Fitness Systems United Pty Ltd v Goldberg

WIGNEY J: 1 The plaintiff, Fitness Systems United Pty Ltd, has commenced proceedings against its former director, Mr Alexander Goldberg, to recover certain moneys allegedly advanced to him while he was a director. It also seeks the return of a motor vehicle which was provided to Mr Goldberg for use during his directorship. Mr Goldberg filed a defence to that claim. He also filed a notice of cross-claim which alleges, in short terms, that Fitness Systems wrongfully terminated his employment in breach of unspecified sections of the Fair Work Act 2009 (Cth). 2 Fitness Systems filed an interlocutory application on 11 October 2019 seeking summary judgment in respect of Mr Goldberg's cross-claim, or alternatively, an order striking out the cross-claim. The main basis for seeking that relief was that Mr Goldberg's claim under the Fair Work Act was filed outside the 14 day limitation period in s 370 of the Fair Work Act. Fitness Systems also raised some deficiencies and procedural issues with the notice of cross-claim which had been filed by Mr Goldberg. 3 Mr Goldberg's response to that interlocutory application was to file a competing interlocutory application seeking an extension of time pursuant to subs 370(a)(ii) of the Fair Work Act. That interlocutory application was filed on the 19 October 2019. Mr Goldberg's interlocutory application also sought orders which would have the effect of giving him access to certain of Fitness Systems' accounting records and email accounts.

Limitation period and extension of time 4 Turning first to the question of Mr Goldberg's claim under the Fair Work Act, there was no dispute that Mr Goldberg filed his notice of cross-claim alleging wrongful dismissal outside the time limit prescribed in the Fair Work Act. The question, in those circumstances, was whether Mr Goldberg should be given an extension of time, or whether his claim should be struck out. 5 Mr Goldberg somewhat belatedly filed an affidavit which provided an explanation for him not filing his cross-claim under the Fair Work Act within the 14 day time limit. Without going into the precise details of Mr Goldberg's evidence in that regard, the essence of his explanation was that he was not given any advice in relation to the limitation period by his former solicitor. That said, it would appear that Mr Goldberg was provided with a certificate issued by the Fair Work Commission which fairly clearly identified the applicable limitation period. Mr Goldberg claimed, however, that he did not read the notation on the certificate which referred to the limitation period. 6 The principles regarding extensions of time under s 370 of the Fair Work Act are conveniently set out by O'Callaghan J in Molony v ATM Logistics Pty Ltd [2018] FCA 640 at [7]-[11]. It is unnecessary for me to rehearse those principles. Suffice it to say that, on the one hand, I am satisfied that the explanation given by Mr Goldberg for the lateness of the filing of his claim under the Fair Work Act is an adequate explanation in all the circumstances. On the other hand, Fitness Systems did not contend that it will be prejudiced in any way by the extension of time. Nor did it point to any other relevant factors which might militate against the grant of an extension of time. 7 In all the circumstances, I am persuaded that it is appropriate to grant Mr Goldberg an extension of time to pursue his unfair dismissal claim pursuant to subs 370(a)(ii) of the Fair Work Act.

Defects and deficiencies 8 As for the defects and deficiencies in the notice of cross-claim, it appears that Mr Goldberg accepts that there were such deficiencies - again, perhaps belatedly - and that it will be necessary for him to file an amended notice of cross-claim and a statement of cross-claim. Fitness Systems, quite reasonably, did not oppose Mr Goldberg being granted leave to file an amended notice of cross-claim and a statement of cross-claim, subject to the question of costs. I will return to the question of costs shortly. 9 In all the circumstances, I am satisfied that it is appropriate to grant Mr Goldberg leave to file an amended notice of cross-claim and a statement of cross-claim in compliance with the Federal Court Rules 2011 (Cth). That then raises the issue in relation to costs.

Interlocutory applications 10 The issue of costs is somewhat complicated by reason of s 570 of the Fair Work Act, which provides as follows: 570 Costs only if proceedings instituted vexatiously etc. (1) A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A. Note: The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 569A. (2) The party may be ordered to pay the costs only if: (a) the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or (b) the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; or (c) the court is satisfied of both of the following: (i) the party unreasonably refused to participate in a matter before the FWC; (ii) the matter arose from the same facts as the proceedings. 11 This is a somewhat curious case given that Mr Goldberg's claim under the Fair Work Act is raised in a cross-claim in proceedings commenced against him by Fitness Systems. The claims by Fitness Systems would appear, at first blush at least, to be fairly straightforward. There may well be an issue about whether s 570 of the Fair Work Act applies at all to that part of the proceeding that concerns the relief sought by Fitness Systems, given that that aspect of the proceeding plainly does not arise under the Fair Work Act. 12 Fortunately, it is unnecessary for present purposes to resolve those issues. That is because I am satisfied that, even if s 570 of the Fair Work Act relevantly applies to this proceeding, Fitness Systems is, in any event, entitled to an order for costs in its favour. Subsection 570(2)(b) of the Fair Work Act provides that a party may be ordered to pay the costs incurred by another party to the proceedings if the Court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs. Perhaps not surprisingly, in the circumstances, Fitness Systems claimed that it was Mr Goldberg's unreasonable acts or omissions which caused Fitness Systems to incur the costs of the respective interlocutory applications. 13 It was submitted on Mr Goldberg's behalf that his conduct was not unreasonable. It was conceded that Mr Goldberg did not file his cross-claim within the time prescribed in the Fair Work Act and that it was therefore necessary for him to seek an extension of time. It was submitted, however, that Mr Goldberg's failure to file his claim within time was not his fault; it was the result of the failure on the part of his former solicitor to advise him in relation to the relevant limitation period. 14 The fundamental difficulty for Mr Goldberg is that the deficiencies in his notice of cross-claim, including the need for him to apply for an extension of time under s 370 of the Fair Work Act, were pointed out to his former solicitor in abundantly clear terms as early as 24 September 2019 - that is, some seven days after his notice of cross-claim was filed. The deficiencies were clearly spelt out in a letter sent on that date by Fitness Systems' solicitors to Mr Goldberg's former solicitor. That letter pointed out not only that it was necessary for Mr Goldberg to seek an extension of time under the Fair Work Act, but also that Fitness Systems would oppose any such application for various reasons, including that the notice of cross-claim did not comply with the Rules and was in any event deficient because it contained an inadequate particularisation of the so-called "wrongful termination claim". 15 Mr Goldberg's then solicitor's response to that letter was, to say the very least, unsatisfactory and unilluminating. No immediate steps were taken to apply for an extension of time. Nor were any steps taken to correct the procedural defects and inadequate particulars in the cross-claim. As a result, Fitness Systems' solicitors were required to follow-up those issues in further correspondence. The unenlightening and somewhat unedifying exchange of correspondence continued for some time until Fitness Systems was effectively compelled to file an interlocutory application. It was only at that point, it appears, that Mr Goldberg, or at least his former solicitor, was spurred into action and filed an application for an extension of time. 16 The filing of an application for an extension of time did not resolve or even bring the dispute concerning the cross-claim to a head. That was because the affidavit filed in support of the interlocutory application did not provide any real explanation for the delay in filing the cross-claim, other than a general assertion that Mr Goldberg was trying to avoid litigation. This deficiency was pointed out to Mr Goldberg's legal representative at a case management hearing on 12 February 2020. That prompted the legal representative to seek leave to file an additional affidavit to "supplement the evidence" in relation to the explanation. Mr Goldberg eventually swore a further affidavit on 18 February 2020, though it is not entirely clear when that affidavit was provided to Fitness Systems. It was not provided to the Court until the hearing of the application today. It should also be added that Mr Goldberg provided effectively no explanation for the defects and deficiencies in his notice of cross-claim. It was implicit, in the submissions advanced on his behalf, that he simply blamed his former solicitor for those deficiencies. 17 There could be little doubt from this short chronology of the conduct of the matter to date that Mr Goldberg's conduct of the matter has been wanting, to say the very least. He failed to file his cross-claim alleging unfair dismissal within the time prescribed in the Fair Work Act. The cross-claim which was filed was also deficient and defective in a number of material respects. When those issues were pointed out to him, through his then solicitor, his response was unsatisfactory and unhelpful. Even when he did file an application for an extension of time, the supporting evidence was inadequate. It is not answer for Mr Goldberg to blame his former solicitor for the deficient and unsatisfactory conduct of his case to date. That may ultimately be a matter between him and his former solicitor. It provides no good reason for concluding that his conduct in relation to the interlocutory applications has not unreasonably occasioned costs to be incurred by Fitness Systems. 18 I accept, as was pointed out by Mortimer J in Ryan v Primesafe (2015) 323 ALR 107; FCA 8 at [64], that the discretion conferred by the confined terms of subs 570(2) of the Fair Work Act should be exercised cautiously, and that the case for its exercise should be clear: see also Saxena v PPF Asset Management Ltd [2011] FCA 395 at [6] (per Bromberg J). I therefore approach the issue with the necessary degree of caution and discretion. I am, nonetheless, satisfied that the case here is clear and that Fitness Systems has demonstrated that it was Mr Goldberg's unreasonable acts or omissions in the course of these proceedings to date which have caused Fitness Systems to incur the costs of these interlocutory applications. 19 It should finally be noted that, as indicated earlier, Mr Goldberg's interlocutory application filed on 19 October 2019 also sought the provision of certain documents. That aspect of the interlocutory application has effectively been resolved without the need for any argument. 20 If that was the only relief claimed in that interlocutory application, I would accept, as was submitted on Mr Goldberg's behalf, that it would not have been appropriate to make a costs order against him. It would also appear that this aspect of the dispute between the parties was only a fairly minor issue. While it is not possible to discern from the material before the Court exactly how much time would have been spent by the parties dealing with this issue, it is doubtful that significant costs would have been incurred in relation to it. Perhaps even more significantly, it is not possible to discern from the materials exactly who was at fault or who was responsible for this issue not being resolved before it was. In those circumstances, it would not be appropriate to order that Fitness Systems is only entitled to a portion of its costs, or to order that Fitness Systems pay Mr Goldberg's costs in relation to this relatively minor aspect of the interlocutory dispute. 21 Accordingly, despite the fact that that aspect of the interlocutory application was effectively resolved in Mr Goldberg's favour, I nonetheless consider it appropriate to award Fitness Systems its costs in respect of the interlocutory application as a whole.

Amended defence 22 The final issue concerns whether Mr Goldberg ought be ordered to pay Fitness Systems' costs thrown away as a result of the filing of Mr Goldberg's amended defence. It was submitted on behalf of Mr Goldberg that no such order should be made because the amended defence did not withdraw any previously pleaded defence. Rather, the amendments simply added to or supplemented the defence. That may be correct to an extent, however even a brief perusal of the amended defence reveals that the additions to the defence are extensive. More significantly, no adequate explanation has been given for why the additions to the defence were not included in the original defence, or for the delay in bringing forth those amendments. 23 I am satisfied, in all the circumstances, that it is appropriate to award Fitness Systems its costs thrown away, if any, in respect of the amendments to Mr Goldberg's defence.

conclusion 24 In all the circumstances, it is appropriate to make the orders set out in the short minutes of order that were provided by the Fitness Systems to the Court. 25 Accordingly, I make the following orders:

1. Pursuant to subs 370(a)(ii) of the Fair Work Act 2009 (Cth), the time for the defendant/cross-claimant to commence a general protections court application under that Act is extended to 17 September 2019, with effect nunc pro tunc.
2. Within 21 days of the making of these orders, the plaintiff/cross-defendant produce to the defendant/cross-claimant a copy of the general ledger for the plaintiff/cross-defendant, including all general ledger accounts and the general ledger detail, recording all transactions during the period 30 June 2017 to 31 July 2019.
3. The defendant/cross-claimant have leave to file and serve: (a) an amended notice of cross-claim; and (b) a statement of cross-claim, within 14 days.
4. The interlocutory applications filed: (a) by the plaintiff/cross-defendant on 11 October 2019; and (b) by the defendant/cross-claimant on 19 October 2019, be otherwise dismissed.
5. The defendant/cross-claimant pay the plaintiff's/cross-defendant's costs of the interlocutory applications referred to in order 4, as agreed or assessed.
6. The defendant/cross-claimant pay the plaintiff's/cross-defendant's costs (if any) thrown away by reason of the filing of the Amended Defence on or about 3 March 2020.
7. The proceeding be listed for a case management hearing at 9:30 am on 7 April 2020. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wigney.