and one upon which there is "no qualification".[18]
2. The power under r.7.01(1) of the FMC Rules is a power capable of exercise at any stage of proceedings, although earlier is better than later.[19] It is not however a power to be used to substitute an applicant for an existing applicant who lacked standing to bring the proceedings originally.[20]
3. The power is clearly a discretionary one.[21]
4. There are several relevant considerations in determining whether or not to exercise the discretion that the power under r.7.01(1) of the FMC Rules gives to the Court:

1. firstly, the interests of justice. In SZGTE it was said that the interests of justice were paramount,[22] and in both SZGTE and Vijayakumar the interests of justice were said to be the "ultimate consideration";[23] 2. secondly, it is relevant to consider whether the party seeking the amendment is acting in good faith;[24]

1. thirdly, it is relevant to consider whether the amendment sought would be futile.[25] If the grounds for the amendment are of "doubtful merit" it is likely that they will be refused;[26]

1. fourthly, it is relevant to consider whether any injustice to the non-amending party cannot be adequately compensated for.[27] This includes consideration of the consequences of a late adjournment if an amendment is granted, including consideration of whether costs orders are likely to be met (the latter is a factor applicable especially in migration cases in this Court);[28] and 2. fifthly, it is relevant to consider the question of case management.[29]
2. In exercising any discretion, the Court must take into account the objects of the FM Act in s.3, the mode of operation of the Court in s.42 of the FM Act, and the objects of the FMC Rules in r.1.03, which make it apparent that the Court is intended to operate in a manner:

1. as informal as possible in the exercise of judicial power; 2. which is not protracted in its proceedings;

1. which resolves proceedings justly, efficiently and economically;

1. which uses streamlined procedures; and 2. that avoids undue delay, expense and technicality.
2. This Court's objects and purposes reflect much of the modern approach to case management, particularly of interim or procedural applications, especially recognising the need for proceedings to be resolved justly, whilst placing emphasis on the need for efficiency, economy and the avoidance of delay and expense, and are not inconsistent with the approach adopted by the High Court in Aon Risk Services Australia Limited v Australian National University[30] where it was said that in respect of procedural and case management issues, the following must be taken into account:

1. the paramount consideration of doing justice between the parties, but observing that a just resolution must have regard to any relevant legislative purpose or object; 2. modern principles of case management;

1. the wastage of public resources.[31]
2. The fact that the power to amend under r.7.01(1) of the FMC Rules is general, extensive, and without qualification indicates that r.7.01(1) of the FMC Rules is sufficient to provide power to grant an application to amend a statement of claim, and certainly so in the present circumstances. That is further confirmed by the nature of the considerations ordinarily to be taken into account by this Court (which are identified above, and which are similar to those ordinarily applied by courts including the Federal Court and this Court) with respect to applications seeking a procedural amendment or amendment to case management timeframes. There is no need to resort to the FC Rules in relation to the amendment sought. Indeed, given the scope of r.7.01(1) of the FMC Rules the circumstances where resort might need to be had to the FC Rules in respect of an amendment will probably be rare.

Should the application to amend the Application and Statement of Claim be granted?

1. It is evident that the Alleged Second Contravention arises from a complaint made against Nerd Group by a former employee (not being the employee concerned with the First Notice to Produce), and that consequently the Second Notice to Produce was issued to Nerd Group, and it is the alleged non-compliance with that Second Notice to Produce which gives rise to the Alleged Second Contravention and the application for an amendment to the Application and Statement of Claim.
2. Because of the similarity of matters, both factual and legal, the Fair Work Ombudsman seeks to amend the Application and Statement of Claim to include the Alleged Second Contravention.
3. There is nothing in the proceedings before the Court to indicate that the Fair Work Ombudsman is acting in anything other than good faith, and consonant with the statutory functions of the Fair Work Ombudsman.[32]
4. Without expressing any view as to the ultimate outcome of the matter, it is fair to observe that the amendment proposed raises, on the evidence of Mr Sutherland, an arguable case of a breach of a civil penalty provision, and therefore cannot be said to be either futile or of doubtful merit.
5. In terms of case management, this is an application to amend not made late in the proceedings. It has been made before the Defence has been filed. Further, there are already orders of the Court in place programming the filing of a Defence to either the Statement of Claim or any Amended Statement of Claim filed pursuant to any order of this Court, that to occur by 9 August 2010. The granting of the Application in a Case entails no disruption to the case management of the matter.
6. In terms of injury to the non-amending party which cannot be compensated for, it appears that there is no such injury. Comfort can be taken from the fact that the orders are made by consent, and that the orders provide for no orders as to costs.[33]
7. As to the interests of justice, the Alleged Second Contravention is likely to involve:

1. if not the same, substantially the same, legal issues; 2. similar facts, and facts to substantially the same effect; and

1. the same applicant, the same respondent, and in all likelihood many of the same witnesses.

Further, if the amendment is allowed all of the issues can be dealt with in one hearing, in one application, and without further delay to the Application proceeding, there already being orders in place for its future case management. It is therefore manifestly in the interests of justice that the Alleged Second Contravention be dealt with at the same time as the alleged contravention presently the subject of the Application and Statement of Claim.

1. The Court is satisfied that the proposed amendments to the Application and Statement of Claim:

1. are made in good faith; 2. raise an arguable case;

1. involve no injury to the non-amending party; and 2. are in the interests of justice.
2. For the reasons set out above, the Court was prepared on 29 July 2010 to make the consent orders signed by the parties in the following terms:
   • 1. The Applicant has leave to file an Amended Application and Amended Statement of Claim in the terms attached to its Application in a Case dated 7 July 2010.
   • 2. Service of the Amended Application and Amended Statement of Claim be dispensed with.
   • 3. There be no orders as to costs in respect of the Application in a Case dated 7 July 2010.

I certify that the preceding 31Error! Style not defined.!Syntax Error, !Error! Style not defined.Error! Style not defined.!Syntax Error, !thirty-onethirty-one (31) paragraphs are a true copy of the reasons for judgment of Lucev FM

[9] [1932] 2 Ch 122 at 138 per Lord Hanworth MR ("Burford").

[10] [1968] 1 Ch 665 at 674 per Cross J.

[11] [1993] 1 NZLR 160 and 164 per Smellie J.

[12] Pechiney Plastic Packaging Inc v Cryovac Australia Pty Ltd [2003] FCA 1261; (2003) 59 IPR 356 at 359 per Tamberlin J; [2003] FCA 1261 at para.18 per Tamberlin J.

[13] [2010] FMCA 242 ("Jetstar Airways").

[14] Jetstar Airways at para.14 per Raphael FM.

[16] SZGTE v Minister for Immigration and Multicultural Affairs [2006] FCA 443 at para.33 per Graham J ("SZGTE"). An application for special leave to appeal SZGTE was refused by the High Court of Australia: SZGTE v Minister for Immigration and Multicultural Affairs & Anor [2006] HCATrans 639.

[17] Lydiard Financial Services Pty Ltd v Moran [2006] FMCA 1341 at para.43 per Riley FM ("Lydiard"). An appeal was dismissed in Moran v Lydiard Financial Services Pty Ltd [2007] FCA 872, in which Riley FM's findings in para.43 of Lydiard were not dealt with.

[18] Vijayakumar v Qantas Airways Limited [2009] FMCA 736; (2009) 233 FLR 369 at 375 per Scarlett FM; [2009] FMCA 736 at para.42 per Scarlett FM ("Vijayakumar"). An application for leave to appeal Vijayakumar was dismissed by the Federal Court in Vijayakumar v Qantas Airways Limited [2009] FCA 1121, in which Scarlett FM's finding in para.43 of Vijayakumar was not disturbed.

[20] Donnelly v Prentice [2003] FMCA 50.

[23] SZGTE at para.34 per Graham J; Vijayakumar FLR at 375 per Scarlett FM; FMCA at para.42 per Scarlett FM.

[30] (2009) 239 CLR 175; [2009] HCA 27 ("Aon Risk Services").

[31] Aon Risk Services CLR at 192 per French CJ and 213-215 per Gummow, Hayne, Crennan, Kiefel and Bell JJ; HCA at para.30 per French CJ and paras.97-103 per Gummow, Hayne, Crennan, Kiefel and Bell JJ.

[32] FW Act, s.682(1)(a)(ii), (b), (c), (d) and (f).

[33] In any event, an award of costs in a matter such as this would have been dependent upon an unreasonable act or omission being proved for the purposes of s.570(2)(b) of the FW Act. In terms of what constitutes an unreasonable act or omission for costs purposes in industrial law proceedings see generally Attwood v Wangka Maya Pilbara Aboriginal Language Centre (No. 2) [2010] FMCA 500 at paras.10-19 (albeit, in that case, in relation to similar provisions in s.666 of the Workplace Relations Act 1996 (Cth)).