NETTLE J. In 2010, the Fair Work Ombudsman instituted a proceeding in the Federal Court of Australia ("the Fair Work proceeding") against the respondent ("Ramsey Food") in which the Ombudsman ultimately succeeded. In giving judgment in favour of the Ombudsman, Buchanan J found, inter alia, that at relevant times Ramsey Food was the appellant's employer and that Ramsey Food had failed to pay the appellant amounts due to the appellant as an employee.
The question for determination in this appeal is whether the appellant was estopped by those findings from contending in a later District Court proceeding between the appellant and Ramsey Food that, at relevant times, Tempus Holdings Pty Ltd ("Tempus") was the appellant's employer.
For the reasons which follow, it should be concluded that the appellant was not.
The facts
On 4 October 2006, Greenwood J handed down judgment in McIlwain v Ramsey Food Packaging Pty Ltd (No 4) ("the McIlwain proceeding"). His Honour found that three of the companies in what was called "the Ramsey Group" had breached s 298K of the Workplace Relations Act 1996 (Cth) by terminating the employment of 12 employees for reasons that were prohibited under the Act. Greenwood J imposed penalties for breach of the Act totalling $84,000 and ordered that compensation be paid to the employees.
In August 2010, the Fair Work Ombudsman instituted the Fair Work proceeding against Ramsey Food and Mr Stuart Ramsey pursuant to s 682(1)(d) of the Fair Work Act 2009 (Cth) and s 719 of the Workplace Relations Act. The claim alleged that Ramsey Food had acted in breach of the Federal Meat Industry (Processing) Award 2000 ("the Award") and thus the Fair Work Act by failing to pay the appellant and ten other former employees of Ramsey Food payments of wages in lieu of notice, severance pay, accrued annual leave and interest on those entitlements.
Buchanan J handed down judgment in the Fair Work proceeding on 19 October 2011. In his reasons for judgment, his Honour described the issue for determination as being whether Ramsey Food as the employer of 11 "complainant employees" failed to pay those employees amounts due to them under the Award and s 235 of the Workplace Relations Act (as it then stood). He defined the principal question in the proceeding as being whether the employees had been employed by Ramsey Food (as the Ombudsman contended) or by Tempus, a company which had been "inter-positioned between [Ramsey Food] and the employees" (as Ramsey Food contended). There was also a related question of whether Mr Ramsey was knowingly concerned in the conduct of Ramsey Food.
Buchanan J found that, at all relevant times since 1998, Mr Ramsey had been in effective control of the management and operation of an abattoir in Grafton, New South Wales, and had so exercised control through a number of companies established by him or at his request which were called the Ramsey Group. Then, shortly after Greenwood J made final orders in the McIlwain proceeding, Mr Ramsey arranged for the acquisition of a new shelf company (Tempus) to be added to the Ramsey Group and at the same time for the winding up of each of the three employing companies. Then, having instigated those arrangements, Mr Ramsey directed that letters dated 16 October 2006 be sent by Tempus to each of the 11 complainant employees, as follows:
"On the 4th October last the Federal Court of Australia made orders against your employer. These orders fined, penalised and awarded costs against your employer causing it to be insolvent and accordingly, your employer cannot continue to incur wage commitments whilst insolvent. Accordingly, your employment with your employer is at an end.
You are at liberty to approach Tempus Holdings Pty Limited who may have a position for you, and who may be willing to honour your entitlements."
In consequence of those measures, nine of the 11 complainant employees, including the appellant, "were transferred to the books of Tempus at about this time" but, apart from that alteration, "nothing changed for employees who were allowed to remain in employment":
"The result of the practices followed at the direction of Mr Ramsey was that money passed through the Tempus account only so often and to such an extent as was necessary to shortly thereafter discharge the obligations assumed by Tempus. Those were in truth nothing more than clerical arrangements. For all practical purposes the Tempus bank account was treated as an account within the Ramsey Group. I am satisfied, on the whole of the evidence, that those arrangements were adopted so as to give colour to the proposition that it was Tempus, rather than [Ramsey Food], which was legally liable for those payments. The effect of Mr Ramsey's evidence was that similar practices had earlier been followed with respect to the four companies within the Ramsey Group used to employ labour at the abattoir before late 2006."
Buchanan J found that application of relevant legal principle to the facts so found led to three possible conclusions in support of the Ombudsman's case. The first was that, despite the interposition of Tempus between Ramsey Food and the complainant employees, Tempus did not become or act as the employer of the complainant employees as a matter of "real substance":
"First, despite the [arrangements], Tempus never became, nor acted as, the employer of the complainant employees. Tempus did not exercise any form of control over the engagement, performance of work, payment or ultimate termination of employment of any of the complainant employees. All such responsibilities were borne by some different legal entity ... [Ramsey Food], in whose business the complainant employees worked and on whose behalf all the functions referred to above were carried out."
The second was that, if the arrangements were effective, Tempus acted as Ramsey Food's agent:
"[I]f any steps taken to inter-position Tempus between the complainant employees and [Ramsey Food] are to be regarded as having any effect at all it is abundantly clear that everything which was done in the name of Tempus was done by Tempus (or others) acting on behalf of [Ramsey Food]."
The third was that "everything done in the name of Tempus was ... a sham"; but his Honour added that it was unnecessary to say so and that the conclusion that it was a sham "supports and reinforces the earlier two, although [it is] not necessary for either".
In the result, Buchanan J concluded that the Ombudsman's case succeeded and he made orders accordingly, including orders pursuant to s 719 of the Workplace Relations Act that Ramsey Food pay the appellant the amount by which his entitlements had been underpaid.
The District Court proceeding
Subsequently, the appellant instituted a proceeding against Ramsey Food in the District Court of New South Wales for damages for personal injuries suffered in 2008 in the course of his employment at the abattoir ("the District Court proceeding").
By his statement of claim in the District Court proceeding, the appellant alleged that, at relevant times, he had been an employee of Tempus and that, pursuant to a labour hire agreement (of the particulars of which it was stated he was unaware), Tempus had made him available to Ramsey Food to perform work in the abattoir. The appellant further alleged that, by reason thereof, Ramsey Food had become the appellant's employer pro hac vice and, as such, Ramsey Food had negligently failed to take sufficient care of the appellant as employee, whereby the appellant had been injured.
In its defence, apart from denying negligence and in the alternative alleging contributory negligence, Ramsey Food pleaded that, by reason of Buchanan J's finding in the Fair Work proceeding that the appellant was at relevant times employed by Ramsey Food, the appellant was estopped from contending that he was at those times employed by Tempus. It was also pleaded that the appellant had not made a claim against Ramsey Food for lump sum compensation, or been paid lump sum compensation, in accordance with ss 280A and 280B of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) and s 151C of the Workers Compensation Act 1987 (NSW) and had not served a pre-filing statement on Ramsey Food or referred the claim to mediation in accordance with ss 315 and 318A of the Workplace Injury Management and Workers Compensation Act; and, consequently, that the appellant was precluded by those provisions from bringing the District Court proceeding.
Relevant legislation
At relevant times s 280A of the Workplace Injury Management and Workers Compensation Act provided that a claim for work injury damages in respect of an injury cannot be made unless a claim for "lump sum compensation" is made before or at the same time as the claim for damages. Section 280B provided that damages cannot be recovered from "the employer liable to pay compensation under this Act" unless and until any permanent impairment compensation to which the worker is entitled has been paid.
Section 151C of the Workers Compensation Act provided that "[a] person to whom compensation is payable under this Act" is not entitled to commence proceedings for damages in respect of work injury "against the employer liable to pay that compensation" until six months after giving notice of the injury to "the employer".
Sections 315 and 318 of the Workplace Injury Management and Workers Compensation Act provided inter alia that, before a claimant may commence court proceedings for recovery of work injury damages, the claimant must serve a "pre-filing statement" on the defendant and for the claim pleaded to be limited to the claim made in the pre-filing statement. Section 318A provided that a claimant must refer a claim for work injury damages to mediation before commencing court proceedings.
The appellant's claim was in common law negligence rather than for compensation under the Workplace Injury Management and Workers Compensation Act and the Workers Compensation Act. He had thus not complied with the statutory requirements set out in those Acts in respect of Ramsey Food. If, therefore, the appellant were found to have been employed by Ramsey Food, the claim would necessarily fail. It was, however, common ground between the parties in the District Court that, if the appellant were found to have been an employee of Tempus, the action would be governed by the Civil Liability Act 2002 (NSW) and thus the pre-action requirements in the Workplace Injury Management and Workers Compensation Act and the Workers Compensation Act would not apply.
The District Court's judgment
At the outset of the District Court proceeding, counsel for Ramsey Food applied to have the plea of estoppel dealt with as a preliminary issue but the judge rightly chose to defer consideration of the point until after the evidence had been heard. In his reasons for judgment following trial, the judge defined the estoppel issue as being whether he was:
"bound by the judgment of Buchanan J in the [Fair Work proceeding] to the effect that the Plaintiff was employed by the defendant at the time of his injury. The defendant contends that that finding creates an issue estoppel."
The judge concluded that the finding did not create the issue estoppel alleged, for three reasons. The first was that he considered that a natural person or corporation may be an employer for one purpose and not another. Although the judge did not say so in terms, it appears that what his Honour meant to convey was that, although Tempus was not regarded as the employer for the purposes of the Fair Work proceeding, it did not follow that Tempus could not be regarded as the employer for the purpose of the District Court proceeding; and, in view of the way in which Tempus had acted, it should be regarded as the employer for the purposes of the District Court proceeding. In that connection, the judge referred to the fact that the letter of 16 October 2006 made it clear that the appellant's employment by one of the employing companies had been terminated. From that point on, the appellant had believed that he was employed by Tempus. Tempus provided labour to the abattoir and the appellant was one of the employees so provided. Tempus paid those employees. Tempus took out workers' compensation insurance and made claims for employees on its workers' compensation policy. And Tempus issued group certificates to its employees and had tax office accounts in its name and credited super guarantee charge in respect of its employees.
The second reason was based on the reasoning of Lee J in Young v Public Service Board. The judge held that, because the appellant was not party to the Fair Work proceeding and had no control over the Fair Work proceeding, and because the subject matter of the Fair Work proceeding was in substance different from the issues raised in the District Court proceeding, there was no privity of interest between the appellant and the Ombudsman.
The third reason was that, if there were privity of interest, it was apparent that Ramsey Food was seeking to take advantage of an arrangement which Buchanan J had labelled a "sham" and, in the judge's view, equity would intervene to prevent Ramsey Food placing reliance on the arrangement.
Ultimately, therefore, the judge gave judgment for the appellant in the amount of $155,069 for damages for work injury suffered in the course of his employment at the abattoir, with no reduction for contributory negligence.
The appeal to the Court of Appeal
The Court of Appeal held that the judge erred in rejecting Ramsey Food's plea that the appellant's claim was barred by reason of the issue estoppel alleged.
Emmett JA delivered the principal judgment. His Honour reasoned that the only question litigated in the Fair Work proceeding so far as the appellant was concerned was whether Ramsey Food was liable to pay the amounts to which the appellant was entitled on the termination of his employment, and that the only basis on which Ramsey Food could be liable to pay those amounts was that Ramsey Food was the appellant's employer during the relevant period. Buchanan J had finally determined that Ramsey Food was the employer at that time. Hence, to assert the contrary was to assert that Buchanan J's judgment was erroneous.
Emmett JA observed that privity of interest is a matter of substance, not form, and that the necessary degree of identity of interest may arise where "the relationship is mutual". But his Honour recognised that, because the Ombudsman was carrying out the function set out in s 682(1)(d) of the Fair Work Act, the mere fact of the Fair Work proceeding was not enough to make the Ombudsman the appellant's privy. Nevertheless, his Honour said, the facts were that the Ombudsman had asserted the appellant's claim against Ramsey Food; the appellant had participated in the claim by providing affidavit evidence in support of it; declarations and orders had been made for the appellant's benefit; and thus "an inference is clearly available that [the appellant] authorised the Fair Work Ombudsman to make the claim on his behalf". It followed, his Honour concluded, that, although the Ombudsman was acting in the public interest in seeking penalties against Ramsey Food, the Ombudsman was also making claims under s 719 of the Workplace Relations Act "on behalf of the claimant employees", including the appellant. That meant that the Ombudsman was the appellant's privy for the purposes of issue estoppel.
Meagher JA delivered a concurring judgment in which he added short reasons of his own. He said that, because of the nature of the relief which was sought in the Fair Work proceeding, it was necessary for the Ombudsman to establish that Ramsey Food was the appellant's employer at the relevant time. That fact was so established and Buchanan J so finally determined. The claim for the orders which Buchanan J made in favour of the appellant was made on behalf of and for the benefit of the appellant, and with his consent. Hence, the claim was, in the language of Barwick CJ in Ramsay v Pigram, made by the Ombudsman "under or through the person of whom he is said to be a privy".
Ward JA agreed with Emmett JA and Meagher JA.
The appellant's contentions
Before this Court, the appellant contended that the Court of Appeal erred by failing to consider the decisions in Young v Public Service Board and Eljazzar v BHP Iron Ore Pty Ltd, and thus in failing to hold that, because the appellant's position was relevantly no different from those of the claimants in those cases, there was no issue estoppel.
In Young, a professional association had previously brought an Industrial Commission proceeding for interpretation of an industrial award covering the association's members. None of the members of the association was party to that proceeding. In the Supreme Court, Lee J held that the members of the association were not bound by findings essential to the Commission's interpretation of the award. His Honour reasoned that there was no privity of interest between the members and their association because the proceeding had been brought by the association for relief on an "industry" basis and the individual employees had no control over it. Most importantly, his Honour said, the proceeding before him had not been brought "through or under" the association.
In Trawl Industries of Australia Pty Ltd (In liq) v Effem Foods Pty Ltd, Gummow J referred to Young with apparent approval as having followed the principles illustrated by Ramsay v Pigram.
In Eljazzar, a union had entered into an industrial agreement with an employer that obliged the employer to refer any unresolved industrial dispute to the Western Australian Industrial Relations Commission. Pursuant to that agreement, the union instituted a proceeding in the Commission for determination of whether the dismissal of two employees had been unfair. The Commission found that it had not been. In separate proceedings brought by one of the employees in the Industrial Relations Court of Australia, Madgwick J held that the employee was not estopped by that finding from later instituting proceedings on his own behalf for unfair dismissal. His Honour reasoned that the union "had legitimate interests of its own to consider, which may or may not entirely have coincided" with the interests of the claimant. Although the claimant was one of the intended beneficiaries of the union's application to the Commission, in a practical sense the claimant had a relatively limited capacity to control the way his case was put and the extent to which it was advanced, still less to ensure that only his own interests were taken into account. Thus, his Honour concluded, it could not be said that the claimant had de facto assumed the role of an "actual party" or that there was otherwise a sufficient degree of identification between the union and the claimant to make it just to hold that the decision should be binding against the claimant. Hence, there was no privity of interest.
Analysis
There appears to be some justification for the appellant's complaint that the Court of Appeal did not refer to Young or Eljazzar. Counsel for the appellant placed heavy reliance on both decisions in his submissions before the Court of Appeal and yet none of the judges of appeal mentioned either decision, still less explained why they considered each to be inapposite.
Possibly, the Court of Appeal considered that Young was distinguishable on the basis that the relief which the professional association sought in that case was the interpretation of an award on an industry-wide basis. The true substance of the dispute was thus considered to be a dispute between the union and the employer rather than between the employer and individual members. It was not open to individual members of the professional association to be joined as parties to the proceeding or otherwise to influence the conduct or outcome of it.
In contrast, what the Ombudsman sought in the Fair Work proceeding included orders for payment to the so-called complainant employees of the amounts which Ramsey Food had underpaid on account of the employees' statutory entitlements. As Emmett JA remarked, the true substance of the dispute was to that extent whether Ramsey Food was obligated to the employees in the amounts which they claimed. As Emmett JA also observed, the appellant was involved in the proceeding to the extent of swearing an affidavit in support of the claim.
Eljazzar is perhaps also distinguishable on the basis that, in that case, although the union's claim was specifically addressed to the lawfulness of the termination of the employment of two of its members, there was no opportunity for the two members to be joined to the proceeding and no opportunity for them to influence the conduct or outcome of the proceeding. There was as well a clear actual or potential conflict of interest between the two members, and, therefore, a potential conflict of interest between each member and the union.
In contrast, in this case there was undisputed evidence that the appellant went to the Ombudsman seeking assistance in recovering his unpaid entitlements. To that extent, the appellant was an initiator of the Fair Work proceeding. As Emmett JA said, the appellant gave evidence in the Fair Work proceeding. And as was conceded in argument before this Court, the appellant could have been joined as a party to the Fair Work proceeding. There was also less chance of an actual or potential conflict of interest between the Ombudsman and the appellant in the Fair Work proceeding.
Even allowing for those differences, however - why should they be considered enough to require the conclusion that the appellant was bound to the outcome of the claim made by the Ombudsman in respect of the appellant and such findings of fact as were essential to its outcome?
The elements of issue estoppel
In Kuligowski v Metrobus, this Court adopted Lord Guest's formulation of the elements of issue estoppel in Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2). That was as follows:
"(1) that the same question has been decided; (2) that the judicial decision which is said to create the estoppel was final; and, (3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies."
The notion of privies was earlier essayed by Barwick CJ in an oft-cited passage of his judgment in Ramsay v Pigram. In that case, the respondent had been involved in a motor accident with a vehicle driven by a police officer. In an earlier action brought by the police officer against the respondent for damages caused by the respondent's negligence, the respondent had pleaded contributory negligence and it had been held that the police officer was without negligence. The respondent subsequently brought an action against the government for damages suffered as a result of the accident, and once again alleged that the accident was caused by the police officer's negligence. In response, the government pleaded that the respondent was estopped from controverting the determination in the previous proceeding that the police officer was without negligence. It was held that there was no estoppel because there was no privity of interest. The government were not claiming under or through the police officer. The police officer had not sued the respondent on behalf of the government. The government had no interest in his claim. Hence the government had no claim under or through him to the benefit of the determination that he was without negligence.
Barwick CJ expressed the position thus:
"Of the three classes of privies of blood, of title and of interest, the only one which is submitted and indeed could be submitted to be relevant is that of a privy in interest. ... The basic requirement of a privy in interest is that the privy must claim under or through the person of whom he is said to be a privy. Here it is quite clear that the Government had no interest in the action between the respondent and the police officer: nor can it be said that the action brought by the police officer was brought by him in any sense on behalf of the Government or that in relation to the defence of contributory negligence the respondent could have been treating the Government as the real 'defendant' to that claim. In every respect the action between the respondent and the police officer was personal to each of them, neither being in any sense in relation to the action or any of the issues involved in it, representative of another. Nor can it be said that the Government in any sense claims under or in virtue of the police officer or of any right of his, or that it derives any relevant interest through him."
Claim "under or through" a privy
The concept of a claim under or through a privy goes back a long way. To begin with, a final decision of a court of competent jurisdiction was only binding between parties to the proceeding. But, by at least the early nineteenth century, it had been extended to a party claiming under or through a party to the proceeding. Lord Penzance so explained the development of it in Spencer v Williams, as follows:
"The decision in Barrs v Jackson was founded on a true principle, and supported by a sound judgment. If two parties have once, before a court of competent jurisdiction, litigated any question of fact, and that question has been finally decided, it is not reasonable that either of them, in any other court, should re-open it. ... Such was the case of Barrs v Jackson, in which the Court of Chancery held the parties were barred. It is material to observe, in passing, that in the Court of Chancery, in that case, the parties were actually, one a party to the suit in the Ecclesiastical Court, and the other a party claiming under the party to the original suit. So that the principle is carried one degree further, and not only is the suit barred where the parties are the same, but where they claim under the original parties. Can the doctrine in these cases be extended any further? In the suit before me the parties are not the same as in the suits in the Court of Chancery, nor do they claim under the same. The parties in the suits of Chancery were Sarah Spencer, Samuel Williams, and others. Here the plaintiffs are the children of Sarah Spencer, but they do not claim through their mother as such ... they rest their claim on the ground that Mary Emsley died intestate ...
It is proper, therefore, where the question is raised between the same parties, or those claiming under them, that they should be estopped; but the decisions give no authority for a proposition of a wider character".
Unsurprisingly, the expression "under or through" is redolent of the party's claim either deriving from or otherwise depending upon the privy's title. Clearly enough, however, it now goes further than that. In Carl Zeiss, Lord Reid described the sufficiency of connection as existing where the putative privy of a party to a subsequent proceeding has sued or defended in a previous proceeding "on account of or for the benefit of" the party to the subsequent proceeding. The difficulty is that the precise content of that concept is not yet settled.
It is established by the decided cases that privity of interest exists where party and privy share the same interest, in the sense that they are equally entitled to assert a discrete legal right; or where they share an interest by reason of an established legal or equitable relationship, such as agency or trusteeship; or, in some of the more recently decided cases, where the privy claims "under or through" or "on account of or for the benefit of" the party in a manner which is sufficiently analogous to one or other of the same interest or established legal or equitable relationship cases to warrant its inclusion. But the problem is in deciding what is sufficiently analogous.
Plainly, "on account of or for the benefit of" includes cases where a trustee has sued or defended on behalf of a beneficiary and where a party to a proceeding relies on the putative privy's title. But it also extends to cases where a party has employed a servant or agent in an attempt to re-litigate an issue already determined against the principal in a previous proceeding and where an action has been brought by a party at the direction and with the authority of the putative privy; and, in England, it has been held to extend to a case where a party to litigation is "the corporate embodiment" of a natural person in the sense that the natural person made decisions and gave instructions on behalf of the corporation.
In England, it has also been said that it is enough that there be "a sufficient degree of identification between the two to make it just to hold that the decision to which one was party should be binding in proceedings to which the other is party". But in contrast, in this country, that formulation has been judicially criticised for its evident circularity - it is what Lord Wright might perhaps have denigrated as "idem per idem" - and, in any event, it is subject to the limitations of any category of indeterminate reference.
The approach in this country, therefore, remains one of identifying characteristics of a relationship between party and privy which, although not amounting to a shared same interest or established legal or equitable relationship like agency or trusteeship, are sufficiently analogous to the established categories of sufficient connection to warrant inclusion in the concept. And, for present purposes, the important characteristics of the established forms of representation which emerge from the decided cases appear to be that a principal is generally able to control the conduct of an agent, and that the imposition of fiduciary duties on certain kinds of representatives has the effect of guiding the representative's conduct and providing remedies to the principal on default.
Was the Fair Work Ombudsman a privy of the appellant?
It follows from what was said in Ramsay v Pigram that, in order for Ramsey Food to succeed in its contention that the appellant was bound by issue estoppel to the result of Buchanan J's findings in the Fair Work proceeding, Ramsey Food had to establish that the appellant had an interest in the Ombudsman's claim in the Fair Work proceeding or that the Ombudsman's claim in the Fair Work proceeding was brought on behalf of the appellant.
For the following reasons, it should be concluded that the appellant did not have an interest in the Ombudsman's claim in the Fair Work proceeding and that the relationship between the appellant and the Ombudsman was not such that the Ombudsman should be regarded as having brought the Fair Work proceeding "on account of or for the benefit of" the appellant.
No identity of interest
Dealing first with whether the appellant had an interest in the Ombudsman's claim in the Fair Work proceeding, it is necessary to begin with the terms of the Fair Work Act and the Workplace Relations Act.
As Emmett JA observed, there were two powers available to the Ombudsman under the Fair Work Act to obtain an order for the appellant to be paid his entitlements. The first was the power under s 682(1)(f) to represent employees who are or may become a party to proceedings in a court under the Act or a fair work instrument. If the Ombudsman had invoked that power, it might have been that the claim for an order in favour of the appellant would have been made "on behalf of" the appellant. But that power was not invoked because the appellant was not a party to the proceeding and it was not contemplated that he might become party to the proceeding.
The other power was under s 682(1)(d) of the Act, to commence proceedings in a court to enforce a fair work instrument, and that was the power which was invoked. Emmett JA appears to have accepted that the invocation of that power was not enough in itself to establish privity of interest. With respect, his Honour was correct.
The order which the Ombudsman sought and which was made under s 719 of the Workplace Relations Act was for payment to the appellant of "the amount of the underpayment". To the extent that Ramsey Food complied with the order, Ramsey Food's obligations to the appellant were pro tanto discharged. But it does not follow that the appellant had an interest in the Ombudsman's claim.
As has been seen, in this country, "interest" for the purposes of issue estoppel means a legal interest. As Gummow J stressed in Trawl, a mere economic interest is not regarded as a sufficient indicium of privity in successive or mutual relationships. For that reason, in Trawl it was held to be insufficient to raise an issue estoppel against Trawl's guarantors that, if Trawl had succeeded in its earlier claim against Effem, its success would have resulted in an award of damages which might have gone in reduction of Trawl's indebtedness to its bank and thereby ameliorated the guarantors' liabilities to the bank. The applicant and the guarantors shared a mutual economic interest in the success of Trawl's earlier claim but mutual economic interests were not enough to amount to privity of interest for the purposes of issue estoppel.
Equally, to establish that a party has an interest in a putative privy's claim, it is not enough to establish that the party and putative privy have different legal interests productive of a unity of outcome. It is necessary that they share the same legal interest. Here, despite the fact that the appellant had an entitlement to be paid by Ramsey Food and the Ombudsman claimed an order that the appellant be paid his entitlement, the appellant and the Ombudsman did not have the same legal interest in the Ombudsman's claim.
Comprehension of that point may perhaps be assisted by reference to a more prosaic example of its application. If for good consideration A covenants with B, and also for good consideration covenants severally with C, that A will pay benefits to C, B obtains a contractual entitlement to performance of A's covenant with B and a legal interest in performance of that covenant which is separate and distinct from C's contractual entitlement to performance of A's covenant with C and C's legal interest in the performance of the latter covenant. Thus, despite the evident mutuality of B and C's economic interests in the performance of A's covenants with B and C, they do not have the same interest for the purposes of issue estoppel. And, in those circumstances, if A fails to pay C, and B brings a proceeding for specific performance of A's covenant with B to pay C, then, unless C is joined as party to the proceeding, C will not be bound by the outcome of the proceeding or by any of the essential issues decided in the proceeding.
Arguably, it would be different if, instead of entering into several covenants with B and C, A covenanted with B and C jointly. In the case of a joint covenant, there is only one covenant, to the benefit of which each of the covenantees is jointly entitled, and it might be said that there is sufficient mutuality of interest to render each of the covenantees privies in interest. If so, C would be bound by the outcome of B's proceeding against A, regardless of whether C were joined as party to the proceeding, at least if C had notice of the proceeding and chose not to become involved. But where covenants are several, the legal interest of each of the covenantees is separate and distinct.
Here, the Ombudsman's entitlement to seek an order under ss 682(1)(d) and 719 was analogous to B's entitlement to seek an order for specific performance of A's covenant with B to pay C. Just as B's contractual entitlement to require A to pay C arises separately and distinctly from C's contractual entitlement to be paid by A, the Ombudsman's statutory entitlement to seek an order under ss 682(1)(d) and 719 arose separately and distinctly from the appellant's statutory and contractual entitlement to be paid by Ramsey Food. Just as B's equitable entitlement to seek an order for specific performance of A's covenant with B to pay C is predicated on A's failure to pay C the amount which is due to C, the Ombudsman's statutory entitlement to seek an order that Ramsey Food pay the underpayment to the appellant was predicated on Ramsey Food's failure to pay the appellant what was due to the appellant. Just as there is mutuality of economic interests between B and C, there was mutuality of economic interests between the Ombudsman and the appellant. But, just as the separate and distinct legal entitlements of B and C mean that there is no privity of interest between them, the separate and distinct statutory entitlements of the Ombudsman and the appellant were insufficient to constitute privity of interest between them.
Claim not on behalf of the appellant
It remains to deal with whether the Ombudsman's claim was made "on behalf of" the appellant. For the following reasons, it was not.
It will be recalled that Emmett JA went on to identify a number of factors which he considered led to the conclusion that the Ombudsman was acting on behalf of the appellant. The relevant section of his Honour's reasoning was as follows:
"While the Fair Work Ombudsman may have been acting in the public interest in seeking penalties from Ramsey Food in the Federal Court Proceedings, there can be no doubt that the Fair Work Ombudsman was also making claims under s 719 of the Workplace Relations Act on behalf of the claimant employees, including Mr Tomlinson. The Fair Work Ombudsman had no entitlement to moneys payable by the employer of the claimant employees upon the termination of their employment. It was seeking to enforce, and did enforce, the rights vested in the employees, including Mr Tomlinson, under the Award. In so far as the Fair Work Ombudsman was enforcing Mr Tomlinson's entitlement, under the Award, to a payment in lieu of notice and a severance payment, the Fair Work Ombudsman was doing so on behalf of Mr Tomlinson. The Fair Work Ombudsman was Mr Tomlinson's privy for the purposes of the application of the doctrine of issue estoppel."
As can be seen, there are two critical links in that reasoning, namely: (1) that the Ombudsman was making claims under s 719 "on behalf of ... Mr Tomlinson"; and (2) that "[i]n so far as the Fair Work Ombudsman was enforcing Mr Tomlinson's entitlement ... the Fair Work Ombudsman was doing so on behalf of Mr Tomlinson". With respect, neither is correct.
The reference to s 719 appears to be a reference to s 719(6) and (7), which at relevant times provided as follows:
"(6) Where, in a proceeding against an employer under this section, it appears to the eligible court that an employee of the employer has not been paid an amount that the employer was required to pay under an applicable provision (except a term of an ITEA), the court may order the employer to pay to the employee the amount of the underpayment.
(7) Where, in a proceeding against an employer under this section, it appears to the eligible court that the employer has not paid an amount to a superannuation fund that the employer was required, under an applicable provision (except a term of an ITEA), to pay on behalf of a person, the court may order the employer to make a payment to or in respect of that person for the purpose of restoring the person, as far as practicable, to the position that the person would have been in had the employer not failed to pay the amount to the superannuation fund."
The orders which were made in favour of the appellant in the Fair Work proceeding were made in pursuance of those sub-sections.
Since the proceeding was brought under s 682(1)(d) of the Fair Work Act and s 719 of the Workplace Relations Act, it logically cannot be that the Ombudsman's claim in relation to the appellant was made by the Ombudsman as representative of the appellant or otherwise "on behalf of" the appellant. The Ombudsman was not representing the appellant in a claim under s 719 but acting in exercise of the Ombudsman's own statutory right of action to enforce the Fair Work Act. The Ombudsman was not making the appellant's claim "on behalf of" the appellant but making the Ombudsman's own claim pursuant to s 682(1)(d) of the Fair Work Act under s 719 of the Workplace Relations Act for an order to compel the enforcement of the Fair Work Act.
Nor is the claim by the Ombudsman under s 719 otherwise of such a nature that it should be regarded as made "on behalf of" the appellant. The relationship between the appellant and the Ombudsman did not fall into one of the established categories of legal and equitable relationships earlier described. The appellant did not engage the Ombudsman as his agent to litigate the question of whether Ramsey Food was his employer and as such had failed to pay his entitlements.
As far as can be told, the appellant did not have any control over the conduct of the Ombudsman's claim. The highest the evidence went in that regard was that the appellant placed the facts of his predicament before the Ombudsman and asked the Ombudsman if there was anything which the Ombudsman could do to procure for the appellant his entitlements.
There is nothing about the power conferred on the Ombudsman by s 682(1)(d) of the Fair Work Act or on the court by s 719 which could be viewed as imposing anything in the nature of a fiduciary duty on the Ombudsman in favour of the appellant.
The Ombudsman could not realistically be regarded as the corporate embodiment of the appellant - even for just the purposes of recovery of the appellant's unpaid entitlements - in the sense of the appellant being the person who made decisions and gave instructions on behalf of the Ombudsman as to how the Fair Work proceeding should be conducted. On the evidence, the scope of the appellant's involvement was limited to being a witness.
Further, because of the Ombudsman's statutory responsibilities to enforce the Act generally, it is not possible to exclude the potential for at least some conflict of interest between the Ombudsman's objectives in and manner of conducting the Fair Work proceeding and the appellant's interests in recovering his entitlements.
It follows that, even on an expansive view of "on behalf of" of the kind suggested by some of the English authorities, there was not here such a degree of identification between the Ombudsman and the appellant that the decision in the Fair Work proceeding should be taken to bind the appellant for the purposes of the District Court proceeding.
Consequences of no estoppel
Counsel for Ramsey Food submitted that so to hold would lead to the "scandal" that, despite an order being made under s 719 and satisfied by payment in full, an employer would then be at liberty to institute a fresh proceeding against the employee for recovery of the amount so paid as money paid under a mistake as to the employment relationship. Counsel acknowledged that there might be other solutions to that problem but contended that the most logical and appropriate manner in which to respond to it was by recognising that where orders are made under s 719, they result in issue estoppels.
The submission is not persuasive. The short answer to it is that, in the circumstances postulated, the payment would not be a payment under mistake of fact or law but rather in satisfaction of a binding legal obligation constituted of the order made under s 719. As such, it would be a payment made for good consideration.
Counsel did not make the point but it might also be thought "scandalous" if an employee, having taken the benefit of an order under s 719 against one entity as employer, could then turn around and bring a fresh proceeding against another entity as employer for payment of the amount already paid and received pursuant to the order. The avoidance, however, of potential difficulties of that kind does not necessitate the application of issue estoppel in relation to s 719 orders. In such circumstances, the employee would be bound to bring the amounts received under the s 719 order to account on the basis that, although paid by a third party, they were paid in intended reduction of the underpayment of the employee's entitlements qua employee and thus pro tanto discharged the underpayment.
There might be still further circumstances in which, having taken the benefit of an order under s 719 and thus the benefit of the findings on the basis of which it was made, it would appear unjust that an employee should be permitted to contend that the entity ordered to make the payment under s 719 was not in fact the employer. If so, however, that would likely be so because the employee has so conducted himself or herself in taking the benefit of the payment ordered and other parties have so acted in reliance upon the assumed state of affairs thereby created that it would be unconscionable for the employee to depart from that basis of assumption. In such circumstances, the employee would be estopped from departing from the assumed state of affairs and therefore estopped from contending that the entity ordered to make the payment under s 719 was not in fact the employer. But, in that event, the estoppel would be an estoppel in pais, not an issue estoppel, and in this case estoppel in pais was not relied upon. Ramsey Food did not allege an estoppel in pais. Had it sought to do so, it would have had to deliver a very different pleading and to prove the assumed basis of dealing between the parties and circumstances which were said to render it unconscionable for the appellant to depart from the assumption. No such thing was attempted.
Notice of contention
Under cover of notice of contention, counsel for Ramsey Food argued that, if the Court of Appeal were wrong in holding that issue estoppel applied, the appeal to this Court should nevertheless be dismissed on the basis that it was open to the Court of Appeal to adopt Buchanan J's findings, and that this Court should similarly adopt Buchanan J's findings, that Ramsey Food was at all relevant times the appellant's employer.
That contention should also be rejected. Even if Buchanan J's findings could be followed or adopted as a matter of precedent or comity, as it was submitted they could be, the only thing which his Honour relevantly determined was that Ramsey Food remained the employer for the purposes of the Workplace Relations Act. As Buchanan J said, that was a question of "substance and reality" as opposed to legal form. In contrast, the issue for the District Court judge involved a question of statutory construction of whether Tempus was "the employer liable to pay ... compensation" under the Workers Compensation Act within the meaning of s 151C of that Act (scil whether Tempus was bound to obtain a workers' compensation policy in respect of the appellant in accordance with s 155 of the Workers Compensation Act). That was a different question, which was predominantly one of legal form. As the District Court judge appreciated, it by no means follows from the fact that Ramsey Food was the employer for the purposes of the Workplace Relations Act that Tempus was not "the employer liable to pay ... compensation" under the Workers Compensation Act within the meaning of s 151C of that Act.
Perhaps it might be said that Buchanan J also decided that Tempus may have acted as agent for Ramsey Food, and possibly that the arrangements between Ramsey Food and Tempus were a "sham". But those findings do not assist Ramsey Food either. If Tempus contracted as agent for Ramsey Food then, based on the District Court judge's findings that Tempus was nominally the employer in all relevant legal respects and that, at all relevant times, the appellant believed that he was employed by Tempus, it is to be inferred that Tempus contracted as agent for Ramsey Food as undisclosed principal. As such, Tempus was personally liable for performance of the obligations thus created and, therefore, personally liable as the employer liable to pay compensation under the Workers Compensation Act.
If by a "sham" Buchanan J meant that the arrangement between Tempus and Ramsey Food was devoid of legal effect, the result might well be different. But, given that his Honour said that it was unnecessary to decide whether the arrangement between Tempus and Ramsey Food was a sham and more significantly that, if it were a sham, it would support the conclusion that Tempus acted as agent for Ramsey Food, he cannot have meant that the arrangement was a sham in the sense of being devoid of legal effect. Rather, it appears that when his Honour spoke of the arrangement as a "sham" he conceived of it as one which, although apparently productive of legal rights and obligations according to their terms, did not detract from the conclusion that, in real substance, Ramsey Food remained the employer for the purposes of the Fair Work proceeding.
To that may be added that, on the basis of the evidence and findings made below, there seems little reason to doubt that Tempus was bound to obtain a workers' compensation policy in accordance with s 155 of the Workers Compensation Act and, therefore, was the employer liable to pay compensation under that Act. On the facts as found by the District Court judge (against which there was no appeal) Tempus was the nominal employer who was responsible for group tax and superannuation obligations. Tempus did obtain a workers' compensation insurance policy. And the insurer under that policy paid compensation under the Act in respect of the injuries the subject of the appellant's work injury claim. Buchanan J did not hold to the contrary or even have reason to consider the point.
Finally, Ramsey Food did not plead in the District Court proceeding or otherwise suggest that the appellant failed to give Tempus a notice under s 151C of the Workers Compensation Act or that the appellant did not make a claim for lump sum compensation against Tempus under s 280A of the Workplace Injury Management and Workers Compensation Act, or that that claim had not been paid under s 280B of that Act. Nor was it pleaded or otherwise suggested that, despite Tempus being liable to pay compensation under the Workers Compensation Act, and its insurer having paid compensation under that Act, Ramsey Food remained the employer liable to pay compensation under the Act in respect of those injuries. Ramsey Food only ever pleaded or otherwise contended that it was enough to bar the appellant's work injury claim that the appellant was bound by Buchanan J's findings.
Of course, so to observe is not necessarily to exclude the possibility that Ramsey Food might also have been required to take out cover or be covered under a workers' compensation policy. Sub-sections (1B) and (2) of s 155 of the Workers Compensation Act suggest that it might have been so. Nor is it to deny the possibility that, if the appellant had made a claim for compensation against Ramsey Food in respect of the injury the subject of the work injury claim, Ramsey Food would have been liable to pay compensation under the Workers Compensation Act in respect of that injury. But there has been no consideration or determination of those issues at any level, still less of whether Tempus would thus have ceased to be liable to pay compensation under the Workers Compensation Act and so ceased to be "the employer liable to pay ... compensation" under the Workers Compensation Act within the meaning of s 151C of that Act. The sole question for Buchanan J was whether Ramsey Food was as a matter of "substance and reality" the appellant's employer for the purposes of the Fair Work Act.
Conclusion and orders
In the result, the District Court judge was right to hold that Buchanan J's finding that Ramsey Food was the employer for the purpose of the Fair Work proceeding did not estop the appellant from contending that Tempus was his employer for the purpose of the District Court proceeding.
Accordingly, the appeal should be allowed with costs. Orders 2 to 5 of the Court of Appeal dated 21 July 2014 should be set aside. In their place it should be ordered that the appeal to the Court of Appeal be dismissed with costs.