Mutch v ISG Management Pty Ltd (No 3)

• Jurisdiction: Australia Federal only
• Judgment Date: 16 June 2023
• Neutral Citation: [2023] FCA 648
• Date: 16 June 2023
• Court: Federal Court

Federal Court of Australia

Mutch v ISG Management Pty Ltd (No 3) [2023] FCA 648

File number:	VID 1492 of 2018
Judgment of:	BROMBERG J
Date of judgment:	16 June 2023
Catchwords:	PRACTICE AND PROCEDURE – representative proceedings – approval of discontinuance – whether proposed discontinuance would be unfair, unreasonable or adverse to the interests of group members – discontinuance approved
Legislation:	Corporations Act 2001 (Cth) s 500(2) Fair Entitlements Guarantee Act 2012 (Cth) s 38 Fair Work Act 2009 (Cth) Federal Court of Australia Act 1976 (Cth) ss 33J, 33V, 33ZE Federal Court Rules 2011 (Cth) r 26.12
Cases cited:	Babscay Pty Ltd v Pitcher Partners (2020) 148 ACSR 551 Davaria Pty Limited v 7-Eleven Stores Pty Ltd [2020] FCA 1234 Laine v Thiess Pty Ltd [2016] VSC 689 Mutch v ISG Management Pty Ltd [2020] FCA 362 Mutch v ISG Management Pty Ltd (No 2) [2020] FCA 954 Simonetta v Spotless Group Holdings Ltd [2017] FCA 1071 Tate v Westpac Banking Corporation (No 2) [2020] FCA 1374
Division:	Fair Work Division
Registry:	Victoria
National Practice Area:	Employment and Industrial Relations
Number of paragraphs:	27
Date of hearing:	Determined on the papers
Solicitor for the Applicant:	Shine Lawyers
Solicitor for the Respondent:	Lander & Rogers

ORDERS

		VID 1492 of 2018
BETWEEN:	ROBERT MUTCH Applicant
AND:	ISG MANAGEMENT PTY LTD (ACN 142 916 970) Respondent

order made by:	BROMBERG J
DATE OF ORDER:	16 June 2023

THE COURT ORDERS THAT:

1. The discontinuance of this proceeding be approved pursuant to s 33V(1) of the Federal Court of Australia Act 1976 (Cth) and r 26.12(4) of the Federal Court Rules 2011 (Cth).

2. Leave is granted to the applicant to discontinue the proceeding by filing a notice of discontinuance.

3. Leave is granted to the respondent to discontinue all cross-claims in the proceeding.

4. There be no order as to costs.

THE COURT DECLARES THAT:

5. Orders 1 and 2 do not affect any rights of the applicant or any group member in the proceeding to pursue the claims that are the subject of this proceeding in another proceeding.

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

REASONS FOR JUDGMENT

BROMBERG J:

1. By an interlocutory application dated 30 March 2023 (Discontinuance Application), the applicant seeks the Court’s approval to discontinue this proceeding pursuant to s 33V(1) of the Federal Court of Australia Act 1976 (Cth) and r 26.12(4) of the Federal Court Rules 2011 (Cth). The Discontinuance Application is made with the support of the liquidator of the respondent, ISG Management Pty Ltd (in liquidation) (ISGM). In support of its application, the applicant relies on the affidavit of Ms Vicky Antzoulatos sworn on 30 March 2023 (March 2023 Affidavit). A further affidavit of Ms Antzoulatos dated 2 September 2021 (September 2021 Affidavit) is also relevant to the Application, as is the affidavit sworn by Mr Hadi Boustani dated 5 May 2023 (May 2023 Affidavit).

2. The basis for the Discontinuance Application is that the respondent is in liquidation and, in those circumstances, there is no utility in continuing the proceeding. For the reasons that follow, I have determined that discontinuing the proceeding and all cross-claims would not be unfair, unreasonable or adverse to the interest of group members. I will therefore grant the approval sought by the applicant.

background

3. This proceeding has a relatively long and complicated history, some of which is described in my judgments in Mutch v ISG Management Pty Ltd [2020] FCA 362 and Mutch v ISG Management Pty Ltd (No 2) [2020] FCA 954. I will only set out below that which is strictly relevant to the Discontinuance Application.

4. In 2018, the applicant commenced a representative proceeding under Pt IVA of the Act against ISGM. The primary issue raised by the proceeding was whether, as the applicant alleged, he and at least 3,348 other group members were employees of ISGM or, as ISGM alleged, those persons were employees or contractors of various corporations which provided services to ISGM. On the basis that he and group members were employees of ISGM but had not been paid employee entitlements, the applicant alleged that ISGM had contravened various provisions of the Fair Work Act 2009 (Cth) and sought compensation and penalties for those contraventions.

5. On 23 April 2019, ISGM filed a cross-claim against the applicant and a former corporation associated with him, Mutch Better Communications Pty Ltd. On 22 February 2021, the Court granted leave to the respondent to file cross-claims against each group member and an associated corporate entity of that group member (Cross-Claims Against Group Members) but ordered that all Cross-Claims Against Group Members be stayed. Those cross-claims have remained stayed throughout the proceeding. A notice of cross-claim dated 11 March 2021 was then able to be served on group members, although it is not clear whether any service was effectuated. If served, each of the notices of cross-claim advised that the cross‑claim had been stayed by the Court and that the group member, or other cross‑respondent to the cross-claim, need not take any action to respond to the cross-claim.

6. On 1 July 2021, ISGM and its parent company, Tandem Corporation Pty Ltd, and a number of related companies, were placed into voluntary administration effective that day. Mr Matthew Caddy and Mr Keith Crawford of McGrathNicol were appointed as voluntary administrators of ISGM.

7. On 7 July 2021, the Court made orders suspending any of the then unperformed timetabling orders made in the proceeding.

8. The September 2021 Affidavit attaches a number of exhibits, including the minutes of the first and second meetings of creditors of ISGM and its related companies, and the Administrators’ Report to Creditors dated 29 July 2021. Those materials show that, at the second meeting of creditors on 5 August 2021, the creditors voted to wind up ISGM and Tandem Corporation, as well as the other related companies, and appointed the voluntary administrators as liquidators.

9. On 1 November 2021, the Court made orders releasing the applicant’s legal representative, Shine Lawyers, from the implied undertaking referred to in order 16 of the Court’s orders dated 15 September 2020 as to the use of the List of Known Group Members. Following those orders, and as set out in the March 2023 Affidavit, Shine:

1. identified whether particular group members were entitled to access the Fair Entitlements Guarantee Scheme (FEG Scheme) established by the Fair Entitlements Guarantee Act 2012 (Cth) (FEG Act);

2. communicated with relevant group members about their potential entitlement to access the FEG scheme;

3. lodged 134 claims on behalf of group members to access the FEG scheme;

4. lodged 756 proofs of debt on behalf of group members with the liquidator; and

5. provided a submission to the Fair Entitlements Guarantee program at the Department of Employment and Workplace Relations on behalf of applicable group members in support of their claims to access the FEG Scheme.

10. On 24 November 2022, Shine received letters of determination from the FEG program advising that the claims of relevant group members had been rejected.

11. On 22 December 2022, Shine lodged a request for a review under s 38 of the FEG Act in respect of 133 group members. As of the date of this judgment, there has been no outcome of that review request.

12. On 16 March 2023, the parties provided their consent to proposed orders seeking the Court’s approval to discontinue the proceeding and all cross-claims. Following correspondence with the Court in which the parties were informed that a formal application should be made, the applicant subsequently filed the Discontinuance Application.

13. On 3 April 2023, and in order to provide group members with an opportunity to oppose the Discontinuance Application, the Court made orders that Shine and the...