Australia: McKenzie friends no more: Arbitration considerations for employers

IN BRIEF - ARBITRATION CONSIDERATIONS FOR EMPLOYERS IN LIGHT OF FITZGERALD V WOOLWORTHS

A recent decision of the full bench of the Fair Work Commission (FWC) will reduce the role lawyers and other representatives can play at the FWC in some matters. If employers wish to proceed to arbitration, they should be aware that they may not be able to rely on their legal representative's assistance during some hearings or conciliation conferences.

The decision in Stephen Fitzgerald v Woolworths Limited [2017] FWCFB 2797:

  • means in circumstances where permission to represent is required (usually for conferences, conciliations or hearings), and the FWC does not grant permission for a person to be represented by a lawyer or paid agent, the representative will no longer be allowed to remain in the conference or arbitration to assist their client
  • reinforces the need for lawyers and paid agents to notify the FWC of their commencing or ceasing to act with diligence
  • may consequently have significant impact on the way the FWC calculates costs, although that is not yet clear
  • does not prevent a lawyer or paid agent representing their clients in relation to correspondence, written applications, written submissions or the preparation of other documents in relation to a matter before the FWC

LAW FIRM ASSISTS WOOLWORTHS' REPRESENTATIVE DURING ARBITRATION

Mr Fitzgerald appealed the first instance decision by Commissioner Cambridge in Stephen Geoffrey Fitzgerald v Woolworths Limited [2017] FWC 1730 to deny his application for remedy following an allegedly unfair dismissal.

Of relevance is that following a conciliation conference, commercial law firm Sparke Helmore, who was representing Woolworths, wrote to Mr Fitzgerald and foreshadowed an application for costs against Mr Fitzgerald if he continued to press his application for unfair dismissal remedy.

During the arbitration, Woolworths was represented by Ms Barclay, an internal industrial relations specialist, and Mr Fitzgerald was self-represented. Despite advising the FWC that Woolworths was not seeking the services of a lawyer or paid agent, Ms Barclay reserved the right to request that the FWC grant permission for Sparke Helmore to represent Woolworths during the proceedings. Sparke Helmore was present during the hearing and acted in a role often described as that of a "McKenzie friend", that is, a person (whether legally qualified or otherwise) present in court to assist a party by prompting, making notes or quietly giving advice on the conduct of a case. Sparke Helmore assisted Ms Barclay, to some extent, at various points throughout the proceedings. Woolworths did not at any time before or during the hearing apply for permission to be represented by lawyers.

Mr Fitzgerald raised concerns about Sparke Helmore's involvement and role at various points during the arbitration. Eventually the Commissioner determined that he was not granting Sparke Helmore permission to represent Woolworths. Mr Fitzgerald called upon the FWC to ask Sparke Helmore to leave the hearing room, however, the FWC was unsure it was necessary and concerned it did not have the power to allow that motion. In his subsequent written submissions, Mr Fitzgerald raised concerns about the presence of a legal representative during the hearing.

Mr Fitzgerald's application for remedy for unfair dismissal was ultimately denied on jurisdictional grounds by the FWC.

WOOLWORTHS SEEKS COSTS ORDER, INCLUDING COSTS BILLED BY SPARKE HELMORE

Woolworths subsequently made an application seeking Mr Fitzgerald pay its costs of the proceedings. Woolworths' internal costs were calculated as totalling $6,500, and the costs billed to Woolworths by Sparke Helmore were $25,885.75. In particular, Woolworths' application included a claim for costs of "fees incurred and paid ... for Costs to Sparke Helmore Lawyers throughout the course of the Proceedings".

Sparke Helmore also billed for preparation of the "without prejudice" letter, drafting an outline of submissions, witness statements, opening submissions, cross-examination questions, scripts for examination in chief and other matters. Costs were also sought for attending the FWC arbitration hearing before Commissioner Cambridge and to assist Ms Barclay, as well as drafting and reviewing closing written submissions in the matter.

FULL BENCH OF FWC CONSIDERS MISREPRESENTATION AND DECEIT RELATING TO LEGAL REPRESENTATION

Mr Fitzgerald filed an appeal of the decision which, among others, referred to "misrepresentation and deceit relating to legal representation" (at [20]). The FWC decided not to deal with the costs issue until after the full bench had dealt with the appeal.

While the full bench noted that Mr Fitzgerald's submissions to support his appeal were mostly unhelpful, it did acknowledge his submission that "Woolworths had misrepresented the position with respect to legal representation at the 25 January 2017 directions hearing, he was misled by the Commission that legal representation was not required, Woolworths was legally represented at the 3 March 2017 hearing without obtaining permission, and he had been left exposed to a costs order even though Woolworths had not obtained permission for legal representation." (At [21].)

In response, Woolworths submitted that Sparke Helmore's role was, among others, confined to assisting and advising Woolworths in the preparation and presentation of the case, and Sparke Helmore's role in the proceedings was the same as the common law recognised role of the "McKenzie friend".

REPRESENTATIVE WORK UNDER FAIR WORK ACT AND BARRISTERS' RULES

The full bench quickly disposed of the appeal on all but the grounds relating to representation.

It then noted and clarified the relationship between the Fair Work Act 2009 (Act) and the FWC procedural rules in relation to representation. The full bench then favourably referred to the barristers' rules (at [34]) which sets out barristers' work as consisting of:

  1. appearing as an advocate;
  2. (preparing to appear as an advocate;
  3. negotiating for a client with an opponent to compromise a case;
  4. (representing a client in a mediation or arbitration or other method of alternative dispute resolution;
  5. giving legal advice;
  6. preparing or advising on documents to be used by a client or by others in relation to the client's case or other affairs;
  7. carrying out work properly incidental to the kinds of work referred to in (a)-(f); and
  8. such other work as is from time to time commonly carried out by barristers

The full bench likened the work of barristers to the work of solicitors and determined that the work performed by Sparke Helmore prior to, during and after the arbitration at first instance had in fact been representative work for the purposes of the Act.

SPARKE HELMORE FAILED IN OBLIGATION TO NOTIFY FWC THAT IT WAS REPRESENTING WOOLWORTHS

In conclusion the full bench said:

... Where an applicant engages the services of a lawyer or paid agent, representation begins at the point that the application to the Commission is made on the applicant's behalf. All dealings with Commission undertaken on behalf of either party from that point onwards in connection with the application constitute representation. Rule 11(1) operates to require the lawyer or paid agent to lodge a "notice of representative commencing to act" as soon as representation in the sense discussed commences. However, notwithstanding that representation has commenced in relation to the application, permission under s.596(2) for any representational activities undertaken prior to or outside of a conciliation conference, determinative conference, or interlocutory or final hearing will generally not be required because rule 12(1) exempts, subject to any contrary direction made under rule 12(2), the making of written applications and written submissions, the lodgment of documents with the Commission and correspondence with the Commission from the general prohibition in s.596(1). If a party considers themselves to be prejudiced by such representational activity on behalf of the opposing party, the remedy is to apply for a direction under rule 12(2) which, if granted, would require the opposing party to seek permission for representation to the necessary extent under s.596(2). (At [45].)

The full bench noted that Sparke Helmore had not met its obligation under the Act to notify the FWC that it was representing Woolworths in relation to the unfair dismissal matter.

Ominously, the full bench also stated;

... The maxim of statutory interpretation that what is prohibited directly cannot be done indirectly (quando aliquid prohibetur, prohibetur et omne per quod devenitur ad illud), applied to s.596, would tell against an overly narrow interpretation and application of the provision which permits its statutory purpose to be defeated or circumvented. ... (At [54].)

Woolworths' costs application was referred to a single commissioner for determination.

Greg McCann Brendan Pearce
Workplace relations
Colin Biggers & Paisley

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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