Federal Court of Australia

Testart v Testart (No 2) [2023] FCA 209

ORDERS

THE COURT ORDERS THAT:

1.    All claims made by the Applicant relating to contraventions of the Fair Work Act 2009 (Cth) in respect of unpaid wages, unpaid annual leave and annual leave loading alleged to have taken place prior to 11 November 2015 are dismissed.

2.    The Respondent’s interlocutory application dated 10 February 2022 is otherwise dismissed.

3.    Pursuant to s 53A of the Federal Court of Australia Act 1976 (Cth) and r 28.02 of the Federal Court Rules 2011 (Cth), the proceeding is referred to mediation on all issues before a Registrar of the Court, as soon as practicable, and by no later than 12 May 2023.

4.    The Registrar shall, not later than 19 May 2023, report back to the Court as to the result of the mediation.

5.    Costs reserved.

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 interlocutory application brought by the respondent, Mr Pierre Testart, by which he seeks summary dismissal of the proceeding brought against him by his former wife (Ms Lisa Testart) under the Fair Work Act 2009 (Cth).

2    I heard the application on 9 December 2022. Ms RW Sweet SC appeared with Mr A Thangarajah of counsel for Mr Testart. Ms Testart represented herself. Written submissions were also filed on behalf of both parties.

3    Mr Testart relied on two affidavits, one sworn by Mr Matthew Condello dated 15 September 2022, the other sworn by Mr Daniel Trindade dated 10 February 2022.

4    Ms Testart relied on an affidavit she swore dated 9 November 2021.

The Facts

5    The relevant facts are as follows.

6    Ms Testart commenced working for Mr Testart, who is a barrister, on 1 July 2009, and continued to do so until June 2017. The parties married in 2010 after a period of co-habitation and separated on a final basis in May 2019.

7    Ms Testart deposed that on 30 June 2009, Mr Testart made her a written offer of employment as his personal assistant. That offer included a proposal to “pay an annual salary of $79,000, payable weekly in advance, together with superannuation at the appropriate statutory rates”. The terms of the offer included references to “the normal terms and conditions of employees in the legal secretarial industry”, “rights you otherwise have under Commonwealth legislation”, “normal industry sick leave entitlements” and “4 weeks’ holiday annually”.

8    The evidence also included a letter dated 17 September 2009, signed by Mr Testart, in which he confirmed the employment of the applicant as his personal assistant from 1 July 2009. This letter provided, among other things, that the “position is permanent, and full time … [and that Ms Testart] is employed at a yearly salary of $80,000, plus statutory superannuation”.

9    Following their separation, Ms Testart commenced a family law proceeding in June 2019 in the then-Federal Circuit Court of Australia, seeking interim and final property and spousal maintenance orders, which included seeking the alteration of property interests under s 79 of the Family Law Act (Family Law Proceeding).

10    Section 79 of the Family Law Act relevantly provides:

(1)    In property settlement proceedings, the court may make such order as it considers appropriate:

(a)    in the case of proceedings with respect to the property of the parties to the marriage or either of them—altering the interests of the parties to the marriage in the property …

11    Section 4(1)(a) of the Family Law Act defines “property” in relation to the parties to a marriage or either of them to mean “property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion”.

12    The application for spousal maintenance was dismissed in October 2019 and the remainder of the Family Law Proceeding was finalised by consent on 6 August 2020. A divorce order was granted on 21 October 2020 and it took effect on 22 November 2020.

13    The final orders made by Judge Kirton on 6 August 2020 relevantly provided that “[t]here be final orders, by consent, in terms of the Minute of Consent Orders signed by the parties and dated 6 August 2020”. That minute was relevantly in these terms:

BY CONSENT IT IS ORDERED THAT:

l.    All previous Orders be and are hereby discharged.

2.    That upon settlement of the sale of the property at … (“the Yallourn North property”) the balance of settlement monies be paid to the Wife into an account nominated by her.

3.    Save as otherwise provided herein, the Wife retain, to the exclusion of the Husband, for her sole use and benefit:-

(a)    Her personal savings;

(b)    Her vehicles;

(c)    Her personal belongings and effects; and

(d)    Any superannuation entitlement she may have.

4.    The Wife be solely liable for any debts in her name or for which she is personally liable, including but not limited to any credit card liabilities.

5.    Save as otherwise provided herein, the Husband retain, to the exclusion of the Wife, for his sole use and benefit:-

(a)    His personal savings;

(b)    His vehicles;

(c)    His personal belongings and effects; and

(d)    Any superannuation entitlement he may have.

6.    The Husband be solely liable for any debts in his name or for which he is personally liable, including but not limited to any credit card liabilities or any liabilities to the Australian Taxation Office arising from his work as a barrister.

7.    Unless otherwise specified in these Orders and except for the purposes of enforcing the payment of any money due under these Orders:

(a)    Each party otherwise be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these Orders;

(b)    Each party shall be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders;

(c)    Money standing to the credit of either party in any bank, building society or investment account shall be the sole property of the owner named thereunder;

(d)    All insurance policies shall be the sole property of the owner named thereunder;

(e)    Each party shall be solely liable for and indemnify the other in respect of their individual debts; and

(f)    Any joint tenancy of the parties in any property real or personal is hereby severed.

8.    All applications be otherwise dismissed and there be no Order as to costs.

THE COURT NOTES THAT:

A.    Pursuant to Section 81 of the Family Law Act 1975, the parties intend that these Orders shall, as far as practicable, finalise their financial and other relationships and sever their financial ties.

B.    The Husband’s lawyers may provide a copy of these Orders to Gadens Lawyers, who act on behalf of the mortgagee in possession, for the purposes of Gadens being able to make the payment to the Wife pursuant to these Orders.

C.    The parties have finalised their property matter on a final basis in accordance with the terms of these Final Orders …

This Proceeding

14    Ms Testart commenced this proceeding by way of originating application and accompanying affidavit filed 11 November 2021 (Fair Work Proceeding). She alleges, among other things, that Mr Testart contravened ss 45 and 323 of the Fair Work Act by failing to pay wages to her between 2009 and 2016, and that he contravened s 45 of the Fair Work Act by failing to pay her annual leave entitlements pursuant to the Legal Services Award 2010 and by failing to make superannuation contributions on her behalf.

15    Sections 45 and 323 are civil remedy provisions within the meaning of s 539 of the Fair Work Act. It follows that the only persons who can “apply to the courts”, which courts include the Federal Court, for orders in relation to a contravention of ss 45 or 323 are an employee, an employee organisation or an inspector. See s 539(2).

16    Section 545 of the Fair Work Act provides relevantly as follows:

(1)    The Federal Court or the Federal Circuit and Family Court of Australia (Division 2) may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.

(2)    Without limiting subsection (1), orders the Federal Court or Federal Circuit Court may make include the following:

  (a)    …

(b)    an order awarding compensation for loss that a person has suffered because of the contravention;

  (c)    …

17    At the time Ms Testart commenced the Family Law Proceeding, s 545(1) referred to the Federal Circuit Court, not its successor.

18    By the terms of her 9 November 2021 affidavit, Ms Testart claims compensation under s 545 of a total amount of $434,683.88, alleged to comprise: $334,453 (unpaid wages); $54,890.05 (unpaid superannuation); $37,736.88 (unpaid annual leave); and $6,603.95 (unpaid annual leave loading). The failure to pay each amount is alleged to have constituted a contravention of s 45 of the Fair Work Act. The failure to pay the wages is also said to be a contravention of s 323 of the Fair Work Act.

The Interlocutory Application

19    On 11 February 2022, Mr Testart filed an interlocutory application seeking orders as follows:

1.    That the proceeding be dismissed or permanently stayed for want of jurisdiction.

2.    Alternatively to 1, pursuant to s 23 of the Federal Court of Australia Act 1976 (Cth) and rule 26.01 of the Federal Court Rules 2011(Cth), that judgment be given against the applicant because:

a.    the applicant has no reasonable prospect of successfully prosecuting the proceeding, or part of the proceeding (r 26.01(a));

   b.    the proceeding is vexatious (r 26.01(b)); and/or

   c.    the proceeding is an abuse of the process of the Court (r 26.01(d)).

20    The grounds for the making of those orders were contained in counsel’s written submissions. The first ground was that this court lacks jurisdiction to hear the Fair Work Proceeding because it is a “matrimonial cause” within the meaning of s 4(1) of the Family Law Act 1975 (Cth).

21    Judgment was also sought on three other grounds:

    Ms Testart is prevented from bringing her claims in the Fair Work Proceeding by reason of an Anshun estoppel;

    the claims in the Fair Work Proceeding are largely time-barred; and

    the Fair Work Proceeding is vexatious and/or an abuse of process.

22    The affidavits relied on by Mr Testart also included voluminous evidence going to the last of those grounds.

23    However, at the hearing on 9 December 2022, Ms Sweet and I had the following exchange, recorded in the transcript as follows:

HIS HONOUR: And then you’ve got your summary judgment claim, which doesn’t really add much of substance, does it. It’s another way of characterising what you say.

MS SWEET: That’s correct, your Honour. So I don’t think I have any separate submissions on that because it’s really already covered by what I’ve raised in the earlier three sections – earlier three claims.

24    For the reasons that follow, and in light of counsel’s concession, it is not necessary to deal separately with the fourth ground, so I say no more about it.

Ground One: Matrimonial Cause

The Relevant Legislation

25    I turn first to Mr Testart’s contention that the Fair Work Proceeding is a “matrimonial cause” within the meaning of s 4(1)(ca) of the Family Law Act, and thus within the exclusive jurisdiction of the Federal Circuit and Family Court of Australia.

26    It was not suggested in argument that any provision of the Family Law Act has been materially amended since the time of the Family Law Proceeding, so I set out below the relevant provisions of the Family Law Act in their current form.

27    Section 8(1) of the Family Law Act relevantly provides that “proceedings by way of a matrimonial cause shall not be instituted except under this Act”.

28    “Matrimonial cause” is in turn defined relevantly in s 4(1), as follows:

matrimonial cause means:

…

(ca)    proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them, being proceedings:

  (i)     arising out of the marital relationship; [or]

(ii)    in relation to concurrent, pending or completed divorce or validity of marriage proceedings between those parties; 

29    Section 4(2)(a) provides that a reference “to a party to a marriage includes a reference to a person who was a party to a marriage that has been … terminated by divorce…”

30    As noted at [11] above, “property” is defined in s 4(1) to mean in relation to the parties to a marriage or either of them “property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion”.

31    Counsel for Mr Testart also relied on two “extended meanings” contained in the Family Law Act, viz:

90AD    Extended meaning of matrimonial cause and property

(1)    For the purposes of this Part, a debt owed by a party to a marriage is to be treated as property for the purposes of paragraph (ca) of the definition of matrimonial cause in section 4.

…

90XC    Extended meanings of matrimonial cause and de facto financial cause

(1)    A superannuation interest is to be treated as property for the purposes of paragraph (ca) of the definition of matrimonial cause in section 4.

32    Section 39 of the Family Law Act provides that “[s]ubject to this Part, a matrimonial cause may be instituted under this Act: (a) in the Federal Circuit and Family Court of Australia (Division 2)”. (In 2019 when the Family Law Proceeding was commenced, s 39 provided that a matrimonial cause could be instituted under the Act either in the Family Court or the Federal Circuit Court: see s 39(1)(a) and s 39(5AA)). By virtue of proclamations made by the Governor-General under ss 39(7) and 40(3) of the Family Law Act, the jurisdiction of the Federal Circuit and Family Court of Australia to hear matrimonial causes is exclusive (other than in Western Australia and the Northern Territory). See, by way of example, Commonwealth of Australia Gazette (No S86, 27 May 1976); Commonwealth of Australia Gazette (No GN45, 13 November 1996).

Consideration

33    It follows that in order for Mr Testart to make good his contention that the Fair Work Proceeding is a matrimonial cause within the meaning of s 4(1)(ca) of the Family Law Act, it must be established that it:

(1)    is between the parties to a marriage;

(2)    is with respect to the property of the parties to the marriage or either of them; and

(3)    either:

(i)    arises out of the marital relationship; or

(ii)    relates to completed divorce proceedings between the parties.

34    The Fair Work Proceeding is relevantly between the parties to a marriage by operation of s 4(2)(a) of the Family Law Act because Mr Testart and Ms Testart are persons who were parties to a marriage that has been terminated by divorce. The first necessary condition is therefore satisfied.

35    The contention that the Fair Work Proceeding is a matrimonial cause, however, falls at the next hurdle, because claims for compensation for breach of civil remedy provisions under the Fair Work Act are not “property” within the meaning of s 79 of the Family Law Act.

36    As Mason ACJ, Wilson, Brennan, Deane and Dawson JJ said in Mullane v Mullane (1983) 158 CLR 436 at 445, “s 79 on its proper construction refers only to orders which work an alteration of the legal or equitable interest in the property of the parties or either of them. An interest in property is a right of a proprietary nature, not a mere personal right”. That is to say, “[w]here [s 79] refers to a settlement of property, it should be understood as using that expression in a sense which is closely related to the meaning which the expression bears in the law of real and personal property”. Ibid.

37    And it is obviously the case that a claim for an award of compensation for loss that a person has suffered because of a contravention of a civil remedy provision of the Fair Work Act is quintessentially a personal, not a proprietary right, because it cannot be assigned. And it cannot be assigned because “an assignee is not a person who comes within the terms of the statutory remedy”. Compare Chapman v Luminis Pty Ltd (No 4) (2001) 123 FCR 62 at 117 [205] (von Doussa J). See too National Mutual Property Services (Aust) Pty Ltd v Citibank Savings Ltd (No 1) (1995) 132 ALR 514; [1995] FCA 874 at 539 (“The causes of action under [ss 52 and 82 of the Trade Practices Act 1974 (Cth)] and the [Securities Industry Code (Vic)] are not assignable, if for no other reason, because it is relevantly only the claimants who could possibly satisfy the statutory descriptions of being persons who suffered loss or damage caused by the conduct described in the statutes”).

38    And so it is here. It is only Ms Testart in her capacity as an alleged employee who relevantly can apply to this court seeking compensation for alleged contraventions of the civil remedy provisions relied on. See s 539(2) of the Fair Work Act.

39    The extended definitions of “property” in ss 90AD(1) and 90XC(1) relied upon by Mr Testart have no bearing on the matter because, as I have explained, the question whether the Fair Work Proceeding is “with respect to the property of the parties to the marriage or either of them” falls to be determined by reference to the relevant provisions of the Fair Work Act, and the nature of the (personal, non-assignable) rights conferred under it on employees under the various civil remedy provisions, not by reference to any extended definition of property in the Family Law Act.

40    It follows that Mr Testart’s contention that the Fair Work Proceeding brought against him by his ex-wife is a matrimonial cause within the meaning of s 4(1)(ca) of the Family Law Act fails for that reason alone.

41    In case it may be relevant for any other purpose, including on any appeal from my orders, I will also deal with the remaining questions, namely whether the Fair Work Proceeding “arises out of the marital relationship” or “relates to completed divorce proceedings between the parties”. Taking them in turn:

Basis of the proceeding: arises out of the marital relationship?

42    Section 4(1)(ca)(i) of the Family Law Act is concerned with “proceedings … arising out of the marital relationship”. It is not sufficient to establish that the subject of the proceedings arose out of the marital relationship. It is the proceedings that must have so arisen. Bate v Priestley (1989) 97 FLR 310 at 327 (Hope AJA).

43    In determining whether the Fair Work Proceeding arises out of the marital relationship between Mr Testart and Ms Testart, it is necessary to have regard to the decided cases. It is convenient to start with the decision of Demack J in In the Marriage of Mills (1976) 25 FLR 433.

44    In that case, Mr and Mrs Mills were the joint owners of a farm, upon which their former matrimonial home was located. Mr Mills began to sell soil from the property. His wife, who had not yet applied for divorce, sought an injunction from the Family Court restraining him from doing so. Mr Mills did not resist the injunction. The sole question was whether the Family Court had jurisdiction to make the orders.

45    Section 114 of the Family Law Act provided that:

Injunctions.

(1)    In proceedings of the kind referred to in paragraph (e) of the definition of “matrimonial cause” in sub-section 4 (1), the court may make such order or grant such injunction as it thinks proper with respect to the matter to which the proceedings relate, including an injunction for the personal protection of a party to the marriage or of a child of the marriage or for the protection of the marital relationship or in relation to the property of a party to the marriage or relating to the use or occupancy of the matrimonial home.

46    Paragraph (e) of the definition of matrimonial cause in s 4(1) was in the following terms: “proceedings between the parties to a marriage for an order or injunction in circumstances arising out of the marital relationship”.     

47    As Demack J explained at 434, “the definition of ‘matrimonial cause’ includes ‘proceedings between the parties to a marriage for an order or injunction arising out of a marital relationship’. Thus injunctions are no longer matters which are ancillary to ‘matrimonial causes’, but are defined as ‘matrimonial causes’ themselves”.

48    It was in that context that his Honour, having referred to a number of passages from various judgments in Russell v Russell (1976) 134 CLR 495 (a case which concerned the question whether s 39(1) of the Family Law Act as it then stood was a valid law of the Commonwealth), continued at 435-6:

Against that background, in my view the words “marital relationship” refer to that body of law which defines the nature and extent of that relationship. They do not define an area of fact which may be explored to determine the jurisdiction of the court. In other words the mere fact that something happens between a husband and wife does not mean that it involves “circumstances arising out of the marital relationship”. The event must be one which raises issues of law that are within the body of law defining marital relationships. … Thus, events which raise issues of criminal law, industrial law or fiscal law cannot be brought within the “marital relationship” simply because the circumstances involve a husband and wife and their children.

(Emphasis added).

49    His Honour concluded at 436:

The case before me does not involve proceedings for principal relief. It does not arise out of the mutual liability to maintain or out of the joint liability to maintain the children of the marriage. It solely concerns the rights of joint tenants to the use and enjoyment of their land. As such it does not involve “circumstances arising out of the marital relationship”. It is therefore, not a matrimonial cause and therefore is not properly within the jurisdiction of this Court.

50    In R v Dovey (1979) 141 CLR 526 at 532-3, Gibbs J (as he then was), with whom Barwick CJ and Mason J (as he then was) agreed, considered what Demack J said in In the Marriage of Mills in the passage quoted at [48] above, as follows:

The words “circumstances arising out of the marital relationship” appear to be wide, but it is not necessary in the present case to attempt to give a comprehensive statement of their meaning. It is, I think, true to say, as Demack J said in In the Marriage of Mills, that “the mere fact that something happens between a husband and wife does not mean that it involves ‘circumstances arising out of the marital relationship’” and that “events which raise issues of criminal law, industrial law or fiscal law cannot be brought within the ‘marital relationship’ simply because the circumstances involve a husband and wife and their children”. However, the occupation by a wife of the matrimonial home is clearly a consequence of the act of marriage between the parties, and can be regarded as an exercise of the rights and a performance of the duties to which the marriage has given rise.

51    It followed in that case that their Honours held that the Family Court had power under s 114(1) of the Family Law Act to grant an injunction to restrain a party to a marriage who was a director and shareholder of a family company that owned the matrimonial home from exercising their voting rights as a director or shareholder in favour of a proposed resolution for the sale of that home.

52    In In the Marriage of Murkin (1980) 5 Fam LR 782, Nygh J had to decide whether the Family Court had jurisdiction to grant an injunction under s 114(1) to restrain the former husband from disposing of the superannuation benefit to which he would become entitled in the future, and no later than June 1983. Relevantly, his Honour held at 786:

I accept the definition offered by Demack J in In the Marriage of Mills … namely: “The event must be one which raises issues of law that are within the body of law defining marital relationships.” I take that as meaning that the claim must be one which a spouse brings as a spouse and which is not a claim arising out of the general law of tort, contracts or property which happens to be between spouses. In this case, if the wife has any claim against the superannuation funds it can only arise because of s 79 of the Family Law Act. We are therefore dealing with proceedings arising out of the marital relationship and not arising out of the general law of contract, tort or property.

(Emphasis added).

53    In Perlman v Perlman (1984) 155 CLR 474, the High Court again considered the meaning of the phrase “arising out of the marital relationship”. The Court unanimously rejected a former husband’s claim that a proceeding brought by his former wife in the Supreme Court of New South Wales to enforce a deed, being a maintenance agreement as defined in s 4(1) of the Family Law Act, was a matrimonial cause. In that case, the deed recited that it was intended to operate in relation to the whole of the financial matters between the parties in substitution for any rights of either of the parties under Pt VIII of the Family Law Act. The deed was approved by the Family Court pursuant to s 87 of the Act. The former wife sought orders for specific performance of the deed, payment of arrears of income and damages for breach.

54    Chief Justice Gibbs said at 486-7 that “[t]he proceedings in the present case clearly do not arise out of a marital relationship; they arise from the fact that the divorced husband has failed to fulfil his obligations under the deed”.

55    Similarly, Deane J (with whom Brennan J (as he then was) agreed) said at 507 that “[t]he agreement itself may properly be regarded as ‘arising out of the marital relationship’. In my view, however, the Supreme Court proceedings for the enforcement of that completed and approved agreement cannot properly be regarded as so arising”.

56    Justice Wilson said at 500:

It is sufficient for me to express the opinion that on no reasonable construction of the paragraph could it be said that the wife’s claims focus on circumstances arising out of the marital relationship. The marriage was dissolved in 1978 and the financial relationships of the parties were finally determined by the approved agreement. The husband’s failure to respect his obligations under the agreement has nothing whatever to do with the marital relationship.

57    And at 511-12, Dawson J said that “[t]he dissolution of the marriage was the occasion for the contract but the circumstances in which relief was sought arose out of the contract and its breach and not the marital relationship”.

58    In Dougherty v Dougherty (1987) 163 CLR 278, the High Court considered a case where the intervention of an adult son in his mother’s property application gave rise to the question whether the son’s application was a “matrimonial cause”. In relation to s 4(1)(ca)(i), Mason CJ, Wilson and Dawson JJ said at 286:

This paragraph requires that proceedings between the parties to a marriage with respect to property should arise out of the marital relationship. By this means a limit is imposed upon the jurisdiction of the Family Court to make an order under s 79 where the parties are parties to a marriage. Proceedings of that kind which do not arise out of the marital relationship do not constitute a matrimonial cause in relation to which jurisdiction is vested in the Family Court. It may be that this limitation sufficiently confines the operation of s 79 in relation to proceedings between the parties to a marriage with respect to property and obviates the need to read the section down in its application to such cases. In any event, whether the exercise is undertaken for the purpose of applying par (ca) or reading down s 79, it should be comparatively easy to ascertain whether or not a claim by a party to a marriage for an alteration of property interests is based upon circumstances arising out of the marital relationship. Claims grounded solely in contract or tort or equity or otherwise arising by reason of a relationship, eg of partnership, where the marriage relationship is purely coincidental are not likely to attract the power. But leaving aside matters such as those there will not be wanting occasions where the Family Court may find it just and equitable to alter the respective property interests of the parties inter se for reasons associated with and finding their source in the marriage relationship.

(Emphasis added).

59    In Bate v Priestley, the parties to District Court of New South Wales proceedings for recovery of a debt had formerly been married to each other. In 1984, the Family Court made consent orders, including an order that the former husband pay $50,000 to the former wife by way of property settlement and/or lump sum maintenance. As part of the settlement and the orders, the parties executed a deed in which the former husband acknowledged a debt to the former wife in the sum of $50,000 which “could be used to found a claim in the District Court of New South Wales …” In its consent orders, the Family Court noted the existence of that acknowledgment.

60    The former husband did not pay the amount owing by the due date, so the former wife brought a debt recovery proceeding in the District Court. The trial judge rejected the challenge to jurisdiction and entered judgment in the former wife’s favour.

61    The former husband appealed on the basis that the proceedings were a “matrimonial cause” and hence within the exclusive jurisdiction of the Family Court.

62    One of his primary submissions was that the proceedings brought in the District Court fell within those parts of the definition of “matrimonial cause” in ss 4(1)(ca)(i) or (ii) of the Family Law Act – that is, they were proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them, being proceedings “arising out of the marital relationship” or “in relation to … completed proceedings between those parties for principal relief”.

63    The appeal was dismissed. In rejecting each of the grounds relied on, Hope AJA (with whom Mahoney JA agreed) relevantly held that the District Court proceeding in which the wife sought to recover the debt owing under the terms of the deed did not arise out of the matrimonial relationship and was not a “matrimonial cause” within the meaning of s 4(1) of the Family Law Act. His Honour reasoned as follows at 329:

In my opinion, these expressions of opinion are to be applied to the words “arising out of the marital relationship” in para (ca)(i). As it seems to me, what the High Court emphasised in Perlman was that the proceedings in the Supreme Court did not arise out of the marital relationship; the fact that the deed arose out of the marital relationship which had previously existed did not mean that the proceedings arose out of that relationship. The proceedings arose out of the deed and the failure by the defendant to carry out its terms.

It has been submitted for the defendant that there is a much closer relationship in the present case between the deed upon which the plaintiff sued and the orders of the Family Court, and hence it can be properly said that the proceedings arose out of the marital relationship. Counsel for the defendant put every argument before the court to support this submission, but in my opinion it cannot succeed. Indeed one would have thought that a deed of maintenance approved by a Family Court under s 87 would have had a much closer tie to the marital relationship than a deed such as that now sued on. It is true that in the present case the Family Court ordered the payment of the sum of $50,000 on or before 1 July 1985 by way of property settlement and/or lump sum maintenance, that the plaintiff can still enforce that order by the various means available under the Family Law Act and Regulations, and that the deed was expressly entered into to provide additional remedies for the plaintiff to ensure that payment of that sum. Nonetheless the proceedings arose out of the deed and not otherwise. They did not arise out of the marital relationship which led to proceedings in the Family Court and to the execution of the deed.

64    Justice Mahoney’s reasons at 325-26 clearly and succinctly demonstrate the distinction that, as I shall endeavour to explain, is critical to the resolution of the issue in this case:

The principal argument for Mr Bate was, I think, to the effect that the proceeding to enforce the deed was a “matrimonial cause” because the proceeding arose out of the deed and the deed arose out of the (former) marital relationship and accordingly the proceeding arose out of the marital relationship. Philosophically, the argument is irrefutable. But the claim of A arising from B arising from C … may be traced back to the Creation without philosophical error. In deciding whether, for the particular purpose before it, A is to be seen as arising from C, the test applied by the court is not philosophical but functional: cf State Rail Authority of New South Wales v Codelfa Construction Pty Ltd (1982) 150 CLR 29 at 40-41. In Perlman v Perlman (1984) 155 CLR 474 the High Court indicated how, for the purposes of this legislation, the sequence is to be terminated. I agree with Hope AJA that, upon the approach adopted in that case, the present proceeding does not arise out of the marital relationship and so is not a matrimonial cause.

65    The final case that warrants mention (although the facts of it are far removed from this case) is the decision of Court of Appeal of Western Australia in Sewell v Wilson (2010) 242 FLR 402.

66    In that case, the Court held that a proceeding for the enforcement of an alleged oral contract between parties to a marriage was a matrimonial cause.

67    The relevant facts were as follows.

68    The appellant and the respondent were married in 1986. On 15 November 1990, the matrimonial home was purchased and registered solely in the appellant’s name. The property was the matrimonial home until about January 2001 when the marriage broke down. The parties divorced in 2003.

69    No application had been made by either party under the Family Law Act for a property settlement. In 2008, the former husband commenced proceedings against his former wife in the District Court of Western Australia based on an alleged oral contract. He pleaded in substance that in August 2007 they had orally agreed that he would undertake certain maintenance and improvement work on the property at his expense; that upon completion of the work the appellant would sell the property, and that the respondent would receive 18% of the net proceeds of sale. He further pleaded that he undertook the work in the latter part of 2007 and completed it by the end of December 2007; that they were unsuccessful in their attempts to sell the property on a private basis between January and April 2008, and agreed to postpone the sale until after the winter months; and that in September 2008, his former wife, in breach of the oral contract, informed him that she would not sell the house or pay him an amount equal to 18% of its value, which conduct he treated as a repudiation of the contract founding a claim for damages.

70    The former wife applied to strike out the proceedings on the ground that the District Court did not have jurisdiction to determine the claim because it was a “matrimonial cause” within the meaning of s 4(1)(ca)(i) of the Family Law Act, and that as a result the proceedings lay within the exclusive jurisdiction of the Family Court of Western Australia. Further, she denied that she entered into the alleged contract with the respondent and claimed that he orally agreed to undertake some maintenance work on the property to assist the appellant in preparing it for sale.

71    The trial judge dismissed the strike out application, holding that the former husband’s claim was not a “matrimonial cause” within the meaning of the Family Law Act, because his action did not arise out of the marital relationship but from his former wife’s failure to fulfil her obligations under the alleged oral contract.

72    The Court allowed the former husband’s appeal and set aside the decision of the trial judge. In relation to the question of whether the proceedings were proceedings “arising out of the marital relationship”, Newnes JA (with whom Buss JA (as his Honour then was) and Murphy JA agreed) reasoned as follows at 413-14, [57]-[62]:

It was submitted by the respondent that the appellant’s case failed to appreciate the distinction between proceedings which arise out of the marital relationship and proceedings for damages for breach of contract. It was not enough that the property which is the subject of the contract is owned by a party to the marriage. The question is whether the proceedings arise out of the marital relationship. In this case, they did not; they arose out of the appellant’s breach of contract. It was not to the point that the contract “killed two birds with one stone” — it achieved a property settlement which would otherwise have required a successful application to the Family Court (WA) for leave under s 44(3) of the Family Law Act and it remunerated the respondent for the work done (albeit, he accepted in argument on the appeal that the amount recoverable for the work on a quantum meruit basis would have been “something relatively inconsequential” … Nor, he argued, was it to the point that it simply replaced the foreshadowed application to the Family Court (WA) - that it represented what he described in argument below as “a change of tack” … The appellant’s objection to jurisdiction must fail, it was argued, because the proceedings did not arise out of the marital relationship but out of a breach of contract by the appellant.

I do not accept that contention. It may not be of any real assistance to describe the alleged contract as a “sham”, although the respondent did not appear to take issue with the primary judge’s description of it in those terms. … It is apparent, however, from the admissions made by the respondent that the alleged contract was not, in truth and substance, a contract for labour and materials as pleaded. In reality, the contract was a settlement of the respondent’s claim to an interest in the property arising out of the marital relationship. The figure of 18% represented what the respondent considered would be approximately the amount he would be awarded on a property settlement under the Family Law Act. To that end, he apparently perceived it to be in his interest to carry out some improvements to the property to maximise its value. The contract was, as the respondent frankly admitted before the primary judge, simply a means of recovering the amount he considered he was entitled to arising out of the marital relationship, while at the same time avoiding what he perceived to be the vagaries and time involved in proceedings for a property settlement in the Family Court (WA).

It is plain, in my view, that the proceedings in the District Court are in substance proceedings with respect to the property to recover the benefit to which the respondent alleges he is entitled arising from the marital relationship. The proceedings have arisen because the appellant declined to sell the property and give the respondent the 18% of the proceeds which he considered constituted that entitlement.

In my respectful view, the primary judge erred in concluding that the decision in Perlman was decisive in this case. The circumstances in Perlman were quite different. In that case, the issue of the distribution of the marital property had come to an end in a final agreement approved by the Family Court and what was sued on was that final agreement. While the marital relationship had given rise to the issue of the distribution of the marital property and to the agreement, the marital relationship itself was no longer relevant to the proceedings in the Supreme Court to enforce the final agreement.

Similarly, in Bate v Priestley the District Court proceedings were brought on a deed following the resolution of the entitlements of the parties in respect of the marital property in Family Court proceedings and, moreover, in making its orders pursuant to the settlement the Family Court had noted that the deed expressly providing for remedies outside the Family Court. As Hope AJA observed, in revoking the previous agreement the Family Court presumably accepted the right of the wife to enter into a deed which gave her remedies outside the Family Law Act (at [FLR] 329).

In the present case, on the other hand, the proceedings brought by the respondent are simply intended to circumvent the need for proceedings in the Family Court (WA) to resolve the respective rights of the parties to the property arising out of the marital relationship.

(Emphasis added).

73    In my view, the Fair Work Proceeding does not arise out of the marital relationship between Mr Testart and Ms Testart.

74    It seems to me quite clear that the Fair Work Proceeding arises out of, or is alleged to arise out of, Ms Testart’s employment relationship with Mr Testart. The claims made do not arise out of the marital relationship which led to the Family Law Proceeding and to the consent orders made ending it. As Mahoney JA said in Bate v Priestley at 325, “the claim of A arising from B arising from C … may be traced back to the Creation without philosophical error. In deciding whether, for the particular purpose before it, A is to be seen as arising from C, the test applied by the court is not philosophical but functional”. And it is in that functional sense that the Fair Work Proceeding does not arise out of the marital relationship.

75    It is, rather, the alleged failure to comply with the employment contract alleged by Ms Testart, a copy of which she produced in her affidavit in support of her Fair Work Act claims and the essential terms of which are summarised above at [7], that gives rise to the Fair Work Proceeding.

76    As the cases to which I refer above indicate, the mere fact that the employment contract happened to be between parties to a marriage, or even that the contract itself may have arisen during a marital relationship (which itself is questionable here, because the alleged contract of employment preceded the parties’ marriage by some six months), does not involve by the application of a functional test, a conclusion that the Fair Work Proceeding arose out of that relationship.

77    Ms Sweet referred to the decision of Opas J in In the Marriage of Bak (1979) 46 FLR 271 at 274-75. In that case, a husband brought an application to restrain proceedings brought by the wife in the Supreme Court of New South Wales for declaratory orders relating to a partnership of the husband and wife in two “milk vending” or “milk run” businesses. Ms Sweet relied on this passage from his Honour’s reasons:

In the present case, the relief sought by the applicant husband is clearly in relation to the property of a party which is clearly a matter of the nature indicated in s 114(1) by its very words. Not only that but the partnership of which there were no other members but the parties is ultimately connected to the fact that the parties are husband and wife. The evidence indicated that the parties were both involved in the business (to what degree I do not find it necessary to decide) and the business provided the funds necessary for their living together as husband and wife and financed the jointly-owned home at Wetherill Park. There is a connexion too between the fact of partnership in this case and the fact of marriage. The applicant husband had been a milk vendor for some years before marriage. The parties were married on 30 October 1976 and the partnership is expressed in the agreement to begin from 1 November 1976. It seems that the partnership was at least in part a result of the marriage.

78    The mostly undisputed facts, in summary, were as follows.

79    In about 1970 the applicant husband purchased a “milk vending” or “milk run” business. He borrowed $15,000 in order to do so. The loan was paid off two years before the marriage. At about the time the parties married, they purchased another milk vending interest in an adjacent suburb. The parties later purchased jointly a house, where they lived until separation, when the wife left. The husband continued to live in the home at the time of his application.

80    In November 1976 the parties entered into a partnership agreement in respect of the milk runs. The husband alleged, and the wife disputed, that the partnership had been dissolved by operation of the agreement.

81    The wife did not dispute that the business had financed and still financed the former matrimonial home and that the parties lived off the proceeds of the business.

82    It was on the basis of those facts that the judge held that the relief sought by the husband in the Family Court was in relation to the property of a party which was a matter within the ambit of s 114(1) of the Family Law Act, and made an order restraining the wife from continuing her proceedings in the Supreme Court of New South Wales in respect of their property.

83    But those facts are far removed from this case. Here there is no dispute about a matrimonial home; there is no suggestion that Ms Testart’s wage was used to fund matrimonial property; Mr Testart and Ms Testart were not in partnership; and Ms Testart’s employment was not said to be something that “resulted” from their marriage – on the contrary, her employment began before the marriage.

84    I turn now to the next question.

Basis of the proceeding: relates to completed divorce proceedings between the parties?

85    Mr Testart contended in the alternative that the Fair Work Proceeding is “in relation to” the completed Family Law Proceeding.

86    As Gibbs CJ said in Perlman v Perlman at 484-85:

The words “in relation to” import the existence of a connexion or association between the two proceedings, or, in other words, that the proceedings in question must bear an appropriate relationship to completed proceedings of the requisite kind: see R v Ross-Jones; Ex parte Beaumont [(1979) 141 CLR 504 at 510]. An appropriate relationship may exist if the order sought in the proceedings in question is consequential on or incidental to a decree made in the completed proceedings (so that, eg, an application by a divorced wife for a settlement and transfer of property is a proceeding in relation to the completed proceedings for the divorce: R v Ross-Jones; Ex parte Beaumont [(1979) 141 CLR 504 at 510–11, 520]). It may exist if the order sought in the later proceedings would reverse or vary the effect of the order made in the former (eg where an application under s 61(4) of the Act is brought by a surviving parent for custody of a child when that custody has been awarded to the other parent, since deceased: Dowal v Murray [(1978) 143 CLR 410 at 417, 423, 427]; or where an application for custody of a child of a marriage since dissolved is made by a stranger to the marriage against a party to the marriage who has been granted custody by an order in previous proceedings: Fountain v Alexander [(1982) 150 CLR 615 at 624, 629, 645]. Proceedings brought to revoke an approval, in the limited circumstances permitted by s 87(6) of the Act, would be proceedings in relation to the completed proceedings for the approval. However, an application to enforce the maintenance agreement in the present case (ie the deed) was not consequential on or incidental to the order approving of the maintenance agreement and it did not vary, reverse or otherwise affect the order giving the approval. The approval of the court had three relevant effects — (1) it rendered the agreement effective (s 87(2)); (2) thereafter no court having jurisdiction under the Act could make an order with respect to the financial matters dealt with in the agreement (ie with respect to any of the financial matters between the parties) except in the circumstances mentioned in s 87(9) which has no relevance to the present case (s 87(3)); and (3) it rendered the agreement enforceable as if it were an order of the Family Court (ss 87(7) and 88). The present proceedings do not affect that position — whether the present proceedings succeed or fail, the approval remains valid, and the deed remains effective; the deed continues to oust the jurisdiction of courts under the Act to make orders with respect to financial matters between the parties and it remains enforceable as if it were an order of the Family Court. Although a grant of approval was a condition of the efficacy of the maintenance agreement, the subject of the present proceedings is not the approval, but the agreement. There is a connection between the present proceedings and the deed, since the present proceedings are brought to enforce the deed; there is none, except of a remote and indirect kind, between the present proceedings and the proceedings brought to obtain the approval. So far as the present proceedings are concerned, the proceedings brought to obtain the approval simply form part of the historical background. The proceedings in the present case are not proceedings in relation to the proceedings for the approval.

87    Mr Testart’s counsel asserted that the Fair Work Proceeding is related to the Family Law Proceeding “because there is a direct relationship between the principal relief and the ‘property’ sought in this proceeding, namely monies in respect of [the applicant’s] contribution to the legal practice”.

88    I do not agree.

89    First, there is no evidence to support such a proposition.

90    Secondly, and in any event, adopting the language used by Gibbs CJ in Perlman v Perlman in the passage extracted above, the Fair Work Proceeding is “not consequential on or incidental to” the Family Law Proceeding, or the orders made by Judge Kirton.

91    Thirdly, there seems to me to be no reason to deny Ms Testart the right of access to the Fair Work jurisdiction in this court in circumstances where the Fair Work Proceeding arises out of alleged failures to perform contractual terms and contraventions of the Fair Work Act.

92    For the foregoing reasons, and those set out at [35]-[40] above, I reject Mr Testart’s contention that the Fair Work Proceeding brought against him by his ex-wife is a matrimonial cause within the meaning of s 4(1)(ca) of the Family Law Act.

Ground Two: Estoppel

93    Mr Testart submitted that Ms Testart ought to be precluded from pursuing her Fair Work Proceeding by operation of an Anshun estoppel.

94    It is necessary to pay close attention to the way the submission was put. In counsel’s written submissions it was put in these terms:

27.    For the following reasons, the applicant ought to be precluded from pursuing the FW Proceeding by operation of an Anshun estoppel:

(a)    First, by the Family Law Proceeding, the applicant sought to alter the property interests of the parties by, amongst other things, relying on her contribution to the legal practice under s 79 of the FLA.

(b)    Second, the applicant could have asserted in that earlier proceeding that, by reason of her contribution to the legal practice, she had entitlements owing under the Fair Work Act, and sought to quantify her contribution referable to that instrument.

(c)    Third, the subject matter of the FW Proceeding – in essence, payment for labour undertaken in a legal practice, is intimately connected to the subject matter of the Family Law Proceeding – in essence alteration of property interests based on, amongst other things, her contribution to the legal practice through her labour.

(d)    Fourth, such is the relevance and connectedness of the subject matter of the two proceedings that the decision of the applicant not to raise it in the earlier proceeding is unreasonable.

(e)    Fifth, the applicant has offered no explanation for the timing of bringing the Claim or her failure to raise it in the earlier proceeding.

(f)    Sixth, no special circumstances exist in favour of allowing the Claim to be pursued.

(g)    Seventh, the respondent relied on the applicant’s undertaking about the finality of the Final Property Orders in agreeing to those Final Property Orders.

(h)    Eighth, the claim involves a large element of “double dipping”, that is, seeking to have the applicant’s contribution remunerated or rewarded twice.

(i)    Ninth, considerations of finality and fairness lend support to the operation of an estoppel in all the circumstances.

95    Ms Sweet gave this further explanation of the estoppel submission in the course of her oral address, which is recorded in the transcript as follows:

And I know it’s put against us, “Well, I couldn’t have” – by Ms Testart – she says, “I couldn’t have raised it, because” – as your Honour will appreciate in – they were in the Federal Circuit Court under the family law jurisdiction, and she says “well, my claim” – at that stage, to raise a small claim in the Federal Circuit Court, there was a jurisdictional limit of $20,000 … at that time she says, “Well, I couldn’t have brought it,” but, then again, that’s – we’re not saying she should have brought it, in form, as a claim of non-payment under the award and annual leave, but she – what needed to happen is she had to bring – in substance, Anshun looks at substance, not form, and these things should have been brought to account at this time.

96    As that extract from the transcript makes clear, counsel is to be understood as having disavowed any contention that Ms Testart should have brought her claim under the civil remedy provisions of the Fair Work Act within the associated jurisdiction of either the Federal Circuit Court or the Family Court (“we’re not saying she should have brought it, in form, as a claim of non-payment under the award and annual leave, but she – what needed to happen is she had to bring – in substance … these things should have been brought into account”).

97    The doctrine of Anshun estoppel “operates to preclude the assertion of a claim, or the raising of an issue of fact or law, if that claim or issue was so connected with the subject matter of the first proceeding as to have made it unreasonable in the context of that first proceeding for the claim not to have been made or the issue not to have been raised in that proceeding”. See Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 at 517-18 [22] (French CJ, Bell, Gageler and Keane JJ). See also Clayton v Bant (2020) 272 CLR 1 at 12 [29] (Kiefel CJ, Bell and Gageler JJ).

98    As Gibbs CJ, Mason and Aickin JJ said in Port of Melbourne Authority v Anshun Pty Ltd at 598:

The critical issue, then, is whether the case falls within the extended principle expressed by Sir James Wigram VC in Henderson v Henderson [(1843) 3 Hare 100 at 115; 67 ER 313 at 319]. The Vice-Chancellor expressed the principle in these terms:

“where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.”

99    Their Honours continued at 602-3:

In this situation we would prefer to say that there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff’s claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding. In this respect, we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings, eg expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few. See the illustrations given in Cromwell v County of Sac [(1877) 94 US 351; 24 Law Ed 195 at 199]. It has generally been accepted that a party will be estopped from bringing an action which, if it succeeds, will result in a judgment which conflicts with an earlier judgment.

100    In Cromwell v County of Sac 94 US 351 (1877) (the case cited in the passage in Anshun cited above) Field J (who delivered the opinion of the Court, Clifford J dissenting) said at 356:

Various considerations, other than the actual merits, may govern a party in bringing forward grounds of recovery or defence in one action, which may not exist in another action upon a different demand, such as the smallness of the amount or the value of the property in controversy, the difficulty of obtaining the necessary evidence, the expense of the litigation, and his own situation at the time. A party acting upon considerations like these ought not to be precluded from contesting in a subsequent action other demands arising out of the same transaction.

101    As the Court of Appeal of New South Wales held in Champerslife Pty Ltd v Manojlovski (2010) 75 NSWLR 245, it is a fundamental error in the operation of the principle of Anshun estoppel to hold that a matter that could have been raised in the first proceeding should have been raised so as to bar later proceeding based on that matter. Rather, it must have been so relevant in the first proceeding that it was unreasonable not to raise it (per Allsop P at 246-7 [3]-[4]; and Giles JA at 255 [52] and 262 [89]).

102    And as Kiefel CJ, Bell and Gageler JJ said in Clayton v Bant at 12 [31]:

In the manner in which the application for the permanent stay appears to have been conducted, the husband did not deign to prove the unreasonableness of the choice made by the wife. His case for the existence of Anshun estoppel seems to have been put on the basis that the fact that the wife could have asserted a right in the Dubai proceedings meant that she should have asserted that right in the Dubai proceedings in the sense that it was unreasonable for her not to have done so. That approach to Anshun estoppel has rightly been said to involve “fundamental error” [citing Champerslife Pty Ltd v Manojlovski].

(Emphasis in original).

103    The crux of Mr Testart’s submission is that Ms Testart “could have asserted” her entitlements under ss 45 and 323 of the Fair Work Act in her Family Law Proceeding pursuant to s 79 of the Family Law Act, and could have sought to quantify them, and that because “the subject matter” of the Fair Work Proceeding, which was said to be “payment for labour undertaken in a legal practice” was “intimately connected to the subject matter of the Family Law Proceeding”, she should have done so.

104    I was not taken to any authority in support of such a contention, but it cannot be right.

105    First, it runs headlong into the proposition that it is a fundamental error in the operation of the principle of Anshun estoppel to hold that because a matter could have been raised in the first proceeding, it should have been raised so as to bar later proceedings based on that matter (see Champerslife Pty Ltd v Manojlovski, referred to at [101] above).

106    Secondly, and more fundamentally, it cannot be right because, as I have explained at [35]-[40] above, claims for compensation for breach of the civil remedy provisions under the Fair Work Act are not “property” within the meaning of s 79 of the Family Law Act, so they form no part of what is colloquially referred to as the “pool” of assets of the parties to a marriage. It follows that, contrary to Mr Testart’s submission, Ms Testart could not have asserted her alleged Fair Work Act entitlements for compensation for contraventions under ss 45 and 323 in her s 79 application.

107    I should add before turning to the limitation ground, that it was also submitted on Mr Testart’s behalf that because there are final orders from the Family Law Proceeding, it is “inherently prejudicial … for [Mr Testart] to be pursued for a claim of almost half a million dollars” and that for Ms Testart to press her statutory claim after the conclusion of the earlier Family Law Proceeding is “oppressive and it’s prejudicial and inherently unfair … and this is exactly the sort of circumstance that Anshun is designed to address”.

108    It was not explained to me why that might be so and no answer was advanced to meet the point made in Champerslife Pty Ltd v Manojlovski. And I was not taken to any evidence about the point. In those circumstances, I do not accept the submission.

109    I should say something very briefly about the small claims procedure, which was referred to in oral argument (see [95] above) and by Ms Testart in her written submissions. The Fair Work Act jurisdiction of the Federal Circuit Court was not subject to a $20,000 limit. Section 548 of the Fair Work Act instead provides for an alternate “small claims procedure” and does not otherwise operate to limit the court’s jurisdiction under s 566. Relevantly, s 548 provides:

548 Plaintiffs may choose small claims procedure

(1)    Proceedings are to be dealt with as small claims proceedings under this section if:

(a)    a person applies for an order (other than a pecuniary penalty order) under Division 2 from a magistrates court or the Federal Circuit and Family Court of Australia (Division 2); and

  (b)    the order relates to an amount referred to in subsection (1A); and

(c)    the person indicates, in a manner prescribed by the regulations or by the rules of the court, that he or she wants the small claims procedure to apply to the proceedings.

(1A)    The amounts are as follows:

(a)    an amount that an employer was required to pay to, or on behalf of, an employee:

(i)    under this Act or a fair work instrument; or

…

Limits on award

(2)    In small claims proceedings, the court may not award more than:

  (a)    $20,000; or

(b)    if a higher amount is prescribed by the regulations—that higher amount.

Procedure

(3)    In small claims proceedings, the court is not bound by any rules of evidence and procedure and may act:

(a)    in an informal manner; and

(b)    without regard to legal forms and technicalities.

(4)    At any stage of the small claims proceedings, the court may amend the papers commencing the proceedings if sufficient notice is given to any party adversely affected by the amendment.

110    No more thus needs to be said in relation to the small claims procedure submission.

Ground Three: Limitation Period

111    Mr Testart submitted that by operation of s 544 of the Fair Work Act, Ms Testart’s claims are time-barred in respect of contraventions alleged to have occurred before 11 November 2015, and that her claim can only be pursued in respect of the claims made for the period 11 November 2015 to 23 October 2016.

112    Section 544 provides as follows:

544 Time limit on applications

A person may apply for an order under this Division in relation to a contravention of one of the following only if the application is made within 6 years after the day on which the contravention occurred:

(a)    a civil remedy provision; …

113    Further, s 545(5) provides that “[a] court must not make an order under this section in relation to an underpayment that relates to a period that is more than 6 years before the proceedings concerned commenced”.

114    It is necessary now to set out the detail of how Ms Testart says she is entitled to compensation under the Fair Work Act.

115    In her 9 November 2021 affidavit she deposed to the following:

3.    The Respondent is a barrister admitted to practice in Victoria on 3 May 1976, signing the Bar Roll on 28 November 1991. He is an employer in the legal services industry solely engaged in the business of providing legal and legal support services as defined in Part 4 of the Legal Services Award 2020.

4.    I say that the Respondent contravened s45 of the Fair Work Act by:

(a)    Not paying annual leave and leave loading entitlements to the Applicant as per Part 6 of the Legal Services Award 2020; and

(b)    Failing to make superannuation contributions on behalf of the applicant as required by part 19 of the Legal Services Award 2020; and

(c)    Failing to pay the Applicant wages between 3 August 2009 and 23 October 2016; and

(d)    Not having copies of the Legal Services Award available to his employees;

5.    I also assert that the Respondent also contravened s323 of the Fair Work Act by

(a)    Failing to pay the Applicant wages between 3 August 2009 and 23 October 2016;

116    Under the heading “My Employment”, the affidavit continued relevantly as follows:

6.    I was employed on a full-time basis by the Respondent from 1 July 2009 to 30 June 2017.

7.    On 30 June 2009 the Respondent gave me a written Offer of Employment setting out my entitlements and the details of the role which I accepted. See Annexure LJT1

8.    I received group certificates and I filed tax yearly returns. See Annexure LJT2

9.    The Respondent paid the income tax obligations that arose from my employment.

10.    The Respondent registered as an employer with Allianz Australia for Workers Compensation. See Annexure LJT3

11.    The first four weeks of my employment were through my accountant’s employment agency, Reflex Corporation Pty Ltd. The Respondent entered into a formal arrangement with Reflex Corporation Pty Ltd to provide my services to him as a temporary full-time placement for the month of July 2009 … my employment as a full-time temp was based on a gross wage of $79,000 per annum, superannuation of $7,110 per annum, work cover of $3151.63 per annum, and GST of $8926.16 per annum totalling $98,187.79 with a monthly charge of $8182.32. The Respondent was issued invoice number 00003807 on 1 July 2009 for the sum of $8182.32 by Reflex Corporation Pty Ltd which was paid by his barristers clerk … See Annexure LJT4

12.    From August 2009 I was employed directly by the Respondent and my yearly salary was $79,000 per annum as per the Offer of Employment. This figure was used to calculate the hourly rate of $39.97 which was my base hourly rate for the entirety of my employment. My gross weekly wages were $1518.86 with a net amount of $1019.86 per week.

13.    On 17 September 2019 the Respondent confirmed my full-time employment from l July 2019 in writing, on yearly salary of $80,000 plus statutory superannuation. The hourly rate of $39.97 was not adjusted. See Annexure LJT5

14.    I was paid the first four weeks of my employment for July 2009 by Reflex Corporation Pty Ltd. After the first four weeks of wages, I was not paid wages again until 24 October 2016.

15.    Even though I may characterise my wages, and my employment, as a business expense to the benefit of the Respondent, I always conducted myself to the benefit of the Respondent and was always seen by others as his employee, regardless of our personal relationship.

16.    The Respondent paid for some of my higher education costs, but I bore most of the costs through my tax with HECS and VETFEE-HELP Government assisted loans. My qualifications in counselling were promoted as a support service for his clients. I was extensively used by the Respondent to provide support to his clients at court, to prepare them for trial, and to explain court processes, and consent orders. The Respondent trained me to provide unique legal support to his clients.

117    As to her claim to superannuation, Ms Testart relevantly deposed as follows:

17.    In late 2019 I used the ATO’s online submission portal to lodge an unpaid superannuation query which was subsequently investigated. I told the ATO that I did not get paid wages. In spite of not getting wages. The ATO determined that my case ought to be progressed to an investigation, which has now been found proven. I received a letter from the ATO on 1 September 2021 informing me of the outcome of the investigation, which was found in my favour … See Annexure LJT6

118    Ms Testart’s evidence about the relevant calculations was as follows:

First Calculations of Unpaid Wages & Entitlements for Letter of Demand

24.    While the 2009 Offer of Employment referred to the legal secretarial industry, my role did not involve any secretarial work, and I was, according the Offer being paid over and above whatever entitlements might have been relevant, if an award applied to my employment which the Respondent did not actually confirm.

25.    Under the Legal Services Award 2020 the highest clerical and administrative grade commensurate with my role would be a grade 5 legal clerical and administrative employee, with an hourly rate of $27.32 per hour.

26.    The base hourly rate of $39.97 was the hourly rate in effect for the entirety of my employment with the Respondent, and did not change.

27.    My employment was based on a 38 hour week, with four weeks annual leave accruing from year to year, with a leave loading of 17.5% as per the Legal Services Award, with an over award hourly rate of payment.

28.    I was not paid any annual leave, or leave loading by the Respondent.

29.    I therefore calculated my leave entitlements for the letter of demand based on the following:

(a)    four weeks annual leave for every year of service being eight years service, that equals 160 days totalling 32 weeks:

(b)    17.5% leave loading;

(c)    Unpaid superannuation as per finalised investigation by the Australian Taxation Office of [$]54,890.05.

30.    To calculate the unpaid wages owed to me I subtracted the total tax withheld amount from the gross payment amount shown on my group certificates for the years ending 30 June 2010, 2011, 2012, 2013, 2014, 2015, 2016, and 2017. This gave me the net amount per year to substantiate the claim. Then from that figure I subtracted the wages paid to me that are not in dispute. I am claiming unpaid wages only for the period in which no wages were paid.

Second Calculations of Unpaid Wages & Entitlements - Annual Leave and Leave Loading Correction

31.    My letter of demand to the Respondent of 21 October 2021 for the unpaid annual leave component was incorrectly based on 4 weeks of leave per year of service, and not from my payslips. I did not realise the payslips showed a higher rate of accrued leave hours owing to me. I have very few payslips. My unused annual leave accrual hours on the last payslip I can find shows an amount of 944.13 hours of holiday leave accrued as at 26 May 2017. See Annexure LJT8. This figure means my unpaid leave entitlement was $37,736.88 at 26 May 2017, and not $32,629.76 as I stated on the letter of demand. Therefore, my adjusted claim is for the following amounts:

32.    Under the Legal Services Award 2020 Part 6 s 22.3 an over award hourly rate higher than a rate specified under the award is the rate at which leave is calculated which 1 have used.

119    Ms Testart deposed that she was paid 32 separate amounts of $1019.86, commencing on 24 October 2016 and ending on 26 May 2017, and that those sums “are the only wage payments I can confidently assert were paid to me by [Mr Testart]”.

120    At the hearing on 9 December 2022, Ms Sweet agreed (at my request) to submit a note after the conclusion of the hearing providing a breakdown of the claims said to be time-barred and the quantum of those that are not.

121    The note, entitled “Respondent’s note as to remainder of applicant’s claim if s 544 time bar operates”, was in these terms:

1.    The Respondent provides this note in response the Court’s request for his assessment of the potential remaining quantum of the Applicant’s claim under the Fair Work Act 2009 (Cth) (FW Act), should the Court find that the Respondent is correct in submitting that all claims relating to FW Act contraventions alleged to have taken place prior to 11 November 2015 [being the date which is 6 years prior to the day on which the Applicant brought this proceeding] are time-barred by s 544 of the FW Act.

2.    By her application, the Applicant contends:

2.1.    She has not been paid wages between 3 August 2009 and 23 October 2016 [citing the affidavit of Ms Testart affirmed 9 November 2021 (LT Affidavit), paragraphs 4(c) and 5(a)].

2.2.    Pursuant to the Legal Services Award 2020 (which the Respondent takes to be a reference to the Legal Services Award 2010 (Award)), her role is properly classified as ‘Level 5 – Legal clerical and administrative employment’, which had a [sic] hourly rate of $27.32 per hour [citing LT Affidavit, paragraph 25].

2.3.    Pursuant to her Offer of Employment, her gross weekly wages were $1,518.86 (net amount: $1,019.86) [citing LT Affidavit, paragraph 12].

2.4.    The base hourly rate of $39.97 was the hourly rate in effect for the entirety of her employment [citing LT Affidavit, paragraph 27].

2.5.    There is a leave loading of 17.5% as per the Award [citing LT Affidavit, paragraph 27].

3.    If the Respondent is correct about the Applicant’s claim being time-barred by reason of s 544 … then it follows that the Applicant is only entitled to pursue her claim in respect of contraventions of a civil remedy provision for the period between 11 November 2015 and 23 October 2016 (the Relevant Period).

4.    The Respondent calculates that there are 49 weeks and 4 days in the period between 11 November 2015 and 23 October 2016. For ease of calculation, the Respondent has assumed that a round figure of 50 weeks is contained within the Relevant Period.

5.    For the Relevant Period, the Award (incorporating the changes made by the Annual Wage Review 2013-14 C2014/1) [citing Fair Work Commission Determination (MA000116 PR551704), 19 June 2014] provided:

5.1.    The minimum weekly award wage (for Level 5 – Legal clerical and administrative employee) of $861.30.

5.2.    Leave loading of 17.5%.

5.3.    An annual leave entitlement of 4 weeks per year of service (pursuant to the National Employment Standards contained in s 87 of the FW Act).

6.    The Applicant makes a claim in this proceeding for unpaid superannuation entitlements. However, the Australian Taxation Office determination dated 1 September 2021 is currently the subject of a notice of dispute by the Respondent … In these circumstances, the Respondent has excluded calculations of the Applicant’s claim for superannuation entitlements in this proceeding from the figures below.

7.    Having regard to the Applicant’s factual and legal claims above, which are denied by the Respondent, the following table sets out the Respondent’s assessment of the quantum of the Applicant’s claims which are not time-barred [(footnotes omitted)]:

122    Courts have long cautioned against deciding limitation questions in the abstract or absent a full hearing. As Mason CJ, Dawson, Gaudron and McHugh JJ said in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533:

We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration [s 82 of the Trade Practices Act 1974 (Cth)] should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally 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.

123    However, as Master Sanderson said in Lovell v Western Australian Police Union of Workers [2004] WASC 19 at [23], “[i]t is clear that their Honours [in Wardley] were concerned that at an interlocutory stage it might be possible to determine what damage has been sustained by a plaintiff and the circumstances in which that damage was sustained” and that “[d]espite the High Court’s warning there have been a number of cases in which Courts have thought it appropriate to determine questions of limitation at an interlocutory stage”.

124    In Jobbins v Capel Court Corp Ltd (1989) 25 FCR 226 at 231, the Full Court (Davies, Burchett and Hill JJ) said “where it is clear that an applicant cannot succeed upon the case pleaded because [a limitation provision] will be a complete answer to the claim, the court should not merely defer the inevitable. As the action must fail, the court should not hesitate to say so …”

125    Along similar lines, in Mayne Nickless Ltd v Multigroup Distribution Services Pty Ltd (2001) 114 FCR 108 at 118 [28] another Full Court (Wilcox, French and Drummond JJ) said that “the decision to hear and determine the limitation point separately was within the reasonable discretion of the judge seised of the management of the case. The question was one whose resolution did not depend upon contested matters of fact, nor even upon contentious characterisation of undisputed fact”.

126    And as O’Bryan J said in Reilly v Australia and New Zealand Banking Group Limited (No 2) [2020] FCA 1502 at [21], the need to apply the caution addressed in the passage from Wardley quoted above need not necessarily apply “where the nature and incidence of the alleged loss and damage is clear and the application of the limitation period turns upon a question of law”.

127    In my view, this is a case, at least in respect of the claims for unpaid wages, unpaid annual leave and annual leave loading, where the nature and incidence of the alleged loss and damage is clear and the application of the limitation period may be determined on the face of Ms Testart’s claim.

128    On the face of her claim, she seeks compensation under the Fair Work Act in respect of unpaid wages, unpaid annual leave and annual leave loading “for the years ending 30 June 2010, 2011, 2012, 2013, 2014, 2015, 2016, and 2017”.

129    In my view, all such claims relating to contraventions said to have taken place prior to 11 November 2015, being the date which is 6 years prior to the day on which Ms Testart brought the Fair Work Proceeding, are time-barred by operation of ss 544 and 545(5).

130    Ms Testart submitted, to the contrary, that her claims are not time-barred because “each contravention arose at the time the wage was not paid, and therefore ought to be treated as cumulative, and continuing to exist until each breach is resolved by the payment to [her] of each outstanding wage due on a weekly basis”, citing R v Industrial Appeals Court [1965] VR 615 at 623 (Smith J). See also Jones v Lorne Saw Mills Pty Ltd [1923] VLR 58 (Cussen J); Bridge v Lindrum [1957] AR (NSW) 356 at 360 (McKeon J); and Brammer v Deery Hotels Pty Ltd (1974) 22 FLR 276 at 278-79 (Joske J, with whom Spicer CJ and Smithers J agreed). (Although her contention, in terms, referred only to unpaid wages, I take it to extend to her claims for unpaid annual leave and annual leave loading).

131    But the case Ms Testart cited, and the others I have mentioned above which are along the same lines, concern courses of conduct in contravention of a statute, not claims for compensation.

132    As Judge Cameron correctly explained in Scotto v Scala Bros Pty Ltd [2014] FCCA 2374 at [309]-[310]:

[309]    [The applicant] referred to a number of cases which dealt with contraventions of statutory provisions involving courses of conduct which commenced outside a particular limitation period and continued into it. Each proceeding was held to be maintainable. However, such considerations are of no significance for the limitation period applicable to [the applicant’s] claims for compensation because the cases he referred to concerned courses of conduct in contravention of a statute, not claims for money. Proceedings for contravention of a statute, even proceedings seeking a civil penalty, are different from proceedings for damages, proceedings for payment of a debt or proceedings for monetary compensation based on statute. The latter class of matters requires the existence of a cause of action in the form of a set of facts whose existence, if proved, entitles the employee to obtain from the court a remedy against his or her employer. In the case of wages said to be owed, the necessary facts giving rise to a cause of action in relation to each non-payment or underpayment are in place each time wages are not paid or are underpaid. The determination of those matters does not depend on and is not determined by the existence of a continuing statutory breach.

[310]    Consequently, each non-payment or underpayment alleged by [the applicant] gave rise to a separate cause of action and, in the case of the underpayments alleged to have occurred before 28 October 2004, causes of action which accrued more than six years before the commencement of this proceeding and which are thus out of time.

(Emphasis added).

133    In any event, the Fair Work Act makes it clear that where an applicant seeks compensation (as opposed to the imposition of a penalty) for underpayments – that is, “compensation for loss that [they have] suffered because of the contravention” of a civil remedy provision within the meaning of s 545(2)(b) of the Fair Work Act – s 545(5) provides that the court “must not make an order under [that] section in relation to an underpayment that relates to a period that is more than 6 years before the proceedings concerned commenced”. (Emphasis added). As Perram J said in Lang v ACN 078 899 591 Pty Ltd t/as Kohinoor Indian Centre [2009] FCA 987 at [30] (in reference to the analogous s 178(7) of the Workplace Relations Act 1996 (Cth)), that provision “continues to render unrecoverable those payments which are due from a time more than six years before the commencement of the proceedings”.

134    It follows that to the extent that Ms Testart seeks compensation under the Fair Work Act in respect of unpaid wages, unpaid annual leave and annual leave loading for the period prior to 11 November 2015, those claims must be dismissed.

135    Ms Testart’s claim for superannuation entitlements falls into a different category because it is the subject of some on-going dispute with the Australian Taxation Office, the particulars of which were not made clear (at least to me). So whether and to what extent the claim with respect to superannuation entitlements is time-barred (or has any merit) are not issues that I am asked to resolve, as Mr Testart’s counsel seems to have accepted in her note set out above.

Conclusion

136    For the foregoing reasons, I will order that all claims made by Ms Testart relating to Fair Work Act contraventions in respect of unpaid wages, unpaid annual leave and annual leave loading for the period prior to 11 November 2015 be dismissed. Mr Testart’s interlocutory application will otherwise be dismissed. I will reserve the question of costs.

137    I also propose to order that the proceeding be referred to mediation by a Judicial Registrar of the court as soon as practicable, and by no later than 12 May 2023.

Associate:

Dated:    16 March 2023