FEDERAL COURT OF AUSTRALIA

Fair Work Ombudsman v Offshore Marine Services Pty Ltd (No 5)

[2014] FCA 724

THE COURT ORDERS THAT:

1.    The cross-claimant have leave to amend its Reply to Defence to Cross-Claim (filed 6 May 2014) by deleting sub-paragraph (a) in paragraph 1.

2.    The cross-respondent have leave to amend its Defence to Cross-Claim (filed 22 April 2014) by deleting sub-paragraph (a) in paragraph 12.

3.    The application by the cross-respondent for the separate trial of the questions raised by paragraphs 14 and 15 in the Defence to Cross-Claim be dismissed.

4.    The cross-respondent pay the costs of the cross-claimant in relation to the above application.

THE COURT FURTHER ORDERS THAT:

5.    By 28 July 2014:

(a)    the applicant file and serve:

(i)    an outline of submissions as to the question of penalty and compensation (the Issues); and

(ii)    any affidavits to be relied upon in respect of the Issues; and

6.    By 25 August 2014:

(a)    the second respondent file and serve:

(i)    an outline of submissions as to the Issues; and

(ii)    any affidavits to be relied upon in respect of the Issues; and

(b)    the cross-claimant file and serve:

(i)    an outline of submissions as to the question of contribution of any compensation (the Contribution Issue); and

(ii)    any affidavits to be relied upon in respect of the Contribution Issue.

7.    By 22 September 2014:

(a)    the applicant file and serve:

(i)    any outline of submissions in reply as to the Issues; and

(ii)    any affidavits in reply to be relied upon in respect of the Issues; and

(b)    the cross-respondent file and serve:

(i)    an outline of submissions as to the Contribution Issue and, if it wishes, the Issues; and

(ii)    any affidavits to be relied upon in respect of the Contribution Issue and, if it wishes, the Issues.

8.    By 20 October 2014:

(a)    the cross-claimant file and serve:

(i)    any outline of submissions in reply as to the Contribution Issue; and

(ii)    any affidavits in reply to be relied upon in respect of the Contribution Issue.

9.    After consultation between the associate to the trial judge and the solicitors for all parties as to issues of availability of counsel and witnesses, the proceeding be listed for hearing on the first available date after 20 October 2014 with an estimated duration of two days to determine the Issues and the Contribution Issue.

10.    At least 14 days prior to the hearing, each party file and serve a notice to the opposite party if any deponent to an affidavit is required to attend for cross-examination.

11.    Any application for costs of all or part of the proceeding that may be made by any party be reserved to be made and determined after the hearing and determination of the Issues and Contribution Issue.

12.    Costs associated with the making of these directions be reserved.

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

REASONS FOR JUDGMENT

1        Pursuant to a Further Amended Application dated 18 December 2013, the applicant (FWO) is seeking penalties and a compensation order against the second respondent (MUA).

2        The compensation order relates to loss suffered by Bruce and Lynne Love after the first respondent (OMS) did not employ the Loves and in circumstances where the MUA advised, encouraged or incited OMS not to do so.

3        On 20 March 2014, the MUA filed a Statement of Cross-Claim seeking contribution from OMS in respect of the MUA's liability arising under any compensation order. Central to its cross-claim, the MUA alleges at para 13:

… any liability in the MUA to pay compensation to the Loves … is

(a)    in respect of the same loss or damage as that for which OMS would have been liable had it been sued for an order for compensation for that loss or damage; and/or

(b)    a liability which is of the same nature and extent as, and is coordinate with, that of OMS …

4        The cross-claim is made pursuant to s 7(1)(c) of the Law Reform (Contributory Negligence and Tortfeasors’ Contribution) Act 1947 (WA) (Law Reform Act), alternatively at common law or in equity.

5        In its Defence to Cross-Claim OMS alleges that the MUA had engaged in improper conduct in causing harm to the Loves and so is disentitled from claiming contribution. OMS, in paras 14 and 15 of the Defence to Cross-Claim, alleges that:

(a)    in engaging in contraventions of the Workplace Relations Act 1996 (Cth) (WR Act) and Fair Work Act 2009 (Cth) (FW Act), the MUA might be found guilty of an indictable offence such that it cannot claim contribution under the Law Reform Act; and

(b)    the MUA does not have clean hands and so cannot claim contribution in equity or common law.

6        On 6 May 2014, the MUA filed a Reply to Defence to Cross-Claim. The reply denies paras 14 and 15 of the Defence to Cross-Claim. Amongst other things, the MUA says, in effect, that OMS itself has unclean hands.

7        By an interlocutory application filed on 15 May 2014, OMS as cross-respondent sought an order that the cross-claim be dismissed pursuant to r 15.13(f) of the Federal Court Rules 2011 (Cth) (Rules). Rule 15.13(f) merely provides that a party to a cross-claim may apply to this Court for an order dismissing the cross-claim. It is not an application for summary judgment dismissing the cross-claim.

8        OMS seeks that its application for dismissal be heard and determined prior to the hearing of the other matters. This is opposed by the MUA. It is this question to which I now turn and which is the subject matter of these reasons.

9        It is unclear why it was thought necessary to file this interlocutory application seeking the very thing which the defence to the cross-claim seeks and which would follow if the defence to the cross-claim were to succeed. What OMS really seeks is an order for the separate trial of the questions raised by paras 14 and 15 of the Defence to Cross-Claim (the Questions).

Principles relevant to separate hearing of questions

10        Rule 30.01(1) of the Rules enables a party to apply for an order that a question be heard separately from any other questions.

11        The starting point is that in the ordinary course all issues of fact and law should be determined at the one time: Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 140-142; Spirits International BV v Federal Treasury Enterprise (FKP) Sojuzplodoimport (2011) 91 IPR 438 per Buchanan J at [148], with whom Foster J agreed (at [160]).

12        Separate determination is an exceptional course of action: Street v Luna Park Sydney Pty Limited [2007] NSWSC 697 at [5]. It is a course which the Court should only adopt cautiously: Save the Ridge Inc v Commonwealth (2005) 147 FCR 97 at [15] (Black CJ and Moore J). Accordingly, single-issue trials should "only be embarked upon when their utility, economy, and fairness to the parties are beyond question": Tepko Pty Limited v Water Board (2001) 206 CLR 1 at [170] per Kirby and Callinan JJ.

13        Ultimately, the issue for the Court to determine is whether it is "just and convenient" for the order to be made: Reading Australia Pty Ltd v Australian Mutual Provident Society (1999) 217 ALR 495. The overarching consideration informing the discretion to make an order for a separate hearing is efficient case management: Olbers v Commonwealth of Australia (No 3) [2003] FCA 651 at [8], and see s 37M of the Federal Court of Australia Act 1976 (Cth). Whilst these decisions deal with the former Federal Court Rules O 29 r 2, the principles discussed apply equally to the present rule.

14        The principles relevant to determining whether the trial of a separate question should be ordered are relatively well established: Reading at [8]. They were repeated by French J (as his Honour then was) in Olbers at [7] and [8], and implicitly endorsed by the majority of the Full Court in Spirits International per Buchanan J at [150], with whom Foster J agreed.

15        As Reading demonstrates, factors which tend to support the making of an order include that the separate determination of the question may contribute to the saving of time and cost by substantially narrowing the issues for trial, or even lead to disposal of the action.

16        Factors which tell against the making of an order include that the separate determination of the question may:

(a)    give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of trial;

(b)    result in significant overlap between the evidence adduced on the hearing of the separate question and at trial - possibly involving the calling of the same witnesses at both stages of the hearing of the proceeding. This factor will be of particular significance if the Court may be required to form a view as to the credibility of witnesses who may give evidence at both stages of the hearing of the proceeding; or

(c)    prolong rather than shorten the litigation.

17        These considerations are but examples and are by no means comprehensive.

18        In CBS Productions Pty Ltd v O'Neill (1985) 1 NSWLR 601 Kirby P said at 606:

… A matter is “ripe” for separate and preliminary determination where it is a central issue in contention between the parties, the resolution of which will either obviate the necessity of litigation altogether or substantially narrow the field of controversy.

Application of the principles to this case

19        OMS submits that it is appropriate that the Questions be tried separately because:

(a)    the Questions are either questions of law, or are to be assessed on the basis of facts that have already been conclusively determined in Fair Work Ombudsman v Offshore Marine Services Pty Ltd (No 2) [2013] FCA 943 (judgment on MUA Liability);

(b)    the trial of the Questions is likely to take no more than a couple of hours;

(c)    if the Court resolves the Questions in favour of OMS it would dispose of the MUA's cross-claim, and obviate the need for OMS to participate in a hearing involving a multitude of claims made by the applicant against the MUA, only one of which relates to compensation; and

(d)    conversely, if the Court were to resolve the Questions against OMS there would not be any duplication of evidence adduced in the two hearings.

The Questions

20        If the Court were minded to determine the Questions as preliminary issues, those which now remain, following the deletion, by amendment, of para 1(a) of the Reply to Defence to Cross-Claim, would be:

(a)    might the MUA be found guilty of any indictable offence, preventing it from relying on s 7(1)(c) of the Law Reform Act due to the operation of s 7(1B)?

(b)    Does the MUA have clean hands, such as to permit it to seek a contribution at common law or in equity?

(c)    What is the position if OMS and the MUA each had unclean hands?

Might be found guilty

21        Section 338A of The Criminal Code (WA) (Code) is an indictable offence: s 67(1a) of the Interpretation Act 1984 (WA) (Interpretation Act).

22        Section 338A of the Code provides that a person is guilty of a crime if the person makes a threat with intent to:

(a)    gain a benefit, pecuniary or otherwise, for any person;

(b)    cause a detriment, pecuniary or otherwise, to any person (the intention to cause a detriment);

(c)    prevent or hinder the doing of an act by a person who is lawfully entitled to do that act (the intention to hinder); or

(d)    compel the doing of an act by a person who is lawfully entitled to abstain from doing that act.

23        By virtue of s 338 of the Code, "threat" in s 338A means a statement or behaviour that expressly constitutes, or may reasonably be regarded as constituting, a threat to, inter alia, cause a detriment of any kind to any person, whether a particular person or not.

24        There is a question as to the scope of ss 338 and 338A. However, OMS submits that, at the very least, a threat to engage in industrial action for the purpose of one of the listed intentions (rather than because there was a legitimate reason for industrial action, such as a safety issue), can constitute an offence against s 338A of the Code.

25        OMS submits that each of the intentions listed in s 338A could be said to apply to the facts in this case. However, it submits that the most apt are the intention to cause a detriment and the intention to hinder:

(a)    In relation to the intention to cause a detriment, it submits that the MUA acted with the intention of causing a detriment to the Loves: the MUA threatened OMS in order to cause the Loves not to be employed.

(b)    In relation to the intention to hinder, it submits that OMS was entitled to employ people who were not members of the MUA: the MUA sought to prevent or hinder OMS from doing so.

26        In the judgment on MUA Liability, in summary, the Court found that the MUA’s contraventions of the WR Act and the FW Act included advising, inciting and encouraging OMS to maintain and apply an employment practice so as to cause OMS not to employ the Loves, and that the MUA's conduct included threatening industrial action against OMS if it did not implement and maintain the employment practice, and intimidating and abusive language to apply commercial pressure upon OMS to maintain the employment practice: at [26], [28], [30], [33], [47], [49], [52], [74], [76], [84], [86], [88], [94], [104], [108], [113], [116], [140]-[151], [161]-[162], [166]-[171].

27        It is evident that it is unnecessary that OMS demonstrate that the facts found by the Court in the judgment on MUA Liability prove that the MUA committed an indictable offence. The MUA will be unable to rely on the Law Reform Act if the Court finds merely that the MUA "might be found guilty" of an indictable offence.

28        OMS submits that the determination of this question does not require any disputed fact to be resolved, or the hearing of any evidence but that it can be determined solely on the facts found by the Court in the judgment on MUA Liability.

29        I am not presently persuaded that such is the case. Arguably, the question involves mixed questions of fact and law. This certainly is the contention of the MUA. There arises the question of whether such a finding requires to be made upon proof to the criminal standard. Plainly the findings upon which OMS rely were made upon proof to the civil standard. However, in any event, I do not regard the construction of s 7(1B) or its application in this case to be as plain and obvious as is contended for by OMS. Whilst not directly on point, nonetheless, some of the considerations by the Full Court in Today FM (Sydney) Pty Ltd v Australian Communications and Media Authority (2014) 307 ALR 1 illustrate the potential difficulties in the construction of a provision such as this. This consideration alone weighs heavily against the separate determination order which OMS seeks. Nor am I confident that there will be no further evidence adduced going to this issue, or that questions of admissibility might not arise, referable to s 7(1B) properly construed.

Common law or equity

30        The MUA also seeks a contribution in "common law or equity". I take this to refer to the principle of equitable contribution, both at common law and in equity: Burke v LFOT Pty Limited (2002) 209 CLR 282 at [14]-[15] per Gaudron ACJ and Hayne J. See also McHugh J at [38]-[39] and Callinan J at [143].

31        OMS submits that to be entitled to seek a contribution under this principle, the person must have "clean hands" and that a person who has been guilty of wilful misconduct is not entitled to contribution. They rely upon what was said, obiter, in Burke by Gaudron ACJ and Hayne J at [17]-[18] and by what Callinan J stated at [143].

32        OMS also relies on the following passage from the reasons of Heerey J in Henderson v Amadio Pty Ltd (No 2) (1996) 62 FCR 221 at 237:

To the extent that [the respondents] have suffered loss as a result of findings that the transactions infringed the prescribed interest provisions, that loss must lie where it falls. The Court cannot assist in recovery of contribution towards that loss from parties engaged in the same unlawful conduct.

33        The MUA's Statement of Cross-Claim admits that:

(a)    the Court found that the MUA had committed various contraventions of the WR Act and the FW Act. These are listed in para 1 of the Statement of Cross-Claim, and referred to as the MUA Contraventions;

(b)    the MUA Contraventions included findings that the MUA was "involved in" each of the breaches by OMS of the WR Act and FW Act: paras 1(a)(iv), 1(b) and 5 of the Statement of Cross-Claim;

(c)    the MUA Contraventions included findings of other contraventions which were not alleged or found against OMS: listed in paras 1(a)(i)-(iii), 1(c) and 5 of the Statement of Cross-Claim.

34        The relevant findings made in the judgment on MUA Liability are summarised above.

35        OMS submits that if the Court concludes from the facts it has already found that the MUA was involved in wilful misconduct, the MUA will not be entitled to seek contribution from OMS as it will not have "clean hands".

36        Similarly, OMS submits that if the Court accepts what was said in Henderson, the MUA will not be entitled to seek contribution from OMS. The MUA was engaged in the same unlawful conduct as OMS, as it was found guilty of being involved in each of OMS' contraventions. Accordingly, OMS submits that the loss must "lie where it falls": Henderson at 237.

37        I do not accept that the maxim of “clean hands” bearing upon the right to contribution is as straightforward as OMS would have it. Burke did not involve consideration of contribution as between two parties, each of whom has unclean hands. Gaudron ACJ and Hayne J in Burke at [16] spoke of “notions of equal or comparable culpability” in this context. Kirby J in the same case at [113] stated that the “maxim is not applied to deny a party, otherwise entitled, contribution to a common liability where the alleged co-obligor is himself shown to have been seriously neglectful …”. There are other authorities that contemplate taking into account the relative improprieties as between the person seeking contribution and the person from whom contribution is sought: Sang Lee Investment Co Ltd v Wing Kwai Investment Co Ltd [1983] HKLR 197 at 209; Robson v Robson [2012] QCA 119 at [82]-[83]. It would be premature to attempt any determinative analysis of the application of the principles to this case.

38        It is quite conceivable that the resolution of the relative improprieties in this case, which is an issue that has never been determined, will require further evidence. This again strains against the separate trial of the Questions.

39        OMS submits that the determination of this question does not require any disputed fact to be resolved or the hearing of any evidence but that it can be determined solely on the facts found by the Court in the judgment on MUA Liability.

Disputed facts

40        OMS states that it will rely only on the findings set out in the judgment on MUA Liability.

41        The MUA's submissions claim that there would be some unfairness in OMS relying on the judgment on MUA Liability, because the appropriate allocation of responsibility between the MUA and OMS for any loss caused to the Loves was not a live issue in the MUA hearing. For reasons I have given there is at least the potential that the allocation of responsibility will be relevant to the resolution of the Questions, and in particular, the issue of relative improprieties going to the issue whether contribution, at the instance of the MUA against OMS, is available at common law or in equity.

Other considerations

42        OMS submits that if the Court were to resolve the Questions in its favour, this would dispose of the MUA's cross-claim, and obviate the need for OMS to participate in a hearing involving a multitude of claims made by the applicant, only one of which relates to compensation.

43        OMS then submits, by contrast, that if the Questions are heard together with the other questions in the cross-claim, the Court will be required to hear submissions and evidence in relation to, for example, the appropriate apportionment of compensation between the MUA and OMS if compensation was ordered to be paid. If the Questions were resolved in favour of OMS, the Court would have heard submissions and evidence in relation to matters on which it was not ultimately required to decide. In addition, the parties would have been required to incur the costs necessary to prepare for those issues.

44        This last submission is one which might always be made upon an application such as this. In a sense it begs the question whether there ought be a separate determination.

45        I do not regard the time, effort and expense to be saved in having a preliminary determination as of much weight in the circumstances of this case. This of course assumes that such a course might otherwise commend itself which it does not.

46        However, the course for which OMS contends will have a likely significant impact upon Mr and Mrs Love. It is common ground that an appeal is likely against whatever decision the Court might make on the Questions which bear on the entitlement, or not, of the MUA to claim contribution from OMS. It is at least conceivable that there could then be an application for special leave to appeal to the High Court.

47        Only upon the exhaustion of that process will the FWO be able to prosecute its claim, relevantly, for compensation for Mr and Mrs Love. The delay involved could be more than a year. The events giving rise to these proceedings arose in 2009. Compensation of more than $600,000 is sought. I do not think those proceedings should be delayed. I do not regard the Questions raised by OMS as being ripe for separate and preliminary determination as is OMS’ contention. There are considerable areas of grey involved and the Court should adopt a cautious approach in those circumstances.

48        This is not a case where a preliminary determination is likely to produce a very considerable saving of time and costs as was the case, for example, in Direct Factory Outlets Homebush Pty Ltd v Property Council of Australia Ltd [2005] FCA 1002. The hearing of the claim and cross-claim is estimated to require two or perhaps three hearing days. The maximum saving of time, in that respect, is 2½ days. I do not regard that as carrying significant weight.

49        This is not a case where the utility, economy and fairness of a trial of preliminary issues is beyond question: Tepko at [170] per Kirby and Callinan JJ.

50        I would, for these reasons, dismiss OMS’ application for an order for the separate trial of the Questions. OMS should pay the costs of the MUA in relation to this application.

Associate:

Dated:    4 July 2014