Federal Court of Australia

Grochowski v Kearney [2020] FCA 1248

ORDERS

THE COURT ORDERS THAT:

1.    The application for leave to appeal is dismissed.

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

REASONS FOR JUDGMENT

O’CALLAGHAN J:

Introduction

1    This is an application for leave to appeal and to appeal against an interlocutory order of a judge of the Federal Circuit Court. The order dismissed an application by the second respondent in the proceeding below to strike out certain paragraphs of the applicant’s amended statement of claim, or alternatively for the provision of particulars. The claim made against the second respondent is that he was involved in contraventions of the Fair Work Act 2009 (Cth) (the Act) by the first respondent, within the meaning of s 550(1) of the Act. The applicant in the proceeding below seeks, among other things, an order that the second respondent pay a pecuniary penalty pursuant to s 546(1) of the Act.

Judge’s findings on deemed admissions

2    During the course of her reasons, the primary judge reasoned as follows (at [40]-[43]):

40.    Counsel for the Respondents did not refer to the Second Respondent’s Amended Defence in submissions. Paragraph 61B of the Second Respondent’s Amended Defence pleads:

As to paragraph 61B:

(a)    He does not plead to paragraph 61B as he claims the privilege against self-exposure to a penalty;

(b)    Further, the allegations in paragraph 3 of the Amended Statement of Claim do not sustain the allegation that the Second Respondent participated in the alleged contraventions of the First Respondent in respect of minimum commission entitlements under the Award.

41.    In the Second Respondent’s Amended Defence, the response to each of the claims made against the Second Respondent is substantially the same. The response is to not plead to the relevant claim and then to claim privilege against self-exposure to a penalty.

42.    By reason of r.16.07(1) of the Federal Court Rules, a party pleading to an allegation of fact [in] another party’s pleading must specifically admit or deny every allegation of fact in the pleading. Pursuant to r.16.07(2) of the Federal Court Rules allegations that are not specifically denied are taken to be admitted. Therefore by not specifically denying the relevant facts pleaded, the Second Respondent is deemed to have admitted the relevant facts.

43.    Therefore, as the Second Respondent has not denied the relevant facts in paragraph 61B of the Second Respondent’s Amended Defence, he is deemed to have admitted the facts in paragraph 61B pursuant to r.16.07(2) of the Federal Court Rules. The Second Respondent is therefore not entitled to further particulars of material facts which are admitted. This also applies to each paragraph referred to in paragraph 1 of the Respondent’s [strike out application].

(Footnote omitted, emphasis added.)

3    With great respect to the primary judge, the critical conclusion in the words emphasised in the last paragraph of those reasons is clearly wrong. It is well established that a personal respondent to a penalty proceeding is entitled to put the applicant to proof of its case, and that such a respondent can decline to admit matters alleged against it. To the extent that the rules of pleading might suggest otherwise, including r 16.07(2) of the Federal Court Rules 2011 (Cth), which says that allegations that are not specifically denied are taken to be admitted, those rules are required to be modified accordingly. See A & L Silvestri Pty Ltd v Construction, Forestry, Mining and Energy Union [2005] FCA 1658; 226 ALR 247 at 251 [17] (Gyles J); MacDonald v Australian Securities and Investments Commission (2007) 73 NSWLR 612 at 619 [39] (Spigelman CJ) (“the law of privilege confers substantive rights to which procedural rules must yield unless there is clear statutory authority to the contrary”); Australian Securities and Investments Commission v Mining Projects Group Ltd (2007) 164 FCR 32 at 37 [12] (Finkelstein J); Anderson v Australian Securities and Investments Commission [2012] 2 Qd R 401 at 406-407 [17], 407 [20], 409-410 [27], 411-412 [32]-[36] (Philip McMurdo J, Holmes and White JJA agreeing); Fair Work Ombudsman v Hu [2017] FCA 1081 at [12]-[13] (Rangiah J).

4    The applicant below (the respondent to this application) conceded that the reasoning of the primary judge on the deemed admissions issue was wrong. The point was not mentioned at the hearing below, let alone argued, and the judge was thus not assisted by submissions from counsel.

5    If that was all there were to it, the second respondent’s application for leave to appeal would be granted, his appeal would be allowed and the proceeding in all likelihood would be remitted for his application to be reheard.

Judge’s finding that the challenged particulars were adequate

6    But there is more to it. Later in her reasons, the judge went on to say (at [48]-[56]):

48.    The second complaint is that in both the ASC [Amended Statement of Claim] and the FASC [Further Amended Statement of Claim] there is a failure to give particulars relevant to the knowledge or condition of mind of the Second Respondent.

49.    Counsel for the Respondents referred to the following paragraphs in the ASC and the FASC: 61A, 61B, 61C and 61D to 61G, 61H to 61K, 61M to 61P, 61Q and 61U, 61V to 61Z and 62. The Respondents’ Application sought that each of these paragraphs be struck out from the ASC and also paragraphs 3, 60, 61 and 61L.

…

51.    Counsel for the Respondents submitted that the FASC did not rectify the deficiencies in the ASC as it failed to comply with Rules 16.41 and 16.43 of the Federal Court Rules. It was submitted that the FASC did not plead the necessary particulars alleged of the Second Respondent’s condition of mind (r.16.43(1)) or relevant state of knowledge (r.16.43(2)).

52.    In response Counsel for the Applicant submitted that:

a)    The Respondents’ Request for Further and Better Particulars of the Amended Statement of Claim was oppressive on the basis of being prolix and also for making impermissible requests for particulars.

b)    The Respondents’ Application to compel the Applicant to provide a further response to the Respondents’ Request for Further and Better Particulars of the Amended Statement of Claim was also oppressive.

c)    Many of the particulars sought in the Respondents’ Request for Further and Better Particulars of the Amended Statement of Claim were not within the knowledge of the Applicant, as the Applicant was still awaiting discovery from the Respondents …

53.    In the Applicant’s Response to the Respondents’ Request for Further and Better Particulars of the Amended Statement of Claim, the Applicant has already provided responses to the Respondents’ Request for Further and Better Particulars of the Applicant’s Amended Statement of Claim. I have read the particulars that have been provided by the Applicant in the Applicant’s Response to the Respondents’ Request for Further and Better Particulars of the Amended Statement of Claim. I have considered the information provided in the document as a whole and I consider that the particulars provided of the Second Respondent’s knowledge or state of mind are sufficient. In forming my opinion I have taken into account r.16.45 of the Federal Court Rules and concluded that the Second Respondent is on fair notice of the case that is to be made against him. I have also taken into account s.42 of the Federal Circuit Court Act, which requires that proceedings before this Court must proceed without undue formality and requires that I must endeavour to ensure that proceedings are not protracted.

54.    I have also taken the following matters into account.

a)    On 7 October 2019 the Court made orders that the Respondents make discovery by affidavit, of the documents referred to in Order 6 of the Orders, on or before 7 February 2020. Therefore the Applicant is still awaiting discovery from the Respondents.

   b)    On 7 October 2019 the Court made trial directions ordering that:

i)    The Applicant file and serve Further and Better Particulars of loss by 28 February 2020;

ii)    Should the Second Respondent waive his privilege against self-exposure to penalty, he must by 3 April 2020 at the conclusion of the Applicant filing and serving his further and better particulars of loss, file and serve:

A.    An Amended Defence;

B.    Any affidavit and all other material on which he proposes to rely at the liability hearing; and

C.    An Outline of Submissions addressing the relevant statutory considerations;

iii)    The Applicant file and serve any affidavits and other material to be relied upon for the purposes of the liability hearing by 6 March 2020;

iv)    The Applicant to file and serve an Outline of Submissions on or before 6 March 2020;

 v)    The Respondents to file and serve any affidavits to be relied upon [for] the purposes of the liability hearing by 3 April 2020;

vi)    The Applicant to file and serve an Outline of Submissions in Reply on or before 17 April 2020;

vii)    The parties exchange with each other and forward by email to the chambers of [the primary judge] objections to the admissibility of evidence in tabular form which identifies the affidavit, the particular paragraph or part thereof or an annexure objected to and the reasons for the objection on or before 17 April 2020;

viii)    The Applicant and the Respondents to file a joint Court book by 20 April 2020.

55.    As this proceeding is to be conducted with Applicant’s trial affidavits and Outline of Submissions to be filed prior to the commencement of the trial, the Second Respondent will be further informed as to the Applicant’s case well prior to the commencement of the trial.

56.    Having considered the matters discussed in paragraphs 48 to 55, I do not propose to either strike out the Applicant’s pleadings or require further particulars from the Applicant, as sought in the [Respondents’] Application.

(Footnotes omitted, emphasis added).

7    Counsel for the applicant before me submitted that this passage of reasoning was infected by the earlier incorrect reasoning about deemed admissions. I do not agree. In my view, read as a whole, the primary judge’s reasons at [48]-[56] are an independent basis for her ruling not to order that further particulars be provided in respect of the claim against the second respondent, or to strike out the identified paragraphs of the pleading: cf Dubow v Fitness First Australia Pty Ltd [2011] NSWCA 401 at [11], [15] (Campbell and Meagher JJA).

Test applicable to review of a decision on a point of practice or procedure

8    It is worth repeating the well-known passage from the judgment of Jordan CJ in In re the Will of FB Gilbert (Deceased) (1946) 46 SR (NSW) 318 at 323:

[T]here is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal.

9    That admonition that a tight rein must be kept upon interference with orders of the type made by the judge in this case was cited with approval by the High Court in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177 (Gibbs CJ, Aickin, Wilson and Brennan JJ), and more recently in Nationwide News Pty Ltd v Rush [2018] FCAFC 70 at [4] (Lee J) and Australian Broadcasting Corporation v Chau Chak Wing [2019] FCAFC 125 at [3] (Besanko, Bromwich and Wheelahan JJ).

Consideration

10    I was taken during oral submissions from counsel for both parties to the amended statement of claim, the relevant request for particulars, the particulars given in response, and the relevant pages of the transcript of counsel’s submissions on the point made to the primary judge.

11    In my view, the judge’s decision not to order the giving of the further particulars sought, or to strike out identified paragraphs of the amended statement of claim, is not attended with sufficient doubt to warrant reconsideration. It seems to me that in circumstances where the pleaded particulars of knowledge given are detailed and, as the judge said, where in any event by the time of trial the second respondent will have the benefit of the applicant’s affidavit evidence and a written opening, the judge’s decision not to order further particulars is not only not attended by doubt, but it is correct. I am also fortified in that conclusion by the fact that the applicant did not, either before the primary judge or in this court, identify with any specificity why the particulars that had been provided did not sufficiently enable him to understand the case that he has to meet. It follows, needless to say, that the judge was also correct not to strike out any part of the pleading.

12    For those reasons, the application for leave to appeal will be dismissed.

Costs

13    Given the judge’s finding that a significant part of the case against the second respondent was deemed to have been admitted, it was understandable that he would seek to reverse that (clearly wrong) finding, which he has succeeded in doing.

14    The respondent to this application sought his costs (see s 570 of the Fair Work Act 2009 (Cth)). But in my view, in light of what I said in the preceding paragraph, this is not a case where it can be said that the making or continuing of the application was unreasonable, so I will not make such an order.

Associate:    

Dated:    28 August 2020