Ridge v Hays Specialist Recruitment

MURPHY J: 1 By an interlocutory application in this wages underpayment class action the applicant sought leave to amend the Originating Application and Statement of Claim. The proposed amendments operate: (a) to narrow the group definition and thereby remove certain group members from the scope of the proceeding; (b) to broaden the group definition by adding persons whose causes of action have accrued since the commencement of the proceeding; and (c) to abandon some of the central causes of action in the proceeding. 2 On the return of the application I made the orders to allow the amendments. I now provide my reasons for doing so.

The proceeding 3 On 21 December 2018 the applicant, Mr Lawrence Ridge, commenced this class action on his own behalf and on behalf of all persons who were employed by the respondent, Hays Specialist Recruitment (Australia) Pty Ltd, a labour hire company, to work at a black coal mine in either Queensland or Western Australia (the Mines) at any time between 21 December 2012 and 21 December 2018 (the Original Claim Period), who were at any time during the Relevant Period a coalmining employee within the meaning of cl 4.1(b)(ii) of the Black Coal Mining Industry Award 2010 (Cth) (the Award), who worked according to a regular roster, and who were treated as "casual" employees by Hays. 4 In substance the proceeding alleged three kinds of claims: (a) the Loaded Rates Claims - a claim that insofar as the Award required shift work, weekend and public holiday work, and overtime to be paid at "double time" or similar, the respondent had underpaid the applicant and group members because it treated the sum to be doubled as the Award rate rather than the agreed or actual rate of pay; (b) the Award-based Annual Leave Claims - a claim that the applicant and group members were entitled to be paid annual leave under clause 24 of the Award; and (c) the National Employment Standard Claims - a claim that since in practice, the applicant and group members worked fixed hours, they were not "casuals" within the meaning of the Fair Work Act 2009 (Cth) (FW Act) and they were entitled to but not paid the employment benefits provided for non-casual employees under the National Employment Standards, including paid annual leave and paid personal leave.

The application 5 In an interlocutory application filed 24 June 2022, the applicant sought orders to amend the Originating Application and the Statement of Claim in the form of the Amended Originating Application and Amended Statement of Claim (Amended Claim Documents) annexed to the Affidavit of the applicant's solicitor Mr Rory Markham made 23 June 2022. The proposed amendments operate to: (1) narrow the group definition to exclude Staff Employees (being persons who undertake white-collar roles), and to exclude Production Employees (being persons who undertake blue collar roles) who worked continuously throughout the Original Claim Period (the first proposed amendments); (2) withdraw the Loaded Rates Claims and the National Employment Standard Claims (the second proposed amendments); (3) extend the date range in the group definition such that the group will include Production Employees who ended their employment after December 2018 (when the proceeding was commenced) up to the date the proposed amendment takes effect (New Group Members) (the third proposed amendment); and (4) to reformulate the Award-based Annual Leave Claims so that the pleading conforms more closely with the structure of the Award (the fourth proposed amendment).

The first and second proposed amendments 6 The first proposed amendments operate to remove Staff Employees from the scope of the proceeding, and also Production Employees whose employment did not come to an end during the Original Claim Period. The second proposed amendments operate to withdraw the Loaded Rates Claims and the National Employment Standard Claims made by the applicant and group members. 7 Rule 8.21 of the Federal Court Rules 2011 (Cth) (the Rules) provides that an applicant may apply to the Court for leave to amend an originating application for any reason. Rule 16.53 provides that a party must apply to the Court for leave to amend a pleading unless r 16.51 applies. Ordinarily, an application for amendment which complies with the Rules will be granted, subject to appropriate terms, unless the proposed amendment is futile or the amendment would cause substantial prejudice or injustice to the opposing party in a way that cannot be compensated by costs: see Research in Motion Ltd v Samsung Electronics Australia Pty Ltd [2009] FCA 320; 176 FCR 66; Advanced Switching Services Pty Ltd v State Bank of NSW T/as Colonial State Bank [2001] FCA 1508; ATPR 41-848 at 43 [8]. 8 But amendments to the pleadings in a representative proceeding sometimes give rise to further considerations, essentially because of the representative nature of the role assumed by the applicant. As the Full Court explained in Dyczynski v Gibson [2020] FCAFC 120; 280 FCR 583 at [209]-[210] (Murphy and Colvin JJ): [209] …The scheme of Part IVA is that the applicant has the conduct of proceedings on behalf of the class members and has fiduciary obligations to them: Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; (2015) 256 CLR 507 at [40] (French CJ, Bell, Gageler and Keane JJ). The applicant's lawyers also owe obligations to class members but how far those obligations extend is not settled. As stated in Kelly v Willmott Forests Ltd (in liquidation) (No 4) [2016] FCA 323; (2016) 335 ALR 439 at [220] and [308] per Murphy J: …The applicant's lawyers owe fiduciary duties to class members who are their clients and they also owe duties to class members who are not their clients. These duties may or may not be fiduciary in nature, but the applicant's lawyers at least have a duty to act in the class members' interests: McMullin v ICI Australia Operations Pty Ltd [1997] FCA 1426 (Wilcox J); Courtney v Medtel Pty Ltd (2002) 122 FCR 168; [2002] FCA 957 at [57] (Sackville J); King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) (2002) 121 FCR 480; [2002] FCA 872 at [24], [27] (Moore J); Bray v F. Hoffman-La Roche Ltd [2003] FCA 1505 at [15] ("Bray") (Merkel J). … Some authorities provide that the applicant's lawyers owe fiduciary duties to class members who are not clients, although the decisions tend to assume this rather than analyse the issue: see McMullin; Courtney at [57]. Associate Professor Legg argues that, by reference to the established criteria, a fiduciary relationship exists between an applicant's lawyers and class members: Legg M, "Class Action Settlements in Australia - the Need for Greater Scrutiny" (2014) 38(2) Melbourne University Law Review 590, 596. Other authorities describe the applicant lawyer's duty as being to conduct the representative proceeding on behalf of the applicant in a way that is consistent with the interests of class members including those who are not clients: King at [24] and [27]; Bray at [15]; Dorajay Pty Ltd v Aristocrat Leisure Ltd [2009] FCA 19 at [8] (Stone J). [210] In acting for the representative applicant [the applicant's solicitor] was obliged to act consistently with the representative applicant's fiduciary obligations to class members. … 9 The first proposed amendments are amendments to the group definition. They therefore require leave under s 33K(1) of the Federal Court of Australia Act 1976 (Cth) (FCA Act), which provides that, on the application of the representative party, the Court may at any stage of a representative proceeding give leave to amend the originating application so as to alter the description of the represented group. 10 The first proposed amendments also require Court approval under s 33V(1) of the FCA Act, which provides that "a group proceeding may not be settled or discontinued without the approval of the Court". That is so because, by narrowing the group definition, the proposed amendments effectively discontinue the claims of those group members who will be excluded from the group through the amendment. Section 33V requires Court approval for the partial settlement or discontinuance of the substantive claims of any category of group members in a class action to be effective: ACCC v Chats House Investments Pty Ltd & Ors [1996] FCA 1119; 22 ACSR 539; 71 FCR 250 at 258; Bray v Hoffman-La Roche Ltd [2003] FCA 1505 at [22]-[24] (Merkel J); Matthews v SPI Electricity Pty Ltd (Ruling No 16) [2013] VSC 74 at [23]-[24] (John Dixon J); Re Banksia Securities Ltd (recs and mgrs apptd) [2017] VSC 148 at [45] (Robson J). 11 When the applicant commenced the class action, s 33ZE(1) of the FCA Act operated to automatically suspend the running of any limitation period that applies to the claims of a group member to which the class action relates. Therefore, the proposed narrowing of the group definition will mean that the excluded group members will be returned to the position they were in before the commencement of the proceeding, and the applicable limitation period will begin to run again. 12 In circumstances like the present case, the appropriate test for Court approval of the proposed discontinuance is whether discontinuance will be unfair or unreasonable in the sense of being adverse to group members' interests, rather than whether discontinuance is positively fair and reasonable in their interests: see Laine v Thiess Pty Ltd [2016] VSC 689 at [34] (John Dixon J); Babscay Pty Ltd v Pitcher Partners [2020] FCA 1610; 148 ACSR 551 at [28] (Anastassiou J); Watson v Maximus Holdings (NSW) Pty Ltd [2021] FCA 87 at [49] (Wigney J); Francis (Trustee) v Oculus Accounting Pty Ltd (No 2) [2021] FCA 1275; 400 ALR 701 at [33] (Derrington J); Turner v TESA Mining (NSW) Pty Ltd (No 2) [2022] FCA 435; 314 IR 214 at [9]-[10] (Murphy J); c.f. Mercedes Holdings Pty Ltd v Waters (No 1) [2010] FCA 124; 77 ACSR 265 at [9]-[10] (Perram J). As I said in Turner at [10]: At least in the context of a proposed discontinuance where the practical effect will be to return group members to the position they were in before the commencement of the class action, I consider the test in Laine to be appropriate. It could be said that group members will always have an interest in the applicant being forced to press on with the litigation, even if the prospects of success are remote, because they will share the benefits of any success in the case without having any of the costs and risks. If that approach is taken, a proposed discontinuance may never be positively fair and reasonable in their interests. That would be an unworkable test and in the circumstances of the present case it is appropriate to decide whether to approve the proposed discontinuance through the prism of what would be positively unfair or unreasonable having regard to group members' interests. 13 Mr Markham deposed that the applicant instructed him only to press the claims in the proposed Amended Claim Documents, and no longer wished to make: (a) the Staff Employees' claims for annual leave; (b) the claims by Production Employees who continuously worked throughout the Original Claim Period; (c) the Loaded Rates Claims; and (d) the National Employment Standards Claims. This evidence is, of course, relevant in deciding the application, but it does not take the issue very far. The applicant brought the proceeding on behalf of the group members and has fiduciary obligations to act consistently with their interests. Having brought the case on their behalf, the applicant cannot just amend the proceeding to exclude certain group members from the case or withdraw the claims made on their behalf. The applicant must put on evidence to persuade the Court that such amendments are fair and reasonable having regard to group members' interests. 14 Mr Markham also deposed that the funder of the proceeding had ceased to provide funding on or around 25 February 2022, and that since that time Adero Law had conducted the proceeding on a no win-no fee basis. He said that the firm was no longer prepared to continue funding the proceeding if the proposed amendments were not allowed. Again, this evidence is relevant in deciding the application, but far from determinative. In accepting a retainer to act on behalf of the applicant and group members in a class action, Mr Markham took on fiduciary obligations to act consistently with their interests in progressing their case. 15 Generally speaking, it will not be in a group member's interests that he or she be excluded from the class action which has the potential to vindicate their rights if the claim against the respondent can be established. Sometimes that will mean that affected group members should be given notice of a proposed narrowing of the group definition and an opportunity to put their views before the Court before a decision is made which will, in substance, discontinue their claims: Williams v FAI Home Security Pty Ltd (No 4) [2000] FCA 1925 at [21]-[23] (Goldberg J). Other times, it will suffice that affected group members are given notice of the narrowing of the group definition in sufficient time that they can bring their own individual proceedings (or another class action) before the limitation period begins to run against them, should they wish to do so. 16 The second proposed amendments - the withdrawal of the Loaded Rates Claim and the National Employment Standards Claim - do not require leave under s 33K because they do not relate to the group definition. But I would not grant leave to discontinue these claims unless the group members are given notice. Unless group members are given notice of those proposed amendments they may think that those claims are still being advanced on their behalf, when they no longer would be. 17 It is significant to my decision that it is appropriate to grant leave to amend under s 33K, and to approve the proposed amendments pursuant to s 33V that the proposed orders provide for notice to be given to group members informing them that the Staff Employees' claims for annual leave; the claims by continuously working Production Employees; the Loaded Rates Claims; and the National Employment Standards Claims would no longer form part of the class action. Any group member who sees merit in the claims to be discontinued will be free to litigate those claims individually, or through another representative proceeding, and the notice informs group members that the limitation period will not commence to run against them until approximately one month after the orders were made. The notice states that if any group member wishes to pursue those claims, they should speedily seek legal advice. 18 Another matter which is material to whether to grant leave to amend and/or to approve the first and second proposed amendments is the merit of the claims which are proposed to be discontinued through the amendments. The central claim in the proceeding is the National Employment Standards Claims, and in my view it is abundantly clear that the cumulative effect of the introduction of s 15A into the FW Act by the Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Act 2021 (Cth) (the FW Amendment Act) with retrospective effect, and the decision in WorkPac Pty Ltd v Rossato [2021] HCA 23; 271 CLR 456, mean that these claims do not enjoy reasonable prospects of success: see Turner at [50]-[53]. 19 Insofar as the other three claims are concerned, the Court had the benefit of the confidential opinion of Mr Joel Fetter of counsel (the Confidential Opinion). Because the opinion is confidential and privileged I cannot go to its detail and it must suffice to note that Mr Fetter considered the discontinuance of those claims was not adverse to group members' interests. It is appropriate to give significant weight to counsel's opinion in this regard.

The third proposed amendment 20 The third proposed amendment will operate to broaden the group definition so as to pick up any Production Employees who ended their employment after the Original Claim Period had ended, and up to the date the amendment takes effect. As an amendment to the group definition it requires leave under s 33K(1) of the FCA Act. The Court has a broad discretion under s 33K to amend a group definition where it is in the interests of justice and efficiency to do so. Here, the claims of Production Employees who ended their employment after December 2018 are the same as, or at least similar to, the claims of group members that are already in issue, and it is appropriate that the claims of the New Group Members be dealt with in the same representative proceeding, rather than be litigated individually or in a different representative proceeding. 21 I am satisfied that it is appropriate to grant leave for this amendment.

The fourth proposed amendment 22 The fourth proposed amendment is just to reformulate the Award-based Annual Leave Claims so that it more closely follows the terms of the Award. This proposed amendment does not involve any issue related to the representative nature of the proceeding and therefore the applicant need only satisfy the test for leave under rr 8.21 and 16.53 to amend the Originating Application and Statement of Claim. The application is compliant with the Rules, there was no opposition by the respondent, and there is nothing to show that the proposed amendment would be futile or would cause prejudice or injustice to the respondent which could not be met by a costs order. It is appropriate to grant leave for this amendment. 23 For these reasons I made the attached orders. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Murphy.