Federal Court of Australia

Patial v Kailash Lawyers Pty Ltd trading as Kailash Lawyers and Consultants [2023] FCA 217

ORDERS

THE COURT ORDERS THAT:

1.    The applicant be granted an extension of time to file a notice of appeal and leave to appeal the orders made in proceeding NSD 1016 of 2021 on 9 June 2022 on the ground that the primary judge erred in striking out the statement of claim as an abuse of process on the basis that the Fair Work Commission had determined that the applicant was not an employee of the first respondent.

2.    The costs of the applicant and the respondents of and incidental to the application for an extension of time to file a notice of appeal and leave to appeal, filed on 8 August 2022, be costs in the cause.

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

ORDERS

THE COURT ORDERS THAT:

1.    The applicant be granted leave to appeal the costs orders made in proceeding NSD 1016 of 2021 on 29 July 2022 on the ground that if he is successful in his appeal against the orders made in that proceeding on 9 June 2022 then the costs orders should also be set aside or dismissed.

2.    The costs of the applicant and the respondents of and incidental to the application by the applicant for leave to appeal, filed on 12 August 2022, be costs in the cause.

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

REASONS FOR JUDGMENT

HALLEY J:

Introduction

1    The applicant, Mr Prateek Patial, seeks an extension of time and leave to appeal from orders made by a judge of this Court striking out a statement of claim as an abuse of process (Strike Out Orders) and leave to appeal subsequent indemnity costs orders made against him (Costs Orders).

2    The applicant must seek leave to appeal because the orders were of an interlocutory nature. In addition, the applicant requires an extension of time to file any application for leave to appeal the Strike Out Orders because the application for leave to appeal was made some 6 weeks after the 14 days period prescribed by r 35.13 of the Federal Court Rules 2011 (Cth).

3    The proposed appeal raises for determination the question of whether it is an abuse of process for an applicant to advance claims in this Court against a respondent based on an employment relationship if a Fair Work Commissioner has determined that the applicant is an independent contractor, not an employee of the respondent.

4    The applicant relied on two affidavits that he affirmed on 7 August 2022 in support of his applications for an extension of time and leave to appeal.

Background

5    The applicant was admitted as a solicitor in the Supreme Court of New South Wales in December 2018 and received a restricted practising certificate from the Law Society of New South Wales which permitted him to practice from 1 January 2019 to 30 June 2019 as a supervised employee of a law practice.

6    The first respondent trades as Kailash Lawyers and Consultants.

7    On 17 April 2019, the applicant and the first respondent entered into a written agreement that purported to set out the terms on which the applicant was to receive supervised legal training with the first respondent (Agreement). Clause 2(a)(vi) of the Agreement provided:

It is expressly understood and stated that the parties do not form an employer-employee relationship. Kailash [the first respondent] do not owe any employer obligations towards Prateek [the applicant] including but not limited to remuneration, salary, superannuation etc. The pure and simple objective of this agreement for the parties is conduct and receive supervised training with certain benefits to both the parties arising out of this relationship.

8    On 28 August 2020, Mr Amit Pall, the sole director of the first respondent, sent an email to the applicant purporting to terminate the Agreement.

9    On 4 September 2020, the applicant filed an application under s 394 of the Fair Work Act 2009 (Cth) in the Fair Work Commission (Fair Work Application).

10    On 6 August 2021, Commissioner McKenna dismissed the Fair Work Application on the basis that the applicant was not an employee of the first respondent and therefore, the Commission lacked jurisdiction to determine the Fair Work Application. In the alternative, if the applicant was an employee, Commissioner McKenna concluded that the termination of the applicant was consistent with the Small Business Fair Dismissal Code: see Re Kailash Lawyers Pty Ltd (t/as Kailash Lawyers and Consultants) [2021] FWC 4167.

11    On 27 August 2021, the applicant sought leave to appeal the decision of Commissioner McKenna pursuant to s 604 of the Act (Fair Work Leave Application).

12    On 29 September 2021, the applicant commenced these proceedings by filing an Originating Application and Statement of Claim. The applicant seeks to advance in these proceedings claims against the first respondent for unfair dismissal, unpaid wages, annual leave, sick leave and overtime (Principal Claims). The applicant also seeks to advance claims against the second and third respondents for work that he alleges he undertook for them.

13    On 24 November 2021, a Full Bench of the Fair Work Commission dismissed the Fair Work Leave Application on the basis that the applicant did not challenge Commissioner McKenna’s finding that the dismissal was consistent with the Code, other than raising a procedural fairness issue, which the Full Bench concluded had not been established: Patial v Kailash Lawyers Pty Ltd (t/as Kailash Lawyers and Consultants) [2021] FWCFB 6055. The Full Bench stated it was therefore unnecessary for it to address the other proposed appeal grounds. The Full Bench also observed at [33] that:

the arrangements between the applicant and the first respondent appeared “contrary to the requirements of the Legal Profession Uniform Law (NSW). Accordingly, we consider it appropriate to refer this matter to the General Manager of the Fair Work Commission for consideration as to whether it should be referred to the Law Society of New South Wales and/or the Office of the Legal Services Commissioner.

Decisions of the primary judge

14    On 23 December 2021, the respondents filed an interlocutory application seeking summary dismissal of the proceedings and in the alternative, an order that the statement of claim be struck out in whole or in part.

15    On 9 June 2022, the primary judge made the Strike Out Orders and published reasons in Patial v Kailash Lawyers Pty Ltd trading as Kailash Lawyers and Consultants [2022] FCA 662 (J). The primary judge found that all of the Principal Claims depend upon the proposition that the applicant was employed by the first respondent but that issue was “considered in detail and determined by the Commissioner adversely to the applicant”: at J [411].

16    The primary judge relevantly concluded at J [42]:

…I am comfortably satisfied that the pursuit in this Court of a case based upon the proposition that the applicant was an employee of the respondent in circumstances where that proposition was found to be false by the Commission is an abuse of process.

17    On 29 July 2022, the primary judge made the Costs Orders and published reasons on 3 August 2022 in Patial v Kailash Lawyers Pty Ltd trading as Kailash Lawyers and Consultants (No 2) [2022] FCA 662 (J2). The primary judge concluded that both ss 570(2)(a) and (b) of the Act, which permits costs orders in matters arising under the Act, were satisfied. The primary judge was persuaded that the applicant had (a) instituted proceedings without reasonable cause given he was seeking to re-agitate an issue already determined by the Commission and (b) acted unreasonably in pursuing claims in this Court based on the proposition that he was an employee of the respondent, contrary to the Commission’s finding: at J2 [20]-[22].

18    The primary judge also concluded that the applicant should pay the respondents’ costs on an indemnity basis because the applicant, as a legal practitioner, (a) should have been aware from the commencement of the proceedings that he was engaging in an abuse of process and (b) persisted in advancing the Principal Claims in the face of three letters from the respondents’ solicitors in which the abuse of process was “clearly spelt out for him”: at J2 [43].

Relevant principles

19    The legal principles governing applications for extension of time and leave to appeal are well established.

20    The principles which guide the Court’s discretion to allow an application for an extension of time within which to file a notice of appeal were restated by a Full Court of this Court in BQQ15 v Minister for Home Affairs [2019] FCAFC 218 at [33] (Yates, Wheelahan and O’Bryan JJ):

Under rule 36.05, the Court may grant an extension of the time within which an appeal is to be filed. The principles applicable to the exercise of the Court’s discretion were set out in Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 at 348-9, which were adopted by the Full Federal Court in Parker v R [2002] FCAFC 133 at [6]:

(a)    Applications for an extension of time are not to be granted unless it is proper to do so; the legislated time limits are not to be ignored.

(b)    There must be some acceptable explanation for the delay.

(c)    Any prejudice to the respondent in defending the proceedings that is caused by the delay is a material factor militating against the grant of an extension.

(d)    The mere absence of prejudice to the respondent is not enough to justify the grant of an extension.

(e)    The merits of the substantial application are to be taken into account in considering whether an extension is to be granted. Leave will not be granted where there are no reasonable prospects of success on the appeal: Kalanje v Minister for Immigration and Multicultural Affairs [2006] FCA 1618 at [5]. The applicant will have no real prospects of success where the case is devoid of merit or clearly fails; is hopeless; or is unarguable. In making an assessment the Court is not required to go into too great a detail, but is to “assess the merits in a fairly rough and ready way”: Jackamarra v Krakouer (1998) 195 CLR 516 at [7] – [9].

21    In Tuakeu v Minister for Immigration and Border Protection [2016] FCA 362, Farrell J relevantly stated at [32]:

Courts have generally taken the position that it is not an adequate reason for extensive delay that a person is not represented and is unaware that they have a right to appeal or to seek review of a decision. Nor is it an adequate reason that they do not know the time periods specified in legislation or the rules of the Court for initiating such processes.

22    Leave will not be granted for an extension of time where there are no reasonable prospects of success on the appeal: see Kalanje v Minister for Immigration and Multicultural Affairs [2006] FCA 1618 at [5] (Finn J).

23    Leave to appeal will only be granted if the decision from which leave to appeal is sought is attended by sufficient doubt to warrant the grant of such leave, and that substantial injustice would result from a refusal of such leave: Decor Corp Pty Ltd v Dart Industries Inc (1991) 33 FCR 397; [1991] FCA 844 at 398-400 (Sheppard, Burchett and Heerey JJ).

24    The discretion to grant leave from an interlocutory order is not constrained by rigid rules. Leave to appeal has been granted where, for example, the questions posed for resolution on appeal “have general importance beyond the concerns of the parties”: Deputy Commissioner of Taxation v Miraki [2022] FCAFC 96 at [5] (Perram, Moshinksy and Hespe JJ) citing Australian Securities and Investments Commission v P Dawson Nominees Pty Ltd (2008) 169 FCR 227; [2008] FCAFC 123 at [10] (Heerey, Moore and Tracey JJ); see also ACE Insurance Ltd v Trifunovski (2012) 291 ALR 46; [2012] FCA 235 at [7]-[9] (Flick J).

Consideration

Strike Out Orders

25    The explanation provided by the applicant for the some 6 week delay in filing his application for leave to appeal is not particularly compelling. He gave evidence that the delay was “unintentional” and it was “because of the confusion/misunderstanding of his Honour’s orders”. In this regard, he seeks to rely on his status as a self-represented litigant with limited experience and the fact that these proceedings are his first employment matter in this Court. He submits that he:

… was under the impression that the proceedings were not complete because, as per orders dated 9 June 2022, I have to file the further statement of claim by 30 June 2022 and also to file the Costs written submissions by 30 June 2022.

26    The fact that costs had not yet been determined does provide some explanation for the applicant’s failure to file his application for leave to appeal within the legislated time limits. Moreover, the delay was relatively small and the respondent does not point to any specific prejudice arising from the delay in the applicant filing the application.

27    I turn now to consider the merits of the proposed appeal from the Strike Out Orders.

28    The draft notice of appeal raises a large number of appeal grounds that are principally directed at alleged failures by the primary judge to make findings that the Agreement was a sham and unsubstantiated allegations of bias on the part of the primary judge.

29    In the course of oral submissions it became apparent that the proposed appeal was, in substance, directed at the decision by the primary judge to strike out the Principal Claims as an abuse of process. This ground was included in proposed appeal ground 1(h), which was in the following terms:

h)    Consideration at [24] – [32]. His Honour did not consider the relevant legal authorities and Hatchett V Bowater Tutt Industries Pty Limited (1990) 26 FCR561(Hatchett) [sic] in which: [sic]

The Court held that these were matters which required a judicial determination, an exercise of judicial power which the Commission lacked. A claim for payment of wages, or for wrongful dismissal, or for breach of an award in whatever form the claim of legal right may have been cast is beyond the jurisdiction of the Commission. Because the Commission had lacked the requisite jurisdiction, its decision could not give rise to an estoppel against the Applicant in the prosecution of her proceedings before the Court, nor could it be said that to bring such proceedings was an abuse of process.

30    I am satisfied that whether it is an abuse of process for an applicant to advance claims in this Court if the Commission has previously determined that the applicant is an independent contractor, not an employee of the respondent, is a significant issue. It does not appear to have been resolved by any previous authority. It is a matter of general importance that is beyond the specific concerns of the parties given the concurrent employment and industrial relations jurisdiction of this Court and the Commission.

31    The proposed appeal, limited to the abuse of process finding, could not be said to have no real prospects of success, be an appeal devoid of merit or raise a contention that clearly fails, is hopeless, or is unarguable.

32    Further, I am satisfied that if the applicant was not permitted to raise the Principal Claims in this Court, he would suffer substantial injustice. He would be precluded from bringing significant claims for relief in this Court arising from his alleged employment with the first respondent in circumstances in which this Court has not made any substantive determination of his entitlement to that relief and in which no issue estoppel has been found to arise.

33    For these reasons, notwithstanding the absence of a particularly compelling explanation for the delay in filing the application for leave to appeal, I am satisfied that an extension of time should be granted and that the applicant should be given leave to appeal the Strike Out Orders. This is limited to a challenge to the primary judge’s finding that it was an abuse of process to advance the Principal Claims given the finding in the Commission that the applicant was not an employee of the first respondent.

Costs Orders

34    The applicant does not require any extension of time to file his application for leave to appeal the Costs Orders. The only issue for determination is whether leave to appeal the Costs Order should be given.

35    The draft notice of appeal against the Costs Orders, similarly to the draft notice of appeal against the Strike Out Orders, raises a large number of appeal grounds that are principally directed at alleged failures by the primary judge to make findings that the Agreement was a sham and unsubstantiated allegations of bias on the part of the primary judge.

36    I am not satisfied that the Costs Orders are attended by sufficient doubt to warrant leave to appeal being granted except that if the applicant was otherwise successful in his appeal against the Strike Out Orders it would follow that the Costs Orders would also be set aside.

37    Costs orders involve the exercise of a broad judicial discretion pursuant to s 43(2) of the Federal Court of Australia Act 1976 (Cth). In order to succeed, the applicant would need to demonstrate that in making the Costs Orders, the primary judge acted upon a wrong principle, allowed extraneous or irrelevant matters to guide or affect the discretion, was mistaken as to the facts or did not take into account some material consideration: House v The King (1936) 55 CLR 499; [1936] HCA 40 at 505 (Dixon, Evatt and McTiernan JJ). If the appeal against the Strike Out Orders does not succeed, the abuse of process findings would stand. They are serious findings that would readily be capable of supporting an indemnity costs order against the applicant. In those circumstances, no substantial injustice would arise if leave to appeal the Costs Orders is refused.

Disposition

38    The applicant is to be granted an extension of time to file a notice of appeal and leave to appeal the Strike Out Orders but only on the ground that the primary judge erred in striking out the statement of claim for an abuse of process because the Commission had found that the applicant was not an employee of the first respondent. There has been no determination of the ultimate merits of the proposed appeal and therefore, the costs of the applicant and the respondents should follow the final disposition of the appeal and be costs in the cause of the successful party.

39    The applicant is to be given leave to appeal the Costs Orders but only on the ground that they should be set aside if the applicant is otherwise successful in his appeal against the Strike Out Orders. There has been no determination of the ultimate merits of the proposed appeal and therefore the costs of the applicant and the respondents should likewise follow the final disposition of the appeal and be costs in the cause of the successful party.

Associate:

Dated:    15 March 2023