FEDERAL COURT OF AUSTRALIA

Matthews v Markos [2019] FCA 1827

ORDERS

THE COURT ORDERS THAT:

1.    Leave be granted to the applicant to make an application to this Court pursuant to s 46PO(1) of the Australian Human Rights Commission Act 1986 (Cth).

2.    The originating application filed on 4 April 2019 be treated as filed with leave of the Court pursuant to s 46PO(3A) of the Australian Human Rights Commission Act 1986 (Cth).

3.    The matter is to be listed for a case management hearing on a date to be fixed.

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

REASONS FOR JUDGMENT

ABRAHAM J:

1    Between 18 October 2010 and 31 December 2016 the applicant, a solicitor, was a “fixed profit share” partner of the law firm carried on by the respondents. The applicant alleges that the respondents discriminated against her for the purposes of s 17 or s 14 of the Sex Discrimination Act 1984 (Cth) (SDA) on the basis of her sex and/or family responsibilities when it: (1) failed to vary the applicant’s “fixed profit share” other than through the payment of bonuses, during the period 2011 to 2016 commensurate with the applicant’s contribution to the partnership and the overall profitability of the partnership; and (2) failed to invite the applicant to become an equity partner.

2    On 25 May 2018, the applicant made a complaint on that basis to the Australian Human Rights Commission (AHRC) which was terminated on 4 February 2019 by a delegate of the AHRC, under s 46PH(1)(b) of the Australian Human Rights Commission Act 1986 (Cth) (AHRC Act). On 4 April 2019, the applicant commenced proceedings in this Court, and by virtue of s 46PO(3A)(a) of the AHRC Act, leave of the Court is required to make the application.

3    The applicant read two affidavits in support of her leave application; an affidavit of Justine Mary Matthews sworn on 24 May 2019, and an affidavit of her solicitor, Elizabeth Anne Milner, sworn on 24 May 2019.

4    For the reasons below, leave pursuant to s 46PO(3A)(a) is granted to the applicant.

Background

5    This background is taken primarily from the applicant’s affidavits (including as summarised in her written submission) and so contains allegations of the alleged unlawful discrimination that the applicant will set out to establish if leave is granted, and evidence led to address the issue of the delay in making the application to the AHRC. The respondents did not provide any evidence on the application, and given the stage of the proceedings, no defence has yet been filed. Nonetheless, it was apparent from the submissions made by the parties that if leave is granted there may be factual issues in dispute which do not arise for determination on this application, and the events below are recited in that context.

6    On 18 October 2010, the applicant commenced working in the Newcastle office of the respondents’ law firm as a “fixed profit share” partner. As the applicant was the primary carer for her two children aged 1 and 3 at the time, she worked part time.

7    On around March 2011, the applicant was appointed “Partner in Charge” of the Newcastle office. It is the applicant’s contention that through her efforts, the annual gross fees generated by the respondents’ Newcastle office, within a 2 year period, grew from approximately $750,000 to approximately $2.2 million.

8    In about late March 2012, the respondents transferred an associate, Najeh Marhaba, from the Sydney to the Newcastle office. He was appointed Senior Associate on 30 June 2012. The applicant deposed that, in late 2012-early 2013, she was instructed to hand over some of her insurance clients to Mr Marhaba. On 30 June 2013, Mr Marhaba was appointed a fixed profit share partner.

9    In September 2014, in a bid to make a written case for why she should be appointed equity partner, the applicant requested financial information for specific clients and billings for the whole of the Newcastle office for each year between 2009 and 2014. The applicant submitted that on 18 September 2014, the respondents provided the applicant with financial information for the billings of some, but not all clients as requested. It is alleged that the respondents also failed to provide financial information for the whole of the Newcastle office.

10    In February 2014, John Markos (one of the partners of the respondent firm) gave a presentation to the partners, including the applicant, and explained the importance of the firm having a “national presence” and being actively involved in “business development”. In April 2015, at the initiation of Mr Markos, the applicant transferred to the Brisbane office on the understanding that setting up that office was part of the respondents’ plan to have a “national presence” and it would assist her case for equity partnership. Prior to leaving the Newcastle office, the applicant contends that she was directed to hand over the client relationships she managed to other partners, including Mr Marhaba.

11    In June 2015, Alan Blanch retired from the equity partnership of the respondents.

12    Between April 2015 and June 2016, the applicant alleges she received limited or no support from the respondents in terms of the development of a business plan, referral of clients or work, support in identifying existing clients who had a Brisbane presence, or access to advice, introduction to business contacts or dedicated secretarial support.

13    On 3 June 2016, Mr Markos purported to end the applicant’s relationship with the respondents due to the “Brisbane office closing”. Mr Markos’ attempt to do so was not in accordance with the procedure outlined in the Partnership Agreement for termination of a partner.

14    The applicant was confused by the prospect of her relationship with the respondents ending and began a process of reviewing her emails and looking for information on the financial performance of the Newcastle office. Through this process she learned the billings of the clients she had attracted to the firm and the financial success of the Newcastle office while she was Partner in Charge. This process made her realise that despite her efforts to build the financial success of the Newcastle office her “fixed share” salary had not increased throughout that time, and she had not been offered equity partnership. At this time her feelings of being discriminated against on the basis of her sex or having family responsibilities crystallised.

15    On 3 June 2016, the applicant sought legal advice from Anne Milner of Milner Lawyers. She expected that Ms Milner would have responsibility for filing any application that was required to pursue any claim she was lawfully entitled to make.

16    On 7 September 2016, the applicant met with Mr Markos and deposed that she put to him that Mr Marhaba was being offered equity partnership, which he did not deny.

17    On 20 September 2016, a letter outlining the applicant’s claim for sex discrimination was sent to Mr Markos.

18    On 12 October 2016, the applicant alleges that she was told by a fellow partner who had recently left the law firm that Mr Marhaba had been “promoted to equity partner” and that Mr Markos had told her that “the partnership agreement does not accommodate partners who are part time”.

19    On 12 October 2016, at a meeting between the applicant and two equity partners of the respondent law firm, Cameron Leaver and Stewart Cameron, the applicant’s sex discrimination claim, including the fact she had not received a pay rise in 6 years, was discussed.

20    On 14 December 2016, the applicant attended a mediation conference to mediate her sex discrimination claims. In preparation, she provided the respondents with a mediation paper that set out her position with respect to her claims of sex discrimination. The mediation did not resolve the applicant’s claims of sex discrimination.

21    On 7 February 2017, the applicant and the respondents entered into an agreement which resulted in the applicant’s relationship with the respondents ending on 31 December 2016 (the Agreement). Under the Agreement, a copy of which was provided to the Court with the applicant’s evidence, the applicant was to be paid $108,000 upon receipt of her formal resignation. The applicant argues that this Agreement was also expressed to be without prejudice to any claims she might have for sex discrimination arising from her tenure as a partner with the respondents’ law firm, and was drafted to include a “credit” of $108,000 against any amount obtained as a consequence of any future claim of any kind against the firm. As discussed below, there is disagreement between the parties as to the effect of the Agreement.

22    On 7 February 2017, the applicant told her solicitor Ms Milner that she wished to pursue her sex discrimination claims. On 14 March 2017, the applicant and Ms Milner attended a conference with senior counsel. The applicant instructed senior counsel and throughout 2017 relied on her legal team to take all necessary steps to progress her claim within any statutory timeframes. She was not advised by her legal team that there were any time limits with respect to a claim for sex discrimination under the SDA.

23    On 19 April 2017, Ms Milner emailed senior counsel and “told him that a draft application to the AHRC had been prepared and enquired about settlement of that application and whether he had given further consideration to the issue of junior counsel”. On 18 May 2017, the applicant and Ms Milner had a conference with senior counsel and junior counsel following which Ms Milner advised the applicant to prepare a chronology of events. On 4 or 5 July 2017, the applicant provided a “comprehensive chronology extending over 110 pages” to Ms Milner. Between 5 July 2017 and mid-September 2017, the applicant had several discussions with Ms Milner about her case. At no time did Ms Milner mention a statutory timeframe for lodging an application with the AHRC. In mid-September 2017, the applicant telephoned Ms Milner about the lack of progress on her claim and expressly told her that she did not want her claim to be statute barred. Ms Milner told the applicant that she had 6 years to file a claim. The applicant accepted this advice. Throughout October and November 2017, the applicant and Ms Milner worked on a statement. On 23 October 2017, during a lengthy conference Ms Milner explained to the applicant the general protections and discrimination provisions of the Fair Work Act 2009 (Cth) (Fair Work Act), advised that she may be an “employee” for the purposes of an “adverse action” claim, explained that the relevant time limit was 6 years, and informed the applicant that she needed to prepare a detailed statement and compile all relevant evidence for counsel’s consideration. In December 2017, a statement and chronology was finalised and sent to counsel.

24    In around February-March 2018, the applicant had become concerned about the lack of progress in her matter, and so in mid-late March 2018 she telephoned a barrister she had briefed in the past, Ms Elizabeth Raper. Ms Raper advised the applicant, for the first time, that “she had better get her skates on” as the AHRC Act had been amended and the time for lodging a claim with the AHRC was now 6 months, though in her case it might be 12 months.

25    In April 2018, the applicant had a conference with senior counsel who advised her to lodge a claim in the AHRC. The same day, the applicant telephoned Ms Raper again to see if she could assist with her application and Ms Raper recommended the services of Ms Bronwyn Byrnes. On 24 April 2018, Ms Milner briefed Ms Byrnes. On 7 May 2018, the applicant, Ms Milner and Ms Byrnes had a telephone conference to discuss the complaint and worked on preparing the application.

26    On 25 May 2018, the applicant lodged her complaint with the AHRC and provided a copy of it to the respondents.

27    On 4 February 2019, by way of notice of termination, the delegate of the President of the AHRC terminated the applicant’s complaint on the basis of s 46PH(1)(b) of the AHRC Act on the ground that the complaint was lodged more than 12 months after the alleged acts, omissions or practices took place. The delegate stated that the following factors were relevant: (1) the length of delay in lodging the complaint; (2) the reasons for the delay; and (3) any other remedies that have been sought/are available. The merit of the application was not addressed.

Principles in relation to the grant of leave

28    Section 46PO(3A) was introduced into the AHRC Act, effective from 13 April 2017. Section 46PO is relevantly in the following terms (with notes omitted):

46PO Application to court if complaint is terminated

(1) If:

(a) a complaint has been terminated by the President under section 46PE, paragraph 46PF(1)(b) or section 46PH; and

(b) the President has given a notice to any person under subsection 46PH(2) in relation to the termination;

any person who was an affected person in relation to the complaint may make an application to the Federal Court or the Federal Circuit Court, alleging unlawful discrimination by one or more of the respondents to the terminated complaint.

….

(2) The application must be made within 60 days after the date of issue of the notice under subsection 46PH(2), or within such further time as the court concerned allows.

(3) The unlawful discrimination alleged in the application:

(a) must be the same as (or the same in substance as) the unlawful discrimination that was the subject of the terminated complaint; or

(b) must arise out of the same (or substantially the same) acts, omissions or practices that were the subject of the terminated complaint.

(3A) The application must not be made unless:

(a) the court concerned grants leave to make the application; or

(b) the complaint was terminated under paragraph 46PH(1)(h); or

(c) the complaint was terminated under paragraph 46PH(1B)(b).

(4) If the court concerned is satisfied that there has been unlawful discrimination by any respondent, the court may make such orders (including a declaration of right) as it thinks fit, including any of the following orders or any order to a similar effect:

(a) an order declaring that the respondent has committed unlawful discrimination and directing the respondent not to repeat or continue such unlawful discrimination;

(b) an order requiring a respondent to perform any reasonable act or course of conduct to redress any loss or damage suffered by an applicant;

(c) an order requiring a respondent to employ or re‑employ an applicant;

(d) an order requiring a respondent to pay to an applicant damages by way of compensation for any loss or damage suffered because of the conduct of the respondent;

(e) an order requiring a respondent to vary the termination of a contract or agreement to redress any loss or damage suffered by an applicant;

(f) an order declaring that it would be inappropriate for any further action to be taken in the matter.

…

(5) In the case of a representative proceeding under Part IVA of the Federal Court of Australia Act 1976, subsection (4) of this section applies as if a reference to an applicant included a reference to each person who is a group member (within the meaning of Part IVA of the Federal Court of Australia Act 1976).

(6) The court concerned may, if it thinks fit, grant an interim injunction pending the determination of the proceedings.

(7) The court concerned may discharge or vary any order made under this section (including an injunction granted under subsection (6)).

(8) The court concerned cannot, as a condition of granting an interim injunction, require a person to give an undertaking as to damages.

29    In James v WorkPower Inc [2018] FCA 2083 (James v WorkPower Inc), Mortimer J considered the history of the provision and the context in which it now appears. Her Honour concluded at [37]-[38]:

37. I am satisfied that the text, context and purpose of the leave requirement in s 46PO(3A) suggests that it is appropriate for the Court to consider in determining whether to grant leave whether the claims made by an applicant are reasonably arguable, and are – at the least – not fanciful. This is consistent with the language used in s 46P(1A). I do not consider, read in context, that s 46PO(3A) sets the bar particularly high: the purpose of the provision is to act as a filter to preclude complaints whose merits are disproportionate to the time and resources likely to be consumed by dealing with them in a whole proceeding, but not to impose a barrier of any substantively greater level.

38. There may be a range of other permissible considerations including:

(1) the circumstances of the parties: how important the subject matter of the complaint is to both the applicant and any respondent, and to their respective circumstances;

(2) the nature of the allegations made (including whether for example they involve allegations of continuing discrimination, or how serious the discrimination is alleged to be);

(3) how thoroughly the Commission has dealt with the merits of the complaint. For example, it may be the Commission’s termination reasons thoroughly answer the alleged merits of a complaint and make it clear the complaint is not reasonably arguable;

(4) whether an applicant has delayed in complaining about the alleged discrimination and if so whether there are any explanations for that delay;

(5) whether a respondent has attempted to address the allegations in any way outside the Commission process and whether the allegations have been addressed or resolved in any way;

(6) the factual and legal complexity of the matters raised by the allegation of unlawful discrimination;

(7) whether the allegations raise issues of public importance, or of general application. The express power given to the President in s 46PH(1)(h) does not exhaust the circumstances in which this factor might be considered; and

(8) other factors that are often considered in leave applications – such as prejudice to a party.

30    As Mortimer J concluded at [39]:

…It would be a denial of procedural fairness to an applicant at the very least and, in my opinion, a misunderstanding of the role to be played by the leave requirement in s 46PO(3A), if the Court were to embark on a detailed consideration and determination of the merits of the applicant’s underlying arguments about unlawful discrimination. Questions of fact, and questions of law, which are arguable are to be determined at trial, subject to any Court-directed processes such as the stating of a separate question under r 30.01 of the Federal Court Rules.

31    Those principles from James v WorkPower Inc have recently been applied in Pathmanathan v St John of God Healthcare Inc [2019] FCA 1460 (Pathmanathan). In Pathmanathan it is sufficient to note that the applicant was a doctor, and the complaints related to an event which occurred in an operating theatre: Pathmanathan at [19]. The applicant was unrepresented, and filed separate proceedings in relation to the same event, against two entities. In relation to the first application, the applicant attempted to file the application in this Court within the 60 day time limit, but was notified by the Court there was an error in the documentation. There was a 67 day delay before the documents were then filed. In addition to the application for leave pursuant to s 46PO(3A), the applicant applied for an extension of time in which to file her application. Having considered the evidence, Steward J concluded at [21]:

… It follows, on the material before me, and applying a “filter” not intended to set a “high bar”, I find that I cannot be confident that the Doctor has not been the subject of discrimination on the grounds of her ethnicity, gender or age, and that this explains why she was the only medical staff member disciplined. For these reasons, and given the grave importance of this matter to the Doctor, leave should be granted for the Doctor to proceed with her case…

32    And later at [25]:

The discrepancy in treatment between the Doctor and the other medical staff associated with the Event sufficiently grounds an arguable case concerning the taking of action against the Doctor and no one else. My present impression is that the case is not compelling, and only just arguable. However, that factor is of less importance in a case where the applicant filed a document on time, albeit incorrectly, and then correctly filed an application a relatively short time later. In particular, because of the vital importance of the case to the Doctor, I do not think she should be shut out from pursuing her claims because of a delay of 67 days.

33    These passages which are a practical application of the considerations in James v WorkPower Inc reflect that the bar in granting leave pursuant to s 46PO(3A) is not high.

34    While the parties disagree as to the application of those principles in James v WorkPower Inc, they nonetheless agree that they are the principles to be applied.

35    However, there was debate as to the proper approach to be taken by the Court in assessing those considerations, with the applicant contending, relying on the comments by Mortimer J in James v WorkPower Inc, that s 46PO is intended to filter out plainly unmeritorious complaints, and that is the overarching consideration when determining whether or not to grant leave. Although the applicant initially appeared to submit, based on Pathmanathan, that if a Court concluded a matter is reasonably arguable then delay does not really feature into the consideration to grant leave, ultimately the applicant submitted that delay is just one of the considerations to be taken into account.

36    The respondents took issue with the submission that if an arguable case is established then the delay, and the other considerations, fall aside. The respondents submitted that the proper reading of James v WorkPower Inc is that all of the factors are matters to be taken into account, and are not factors that are, in a sense, vitiated if the applicant can point to an arguable case or case that’s not fanciful. It was submitted that having an arguable case was only one factor to be taken into account, and that may have to be weighed against delay, and delay may also have a bearing on identifying whether there is an arguable case.

37    Whether ‘overarching’ is the correct description may be debateable. Nonetheless, certain matters are clear. First, the purpose of s 46PO(3A) in this legislative scheme is, as described by Mortimer J in James v WorkPower Inc at [37], “to act as a filter to preclude complaints whose merits are disproportionate to the time and resources likely to be consumed by dealing with them in a whole proceeding, but not to impose a barrier of any substantively greater level”. Second, whether a matter is reasonably arguable is a consideration, unlike others, which must necessarily be satisfied before leave will be granted. It would be perverse, and contrary to the legislative scheme to grant leave if the matter were considered by a Court to be without any merit (in the manner described in James v WorkPower Inc). Third, if a matter is considered to be reasonably arguable, the other relevant considerations do not fall away. Rather, the weight to be given to each of the relevant considerations will necessarily be case specific. Moreover, the content of each of the considerations referred to in James v WorkPower Inc may inform the significance of other considerations (e.g. delay may contribute to the assessment of whether a matter is reasonably arguable if it affects the ability to establish the factual basis of the claim, and may also inform the question of prejudice to the respondents).

Extension of time

38    The respondents submitted that the applicant must seek an extension of time in which to file an application.

39    As noted above, on 4 April 2019, the applicant filed an originating application and statement of claim which seeks, “the leave of the court to make this application in accordance with s 46PO(3A)(a) of the [AHRC Act]”. An application must be filed within 60 days of the notice of termination under s 46PH(2) or within such further time as the Court orders: s 46PO(2). In this case an application “must not be made” unless the Court grants leave: s 46PO(3A)(a). The respondents submitted that those provisions require that leave is obtained within the 60 days, to enable an application to then be made within time, otherwise the applicant requires an extension of time. That is, filing the application for leave within the 60 days, without leave being granted within that time, does not satisfy s 46PO(2).

40    This issue was not addressed in either James v WorkPower Inc or Pathmanathan, although I note in James v WorkPower Inc Mortimer J ordered that the originating application filed by the applicant be treated as filed with leave of the Court pursuant to s 46PO(3A). As Mortimer J observed, the text of s 46PO(3A) suggests that leave be considered at the time the applicant seeks to file their originating process in the Court, and not at some later stage.

41    The applicant submitted that she “commenced proceedings” within time by filing the originating application, statement of claim and applicant’s genuine steps statement within 60 days. Apart from suggesting that it would be a rather “odd reading” of the legislation to require an applicant to obtain leave before the 60 day time limit, and that the better view was to adopt the approach of Mortimer J in treating the originating application as if it had been filed with leave, the applicant did not advance an argument based on the construction of the specific provisions of the AHRC Act. Rather, the applicant’s submission was, that if the respondents are correct and leave ought to be granted within the 60-day time limit, then an applicant’s right to make an application to this court will be at the mercy of the court’s timetable to hear and determine any application for leave, and that the legislature could not have intended this result, as it is impracticable.

42    I note that the better approach relied on by the applicant overcomes the consequences of not having obtained leave within time, but does not obviate the need to do so. The applicant referred to a number of authorities in support of this Court’s ability to grant leave nunc pro tunc, albeit the cases dealt with different statutory provisions: Emanuele v Australian Securities Commission [1997] HCA 20; (1997) 188 CLR 114; Barnes v Fortytwo International Pty Ltd [2010] FCAFC 87 (Barnes) at [12]; HFGC Nominees (No 2) Pty Ltd v Hancock as Liquidator of 246 Arabella Investments Pty Ltd (in Liquidation) [2010] FCA 1005 (HFGC Nominees (No 2) Pty Ltd); University of Wollongong v National Tertiary Education Industry Union [2002] FCAFC 85 and Graham Douglas Cockerill & Ors v Westpac Banking Corporation [1997] FCA 241.

43    I note also that when s 46PO(3A) was introduced into the AHRC Act, there was no amendment to s 46PO(2), and the time limit remained 60 days.

44    The respondents are correct that the proper construction of the relevant provisions is that leave must be obtained before an application can be filed: see principles in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) [2009] HCA 41; (2009) 239 CLR 27 at [47] per Hayne, Heydon, Crennan and Kiefel JJ. Therefore, to comply with the time limit in s 46PO(2), leave must be obtained within that time. Where an application for leave was filed but not determined within the 60 days, and where the applicant establishes that leave should be granted pursuant to s 46PO(3A), there are a number of available options.

45    The respondents accepted that one option, rather than providing an extension of time, was to grant leave nunc pro tunc. The statutory language is silent on whether this can occur. In those circumstances (and particularly in the matters where the proceedings are commenced within the time specified), the power to grant leave may be exercised nunc pro tunc: e.g. HFGC Nominees (No 2) Pty Ltd at [21]. In any event, the Court has power to grant leave nunc pro tunc by virtue of s 23 of the Federal Court of Australia Act 1976 (Cth): Barnes at [12] per Stone, Jacobson and Nicholas JJ. Mortimer J made the order in James v WorkPower Inc pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth) and r 1.32 of the Federal Court Rules 2011 (Cth).

46    Alternatively, an extension of time could be granted, as provided for in s 46PO(2). That extension could be until the determination of the application for leave.

47    It was acknowledged by the respondents that its point might appear to be a technical one. However, it submitted that the import of their objection was based on the fact that Parliament had set out a scheme containing timeframes for making claims, bearing in mind the interests of all parties, (not only an applicant), and also to ensure the efficient use of court processes and resources. That the applicant had not obtained leave within the 60 days, so the respondents contended, was yet another example of delay which had typified this matter.

48    The respondents did not suggest that where an extension of time was needed, that it must be considered before the question of leave. Realistically, whether leave should be granted must necessarily inform any question of an extension of time.

Application for leave

Submissions

49    The parties provided detailed written submissions supplemented by oral submissions.

50    The applicant identified five factors which she submitted were significant in the exercise of the Court’s discretion in this matter: (1) the circumstances of the parties and the nature of the allegations; (2) there is a reasonable explanation for the delay; (3) there were attempts to resolve the claims made promptly after the applicant was notified of the intention to terminate her engagement with the firm which put the respondents on notice of the claims; (4) there is no prejudice to the respondents; and (5) there is a reasonably arguable claim for final relief.

51    The parties addressed each of those considerations.

52    In relation to the circumstances of the parties, the applicant noted the nature of the allegations and that those actions resulted in significant economic loss, which the applicant continues to suffer. It submitted the actions also resulted in significant psychological distress due to the disruption to the applicant’s career and identity. That the impact is significant and ongoing, is on the applicant’s submission, an important consideration favouring the grant of leave. The applicant submitted the matter also raised issues of general importance and ongoing significance in terms of the respondents’ failure to remunerate women who work part time as a result of their family responsibilities in a non-discriminatory manner and the failure to invite such women to join equity partnership, and therefore the matter raises issues in the public interest generally. It was also submitted that a complaint about alleged unlawful discrimination by a law firm, that performs legal work for clients such as the state and federal government and other large institutions, should be the subject of a determination by this Court.

53    In relation to the nature of the allegations, the applicant submitted that the respondents’ omissions were an “ongoing pattern of conduct”, citing Commissioner of Fire Brigades (New South Wales) v Lavery [2005] NSWSC 268 at [61]-[62] and [66]. The applicant alleges that the respondents failed to invite her to join the equity partnership on the basis of her sex and/or family responsibilities throughout her tenure as a partner, and by its nature, this “omission” is difficult to pinpoint to a precise moment in time. The applicant made the same submission in relation to the respondents’ failure to vary her “fixed profit share” commensurate with her efforts to build the financial performance of the Newcastle office. The applicant referred to the Partnership Agreement drawing attention to a specific clause dealing with the “admission of new partners” in support of this consideration. The applicant alleges that during late 2012 or 2013-2014, the respondents determined not to invite her to become an equity partner and/or not to consider her for progression to equity partnership. The applicant submitted this was in a context where she had made a significant contribution to the profitability of the respondents’ Newcastle office having significantly increased the client base and the number of files throughout 2011 to 2014. In discussions with Mr Markos the applicant had expressed interest in progressing to equity partnership. It was submitted that there was every reason why, if partnership was to be offered to a lawyer in the Newcastle office, the offer should have been made to the applicant other than that she was female, with children and working part time. Her move to the Brisbane office was at the instigation of the respondents. It is the applicant’s case that her move to Brisbane and the lack of promised support for her there, were deliberate acts by the respondents in an effort to minimise any claim she might make for equity partnership. The applicant submitted that unlike other discrete acts of discrimination, the failure to invite her to equity partnership is difficult to pinpoint in time and is of a continuing nature. Her feelings that she was being discriminated against because of her sex and/or her family responsibilities only crystallised after Mr Markos purported to terminate her relationship with the respondents in June 2016. It was submitted that while on the face of it, the applicant’s complaints relate to issues dating back to at least 2011, the nature of her two allegations are such that they were of an ongoing nature continuing at least until the termination of her employment on 31 December 2016, which was only affected by the Agreement entered into on 7 February 2017. As a result, on the applicant’s submission, the relevant date for consideration of any relevant delay ought to be taken from 7 February 2017.

54    The respondents addressed these first two considerations together, and submitted that the circumstances of this case are not unusual or novel. The respondents submitted that the applicant alleged conduct was an “ongoing pattern of conduct” to justify the 7 February 2017 date as being the date of the last alleged discrimination. The respondents proceeded on the basis that 7 February 2017 is the date from which the timeframe in s 46PO(2) should run, meaning it is unnecessary for the Court to consider the applicant’s submission about an “ongoing pattern of conduct”. Nonetheless, the respondents contended the submission that there was some “ongoing pattern of conduct” is misconceived, and that the events referred to by the applicant do not support that conclusion. It was submitted that at best, those matters establish that, despite desiring to be invited to become an equity partner, no such invitation was made to her or anyone else in that time. The respondents submitted this proceeding does not raise a matter of “general importance and ongoing significance”, but rather this matter simply arises out of the ending of a partner’s relationship with a law firm.

55    In relation to delay, the applicant submitted that there is no time limit for the making of a complaint to the AHRC. It was submitted that delay in bringing a complaint is one consideration to be taken into account in the exercise of discretion as to whether to grant leave, and the grant of leave should not be approached in the same way as an application for an extension of time. The applicant acknowledged that there was a delay in the complaint, it not being lodged until 25 May 2018, a delay of approximately three and a half to four months.

56    The applicant submitted that regardless of which approach the Court adopts to the question of when the alleged conduct/omissions constituting unlawful discrimination occurred, the delay of the applicant is adequately explained and is not a sufficient basis upon which to refuse leave. The applicant submitted that from her affidavit it is clear that her feelings of being discriminated against on the basis of her sex or family responsibilities did not crystallise until after June 2016 when she was faced with the putative termination of her relationship with the respondents. Further, the applicant submitted that she reasonably formed the view moving to the Brisbane office in early 2015 to help establish a “national practice” would assist her case for equity partnership. The applicant submitted that as soon as Mr Markos purported to terminate her relationship with the respondents by letter dated 3 June 2016, the applicant promptly sought the assistance of a solicitor that same day. The applicant submitted that despite being a lawyer, she recognised her vulnerable mental state and her limited experience in the area of discrimination and employment law and relied on her legal team to provide her with advice and representation. With the assistance of her solicitor, the applicant prepared for and participated in a mediation conference on 14 December 2016. The mediation did not resolve her claims of sex discrimination but resulted in her entering into the Agreement on 7 February 2017 to leave the partnership with effect from 31 December 2016.

57    The applicant submitted that the evidence establishes that as of 7 February 2017, the applicant had stated to Ms Milner that she wished to pursue her claim of sex discrimination against the respondents.

58    The affidavit of Ms Milner gives reasons for not lodging a complaint with the AHRC until 25 May 2018. First, Ms Milner’s understanding as at 7 February 2017 was that while the AHRC had the power to terminate a complaint if it was not made within 12 months of the alleged discrimination, a complainant still had the right to pursue proceedings in the Court. Second, Ms Milner was unaware of the April 2017 amendments that inserted the requirement that an applicant must seek leave if their complaint is lodged more than 12 months after the alleged discrimination until 28 March 2018 when the applicant informed her of the conversation she had had with Ms Raper. Third, the advice of senior and junior counsel in May 2017 that the applicant may have a claim for adverse action under the Fair Work Act which resulted in her explaining to the applicant, on 23 October 2017, that for a matter under the Fair Work Act the relevant time limit is six years. Fourth, the advice of senior counsel in May 2017 that the applicant and Ms Milner provide more detailed information about the events in question, provide more information about whether the applicant was an employee, and comment on what legal/statutory provisions are intended to be relied upon to determine the cause of action. Fifth, on the advice of counsel, the significant work and effort that was expended on the preparation of a chronology and statement from the applicant and her husband which was dispatched to senior counsel in December 2017.

59    The applicant’s evidence was that senior counsel advised her for the first time in April 2018 that she should lodge a claim in the AHRC. She gave evidence that she did “not know why a decision about the strategic direction of the matter was not made in 2017”, or “why her solicitor did not make a diary note of the date for the filing of an application in the AHRC and if needed, the claim under the Fair Work Act 2009 (Cth)”. She deposed that she “relied on the advice of her solicitor at all times”.

60    The applicant submitted that on the evidence the reason for the delay in lodging a complaint can be described as “representative error”. The applicant relies on statements in Comcare v A’Hearn [1993] FCA 498; (1993) 45 FCR 441 (Comcare) at 443 and Hunter Valley Developments Pty Ltd v Cohen [1984] FCA 176; (1984) 3 FCR 344 at [33], to support a submission that the applicant should not be denied the opportunity to pursue her claim solely because of her solicitor’s error or inaction. The applicant submitted any delay in lodging the complaint after she instructed a solicitor on 3 June 2016 arises solely from the actions of her legal team and cannot be attributed to her, which weighs in favour of granting leave.

61    The respondents took issue with the applicant’s submission, contending the evidence does not satisfactorily explain the delay. It was submitted that the only relevant events are those after 7 February 2017, and therefore the evidence about the events in the second half of 2016 are irrelevant to this question. After detailing the timeline thereafter, it was submitted there was ample opportunity for the complaint to be filed. The respondents submitted that the Court should reject the applicant’s explanation as being sufficient for her to now, some three years after the end of her relationship with the respondents, be granted leave to bring this proceeding. Therefore, the respondents contended that the delay is a significant factor that militates against the applicant being granted leave to bring, and now continue, this proceeding.

62    The respondents submitted the delay also continued after the President’s delegate terminated the complaint with leave to file the application not being obtained within the 60 day time period required by s 46PO(2).

63    In relation to the applicant’s attempts to resolve the claims, the applicant submitted that this factor weighed heavily in her favour. The applicant submitted that she put the respondents on notice of her claim of sex discrimination by letter dated 20 September 2016, which was further elaborated in a mediation position paper provided to them on 12 December 2016. The applicant submits that she also foreshadowed a claim for unlawful discrimination in correspondence from her solicitor to the respondents, dated 7 February 2017. Through both of these processes, the applicant contended that she placed the respondents on notice, at an early stage, of her claims.

64    The respondents submitted that this is a matter irrelevant to whether leave should be granted. It submitted that even accepting the respondents were on notice of the allegations of discrimination before 7 February 2017, it was not unreasonable for them to have proceeded on the basis that, after entry into the Agreement, the applicant had determined not to proceed to prosecute them.

65    In relation to prejudice to the respondents, the applicant submitted they suffer no discernible prejudice as a result of any delay in making the complaint to the AHRC, and that it is notable that they have elected not to file any evidence demonstrating any particular prejudice to them. The applicant made a number of submissions on this factor by reference to the reasons given by the delegate for the termination of the complaint.

66    The respondents submitted the failure to file evidence is irrelevant and it is evident they will suffer considerable prejudice should leave be granted to bring, and now continue, this proceeding. The respondents submitted the reasons of the delegate do not assist, and instead emphasised that the alleged events the subject of the proceeding happened between 2011 and 2016 and it is over three years since the last of the events. Given the nature of the claim it was submitted that the prejudice arising from the delay is readily apparent.

67    In relation to having a reasonably arguable claim, the applicant submitted that the Court can be satisfied from the detailed statement of claim that her claims of sex discrimination have reasonable prospects of success so as to justify a grant of leave. The applicant noted that she may file and rely on additional evidence if leave is granted.

68    The applicant alleges that by failing to vary her “fixed profit share” other than through the payment of bonuses during the period 2011 to 2016 commensurate with her contribution to the partnership and the overall profitability of the partnership, the respondents contravened s 17(3)(a) of the SDA by denying her access, or limiting her access to any “benefit” arising from being a partner in the partnership or alternatively contravened s 14(2)(b) of the SDA by denying her access, or limiting her access to benefits associated with her engagement. The applicant alleges that it was a “benefit” of the Partnership Agreement that she receive a fixed profit share determined by a resolution of the Equity Partners holding not less than 75% of the Partnership Capital (clause 7(b) of the Partnership Agreement, dated 6 July 1999) and that the Equity Partners would not exercise this power unreasonably, arbitrarily, capriciously or not in good faith and that, in the alternative, these were benefits associated with her “employment” with the respondents.

69    The applicant submitted that there are two main elements to meet the definition of direct discrimination on the ground of sex or family responsibilities under s 5(1) and 7A of the SDA: (1) less favourable treatment than a comparator in materially similar circumstances; and (2) causation, that the less favourable treatment was because of the applicant’s sex, family responsibilities or a characteristic that appertains generally or is generally imputed to persons with family responsibilities.

70    The applicant contended that her fixed profit share was not increased during the period of her tenure as a fixed share profit partner because she was a woman or because she worked part time due to her family responsibilities. She submitted this is so given her significant contribution to the overall profitability of the Newcastle office during 2011-2015 that would have been recognised and remunerated accordingly had she been a man or working full time without family responsibilities. The applicant notes that further evidence is likely to be adduced at any final hearing of the issues in dispute after interlocutory processes are concluded. The applicant alleges that the respondents’ failure to invite her to the equity partnership was an instance of direct or indirect discrimination that contravened either s 17(2)(a) of the SDA when “determining who should be invited to become an equity partner of the partnership” or s 14(2)(b) of the SDA by denying the applicant access, or limiting the applicant’s access, to opportunities for promotion.

71    In the case of direct discrimination, the applicant alleges that she was treated less favourably than Mr Marhaba in not materially different circumstances, and that the reason she was not invited to equity partnership was either her sex/and or her family responsibilities. As stated above, the applicant relies on her significant contribution to the financial success of the Newcastle office between 2011 and 2015 which warranted an invitation to equity partnership, as well as her discussions with Mr Markos where he is alleged to have said to her in June 2011 “don’t tell me you’re pregnant, it will ruin all my plans” and asked in late 2012 whether she was “planning to have more children?”. She also relies on the respondents’ submission to the Workplace Gender Equality Agency in 2014-2015 which confirms that their law firm has not invited any women to join equity partnership despite the large number of senior women in fixed profit share partner positions, at least four of whom worked part time.

72    In relation to indirect discrimination, the applicant referred to the definition of “indirect discrimination” under s 5(2) of the SDA, and submitted that it requires the applicant to establish: (1) that a condition, requirement or practice existed that only the full time fixed profit share partners would be invited to equity partnership; and (2) that this condition, requirement or practice has or is likely to have the effect of disadvantaging women who are more likely than men to bear family responsibilities requiring them to work part time for at least the period before their children attend school and while their children attend the early years of primary school. To establish the practice that only full time fixed profit share partners would be invited to equity partnership the applicant relies on the statement made by Mr Markos to Ms Virgara in late 2016 that “the partnership agreement does not accommodate partners who work part time” and the report submitted by the respondents to the Workplace Gender Equality Agency in 2014-2015. The applicant contended that this practice of the respondents, if established, disadvantages women who are more likely than men to bear family responsibilities requiring them to work part time for at least the period before their children attend school and while their children attend the early years of primary school.

73    If established, the applicant noted that by virtue of s 7B and s 7C of the SDA, the respondents must prove that the condition, requirement or practice that only full time fixed profit share partners would be invited to equity partnership is reasonable in the circumstances. The applicant contends that the respondents will not be able to meet this burden of proof. Accordingly, the applicant’s claim sets out substantive allegations against the respondents which, if established on the evidence, would be capable of constituting contraventions of ss 17 or 14 of the SDA.

74    The applicant submitted that proper construction of the Agreement between the parties at the time of leaving the respondents’ firm, is not a bar to her commencing this application against the respondents as the Agreement does not include within its scope the applicant’s claim for sex discrimination.

75    The respondents submitted that the complaint has poor prospects of success.

76    The respondents submitted that to the extent the applicant’s claim alleges: (1) a failure to vary her fixed profit share contravened ss 17(3)(a) and 14 of the SDA, the Partnership Agreement did not provide the applicant with any “right” to a remuneration review or increase; (2) a failure to invite the applicant to become an equity partner was direct discrimination contravening ss 17(2)(a) and 14(2)(b) of the SDA, the applicant had no right (contractual or otherwise) to, nor was she given any guarantee of, advancement to equity partner; and (3) a failure to invite the applicant to become an equity partner was indirect discrimination, that allegation is, necessarily, mutually exclusive to direct discrimination. On the respondents’ submission, the same pleaded conduct cannot be both direct and indirect discrimination.

77    It was submitted that for those reasons, much (if not all) of the applicant’s claim is liable to be dismissed summarily, and the statement of claim is liable to be struck out. The respondents submitted that independently of the substantive defects in the applicant’s claim, the Agreement (referred to by the respondents as a “Deed of Release”) states that if the applicant makes a claim against the respondents and is awarded damages, then the subject of such a claim will have a credit against the amount of such damages in the amount of $108,000. Assuming, contrary to the submissions above, liability is established, the effect of clause 7 is that any award of damages will be reduced by $108,000. Having regard to awards of damages in discrimination cases, the respondents submitted that it is highly unlikely the applicant will receive any award after the credit is applied.

Consideration

78    As noted above, there was no dispute between the parties that the relevant principles are those discussed in James v WorkPower Inc, recognising though that the considerations identified by Mortimer J are not exhaustive.

79    While each of the considerations referred to above were addressed, the focus of the oral submissions was directed to delay and the merit of the claim. On that basis, and given that the case being reasonably arguable is necessary to the grant of leave, I begin with that consideration.

Reasonably arguable

80    As is clear from James v WorkPower Inc and Pathmanathan, the filter process created by s 46PO(3A) was not intended to set a high bar. Indeed, Steward J in Pathmanathan, considered that a case which was “not compelling” and “only just arguable” was sufficient to satisfy the merit aspect of the test, and indeed, sufficient to grant leave (in a context where an extension of time was required).

81    I note that the AHRC delegate did not address the issue of merit.

82    The respondents made detailed submissions based on the terms of the statement of claim, variously submitting that as pleaded there is no arguable cause of action. With respect, while some of the criticisms might mean that consideration is given to the drafting of the statement to ensure sufficient information is pleaded, or accurately pleaded, others, (e.g. that the applicant pleads a case in the alternative as a partner or an employee) are matters which are not unusual. Many of the complaints are that particular pleadings do not identify the basis of the allegation. Some of the criticisms (e.g. that certain matters cannot be argued as and/or in the pleadings) are matters which, if correct, are easily remedied. The applicant accepted in reply that some of the submissions she was then making addressing the criticisms included matters not currently in the statement of claim which might need amendment (e.g. the respondents identified (and the applicant accepted) some errors in establishing the material facts on which a benefit for the purposes of s 17(3) of the SDA was claimed), and that in some instances matters could be dealt with by particulars. In any event, it was accepted that attention might need to be given to the statement of claim (particularly in light of the criticisms made).

83    Necessarily the assessment of the merits at this stage is only conducted in a preliminary manner given the nature of the application, and it is well established that “it is important with judicial discretions concerning leave not to conflate the task of granting leave with the task of considering what is the correct conclusion on the facts and the law at final hearing”: James v WorkPower Inc at [39]. Consequently, it is not appropriate at this stage to give detailed consideration and determination of the merits of the arguments. Nor in that context, and without the benefit of full argument, is it appropriate to address the merits of the particular arguments in the reasons determining this application, where leave is to be granted.

84    Nonetheless, having said that, it is apparent from the material to which I was taken, including the position papers for the parties at the mediation, and the documentation in relation to the AHRC, that the nature of alleged unlawful discrimination is identified. It is also apparent from that documentation that there may be significant factual issues in dispute. The applicant will need to establish the factual basis of her claims.

85    There are also clear areas of argument to be had as to the meaning of at least some aspects of the legislative provisions, and if established, their application to the facts.

86    At this stage, and given that the bar is not high, despite what may be deficiencies in the statement of claim, the application cannot be said to be fanciful or so obviously misconceived in the manner explained in James v WorkPower Inc, so as to warrant leave being refused. The application is reasonably arguable within the meaning of James v WorkPower Inc.

87    It is necessary to turn to any other relevant consideration.

Delay

88    There is no doubt that some delay has occurred in this case, although the extent of that delay may be debatable.

89    From the time that the Agreement was entered into and the applicant’s relationship with the respondents formally ended, it took approximately sixteen months to file the complaint with the AHRC, approximately three and a half to four months over the twelve month period.

90    There are a number of observations to make.

91    First, the 12 months in which to file a complaint with the AHRC is not a time limit. Rather, it provides a discretionary basis on which the AHRC may terminate a complaint. A consideration of leave pursuant to s 46PO is not an application for an extension of time. Delay is but one factor to be taken into account when considering an application pursuant to s 46PO, the significance of which will depend on the circumstances of the case.

92    Second, on 3 June 2016, the day Mr Markos purported to terminate the applicant’s relationship with the respondents, the applicant contacted a lawyer. On 7 February 2017, the date of the Agreement being signed, the applicant made it plain to Ms Milner that she wished to pursue a claim for discrimination. On the applicant’s evidence she was diagnosed with depression and anxiety and prescribed medication subsequent to her purported termination. Due to her psychological state and her limited experience in discrimination and employment law, she relied on her legal team throughout to take the necessary steps to protect her interests and progress her claims of sex discrimination. Even so, it was the applicant who became concerned at the lack of progress and she contacted Ms Raper as a result. From that she informed her lawyers of the time constraints, and from there her lawyers acted quickly, with the complaint being lodged approximately two months later. It was not unreasonable that, in the circumstances she rely on her lawyers, and the delay ought not to be sheeted home to her directly: see for example, Comcare at [13]. More so given that she took steps when she became concerned about the lack of progress.

93    Third, the respondents’ submission that the applicant provided no explanation for the delay that occurred before the relationship was terminated is not borne out by the evidence. The respondents submitted that if the discrimination occurred as the applicant contends, and given she “felt” that to be the case in 2014 (as attested to in her affidavit), the complaint to the AHRC could have been made at that time. The applicant stated in her affidavit as follows:

I did not make a complaint of discrimination to the Australian Human Rights Commission at this time because I believed it would harm my career. Newcastle is a small community and I was afraid that if I made a complaint of discrimination against my firm, I would not be able to get a job with any other law firm in Newcastle. I determined to continue working with Hicksons and see if I would be appointed to equity partner in the future.

94    The respondents submitted that the decision not to make a complaint in 2014 was deliberate, and that the applicant changed her mind some years later and therefore, there is an additional delay based on a deliberate choice, which is a relevant factor on the grant of leave.

95    The applicant did give an explanation for that aspect of the delay, which cannot be said to be unreasonable. This is not to condone or encourage any delay, but it is naive to suggest that it was not the genuine explanation. If this application otherwise has merit, in the circumstances of this case, this is not a basis to prevent the application being pursued.

96    Fourth, although the complaint was not made to the AHRC until 25 May 2018, the respondents were on notice of the nature of the complaint from at least 20 September 2016 when a letter outlining the complaint was provided to Mr Markos. There was then a meeting on 12 October 2016 with two other partners, with the detail being provided by the applicant in the mediation paper in December 2016.

Prejudice

97    The respondents correctly submitted that there is no onus on them to prove prejudice. They submitted that the prejudice is, as acknowledged by the applicant, that memories fade.

98    This consideration must be viewed in the context, as discussed above, that the respondents were on notice of the allegations at a time much earlier than the filing of the complaint. The absence of any evidence from the respondents means there is no basis advanced from them, over and above what might be inferred from the delay.

99    I note the respondents submitted that it was the applicant who identified prejudice as a live issue in her complaint to the AHRC. While it is correct that the applicant addressed the issue of prejudice in the complaint, it appears that was in the context where it was no more than a recognition that there has been delay and her submission that there is no relevant prejudice to the respondents as a result. Prejudice is always a factor when considering the consequences of delay. Nothing can be inferred as to the significance of prejudice in this case on the basis the applicant proactively addressed the issue in her complaint to the AHRC.

100    The time when the events in this case are alleged to have occurred, although they go back some years, and cover some years, in the circumstances, does not unduly prejudice the respondents.

The attempt to resolve the matter

101    The respondents submitted that the fact the parties went to mediation and the applicant had an opportunity to address her claim there is a relevant factor. The respondents submitted that there is no evidence that the applicant was under some impediment in advancing the discrimination allegations there.

102    There is a dispute between the parties as to the meaning of the Agreement signed on 7 February 2017, which will no doubt be the subject of argument. However, it is at the very least arguable, that clause 7 of the Agreement on its face recognises the possibility of later proceedings against the respondents, by providing that any damages that may be awarded in such proceedings would be reduced by $108,000.

103    That the applicant was given an opportunity to advance her case at mediation does not render this matter any less significant to her. The respondents simply denied the case against them.

104    Moreover, the submission that even if the applicant succeeded with her claim she would not get more than the $108,000 already paid to her under the Agreement, has more weight in relation to that aspect of her claim of not receiving increases in her fixed share. However, as to her claim in relation to being an equity partner, there is no material before the Court as to the amount equity partners were receiving. The respondents did not put on any evidence in support of this submission. At this stage, there is no basis to consider other than that the equity partners received more profit, perhaps substantially more, than the fixed share received by the applicant.

The circumstances and nature of the allegations

105    That this matter is significant to the applicant is self-evident. The alleged conduct, if established, on the applicant’s evidence, has had significant and lasting impact on her. The circumstances of the case do not need to be unusual or novel. That does not make the matter any less significant to the applicant, and if anything, arguably may provide a basis to suggest that it could have broader implications.

Conclusion

106    As discussed above, the application is reasonably arguable within the meaning of James v WorkPower Inc. The delay in this matter, and the other considerations raised are not such as to render it inappropriate to grant leave. Given the nature of the arguments as outlined above at paragraph [39], and the consideration of the relevant factors from James v WorkPower Inc above at [29] – [30] this is an appropriate case to grant leave.

107    Having said that, attention does need to be addressed to the statement of claim to ensure that it accurately and appropriately sets out the basis of the applicant’s claims.

108    I grant leave nunc pro tunc. The originating application filed on 4 April 2019 is to be treated as filed with leave of the Court pursuant to s 46PO(3A) of the AHRC Act.

Costs

109    The applicant submitted that if leave is granted the costs of this application should be paid by the respondents on the basis that they opposed what the applicant submitted was an obvious case in which leave would be granted. The respondents opposed the submission, submitting that it is using costs to punish them for doing nothing more than it was legally entitled to do.

110    It is not appropriate to make the order sought. The application for leave was necessary on the basis that the complaint was dismissed by the AHRC for being filed over 12 months after the relevant act. It is the applicant who wishes to invoke the jurisdiction of the Court.

111    It is not appropriate to make any costs order at this stage. Costs should be dealt with at the completion of the hearing.

Associate:

Dated:    7 November 2019