FEDERAL COURT OF AUSTRALIA

Patrick Stevedores Holdings Pty Limited v Construction, Forestry, Maritime, Mining and Energy Union (No 2) [2020] FCA 1093

ORDERS

THE COURT ORDERS THAT:

1.    The parties are to provide to the Associate to Justice Lee within 14 days an agreed minute or competing minutes of order reflecting these reasons.

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

ORDERS

THE COURT ORDERS THAT:

1.    The parties are to provide to the Associate to Justice Lee within 14 days an agreed minute or competing minutes of order reflecting these reasons.

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

REASONS FOR JUDGMENT

LEE J:

A    INTRODUCTION AND BACKGROUND

1    The relevant facts relating to these proceedings are set out comprehensively in Patrick Stevedores Holdings Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union [2019] FCA 451; (2019) 286 IR 52 (Principal Judgment). These reasons assume a familiarity with the Principal Judgment. For simplicity, the defined terms are as set out in that judgment.

2    As I said in the Principal Judgment (at 58 [9]) when explaining the relief sought:

A bewildering and complex range of relief is sought, but it is unnecessary to deal with it all in this judgment. Following complaints made about the tardy service of material going to issues of loss said to have been occasioned by the alleged contravening conduct, on 20 July 2018, I made orders pursuant to s 37P(2) of the Federal Court of Australia Act 1976 (Cth), which, in effect, provided for the deferral of all issues of pecuniary penalty, injunctive relief and compensation. Accordingly, the initial hearing was directed to the issue of whether the applicants had established that the respondents engaged in the contraventions of the FW Act alleged.

3    Contravening conduct was established for the reasons set out in the Principal Judgment and hence now two issues remain to be determined in relation to the dispute between the parties: (1) the identification and quantification of any entitlement to statutory compensation; and (2) whether the Court should impose any pecuniary penalty. As I said in the Principal Judgment (at 114–5 [236]), I do not understand why injunctive relief would be pressed in all the circumstances. Given that the issue of whether a pecuniary penalty should be imposed and, if so, the quantum of any penalty would need to take into account any payment of compensation, it is common ground that the issue of statutory compensation should be determined separately and before any issue as to penalties.

4    Following delivery of the Principal Judgment on 2 April 2019, and the making of final orders on 18 April 2019, the parties were directed to attend a mediation. The mediation was unsuccessful and by an order dated 8 July 2019, the applicants, Patricks and Qube, were required to file a document titled “Factual Contentions in Relation to Claim for Statutory Compensation”, which was to set out, with particularity, each asserted fact relied upon by the applicants in their claim for statutory compensation (other than any asserted fact going only to the issue of quantification). A further order was made on 11 October 2019, extending to 18 October 2019 the deadline for Patricks and Qube to file any further evidence on which they intended to rely in relation to, inter alia, compensation. The time by which the respondents were to serve any evidence upon which they intended to rely was also extended to 29 November 2019.

5    The matter next came before the Court on 20 December 2019, when an order was made that the applicants file and serve any evidence in reply to the evidence filed by the respondents in both matters.

6    By the time the matter next came before the Court on 25 February 2020, because of the demands of a large number of cases on my docket listed for hearing (or about to be listed for hearing), it became evident that there would be significant difficulty in relisting these proceedings for a hearing as to quantum until late next year. In my estimate, it is likely that the hearing required to resolve the anticipated significant number of contested factual issues, together with submissions, would likely exceed one hearing week. As a consequence, I raised with the parties whether it would be consistent with the overarching purpose for various facts relevant to the question of statutory compensation to be referred to a referee for inquiry and report which, it seemed to me, would likely allow the issue of statutory compensation to be determined far more quickly than otherwise would be the case. In this regard, it may be possible, if a reference took place, to fit in any proceeding on the reference this year and, if the report was adopted, to deal with any remaining questions within a day’s hearing time this year.

7    To that end, on 25 February 2020, without any apparent opposition from the parties, I made the following orders:

1.    Pursuant to s 37P(2) of the Federal Court of Australia Act 1976 (Cth) the legal practitioners for the parties are to confer and provide to the Court with an agreed document, by 9 April 2020, which identifies the factual and legal issues that need to be determined in relation to the quantification of statutory compensation, and failing such agreement each of the parties are to provide the Court by that date with their contentions as to what those factual and legal issues are.

2.    The proceeding be listed for a further case management hearing at 9am on 17 April 2020 with a view to considering whether an order should be made for inquiry and report in relation to the determination of factual questions in respect of the issue of quantification.

8    The matter has now come back before me for further case management. Order 1 identified above has been belatedly the subject of compliance in both proceedings. Both Patricks and Qube are content for a reference to take place. The respondents now object to a reference upon the bases that: (a) they would suffer a forensic disadvantage if the matter was now to proceed to a reference; and (b) they would be deprived of the ability to exclude various aspects of the affidavit evidence filed in support of the claim for statutory compensation.

9    For the reasons that follow, notwithstanding the two related objections now raised by the respondents, I have determined to order a reference.

B    References Generally

10    There have now been a number of cases in recent years where the Court has considered whether or not to make an order for reference and the principles by which any application for such an order should be determined. In Kadam v MiiResorts Group 1 Pty Ltd (No 4) [2017] FCA 1139; (2017) 252 FCR 298 (at 312 [57] and [58]), I noted:

… [I]n considering whether to make order a reference, the starting (and in many cases the finishing) point will be the consideration of the overarching purpose. Of course, s 37M(2) gives some guidance as to how this is done by setting out a number of objectives which, without limiting s 37M(1), comprise the following:

(a)    the just determination of all proceedings before the Court (s 37M(2)(a)) (Justice Factor);

(b)    the efficient use of the judicial and administrative resources available for the purposes of the Court, and the efficient disposal of the Court’s overall caseload (ss 37M(2)(b) to (c)) (Efficiency Factor);

(c)    the disposal of the proceedings in a timely manner (s 37M(2)(d) (Timeliness Factor); and

(d)    the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute (s 37M(2)(e)) (Cost-effectiveness Factor).

As can be seen, these four factors reflect what might be described as both party-centric and the macro considerations in relation to the administration of justice, to which I have already made reference. They are not, however, exclusive considerations and the considerations in s 37M(2) should not be treated as ‘tick box’; a wider evaluative process is to be undertaken: see Irwin v Irwin [2016] FCA 1565 at [37] per Charlesworth J.

11    I repeat what I said in Kadam (at 300–1 [4] and [5]), that the efficiency of litigation in this Court would be enhanced by the profession giving increased attention to the prospect of suitable questions arising in a proceeding being referred to a referee for inquiry and report, and that attention to adopting the expedient of a special jury in suitable cases is consistent with parties (and those that advise them) giving proper attention to facilitating the overarching purpose provisions contained in Pt VB of the Federal Court of Australia Act 1976 (Cth) (Act). Despite these comments by me and others, including the Chief Justice (see Sheehan v Lloyds Names Munich Re Syndicate Ltd [2017] FCA 1340; (2017) 19 ANZ Ins Cas ¶62–158 at 76,024–6 [7]–[13]), there appears, at least in some quarters, for there to be resistance to references being ordered even when it would demonstrably save time and cost to both the parties and the Court. Perhaps that is a legacy of the fact that in some Australian jurisdictions references were historically not ordered anywhere near as frequently as they have been in New South Wales over the last two generations and indeed, were rarely (if ever) ordered unless it was with the consent of the parties. Those days should now be regarded as having passed into history. Yet again, the point expressed almost 30 years ago by Gleeson CJ, the then Chief Justice of New South Wales, needs to be reinforced: “[t]he proposition that all litigants are entitled to have a judge … decide all issues of fact and law that arise in any litigation, is unsustainable”: Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 (at 558).

12    The notion that any type of litigation in this Court, including Fair Work litigation, should be regarded as immune from consideration of whether a special jury process could be appropriate to assist in the resolution of legal and factual issues, is one which is without merit. Having said that, the fact that the current litigation is under the Fair Work Act 2009 (Cth) (FWA) is clearly a relevant consideration in ordering a reference (including the fact that proceedings under the FWA are what has been described as a “no-costs” jurisdiction as between the parties).

C    REASONS WHY A REFERENCE SHOULD BE ORDERED

13    The starting point is that there was little suggestion that the Efficiency Factor, the Timeliness Factor, and the Cost-effectiveness Factor (see [10] above) did not militate in favour of a reference order being made. Indeed, it is difficult to see how a contrary argument to this effect could have been sensibly adopted. It is obvious that the counterfactual to the ordering of a reference (with the possibility of a day’s further hearing if the report was adopted) would be a full quantum hearing of more than a week’s duration (at best) towards the end of next year. This is a prospect that would be much slower, significantly more costly and plainly less efficient. This is important because the disadvantage in the costs associated with the reference (including the likely inability to recover those costs as part of an adverse costs order due to s 570 of the FWA) is substantially outweighed by the fact that I find that the likely unrecoverable costs of any counterfactual approach would substantially exceed any reference costs.

14    The submissions made by the respondents, with respect sensibly, focussed on the Justice Factor, that is, whether the making of an order for inquiry and report in the present circumstances would facilitate the just determination of all proceedings before the Court (see s 37M(2)(a) of the Act).

15    The starting point is to identify what the scope of the proposed reference would be. This can be seen by having regard to the issues in the Patricks Proceeding (although the questions in the Qube Proceeding will be substantially to the same effect).

16    The document jointly prepared by the parties pursuant to order 1 on 25 February 2020 is in the following terms:

Agreed Factual and Legal Issues to be Determined In Relation To Claim For Statutory Compensation

…

A.    The issues to be determined in relation to statutory compensation (in respect of each head of damage):

Claim A – Additional Rail Loop trucks

1.    In the period April to 12 June 2017, did Patrick Operations engage additional rail loop trucks to clear import containers in the Rail Yard?

2.    If yes, were additional rail loop trucks engaged because of the Ban and/or the General Stoppage of Work?

3.    If yes, what was the cost to Patrick Operations of engaging those additional rail loop trucks?

4.    Was that cost a loss suffered by Patrick Operations because of the Ban and/or General Stoppage of Work?

Claim B - Cost of Inefficient Use of Rail Employees Labour

5.    In May 2017, did Patrick Holdings engage additional shifts of rail employee labour to load and unload trains in the Rail Yard?

6.    If yes, were the additional shifts of rail employee engaged because of the Ban and/or the General Stoppage of Work?

7.    If yes, what was the cost to Patrick Holdings of engaging those additional shifts?

8.    Was that cost a loss suffered by Patrick Holdings because of the Ban and/or General Stoppage of Work?

Claim C – Increased Unproductive Time by Employees Working on Cranes

9.    In the period April to June 2017, did Patrick Holdings allocate additional crane teams to process container volumes?

10.    If yes, were additional crane teams allocated because of the Ban and/or General Stoppage of Work?

11.    If yes, what was the cost to Patrick Holdings of allocating those additional crane teams?

12.    Was that cost a loss suffered by Patrick Holdings because of the Ban and/or General Stoppage of Work?

Claim D – Reduction in volume from Fletcher

13.    In the period commencing April 2017, did the volume of containers moving through the Terminal originating from the customer Fletcher decline?

14.    If yes, was the decline because of the Ban and/or the General Stoppage of Work?

 15.    If yes, what was the cost or value to Patrick Operations of that decline?

16.    Was this cost or value a loss suffered by Patrick Operations because of the Ban and/or the General Stoppage of Work?

(underline and italics added)

17    It can be seen that the questions adopt a similar form: a series of factual inquiries directed at ascertaining whether a “loss” existed and whether there was what might be described as “factual causation”, and then a further explicit question as to whether that loss was related, as a matter of legal causation, to the contravening conduct. In this regard, in the various “causation questions”, the statutory word “because” (which frames the causation inquiry) is used: see s 545(2)(b) of FWA.

18    As I indicated during the course of argument, if an order for reference was to be made, using Claim A as the example, I would make the scope of the reference questions to be along the lines of questions 1, 2 and 3, but leave question 4 for determination by the Court.

19    As noted above, the only opposition to this course by the respondents was twofold (see [8] above). It is convenient to address each of these arguments in turn.

I    Forensic Disadvantage

20    The respondents were quite specific about the forensic disadvantage that they contended would be suffered. On 29 November 2019, an expert report of Dawna Kathleen Wright was provided. Ms Wright was an independent expert retained to provide her views on the quantification of losses allegedly suffered “as a result of the industrial action”. In broad terms, in relation to both proceedings, Ms Wright expressed the view that Patricks and Qube have failed to quantify any loss suffered as a result of the industrial action. This is because those parties had not explained the specific activities during the industrial action that had adversely impacted their operations, and that Patricks and Qube had therefore not assessed, and therefore Ms Wright did not have sufficient information to assess, any loss suffered as a direct consequence of the industrial action. In relation to each head of claim, Ms Wright has provided her assessment which, in regard to almost all claims, is that “insufficient information” has been provided.

21    The short point made by the respondents is that in circumstances where Ms Wright has explained, with some particularity, the deficiencies in the material filed in chief on behalf of both Patricks and Qube, it would operate a signal unfairness for Patricks and Qube to have a further opportunity to “backfill” their case, that is, by filling in perceived “gaps” during the course of a reference.

22    There is some superficial attraction to this argument, but it does not assume decisive importance. In part, this is because in response to a query raised by me, both Patricks and Qube are content to have the reference proceed on the basis of the material they have filed thus far. Accordingly, unlike some other references, save for the possibility of a view (a matter to which I will return below), the conclusions drawn by the referee will be largely on the basis of the material already filed. When I enquired as to whether this ameliorated the unfairness identified by the respondents, counsel noted that it did not cure all difficulties, because since the report of Ms Wright was filed, Patricks had filed so-called “reply evidence” which is not, in truth, in “reply”.

23    In my view, this difficulty can be resolved by me ruling upon the question of what part of the material filed in “reply” is really material in reply, and only allowing material filed in chief and properly in reply to be provided to the referee. It would follow that the material before the referee would be the evidentiary material filed in accordance with the orders of the Court, together with the brief statement of findings of fact and law contended by each party to be provided to the referee pursuant to r 28.65(7) of the Federal Court Rules 2011 (Cth) (FCR).

24    I am satisfied that orders could be calibrated to ensure that the “gap filling” suggested by the respondents (if there are any such gaps to fill) could not be achieved by Patricks and Qube providing additional evidentiary type material to the referee. Having said that, like in most references, the rules of evidence would not apply. In the event that the referee regarded it appropriate to make enquiries to clarify or further understand the material that has been provided, then I would not impose some fetter on the referee making enquiries that the referee thought necessary or appropriate. But the referee would understand that this would not amount to a process where so-called “gaps” in the material thus far provided by Patricks and Qube could be rectified by the referee seeking to elicit what amounts to new material.

25    Apart from anything else, confining the reference in this way would seek to further the overarching purpose by ensuring the reference process could be conducted as cheaply and as efficiently as possible. It follows that I do not think that there is substance in this objection.

II    Loss of Hearsay Objection

26    Related to the forensic disadvantage point, was an issue raised that part of the evidence filed in support of the claim (including the largest component of the claim advanced by Patricks) was said to be inadmissible hearsay. The respondents contended that it would be entitled to exclude this evidence at a final hearing with the consequence that Patricks would be deprived of evidence to support this aspect of their claim. I do not think this argument to be of substance. Apart from anything else, well in advance of any counterfactual hearing, I would have required objections to evidence to have been taken. If a well-founded hearsay objection was taken, then it would be unusual to prevent a party producing additional material to cure the objection. The time has long past where litigation could be perceived as some sort of “game”, where technical evidentiary points could prevent a valid claim being the subject of proof, provided a procedural unfairness did not result.

27    I should note that the attitude taken by the respondents has been commendable in that they have indicated, at an early stage, the perceived deficiencies in the evidence in chief advanced by Patricks and Qube. This is consistent with the overarching purpose and is the opposite of the “footprints in the sand” approach to litigation which has been the subject of criticism by this Court. Although the rules of evidence would not apply to this reference, this does not mean that the referee will not have regard to the inherent weight of the material put before him or her. Ultimately, the rule against hearsay reflects the accumulated experience of the law that hearsay evidence is inherently less reliable than direct evidence. Accordingly, no doubt the referee will assess the material and give it such weight as the referee regards as appropriate in all the circumstances. Again, I do not think this objection is decisive.

D    CONCLUSION

28    In circumstances where it seems to me that there are very powerful discretionary factors in favour of a reference and that the objections raised by the respondents can either be largely ameliorated or, in truth, are of insignificant weight, then I am comfortably satisfied that a reference should be made. I should, however, mention two final matters.

29    First, there is the prospect of a view. During the course of submissions, senior counsel for Patricks indicated that it may be appropriate for a referee to conduct a view. A view took place for the purposes of the liability hearing and was of some assistance in understanding the other evidence adduced. It seems to me that a view may be of some utility to a referee in being able to understand the material provided to the referee and this seems a sensible course to adopt.

30    Secondly, the respondents have noted that there may be some disadvantage in the individual respondents not being represented on any reference if the reference was to take place without legal assistance. There should be a “level playing field”. In my view, like in many references, the overarching purpose would be furthered and costs would be reduced if the involvement of lawyers was limited to providing the materials and a statement to the referee, with any other involvement of lawyers in the inquiry only occurring if the referee considered it necessary.

31    Having identified that I consider a reference to be appropriate, I propose to adjourn the matter for 14 days to allow the parties to agree on orders reflecting the proposed procedure that I indicated during the course of the recent case management hearing. It seems to me that this is a case for a referee who is an experienced barrister (perhaps a senior junior or a silk) rather than a “subject matter” referee. If the parties can agree on the identity of such a referee then that would be of assistance, but if not, I would propose to select an appropriate referee at the same time I settle upon the precise orders for reference.

Associate:

Dated:    31 July 2020