Federal Court of Australia

Wachler v JNCTech Managed Services Pty Ltd [2025] FCA 815

ORDERS

THE COURT ORDERS THAT:

1.    The Applicant be given leave pursuant to rr 8.21(1)(g)(i) and 16.53 of the Federal Court Rules 2011 (Cth) to amend, respectively, the Originating Application and the Amended Statement of Claim to add a cause of action in tort against the Second and Third Respondents alleging that they induced the First Respondent to breach its contract of employment with the Applicant.

2.    The Applicant pay to the Second and Third Respondents the costs of and incidental to the Interlocutory Application for leave to amend the Originating Application and Amended Statement of Claim to add the cause of action referred to in Order 1.

3.    The Applicant pay to the Second and Third Respondents the costs thrown away by reason of the amendments referred to in Order 1.

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

REASONS FOR JUDGMENT

STELLIOS J:

1    This matter concerns an Interlocutory Application made by Ms Wachler (the Applicant) for leave to amend the Originating Application and the Amended Statement of Claim (ASOC).

2    The application has been made in circumstances where the Applicant was ordered to file and serve a Further Amended Statement of Claim discontinuing proceedings against JNCTech Pty Ltd (First Respondent), on the basis that it is a corporation that is being wound up.

3    The Applicant’s Interlocutory Application seeks leave to add a new cause of action against Mr Zammit (Second Respondent) and Mr Kostakis (Third Respondent) (collectively, the Respondents).

4    For the reasons that follow, leave is granted to the Applicant to amend the Originating Application and the ASOC to add a new cause of action in tort against the Respondents alleging that they induced the First Respondent to breach its employment contract with the Applicant.

Background

Substantive proceeding

5    The substantive proceeding in this matter was commenced by Originating Application and Statement of Claim (SOC) filed on 16 September 2022. The SOC was amended on 9 November 2022. The Originating Application alleges that:

(1)    The First Respondent discriminated against the Applicant in contravention of s 14 of the Sex Discrimination Act 1984 (Cth);

(2)    The Respondents engaged in sexually harassing conduct against the Applicant in contravention of s 28B of the Sex Discrimination Act;

(3)    The First Respondent, by operation of s 106 of the Sex Discrimination Act, is statutorily liable for the Respondents’ contraventions of s 28B of the Sex Discrimination Act; and

(4)    The Second Respondent, by operation of s 105 of the Sex Discrimination Act, is statutorily liable for the Third Respondent’s contraventions of s 28B of the Sex Discrimination Act.

6    The Applicant was an employee of the First Respondent, and the Respondents were directors and employees of the First Respondent.

7    On the basis of these allegations, the Applicant seeks relief including by way of a declaration and damages pursuant to s 46PO(4)(d) of the Australian Human Rights Commission Act 1986 (Cth), and damages against the First Respondent for breach of contract.

Winding up of the First Respondent

8    The First Respondent is a corporation that is being wound up. A liquidator was appointed on 4 July 2023.

9    On 12 July 2023, the Respondents’ solicitor sent an email to the Applicant’s solicitor which stated:

We confirm our telephone conversation regarding the above matter.

We confirm our clients [sic] instructions and as indicated in our discussion that a liquidator has been appointed for JNCTech.

Please let us know if you require further information regarding the above.

10    By reply email on the same day, the Applicant’s solicitor noted that a liquidator had been appointed:

Thank you for your email.

We note that a liquidator has now been appointed for the First Respondent.

However, as you are aware, our client also has claims against the Second Respondent and Third Respondent, which she wishes to pursue.

We note that the Court has expressly asked for our availability to attend a case management hearing on 10 August 2023 or 11 August 2023.

11    On 4 October 2023, the parties attended a case management hearing before Wigney J. His Honour shared with the parties a letter received from the liquidator dated 3 October 2023 indicating that he had been appointed and a creditor’s report had been issued. On 5 October 2023, the liquidator’s office independently notified the Applicant’s solicitor of the liquidator’s appointment.

The intervening period

12    In her affidavit dated 26 May 2025, Ms Liav Hava Benstock deposed that, having reviewed the Applicant’s solicitor’s file, between the case management hearing on 4 October 2023 and the unsuccessful mediation held on 16 September 2024, the parties “were focused on preparing their respective cases for hearing, and neither addressed the fact that the proceedings had not been discontinued against the First Respondent on the basis it was in liquidation”.

13    Ms Benstock annexes timetabling orders made by consent on 5 October 2023, 16 November 2023, 21 December 2023 and 21 May 2024 relating to the filing of evidence. Also annexed to Ms Benstock’s affidavit is an order made by consent on 16 July 2024 that included further timetabling orders relating to the filing of evidence and an order that the matter be referred to mediation on a date to be fixed between 19 August and 27 September 2024. As indicated, the unsuccessful mediation took place on 16 September 2024.

14    In her affidavit affirmed on 30 April 2025, Ms Benstock deposed that the following evidence has been served by the Applicant:

(1)    Outline of Evidence of the Applicant dated 12 July 2023;

(2)    Further Outline of Evidence of the Applicant dated 1 November 2023;

(3)    Outline of Evidence of the Applicant in Reply dated 9 August 2024;

(4)    Outline of Evidence of Jacob Arnold dated 9 August 2024;

(5)    Affidavit of Dr Janelle Buchanan dated 13 July 2023;

(6)    Affidavit of Dr Enrico Parmegiani dated 12 July 2023; and

(7)    Supplementary report of Dr Enrico Parmegiani dated 19 August 2024.

15     Ms Benstock also deposed that the following evidence has been served by the Respondents:

(1)    Outline of Evidence of Kevin Zammitt dated 13 September 2023;

(2)    Outline of Evidence of Kevin Zammitt dated 21 June 2024;

(3)    Outline of Evidence of Constandinos Kostakis dated 13 September 2023;

(4)    Outline of Evidence of Constandinos Kostakis dated 27 June 2024;

(5)    Outline of Evidence of Tanealle Short dated 13 September 2023;

(6)    Outline of Evidence of Tanealle Short dated 21 June 2024;

(7)    Outline of Evidence of Lisa Stefanie Janssen dated 13 September 2023;

(8)    Outline of Evidence of Chloe Pickett dated 13 September 2023; and

(9)    Report of Dr Leonard Lee dated 12 December 2023.

Orders made on 18 December 2024

16    On 17 December 2024, the Applicant’s solicitor emailed the Respondents’ solicitor indicating an intention to amend the ASOC to discontinue the proceeding against the First Respondent. As foreshadowed earlier in these reasons, on 18 December 2024, by consent, Wigney J ordered that the Applicant file and serve a Further Amended Statement of Claim discontinuing proceedings against the First Respondent by 14 February 2025.

The Proposed Further Amended Statement of Claim

17    On 14 February 2025, solicitors for the Applicant notified the Respondents that they required further time to prepare the Further Amended Statement of Claim required by the orders of Wigney J. A proposed Further Amended Statement of Claim (Proposed FASOC) was sent to the Respondents’ solicitor on 26 February 2025. The Proposed FASOC proposes various amendments to the ASOC, including the removal of the First Respondent as a party.

18    It also proposes a new cause of action against the Respondents for the tort of inducing a breach of contract that is said to be in lieu of the breach of contract claim previously pleaded against the First Respondent (proposed tort claim).

19    The Respondents consent to the amendments to the Proposed FASOC with the exception of the proposed tort claim at para [67A].

The Interlocutory Application and the Proposed FASOC

20    The Interlocutory Application sought an order pursuant to r 8.21(1)(g) of the Federal Court Rules 2011 (Cth). That rule relates to the amendment of an originating application. In reply submissions, the Applicant sought leave to amend the Interlocutory Application to provide as follows:

[1]    Pursuant to rule 8.21(1)(g) 16.53(2) of the Federal Court Rules 2011 (Cth), leave is granted to the Applicant to file a Further Amended Statement of Claim in the form annexed to this Interlocutory Application and marked “A”, within 7 days of the making of this order.

[1A]    Pursuant to rule 8.21(1)(g)(i) of the Federal Court Rules 2011 (Cth), leave is granted to amend the Originating Application to add the new claim for relief at [67A] of the proposed Further Amended Statement of Claim at Annexure “A”.

[2]    Costs.

21    The Respondents did not take issue with the proposed amendments to the Interlocutory Application. Because the substance of the Application was apparent from its original form and the parties provided submissions addressing the relevant principles applicable to both rules, I do not consider that the Respondents have been prejudiced by the incompleteness of the Interlocutory Application. Accordingly, I give leave for the proposed amendment to be made to the Interlocutory Application and have considered the Interlocutory Application on that basis.

22    Ms Benstock deposed that the Proposed FASOC annexed to the Interlocutory Application is in the same terms as the copy provided to the Respondents on 26 February 2025 except in relation to two changes to section references in the Sex Discrimination Act. Ms Benstock explains that one of those changes is to the section reference at para [59] of the Proposed FASOC. She further explains that, whereas the version of the Proposed FASOC that was sent to the solicitors for the Respondents on 26 February 2025 contemplated that the reference to s 105 would be omitted and replaced with s 106, the Proposed FASOC that is annexed to the Interlocutory Application has reversed that proposed amendment and preserved the original text referring to s 105. There appears to be some confusion in this explanation. In its original form, para [59] of the SOC referred to s 105 of the Sex Discrimination Act. That was amended to refer to s 106 in the ASOC. The Proposed FASOC that accompanies the Interlocutory Application does not seek to revert the reference to s 105. In any event, the Respondents have not taken issue with this explanation and, as will be explained, have opposed the Interlocutory Application in terms which assume that the allegations against the Respondents include a claim under s 105.

23    The only proposed amendment in dispute is the inclusion of the proposed tort claim.

24    The relevant paragraphs of the Proposed FASOC in dispute (marked up in the usual way) are as follows:

Tort of Inducing Breach of Contract

62.    In acting as pleaded below, Mr Zammitt and Mr Kostakis were acting as JNC.

63.    By reason of the Sexual Conduct, Zammitt Inaction and matters pleaded at paragraphs 0 to 60 53A to 59 and each of them, JNC fundamentally breached the Duty of Care Term.

Particulars

(i)    JNC failed to take reasonable measures to prevent Ms Wachler from being exposed to sexually discriminatory and harassing conduct.

64.    By reason of the Sexual Conduct, Zammitt Inaction and matters pleaded at paragraphs 0 to 60 53A to 59 and each of them, JNC fundamentally breached the Good Faith Term.

Particulars

(i)    At all material times, Ms Wachler, in her status as an employee of JNC, was vulnerable;

(ii)    Mr Zammitt and Mr Kostakis, as Ms Wachler’s managers and Directors of JNC, took advantage of, and exploited, such vulnerability for their sexual satisfaction and gratification;

(iii)    the Sexual Conduct was in bad faith and interfered with Ms Wachler and her duties; and

(iv)    the Sexual Conduct resulted in Ms Wachler ending her employment with JNC.

65.    By reason of the Sexual Conduct, Zammitt Inaction and matters pleaded at paragraphs 0 to 60 53A to 59 and each of them, JNC fundamentally breached the Co-Operation Term.

Particulars

(i)    The Sexual Conduct and Zammitt Inaction operated to prevent Ms Wachler from enjoying the benefits of her contract and JNC did not do what was reasonably necessary to prevent the Sexual Conduct and Zammitt Inaction.

66.    By reason of the Sexual Conduct, Zammitt Inaction and matters pleaded at paragraphs 0 to 60 53A to 59 and each of them, JNC fundamentally breached the Safe Work Term.

Particulars

(i)    JNC failed to provide Ms Wachler a safe workplace;

(ii)    JNC failed to offer adequate support to Ms Wachler.

(iii)    JNC failed to provide, implement and enforce adequate policies and/or training dealing with harassment, discrimination and safety.

67.    By reason of JNC’s fundamental breaches of contract of employment and each of them, Ms Wachler suffered injury loss and damage.

Particulars

(i)    Ms Wachler repeats the particulars given to paragraph 61 above.

67A.    Mr Zammitt and/or Mr Kostakis are liable as accessories to one or more of JNC’s breaches of its contract of employment with Ms Wachler in that by reason of the Sexual Conduct, Zammitt Inaction and matters pleaded at paragraphs 53A to 59 and each of them, Mr Zammitt and/or Mr Kostakis induced JNC to breach its contract of employment with Ms Wachler.

…

Relief sought

72.    Ms Wachler seeks the following:

…

(c)    an order that JNC Mr Zammitt and/or Mr Kostakis pay to Ms Wachler damages in respect of claims for breach of contract for inducing JNC to breach its contract of employment with Ms Wachler;

Evidence

25    As indicated earlier in these reasons, the Applicant read and relied on two affidavits of Liav Hava Benstock, a law graduate at the solicitors for the Applicant, affirmed on 30 April 2025 and 26 May 2025. The Respondents read and relied on the affidavit of Ljupka Subeska, the Respondents’ solicitor, sworn on 16 May 2025. Those affidavits were read without objection and contained the facts outlined above.

Relevant principles

26    Rule 8.21(1)(g)(i) of the Rules relevantly provides that “[a]n applicant may apply to the Court for leave to amend an originating application for any reason, including … to add or substitute a new claim for relief, or a new foundation in law for a claim for relief, that arises … out of the same facts or substantially the same facts as those already pleaded to support an existing claim for relief by the applicant” (emphasis added).

27    Rule 16.53 of the Rules relevantly provides (emphasis added):

(1)    Unless rule 16.51 applies, a party must apply for the leave of the Court to amend a pleading.

(2)     A party may apply under subrule (1) for leave to amend a pleading to add or substitute a new claim for relief, or a new foundation in law for a claim for relief that arises out of the same facts or substantially the same facts as those already pleaded to support an existing claim for relief by the party, even if the application is made after the end of any relevant period of limitation applying at the date the proceeding was started.

28    There was no dispute between the parties that the proposed tort claim “arises out of the same facts or substantially the same facts” as those already pleaded. The question then is whether the Court should exercise its discretion to grant leave for amendment of the Originating Application and the ASOC to add the proposed tort claim.

29    There was also no dispute between the parties about the principles that govern the exercise of discretion to grant leave to add a new cause of action. They are well established. In Clurname Pty Ltd v McGraw-Hill Financial, Inc [2017] FCA 1319 at [54]–[59], Wigney J summarised those principles as follows:

[54]    The power of the Court to grant or refuse leave to amend under rr 8.21 and 16.51 [sic] of the Rules must be exercised in the way that best promotes the Court’s overarching purpose to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible: s 37M(3) of the [Federal Court of Australia Act 1976 (Cth) (‘Federal Court Act’)]; Caason Investments Pty Ltd v Cao (2015) 236 FCR 322 at 326 [19] and the cases there cited. The Court’s power to grant leave to amend is broad and has the remedial objective of ensuring that any defect in the pleadings is cured and that the real questions in the controversy are properly agitated: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at 185 [14]; Caason Investments at 327 [20]. The object of the Court is not to punish parties for mistakes made in the course of their case, but to correct errors with the result that a decision can be made on the real matters in controversy: Clough v Frog (1974) 4 ALR 615 at 618; (1974) 48 ALJR 481 at 482; Caason Investments at 327 [20].

[55]    Leave to amend should be granted unless the proposed amendment is futile, such that the issue sought to be raised by the amendment has no reasonable prospects of success, or would be liable to be struck out as not raising a reasonable cause of action, or where the amendment would cause substantial prejudice or injustice to the opposing party in a way that cannot be compensated by the award of costs: Research in Motion Ltd v Samsung Electronics Australia Pty Ltd (2009) 176 FCR 66 at 69-70 [21]-[22]; Medich v Bentley-Smythe Pty Ltd [2010] FCA 494 at [8]; Caason at 327 [21].

[56]    There are limits to be placed upon re-pleading. An amendment application should not be approached on the basis that a party is entitled to raise an arguable claim subject to the payment of costs by way of compensation: Aon at 217 [111]. An order for costs may not always provide sufficient compensation and therefore achieve a just resolution. Parties are also entitled to expect that litigation be resolved with reasonable despatch: Richards v Cornford (No 3) [2010] NSWCA 134 at [44].

[57]    In Tamaya Resources Ltd (in liq) v Deloitte Touche Tohmatsu (A Firm), in the matter of Tamaya Resources Ltd (in liq) [2015] FCA 1098 at [127], Gleeson J provided a useful summary of the types of matters that the Court should consider in exercising its discretion whether or not to grant leave to amend.

The principles articulated by the High Court in Aon apply to matters in this Court: Cement Australia Pty Ltd v Australian Competition and Consumer Commission [2010] FCAFC 101; (2010) 187 FCR 261 at [43]. Relevant matters the Court is to consider include:

•    The nature and importance of the amendment to the party applying for it: Aon at [102];

•    The extent of the delay and the costs associated with the amendment: Aon at [102];

•    The prejudice that might be assumed to follow from the amendment, and that which is shown: Aon at [5], [100] and [102];

•    The explanation for any delay in applying for that leave: Aon at [108]; and

•    The parties’ choices to date in the litigation and the consequences of those choices: Aon at [112] and Luck v Chief Executive Officer of Centrelink [2015] FCAFC 75 (“Luck“) at [44];

•    The detriment to other litigants in the Court: Aon at [93], [95] and [114] and Luck at [44]; and

•    Potential loss of public confidence in the legal system which can arise where a court is seen to accede to applications made without adequate explanation or justification: Aon at [5], [24] and [30].

[58]    Gleeson J did not suggest that this list was exhaustive, or that each of the matters in the list would necessarily be material in every case. At [128] her Honour noted that the weight to be given to these considerations, individually and in combination, and the outcome of the balancing process generally, may vary depending on the particular facts of the case.

[59]    The onus is on the party seeking leave to amend to persuade the Court that such leave should be given: Dye v Commonwealth Securities Ltd (No 2) [2010] FCAFC 118 at [17].

See also Gloucester Shire Council v Fitch Ratings, Inc (No 2) [2017] FCA 248 at [84]‍–‍[89] (Wigney J).

submissions

30    In written submissions, the Applicant contended that the substance of the claim is not new and was already an issue in the proceeding. The tort claim relies upon the notion that the Respondents were accessories to the First Respondent’s breach of contract with the Applicant. The Applicant argued that “the same contention of accessorial liability is at the core of the Second and Third Respondent’s liability for the Applicant’s claim that she was unlawfully discriminated against by” the First Respondent. The essential steps in the argument can be summarised as follows:

(1)    The ASOC pleads that the Respondents caused the First Respondent to discriminate against the Applicant and, therefore, are taken to have unlawfully discriminated against the Applicant pursuant to s 105 of the Sex Discrimination Act. The Applicant submitted that the Respondents’ liability under s 105 of the Sex Discrimination Act is a form of accessorial liability, relying on Cooper v Human Rights and Equal Opportunity Commission (1999) 93 FCR 481; [1999] FCA 180, Elliott v Nanda & Commonwealth (2001) 111 FCR 240; [2001] FCA 418 and Wilson v Britten-Jones (No 2) [2020] FCA 1290.

(2)    The ASOC also pleads that the First Respondent breached its employment contract with the Applicant by contravening obligations to keep her safe from sexual harassment. In oral submissions, I was taken by the Applicant’s counsel to the judgment of McHugh J in Tame v New South Wales (2002) 211 CLR 317; [2002] HCA 35 at [140] in support of the proposition that the law of contract “implies a general duty to take reasonable care for the safety of the employee”. The contravention is alleged to have arisen by reason of the Respondents’ conduct.

(3)    The proposed tort claim would allege that the Second Respondent and/or the Third Respondent are liable as accessories to one or more of the First Respondent’s breaches of contract in that the Respondents’ conduct, as pleaded, induced the First Respondent to breach the employment contract. In other words, the Applicant submitted, “[b]y sexually harassing the Applicant, the Second and Third Respondents were accessories to the First Respondent’s breach of the Applicant’s contract of employment”.

(4)    Thereby, the Applicant submitted, “[t]he substance of this accessorial liability is the same as the liability of the Second and Third Respondents for the First Respondent’s unlawful discrimination against the Applicant”. The proposed tort claim agitates the same issue of accessorial liability.

31    The Respondents denied that the proposed tort claim could be characterised as “not new”. They also denied that accessorial liability was relevant to the proposed tort claim. As mentioned earlier in these reasons, they did not take issue with the fact that para [59] of the Proposed ASOC refers to s 106 of the Sex Discrimination Act, rather than s 105. In any event, the pleading at para [59] of the Proposed FASOC that the Respondents caused the First Respondent to discriminate against the Applicant is consistent with s 105, not s 106, and the Respondents’ submissions were put in terms that assumed that the allegations against the Respondents included one under s 105.

32    The Respondents opposed the amendment to include the proposed tort claim on four grounds: the Applicant’s delay in applying for the amendment; the consequential prejudice to the Respondents; the lack of utility in adding the proposed tort claim; and that the proposed tort claim is not reasonably arguable. I will address these arguments in turn.

Delay

33    The High Court’s decision in Aon demonstrates the importance of the question of delay in applying for amendment. As the Respondents submitted, there are clear statements in Aon that delay in applying for an amendment must be explained: at [102], [103], [106] and [114] (Gummow, Hayne, Crennan, Kiefel and Bell JJ).

34    The facts in this case are that the Applicant was notified by email on 12 July 2023 that a liquidator had been appointed for the First Respondent. That fact was brought to the attention of the Applicant again during the case management hearing on 4 October 2023 and independently by the liquidator’s office on 5 October 2023. It was not until 17 December 2024 that the Applicant sought the Respondents’ consent to have the First Respondent removed as a party. Following the order of Wigney J on 18 December 2024, it was not until 26 February 2025 that the intention to add the proposed tort claim was communicated to the Respondents.

35    The Applicant’s opening written submissions provided little, if any, explanation for the time that elapsed between 12 July 2023 and 26 February 2025. It was contended that the proposed tort claim “was conceived of in the context of amending the pleading” following the winding up of the First Respondent. It was submitted that the Applicant should not be penalised “merely because, through no fault of her own, the First Respondent is being wound up”. While it might be accepted that the winding up of the First Respondent provided the context for the proposed tort claim, and that the Applicant should not be disadvantaged by a matter beyond her control, the Respondents were correct in their written submissions to say that no explanation for the delay had been provided in the Applicant’s written submissions.

36    In reply, the Applicant submitted:

(1)    Aon can be distinguished, being a case where a party applied for an adjournment of a four-week trial at the commencement of the trial to permit substantial amendments to the pleadings.

(2)    It was not until the Applicant “took the initiative in December 2024 to regularise the proceedings against the First Respondent, that consideration was given to the effect of the claim being discontinued against the First Respondent”. Discontinuing the proceeding against the First Respondent was a significant step that came about through no fault on the Applicant’s part.

(3)    The Applicant should not be disadvantaged because her earlier lawyers had not considered the proposed tort claim when the original SOC or the ASOC were prepared.

(4)    It could not be said that the Applicant failed to act on requests by the Respondents to regularise the proceeding against the First Respondent. No such requests were made after 12 July 2023. The Respondents should not be advantaged by their failure to agitate for the removal of the First Respondent.

37    In oral submissions, counsel for the Applicant further submitted that the most critical date for determining the consequences of delay was the case management hearing on 4 October 2023. It was submitted that, while the email of 12 July 2023 might have prompted further enquiries, it did not attach the document evidencing the appointment of the liquidator.

38    Counsel for the Applicant contended that, from the critical date of 4 October 2023, and for the following 11 months, the parties were focused on marshalling their evidence and, ultimately, attending an unsuccessful mediation. It was submitted that a great deal of work was done by the parties to get their evidence assembled in order to enhance the prospects of a successful mediation.

39    After the failed mediation on 16 September 2024, the Applicant’s attention then turned to preparing the case for trial and, in that context, the Applicant contacted the Respondents on 17 December 2024 to regularise the position of the First Respondent. That, it was submitted, led to the consent orders made by Wigney J on 18 December 2024 and the Proposed FASOC being sent on 26 February 2025.

40    In oral submissions, counsel for the Respondents submitted that the explanation put forward by the Applicant was not really an explanation at all. The fact that the parties were preparing their evidence for mediation does not provide an adequate explanation for the delay, and that should weigh in the exercise of discretion.

41    There are two distinct periods of delay. The first is from the time the Applicant became aware of the liquidator’s appointment (12 July 2023) until the step taken on 17 December 2024 leading to Wigney J’s order on 18 December 2024. That first period of delay relates to the time taken to regularise the proceeding against the First Respondent. The second period is from the making of that order until the communication of the proposed tort claim on 26 February 2025. Both periods are relevant to the exercise of discretion; however, the second period has a more significant bearing.

42    In relation to the first period, I do not accept the Applicant’s argument that it was incumbent on the Respondents to request the Applicant to regularise the proceeding against the First Respondent. The Applicant is the moving party in this proceeding. I also do not accept that the critical date from which to measure delay was 4 October 2023. The Applicant was on notice from 12 July 2023.

43    However, I also do not accept the Respondents’ submission that the Applicant has failed to provide any explanation for the first period of delay in seeking to regularise the proceeding. I accept the Applicant’s submission that, in a context where the parties were actively preparing their evidence and, at least from the order for mediation on 16 July 2024, with the prospect of good faith attempts at mediation to settle the dispute, the regularisation of the proceeding was not the Applicant’s priority. It is not a complete explanation for the delay, particularly after the failed mediation on 16 September 2024, however, unlike the position in Aon, there is a partial explanation. I do not consider that the Applicant should be punished for its inadvertence in those circumstances.

44    Once the step was taken to regularise the proceeding on 17 December 2024, and the subsequent order of Wigney J was made on 18 December 2024, I do not consider that the time that then elapsed until 26 February 2025 constituted unreasonable delay. I accept that it would have taken some time to work through the consequences of the removal of the First Respondent as a party and its impact on the pleadings.

45    In any event, delay must be assessed against the prejudice created. On that basis, as submitted by the Applicant, Aon can be distinguished. The application in Aon was made “during the time set for trial” and, if granted, “would result in the abandonment of the trial”. The timing of that application created significant prejudice for Aon. The amendments permitted in Aon “were substantial” and contained allegations that were “substantially different” from the pleading taken to trial. Aon “would be required to again defend litigation which was, effectively, to be commenced afresh”: at [39], [47], [99] and [104] (Gummow, Hayne, Crennan, Kiefel and Bell JJ).

46    As will be seen, the prejudice to the Respondents is not of that magnitude.

Prejudice

47    The Applicant contended in written submissions that the Respondents are not irremediably prejudiced by the addition of the proposed tort claim. It was contended that, in terms of the facts to be proven, the only difference between the accessorial liability under s 105 of the Sex Discrimination Act and accessorial liability under the tort, is that the former requires a lesser degree of knowledge. For the purposes of liability under s 105, specific knowledge that the Respondents’ sexual harassment would cause the First Respondent’s unlawful conduct is not required.

48    It was submitted that, by contrast, an element of the tort cause of action is that the Respondents intentionally induced the breach of contract. The Applicant submitted that there is no prejudice by this higher level of proof because the Applicant’s case will be that it should be inferred that the Respondents must have been aware that their conduct would breach the employment contract. Accordingly, it was submitted, “[n]o prejudice arises from the need to marshal any additional evidence with respect to the need for proof” of the requisite knowledge.

49    Furthermore, the Applicant submitted that there is no other prejudice because: the proceeding has not been listed for trial; the question under the proposed tort claim is a question of legal characterisation of the pleaded conduct; and there is ample time for further evidence from the Respondents.

50    The Respondents accepted that prejudice to them “does not rise to a level of ‘irremediable prejudice’”. Nonetheless, the Respondents submitted that the proposed tort claim: is significantly different to what was pleaded in the ASOC; would necessitate significant amendment to the defence and would require additional evidence; and raises complex legal matters.

51    In reply, the Applicant submitted that:

(1)    The need to amend the defence creates no prejudice. The First Respondent went into administration after the ASOC was filed. Even if the amendment had been sought soon after the Applicant was first notified of that winding up (ie, 12 July 2023), it would still have been necessary to amend the defence.

(2)    The prejudice arising from further evidence is minimal. It is anticipated that the Applicant will invite the Court to draw inferences about the Respondents’ knowledge for the purpose of making good the proposed tort claim. That might be supplemented by cross-examination of the Respondents. The Applicant accepted that the Respondents might need to adduce evidence to contradict those inferences. However, it was submitted that the evidence of lay witnesses would be given orally and any need to prepare further affidavits or serve an updated outline of evidence would create minimal prejudice.

52    I accept that the amendment will create some prejudice. As properly conceded by the Respondents, it certainly is not irremediable, and most likely will be minor. The proceeding is yet to be listed for hearing and there is time for the defence to be amended, additional evidence to be put on and the proceeding to be timetabled accordingly. The prejudice is appropriately factored into the costs order.

53    The circumstances in this case are clearly distinguishable from those in Aon.

Utility

54    The Respondents’ written submissions on utility can be summarised as follows:

(1)    If it were held that the Respondents attended the unlawful conduct, s 105 of the Sex Discrimination Act would operate to make them accessories to the unlawful conduct. The Court would then make orders pursuant to s 46PO of the Human Rights Commission Act, including damages.

(2)    In the event that the s 105 ground did not succeed, then the proposed tort claim “would fall away as it is not pleaded as an ‘alternative action’ nor could it be”.

(3)    If it were to succeed, and the tort were made good, the Court would not award any further damages.

55    Consequently, the amendment to introduce the proposed tort claim would serve no utility, unnecessarily occupy the Court’s time, and be inconsistent with the overarching purpose in s 37M of the Federal Court Act.

56    In her written reply, the Applicant submitted that success on the proposed tort claim, along with success on the Sex Discrimination Act claims, could give rise to additional aggravated damages. In this respect, the Respondents’ counsel took me in oral submissions to the judgment of Katzmann J in Taylor v August and Pemberton Pty Ltd (2023) 328 IR 1; [2023] FCA 1313 at [395], [458] and [523] to support the argument that damages under s 46PO can include aggravated damages. Since the proposed tort claim is not pleaded in the alternative, but instead as an additional cause of action, it can add nothing to the calculation of damages for a contravention of s 105 of the Sex Discrimination Act. The Respondents submitted that, given the factual matrix is the same for each cause of action, it is difficult to see what the additional cause of action would add to the calculation of damages.

57    In oral submissions in reply, counsel for the Applicant renewed the contention that the addition of the proposed tort claim could add to the quantum of damages. However, in any event, it was argued that what needs to be proven with respect to the s 105 claim is different to what needs to be proven for the tort claim. For the tort claim, the postulated breach of the employment contract would involve questions directed to the duty to take reasonable care. That would concern questions about the steps that were or should have been taken by the First Respondent to ensure the Applicant’s safety. The elements to be established for the underlying sexual harassment claims are altogether different. It was submitted that it might be more difficult to prove sexual harassment than it is to make out a case for a breach of the employment contract. Consequently, it was argued, some care needs to be taken with the observations made by Katzmann J in the circumstances of Taylor.

58    I am not prepared to accept that there is no utility in the proposed tort claim. While I see force in the submission that, given that the factual matrix is the same, a failure to prove that the alleged conduct took place might result in both the s 105 and tort claims failing, I accept the Applicant’s argument that the different legal elements to be established for each cause of action will require different analyses to be undertaken to determine liability. On this Interlocutory Application, I am not prepared to accept that failure on one cause of action will lead necessarily to failure on the other. That leaves aside the potential for additional aggravated damages.

59    In short, I consider there to be utility in adding the proposed tort claim.

Reasonably arguable

60    Three issues arose that are relevant to the question of whether the new tort claim is reasonably arguable.

61    First, there is the question of law as to whether the tort is capable of applying to the acts of a company director (or employee). The Applicant relied on Donaldson v Natural Springs Australia [2015] FCA 498, where Beach J said at [206] that the various elements of the tort (contract, knowledge of contract, knowledge of prospective breach, and intention to induce or procure the breach) “are not in doubt”, and on OBG Limited v Allan [2007] UKHL 21 where the UK House of Lords said at [3] that “a person who procures another to commit a wrong incurs liability as an accessory”.

62    While the tort could not apply to directors acting within the scope of their authority, the Applicant submitted that the tort was capable of applying to the Second and Third Respondents because, by reason of their unlawful conduct, they were not acting as agents of the First Respondent when the company breached the employment contract. Accordingly, it was submitted, the Respondents would be “sufficiently separate from the First Respondent for their conduct to have procured or caused the First Respondent to have breached its contract with the Applicant”.

63    The submission was developed further in oral submissions. Counsel for the Applicant took me to the judgment of Einstein J in Biscayne Partners Pty Ltd v Valance Corp Pty Ltd [2003] NSWSC 874 at [101], which extracted passages from his Honour’s judgment in Idoport Pty Ltd v National Australia Bank Limited [2001] NSWSC 328 at [13]–[29]; from the judgment of Jordan CJ in O’Brien v Dawson (1941) 41 SR (NSW) 295 at 307–308; and from the judgment of Starke J in O’Brien v Dawson (1942) 66 CLR 18 at 32.

64    In Idoport, Einstein J had said that:

It is quite plain that the person who commits the tort [of interference with contractual relations] must be a third party, someone who stands outside the contractual relations being interfered with. Third party cannot be the alter ego of one of the parties to the contract.

65    In the context of company directors, Jordan CJ said in O’Brien v Dawson (1941) that (emphasis added):

The next question is whether, if an ordinary limited liability company is a party to a contract, and its directors acting as such, and in the course of conducting the company's business at a Board meeting, resolve that the company shall refuse to perform a contract to which it is a party, the directors knowing that the refusal cannot be legally justified, and effect is given to this resolution, the directors concerned are guilty of the tort-and presumably also of the crime-of conspiracy. I am of opinion that in such a case it is entirely artificial to speak of the directors as "procuring" the company to break its contract ....

They are its agents who have power to control its acts. It cannot act at all except through them or through some other authorised agents. They are not in the position of outsiders who are influencing the independent volition of a contracting party who is capable of exercising volition for himself.

66    However, his Honour then says:

Directors of a company are, however, personally responsible for any torts committed by their company in the procuring of which they are personally implicated… But there is authority for the proposition that the fact that one or more directors of a company acting as such, are the instruments by which the company, without just cause, refuses to perform a contract does not confer on the other party to the contract a right to sue directors in tort on the footing that they have procured a breach of contractual rights…

67    In O’Brien v Dawson (1942), Starke J said (emphasis added):

The acts of Doyle were the acts of the company and not his personal acts which involved him in any liability to the plaintiff. But I would add that it does not follow that a director of a company would escape personal liability under cover of the company's responsibility if he himself became an actor and invaded the plaintiff’s rights.

68    Einstein J in Idoport then summarised the position in the following way:

I take it as clear law that so long as a director is acting within the scope of his authority, the company is responsible for the acts of the director.

69    Counsel for the Applicant relied on these passages to argue that a distinction is to be drawn between, on the one hand, directors acting as such and, on the other hand, the conduct of directors in their personal capacity. On that premise, it was submitted that the Respondents could not have been acting in their capacities as directors when sexually harassing the Applicant; they could not have been acting in pursuance of their authority as directors. Accordingly, their alleged sexual harassment was conduct capable of procuring the company to breach its contract.

70    The Respondents did not engage directly with this argument, instead contending in written submissions that the proposed tort claim does not involve the concept of accessorial liability and, thus, para [67A] of the Proposed FASOC does not disclose a cause of action against the Respondents.

71    On this Interlocutory Application, and based on the authorities mentioned at [61]–[68] above, I am prepared to accept that the position is reasonably arguable.

72    The Respondents’ position on whether the proposed tort claim was reasonably arguable focused on two ways in which the pleadings were said to be deficient. Those arguments are dealt with in the second and third points that now follow.

73    Secondly, the Respondents submitted that, while the pleading identified the Respondents as both employees and directors, “the pleading does not identify what conduct, alleged against the Respondents to have engaged in, is attributable to the Respondents in their capacity as employees or as directors”. None of the conduct alleged to have been engaged in by the Respondents draws any distinction between their capacity as an employee or their capacity as a director. Consequently, it was submitted, it is difficult to understand what conduct might enliven the tortious action.

74    In response, the Applicant contended that the pleadings contemplate that the alleged unlawful conduct was not conduct that could be properly engaged in by directors. It was submitted that the critical question becomes whether the Respondents were authorised to act as agents, not whether they were acting in their capacity as directors or employees.

75    On the basis of the authorities outlined at [61]–[68] above, I accept that the Applicant’s position is reasonably arguable.

76    Thirdly, the Respondents submitted that para [67A] of the Proposed FASOC does not plead any material facts to support the allegation that the Respondents induced the First Respondent to breach the employment contract. While the Respondents might have known of the existence of the employment contract, what is not pleaded is the knowledge held by the Respondents that, by their conduct, they would be inducing a breach of contract. Put another way in the course of oral submissions, there is no pleading about how the requisite intention arises to cause a breach of the employment contract. Consequently, para [67A] “does not disclose a cause of action as against the Respondents”. In this respect, in oral submissions, counsel for the Respondents accepted that it was primarily a difficulty with the way that the proposed tort claim has been pleaded in the Proposed FASOC.

77    In her written reply, the Applicant submitted that the proposed tort claim identifies, by cross-references to the alleged unlawful conduct of the Respondents, the conduct that makes them accessories to unlawful discrimination. However, in oral submissions, counsel for the Applicant accepted that there were infelicities in the pleading of the proposed tort claim in the Proposed FASOC.

78    At the hearing, counsel for the Applicant handed up a document that was described as a working document setting out particulars of the proposed tort claim. It included the following particulars:

(1)    The First Respondent had a contract of employment with the Applicant;

(2)    The contract of employment contained an implied term that the First Respondent would take reasonable care for the safety of the Applicant;

(3)    The Second and Third Respondents were directors of the First Respondent;

(4)    The Second and Third Respondents must have known of the contract of employment between the First Respondent and the Applicant;

(5)    As directors of the First Respondent, the Second and Third Respondents must have known that if the First Respondent breached its contract with the Applicant, the First Respondent could be liable for breach of contract;

(6)    The Second and/or Third Respondents did acts that induced or procured a breach of contract;

(7)    The conduct of the Second and/or Third Respondents, in inducing or procuring the First Respondent to breach its contract with the Applicant, must have been intentional;

(8)    The breach of contract caused loss and damage to the Applicant; and

(9)    It is inconceivable that the conduct of the Second and Third Respondents in inducing the breach of contract could in any way have been justified.

79    Sub-particulars were set out for the particular set out at (6) — that is, that the Respondents did acts that induced or procured a breach of contract. Those sub-particulars were as follows:

(1)    The Second and/or Third Respondents sexually harassed the Applicant;

(2)    This conduct involved the First Respondent breaching its contract with the Applicant by breaching the implied term to take reasonable care for the safety of the Applicant;

(3)    The sexual harassment also caused the First Respondent to unlawfully discriminate against the Applicant;

(4)    The Second and/or Third Respondents could not have been acting in their capacities as directors when they sexually harassed the Applicant; the conduct of the Second and/or Third Respondents in sexually harassing the Applicant was therefore the conduct of Third Parties relative to the First Respondent; and

(5)    By sexually harassing the Applicant, the Second and/or Third Respondents induced the First Respondent to breach its contract of employment with the Applicant.

80    There were also sub-particulars for the particular set out at (7) at [77] above, that is, the conduct induced or procured the breach of contract. That sub-particular read:

The second and/or third respondent must have known by virtue of their status as directors of the first respondent and persons directing the applicant in her employment by the first respondent and the intentional nature of the sexual harassment, the conduct would cause the first respondent to breach its implied contractual duty to take reasonable care of the safety of the applicant.

81    There were other sub-particulars related to causation that I have not reproduced.

82    These particulars and sub-particulars are not currently in the Proposed FASOC, and counsel for the Applicant accepted that the pleadings would benefit by the insertion of particulars to this or a similar effect.

83    I accept, as did counsel for the Applicant, that the pleadings require greater clarity to identify the issues to be determined. However, I do not consider that the deficiencies are incurable.

Summary of the exercise of discretion under rr 8.21(1)(g)(i) and 16.53

84    In summary, the parties accept that the new tort claim “arises out of the same facts or substantially the same facts as those already pleaded to support an existing claim for relief by the party”. The discretions to grant leave under rr 8.21(1)(g)(i) and 16.53(2) are thereby enlivened.

85    I am mindful that the discretions should be exercised in a way that best promotes the Court’s overarching purpose to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible: Federal Court Act s 37M(3).

86    However, having considered the factors of delay in applying for the amendment, consequential prejudice to the Respondents, utility of adding the proposed tort claim, and whether the proposed tort claim is reasonably arguable, I am satisfied that the Applicant has discharged her onus of establishing that leave should be granted to amend the Originating Application and the ASOC to add the proposed tort claim. The case is yet to be listed for hearing and the prejudice to the Respondents and disruption to the timetable for hearing are likely to be minor. I consider that the proposed tort claim, when properly pleaded, is reasonably arguable and I am satisfied, on balance, that there is utility in the Applicant adding the proposed tort claim.

87    It has been accepted by the Applicant that para [67A] in the Proposed FASOC requires greater clarity and precision. Consequently, leave will be given generally to amend the Originating Application and the ASOC to add the proposed tort claim consistently with these reasons, but not necessarily in the form set out in the Proposed FASOC.

discontinuance of proceeding against the firsT respondent

88    In oral submissions, counsel for the Applicant indicated that consideration is being given to retaining the First Respondent as a party. It was indicated that there were genuinely held concerns about recovery in the event that the proceeding is discontinued against the First Respondent.

89    The Applicant has requested from the Respondents a copy of the workers compensation insurance policy, and that request was being considered at the time of the hearing. Counsel foreshadowed that an application might be made to join the insurer pursuant to r 9.05 of the Rules in the event that the policy covered the alleged conduct. If that were to eventuate, the First Respondent would remain as a party and the insurer would stand in the shoes of the First Respondent. I was directed to passages from the judgment of Lee J in R&B Investments Pty Ltd (Trustee) v Blue Sky Alternative Investments Limited (Administrators Appointed) (in liq) [2023] FCA 703 at [19]–[21] where insurers were joined as parties pursuant to r 9.05(1).

90    There is no need to consider this possibility further in determining this application. As the Applicant foreshadowed, it will need to be the subject of a separate application to the Court.

91    As it stands, however, the Applicant has not complied with the order made by Wigney J on 18 December 2024 to file and serve a Further Amended Statement of Claim discontinuing proceedings against the First Respondent by 14 February 2025. The Applicant must address that non-compliance.

Costs

92    Both the Applicant and the Respondents sought costs orders. In written submissions, the Respondents submitted that “if the Court is minded to grant leave, the Applicant should be ordered to pay the costs ‘thrown away’ and additional costs incurred in adducing the new additional evidence”.

93    During the hearing, counsel for the Applicant contended that the general rule is that costs follow the event. Accordingly, with one qualification, if the Applicant were successful, then she should be entitled to a costs order. The qualification was that there was force in the argument that the Applicant might cover the costs of additional evidence that would need to be put on by the Respondents.

94    The Court has a broad discretion to order costs pursuant to s 43(2) of the Federal Court Act. In J&A Vaughan Super Pty Ltd (Trustee) v Becton Property Group Ltd (No 4) [2015] FCA 218, Pagone J said the following at [5] about the question of costs in the context of a successful amendment application under r 16.53 of the Rules:

The party successfully seeking leave asks for an indulgence to which it is not entitled as a right and, therefore, is usually required to pay the costs of the application for leave and the costs thrown away by reason of the amendment: Queensland v JL Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146; Media Ocean Limited v Optus Mobile Pty Ltd (No 6) [2009] FCA 1319, [34]; Servcorp Ltd v Nuclei Ltd [2011] FCA 1229, [11]. An unsuccessful party opposing the grant of leave may, however, be deprived of its costs or may be ordered to pay the costs of the application for leave if that party has “unreasonably opposed” the application: Public Trustee v Nash (1921) 38 WN (NSW) 142; Media Ocean Limited v Optus Mobile Pty Ltd (No 6) [2009] FCA 1319, [34].

See also Australian Securities and Investments Commission v Whitebox Trading Pty Ltd (No 2) [2017] FCA 385 at [3]–[5] (Gleeson J); Richmond v Ora Gold Ltd [2020] FCA 70 at [15]‍–‍[16] (Colvin J); and Zircon Australia Pty Ltd v BCC Trade Credit Pty Ltd trading as Bond and Credit Co [2023] FCA 636 at [18]–[20] (Stewart J).

95    I accept that the application to amend the pleadings to add the proposed tort claim has arisen in the context of the First Respondent’s winding up. That was a matter beyond the Applicant’s control. However, it was open to the Applicant to have prosecuted the proposed tort claim against the Second and Third Respondents from the commencement of the proceeding.

96    Furthermore, I do not consider that it was relevantly unreasonable for the Respondents to oppose the Interlocutory Application. As Pagone J said in Vaughan at [7] “[u]nreasonableness is not established merely because an application for leave is unsuccessfully resisted”. The arguments put by the Respondents “were open to be put”: at [7]. That is particularly the case because of the prejudice that will be caused and the fact that it was still open at the hearing as to what shape the amendments to the pleading would take.

97    Accordingly, it is appropriate for the Applicant to pay the costs of, and incidental to, the Applicant’s Interlocutory Application for leave to amend and the costs thrown away by reason of the amendments to the Originating Application and the ASOC.

Associate:

Dated:    17 July 2025