Federal Court of Australia

Hill v Skilled Workforce Solutions (NSW) Pty Ltd [2024] FCA 603

ORDERS

THE COURT ORDERS THAT:

1.    Discontinuance of the proceeding be approved pursuant to s 33V(1) of the Federal Court of Australia Act 1976 (Cth) (FCA). The Applicant has leave to discontinue the proceeding by filing a notice of discontinuance, forthwith.

2.    Pursuant to ss 33V and 33ZF of the FCA any limitation period that applies to the claim of the Applicant and any group member, to which the proceeding relates, shall begin to run again from a date 60 days after filing of a notice of discontinuance.

3.    There be no order as to costs of the interlocutory application for approval of the discontinuance.

4.    There be no order as to costs in the proceeding.

5.    Any existing orders as to costs are vacated.

THE COURT DECLARES THAT:

6.    Order 1 does not affect any rights of the Applicant or any group member in the proceeding to pursue the claims that are the subject of this proceeding in another proceeding.

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

REASONS FOR JUDGMENT

MURPHY J:

1    By an interlocutory application dated 25 January 2022 the applicant, Mr Justin Hill, seeks court approval under s 33V(1) of the Federal Court of Australia Act 1976 (Cth) (FCA) to discontinue the class action he has brought against the respondent, Skilled Workforce Solutions (NSW) Pty Ltd (Skilled). He brought the proceeding on his own behalf and on behalf of all persons who:

(a)    were employed by Skilled and worked at a black coal mine within the coal mining fields of Newcastle, Maitland, Singleton-Northwest or Gunnedah in New South Wales (Placement) for at least one day in the period 5 January 2014 to 31 October 2019 inclusive;

(b)    were, in those Placements, covered by the Skilled Workforce Solutions (NSW) Pty Ltd Enterprise Agreement 2014 (2014 Agreement) or the Skilled Workforce Solutions (NSW) Pty Ltd Enterprise Agreement 2019 (2019 Agreement) (collectively, the Agreements) within the meaning of the Fair Work Act 2009 (Cth) (FWA); and

(c)    were in those Placements, classified by the respondent as a casual employee,

(group members).

2    Broadly, the proceeding alleges that the applicant and group members (the claimants), although treated as casual employees were in fact not casuals, and they were entitled to be but were not paid the employment benefits provided for non-casual employees under the FWA and the Agreements as applicable to them.

3    For the reasons I explain, I am satisfied that it is appropriate to approve the discontinuance of the proceeding.

The evidence

4    The applicant relies on:

(a)    two affidavits of Rory Markham, a solicitor and principal of Adero Law, the solicitors for the applicant:

(i)    sworn on 24 January 2022 which annexes a confidential Counsel’s Opinion of Joel Fetter of counsel;

(ii)    sworn on 3 February 2022;

(b)    an affidavit of Kalle Häkkinen, a solicitor of Adero Law, affirmed on 20 October 2022;

(c)    an affidavit of Donna Godman, a Workplace Relations Partner of Programmed Skilled Workforce, a related body corporate of Skilled, affirmed on 6 June 2024.

The relevant principles

5    I set out the relevant principles in in Turner v TESA Mining (NSW) Pty Ltd (No 2) [2022] FCA 435; 314 IR 214 (Turner v TESA) at [6]-[31], including that:

(a)    the Court’s task in considering whether to approve a discontinuance is different to its task in approving a settlement under section 33V of the Act. The proposed discontinuance is a unilateral act of an applicant, which (subject to cost consequences) puts the applicant in the same position as if the proceeding had not been commenced, and it has different consequences to a settlement. As there is no agreement by which the proceeding is compromised, there can be no merger of the applicant’s rights in the proceeding. As there is no judicial determination, there can be no res judicata or issue estoppel; and

(b)    in the circumstances of the present application, where the practical effect of discontinuance will be to return group members to the position they are in before the commencement of the class action, the applicable test for approval to discontinue a representative proceeding is whether the Court is satisfied that discontinuance would not be unfair or unreasonable or adverse to the interests of group members: see Turner v TESA at [6]-[10]; Rota v Fire Rescue Victoria [2024] FCA 424 (Anderson J);

(c)    in circumstances where group members are aware of the proceeding it would be inappropriate to approve discontinuance without giving notice to group members who may be affected by that decision: Turner v TESA at [32]-[35]. Here, the group members were given notice of the application for discontinuance.

6    In relation to the limitation periods applicable to group members’ claims in the proceeding (which are suspended by operation of s 33ZE(1) of the FCA), they do not commence to run again from the date of discontinuance, as discontinuance does not constitute a “determination” for the purpose of s 33ZE(2): c.f. Rota. In the circumstances of this case it is appropriate to make an order pursuant to ss 33V and 33ZF that the limitation periods for group members’ claims commence to run again from 60 days after the date on which a notice of discontinuance is filed.

7    Section 33V(1) requires that the Court approve the discontinuance of class proceedings, which implicitly imposes a condition that the discontinuance be just. Section 33ZF empowers the Court to make any order the Court thinks appropriate or necessary to ensure justice is done in the proceeding. And the Court may order a discontinuance subject to a term or condition: Note 2 of r 26.12 of the Federal Court Rules 2011 (Cth); see e.g. O’Neill v Mann [2000] FCA 1680 at [11] (Finn J). An order that provides that the limitation period commences to run again from 60 days after discontinuance, is “just” because it provides group members an opportunity to protect their rights by bringing their own proceedings, and because it protects the respondent from exposure to the risk of group members’ claims in perpetuity: see Turner v TESA at [11]-[31].

Background

8    The claimants were employed by Skilled, which is a labour hire company, and assigned to work in black coal mines in New South Wales. Upon hiring, the claimants signed contracts of employment in template form. Although the contracts contained some provisions consistent with a mutual expectation of long-term engagement, the contract described the employment as “casual” and expressly stated: “You have no guarantee of ongoing employment”. The contract provided for a flat hourly rate of pay, which was said to “include” a casual loading, although the amount of the loading was not stated. In their employment, the claimants were covered by collective industrial agreements which denied paid annual leave entitlements to “casual” employees, defined as those “engaged in accordance with the Company’s casual contract of employment, and paid as such.”. During their employment, the claimants were not paid annual leave.

9    On 16 August 2018, the Full Court had handed down judgment in WorkPac Pty Ltd v Skene [2018] FCAFC 131; 264 FCR 536, in which it found that the applicant, who was employed as a casual employee by a labour hire company to work in black coal mines, was as a matter of law not a casual employee and as a full-time employee was entitled to the benefits of the applicable enterprise agreement and under the FWA. I summarised the background and result in Skene in Turner v TESA (at [39]-[43]).

10    In reliance on the decision in Skene the applicant commenced this proceeding on 31 October 2019. In the proceeding it is alleged that the claimants worked shifts according to a continuous roster which was provided to claimants at the beginning of their employment, and that despite contractual provisions to the contrary, there was a firm advance commitment from the respondent to each group member as to continuing and indefinite work according to an agreed pattern of work. It is alleged that claimants were therefore not casual employees under the FWA or the relevant collective agreement and were entitled to paid annual leave or compensation for underpaid annual leave entitlement, and for a pecuniary penalty for breach of the collective agreement and of the National Employments Standards in the FWA.

11    Then, on 20 May 2020, in WorkPac Pty Ltd v Rossato [2020] FCAFC 84; 278 FCR 179 another Full Court, differently constituted, upheld the approach in Skene. The Full Court unanimously decided that Mr Rossato, who was employed as a casual employee to work in black coal mines by the same labour hire company as in Skene, was as a matter of law not a casual employee and was entitled to the benefits of the relevant enterprise agreement and the FWA as a full-time employee.

12    Up to that point the applicant had a reasonable basis to believe that the proceeding had reasonable prospects of success.

Changes to the law that apply to the claims in the proceeding

13    However, on 26 March 2021 changes to the FWA were introduced by the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 (Cth) (the FW Amendment Act). In short, the amendments retrospectively inserted a restrictive definition of “casual employee” into the FWA together with a mechanism for reducing or “off-setting” the amount payable for the relevant entitlements to an employee who is found to not be a casual employee, against any amount previously paid to that employee by way of casual loading. I described those changes more fully in Turner v TESA (at [49]-[53]).

14    Subsequently, on 4 August 2021 the High Court handed down WorkPac Pty Ltd v Rossato [2021] HCA 23; 271 CLR 456 (Rossato HC) in the appeal from the Full Court decision in Rossato. In short, the High Court rejected the reasoning of the Full Court in Skene and Rossato, and held that the contract of employment rather than the actual working arrangements reliably indicated the “true character of the employment relationship” (at [62]). The High Court found that Mr Rossato was a casual employee and therefore was not entitled to the benefits of the relevant enterprise agreement and the FWA as a full-time employee. I described the background and result in that case more fully in Turner v TESA at [45]-[48].

Instructions to discontinue the proceeding and notice to group members

15    Mr Markham deposed and I accept that following the decision in Rossato HC, he received instructions from Mr Hill to discontinue the proceeding. The applicant filed an interlocutory application for leave to discontinue the proceedings on 19 January 2022.

16    On 2 September 2022 I made orders requiring that, by 9 September 2022:

(a)    Skilled send a Court-approved notice (Notice) to each group member recorded in its files; and

(b)    Adero Law also send the Notice to each of the group members who had registered with the firm as being interested in participating in the action,

by sending it to their last known email address or, where no email address was held, by post to their last known postal address.

17    The Notice informed group members of three options for action they may take in response to the proposed discontinuance:

(a)    do nothing, in which case the proceeding will be discontinued. In that event, they would still be able bring their own proceeding, either individually or in another class action, making the same claims. However, if their claims extended back more than 6 years, it informed them that they may need to issue individual claims before the discontinuance takes effect;

(b)    exercise their right to object to or oppose Court approval of the proposed discontinuance; and

(c)    exercise their entitlement to seek to be substituted as the representative applicant.

The Notice provided that if a group member wished to take up either of the latter two options they were required notify Adero Law by 6 October 2022.

18    The orders provided that by 20 October 2022 Adero Law file and serve an affidavit to inform the court as to whether any group member had notified Adero Law of an intention to object to or oppose discontinuance or to seek to be substituted as the applicant in the proceeding. Adero Law complied with that order. On 20 October 2022 the firm filed the affidavit of Mr Häkkinen in which he deposed that Adero had sent the Notice to the 158 group members for which it held contact details and contacted by phone those to whom emails were undeliverable. He deposed that: (a) no objections had been received; and (b) no group member wished to be substituted as the applicant in the proceeding.

19    There was, however, a shortcoming in Mr Häkkinen’s affidavit. He stated that Adero Law had complied with the order to send the Notice to group members who had registered with the firm, but he did not state that Skilled had complied with the order to send the Notice to all group members recorded in its files.

20    Further, the orders provided that in the event that no group member informed Adero Law of an intention to object to or oppose discontinuance, or to seek to be substituted as the applicant in the proceeding, the applicant was required to notify my Chambers and the discontinuance application would then be determined on the papers.

21    Email records produced by the applicant show that the applicant provided this notification to my Chambers in February 2023, however, presumably for technical reasons, my Chambers did not receive this communication. The applicant contacted my Chambers again on 11 April 2024 and re-provided the notification that no group members informed Adero Law of an intention to object or oppose to discontinuance. Upon that being brought to the attention of my Chambers my associate contacted the parties and requested an affidavit stating whether or not Skilled had complied with the 2 September 2022 order to send the Notice to all group members recorded in its files.

22    On 6 June 2024 the respondent filed the affidavit of Donna Godman affirmed 6 June 2024, in which she deposed that on 6 September 2022 she sent the Notice by email to the last known email address recorded in the respondent's files for 1,376 group members; and had on 9 September 2022 mailed the notice to the last known postal address in respect of each of the 31 group members for whom delivery of the email was unsuccessful. Those group members to whom the Notice was sent by email and ordinary mail had an opportunity to consider that Notice and to contact Adero Law before 20 October 2022, when Mr Häkkinen filed his affidavit deposing as to the objections received.

Determination

23    It is appropriate to approve discontinuance of the proceeding.

24    First, it is appropriate to give weight to the confidential Counsel’s Opinion of Mr Fetter. Because the opinion is confidential I cannot go to the detail of it. It must suffice to note that that the Counsel’s Opinion analyses the likelihood of the applicant and group members being able to establish liability and an entitlement to relief against the respondents. It is thorough and cogent; and it supports approval to discontinue the proceeding.

25    Second, the retrospective amendments to the FWA and the decision in Rossato HC mean that in my view the proceeding has little prospect of success. The template employment contract between Skilled and the claimants described the claimants as “casuals”; purported to pay them a “casual loading”; and explicitly denied any commitment to ongoing employment. In my view, the effect of s 15A(4) and (5) of the FWA, and having regard to the decision in Rossato HC, is that it is quite unlikely the applicant and group members will succeed in establishing that they are not casual employees.

26    Further, even if (contrary to my view) group members are likely to be held to be casual employees, the off-setting provisions in s 545A of the FWA are likely to apply. The effect of s 545A is that, if it is established that a person has accrued paid leave entitlements in circumstances where the terms under which the applicant and group members were employed provided that their pay was inclusive of casual loadings, it is likely that a significant proportion of the employer’s liability to make any further payment would be set-off against the causal loading already paid to group members. Mr Markham deposed and I accept that the operation of s 545A is likely to mean that the net recovery of any group member who managed to prove that he or she was not a casual employee is likely to be reasonably small.

27    Third, no group member objected to the proposed discontinuance or offered to be substituted as the representative applicant. In circumstances where Mr Hill no longer wishes to proceed, it is appropriate to grant leave to discontinue unless someone else steps forward.

28    Fourth, it can be said to be in the group members’ interests that the proceeding continues so that he or she can obtain the fruits of any success, even if success is unlikely. But given that Mr Hill no longer wishes to be the representative applicant; that Adero Law no longer wishes to act in the proceeding; that no group member has stepped forward to take over the role of representative applicant; that the proceeding has poor prospects of success; and that the orders include a declaration that the discontinuance does not affect the rights of group members to pursue their claims either individually or collectively, group members will not suffer any material disadvantage if discontinuance is approved. They will be returned to the position they were in before the proceeding was commenced.

29    While some group members’ claims may extend back more than 6 years, and therefore be subject to a limitation bar once the limitation period begins to run again, the orders provide for 60 days before the limitation period begins to run again, giving these group members ample time to seek advice as to their prospects and to commence a proceeding if they wish. The Notice specifically warned group members that they may need to commence their own proceedings before discontinuance takes effect.

30    Having regard to the matters set out above I am not persuaded that group members will suffer any material detriment by the discontinuance and in my view it is not unfair or unreasonable or adverse to group members’ interests to approve discontinuance of the proceeding. I have made orders accordingly.

Associate:

Dated:    7 June 2024