FEDERAL COURT OF AUSTRALIA
Fair Work Ombudsman v Eastern Colour Pty Ltd [2011] FCA 803
| IN THE FEDERAL COURT OF AUSTRALIA | |
| DATE OF ORDER: | |
| WHERE MADE: |
THE COURT ORDERS THAT:
Paragraphs 7, 8, 9, 10, 11(b), 11(c), 12, 18, 19, 20, 21, 23, 24, 25, 26, 28, 29, 30, 33, 34, 37, 38, 39, 40, 41, 42, 45 and 46 of the Further Amended Statement of Claim filed 1 December 2010 be struck out.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website.
| QUEENSLAND DISTRICT REGISTRY | |
| GENERAL DIVISION | QUD 376 of 2010 |
| BETWEEN: | FAIR WORK OMBUDSMAN Applicant |
| AND: | EASTERN COLOUR PTY LTD (ACN 001 852 071) First Respondent SB EMPLOYMENTS PTY LTD (ACN 117 006 596) Second Respondent NB EMPLOYMENTS PTY LTD (ACN 117 059 319) Third Respondent LOUISA BARONIO Fourth Respondent VINCENZO CATENO CATANZARO Fifth Respondent |
| JUDGE: | COLLIER J |
| DATE: | 19 JULY 2011 |
| PLACE: | BRISBANE |
REASONS FOR JUDGMENT
1 I have before me for consideration two notices of motion.
2 The first notice of motion was filed on 14 December 2010 by the fifth respondent, and the second notice of motion was filed on 15 December 2010 by the first, second, third and fourth respondents. The two notices of motion are, in all material respects, identical. The applicant opposes the orders sought by the respondents.
3 Although the respondents in the two notices of motion seek a variety of relief, the only relief pressed at the hearing before me related to particular paragraphs in the applicant's further amended statement of claim (FASC) filed 1 December 2010. In particular, all respondents seek the following paragraphs of the applicant's FASC struck out:
Paragraphs 7, 8, 9, 10, 11(b), 11(c), 12, 17, 18, 19, 20, 21, 23, 24, 25, 26, 28, 29, 30, 33, 34, 37, 38, 39, 40, 41, 42, 45 and 46.
4 In his submissions Mr Friend SC for the first to fourth respondents described four broad categories of objection maintained by the first to fourth respondents to the FASC. Mr Herbert for the fifth respondent supported this categorisation, and Mr Murdoch for the applicant addressed the four categories in his submissions. The categories are as follows:
Paragraphs 7, 8, 9, 10, 37 and 38 are embarrassing in that they are susceptible to various meanings and contain inconsistent or confusing allegations.
In respect of paragraphs 20, 24, 25, 26 and 30 the applicant fails to allege a material fact and thereby plead a complete cause of action.
In paragraphs 11(b), 11(c), 12, 18, 19, 20, 23, 24 and 25 the applicant advances a case which cannot succeed on the law as it stands.
Paragraphs 21, 32, 33, 34, 39, 40, 41 and 42 are dependent on the paragraphs listed in the other three categories, and should therefore also be struck out.
5 The categories conveniently bundle the respondents' objections to paragraphs in the FASC. I will adopt these categories for the purposes of this judgment, although I note that the categories make no reference to paragraphs 17, 28, 29, 45 and 46 to which there is reference in the notices of motion. Nonetheless I will consider paragraphs 17, 28, 29, 45 and 46 during the course of this judgment.
Background
6 The applicant to the substantive proceedings is the Fair Work Ombudsman.
7 By Application filed 6 September 2010 the applicant seeks declarations and the imposition of penalties pursuant to, inter alia, s 719 and s 792 of the Workplace Relations Act 1996 (Cth) ("the Act") against all respondents in relation to breaches of the Act and a number of provisions of an industrial agreement.
8 The FASC is the subject of the relevant notices of motion was filed 1 December 2010 and followed the earlier Amended Statement of Claim filed 10 November 2010, and the original Statement of Claim filed 6 September 2010.
9 In summary, the applicant alleges that the first, second and third respondents were employers of persons listed in the schedule to the FASC ("the employees"). The applicant also alleges that the fourth respondent (being at all material times a director of the first respondent) and the fifth respondent (being at all material times the solicitor and accountant for the first, second and third respondents) were persons knowingly concerned in the contraventions of the Act by the first, second and third respondents.
10 The precise nature of the applicant's case is, in light of the notices of motion before the Court, in dispute. In summary it appears to claim that:
the first, second and third respondents were employers of persons listed in the schedule to the FASC ("the employees");
the employees worked in the fruit-picking industry;
the fourth respondent was at all material times a director of the first respondent;
the fifth respondent was at all material times the solicitor and accountant for the first, second and third respondents;
the first to fourth respondents were involved in contraventions of the Act including underpayment of and injury to the employment of the employees; and
the fifth respondent was associated with those contraventions.
11 The first to fourth respondents were represented by different solicitors and counsel to those representing the fifth respondent. However I have already noted that the notices of motion filed by both sets of respondents are in all material respects identical. Further, it is clear from the submissions of Mr Friend SC for the first to fourth respondents and Mr Herbert for the fifth respondent that, so far as is material for the purposes of these proceedings, the respondents have a common position in respect of orders currently sought.
Pleadings – general principles
12 Principles pertaining to pleadings are well-settled. As observed by Murphy, Wilson, Brennan, Deane and Dawson JJ in Dare v Pulham (1982) 148 CLR 658 at 664:
Pleadings and particulars have a number of functions: they furnish a statement of the case sufficiently clear to allow the other party a fair opportunity to meet it (Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in liq) (1916) 22 CLR 490 at 517); they define the issues for decision in the litigation and thereby enable the relevance and admissibility of evidence to be determined at the trial (Miller v Cameron (1936) 54 CLR 572 at 576–7); and they give a defendant an understanding of a plaintiff's claim in aid of the defendant's right to make a payment into court. Apart from cases where the parties choose to disregard the pleadings and to fight the case on issues chosen at the trial, the relief which may be granted to a party must be founded on the pleadings (Gould and Birbeck and Bacon, supra, at 517–8; Sri Mahant Govind Rao v Sita Ram Kesho (1898) LR 25 Ind App 195 at 207.
(cf Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 288, 293 and 302-303)
13 In the substantive proceedings the applicant seeks, inter alia, imposition of civil penalties for contraventions of the Act and contraventions of certain awards or instruments which set pay rates. In light of the seriousness of the consequences to the respondents should the applicant substantiate its claims, it is incumbent upon the applicant to clearly plead the case the respondents are required to meet.
14 Principles relevant to strike out of pleadings were summarised by Bowen CJ in Brambles Holdings Ltd v Trade Practices Commission (1979) 28 ALR 191 at 193 in the following terms:
The power to strike out is primarily designed to ensure compliance with the rules of pleading: Meckiff v Simpson [1968] VR 62 at 70. It is a power which is discretionary: Golding v Wharton Saltworks (1876) 1 QBD 374. It is to be employed sparingly and only in a clear case: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129.
15 Similar comments were made in Davis v Commonwealth (1986) 68 ALR at 23, Lonrho Plc v Fayed [1992] 1 AC 448 at 469, and Murex Diagnostics Pty Ltd v Chiron Corporation (1995) 55 FCR 194 at 203.
Order 11 rule 16 of the Federal Court Rules
16 In respect of their notices of motion the respondents seek to invoke O 11 r 16 of the Federal Court Rules, which provides:
Where a pleading:
(a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading;
(b) has a tendency to cause prejudice, embarrassment or delay in the proceeding; or
(c) is otherwise an abuse of the process of the Court;
the Court may at any stage of the proceeding order that the whole or any part of the pleading be struck out.
17 In Allstate Life Insurance Co v Australia and New Zealand Banking Group [1995] FCA 1368; (1995) 130 ALR 469 the Full Court considered the concept of a pleading disclosing no reasonable cause of action for the purposes of O 11 r 16(a), and suggested that the terms of the sub-rule relate to circumstances where, for example, pleadings are obviously futile. Earlier in General Steel Industries Inc. v Commissioner for Railways (N.S.W.) (1964) 112 CLR 125 in relation to an equivalent State Court rule, Barwick CJ at 129 explained:
It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action – if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal – is clearly demonstrated. The test to be applied has been variously expressed; "so obviously untenable that it can• not possibly succeed"; "manifestly groundless"; "so manifestly faulty that it does not admit of argument"; "discloses a case which the Court is satisfied cannot succeed"; "under no possibility can there be a good cause of action"; "be manifest that to allow them" (the pleadings) "to stand would involve useless expense". At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or "so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument"; "so to speak apparent at a glance".
18 So far as concerns the term "embarrassing", the Full Court of the Supreme Court of Victoria in Meckiff v Simpson [1968] VR 62 at 70 explained that, in the context of pleadings, "embarrassing" includes defects resulting in the pleading being unintelligible, ambiguous, vague or too general, so as to embarrass the opposite party who does not know what is alleged against it.
19 More recently in Spiteri v Nine Network Australia Pty Ltd [2008] FCA 905 at [22] Edmonds J said:
Embarrassment in the context of O 11 r 16 'carries the connotation of a pleading which is susceptible to various meanings, or contains inconsistent allegations or in which alternatives are confusingly intermixed or in which irrelevant allegations are made tending to increase expense. The list is not intended to be exhaustive': Bartlett v Swan Television and Radio Broadcasters Pty Ltd (1995) ATPR 41-434.
A pleading which is internally inconsistent is embarrassing: Vasyli v AOL International Pty Ltd (NG 219/96) Lehane J, 19 August 1996, unreported. A pleading should assert the basic and constituent facts, not the evidence upon which those facts will or may be proved at trial. A pleading is defective if it simply asserts a conclusion to be drawn from the facts not stated: Trade Practices Commission v David Jones (Australia) Pty Ltd (1985) 7 FCR 109 at 114-115; and is not saved by using the words '[i]n the premises' to introduce the conclusion: Davids Holdings Pty Ltd v Coles Myer Ltd (1993) ATPR 41-227.
The pleading should enable the respondent to know, with sufficient clarity, the case which it is required to meet: Dare v Pulham (1982) 148 CLR at 664.
20 I respectfully adopt these summaries of relevant principles.
1. Paragraphs 7, 8, 9, 10, 37 and 38
21 The respondents submit that these paragraphs of the FASC are embarrassing in that they are susceptible to various meanings, and in that they contain inconsistent or confusing allegations.
22 They also submit that, so far as the applicant alleges the respondents breached s 792 of the Act, paragraphs 37 and 38 are embarrassing and disclose no reasonable cause of action, and ought be struck out.
23 The relevant paragraphs read as follows:
7. At all material times the Second and Third respondents purported to supply labour to the First Respondent in that the Second and Third Respondents made payments for work performed by each of the Employees at the Premises in circumstances where each of the Second and Third Respondents did not otherwise direct or control the work of the Employees and the employer of the employees was the First Respondent.
Particulars
The Applicant relies upon the matters particularised at paragraph 8 herein.
8. At various times between 27 November 2005 and 15 July 2007 the First Respondent employed each of the Employees to work within its farming business (the Business) as casual employees.
Particulars
(a) Gordon Peter Falconer commenced employment on 27 November 2005
(b) Lachlan Eric Falconer commenced employment on 3 September 2006.
(c) Sandra Di Betta commenced employment on 14 January 2007.
(d) Joanne Kathleen Donges commenced employment on 15 July 2007.
(e) Gordon Peter Falconer ceased employment on or about 18 November 2007
(f) Lachlan Eric Falconer ceased employment on or about 11 March 2007
(g) Sandra Di Betta ceased employment on or about 24 February 2008
(h) Joanne Kathleen Donges ceased employment on or about 24 February 2008
(i) The Employees were each offered employment by the Fourth Respondent, or her husband Antonio Baronio, on behalf of the First Respondent.
(j) The employees were required to perform work for the First Respondent at the Premises.
(k) The Employees were required to work at the Premises as directed by the Fourth Respondent and/or other persons acting for and on behalf of the First Respondent.
(l) The Employees were required to abide by workplace policies enforced by the Fourth Respondent and/or other persons acting for and on behalf of the First Respondent.
(m) The Employees could not delegate or subcontract the performance of their duties.
(n) The Employees were required to contact the Fourth Respondent, or other persons acting for and on behalf of the First Respondent, if they were going to be absent from work for any reason.
(o) The Employees had no discretion as to the manner in which they carried out their duties for the First Respondent.
(p) The Employees only performed work for the First Respondent and had no genuine and practical entitlement to perform similar work for other parties.
(q) The Employees performed the same duties, in the same location at the Premises throughout their employment and the work was performed exclusively for the First Respondent.
(r) The employees had no written contract of employment with either the First Respondent, Second Respondent or Third Respondent.
(s) There is no written contract between the First Respondent, Second Respondent and Third Respondent for the supply of labour by the Second Respondent and Third Respondent to the First Respondent.
(t) The Fourth Respondent or other persons acting for and on behalf of the First Respondent set the hours and days of work for the Employees, prepared the rostering of the Employees, directed the work performed and was responsible for disciplining the Employees.
(u) The Fourth Respondent, or other persons acting for and on behalf of the First Respondent, and under the direction of the Fourth Respondent, terminated the employment of Mr Gordon Falconer, Ms Donges and Ms Di Betta.
(v) The Employees, other than Ms Donges, were not advised:
i. That the would be working for two employers;
ii. That they would be employed by the Second Respondent until they had worked 40 hours per week, and were then employed by the Third Respondent for additional hours worked in that week; or
iii. The reasons for this arrangement.
(w) The Employees were not free to reject further work once they had worked in excess of 40 hours per week, and were unable to differentiate at any particular point in time which of the First Respondent, Second Respondent or Third Respondent they were employed by.
(x) The Employees had no involvement or contact with either the Second Respondent or Third Respondent, or any representatives of the Second Respondent or Third Respondent, in relation to their hiring, their daily duties, their discipline, their terms and conditions of employment or their termination of employment.
(y) The employees completed a single timesheet for the work completed each day. The timesheets were located at and managed by the First Respondent.
9. In the alternative to paragraph 7 and paragraph 8, at various times between 27 November 2005 and 15 July 2007 the First, Second and Third Respondents employed each of the Employees to work within the Business as casual employees.
Particulars
(a) The Applicant repeats and relies upon the matters particularised in paragraph 8 herein.
(b) The actions of the Fourth Respondent and/or other persons acting for and on behalf of the First Respondent particularised in paragraph 8 were also taken by such persons for and on behalf of the Second Respondents.
(c) The Fourth Respondent, or other persons acting for and on behalf of the First Respondent and/or the Second Respondent and/or the Third Respondent, and under the direction of the Fourth Respondent, provided each of the Employees with two forms entitled "Employee Details" which stated that the Employees were casual employees of the Second Respondent and Third Respondent respectively.
(d) Each Employee was requested by the Fourth Respondent or other persons acting for and on behalf of the First Respondent and/or the Second Respondent and/or the Third Respondent to complete two tax file declarations – one for the Second Respondent and one for the Third Respondent
(e) The Employees were paid by the Second Respondent, or the Second Respondent and the Third Respondent for all work they performed at the Premises.
(f) The Employees received payslips each week for the work they performed at the Premises, receiving one from the Second Respondent or one from the Second Respondent and one from the Third Respondent.
(g) The Employees received annual Pay as You Go (PAYG) payment summaries for the work they performed at the Premises, receiving one from the Second Respondent or one from the Second Respondent and one from the Third Respondent.
10. In the alternative to paragraph 7, paragraph 8 and paragraph 9, at various times between 27 November 2005 and 15 July 2007 the Second and Third Respondents employed each of the Employees to work within the Business as casual employees.
Particulars
(a) The Applicant repeats and relies upon the matters particularised at paragraphs 8 and 9(c), 9(d), 9(e), 9(f) and 9(g) herein.
(b) The actions of the Fourth Respondent or other persons particularised in paragraphs 8 and 9(c) and 9(d) were taken on behalf of the Second and/or Third Respondent.
(c) The Second Respondent or Second and third Respondents supplied the labour of the Employees to the First Respondent to perform duties in the Business of the First Respondent at the Premises.
….
37. In or around November 2005, the First, Second and Third Respondents established an employment structure under which:
(a) the Second and Third Respondents respectively purported to supply labour to the First Respondent as pleaded at paragraph 7 herein;
(b) the Employees were purported to be employed by the Second Respondent until they had worked 40 hours per week and were then purported to be employed by the Third Respondent for additional hours worked in that week;
(c) In the alternative to subparagraph 37(a), the Second and Third Respondents respectively supplied labour to the First Respondent;
(d) In the alternative to subparagraph 37(b), the Employees were employed by the Second Respondent until they had worked 40 hours per week, and were then employed by the Third Respondent for additional hours worked in that week (the Employment Structure.)
A. By operation of clause 6.4.2 of the NAPSA an employer is required to pay an employee overtime rates of pay for hours worked in excess of 40 hours in any seven days.
38. If the effect of the Employment Structure was that the Employees were employed or, alternatively, purported to be employed by the Second Respondent until they had worked 40 hours per week, and were then employed or, alternatively, purported to be employed by the Third Respondent for additional hours worked in that week, then:
(a) In weeks where the Employees worked more than 40 hours in the business for one employer, they were entitled to be paid on the basis of ordinary time for all of the hours so worked;
(b) If they had worked for the First Respondent for all of the hours worked in that week, they would have been entitled to be paid at overtime rates for all hours in excess of 40 in the week;
(c) If they had worked for the Second Respondent for all of the hours worked in that week, they would have been entitled to be paid at overtime rates for all hours in excess of 40 in the week;
(d) If they had worked for the Third Respondent for all of the hours worked in that week, they would have been entitled to be paid at overtime rates for all hours in excess of 40 in the week;
(e) Accordingly, as a result of the Employment Structure, the employees were denied the benefit of remuneration which they would have otherwise been or, alternatively, were entitled to.
(tracked changes incorporated)
Are these pleadings embarrassing?
24 In summary, the respondents submit that paragraphs 7, 8, 9, 10, 37 and 38 of the FASC are embarrassing because:
(a) they raise alternative and inconsistent allegations;
(b) the question of who is the employer of each employee at any relevant time is a crucial question. The applicant never pleads the material facts to sustain its allegation that there was employment by one or more of the respondents;
(c) the applicant relies on inconsistent cases;
(d) the use of the word "purported" in paragraph 7 is, without more, embarrassing. There is no explanation why it is said that the second and third respondents were not labour hire companies or were engaged in a sham. The respondents should not be required to plead to a conclusion which is not supported by any pleading of material facts.
25 In response the applicant has made extensive and very detailed submissions in support of its contention that paragraphs 7, 8, 9, 10, 37 and 38 of the FASC are not embarrassing. In summary, the applicant submits that:
Material facts are pleaded to sustain the allegation that there was employment by one or more of the respondents.
Each paragraph contains sufficient facts stating with clarity the case which must be met by the respondents.
Although the pleadings raise alternative arguments this does not of itself make the pleading embarrassing.
Paragraph 8 clearly pleads that the First Respondent employed each of the employees.
Paragraph 9 clearly pleads that in the alternative the first, second and third respondents employed each of the employees. Likewise paragraph 10 clearly pleads that in the alternative the second and third respondents employed each of the employees.
Paragraph 7 is not inconsistent with these alternatives, and is supported by the material facts particularised in paragraph 8.
It is reasonable for paragraphs 8, 9 and 10 to plead a conclusion of law, namely that the relevant employees were employed by the first respondent or the first, second and third respondents, or the second and third respondents, because these conclusions are supported by material facts and particulars. So, for example, in relation to the first respondent as employer the applicant pleads:
when the offer of employment was made (paragraphs 8, 8(a), 8(b), 8(c), 8(d));
who offered the employment (paragraph 8(i));
whether the person making the offer had authority (paragraph 8(i));
how the offer was accepted (paragraphs 8, 8(a),8(b),8(c),8(d));
the material terms of the contract (paragraphs 8(j)-(r) and paragraphs (w)-(y)).
Alternatively the applicant pleads the factual elements required to prove the existence of an employment contract with the first, second and third respondents as employer as follows:
when the offer of employment was made (paragraphs 9, 8(a), 8(b), 8(c), 8(d));
who offered the employment (paragraphs 8(i) and 9(b));
whether the person making the offer had authority (paragraphs 8(i) and 9(b));
how the offer was accepted (paragraphs 8, 8(a), 8(b), 8(c), 8(d);
the material terms of that contract (paragraphs 8(j)-(r) and paragraphs (w)-(y) and paragraphs 9(c)-(g)).
Alternatively the applicant pleads the factual elements required to prove the existence of an employment contract with the second and third respondents as employer as follows:
when the offer of employment was made (paragraphs 9, 8(a), 8(b), 8(c), 8(d));
who offered the employment (paragraphs 8(i) and 10(b));
whether the persons making the offer had authority (paragraphs 8(i) and 10(b));
how the offer was accepted (paragraphs 8, 8(a), 8(b), 8(c), 8(d));
the material terms of that contract (paragraphs 8(j)-(r) and paragraphs 8(w)-(y) and paragraphs 9(c)-(g) and paragraph 10(g)).
In relation to the use of the word "purported" in paragraph 7, it is apparent from that paragraph and the pleadings as a whole that the second and third respondents have sought to act as if they were labour hire companies by, amongst other things, making payments for work performed by each of the employees, when in reality the real employer was the first respondent.
Paragraphs 36 to 42 of the FASC highlight that the first, second and third respondents either established or "purported" or claimed to establish the relevant employment structure in which the employees were employed for the first 40 hours of a working week by the second respondent and by the third respondent for the remaining hours worked in any week, and that due to the creation of that employment structure the employees have not been paid proper overtime, thus constituting an "injury" in employment.
Consideration
26 There is clearly cross-referencing between paragraphs 7, 8, 9, 10, 37 and 38. For example paragraph 38 refers to the material pleaded in paragraph 37, paragraph 37 refers to paragraph 7, and paragraphs 7, 9 and 10 repeat the particulars to paragraph 8.
27 In my view paragraphs 7, 8, 9, 10, 37 and 38 ought be struck out as embarrassing. I form this view for the following reasons.
(i) Inconsistent allegations
28 First, the applicant forcefully contends that the paragraphs are not inconsistent, but rather plead alternatives. However as Weinberg J correctly observed in JC Decaux Pty Ltd v Adshel Street Furniture Pty Ltd [2000] FCA 1118 at [19], a party may, in a proper case, include in his pleading alternative and inconsistent allegations of material facts, as long as that party does so separately and distinctly. Indeed, his Honour went on to note that whenever alternative cases are alleged, the facts relating to those cases should be stated separately, and should not be commingled, so as to show on what specific facts each alternative cause of action is based.
29 In this case while the applicant is entitled to make allegations of fact, or raise grounds or claims, in the alternative (O 11 r 8(2) Federal Court Rules), the allegations in paragraphs 7, 8 and 9 are not only inconsistent, but confusing, illogical and painfully labyrinthine. The applicant has, in those paragraphs, done precisely that which Weinberg J in JC Decaux stated that it should not do: that is, hopelessly commingled the allegations of material facts upon which it relies.
30 Examples of inconsistencies are clearly apparent.
1. First, for instance:
in paragraph 7 the applicant pleads unequivocally that the first respondent is the employer of all relevant employees; and
in paragraph 8 the applicant pleads that the first respondent employed each of the employees to work in its farming business as casual employees; and
at paragraph 8(i) the applicant pleads that the employees were each offered employment by the fourth respondent or her husband on behalf of the first respondent.
31 Yet in paragraph 9(b), where the applicant pleads as an alternative that the first, second and third respondents employed the employees, the applicant also pleads that the actions of the fourth respondent acting for and on behalf of the first respondent as particularised in paragraph 8 were also taken for and on behalf of the second and third respondents. From this, it is unclear, for example, whether the applicant alleges that fourth respondent and/or her husband had offered employment to the employees to work for the first respondent, the first, second and third respondents, the second and third respondents, or someone else.
2. Second, there are internal contradictions within paragraph 8. So for example, at paragraph 8 the applicant pleads that the first respondent employed each of the employees to work within its farming business as casual employees. In the particulars at paragraph 8(p) the applicant pleads that the employees only performed work for the first respondent and had no genuine and practical entitlement to perform work similar work for the other parties, and further at paragraph 8(q) the applicant alleges that the employees work "was performed exclusively for the first respondent". Yet:
At paragraph 8(r) the applicant pleads that the employees had no written contract of employment with "either the first respondent, second respondent or third respondent";
At paragraph 8(v) the applicant pleads that the employees other than Ms Donges were not advised that they would be working for two employers, and that they would be employed by the second respondent until they had worked 40 hours per week and were then employed by the third respondent for additional hours worked in that week; and
At paragraph 8(w) the applicant pleads, inter alia, that the employees were unable to differentiate at any particular point in time which of the first respondent, second respondent or third respondent they were employed by.
32 Paragraphs 8(r), (v) and (w) plead facts which are completely at odds with the claim in paragraph 8 that the first respondent employed each of the employees, and the particulars in paragraphs 8(p) and (q).
3. Third, in paragraph 7 the applicant pleads, in summary, that the second and third respondents purported to supply labour to the first respondent, and the second and third respondents did not otherwise direct or control the work of the relevant employees, and the employer of the employees was the first respondent. The particulars to paragraph 7 state that "The applicant relies upon the matters particularised at paragraph 8".
33 Yet a number of particulars in paragraph 8 are inconsistent with the allegations in paragraph 7. So, for example:
In paragraph 8(s) the applicant pleads that there was "the supply of labour by the second and third respondent to the first respondent." There is no qualification in this particular by reference to a "purported" supply.
In paragraph 8(v), as I have already observed, the applicant pleads that the relevant employees were "not advised that they would be working for two employers", and that they were not advised that they would be employed by the second and third respondents. To the extent that the inference can be drawn from this particular that the employees were, in fact, employed by the second and third respondents, this contradicts paragraph 7.
In paragraph 8(x) the applicant pleads, inter alia, that the employees had no involvement or contact with either the second or third respondent in relation to their hiring. This seems directly at odds with paragraph 7, where the applicant pleads that the second and third respondents purported to supply labour to the first respondent (which, in the absence of further particularisation, suggests some contact with the employees).
4. Similarly, in paragraph 10, the applicant pleads as an alternative to paragraphs 7, 8 and 9 that the second and third respondents employed each of the employees. In paragraph 10(a) the applicant repeats and relies on paragraphs 8 and parts of paragraph 9. However this is not logical. The applicant cannot claim employment of the employees by the second and third respondents, yet seek to import paragraph 8 without qualification. I note, for example:
paragraph 8(i) to which I already referred;
paragraph 8(k) by which the applicant pleads that the employees were required to work at the premises as directed by the fourth respondent and/or persons acting for and on behalf of the first respondent; and
notably paragraph 8(p) where the applicant alleges that the employees only performed work for the first respondent and had no genuine and practical entitlement to perform similar work for other parties.
These paragraphs are inconsistent with the claim in paragraph 10. They are also inconsistent with the allegation in paragraph 10(b), namely that the actions of the fourth respondent or other persons particularised in, inter alia, paragraph 8 were taken on behalf of the second and/or third respondent.
5. Fifth, in paragraph 8 the applicant pleads the existence of a contract of employment between the first respondent and the relevant employees, and makes detailed and extensive claims as to the control exercised by the first respondent over those employees as indicia of the existence of a contract of employment between the first respondent and those employees. I am unable to identify how such claims can sit logically with paragraphs 9 and 10, where the applicant not only pleads that the second and third (or, in the case of paragraph 9, the first second and third) respondents were employers, but specifically incorporates the details in paragraph 8 into those paragraphs. While the applicant attempts in paragraphs 9(b) and 10(b) to explain the application of paragraph 8 in the context of paragraphs 9 and 10, in my view it fails to do so adequately.
34 These examples illustrate inconsistencies afflicting these paragraphs in their current form.
35 The applicant submits that paragraphs 9 and 10 clearly plead in the alternative the first second and third respondents (in the case of paragraph 9) and the second and third respondents (in the case of paragraph 10) as the employers of the relevant employees. While the applicant seeks to plead these alternatives in paragraphs 9 and 10, the inconsistencies arising from the adoption of allegations in paragraph 8 in both paragraphs 9 and 10 (examples of which I have given above) render paragraphs 9 and 10 unworkable as pleadings. The same problem afflicts paragraphs 7 as well as paragraph 8, where internal inconsistencies render parts of that paragraph simply illogical.
(ii) Is the employment relationship properly pleaded?
36 The next question is whether the applicant has in any event properly pleaded material facts to sustain its allegation that there was employment by one or more of the respondents. It is not in dispute that the claims in the proceedings are dependent upon the existence of an employment relationship. The respondents submit in summary:
In the statement of claim the applicant makes an assertion, namely that the relevant employees were employed by the first respondent (paragraphs 7, 8), the first second and third respondents (paragraph 9), or the second and third respondents (paragraph 10). However the applicant never pleads the material facts to sustain its allegation that there was employment by one or more of the respondents, for example the elements of the relevant contract of employment.
Although the particulars to paragraph 8 contain some material facts which might assist in supporting the conclusion of law pleaded in that paragraph, on a question as crucial to the case as this the particulars do not cure the defect.
A number of inconsistent legal conclusions are pleaded in paragraphs 8, 9 and 10. This emphasises the importance of the underlying material facts being pleaded.
If the applicant alleges that the legal arrangements of the first, second and third respondents were a sham, the material facts which give rise to such a conclusion ought be pleaded.
37 The applicant submits in summary:
each paragraph contains sufficient facts stating with clarity the case which must be met by the respondents.
there is no vice in pleading a conclusion of law supported by material facts and particulars.
the FASC addresses the factual elements required to prove the existence of an employment contract, for example in the particulars to paragraph 8 which are also incorporated into paragraphs 9 and 10.
The particulars relied upon at paragraphs 8, 9 and 10 of the FASC clearly establish in each instance the factors that point to an employment relationship being in existence between the first respondent and the employees, or alternatively the first, second and third respondents and the employees or lastly the second and third respondents and the employees.
38 In respect of this issue, a number of principles are clear.
39 First, as a general rule, a statement of claim which pleads a conclusion without pleading material facts is, to that extent, bad.
40 Although the pleading of a conclusion may, in some circumstances, constitute a material fact, nevertheless the pleading will be embarrassing if allegations are made at such a level of generality that the defendant does not know in advance the case it has to meet: McGuirk v The University of New South Wales [2009] NSWSC 1424 at [33], Charlie Carter Pty Limited v Shop Distributive and Allied Employees Association (1987) 13 FCR 413 at 417-418. As Weinberg J observed in McKellar v Container Terminal Management Services (1999) 165 ALR 409 at 418:
[23] A number of authorities support the proposition that a statement of claim must contain material facts, being the facts necessary for the purpose of formulating a complete cause of action, and that it is not sufficient simply to plead a conclusion drawn from unstated facts: see, for example, Trade Practices Commission v David Jones (Australia) Pty Ltd (1985) 7 FCR 109 at 114–15 per Fisher J; H 1976 Nominees Pty Ltd v Galli (1979) 30 ALR 181; 40 FLR 242 at 246–7 per Northrop J; Pioneer Electronics Australia Pty Ltd v Edge Technology Pty Ltd [1999] FCA 142 at [7] per Kenny J. A statement of claim which simply repeats the language of a provision of the Act, and then baldly asserts a contravention of that provision, without more, will be struck out.
41 Similar observations were also made in CFMEU v Able Demolitions & Excavations Pty Ltd [2001] FCA 1748 at [10], Seven Network Limited v News Limited [2003] FCA 388 at [21], Porter v OAMPS Ltd [2005] FCA 232 at [67], Australian Competition and Consumer Commission v April International Marketing Services Australia Pty Ltd [2007] FCA 2024 at [41].
42 However second, in recent times there has been some relaxation of this rule to take into account the complexities of modern litigation. In McKellar, Weinberg J also quoted, with approval, comments of Drummond J in Queensland v Pioneer Concrete (Qld) Pty Ltd (1999) ATPR 41–691 at paras 42,828–9 where his Honour said:
In any event, that a pleading alleges conclusions does not mean it is necessarily bad. The requirement of O 11 r 2 to plead the material facts, is subject to the established qualification to rules in this form that allows, in appropriate cases, pleading at a level of generality which excuses the failure to plead every fact material to the cause of action sued upon: Charlie Carter Pty Ltd v SDAEA (WA) (1987) 13 FCR 413 at 417; ATPR (Digest) 46–021. In Kernel Holdings Pty Ltd v Rothmans of Pall Mall (Australia) Pty Ltd (Fed C of A, 3 September 1991, unreported) French J, in dealing with a complaint that a statement of claim alleging contraventions of s 45 of the Act pleaded conclusions in terms of the section, rather than the material facts underlying them, said:
"I do not accept that the pleading of something which can be described as a conclusion cannot also be a pleading of a material fact. The real issue in a case where such an objection is raised is whether the facts are pleaded at too great a level of generality. In my opinion, the level of generality of the statement of claim in this case is too great for Rothmans to know with any precision what case it has to meet."
The modern approach to litigation in this court is not to strike out or order further particulars of a conclusionary pleading, if it appears that that is unnecessary in the circumstances of the particular case to achieve the object of pleadings: see also Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (1996) ATPR 41–522 at 42,679.
It is, in my opinion, a legitimate and necessary exercise of the controlling discretion the court has over pleadings to utilise that power to ensure that a party is not required to incur the expense of providing masses of information in its pleadings that can be seen to be unnecessary for the proper disposition of the case, even though the prima facie obligation of a party to plead all material facts necessary to make out its cause of action could be said to require that. This is not to suggest that clarity in pleading is not important. The need to focus on pleadings being used to identify the matters really in issue is particularly pressing in a complex case. But the rules of pleading do not now provide the only means for achieving this. And above all, those rules are not now intended to be an arsenal for litigation by attrition.
43 This principle was received with some caution by the Full Court in Philip Morris (Australia) Ltd v Nixon [2000] FCA 229 where Sackville J (with whom Spender and Hill JJ agreed) said:
Thus it is a well established rule that the permitted level of generality of a pleading must depend on the general subject matter and on what is required to convey to the opposite party the case that is to be met: Ratcliffe v Evans [1892] 2 QB 524 (CA). For example, in some circumstances, it may be permissible to plead a conclusion rather than the material facts underlying the conclusion: Kernel Holdings Pty Ltd v Rothmans of Pall Mall Australia Pty Ltd (French J, 3 September 1991, unreported); Queensland v Pioneer Concrete (Qld) Pty Ltd [1999] FCA 499; (1999) ATPR 41-691 (Drummond J), at 42,829. [132]
…
Whether pleadings at a relatively high level of generality are permissible will depend on the circumstances of the particular case and the stage it has reached. The facts material to the claims of each member of the represented group might not be necessary to ensure that the respondent adequately understands the case made on behalf of the represented class and has a fair opportunity to meet that case. This may be the position, for example, where representative proceedings are brought in order to provide a mechanism to enable one or more common issues of law or fact to be resolved in a manner that binds the respondent and all class members, rather than to determine finally the claims of each class member: see Federal Court Act ss 33Q, 33R. [136]
(emphasis added)
44 The comments of the Full Court in Philip Morris were considered by Lehane J in Bright v Femcare Ltd [2000] FCA 742 where his Honour observed:
It seems to me that the Full Court clearly contemplated that allegations made on behalf of group members may initially be pleaded (in an appropriate case) at a high level of generality, and that amendment of the pleading (or, possibly, successive amendments) made during the course of the proceeding will introduce greater particularity. [53]
45 Third, as a general proposition the inclusion of particulars is not a panacea for failure to plead material facts. The position was comprehensively explained by Fisher J in Trade Practices Commission v David Jones (Australia) Pty Ltd (1985) 7 FCR 109 at 112-114 where his Honour said:
Relevant authorities establish the difference between pleadings and particulars and especially establish that it is not the function of particulars to take the place of the necessary averments in a statement of claim. As Lord Justice Scott said in Pinson v Lloyds and National Provincial Foreign Bank Ltd [1941] 2 KB 72 at 75:
It is a well-recognised canon of pleading that the defendant need not, and, indeed, ought not to, plead to "particulars", whether contained in or delivered with the statement of claim. The reason for that canon is plain. All the material facts constituting the cause of action ought already to have been plainly stated in the pleading itself, as required by Order XIX, r 4, the plainest and most fundamental of all the rules of pleading. The proper function of particulars is not to state the material facts omitted from the statement of claim in order, by filling the gaps, to make good an inherently bad pleading, however common that pernicious practice may have become. On this topic I made some observations in Bruce v Odhams Press, Ltd and will not repeat them beyond saying that I still hold the opinion that it is not the function of particulars to take the place of necessary averments in the pleading. Their function is to put the opposite party on his guard and prevent him being taken by surprise at the trial of an action, the "material facts" of which should have been already averred. Nor have mere statements of evidence as such a place in particulars, any more than in the pleading, although the dividing line between statements which contain sufficient indication to prepare the opponent's mind for what he will have to meet at the trial and mere statements of evidence is sometimes hard to draw and should not invite meticulous criticism. The essential rules of modern pleading embody a common-sense view of litigation, and, if complied with substantially and in accordance with their real intention, are well calculated to keep the cost of litigation down.
Likewise in Chapple v Electrical Trades Union [1961] 3 All ER 612; 1 WLR 1290 Pennywick J said at 1292:
As regards the first ground, it is a well recognised canon of pleading that the defendant need not and, indeed, ought not to plead to particulars, whether contained in or delivered with the statement of claim. ... It seems to me that a defendant should not be required to plead to particulars merely because, on analysis, it turns out that the particulars could equally or more appropriately have been included in the body of the statement of claim.
An application to strike out a statement of claim in circumstances very similar to the present was made to Northrop J in H 1976 Nominees Pty Ltd v Galli and Apex Quarries (1979) 40 FLR 242. In that matter no material facts were pleaded in the relevant paragraph of the statement of claim which only contained conclusions of law. At 246-247 he said:
Paragraph 17 contains a conclusion drawn from facts which are not contained in the statement of claim. In order to disclose a reasonable cause of action, a statement of claim must contain statements of material facts which support the claims made. Particulars are not statements of material facts; particulars perform a different purpose. The distinction is made clear in Bruce v Odhams Press Ltd [1936] 1 KB 697, per Scott LJ at 712-713:
The cardinal provision in r 4 is that the statement of claim must state the material facts. The word "material" means necessary for the purpose of formulating a complete cause of action; and if any one "material" fact is omitted, the statement of claim is bad; it is "demurrable" in the old phraseology, and in the new is liable to be "struck out" under O XXV, r 4: see Philipps v Philipps (1878) 4 QBD 127; or "a further and better statement of claim" may be ordered under O XIX, r 7.
The function of "particulars" under r 6 is quite different. They are not to be used in order to fill material gaps in a demurrable statement of claim — gaps which ought to have been filled by appropriate statement of the various material facts which together constitute the plaintiff's cause of action. The use of particulars is intended to meet a further and quite separate requirement of pleading, imposed in fairness and justice to the defendant. Their function is to fill in the picture of the plaintiff's cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial. Consequently, in strictness, particulars cannot cure a bad statement of claim. But in practice it is often difficult to distinguish between a "material fact" and a "particular" piece of information which it is reasonable to give the defendant in order to tell him the case he has to meet; hence in the nature of the things there is often overlapping. And the practice of sometimes putting particulars into the statement of claim and sometimes delivering them afterwards either voluntarily, or upon request or order, without any reflection as to the true legal ground upon which they are to be given has become so common that it has tended to obscure the very real distinction between them.
The particulars to par 17 of the statement of claim cannot cure the defects contained in the statement of claim. With respect, I would agree with what was said by Adam J in Rubenstein v Truth and Sportsman Ltd [1960] VR 473 at 476.
The dicta of Adam J in Rubenstein's case approved by Northrop J was as follows:
Where, as in the present case, there has been a clear infringement of the rule as to stating all material facts and not merely a failure to give sufficient particulars of facts which have been pleaded (a distinction made clear by Scott, LJ, in Bruce v Odhams Press Ltd [1936] 1 KB 697, at 712-13) the preferable course, I consider, in the interests of proper pleading is to strike out the offending pleading, with liberty to amend, rather than to order particulars. As Scott, LJ, said, at p 173 of the judgment, the whole of which will repay study in this age of lax pleadings, "in strictness, particulars cannot cure a bad statement of claim".
46 Taking these principles into consideration, it is clear that the applicant has failed to plead material facts in paragraphs 7, 8, 9, 10, 37 and 38 of the FASC. The respondents are not in a position to know what case will be advanced against them, and accordingly paragraphs 7, 8, 9, 10, 37 and 38 ought be struck out. I have formed this view because:
• Where the applicant is required to establish the existence of an employment relationship, a bare claim that the employment relationship existed as alleged in paragraphs 7, 8, 9 and 10 is inadequate. The various iterations of employment relationships alleged in these paragraphs were merely conclusions, unsupported by pleaded material facts.
• In the circumstances of this case, in order to support the contention that the employees were employed by the first respondent, the second respondent, the third respondent, or any combination of one or the other, the respondents are entitled to know the applicant's allegations as to each of the necessary factual elements required to prove the existence of an employment contract, for example:
o when and how the offer of employment was made;
o by whom the offer of employment was made;
o whether the person making the offer had actual or ostensible authority to bind the person on whose behalf the offer was made;
o when the offer of employment was accepted; and
o the material terms of the contract.
• It would be appropriate for such facts to be pleaded in the FASC. They are not pleaded in any of paragraphs 7, 8, 9, 10, 37 or 38.
• This is not a case where the pleadings can tolerate a level of generality in respect of the alleged employment relationship(s). This position is underlined when one has regard to paragraphs 37 and 38, where the applicant pleads the existence of "the Employment Structure". To the extent that the existence of the Employment Structure is an integral part of the applicant's case, it is incumbent on the applicant to properly plead material facts relevant to that claim.
• Even assuming that particulars could address the failure of the applicant to plead material facts, such particulars as support the pleadings in paragraphs 7, 8, 9, and 10 are woefully inadequate, inconsistent and confusing. I have already given numerous examples of the inconsistency inherent in the attempted application of the particulars to paragraph 8 to paragraphs 7, 9 and 10, as well as the internal contradictions within paragraph 8 itself. By way of further example:
o in the particulars to paragraph 8 the applicant pleads that the relevant employees were employed by the first respondent, and that the fourth respondent (or her husband) offered the relevant employees employment with the first respondent; however
o in paragraph 9 the applicant pleads an alternative allegation that the relevant employees were employed by the first, second and third respondents. In so doing the applicant relies, inter alia, upon particulars provided in paragraph 8 as well as further particulars to paragraph 9 which are inconsistent with the particulars in paragraph 8 (for example, paragraphs 8(p) and (q), and paragraph 9(e));
o in paragraph 10 the applicant pleads the further alternative allegation that the employees were employed by the second and third respondents, to the exclusion of the first respondent, while relying on particulars which are inconsistent with that plea (for instance, particulars to paragraph 8).
• In light of clear inconsistencies, particulars of paragraph 8 cannot be applicable mutatis mutandis to paragraphs 9 and 10. Attempts to do so in paragraphs 9 and 10 render those paragraphs ambiguous to the point of nonsense.
(iii) "Purported" in paragraphs 7 and 37: "sham"
47 The respondents submit that the use of the word "purported" in paragraphs 7 and 37, without more, is embarrassing, as there is no explanation why it is said that the second and third respondents were engaged in a sham or were not labour hire companies.
48 In written submissions the applicant claims as follows:
41…It is apparent from Paragraph 7 of the Further Amended Statement of Claim, and the pleadings as a whole, that the Second and Third Respondents have sought to act as if they were labour hire companies by, amongst other things, making payments for work performed for each of the Employees. The use of the word 'purported' is appropriate in that the remainder of paragraph 7 clearly outlines that this alleged supply of labour occurred in circumstances where each of the Second and Third Respondents did not otherwise direct or control the work of the Employee and the real Employer was in fact the First Respondent. The material facts relied upon in support of this pleading are set out in the particulars to paragraph 8 of the Further Amended Statement of Claim.
42. Further, for the purposes of paragraph 37, it is clear why "the Second and Third Respondents were not labour hire companies or were engaged in a sham" in that, as pleaded in paragraph 7 these entities merely made payment for work but did not otherwise direct or control the work of the Employees and another entity, the First Respondent, was the employer.
43. In these circumstances, the pleadings as a whole clearly highlight an explanation as to why the Applicant states that the Second and Third Respondents purported to supply labour.
49 While this explanation is interesting, it does not overcome a fundamental defect of paragraphs 7 and 37, namely the absence of material facts. This defect also flows over to paragraph 38, which refers to the existence of the "Employment Structure" in paragraph 37. So:
• An allegation of sham is not only serious, but critical in the context of the applicant's claims in application.
• The respondents are entitled to be told the material facts, with appropriate particulars, supporting such an allegation.
• A claim in a pleading which requires the respondents to look through the remainder of the pleading to understand the claim, is clearly bad.
• In relation to the use of the term "purported", Mr Herbert for the fifth respondent submitted at the hearing:
On a considered analysis it does appear that an allegation that somebody purported to do something, in this context, is simply a confusing red herring. They either did it, in which case you plead they did, or they didn't do it, in which case you plead they didn't do it. But to plead some sort of middle ground saying they purported to do so has no operative effect in relation to these arrangements. It's an ineffective middle ground between they did it and they didn't do it. And it simply throws the matter into confusion. One asks rhetorically, how does a respondent plead to the notion that they purported to do something? Well, yes I did purport; no I didn't purport. (TS p 16 ll 25-32)
I agree with this analysis.
• If the applicant is actually claiming that the second and third respondents did not supply labour to the first respondent, it would be proper to so plead rather than claim there was a "purported" supply.
• The mixture of pleading a "sham" employment arrangement and a "real" employment arrangement in paragraph 37 is confusing to the point of nonsense.
• The fact that the applicant is seeking the imposition of penalties against all respondents requires a precision of pleading which is absent this aspect of the claim.
(iv) "Purported" in paragraphs 37 and 38: freedom of association allegations
50 Paragraphs 36 to 42 are described in the FASC as "The Freedom of Association Contraventions". In paragraph 36, which is not the subject of dispute in these proceedings, the applicant contends that at all material times the employees were entitled to the benefit of an industrial instrument and the Australian Pay and Classification Scale ("APCS"), being a preserved APCS within the meaning of that term given by s 208(1) of the Act which was applicable to the work. In paragraph 39 the applicant claims that the "Employment Structure" established in paragraphs 37 and 38 injured the employees in their employment, or alternatively resulted in an alteration of the position of the employees to their prejudice, within the meaning of s 792(1)(b) and (c) of the Act. Section 792(1) provides, in summary, that an employer must not, for a prohibited reason, do or threaten to do any of the following:
(a) dismiss an employee;
(b) injure an employee in his or her employment;
(c) alter the position of an employee to the employee's prejudice;
(d) refuse to employ another person as an employee;
(e) discriminate against another person in the terms or conditions on which the employer offers to employ the other person as an employee.
51 Section 792(1) is a civil remedy provision.
52 In summary, the respondents challenge paragraphs 37 and 38 in respect of the use of the word "purported" in both paragraphs in relation to the freedom of association allegations, although Mr Herbert for the fifth respondent also submitted at the hearing (with justification) that an "employment structure" cannot injure or alter the position of an employee.
53 The applicant provided detailed submissions as to the meaning of s 792(1) of the Act. The key contention of the applicant is that:
• due to the creation of the Employment Structure the employees have not been paid overtime in accordance with the APCS and the Notional Agreement Preserving State Award (NAPSA) under the Act, and as a result suffered a loss of pay that puts them in a worse position than if the Employment Structure had not been established; and
• the result remains the same whether the Court finds that the Employment Structure was validly created or merely purported to be established.
54 A fundamental problem with this submission, however, is that, contrary to the submission of the applicant, the result is not the same as between the "real" position and the "purported" position as alleged by the applicant. In my view the entire analysis as presented by the applicant is afflicted by a fundamental flaw: the interposition of the word "purported" throws into confusion claims that the actions of the relevant employers constituted conduct in breach of s 792. So, for example, it is difficult as a matter of principle to identify how the second and third respondents injured or caused an alteration in the position of the employees as subsequently pleaded in paragraph 39 if:
the second and third respondents did not actually supply labour or employ the employees as contemplated by paragraph 37(a) and (b); or
the Employment Structure was ineffective because the second and third respondents only "purported" to create it (leaving the applicant to then identify what the actual employment arrangements were and how the employees were adversely affected).
55 This confusion is not assisted by the submission of the applicant that the result is the same if the Employment Structure was "merely purported to be established" (which gives rise to a curious outcome, when the applicant has also contended that the Employment Structure was itself characterised by purported conduct on behalf of the second and third respondents).
56 In my view, paragraphs 37 and 38 do not plead a case the respondents can properly answer. They are embarrassing, and ought be struck out.
Summary
57 For the reasons I have given paragraphs 7, 8, 9, 10, 37 and 38 should be struck out.
2. Paragraphs 20, 24, 25, 26 and 30
58 The respondents submit that these paragraphs ought be struck out as embarrassing because, in summary, the applicant fails to allege a material fact and fails to plead a complete cause of action.
59 The relevant paragraphs read as follows:
20. In breach of the AFPCS each of the First Respondent or alternatively the First Respondent, Second Respondent and Third Respondent or alternatively the Second Respondent and the Third Respondent failed to pay each of the Employees listed at Schedule 1 at least the guaranteed basic periodic rate of pay payable under the APCS for each of the Employees' guaranteed hours of work (the underpayment of wages for ordinary hours breaches).
Particulars
(i) The ordinary hours worked by each Employee are particularised in Schedule 3 to this Statement of Claim.
(ii) The hourly rate that the First Respondent or alternatively the First Respondent, Second Respondent and Third Respondent or alternatively the Second Respondent and Third Respondent was/were required to pay the Employees engaged on a casual basis listed in Schedule 1 for fruit and vegetable employees performing the tasks and duties for each hour he/she was required to work was:
| Date | Adult Rate | Junior Rate (18-19 years old) |
| 27/3/06 to 30/11/06 | $14.90 | $11.17 |
| 1/12/06 to 30/09/07 | $16.57 | $12.43 |
| 1/10/07 to 30/09/08 | $16.90 | $12.68 |
(iii) The First Respondent or alternatively the First Respondent, Second Respondent and Third Respondent or alternatively the Second Respondent and Third Respondent did not pay the Employees listed at Schedule 1 of this Statement of Claim in accordance with the APCS.
(iv) The First Respondent or alternatively the First Respondent, Second Respondent and Third Respondent or alternatively the Second Respondent and Third Respondent paid the Employees less than the required minimum hourly rate of pay as required by the APCS for the hours recorded as worked by the Employees.
24. In the alternative to paragraph 22 and 23, by operation of clause 6.4.2 of the NAPSA the Second Respondent and Third Respondent were jointly and severally required to pay each of the Employees at least the overtime rate of pay for hours worked in excess of 40 hours in any seven days.
25. In breach of clause 6.4.2 of the NAPSA each of the First Respondent or alternatively the First Respondent, Second Respondent and Third Respondent or alternatively the Second Respondent and the Third Respondent failed to pay each of the Employees listed at Schedule 1 at least the overtime rate of pay for hours worked in excess of 40 hours in any seven days (the failure to pay overtime breaches).
Particulars
(a) The overtime hours worked by each Employee are particularised in Schedule 3 to this Statement of Claim.
(b) Clause 6.4.2 of the NAPSA required that overtime be paid for at the rate of time and a half for the first three hours and double the ordinary rate of pay thereafter.
(c) The overtime rate that the First Respondent or alternatively the First Respondent, Second Respondent and Third Respondent or alternatively the Second Respondent and Third Respondent was/were required to pay the Employees engaged on a casual basis listed in Schedule 1 for fruit and vegetable employees performing the tasks and duties for each hour he/she was required to work in excess of 40 hours in any seven days was:
| Date | Adult Rate (150% - first 3 hours)* | Adult Rate (200%)* | Junior Rate (18-19 years old) (150% - first 3 hours)* | Junior Rate (18-19 years old) (200%)* |
| 27/3/06 to 30/11/06 | $20.95 | $27.01 | $15.71 | $20.25 |
| 1/12/06 to 30/09/07 | $23.30 | $30.04 | $17.48 | $22.53 |
| 1/10/07 to 30/09/08 | $23.77 | $30.64 | $17.83 | $22.98 |
* rounded to two decimal places.
(d) The First Respondent or alternatively the First Respondent, Second Respondent and Third Respondent or alternatively the Second Respondent and Third Respondent did not pay the Employees listed at Schedule 1 of this Statement of Claim in accordance with clause 6.4.2 of the NAPSA.
(e) The First Respondent or alternatively the First Respondent, Second Respondent and Third Respondent or alternatively the Second Respondent and Third Respondent paid the Employees less than the required overtime hourly rate of pay as required by the NAPSA for the overtime hours recorded as worked by the Employees.
26. In consequence of the failure to pay overtime breaches, each of the Employees was underpaid the amounts set out in Schedule 1 to this Statement of Claim.
30. In breach of clauses 7.6.1, 7.6.2 and 7.6.3 of the NAPSA each of the First Respondent or alternatively the First Respondent, Second Respondent and Third Respondent or alternatively the Second Respondent and the Third Respondent failed to pay each of the Employees listed at Schedule 1 at least the penalty rate of pay for hours worked by an employee on each of the public holidays (the failure to pay public holiday penalty rates breaches).
Particulars
(a) The public holidays worked by each employee is particularised in Schedule 2 to this Statement of Claim.
(b) Clause 7.6.1 of the NAPSA required that all work done by an employee on all the public holidays, save for Labour Day, will be paid for at the rate of double time and a half with a minimum of four hours pay.
(c) Clause 7.6.2 of the NAPSA provides that all employees covered by the NAPSA are entitled to be paid a full day's wage for Labour Day irrespective of the fact that no work is performed, and if any employee concerned actually works on Labour Day, such employee will be paid a full day's wage for that day in addition to a payment for the time actually worked at one and a-half times the ordinary rate prescribed for such work with a minimum of four hours pay.
(d) The public holiday penalty rate that the First Respondent or alternatively the First Respondent, Second Respondent and Third Respondent or alternatively the Second Respondent and Third Respondent was/were required to pay the Employees engaged on a casual basis listed in Schedule 1 for fruit and vegetable employees performing the tasks and duties for each hour he/she was required to work on the public holidays was:
| Date | Adult Rate (250%)* | Junior Rate (18-19 years old) 250%)* |
| 27/3/06 to 30/11/06 | $33.06 | $24.80 |
| 1/12/06 to 30/09/07 | $36.77 | $27.58 |
| 1/10/07 to 30/09/08 | $37.51 | $28.13 |
* rounded to two decimal places.
(e) The First Respondent or alternatively the First Respondent, Second Respondent and Third Respondent or alternatively the Second Respondent and Third Respondent did not pay the Employees listed at Schedule 1 of this Statement of Claim in accordance with clauses 7.6.1, 7.6.2 and 7.6.3 of the NAPSA.
(f) The First Respondent or alternatively the First Respondent, Second Respondent and Third Respondent or alternatively the Second Respondent and Third Respondent paid the Employees less than the required public holiday penalty hourly rate of pay as required by the NAPSA for the public holiday hours recorded as worked by the Employees.
(tracked changes incorporated)
Do these paragraphs plead a completed cause of action?
60 In summary, the respondents submit:
In order to make out a claim for underpayment it is necessary to identify and make findings on the facts relevant to that underpayment.
In the present case it would be necessary to identify the employer, the applicable industrial instrument, the employees involved, the times the employees worked and for whom, and by applying those facts, calculate any underpayment which might arise.
The difficulty with these paragraphs in the FASC is that they do not at any point identify which employer, even by way of alternative allegations, employed the employees at which time. Accordingly, whether there was an underpayment cannot be determined.
it is unclear on a reading of the FASC whether there is an allegation that sometimes the employment was consecutive and sometimes concurrent.
it appears from the applicant's outline of submissions that it is not submitted at all by the applicant that the employment of the various employees was ever consecutive.
however, if there is an allegation that there were different employers at different times, the dates and times in which the employees worked is not clear.
To that extent no completed cause of action in respect of the underpayments is pleaded.
The pleading is incomplete and confusing.
61 The applicants rejects the assertion that paragraphs 20, 24, 25, 26 and 30 of the FASC fail to identify which employer employed the employees at which time. In particular, the applicants submit:
Paragraph 8 pleads that "at various times between 27 November 2005 and 15 July 2007 the First Respondent employed each of the Employees…". Paragraph 8 identifies the employer and the time period in which the employees were employed.
Paragraph 9 pleads in the alternative that "at various times between 27 November 2005 and 15 July 2007 the First, Second and Third Respondents employed each of the Employees…". Paragraph 9 identifies the employer and the time period in which the employees were employed.
Paragraph 10 pleads in the alternative that "at various times between 27 November 2005 and 15 July 2007 the Second and Third Respondents employed each of the Employees…". Paragraph 10 identifies the Employer and the time period in which the Employees were employed.
The hours worked by each Employee are particularised in Schedule 3 to the Statement of Claim.
Consideration
62 For reasons I have already given, paragraphs 7, 8, 9 and 10 are ineffective to plead an employment relationship between the first, second and/or third respondents or any combination of these parties, and the relevant employees. To that extent, contrary to the submissions of the applicant, those paragraphs do not support the claims of the applicant in respect of paragraphs 20, 24, 25, 26 and 30.
63 More particularly however, the respondents complain that no completed cause of action in respect of the underpayments is pleaded in respect of the FASC. Notwithstanding the detailed nature of paragraphs 20, 24, 25, 26 and 30 of the FASC this complaint has merit.
64 In Warramunda Village v Pryde (2001) 105 FCR 437 the Full Court considered, inter alia, the application of s 178(1) of the Act. In its form at the time of consideration by the Full Court, s 178(1) provided that where an organisation or person bound by an award, an order of the Commission or a certified agreement breached a term of the award, order or agreement, a penalty might be imposed by the Court. Section 719(1), which is the basis of allegation in the FASC, is in similar terms to the version of s 178(1) considered by the Full Court in Warramunda Village v Pryde.
65 In considering this provision, the Court observed:
As a step towards the exercise of the jurisdiction, it is obviously necessary to determine whether any breach of any term of an award has occurred. It may be necessary to determine the proper construction of the term of the award. It will almost certainly be necessary to make findings of fact. In a case such as the present, those findings must include findings as to the circumstances in which particular persons performed work for their employer on particular days and the amount or amounts they were paid in respect of that performance of work. It can then be determined, by reference to specific terms of the award concerned whether the person concerned should have been paid some other amount, by way of overtime rate, or specific rate fixed for a Saturday, Sunday or public holiday, pursuant to a particular term of an award. The amended statement of claim did not seek to deal with the application in this way. It attempted to plead the alleged under-payments in a global sense, referring only to numbers of days worked that were Saturdays, Sundays or public holidays, and not specifying any particular breach in respect of any particular day. (emphasis added)
66 It seems to me that the comments of the Full Court are generally relevant to the case before me. The applicant seeks the imposition of penalties under s 719 against each respondent for breaches of s 182(1) of the Act and the NAPSA. In seeking the imposition of penalties, the applicant is required to plead material facts relevant to its claims that s 182(1) and the NAPSA have been breached. Paragraphs 20, 24, 25, 26 and 30 constitute the basis of the applicant's claim that employees were underpaid their proper entitlements.
67 However in order for the applicant to substantiate such a case, it must plead material facts in support. Putting to one side for the moment apparent defects in the pleading, as a general proposition it appears from paragraphs 37 and 38 of the FASC that the applicant seeks to allege an arrangement of consecutive employment of the employees by various of the respondents, and underpayment of the relevant employees as a result of that arrangement. However:
Paragraph 20 does not plead material facts supporting a claim that the employees have been underpaid by the respective respondents. The particulars to paragraph 20 refer only to pay rates in general, and do not, for example, refer to rates payable by particular employers at particular times for particular duties and particular hours of work. Further, paragraphs 20(iii) and (iv) plead material in the nature of allegations, which are inappropriate to particulars.
Paragraphs 24 and 25 do not plead material facts supporting a claim of overtime. The particulars to paragraph 25 plead only rates of pay in general. Further, paragraphs 25(d) and (e) plead material in the nature of allegations, which are inappropriate to particulars.
Paragraph 26 pleads a conclusion not supported by other paragraphs in the FASC.
Paragraph 30 does not plead material facts supporting a claim that the employees have been underpaid in respect of hours worked on public holidays. The particulars to paragraph 30 refer only to the obligation under the NAPSA to pay penalty rates on public holidays. Paragraph 30(f) pleads material in the nature of an allegation, which is inappropriate to particulars.
68 It follows that, in respect of paragraphs 20, 24, 25, 26 and 30, no completed cause of action in respect of the underpayments is pleaded, and they ought be struck out.
3. Paragraphs 11(b), 11(c), 12, 18, 19, 20, 23, 24 and 25
69 The respondents submit, in summary, that in paragraphs 11(b), 11(c), 12, 18, 19, 20, 23, 24 and 25 the applicant advances a case which cannot succeed on the law as it stands. These paragraphs provide as follows:
11. At all material times when engaged to perform work within the Business, each of the Employees was an employee, within the meaning of that term as defined by the WR Act, of either:
…
(b) alternatively, both the First Respondent, Second Respondent and Third Respondent; or
(c) alternatively, both the Second Respondent and Third Respondent.
Particulars
(a) The Applicant repeats and relies upon the matters particularised at paragraphs 8, 9 and 10 herein.
12. Each of the Employees, was employed by the First Respondent or alternatively the First, Second and Third Respondents or alternatively the Second and Third Respondents to work in the packing shed at the Premises. Each of the Employees, save for Mr Gordon Falconer who was engaged as a forklift driver, packed fruit and vegetables for supply to customers of the First Respondent (the work).
18. In the alternative to paragraph 17, by operation of s.182(1) of the WR Act the First Respondent, Second Respondent and Third Respondent were jointly and severally required to pay each of the Employees at least the guaranteed basic periodic rate of pay payable under the APCS for each of the Employees' guaranteed hours of work.
19. In the alternative to paragraph 17 and 18, by operation of s.182(1) of the WR Act the Second Respondent and Third Respondent were jointly and severally required to pay each of the Employees at least the guaranteed basic periodic rate of pay payable under the APCS for each of the Employees' guaranteed hours of work.
20. In breach of the AFPCS each of the First Respondent or alternatively the First Respondent, Second Respondent and Third Respondent or alternatively the Second Respondent and the Third Respondent failed to pay each of the Employees listed at Schedule 1 at least the guaranteed basic periodic rate of pay payable under the APCS for each of the Employees' guaranteed hours of work (the underpayment of wages for ordinary hours breaches).
Particulars
(i) The ordinary hours worked by each Employee are particularised in Schedule 3 to this Statement of Claim.
(ii) The hourly rate that the First Respondent or alternatively the First Respondent, Second Respondent and Third Respondent or alternatively the Second Respondent and Third Respondent was/were required to pay the Employees engaged on a casual basis listed in Schedule 1 for fruit and vegetable employees performing the tasks and duties for each hour he/she was required to work was:
| Date | Adult Rate | Junior Rate (18-19 years old) |
| 27/3/06 to 30/11/06 | $14.90 | $11.17 |
| 1/12/06 to 30/09/07 | $16.57 | $12.43 |
| 1/10/07 to 30/09/08 | $16.90 | $12.68 |
(iii) The First Respondent or alternatively the First Respondent, Second Respondent and Third Respondent or alternatively the Second Respondent and Third Respondent did not pay the Employees listed at Schedule 1 of this Statement of Claim in accordance with the APCS.
(iv) The First Respondent or alternatively the First Respondent, Second Respondent and Third Respondent or alternatively the Second Respondent and Third Respondent paid the Employees less than the required minimum hourly rate of pay as required by the APCS for the hours recorded as worked by the Employees.
23. In the alternative to paragraph 22, by operation of clause 6.4.2 of the NAPSA the First Respondent, Second Respondent and Third Respondent were jointly and severally required to pay each of the Employees at least the overtime rate of pay for hours worked in excess of 40 hours in any seven days.
24. In the alternative to paragraph 22 and 23, by operation of clause 6.4.2 of the NAPSA the Second Respondent and Third Respondent were jointly and severally required to pay each of the Employees at least the overtime rate of pay for hours worked in excess of 40 hours in any seven days.
25. In breach of clause 6.4.2 of the NAPSA each of the First Respondent or alternatively the First Respondent, Second Respondent and Third Respondent or alternatively the Second Respondent and the Third Respondent failed to pay each of the Employees listed at Schedule 1 at least the overtime rate of pay for hours worked in excess of 40 hours in any seven days (the failure to pay overtime breaches).
Particulars
(a) The overtime hours worked by each Employee are particularised in Schedule 3 to this Statement of Claim.
(b) Clause 6.4.2 of the NAPSA required that overtime be paid for at the rate of time and a half for the first three hours and double the ordinary rate of pay thereafter.
(c) The overtime rate that the First Respondent or alternatively the First Respondent, Second Respondent and Third Respondent or alternatively the Second Respondent and Third Respondent was/were required to pay the Employees engaged on a casual basis listed in Schedule 1 for fruit and vegetable employees performing the tasks and duties for each hour he/she was required to work in excess of 40 hours in any seven days was:
| Date | Adult Rate (150% - first 3 hours)* | Adult Rate (200%)* | Junior Rate (18-19 years old) (150% - first 3 hours)* | Junior Rate (18-19 years old) (200%)* |
| 27/3/06 to 30/11/06 | $20.95 | $27.01 | $15.71 | $20.25 |
| 1/12/06 to 30/09/07 | $23.30 | $30.04 | $17.48 | $22.53 |
| 1/10/07 to 30/09/08 | $23.77 | $30.64 | $17.83 | $22.98 |
* rounded to two decimal places.
(d) The First Respondent or alternatively the First Respondent, Second Respondent and Third Respondent or alternatively the Second Respondent and Third Respondent did not pay the Employees listed at Schedule 1 of this Statement of Claim in accordance with clause 6.4.2 of the NAPSA.
(e) The First Respondent or alternatively the First Respondent, Second Respondent and Third Respondent or alternatively the Second Respondent and Third Respondent paid the Employees less than the required overtime hourly rate of pay as required by the NAPSA for the overtime hours recorded as worked by the Employees.
70 In summary the respondents submit:
Paragraphs 11(b) and (c) allege in effect that the named respondents jointly employed each of the employees.
In order for the applicant to succeed in any argument that the respondents were jointly and severally liable to make payments in relation to wages and other benefits (as alleged by paragraphs 18 and 19) it must show that they are jointly employers of the relevant employees.
There is no recognised doctrine of joint employment known to Australian law other than in circumstances where the entitlements of the employee to the respective employers are sequential, and not parallel, in time and effect.
Further, the applicant has not pleaded any material facts which would support a contention that all or any of the respondents had contracted with the employees in terms that created parallel obligations and responsibilities of a "joint and several" nature.
71 The applicants submit in summary:
There is Australian authority that there is no barrier to "joint employment".
The doctrine of joint employment is well established in labour law in the United States of America.
The respondents are incorrect in asserting that material facts have not been pleaded to support a contention of joint employment. Paragraphs 9 and 10 plead the manner in which the joint employment arose.
Consideration
72 The question whether joint employment is a valid concept in this country has not been the subject of decisive consideration by an Australian court. In Damevski v Giudice (2003) 133 FCR 438 at [76] Wilcox J said:
There are a few recent examples of cases concerning labour hire arrangements in which either contractual relationships have been found between a worker and a "host employer", or where the concept of dual employment has been entertained: see Nguyen v ANT Contract Packers Pty Ltd (2003) 128 IR 241; Morgan v Kittochside Nominees Pty Ltd (2002) 117 IR 152; Bianchi v Staff Aid Services (2003) (unreported, AIRC, Lewin C, 12 September 2003).
73 However neither his Honour nor the other members of the Full Court in that case made any findings as to the existence of multiple employers in those circumstances.
74 Similarly in Lafrenais v Estate of Heaton-Harris [2006] ACTSC 22 Connolly J said:
19. The real question is for whom did he work? Mr Maxwell, for the plaintiff, in his written submissions, floated the possibility that the Australian common law may recognise the concept of multiple employers of the one worker at the one time. Joint employment is an interesting concept that has been recognised as forming part of American law. (R Cullen, A Servant of Two Masters? The Doctrine of Joint Employment in Australia (2003) 16 AJLL 359.) There have been references to the possible application of the doctrine to an appropriate factual basis in Australia in decisions of the Full Bench of the Australian Industrial Relations Commission in Morgan v Kittochside Nominees Pty Ltd (2002) 117 IR 152 and the New South Wales Industrial Commission in Nguyen v ANT Contract Packers Pty Ltd [2003] NSWIR 1006. Mr Maxwell acknowledged, however, that neither decision went so far as to make a finding of joint employment. In an increasingly deregulated labour market, with labour hire companies and seemingly increasing efforts to create a situation where day labourers are structured as independent contractors, this doctrine may need to be further considered in Australia, but, it seems to me, that it is unnecessary for me to go so far in this case.
75 In circumstances where there are multiple possible employers of a person, the traditional approach of the Courts is to endeavour to determine which is the actual employer, by applying principles developed for determining whether there is an employment relationship: Pitcher v Langford (1991) 23 NSWLR 142, Finance Sector Union of Australia v Commonwealth Bank of Australia [2001] FCA 1613 at [60]-[61]. More specifically in In the matter of C&T Grinter Transport Services Pty Ltd (In Liquidation) [2004] FCA 1148 Finn J explained relevant principles as follows:
20 The principles to be applied in the identification of the employer of an employee where there are two or more possible employers, are reasonably well settled. For present purposes I would note the following:
(1) A contract of service cannot be transferred by one employer to another or novated as between them without the employee's consent: Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014; Re Coogi Nominees Pty Ltd (Administrators appointed); McCluskey v Karagiosis [2002] FCA 1137; (2002) 120 IR 147. Questions of estoppel apart: Smith v Blandford Gee Cementation Co Ltd [1970] 3 All ER 154; the employee's consent must be a real one whether express or implied and is "not to be raised by operation of law": Denham v Midland Employers Mutual Assurance Ltd [1955] 2 QB 437 at 443.
(2) The totality of the circumstances surrounding the relationships of the various parties including conduct subsequent to the creation of an alleged employment relationship is relevant to the assessment to be made: Romero v Auty (2001) 19 AGLC 206 at [10] and [42]-[44].
(3) Documentation created by one or more of the parties describing or evidencing an apparent employment relationship will be relevant to, but not necessarily determinative of, the true character of that relationship: Pitcher v Langford (1991) 23 NSWLR 142; Marrs Fabrics Pty Ltd & Nathan Wholesale Fabrics Pty Ltd v Whipps (1991) 33 AILR 167. In determining the identity of a disputed employer, the Court is entitled to consider "the reality of purported contractual arrangements": Dalgety Farmers Ltd t/a Grazcos v Bruce, NSWCA, 3 August 1995. The documentation may have been brought into existence for other purposes, for example, tax minimisation or the reduction of insurance premiums, without reflecting the reality of the parties relationship: ibid; Pitcher v Langford, at 149; Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449 at 454.
(4) Conversations and conduct at the time of the alleged engagement of the employee is of considerable significance: Romero, at [9]. The beliefs of the employees as to the identity of their employer is admissible and is entitled to weight: Pitcher v Langford.
(5) In cases of the engagement of new employees to work in a business in which a number of separate corporate entities participate otherwise than as partners:
"... it was open to those controlling the business to select which company should be the employer provided that the selection was consistent with the financial and administrative organisation of the business and was not otherwise a sham."
See Textile Footwear and Clothing Union of Australia v Bellechic Pty Ltd, FCA, Ryan J, 19 November 1998.
76 See also Edmonds J in Gothard, in the matter of AFG Pty Limited (Receivers and Managers appointed) (in liq) v Davey [2010] FCA 1163 at [52] et seq.
77 However the possibility of joint employment was explored by the Full Bench of the Australian Industrial Relations Commission in Morgan v Kittochside Nominees Pty Ltd (2002) 117 IR 152. In that case the Commissioners said:
[72] There is an alternative but more novel path of reasoning to a similar conclusion. Our directions of 6 February 2002, requiring written submissions, drew the parties' attention to an aspect of the issue to be determined. We canvassed our view about questions of jurisdiction raised by the appeal. The construction of section 170CB was one such question. Another was the construction and application of the notion of "employee" in circumstances involving joint engagement by a labour service provider and a client contractor exercising control over work performed. We took that step so that the parties in their submissions might have the opportunity to canvass issues about whether the employment of Ms Morgan in the circumstances of the case could be considered to be a joint employment by Kittochside and Mr Reid trading as Northam Pharmacy. That invitation attracted no substantive response.
[73] So far as we are aware, the notion of joint employment has thus far not been the subject of rulings or dicta by any Australian court. The compatibility of the notion with the common law concept of employment based on the master servant relationship is therefore moot.
[74] The doctrine of joint employment, or of joint employers, is well established in labour law in the United States. It appears to have been a response to the use of labour hire arrangements by employers in circumstances that conduced to an avoidance of labour regulation and employee protections:
"Before assessing liability for violations of the NLRA (National Labour Relations Act) in temporary employment relationships, the NLRB will seek to determine whether the temporary service provider and client employer are 'joint employers' under the Act. Applying the standard enunciated by the Supreme Court in Boire v. Greyhound Corp., [1964] USSC 49; 376 U.S. 473 (1964), the question of 'joint employer' status is a factual issue and requires examination into whether the employer that is alleged to be a joint employer (the client employer) possesses sufficient control over the work of the employees at issue to qualify as a joint employer with the actual employer (the temporary service provider). Under this standard:
[W]here two or more employers exert significant control over the same employees - where from the evidence it can be shown that they share or co-determine those matters governing essential terms and conditions of employment - they constitute 'joint employers' within the meaning of the NLRA. [NLBR v. Browning-Ferris Indus., [1982] USCA3 1083; 691 F. 2d 1117 (wd Cir. 1982); see also, TIJ, Inc., 271 NLRB 798 (1984).
At the outset, it should be noted that 'joint employers' are businesses that are entirely separate legal entities, although both `take part in determining essential terms and conditions of employment of the group of employees [See Capitol EMI Music, 311 NLRB 997 (1993). In that case the National Labour Relations Board held the temporary service provider and client employer to be joint employers because they shared and codetermined the essential terms and conditions of employment of temporary employees. The temporary employment agency negotiated the wage rates of its temporary employees assigned to Capitol, while Capitol's supervisors assigned all work and supervised the temporary employees, effectively disciplined the temporary employees, and made effective recommendations concerning the firing and discharge of the temporary employees]. Thus, joint employer relationships are found where, despite the absence of common ownership, one entity effectively and actively participates in the control of labor relations and working conditions for employees of the other entity [Goodyear Tire & Rubber Co., 312 NLRB 674 (1993)].
The Board has defined 'essential terms and conditions of employment' as those involving such matters as hiring, firing, discipline, supervision, and direction of employees [Ibid Goodyear Tire at 676]. Moreover, the presence of an operational control clause in a temporary services agreement - that is, a clause that gives one employer the sole and exclusive right to direct the temporary employees - is not, in and of itself, conclusive evidence of joint employer status [Ibid]. Rather, to establish joint employer status, there must be a showing that the employer meaningfully affects essential terms and conditions of employment of the temporary employees' employment, and that its involvement is more than minimal or routine [LAERCO transportation 269 NLRB (1984)]."
[75] It is not necessary for us to further explore the compatibility of a joint employer principle with, or its applicability to, the employment relationship that exists between Ms Morgan, Kittochside and Mr Reid trading as Northam Pharmacy. Were it necessary to do so, we would incline to the view that no substantial barrier should exist to accepting that a joint employment relationship might be found and given effect for certain purposes under the Act.
(footnotes omitted)
78 To the extent that the applicant's case is that the first, second and third respondents (or alternatively the second and third respondents) jointly employed the relevant employees, the cause of action is novel, but in my view not unknown to law. As the applicant submits, it is a cause of action entertained by US law. It has also been entertained, although not considered and decided, in such cases as Morgan v Kittochside Nominees Pty Ltd (2002) 117 IR 152, and subsequently Nguyen v A-N-T Contract Packers Pty Ltd [2003] NSWIRComm 1006, Bianchi v Staff Aid Services [2003] AIRC 1150 and Savage v Department of Education [2004] AIRC 552. While traditionally, in circumstances where multiple entities are alleged to be "the employer" of a person, the approach of the Courts of this country has been to seek to identify which one of those entities is the employer, a claim that multiple entities perform that role is not unarguable or unintelligible (contrast for example findings in Stergiou v Phelps [1999] FCA 1563, Walsh v University of Technology, Sydney [2007] FCA 1288 and Kowalski v Mitsubishi Motors Australia Ltd [2010] FCAFC 73) or so obviously futile or manifestly groundless on the state of the law that it discloses no reasonable cause of action within the meaning of O 11 r 16(1) (General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129, contrast for example the decision of the Full Court Allstate Life Insurance Co). There is, in my view, scope in Australian law for a claim that multiple entities can jointly employ a person. Whether such a claim can be substantiated, either on particular facts or on the law following proper argument at a hearing, is a different question. However I consider it would be premature to find at this stage of the proceedings that the applicant's claims in paragraphs 11(b), 11(c), 12, 18, 19, 20, 23, 24 and 25 should be struck out as disclosing no cause of action known to law.
79 A separate question however is whether the applicant has pleaded material facts to support a claim that the relevant employees were jointly employed by the first second and third respondents or alternatively by the second and third respondents. I am not satisfied that this is the case:
The applicant relies on paragraphs 9 and 10. However I have already found that the applicant does not, in paragraphs 9 and 10, plead material facts which support the existence of an employment relationship as claimed. This flaw in the claims presented by the respondents in paragraphs 9 and 10 becomes even more acute when the allegation is of joint employment.
Although in paragraphs 18, 19, 23 and 24 the applicant contends that the respondents were jointly and severally required to pay relevant rates, no facts are pleaded which supports contentions of joint and several liability. It is insufficient for the applicant to simply contend the existence of joint and several liability without pleading a case the respondents can meet. As Mr Friend SC submitted during the hearing, if there is joint employment, and joint and several liability in respect of industrial instruments, presumably there is also joint and several liability in respect of, for example, workplace accidents, insurance, workers' compensation, common law rights, and payroll tax. No facts are pleaded which could support a relationship giving rise to such obligations.
The lack of clarity in the FASC in respect of the contention as to joint employment, and the absence of material facts pleaded, means that, for example, it is unclear:
whether the applicant contends there is an employment contract between each relevant employee and each of the employers separately;
whether there is a contract between each relevant employee and the two or three employers (depending on the contention); or
whether the applicant claims that each alleged employer had different rights or obligations in the employment structure.
The confusion inherent in the FASC is not assisted by such particulars as that found in paragraph 8(x), which provides that:
The Employees had no involvement or contact with either the Second Respondent or Third Respondent, or any representatives of the Second Respondent or Third Respondent, in relation to their hiring, their daily duties, their discipline, their terms and conditions of employment or their termination of employment. (emphasis added)
This is particularly relevant in that while paragraph 8(x) refers to common incidents of employment, the applicant in paragraphs 9 and 10 repeats and relies upon matters particularised in paragraph 8 (including paragraph 8(x)) as support for the contention that the employees had an employment relationship with the second and third respondents. This is, confusingly, contrary to the concept that hiring, daily duties, discipline, terms and conditions of employment, and termination of employment are essential indicia of employment over which an employer has control in respect of an employment relationship (cf Morgan v Kittochside Nominees Pty Ltd at [74]).
80 The absence of material facts pleaded in support of the contentions in paragraphs 11(b), 11(c), 12, 18, 19, 20, 23, 24 and 25 means that those paragraphs are embarrassing, and ought be struck out.
Paragraphs 21, 32, 33, 34, 39, 40, 41 and 42
81 As the operation of paragraphs 21, 32, 33, 34, 39, 40, 41 and 42 are dependent upon other paragraphs which, in my view, ought be struck out, it follows that paragraphs 21, 32, 33, 34, 39, 40, 41 and 42 should also be struck out.
Paragraphs 17, 28, 29, 45 and 46
82 Other than a brief reference to paragraph 17 at the hearing (TS p 10 ll 25-28), these paragraphs of the FASC were not addressed in written or oral submissions. In the notices of motion however the respondents sought orders that they be struck out. In the absence of a clear abandonment of their claims in respect of these paragraphs, I infer that the respondents continue to press for striking out orders.
83 In the absence of submissions, I make the following observations in respect of these paragraphs.
Paragraph 17
84 Paragraph 17 provides as follows:
17. By operation of s. 182 (1) of the WR Act the First Respondent was required to pay each of the Employees at least the guaranteed basic periodic rate of pay payable under the APCS for each of the Employees' guaranteed hours of work.
Particulars
(i) Section 183 of the WR Act sets out an employee's guaranteed hours of work for the purposes of section 182 of the WR Act.
(ii) By section 183 (5) of the WR Act the guaranteed hours for the Employees were the ordinary hours worked by each Employee.
(iii) The ordinary hours worked by each Employee are particularised in Schedule 3 to this Statement of Claim.
85 Paragraph 17 pleads a claim and material facts with appropriate supporting particulars. I do not consider an order to strike out paragraph 17 warranted.
Paragraphs 28 and 29
86 Paragraphs 28 and 29 provide as follows:
28. In the alternative to paragraph 27, by operation of clauses 7.6.1, 7.6.2 and 7.6.3 of the NAPSA the First Respondent, Second Respondent and Third Respondent were jointly and severally required to pay each of the Employees at least the penalty rate of pay for hours worked by an employee on each of the public holidays.
29. In the alternative to paragraph 27 and 28, by operation of clauses 7.6.1, 7.6.2 and 7.6.3 of the NAPSA the Second Respondent and Third Respondent were jointly and severally required to pay each of the Employees at least the penalty rate of pay for hours worked by an employee on each of the public holidays.
87 For the same reasons I have already given in respect of paragraphs 11(b), 11(c), 12, 18, 19, 20, 23, 24 and 25, I consider that paragraphs 28 and 29 should be struck out.
Paragraphs 45 and 46
88 Paragraphs 45 and 46 provide as follows:
45. By virtue of the matters pleaded at paragraphs 17 to 31, 36 to 41, 43 and 44 herein, the Fourth Respondent:
(a) was knowingly concerned in or party to each of the Contraventions and the Freedom of Association Contraventions;
(b) conspired with the Fifth Respondent to effect the Contraventions and the Freedom of Association Contraventions.
46. By reason of the matters referred to in paragraph 45, the Fourth Respondent:
(a) was involved in each of the Contraventions and the Freedom of Association Contraventions within the meaning of section 728 of the WR Act; and
(b) is treated as having herself contravened section 792(1) of the WR Act, the APCS and the NAPSA in relation to each of the Freedom of Association Contraventions and the Contraventions.
Particulars
A person who is 'involved in' a contravention of a civil remedy provision is treated by subsection 728(1) of the WR Act as having contravened that provision. 'Involved in' is defined in subsection 728(2) of the WR Act.
89 Paragraph 45 is clearly dependent upon many other paragraphs in the FASC, which I have ordered struck out. Paragraph 46 is, in turn, dependent upon paragraph 45.
90 It follows that paragraphs 45 and 46 should also be struck out.
Conclusion
91 In Nulyarimma v Thompson [1999] FCA 1192 at [208] the Full Court adopted the following comments of Kirby J in Thorpe v Commonwealth [No 3] [1997] HCA 21:
Setting aside, striking out, summarily dismissing or permanently staying proceedings of a litigant who has come to a court of law, are self-evidently serious steps. They are to be reserved to a clear case. If there is any doubt, a court should err on the side of allowing the claim to proceed.
92 In this case, I consider that there is no doubt. Notwithstanding the gravity of the consequences of the striking out orders in this case, it is very clear that the paragraphs of the FASC in its current form, which I have ordered struck out, do not present a case which the respondents are able to meet.
93 In Nulyarimma at [208] the Full Court continued:
Even if a party makes good its attack on another's pleading, a court will ordinarily permit the opponent to reframe the pleading so long as it is clear that there is point in doing so and that the further time and opportunity will have utility. The guiding principle is doing what is just. Courts, particularly today, strive to uphold efficiency and economy in the disposal of proceedings before them. But they also remember that pleadings are a means to the end of justice according to law. Pleadings are the servants, not the masters of the judicial process.
94 The FASC in this case constitutes the third attempt of the applicant to frame a statement of claim. A further opportunity to plead will be the fourth. The opportunity to replead is not always given, and ultimately whether it is given depends on the circumstances of the case: Kowalski at [41]. I will hear submissions from the parties as to whether the Court should grant leave to the applicant to file a further amended statement of claim.
| I certify that the preceding ninety-four (94) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier. |
Associate:
