FEDERAL COURT OF AUSTRALIA Barnett v Territory Insurance Office [2011] FCA 155 Citation: Barnett v Territory Insurance Office [2011] FCA 155 Parties: PHILIP BARNETT v TERRITORY INSURANCE OFFICE File number(s): VID 1045 of 2010 Judge: MARSHALL J Date of judgment: 22 February 2011 Catchwords: PRACTICE AND PROCEDURE—Application by respondent for summary judgment pursuant to s 31A of the Federal Court of Australia Act 1976—or in the alternative to strike out pleadings under Order 11 Rule 16 (a) of the Federal Court Rules — whether a common law agreement is recognised as a "workplace instrument" for the purposes of the Fair Work Act 2009 (Cth) and whether applicant has no reasonable prospect of successfully prosecuting proceeding. Legislation: Federal Court of Australia Act 1976 (Cth) s 31A Fair Work Act 2009 (Cth) Federal Court Rules – O 11 r16 (a) Cases cited: Fair Work Ombudsman v Maclean Bay Pty Ltd [2010] FCA 1378 Field v Perpetual Ltd [2010] FCA 1001 Keynes v Rural Directions Pty Ltd (No 2) [2009] FCA 567 Spencer v The Commonwealth of Australia (2010) 241 CLR 118 Date of hearing: 22 February 2011 Place: Melbourne Division: FAIR WORK DIVISION Category: Catchwords Number of paragraphs: 22 Counsel for the Applicant: Mr N Green QC and Mr T Martin Solicitor for the Applicant: Minter Ellison Counsel for the Respondent: Mr A Foster Solicitor for the Respondent: Foster Nicholson Legal IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY FAIR WORK DIVISION VID 1045 of 2010 BETWEEN: PHILIP BARNETT Applicant AND: TERRITORY INSURANCE OFFICE Respondent JUDGE: MARSHALL J DATE OF ORDER: 22 FEBRUARY 2011 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The motion of the respondent filed 4 February 2011 is dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY FAIR WORK DIVISION VID 1045 of 2010 BETWEEN: PHILIP BARNETT Applicant AND: TERRITORY INSURANCE OFFICE Respondent JUDGE: MARSHALL J DATE: 22 FEBRUARY 2011 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 On 2 December 2010, the applicant Mr Barnett filed an application in the Victoria District Registry of the Court. Mr Barnett claimed compensation for the termination of his employment by Territory Insurance Office ("TIO"). At the first directions hearing, counsel for TIO foreshadowed a possible application to transfer the proceeding to the Northern Territory District Registry and a possible application to strike out the proceeding. Ultimately, only the last course was pursued. On 4 February 2011, TIO applied to the Court for an order that the application be summarily dismissed pursuant to s 31A (2) of the Federal Court of Australia Act 1976 (Cth) ("the Federal Court Act"). Alternatively, TIO seeks an order striking out the statement of claim filed by Mr Barnett on the basis that it discloses no cause of action; see O 11 r 16 (a) of the rules of this Court. 2 Although put as an alternative claim, it is difficult to see how a strike out application concerning the statement of claim could succeed if the s 31A application did not. The Court will now examine the claim for relief under s 31A of the Federal Court Act. Section 31A Section 31A of the Federal Court Act provides: (1) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if: (a) the first party is prosecuting the proceeding or that part of the proceeding; and (b) the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding. (2) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if: (a) the first party is defending the proceeding or that part of the proceeding; and (b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding. (3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be: (a) hopeless; or (b) bound to fail; for it to have no reasonable prospect of success. (4) This section does not limit any powers that the Court has apart from this section. FACTUAL BACKGROUND 3 This proceeding has now reached the stage where a statement of claim has been filed. The orders of the Court made at the directions hearing on 20 December 2010 contemplated that a defence would be filed by 14 February 2011. The parties agreed that TIO should not be required to file its defence prior to the resolution of the s 31A and O 11 r 16 (a) issues. Paragraph 1 of the motion currently before the Court sought relief in respect of filing a defence by 14 February 2011. That aspect of the motion is redundant. The Court treats paragraph 2 of the motion concerning summary dismissal as the only live issue before it. The order made on the motion is to be read in that context. 4 Although the resolution of the s 31A claim chiefly requires an examination of questions of law, rather than fact, the Court (in the absence of a defence) is forced to focus on the statement of claim to set the factual background to the matter before it. 5 From the statement of claim, the following germane matters, amongst others are evident: On 31 May 2010, TIO commenced to employ Mr Barnett; The terms and conditions of the contract of employment were regulated by a common law written employment agreement dated 31 May 2010 ("the 31 May agreement"); On 7 May 2010, prior to commencing employment with TIO, Mr Barnett was provided with a formal "position description" prepared by TIO. The position title was "Manager, Claims Operations – Property". Various "key accountabilities" were set out in the document. There were said to be roles and responsibilities of Mr Barnett pursuant to the 31 May agreement. 6 Further identified by Mr Barnett as a workplace role or responsibility was the requirement by TIO that Mr Barnett, in his managerial role, would be required to rectify perceived problems in TIO's property section and introduce staff training. 7 Mr Barnett alleges that as a consequence of carrying out his workplace roles and responsibilities, or being prevented from doing so, TIO terminated his employment. the legal issue raised 8 In reliance on s 31A (2)(b) of the Federal Court Act, TIO contends that the Court should be satisfied that Mr Barnett has no reasonable prospect of successfully prosecuting the proceeding. 9 The basis for that submissions is as follows: Mr Barnett claims he was terminated because he exercised a "workplace right" and was prevented from exercising such a right, under a "workplace instrument"; The "workplace instrument" was said to be the 31 May agreement; The 31 May agreement is not a "workplace instrument" for the purposes of the Fair Work Act 2009 (Cth) ("the FW Act"); Alternatively, if the 31 May agreement is a "workplace instrument" for the purposes of the FW Act, Mr Barnett's management of staff at TIO was properly regarded as part of his duties as manger and not as a "role or responsibility" under a "workplace instrument". 10 An outline of Mr Barnett's response is as follows: The 31 May agreement is a "workplace instrument" being one recognised by a workplace law, being the FW Act; Section 326 of the FW Act, recognises a common law contract of employment by prohibiting unreasonable payments and deductions for the benefit of an employer that may be contained in such contracts from having any effect; A "workplace instrument" is a broader concept than a "fair work instrument" which s 12 of the FW Act defined to mean: (a) a modern award; (b) an enterprise agreement; (c) a workplace determination; or (d) an FWA order. Section 542 of the FW Act recognises a "safety net contractual entitlement", which is defined in s 12 to mean: an entitlement under a contract between an employee and an employer that relates to any of the subject that described in: (a) Subsection 61 (2) (which deals with the National Employment Standards); or (b) Subsection 139 (1) (which deals with modern awards). APPROACH TO s 31A IN THE CURRENT CONTEXT 11 A proceeding need not be "hopeless" or "bound to fail" for it to have no reasonable prospect of success; see s 31A (3). To have "a reasonable prospect of success", a proceeding must have real prospects of success as apparent to fanciful and arguable prospects; see Field v Perpetual Ltd [2010] FCA 1001 at [9], per Gordon J. 12 In Spencer v The Commonwealth of Australia (2010) 241 CLR 118 at [25], French CJ and Gummow J said: Where the success of a proceeding depends upon propositions of law apparently precluded by existing authority, that may not always be the end of the matter. Existing authority may be overruled, qualified or further explained. Summary processes must not be used to stultify the development of the law. But where the success of proceedings is critically dependent upon a proposition of law which would contradict a binding decision of this [High] Court, the court hearing the application under s 31A could justifiably conclude that the proceedings had no reasonable prospect of success. 13 As Besanko J said in Keynes v Rural Directions Pty Ltd (No 2) [2009] FCA 567 at [47]: Where the plaintiff's cause of action depends on an arguable question of law then summary judgment may not be entered. 14 Further as the Court said in Fair Work Ombudsman v Maclean Bay Pty Ltd [2010] FCA 1378 at [10]: The discretion in s 31A should only be exercised in the clearest of cases, where there is a high degree of certainty that there are no reasonable prospects of a case being prosecuted successfully. 15 As discussed in Maclean Bay at [11], the resolution of this proceeding also concerns legal issues which have not previously been ventilated. There is no authority dealing with whether a written common law contract of employment is a "workplace instrument" recognised by the FW Act. 16 Mr Barnett alleges that TIO has breached s 340 of the FW Act. That section prohibits, amongst other things, an employer from taking adverse action [including dismissal] against an employee because the employee: Has a workplace right; Has exercised such a right, Proposed to exercise such a right. Prevention of the exercise of the right is also proscribed. 17 If, at trial, the Court accepts the submission of Mr Barnett that, "workplace right" as defined in s 341 of the FW Act, includes an entitlement to a benefit under a workplace instrument and that the 31 May agreement is such an instrument because it is recognised by the FW Act, Mr Barnett will be entitled to have the merits of his claim tested on the facts. The argument put before the Court as to the existence of a valid workplace right in Mr Barnett is respectfully arguable. The Court need say no more, than that, it is not obviously without a clear defect. The test of the strength of that claim should await trial. 18 Consistently with Spencer, given that there is no authority on the part, let alone binding authority, and given the argument of Mr Barnett put in opposition to the motion is not fanciful or unarguable, but does have some real prospect of success, it is not an appropriate case for the exercise of the Court's discretion to dismiss the proceeding under s 31A (2) of the Federal Court Act. In so finding, the Court should not be taken to have the view that Mr Barnett's argument will necessarily succeed at trial. 19 This leaves for consideration TIO's contention, in the alternative, that the workplace right asserted was not a role or responsibility under the 31 May agreement. In the absence of the 31 May agreement being in evidence, it is impossible to resolve that issue. That matter is a currently contested matter of fact raising a triable issue, which will require resolution at trial. 20 As the Court is not satisfied that Mr Barnett has no reasonable prospect of successfully prosecuting the proceeding and, on the contrary, considers his contentions raise a triable issue, it is appropriate to order that that part of the motion is dismissed. It follows that the claim based on O11 r 16 (a) is also rejected. 21 The order of the Court on the motion is: 1. The motion of the respondent filed on 4 February 2011 is dismissed. 22 The matter is also listed today for directions. The Court will hear submissions from counsel shortly on the timing of the filing of defence by TIO and/or any matter which the parties wish to raise on the future conduct of the proceeding. Such matters may include the possible listing of a motion to transfer the proceeding to the Northern Territory District Registry and/or a mediation. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. Associate: Dated: 28 February 2011