Federal Court of Australia

Revill v John Holland Group Pty Ltd [2020] FCA 1633

ORDERS

THE COURT ORDERS THAT:

1.    The respondent's interlocutory application dated 3 July 2020 is dismissed.

2.    There is no order as to costs in respect of the respondent's interlocutory application.

3.    The applicant's interlocutory application dated 17 July 2020 is dismissed.

4.    The costs of and incidental to the applicant's interlocutory application are the respondent's in any event.

5.    On or before 20 November 2020, the applicant must file and serve a substituted statement of claim.

6.    On or before 4 December 2020, the respondent must file and serve a substituted defence.

7.    The matter is listed for a case management hearing on 11 December 2020 at 9.30 am AWST.

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

REASONS FOR JUDGMENT

JACKSON J:

1    In this proceeding the applicant, Mr Revill, claims damages against the respondent, John Holland Group Pty Ltd (JH Group), for alleged non-payment of income protection insurance. These reasons concern two interlocutory applications. One is an application by Mr Revill to join as respondents two related entities of JH Group. They are John Holland Pty Ltd (JHPL) and JHG Mutual Pty Ltd (JHG Mutual). The other is an application by JH Group for the dismissal of Mr Revill's claim due to default. At a hearing on 6 November 2020 I dismissed both applications. These are my reasons for doing so.

2    JH Group opposed the application for joinder of JHPL and JHG Mutual on the basis that adding them as parties was futile, because the relevant limitation period for Mr Revill's proposed claim against each of them has expired. The issue in the joinder application was whether JH Group's position in that regard was both correct, and so clearly correct as to justify what will, in effect, be disposal on a summary basis of any claim Mr Revill may have against JHPL and JHG Mutual.

3    JH Group applied for dismissal of the claim against it because on 11 May 2020 the court ordered Mr Revill's amended statement of claim to be struck out with leave to re-plead within four weeks of those orders, but no further amended statement of claim or substituted statement of claim has since been filed. The issues raised by the application for dismissal are whether this means that Mr Revill is in default and, if he is, whether the court should exercise the discretion to dismiss.

4    I will deal with the joinder application first because it requires some description of Mr Revill's present and proposed claims and they are also relevant background to the application for dismissal for default. I will describe the underlying facts as appear from the pleadings and materials filed in support of the interlocutory applications as necessary to understand the background to the proceeding, and these reasons. However nothing in these reasons should be taken as a firm finding of fact on any question likely to be in issue at any trial of the proceeding. As will be seen, the scope of such issues and the evidence adduced in relation to them is highly uncertain at this stage.

5    For present purposes 'the pleadings' include an amended statement of claim which Mr Revill filed on 2 October 2019, being the one that has been struck out without any replacement filed. While there is no statement of claim which stands as Mr Revill's pleading on the court file, I have had regard to the amended statement of claim in order to seek to understand the factual and legal bases of Mr Revill's claim.

The joinder application - Mr Revill's present claim and JH Group's defence

6    The amended statement of claim alleged that in February 2013 Mr Revill was employed by JH Group on a full time basis as a storeman at the Wheatstone Project near Onslow, Western Australia. It claims that his terms and conditions of employment were 'provided for' by an enterprise agreement which had effect under the Fair Work Act 2009 (Cth) (FWA), which was called the John Holland Wheatstone Project Agreement (EA). The copy of the EA in evidence, however, indicates that the employer is not JH Group, but JHPL.

7    In the amended statement of claim Mr Revill relied on the EA and a document titled 'Employee Financial Support Plan' stated to be effective 1 July 2012 (EFS Plan) as creating an obligation on the part of JH Group to provide income protection insurance to him. It is not necessary to describe the provisions of those instruments in any detail. They provide a basis to claim that JHPL, at least, undertook an obligation to provide income protection to Mr Revill in circumstances which included non-work related injuries but subject to an exclusion for pre-existing conditions. They also provide a basis to claim that JHPL performed that obligation by entering into a policy of insurance (or similar set of obligations) with JHG Mutual as insurer. It is relevant to note that the statement of claim did not claim that there was a breach of any statutory provision which might attract the jurisdiction of this court, such as the FWA or the Insurance Contracts Act 1984 (Cth) (ICA).

8    It appears from the EFS Plan that assessment for financial support in the event of injury to employees is made on a case by case discretionary basis on the advice of JHG Mutual and another company, Regis Mutual Management Pty Ltd, which is called its 'manager'.

9    Mr Revill's claim for income protection insurance arose because of a non-work related injury which he said he suffered on 19 June 2013. On 4 July 2013 he applied for income protection insurance. According to his pleading he did so under the EA and the EFS Plan.

10    On 21 August 2013 Regis, purportedly writing on behalf of JH Group, wrote to Mr Revill refusing the claim on the basis of an alleged pre-existing injury or sickness. Mr Revill claimed this was a breach of the terms of the EA and the EFS Plan, because he was not suffering from a pre-existing injury at relevant times. He claimed that he challenged the decision with certain review bodies, to no avail.

11    Mr Revill's originating application was filed on 15 August 2019. In it, he sought damages from JH Group for non-payment of the income protection insurance.

12    In its defence, JH Group relevantly denied that Mr Revill was employed by it, and alleged that he was employed by JHPL. It pleaded that his contract of employment was constituted by documents that do not include the EA or the EFS Plan. It also alleged, however, that the EA 'applied to' and 'covered' Mr Revill's employment with JHPL within the meaning of those terms in the FWA, while denying that the EA provided any contractual terms and conditions of employment. In broad terms, JH Group's position on the EFS Plan was that the payment of income maintenance was discretionary and subject to the conditions in the EFS Plan, but in any event the EFS Plan did not provide any contractual terms and conditions. The defence also briefly joined issue on the claim for income protection insurance on its merits.

Mr Revill's proposed claims against JHPL and JHG Mutual

13    There is no draft amended or substituted statement of claim which pleads claims against JHPL or JHG Mutual. Mr Revill's written submissions on the joinder application articulated the claim in a certain way although they did not state the precise basis on which the cause of action arose, such as a specific statutory provision or common law wrong. More clarity emerged in oral submissions made on behalf of Mr Revill. His counsel confirmed that the claim which Mr Revill wished to mount against JHG Mutual, at least, was based on s 48 of the ICA. Subsection 48(1) provides:

A third party beneficiary under a contract of general insurance has a right to recover from the insurer, in accordance with the contract, the amount of any loss suffered by the third party beneficiary even though the third party beneficiary is not a party to the contract.

I note that this subsection was amended so as to be put in its present form on 28 June 2013.

14    'Third party beneficiary' under a contract of insurance is defined in s 11 to mean:

a person who is not a party to the contract but is specified or referred to in the contract, whether by name or otherwise, as a person to whom the benefit of the insurance cover provided by the contract extends.

15    It appears that the case Mr Revill wished to mount under s 48 started with the proposition that under the EA, JHPL was obliged to procure income protection insurance for its employees. JHPL discharged that obligation by entering into an insurance policy (or similar set of obligations) with JHG Mutual. So JHG Mutual was the insurer and JHPL was the insured under a contract of general insurance. As an employee of JHPL, the benefit of the cover under that contract extended to Mr Revill. So under s 48 he had a right to recover against JHG Mutual.

16    In order to support his ability to make that case, Mr Revill relied on the obligations on JHPL in the EA, a reference to JHG Mutual in the EA, the description of employee entitlements described in the EFS Plan and, possibly, on the EFS Plan itself as a document with contractual effect. But he was not able to identify which documents make up the contract of general insurance between JHPL (and/or JH Group) and JHG Mutual which is required for s 48(1) to apply. He is not a party to that contract (assuming it exists at all) and for the most part the internal arrangements between members of the John Holland group are not visible to him. While he has some potentially relevant documents, it may be that there are more which are solely in the possession of members of the John Holland group. Mr Revill has not applied for preliminary discovery, and discovery in the present proceeding has not occurred.

17    Mr Revill's counsel therefore submitted that while, on the face of things, JHG Mutual is the 'insurer' for the purposes of s 48, Mr Revill does not know the precise nature of the relevant relationships between JH Group, JHPL and JHG Mutual, and which of those entities may have breached a relevant obligation. So, as his counsel said, he could not precisely articulate how JHPL has an obligation to pay compensation to his client. Counsel for Mr Revill frankly acknowledged that the extent to which JHPL had relevant obligations, and the basis on which it conducted activities in relation to the insurance arrangements, were speculative. He accepted that it was not clear that he had articulated any basis for a claim against JHPL. Similarly, although counsel said that JH Group is 'part of the matrix', whether it is acting as agent for the employer JHPL or as an 'administrative arm' is unknown.

18    There was also a lack of clarity as to whether Mr Revill also might pursue a cause of action for breach of the EA, or otherwise under the FWA. At first, his counsel disavowed any such claim, but in reply submissions he sought to retract that, so as to seek to reserve Mr Revill's right to pursue such a cause of action at some later time. But whether he has reserved that right or not, it was clear that the joinder application was not based on any potential claim under the FWA and, as I have said, no specific cause of action was articulated against Mr Revill's former employer JHPL, under the FWA or at all.

19    JH Group submitted in response to the joinder application that any cause of action under a contract of insurance has a limitation period of six years by reason of s 13 of the Limitation Act 2005 (WA). I note for completeness that if the claim is under s 50 (and s 545(2)) of the FWA, the limitation period there is also six years: FWA s 544. If JHPL or JHG Mutual are joined as respondents, the start date of the proceeding for them will be the date on which the order for joinder is made: Federal Court Rules 2011 (Cth) r 9.05(3). So if the action Mr Revill wishes to pursue against them is time barred as at the date of any joinder orders, that will give them a complete defence to his claim.

Consideration of Mr Revill's joinder application

20    Mr Revill's application for joinder of JHPL and JHG Mutual was brought under r 9.05(1) of the Federal Court Rules. That rule provides:

Joinder of parties by Court order

(1)    A party may apply to the Court for an order that a person be joined as a party to the proceeding if the person:

(a)    ought to have been joined as a party to the proceeding; or

(b)    is a person:

(i)    whose cooperation might be required to enforce a judgment; or

(ii)    whose joinder is necessary to ensure that each issue in dispute in the proceeding is able to be heard and finally determined; or

(iii)    who should be joined as a party in order to enable determination of a related dispute and, as a result, avoid multiplicity of proceedings.

Mr Revill relied on r 9.05(1)(a) and r 9.05(1)(b)(ii). I proceed on the basis that if Mr Revill has an arguable cause of action against either of JHPL or JHG Mutual, one or both of those sub-rules authorise their joinder. The problem is that for both companies, there is doubt about whether he does have an arguable cause of action with reasonable prospects of success, because he may be time barred. In relation to JHPL, there is the additional problem that Mr Revill has not even articulated a cause of action against it.

21    As to the standard to be applied in determining whether a proposed claim is sufficiently arguable for the purposes of joinder, both parties relied on Bupa Australia Pty Ltd v iSelect (No 2) [2012] FCA 1277 where, at [23], Dodds-Streeton J held that an applicant for joinder 'must show an arguable case against the parties proposed for joinder, at least to the standard of being able to resist an application for summary judgment if the relevant persons had been sued in separate proceedings'. That standard in turn requires an inquiry into whether the prosecution of the proceeding has no reasonable prospect of success, not whether it is hopeless or bound to fail: Spencer v Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118 at [52]. That is the standard I will apply here.

22    So the application for joinder turns on the question of whether the argument that Mr Revill's proposed claims are time barred is so strong that he has no reasonable prospect of success. That requires, first, identification of when the causes of action arose. Counsel for Mr Revill submitted that they arose when his client received notification of the rejection of his claim in the letter from Regis of 21 August 2013. JH Group disputed that, saying that the cause of action for a claim under an insurance policy arises at the time of the injury entitling the insured (or third party beneficiary) to claim (here, according to JH Group, 19 June 2013): Globe Church Incorporated v Allianz Australia Insurance Ltd [2019] NSWCA 27; (2019) 99 NSWLR 470 at [210]. But nothing turns on that difference because, if there is a limitation period of six years as JH Group submitted, on either view Mr Revill would now be out of time.

23    Turning to whether there is a limitation period, neither party has found any case which has decided the question of what limitation period, if any, applies to a claim pursuant to s 48 of the ICA. But JH Group submitted that it is clear that the ordinary limitation period which applies to claims under contracts of insurance under State limitation acts applies. In the case of a matter arising in Western Australia, as this one does, the limitation period is six years: Limitation Act s 13(1).

24    I have already quoted s 48(1) of the ICA; s 48 has two more sub-sections:

(2)    Subject to the contract, the third party beneficiary:

(a)    has, in relation to the third party beneficiary's claim, the same obligations to the insurer as the third party beneficiary would have if the third party beneficiary were the insured; and

(b)    may discharge the insured's obligations in relation to the loss.

(3)    The insurer has the same defences to an action under this section as the insurer would have in an action by the insured, including, but not limited to, defences relating to the conduct of the insured (whether the conduct occurred before or after the contract was entered into).

(Like s 48(1), s 48(2) and s 48(3) were amended with effect on 28 June 2013. The amendments included the addition of the words following 'by the insured' above. But while the amendments took effect within the range of dates for accrual of the cause of action for which the parties contend, they do not affect the meaning of s 48(3) in any way that is material to this matter).

25    JH Group relied on s 48(3) to submit that, as a limitation defence would be available to the insurer in an action by the insured, so it will be available to JHG Mutual and JHPL (if it is the insurer) in any action by Mr Revill.

26    I accept that submission. Section 48 provides its own statutory right of recovery to third party beneficiaries, and does so directly: Commonwealth Bank of Australia v Baltica General Insurance Co Ltd (1992) 28 NSWLR 579 at 589D; Zurich Australian Insurance Ltd v Metals & Minerals Insurance Pte Ltd [2009] HCA 50; (2009) 240 CLR 391 at [24]. The evident intent of the section is to overcome the common law principles which precluded both recovery by the insured of losses suffered by third parties and (in the absence of special circumstances) recovery by third parties themselves, by reason of the doctrine of privity of contract: Baltica General at 582E-G; CE Heath Casualty & General Insurance Ltd v Grey (1993) 32 NSWLR 25 at 43F.

27    It has been said that the question of interpretation of s 48 is not a simple one: CE Heath at 45D. But that was said having regard to the range of defences open to an insurer and the impact of other provisions of the ICA upon those defences; for example, the defence of non-disclosure of a material fact and its modification by the ICA. I detect no difficulty of interpretation in the present case. As Clarke JA said in CE Heath (at 47C), '[d]espite its economy of language the subsection says in plain words that the insurer is to have the same defences to a claim by the named person as it would have in an action by the insured'. JHG Mutual (or JHPL), as insurer, has the same defences to an action under s 48 as it would have in an action by the insured. JHG Mutual (or JHPL) would have a limitation defence in any action by the insured. So it has a limitation defence to Mr Revill's action under s 48.

28    Any other outcome would be surprising, because it would be surprising if the intent of s 48 were to put a third party beneficiary, who is not a party to the insurance contract, in a better position to claim than an insured, who is a party to the contract. It has been held that limitation defences apply to statutory derivative actions even when there is no express provision like s 48(3) of the ICA. For example, Almario v Allianz Australia Workers Compensation (NSW) Insurance Ltd [2005] NSWCA 19; (2005) 62 NSWLR 148 dealt with s 601AG of the Corporations Act 2001 (Cth), which provides that a person may recover from the insurer of a deregistered company an amount that was payable to the company under an insurance contract if the contract covered a liability of the company to the person. Ipp JA held (at [34]-[36], Hodgson JA and Hunt AJA agreeing) that it would be open to an insurer in a claim under s 601AG to raise a defence that a limitation period had expired. It is implicit in his Honour's reasons that it is unlikely that a statutory cause of action of this kind is intended to put the claimant or the defendant in a better or worse position than the actual parties to the insurance contract.

29    Mr Revill's main response to the argument based on s 48(3) was to say that it assumed that the claim of the insured from which Mr Revill's action would derive was a claim under Western Australian law. He submitted that an insured could, for example, have a statutory claim under the ICA, which is Commonwealth legislation, so that the Limitation Act 2005 (WA) would not apply. But there were at least two fundamental flaws in that submission. The first was that Mr Revill's counsel was unable to identify any provision of the ICA which gives rise to a claim of that kind. The second was that, whether or not such a provision exists, it is clear from the words of s 48 that the right it creates does not derive from any statutory cause of action (whether Commonwealth or not); it derives from the contract of insurance. So the limitation period of six years for contractual claims applies.

30    Mr Revill's written submissions made a number of other points. He argued that in the absence of any express limitation period in the ICA for claims under s 48, there was no limitation period at all. The submission appeared to rely on the proposition that as Commonwealth legislation, the ICA takes precedence over State based legislation such as the Limitation Act 2005 (WA). But even assuming that s 109 of the Constitution means that the proposition is correct, to make the submission good it would need to be established that the absence of any express limitation period in the ICA reflects an intention on the part of the Commonwealth Parliament that there is no limitation period at all.

31    In an apparent attempt to make that good, Mr Revill's written submissions referred to numerous examples of the Commonwealth Parliament 'evidencing its intention to impose time limits on causes of action pursuant to Commonwealth legislation' and said that there was no 'evidence' that Parliament intended State based limitation periods to apply to the ICA. While speaking in terms of 'evidence' is inapposite, I take it to be a submission that it should be inferred from the absence of a time limit in the ICA, when one is present in many other pieces of Commonwealth legislation, that there is no limitation period applicable to claims under the ICA. I doubt that is correct, but in any event the submission cannot stand in the face of the clear intention of s 48(3) to give the insurer the same defences as it would have in an action by the insured under State law.

32    Mr Revill relied on Kujundzic v MAS International [2013] FMCA 8; (2013) 274 FLR 125 and Coombe v Bonney [2015] FCCA 916; (2015) 295 FLR 239. But they were cases in which it was held that the presence in Commonwealth legislation of a time limit on taking proceedings under that legislation overrode any State based time bar. They cannot assist Mr Revill here.

33    Mr Revill submitted that if s 13(1) of the Limitation Act does apply to his claim, then limitation periods can be extended under Part 3 of that Act. But his counsel was unable to identify any provision in Part 3 that might apply to his client. On the face of it, there are none. Part 3 provides for extensions for persons who were under 18 years of age when the cause of action accrued (Division 1 and s 41); persons with mental disabilities (Division 2 and s 42); cases of fraud or improper conduct (s 38); claims under the Fatal Accidents Act 1959 (WA) (s 39); defamation (s 40); agreements to extend or shorten limitation periods (s 45); and cases of confirmation of causes of action by defendants (Division 5). There is no suggestion that any of these apply here.

34    Mr Revill also relied on a passage in Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514 at 533 in which Mason CJ, Dawson, Gaudron and McHugh JJ said, '[w]e should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases'. But that is not an absolute prohibition; it is qualified by reference to limitation questions of the kind under consideration in Wardley. That case concerned a claim for loss suffered by reason of having granted an indemnity, and the question was when the cause of action accrued in light of the contingent nature of the loss at the time the indemnity was granted. It is easy to see why an issue of that kind, which may depend on questions of fact, is best determined at trial. As their Honours went on to say, '[g]enerally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question'.

35    There is no difficulty of that kind in this case. The cause of action accrued on or before 21 August 2013, so if a limitation period of six years applied then an action taken to commence now would undoubtedly be out of time. I do not consider that Wardley stands in the way of determining whether the proposed claims against JHG Mutual and JHPL have reasonable prospects of success.

36    Mr Revill also relied on s 79(1) of the Limitation Act, which places on the defendant the burden of proving that the action cannot be commenced because the applicable limitation period has expired. He said that the defendant in the present case is JH Group and it has not asserted that the Limitation Act has any application to the claim against it. But that is not the point. The question is whether JHPL and/or JHG Mutual should not be joined as respondents because a limitation defence available to them means that any claim against them would have no reasonable prospect of success. Mr Revill submitted that any argument against the joinder of parties ought to be made by the prospective respondents. But JH Group as a present respondent has a right to be heard on the joinder of any other party to the proceeding. And there is an air of artificiality about the submission; one may readily infer that JHPL and JHG Mutual will raise precisely the same arguments as their related entity, JH Group has raised. To join the prospective respondents to a claim with no reasonable prospect of success against them, so as to require them to apply for summary judgment, would produce inefficiency and wasted cost. That is the very reason why a new respondent will generally not be joined if the case against it is not sufficiently arguable.

37    It is true that if JHPL and JHG Mutual were to be joined, they would have the burden of establishing the limitation defence. But that makes little difference in circumstances where there can be no factual controversy about the application of the defence, and Mr Revill has failed to raise any cogent legal argument as to why it does not apply. In my view, the availability of the limitation defence means that Mr Revill's proposed claim against JHPL or JHG Mutual would not have reasonable prospects of success, so that the court should exercise its discretion against joining those companies to this proceeding.

38    There is another significant reason why JHPL will not be joined. It is that Mr Revill has failed to even to articulate a coherent claim against that company. It would be extraordinary for the court to join a prospective respondent where an applicant cannot even describe how its liability is said to arise. It may be that the difficulty arises out of Mr Revill's current lack of information about the internal arrangements between members of the John Holland group. But problems of that kind are one of the reasons why the preliminary discovery procedures in Division 7.3 of the Federal Court Rules exist. A person cannot be made a respondent to a proceeding on the basis of nothing more than speculation.

Conclusion on joinder

39    Mr Revill's application for the joinder of JHPL and JHG Mutual must be dismissed. JH Group is entitled to its costs of and incidental to the application in any event. Mr Revill submitted that the order should be costs in the cause. His counsel said that the application sought to do no more than join as respondents entities that are related to the present respondent, JH Group. But be that as it may, JH Group was entitled to oppose the application to join other entities, whether related to it or not, and it has been successful. There is no reason to depart from the ordinary rule that costs should follow the event.

40    There may have been a question about costs if the joinder had been pursued on the basis of a cause of action arising out of the FWA: see FWA s 570. But since Mr Revill is not basing the claim on that Act (whether or not he reserves the right to do so later) the issue does not arise.

Application for dismissal for default - procedural history

41    I now turn to JH Group's application for Mr Revill's claim against it to be dismissed for default. It is necessary to describe the aspects of the procedural history of the matter that are directly relevant to the alleged default, namely failing to file a further amended statement of claim after the amended statement of claim was struck out. The account below largely omits many other aspects of the procedural history which are collateral to that key issue, although it will be necessary to touch on those other aspects from time to time.

42    As I have said, Mr Revill commenced the proceeding against JH Group by originating application filed on 15 August 2019. JH Group filed its defence on 16 October 2019 and there was no reply.

43    On 29 October 2019, by consent of both parties, the proceeding was referred to mediation by a registrar of the court. However on 26 February 2020 the registrar to whom the mediation was referred determined that it should not proceed.

44    The proceeding was listed for a case management hearing on 19 March 2020. My Chambers emailed the parties shortly before the hearing saying, among other things, that the statement of claim and defence did not clearly indicate the basis on which the court had jurisdiction in the matter. That was because, as I have mentioned, the amended statement of claim did not allege a breach of any Commonwealth statute, nor did it indicate any other apparent basis on which the court's jurisdiction might be attracted. On 18 March 2020 directions were made for the parties to file written submissions on that subject. At the same time, the court ordered the legal practitioner representing Mr Revill to file and serve a Form 5 Notice of Acting - change of lawyer by 25 March 2020, as it appeared to the court that the legal practitioner who was named on the originating process no longer worked at Chapmans, the law firm which continued to represent Mr Revill.

45    Much correspondence from Chapmans with the court and with KHQ Lawyers ensued, which is not necessary to describe in detail. It is only necessary to say that in it, Chapmans took the extraordinary position that by asking how its jurisdiction was attracted, the court was effectively acting as a party to the proceeding. That is wrong. The first duty of any court, in approaching a cause before it is to consider its jurisdiction: Hazeldell Ltd v Commonwealth (1924) 34 CLR 442 at 446. The parties cannot confer jurisdiction which the court does not otherwise have, even by consent: Ridley v Whipp (1916) 22 CLR 381 at 386. So in seeking to ascertain whether it has jurisdiction, the court was not acting as though it were a party to the dispute; it was merely seeking to ascertain whether it could adjudicate the dispute.

46    Mr Revill's written submissions as to jurisdiction were filed on 2 April 2020. In them, he said he relied on s 48 of the ICA and also on s 50 of the FWA, which prohibits breaches of enterprise agreements.

47    On 14 April 2020 JH Group filed submissions which acknowledged that those matters would found the jurisdiction of the court but said that, as claims to that effect do not appear on the face of the statement of claim, it should be struck out with leave to re-plead to raise the claims that invoke the court's jurisdiction. Chapmans insisted that JH Group file an interlocutory application for those orders. On 24 April 2020 orders were made programming any such application to a hearing on 13 May 2020.

48    JH Group filed the application on 28 April 2020. But on 11 May 2020, by consent, orders were made to strike out the amended statement of claim and for Mr Revill to re-plead. The latter order was in the following terms:

The applicant has leave to file and serve a further amended statement of claim within four weeks of the making of these orders.

49    So the further amended statement of claim was due by 8 June 2020. No pleading was filed by that time. On 10 June 2020 Chapmans wrote to JH Group's solicitors, KHQ, saying that a further amended statement of claim was close to finalisation within the time period set down by the court, but giving two reasons why it would be delayed (in fact that time had already passed). One was that the number of amendments, presumably in mark up, made the document unreadable. The other was an allegation that the court had imposed a 'bar' on Chapmans filing further documents, because there had been no compliance with the order of 18 March 2020 requiring the legal practitioner representing Mr Revill to file a notice of acting. Chapmans therefore proposed that the orders be varied to provide for the filing of a substituted statement of claim and that the time be extended to 15 June 2020.

50    On 15 June 2020 KHQ replied to this saying, in effect, that it had no objection to a substituted statement of claim but that since the other reason for delay was the asserted 'bar', any extension was a matter for the court.

51    On 19 June 2020 KHQ wrote to Chapmans saying, in effect, that no further statement of claim had been served and it did not appear that any application for an extension of time had been made. Their email said:

Our client has been extraordinarily patient in this matter but that patience is not infinite. We consider that, pursuant to r.5.22(b) of the Federal Court Rules 2011, your client is currently in default. We accordingly advise, as a matter of professional courtesy, that we are instructed to approach the Court on 22 June 2020 in this regard.

The reference to extraordinary patience may seem precipitous given that at that point the default, if there was one, was only a default of 11 days. It may be explicable by the collateral history I mentioned at the start of this section but have largely not described, including the issue about the 'bar' and the correspondence which led to the striking out of the amended statement of claim.

52    Chapmans responded to the email by a letter of 19 June 2020 making a number of misconceived observations about the role of the court and the proper role of KHQ which it is not necessary to describe. On the basis of those observations, the letter concluded by saying that Chapmans would take KHQ's previous email as a refusal to agree to filing and serving a substituted statement of claim and would take Mr Revill's instructions. It also raised, for the first time, that Mr Revill had identified the need to join JHPL and JHG Mutual to the proceeding and asked whether JH Group would agree to their joinder. The letter gave no explanation of the basis on which they might be liable or the basis on which they should be joined.

53    On 25 June 2020 KHQ responded, recounting the history of the correspondence I have described and saying that JH Group maintained that it could not consent to a substituted statement of claim because 'there is no power in the Rules for it to do so' and that it will object to the joinder of JHPL and JHG Mutual. It said that JH Group's patience was 'now exhausted' and that if a further amended statement of claim was not filed by 26 June 2020, JH Group would apply to dismiss the proceeding for default.

54    Chapmans responded on 26 June 2020 (a Friday) asking for JH Group to consent to an extension of time for the filing of a statement of claim to 1 July 2020. On 29 June 2020 (the following Monday) Chapmans wrote again saying that it had not heard from KHQ by close of business on 26 June 2020. The letter asked again whether JH Group was prepared to agree to the joinder of JHPL and JHG Mutual and said that if Chapmans did not hear from KHQ by noon the following day, they would make application.

55    KHQ responded by letter dated 30 June 2020 saying that they did not receive the letter of 26 June 2020 until 5.01 pm that day and so it was not unreasonable not to respond on that day. The letter recounted the recent history once again, which included pointing out that KHQ had already replied on the question of joinder. It said that JH Group was willing to consent to the extension to 1 July 2020 for filing the statement of claim. The letter said that if there was no further amended statement of claim or necessary application filed by that time, JH Group would apply for dismissal of the proceeding (and indemnity costs).

56    No further amended statement of claim, or substituted statement of claim, or application for an extension of time was filed by 1 July 2020 (or has been filed since). On 3 July 2020 JH Group filed the present interlocutory application for the proceeding to be dismissed.

57    Mr Revill filed his interlocutory application for joinder of JHPL and JHG Mutual on 17 July 2020. On 21 July 2020 the solicitor from Chapmans who acts for him filed a Form 5 - notice of change of lawyer.

Resolution of JH Group's dismissal application

58    JH Group relied on r 5.23(1)(b)(i) of the Federal Court Rules which, if Mr Revill was in default, permitted JH Group to apply for an order that the proceeding be stayed or dismissed immediately.

59    The threshold question is whether Mr Revill is in default. Rule 5.22 provides:

A party is in default if the party fails to:

(a)    do an act required to be done, or to do an act in the time required, by these Rules; or

(b)    comply with an order of the Court; or

(c)    attend a hearing in the proceeding; or

(d)    prosecute or defend the proceeding with due diligence.

60    JH Group relied on r 5.22(b), and asserted that Mr Revill has failed to comply with the order of 11 May 2020 providing for the filing of a further amended statement of claim. But there is room for argument about whether Mr Revill has failed to comply with that order. I have set the order out at [48] above; it is framed in permissive, rather than mandatory terms. Despite that, I am inclined to the view that on its proper construction in context, the order is mandatory. The previous statement of claim had been struck out, and the action could not proceed unless a statement of claim raising a claim attracting the jurisdiction of the court was on file.

61    Given that I have decided not to exercise any discretion arising under r 5.23 adversely to Mr Revill, it is not necessary to express a concluded view. But the fact that there is doubt over the effect of the order, properly construed, is itself a factor which speaks against the exercise of the discretion to dismiss the proceeding. The court should be slow to visit such a drastic consequence on an applicant where there is sensible room for doubt about whether he is in default. That is especially so where, as will be apparent from the above reasons concerning the joinder application, Mr Revill is likely to be time barred from commencing any fresh proceeding.

62    Assuming the discretion arises, JH Group relied principally on the well-known statement of Wilcox and Gummow JJ in Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 27 FCR 388 at 396, to the effect that obvious candidates for the exercise of the power are 'cases in which the history of non-compliance by an applicant is such as to indicate an inability or unwillingness to co-operate with the Court and the other party or parties in having the matter ready for trial within an acceptable period'. JH Group referred to the history I have summarised above and submitted that Mr Revill's delay and procedural non-compliance was directly inconsistent with the court's case management principles and has been repeated to such an extent as to demonstrate a lack of cooperation with the court and the respondent. It said that was especially so in light of the position Mr Revill has taken about the court's concerns about jurisdiction and his position on the filing of a notice of change of lawyer. Mr Revill's non-compliance had caused delay, which is deleterious to the just resolution of the dispute, and expense arising out of the need for KHQ to engage in repeated correspondence with Chapmans. In oral submissions, counsel for JH Group relied on another passage from Lenijamar at 396 in which Wilcox and Gummow JJ said that 'in almost every case, delay adversely affects the quality of the trial and is an additional burden upon the parties'. He also referred to the importance of visiting consequences on defaults (see Lenijamar at 402 (Pincus J)) and said that his client had no choice but to make the application.

63    There is force in all these submissions. But dismissing an application for default is a large step for the court to take (ACOHS Pty Ltd v Ucorp Pty Ltd [2009] FCA 577 at [27]), all the more so when, as I have said, any fresh application may be time-barred. The (assumed) default, while serious, is not in my view so serious as to warrant dismissal of the proceeding purely on the basis that past default should be visited with serious consequences. In the present case, the key question is whether the court should conclude that the past history of default demonstrates an unwillingness or inability to cooperate with the court and with JH Group in proceeding to a just and efficient determination of the dispute in the future.

64    I do not consider that it does. It is true that the proceeding was commenced in August of 2019 and now, more than fourteen months later, there is not even a current statement of claim on file. Although four of those months may be accounted for by the abortive mediation, that is still a significant delay. It is also true that, on the basis of the history I have outlined, responsibility for the delay must be laid at the feet of Mr Revill and Chapmans. But on 19 June 2020 Mr Revill sought JH Group's consent to the joinder of JHPL and JHG Mutual. In relation to JHG Mutual, at least, this can be characterised as an attempt to put the matter on a proper footing by joining a respondent which should have been joined in the first place. It is open to argue that, while the joinder issue was outstanding, filing a further amended statement of claim against JH Group only may have been inefficient. If one or more new respondents were to be joined, further amendment of the pleading would be necessary, and little would have been achieved by the filing of the further amended statement of claim (or substituted statement of claim) in the meantime.

65    I therefore do not accept a submission made on JH Group's behalf that there was no connection between the desire of Mr Revill to join JHPL and JHG Mutual as respondents and his omission to file a further amended statement of claim in accordance with the orders of the court. I do, however, consider that it was remiss of Chapmans not to have sought to regularise the position by applying for a further extension of time on that basis, or on any other appropriate basis. It was also remiss of them, having effectively secured JH Group's consent to an extension of time for the filing of a further amended statement of claim until 1 July 2020, not to have prepared a minute of consent orders to that effect and not to have complied with that extended deadline. But given Mr Revill's more recent attempts to pursue his action, I do not consider that these things, or the history of the matter as a whole, justify the dismissal of the proceeding.

Conclusion on the application to dismiss the proceeding

66    JH Group's application for the dismissal of the proceeding will be dismissed.

67    In relation to costs, JH Group submitted that even if its application is dismissed, it was necessary to make the application, so it should receive the costs of the application. Mr Revill made no submissions in response. The history I have outlined does show that as a matter of practical reality, some approach to the court to prompt action from Mr Revill or Chapmans was justified. But, as I have said, there is doubt about whether there was a default of the kind that engages r 5.23. Also, an application for some lesser step than dismissal, such as a guillotine order for the filing of an amended statement of claim, would have been appropriate to make first, and would have been more likely to have been successful. In all the circumstances, the appropriate order is that there be no order as to the costs of the application.

68    Mr Revill must file a substituted statement of claim in his action against JH Group within two weeks of the orders made on 6 November 2020. Given that part of the delay has been explicable by Mr Revill's attempts to put the action on a proper footing as to parties, I did not consider that a guillotine order was appropriate yet. But in view of the history, it is imperative that Mr Revill now comply with the orders the court has made.

Associate:

Dated:    10 November 2020