FEDERAL COURT OF AUSTRALIA

Fair Work Ombudsman v Devine Marine Group Pty Ltd [2013] FCA 1135

THE COURT ORDERS THAT:

1.    Paragraphs 63.9, 64 and 65 of the amended statement of claim be struck out.

2.    The applicant has leave to file and serve a further amended statement of claim, re-pleading in an appropriate manner the allegations presently in paragraphs 63.9, 64 and 65.

3.    The leave granted by Order 2 is to be exercised by 4.00pm on Monday, 11 November 2013.

4.    The respondents must file and serve any amended defence by 4.00pm on Monday, 18 November 2013.

5.    The respondents’ application that the costs reserved in the Federal Circuit Court be determined by this Court is declined.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

RULING

1    This is a ruling on an application under s 31A of the Federal Court of Australia Act 1976 (Cth) for the entry of judgment for one of three respondents on the basis that the applicant has no reasonable prospect of prosecuting successfully the proceeding against that respondent. Alternatively, the respondent seeks an order striking out various paragraphs of the applicant’s statement of claim.

2    In addition, all the respondents seek an order under s 570 of the Fair Work Act 2009 (Cth) (FW Act) concerning the costs of an unsuccessful discovery application.

3    In the substantive proceeding, the Fair Work Ombudsman (the FWO) seeks declarations that the first respondent, Devine Marine Group Pty Ltd (DMG), has contravened s 45 of the FW Act in respect of two persons, Mr Kouka and Mr James. Those contraventions are said to arise from DMG’s failure, in respect of each, to pay applicable minimum hourly rates of pay, casual leave loadings and penalty rates, and to pay wages at least weekly or fortnightly.

4    In addition, the FWO seeks declarations that DMG contravened s 535 of the FW Act in respect of Mr Kouka and Mr James by failing to keep employee records and contravened s 712(3) by failing to comply with a notice issued under s 712(1) requiring it to produce records to an inspector.

5    The FWO then seeks orders requiring the payment to Mr Kouka and Mr James of their entitlements under the Manufacturing and Associated Industries and Occupations Award 2010 (the Award), which is said to be a “modern award” for the purposes of s 45 of the FW Act. In addition, the FWO seeks the imposition, pursuant to s 546 of the FW Act, of pecuniary penalties.

6    Underlying the FWO application is the assertion that DMG arranged for Mr Kouka and Mr James, who are both Fijians, to come to Australia and to perform work as employees, under the guise of participation in an unpaid training program, without paying them the remuneration to which they were entitled for their work.

7    The second respondent, Capt Devine, is the principal of DMG. The FWO seeks accessorial liability orders against him which it is not necessary, for present purposes, to detail.

8    The third respondent, Capt Boucaut-Jones, is said to be the principal of Adelaide Nautical College Incorporated. The FWO claims that Capt Boucaut-Jones was involved in, or party to, each of the contraventions of s 45 alleged against DMG, because he aided, abetted, counselled or procured the contraventions within the meaning of s 550(2)(a) of the FW Act, or was knowingly concerned in or party to those contraventions within the meaning of s 550(2)(c) of the FW Act. The FWO alleges further that the employment of Mr Kouka and Mr James arose by reason of an arrangement between Captains Devine and Boucaut-Jones pursuant to which there was to be an appearance that the men were being provided with training by Adelaide Nautical College, although in reality they were working as employees of DMG. The FWO thereby alleges a conspiracy between Captains Devine and Boucaut-Jones of the kind to which s 550(2)(d) of the FW Act refers.

9    The essence of the FWO’s claim is that Capt Boucaut-Jones provided assistance to DMG and Capt Devine in creating the appearance of an unpaid training arrangement when he knew that Mr Kouka and Mr James were employees to whom award entitlements had to be paid.

10    The action commenced in the Federal Circuit Court (FCC) but, given the parties’ estimates as to the length of the trial, was transferred to this Court. The trial is now to commence on 9 December, with five days set aside.

11    On 23 May 2013, a FCC Judge directed that the FWO file and serve affidavits containing the evidence-in-chief of each witness from whom he proposed to adduce evidence at the trial. The FWO has filed affidavits from five witnesses in accordance with that order.

Section 31A: Principles and approach

12    The effect of s 31A was considered by the High Court in Spencer v The Commonwealth [2010] HCA 28; (2010) 241 CLR 118 and has been addressed in numerous decisions of this Court. It is convenient to refer to the summary by Gilmour J in Dandaven v Harbeth Holdings Pty Ltd [2008] FCA 955 at [6] of the principles relevant to an application under s 31A. His Honour’s summary commences with the observation that, by subs (3), a proceeding need not be hopeless or bound to fail in order to have no reasonable prospect of success. It continues:

(a)    the Court must be very cautious not to do a party an injustice by dismissing proceedings summarily;

(b)    the Court ought not dismiss a claim based on a predictive assessment of prospects, when it is possible that, if the claim goes to trial, it may succeed;

(c)    in cases in which the evidence may give colour and content to allegations, and in which questions of fact and degree are important, the Court should be more reluctant to dismiss a proceeding on the face of a pleading;

(d)    it is not Parliament’s intention to require the Court to engage in lengthy and elaborate trials on an interlocutory basis for the purposes of determining whether or not a proceeding has no reasonable prospect of success. It may be necessary for the opposing party to provide no more than an outline of evidence, sufficient to show that there is a genuine dispute, to prevent the summary application becoming a trial;

(e)    if there is a real issue of fact or law to be decided, and the rights of the parties depend on it, it is obviously appropriate that the matter go to trial. It cannot be said, when there is a real factual dispute and that factual dispute must be resolved to determine whether the claim succeeds, that there is “no reasonable prospect of success”;

(f)    s 31A should not be used to shut out proceedings if, on a proposition of law, there may be room for doubt. On questions of law, an inquiry as to their merit should not be for the purpose of resolving them and also not simply to determine whether the argument is hopeless, but in order to decide if it is sufficiently strong to warrant a trial;

(g)    evidence of an ambivalent character will usually be sufficient to amount to reasonable prospects;

(h)    in determining whether there are real issues of fact which preclude summary judgment, the Court should draw all reasonable inferences in favour of the non-moving party.

13    The authorities also indicate that the circumstances of the case generally will be important. In the present case, one relevant circumstance is that the FWO makes serious allegations against Capt Boucaut-Jones, being allegations of conspiracy and involvement in contraventions of s 45. In addition, the FWO seeks the imposition of a civil penalty against Capt Boucaut-Jones. Those considerations bear upon an assessment of the quality of the evidence foreshadowed by the FWO to make out the allegations.

14    Some of the submissions made on Capt Boucaut-Jones’ behalf invited an assessment by the Court at this stage of the FWO’s proposed evidence-in-chief as contained in filed witness affidavits. The FCC required the filing of those affidavits in an endeavour to facilitate the conduct of the trial. I am conscious that, while some assessment of the proposed evidence may be necessary, the Court should be wary of allowing the circumstance that written witness statements have been provided in advance of a trial to beget a new field of interlocutory or litigious endeavour. Should that occur, the economies and efficiencies sought to be achieved by the provision of written statements of evidence-in-chief may be lost. Further, it may have the consequence that the Court is in effect being asked to consider a submission of no case to answer even before it has heard or received the evidence. There may, of course, be cases in which it may be plain that the evidence proposed by an applicant is insufficient to make out an applicant’s claim, but there is cause for caution on this account.

15    There is an additional reason for caution in the present circumstances. The FWO seeks relief against three respondents, but it is only Capt Boucaut-Jones who seeks summary judgment under s 31A. The fact that neither DMG nor Capt Devine, who are presently represented by the same solicitors and counsel as Capt Boucaut-Jones, has made an application seems to imply a tacit acceptance on their part that the FWO’s claims against them may pass the reasonable prospect of success threshold.

16    Normally a no case to answer submission by one of several defendants is not entertained, or is allowed only in limited circumstances (Hummerstone v Leary [1921] 2 KB 664). The rationale is that it is undesirable for one defendant to be discharged from an action when it is possible that evidence adduced in the remainder of the case may implicate that defendant. In James v Australia and New Zealand Banking Group Ltd (1986) 64 ALR 347 at 401, Toohey J commenced his review of the authorities on this topic by noting:

Where there is more than one respondent, the arguments against allowing one respondent to make a no case submission are powerful and they have been endorsed by courts on a number of occasions.

Similarly, in Trade Practices Commission v George Weston Foods Ltd (No 2) (1980) 43 FLR 55 at 62, Davies J said:

The evidence against some defendants is weaker than the evidence against others. However, if further evidence is given, the strength of the evidence against a particular defendant may well alter. In Menzies v Australian Iron & Steel Ltd (1952) 52 SR(NSW) 62 and Hummerstone v Leary [1921] 2 KB 664 it was established that in such a circumstance it is undesirable that one or more of the defendants should be dismissed from the action prior to the reception of all the evidence.

17    French J, when a member of this Court, reviewed the authorities in J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (Western Australian Branch) (No 2) (1992) 38 FCR 458. His Honour considered the question of whether or not to entertain a no case submission by one of several respondents to be a matter of proper case management, having regard to the interests of justice, including the convenience and economy in time and money which may be achieved in an appropriate case (at 463-4). French J concluded (at 465):

The question is in essence one of practice within the general discretion of the court to regulate the conduct of the trial. … The discretion is necessarily to be regulated by the powerful practical considerations to which the authorities cited refer. But that is not to say that circumstances may not arise in which one respondent may without inconvenience be dismissed out of a case notwithstanding that the case proceeds against another. One example might be on a question of jurisdictional fact. It may be that at the close of an applicant’s case in proceedings under the Trade Practices Act a respondent whose liability depends upon whether it can be characterised as a trading or financial corporation within the meaning of the Act, may submit that the evidence is not capable of establishing that characterisation. Such a submission can conceivably be made without involving any of the practical inconveniences referred to in the cases mentioned above. And in the contemporary climate where judicial time is limited and the costs of legal services are high, it is my opinion that courts should not be slow to consider the possibility of entertaining a submission of no case to answer from one of a number of respondents where the interests of justice are not compromised and economies may be effected thereby.

Having said that, I am not satisfied that the present case is one in which I should entertain a submission of no case on the part of the BTA. While the interests of the BLF and the BTA may be closely aligned, it is not beyond the bounds of possibility that the course of the BLF’s defence could involve raising at least the hypothesis that some of the conduct attributed to it by the applicant is attributable to the BTA.

This may suggest that the principle is to be applied more flexibly than some of the earlier authorities have suggested.

18    In my opinion, the underlying rationale for the principle developed in the context of no case submissions also applies to an application under s 31A, at least when the application is based on an asserted insufficiency in an applicant’s proposed evidence. The principle may be accommodated within the terms of s 31A(2)(b) by the Court having regard not only to the evidence-in-chief foreshadowed by an applicant, but also to the prospect that additional evidence may be elicited by the cross-examination by another respondent of the applicant’s witnesses, or be led by another respondent as part of its case. It has the effect that the Court should generally be slow to uphold an application under s 31A by one of several respondents when the application is based on an alleged insufficiency of the evidence.

19    That caution is appropriate in the present case given that cross-examination of the FWO’s witnesses may elicit evidence implicating Capt Boucaut-Jones, and that evidence adduced by the first two respondents may also implicate him.

The pleaded claims against the third respondent

20    The first part of Capt Boucaut-Jones’ submission that the FWO claim against him has no reasonable prospect of success was based on an analysis of the amended statement of claim filed on 20 September.

21    The various contraventions of s 45 of the FW Act alleged against DMG are pleaded in [11]-[29] inclusive.

22    The substance of that amended statement of claim in relation to Capt Boucaut-Jones is as follows.

23    Paragraph [5] alleges that Capt Boucaut-Jones was the principal of Adelaide Nautical College.

24    Paragraph [63] contains allegations of knowledge by Capt Boucaut-Jones of a number of matters going to the employment by DMG of Mr Kouka and Mr James as employees, the work which they performed, the obligation of DMG to pay minimum wages for the time they worked, and that they had not been so paid. In addition, it alleges (in [63.4] and [63.9]) that Capt Boucaut-Jones:

[63.4]    Attended at the Company’s premises while the Employees were working there.

…

[63.9]    Provided [Mr Kouka and Mr James] with “training certificates” from [Adelaide Nautical] College in which he purported to “note” the completion of a “training program” by [Mr Kouka and Mr James].

These are the only pleas in [63] of conduct by Capt Boucaut-Jones. The remainder of the pleas relate to his knowledge of particular matters.

25    Paragraph [64] then pleads that, by reason of the matters pleaded in paras [5] and [63], Capt Boucaut-Jones was involved in, or a party to, each of the alleged contraventions of s 45 of the FW Act in that:

64.1    Boucaut-Jones aided, abetted, counselled or procured the contraventions within the meaning of subsection 550(2)(a) of the Fair Work Act; and/or

64.2    Boucaut-Jones has been knowingly concerned in or party to the contraventions within the meaning of s 550(2)(c) of the Fair Work Act.

26    Paragraph [64] does not provide particulars of the conduct said to constitute the alleged aiding, abetting etc, or which constitutes Capt Boucaut-Jones having been knowingly concerned in the contraventions. That means that the only conduct of Capt Boucaut-Jones relied upon as comprising the relevant conduct is that which is incorporated by the reference to [63] which, as noted, is only that contained in [63.4] and [63.9].

27    A primary focus of counsel’s submission was on [65] of the amended statement of claim, which has been pleaded to support the FWO’s claim of conspiracy. In its amended form, [65] provides:

The employment of the Employees and the contraventions pleaded in paragraphs 19, 23, 26, and 29 above arose by reason of an arrangement between the Director and Boucaut-Jones whereby employees of the Company, including the Employees, were to be ostensibly enrolled in an unpaid training program with the College but in reality would be employed by the Company.

Particulars

a)    The arrangement arose pursuant to a verbal agreement between the Director and Boucaut-Jones.

b)    The agreement was made on or before 7 April 2011 and was a continuing agreement until at least on or after 17 December 2011.

c)    The relevant agreement is to be inferred from correspondence, documents and verbal directives issued by each of the Director and Boucaut-Jones, including:

a.    the “training certificates” issued by Boucaut-Jones and the Director to the Employees, and to other persons engaged by the Company in similar circumstances, including certificates dated 7 April 2011;

b.    the letter dated 27 April 2011 from the Director, purportedly to James, in support of James’ visa application dated 29 April 2011;

c.    the letter dated 27 September 2011 from Boucaut-Jones to the Director regarding training arrangements;

d.    verbal directives given by Boucaut-Jones to Kouka to represent his activities on behalf of the Company as “training” not “working”; and

e.    verbal directives given by the Director to James and Kouka to represent their activities on behalf of the Company as “training” not “work”.

28    As can be seen, the substantive allegation in [65] is that both the employment of Mr Kouka and Mr James, and the contraventions of s 45 “arose by reason of an agreement” between Captains Devine and Boucaut-Jones pursuant to which persons, who in reality were working as employees, were to be given the appearance of participants in an unpaid training program. The amended statement of claim does not, as may have been desirable, plead explicitly that the purpose of the alleged agreement was to have DMG obtain the benefit of the services of these persons without paying them the remuneration to which they would be entitled as employees. However, this may be implicit. The allegation in [65] is supported by particulars relating to the form of the agreement (verbal), the time when it was made, and the circumstances from which its existence is to be inferred. As will be seen, I consider that there are shortcomings in the amended [65].

29    Paragraph [66] alleges that Captains Devine and Boucaut-Jones knew that Adelaide Nautical College was not a registered training provider.

30    Paragraph [68] makes the allegation of conspiracy as follows:

By reason of the matters pleaded at paragraphs 5, 63 and 65 to 66 above, Boucaut-Jones was involved in or party to each of the contraventions [of s 45] alleged against the Company … in that Boucaut-Jones conspired with Devine to effect the contraventions within the meaning of section 550(2)(d) of the Fair Work Act.

As can be seen, the conspiracy alleged in [68] is said to arise from the matters pleaded in [5], [63], [65] and [66]. The expression “to effect the contraventions” in [68] replicates the terminology of s 550(2)(d), which provides that a person is involved in a contravention of a civil penalty provision if, and only if (relevantly), the person has conspired with others to effect the contravention.

31    Sections 45 and 46 of the FW Act provide as follows:

45.    A person must not contravene a term of a modern award.

46.    (1)    A modern award does not impose obligations on a person, and a person does not contravene a term of a modern award, unless the award applies to the person.

(2)    A modern award does not give a person an entitlement unless the award applies to the person.

(Notes and titles in each case omitted.)

32    The Award contains provisions requiring employers to pay wages weekly or fortnightly (cl 34.1), to pay minimum wages (cl 24.1), to pay a casual loading to casual employees (cl 14.1) and to pay penalty rates for weekend work (cl 40.7 and cl 40.8).

Consideration

33    The critique of Capt Boucaut-Jones of the amended statement of claim had a dual aspect. Counsel submitted first, that the statement of claim did not comply with the pleading rules as it did not plead the material facts necessary to make out the causes of action on which the FWO relies. Secondly, counsel contended that the conspiracy pleaded in [68] of the amended statement of claim was not the kind of conspiracy to which s 550(2)(d) refers.

34    Rule 16.02(1)(d) of the Federal Court Rules 2011 (pursuant to which the amended statement of claim was filed) requires a pleading to state the material facts on which a party relies which are necessary to give the opposing party fair notice of the case to be made against that party at trial. Rule 16.02(2) requires that a pleading not be evasive or ambiguous, or be likely to cause prejudice, embarrassment or delay in the proceeding, or fail to disclose a reasonable cause of action.

35    In my opinion, counsel for Capt Boucaut-Jones has made good the submission that the statement of claim fails to disclose a reasonable cause of action in relation to the alleged aiding and abetting of contraventions and the alleged knowing concern in contraventions. As already noted, with the exception of [63.4] and [63.9], the amended statement of claim does not provide any particulars of the conduct said to amount to the aiding, abetting etc or the being knowingly concerned in the alleged contraventions. That is a fundamental defect.

36    To the extent that the FWO relies upon the conduct alleged in [63.9] for this purpose, I consider that that subparagraph is ambiguous and likely to cause prejudice. The word “purported” and the three expressions in quotation marks hint at an allegation that the matters to which reference was made were not actual or legitimate but do not make a firm allegation to that effect. If the FWO intends to allege that Capt Boucaut-Jones provided certificates noting matters which were not as certified, or that the certificates were false to the knowledge of Capt Boucaut-Jones, then he should say so. If the allegation is that Capt Boucaut-Jones certified as to the completion of a training program, when no such program had been provided or completed, then that should be pleaded explicitly.

37    Absent some plea or pleas of this character, there is uncertainty as to how the conduct pleaded in [63.9] can be a particular of the accessorial conduct alleged.

38    However, it does not follow that on this account the application under s 31A should be upheld. The deficiency in the pleading is capable of being rectified. I would instead give the FWO the opportunity to re-plead, in an appropriate manner, the allegation of accessorial liability to address these shortcomings.

39    Counsel’s next submission related to the pleading of Capt Boucaut-Jones’ knowledge of the contraventions. Counsel referred to the well-known passages in Giorgianni v The Queen (1985) 156 CLR 473 and Yorke v Lucas (1985) 158 CLR 661 establishing that intentional participation in a contravention of a provision by aiding or abetting, or by being knowingly concerned in the contravention, requires actual, rather than constructive, knowledge of the essential matters making up the contravention. In addition, counsel drew attention to the statement of Greenwood J in Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (AMWU) v John Holland Pty Limited ACN 004 282 268 [2009] FCA 274 at [44] that:

Accessorial liability requires a pleading of actual knowledge on the part of the accessory of each and every element of the offence or contravening conduct … and an election to engage in the relevant conduct.

In that case, a respondent was charged with having assisted in the contravention by a company of a provision in the Workplace Relations Act 1996 (Cth) requiring employers, in defined circumstances, to permit unions a right of entry. Justice Greenwood held that the applicant had to establish that the defendant “had knowledge that the permit holders enjoyed a right of entry and, notwithstanding that knowledge, he set about engaging in the contravening conduct” (at [45]). The absence of a plea of those matters meant, so Greenwood J held, that that particular allegation in the statement of claim had no reasonable prospect of success.

40    Counsel contended that in the present case, the FWO would have to prove that Capt Boucaut-Jones had knowledge that particular obligations were established by the Award, that Mr Kouka and Mr James performed work in circumstances attracting those obligations, and that DMG had failed to meet those obligations. He contended that a pleading of those matters was lacking.

41    Counsel is correct in the contention that the amended statement of claim does not contain any allegation of knowledge by Capt Boucaut-Jones of the Award or of particular provisions in it, or of the performance of work by Mr Kouka and Mr James of a kind which would attract an entitlement to the casual loading or weekend penalty rates.

42    However, I am not satisfied that this indicates that these particular claims of the FWO have no reasonable prospects of success. First, the manner in which Giorgianni and Yorke v Lucas are to be applied in a context such as the present is not settled. At the heart of the FWO’s claim is an allegation that DMG sought to avoid the payment to Mr Kouka and Mr James of employment entitlements of a kind commonly found in an industrial award. In that context, there is a question as to whether it is sufficient for the FWO to establish knowledge on Capt Boucaut-Jones’ part that work was being carried out to which minimum legislative protections would apply or to which the Award would apply if it were performed by employees. Alternatively, must the FWO go further and establish knowledge of the particular circumstances giving rise to the individual contraventions arising under the applicable award? These are not easy questions and, in my opinion, should be addressed in the context of a trial.

43    I add the following by way of illustration why I consider that to be appropriate. The presence of actual knowledge of the relevant circumstances required for accessorial liability may be able to be inferred from a combination of suspicious circumstances and a wilful failure to make inquiry (Giorgianni v The Queen (1985) 156 CLR 473 at 482, 487, 507-8). That may be pertinent in the present case. The FWO’s allegation is that Captains Devine and Boucaut-Jones combined to create an appearance that the two men were participants in an unpaid training program, even though they were really working as employees. If the indicia of the training program said to have been provided by Captains Devine and Boucaut-Jones were a façade or pretence, it may be possible to draw an inference from the very fact of their engagement in the pretence that it had a purpose known to both. It may be able to be inferred that the purpose was to avoid paying the amounts to which the men were otherwise entitled. Entitlements with respect to payment of wages, casual loading and weekend penalty rates are often found in industrial awards. This may support a further inference as to the knowledge of Captains Devine and Boucaut-Jones. I acknowledge that there is a considerable degree of speculation and inference in all of this and much may depend on the evidence. However, it serves to indicate the desirability of caution in acceding to the present s 31A application.

44    I note that in Fair Work Ombudsman v Al Hilfi [2012] FCA 1166, Besanko J dealt with a submission similar to that made presently on Capt Boucaut-Jones’ behalf. The FWO in Al Hilfi alleged that Coles Supermarkets Australia Pty Ltd had, in relation to four employees, aided, abetted, etc. the contravention of a contractor’s subcontractor of various provisions in an industrial award relating to trolley collectors. Coles argued that, in order to be found liable under s 550 of the FW Act, the FWO had to establish that it knew of four matters. First, that the four employees were employed by the subcontractor in the relevant period; secondly, that the award applied to those employees; thirdly, that the work of each employee gave rise to the entitlements alleged; and finally, that the employees had not been paid their entitlements by the subcontractor. Coles argued that each of these matters should be pleaded and that such pleadings were lacking.

45    Although Besanko J considered that there was “a good deal of force” in Coles’ submission, he declined to find that the FWO claim had no reasonable prospect of success, having regard to the broad terms of s 550(2)(c) and to the possibility that evidence at trial would cast light on the issue (at [44]).

46    In my opinion, a similar approach is appropriate presently for the reasons already given and for the further reason that there is a close relationship between the four different contraventions of s 45 alleged in this case.

47    In addition, while it is true that the amended statement of claim does not make any allegation of Capt Boucaut-Jones’ knowledge of the Award, or of the particular award provisions alleged to have been contravened, or that work was performed in circumstances in which the casual loading and weekly penalty rates may be payable, it does in [63] allege that Capt Boucaut-Jones was aware of the obligation to pay minimum wages to employees for time worked, was aware of the work which Mr Kouka and Mr James were performing and was aware that they were not paid wages. These pleadings allege, in effect, knowledge by Capt Boucaut-Jones of the elements of at least one of the alleged contraventions of s 45. Even if the plea in [64] were struck out in relation to the alleged contraventions concerning casual loadings, weekend penalty rates and time of payment of wages, Capt Boucaut-Jones’ alleged involvement in DMG’s failure to pay the minimum wage would remain. He would therefore remain in the action. That is a consideration which, to my mind, points against striking out the pleading on this ground and against a conclusion that the FWO claim has no reasonable prospect of success.

48    Counsel’s next submission concerned the allegation of conspiracy.

49    The essence of a conspiracy is an agreement between two or more persons to do an unlawful act, or to do a lawful act by unlawful means (Ahern v The Queen (1988) 165 CLR 87 at 93). It is the former kind which is pertinent presently. Proof of such a conspiracy in the present case will require proof that Capt Boucaut-Jones concurred with, or assented to, a scheme or plan to effect the alleged contraventions of s 45 and either agreed to participate in the scheme or plan, or actively encouraged Capt Devine to implement it (R v Henderson and Panagaris (1984) 37 SASR 82 at 91-2).

50    Counsel referred to the absence of any pleading of knowledge by Capt Boucaut-Jones of the existence or application of the Award, let alone of the requirements imposed by the Award with respect to minimum wages, casual loadings, penalty rates and the time at which wages are to be paid. Counsel emphasised that the conspiracy to which s 550(2)(d) refers is a conspiracy to “effect the contraventions” and not a conspiracy to achieve some more generalised object of which the contraventions may be only an incident. This indicated, he submitted, that there should be a pleading of these material facts.

51    Again, there is some force in this submission. The amended statement of claim does not include any plea of knowledge by Capt Boucaut-Jones of the Award or of its requirements (apart from, at a general level, the requirement to pay a minimum wage). With one exception (or possibly two), the amended statement of claim does not link the particular contraventions of s 45 alleged against DMG on the one hand, with the alleged conspiracy on the other.

52    The exception is the allegation in [63] that Capt Boucaut-Jones was aware of the obligation of DMG to pay minimum wages to employees for the time worked, knew that Mr Kouka and Mr James were employees, knew the work that they were performing, and knew that they were not being paid wages. The plea in [63] is prefaced by the clause “at all material times”. Paragraph [63] may, therefore, be able to be understood as a pleading that Capt Boucaut-Jones had the alleged knowledge at the time of formation of the alleged agreement with Capt Devine and at material times thereafter.

53    The second possible exception arises from the reference in [68] to [65].

54    Despite the force of counsel’s submission, I consider again that it is appropriate to be cautious. If the purpose of the conspiracy was to obtain the men’s services but to avoid a liability to pay award entitlements, then it may not be necessary for the FWO to establish actual knowledge by Capt Boucaut-Jones of the particular entitlements or of the performance of work giving rise to those entitlements. Whether or not that is so is a matter appropriately addressed at trial.

55    There is an additional reason for caution. For the reasons given at the outset, I am reluctant to engage in a detailed analysis of the applicant’s witness statements. However, the witness statements of Mr Kouka and Mr James suggest that evidence may be given at the trial to the effect that they were given certificates by the Adelaide Nautical College certifying as to their completion of training programs in circumstances in which they had not received any training from Capt Boucaut-Jones, or apparently from anyone else, let alone someone acting for or on behalf of the Adelaide Nautical College. It also appears that there may be evidence from Mr Kouka to the effect that he was cautioned by Capt Boucaut-Jones not to tell investigators that he was working but, instead, to say that he was undertaking training; that on one occasion he was given money by Capt Boucaut-Jones, apparently on behalf of Capt Devine; and that on another occasion Capt Boucaut-Jones provided him with some blank note books and pens which he could produce if questioned about the training he was undertaking. Mr James has deposed that he did not come to Australia with the intention of undergoing training but, instead, that he came here to work, and that that is what he did. Mr Kouka has deposed that he expected to work and undergo training, but that he did not receive any training.

56    Counsel for Capt Boucaut-Jones submitted that these passages in the foreshadowed evidence could be given a benign explanation. That may well be so and, at a trial, that benign explanation may well be accepted. However, that is not the issue presently. As outlined earlier, on an application of the present kind all reasonable inferences from the foreshadowed evidence should be drawn in favour of the non-moving party.

57    Counsel for Capt Boucaut-Jones then made some submissions concerning the proposed evidence of the FWO. It was said that the evidence would not establish that any conduct of Capt Boucaut-Jones was “intentionally aimed” at DMG’s conduct in not paying wages, or that he had a close involvement in DMG’s omission to pay wages, or that Capt Boucaut-Jones had the intention of effecting a contravention of s 45 of the FWA, and so was not sufficient to establish accessorial liability. It was said that the foreshadowed evidence of Mr Kouka, in particular, was unsatisfactory and ambiguous and, in any event, was not supported by other evidence proposed to be led by the FWO. Finally, it was said that the foreshadowed evidence would not make out the various particulars alleged in [63].

58    As noted earlier, in some cases, a consideration of foreshadowed evidence will be necessary in order to determine a s 31A application. However, in the present case, that is neither necessary nor desirable. For the reasons given earlier, I consider that the Court should adopt presently the same attitude to the s 31A application as it would if the same submissions were made in the context of a no case to answer submission. The possibility that further evidence will be adduced at trial by the cross-examination of the FWO’s witnesses, or by DMG and Capt Devine themselves, makes it inappropriate for the Court to determine, at this stage, the sufficiency of the FWO’s evidence against Capt Boucaut-Jones.

59    Capt Boucaut-Jones’ remaining complaints are appropriately addressed in the context of his critique of the adequacy of the pleading in the statement of claim.

The alleged pleadings deficiencies

60    I have already identified shortcomings in the plea of accessorial liability in [63.9] and [64] of the amended statement of claim.

61    In my opinion, the current pleading in [65] is also deficient in that it does not particularise adequately the “arrangement” alleged. Paragraph [65] alleges that the employment of Mr Kouka and Mr James “arose” by reason of “an arrangement” between Captains Devine and Boucaut-Jones, by which persons who were in reality employees would be given the appearance of participants in an unpaid training program. As noted, particulars are given of the means by which the arrangement was made and of when it was made. Paragraph [65] then particularises in a very general way a circumstance said to have arisen by reason of the arrangement, namely, the employment of Mr Kouka and Mr James and the contraventions of s 45. However, this is not a particularisation of the alleged arrangement itself. It does not inform Capt Boucaut-Jones of the terms of the alleged arrangement, or of what it is he agreed to do as part of the alleged arrangement. These matters are left to inference and, in my opinion, are thereby productive of prejudice. The prejudicial effect is enhanced by the allegation that the employment of Mr Kouka and Mr James “arose by reason of an arrangement”, which rather implies that those circumstances were not themselves the object of the arrangement.

62    Captain Boucaut-Jones had other criticisms. These have already been addressed or are subsumed by the orders which I will make with respect to [63.9], [64] and [65]. It is not necessary to address them further.

63    In my opinion, [63.9], [64] and [65] should be struck out. However, it is appropriate that the FWO be given an opportunity to re-plead those paragraphs and I will make an order to that effect. If the FWO does not re-plead [65] appropriately, it will be necessary to consider whether [68] should be permitted to remain in the pleading.

Costs of discovery application

64    On 13 September 2012, the FWO filed an application in the now FCC seeking a declaration pursuant to s 45 of the Federal Magistrates Act 1999 (Cth) that it was in the interests of justice for each respondent to make discovery of documents. That application was heard by a Judge in the FCC, then a Federal Magistrate.

65    The Judge made orders in favour of the FWO in relation to DMG. It seems that one aspect of the FWO’s application was not pursued at the hearing before the FCC Judge and that another was refused. The FCC Judge reserved the question of costs under s 570 of the FWA in relation to all aspects of the application brought by the FWO.

66    DMG appealed successfully to this Court against the order that it make discovery (Devine Marine Group Pty Ltd v Fair Work Ombudsman [2013] FCA 442). The order of this Court allowing the appeal included an order that there be no order as to costs with respect to the appeal.

67    The respondent submitted that this Court should now determine the question of costs reserved by the FCC Judge.

68    The order which the respondent seeks would require this Court to be satisfied that the FWO’s conduct in bringing the discovery application, or its conduct of that action, was unreasonable in the sense that that expression is used in s 570(2) of the FWA. This is not a straightforward task given the extensive materials filed by the FWO to support the discovery application in the FCC.

69    As I observed to the parties at the hearing, this is an unfortunate course of events. The course proposed by the respondents would require a judge of this Court, who has had no previous involvement in the discovery applications, to determine the costs in relation to those applications. It is no longer possible for the Judge who heard DMG’s appeal (Lander J) to determine the question of costs (even if it were otherwise appropriate) as he is no longer a member of the Court.

70    In my opinion, the FCC Judge who heard the discovery application is best placed to make that assessment. The fact that the proceedings have been transferred to this Court for trial, because of the estimated length of the trial, does not warrant a member of this Court determining a matter which should be addressed in the FCC by the member of that Court who reserved the costs. The respondents’ present application should have been agitated in the FCC before the transfer of the proceeding to this Court.

71    The FWO submitted that the respondents had waived the pursuit of any application for costs by their consent to the order of transfer to this Court. Although that contention is arguable, I do not consider that it should be upheld. It seems that the transfer to this Court arose at the initiative of the FCC Judge. Counsel for the respondents did indicate that there may be some ancillary applications to be made before the matter proceeded to trial, although he did not indicate this particular application. In those two circumstances, I do not consider that it can be properly held that the respondents waived any entitlement to apply for costs.

72    Neither party suggested that any principle of necessity required this Court to determine the reserved costs.

73    This Court has power under s 32AB of the Federal Court of Australia Act 1976 (Cth) to transfer a proceeding to the FCC. By s 32AB(6), in deciding whether to transfer a proceeding to the FCC, the Court must have regard to the following:

(a)    any Rules of Court made for the purposes of subsection (4); and

(b)    whether proceedings in respect of an associated matter are pending in the Federal Circuit Court; and

(c)    whether the resources of the Federal Circuit Court are sufficient to hear and determine the proceeding; and

(d)    the interests of the administration of justice.

Subparagraphs (a) and (b) are not presently pertinent. If this Court hears the trial of the matter, the resources of the FCC will be sufficient to hear and determine the question of costs which it itself reserved. In my opinion, the interests of the administration of justice points strongly in favour of the transfer of the proceeding back to the FCC, after judgment, for the purpose of the determination of the reserved question of costs. Any such determination may have to take account of the reasoning of Lander J in [2013] FCA 442 at [72] and at [88]-[105].

74    In these circumstances, I decline, at this stage, to deal with the respondents’ costs application. I will, instead, entertain an application on the delivery of judgment for the proceeding to be transferred back to the FCC in order that the FCC Judge who heard the discovery application may determine the reserved question of costs.

Conclusion

75    For the reasons given, I order that [63.9], [64] and [65] of the amended statement of claim be struck out. The FWO has leave to file a further amended statement of claim re-pleading, in an appropriate form, the allegations presently contained in those paragraphs. That leave must be exercised by Monday, 11 November 2013 and any amended defence by the respondents must be filed and served by 18 November 2013.

Associate:

Dated:    4 November 2013