Industrial Law – Barrister Sued by Ex-Spouse for Unpaid Employment Remuneration Apropos of Employment in his Practice

In Testart v Testart (No 2) [2023] FCA 209, the applicant was the ex-spouse of the respondent (a barrister).  The applicant sued the defendant for compensation for alleged contravention of ss 45 and 323 of the Fair Work Act 2009 (Cth) on account of alleged failure to pay wages to her for a period of 7 years from 2009 to 2016 on account of work she undertook in and about his practice.  The amounts involved – including wages, superannuation and annual leave loading – amounted to close to $450,000.  The respondent applied – substantially successfully, but only upon a limitation plea – for summary dismissal of the applicant’s proceeding.  It was found the prior finalisation of their Family Court property settlement litigation, of itself, did not preclude the claim.

O’Callaghan J wrote:

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

…

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

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

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

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

…

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

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

BY CONSENT IT IS ORDERED THAT:

l. All previous Orders be and are hereby discharged.

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

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

(a) Her personal savings;

(b) Her vehicles;

(c) Her personal belongings and effects; and

(d) Any superannuation entitlement she may have.

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

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

(a) His personal savings;

(b) His vehicles;

(c) His personal belongings and effects; and

(d) Any superannuation entitlement he may have.

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

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

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

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

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

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

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

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

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

THE COURT NOTES THAT:

1. Pursuant to Section 81 of the Family Law Act 1975, the parties intend that these Orders shall, as far as practicable, finalise their financial and other relationships and sever their financial ties.
2. The Husband’s lawyers may provide a copy of these Orders to Gadens Lawyers, who act on behalf of the mortgagee in possession, for the purposes of Gadens being able to make the payment to the Wife pursuant to these Orders.
3. The parties have finalised their property matter on a final basis in accordance with the terms of these Final Orders …

THIS PROCEEDING

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

…

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

…

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

[21]  Judgment was also sought on three other grounds:

• Ms Testart is prevented from bringing her claims in the Fair Work Proceeding by reason of an Anshun estoppel;
• the claims in the Fair Work Proceeding are largely time-barred; and
• the Fair Work Proceeding is vexatious and/or an abuse of process.

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

…

GROUND ONE: MATRIMONIAL CAUSE

The Relevant Legislation

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

…

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

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

…

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

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

(emphasis added)

…

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

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

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

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

…

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

[88]  I do not agree.

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

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

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

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

GROUND TWO: ESTOPPEL

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

…

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

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

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

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

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

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

…

GROUND THREE: LIMITATION PERIOD

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

[112]  Section 544 provides as follows:

544 Time limit on applications

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

(a) a civil remedy provision; …

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

…

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

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

…

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

We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration [s 82 of the Trade Practices Act 1974 (Cth)] should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question.

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

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

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

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

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

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

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

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

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

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

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

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

(emphasis added)

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

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

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

CONCLUSION

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

(emphasis added)