Adams v Makita (Australia) Pty Ltd (No 3)
[2024] FedCFamC2G 195
•4 March 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Adams v Makita (Australia) Pty Ltd (No 3) [2024] FedCFamC2G 195
File number(s): MLG 458 of 2021 Judgment of: JUDGE SYMONS Date of judgment: 4 March 2024 Catchwords: INDUSTRIAL LAW – costs – whether rejection of series of offers constitutes an unreasonable act or omission for the purposes of s 570(2)(b) of the Fair Work Act 2009 (Cth) – rejection of offers not unreasonable having regard to stage of offer, extent of compromise and strength of case at relevant times – s 570(2)(b) not engaged – application for costs dismissed Legislation: Fair Work Act 2009 (Cth), ss 340, 361, 570 Cases cited: Adams v Makita (Australia) Pty Ltd (No 2) [2023] FedCFamC2G
Buksh v Holmesglen Institute (No 3) [2022] FedCFamC2G 339
Calderbank v Calderbank [1975] 3 All ER 333
Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd [2017] FCAFC 116
Richens v Commonwealth of Australia (as represented by the Commissioner of the Australian Federal Police) [2018] FCA 1276
Saxena v PPF Asset Management Ltd [2011] FCA 395
Trustee for the MTGI Trust v Johnson (No 2) [2016] FCAFC 190
Veda Advantage Ltd v Malouf Group Enterprises Pty Ltd (No 2) (2016) 118 IPR 156; [2016 FCA 470.Division: Division 2 General Federal Law Number of paragraphs: 43 Date of last submissions: 2 November 2023. Date of hearing: On the papers Place: Melbourne Solicitor for the Applicant: Access Law Solicitor for the Respondents: Sparke Helmore ORDERS
MLG 458 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: AMILIA ADAMS
Applicant
AND: MAKITA (AUSTRALIA) PTY LTD
First Respondent
ANDREW CRONIN
Second Respondent
CATHY NEWELL
Third Respondent
ANTHONY AZZATO
Fourth Respondent
ORDER MADE BY:
JUDGE SYMONS
DATE OF ORDER:
4 MARCH 2024
THE COURT ORDERS THAT:
1.The respondents’ application for costs pursuant to s 570(2)(b) of the Fair Work Act 2009 (Cth) is refused.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE SYMONS:
INTRODUCTION
On 9 August 2023, I made an order dismissing an application brought by the applicant, Ms Adams, seeking remedies under the Fair Work Act 2009 (Cth) (FW Act) for an alleged breach by the first respondent Makita (Australia) Pty Ltd (Makita) of s 340(1)(a) of the FW Act. I was satisfied that Makita had discharged its evidentiary onus under s 361 of the FW Act of proving that the decision to terminate Ms Adams’ employment was not actuated by the exercise by Ms Adams of a workplace right. It followed that none of the individual respondents were liable as accessories for Makita’s contravention. My reasons for judgment were published as Adams v Makita (Australia) Pty Ltd (No 2) [2023] FedCFamC2G (substantive judgment).
On 7 September 2023, the respondents filed an application in a proceeding seeking an order that Ms Adams pay its costs, on an indemnity basis, from 31 March 2021 as agreed or assessed pursuant to s 570(2)(b) of the FW Act. The respondents’ written submissions filed on 28 September 2023 confirmed that the respondents sought an order for party-party costs in the alternative.
Ms Adams resists the making of an order for costs. She contends that the default position under the FW Act should prevail.
In making and resisting the application for costs the parties respectively rely upon:
For the respondents:
·Application in a proceeding filed on 7 September 2023;
·Affidavit of lawyer Roland Hassall, affirmed on 6 September 2023;
·Written submissions filed on 28 September 2023; and
·Reply submissions filed on 2 November 2023.
For the applicant:
·Written submissions filed on 18 October 2023; and
·Affidavit of Ms Adams affirmed on 17 October 2023.
Offers exchanged between the parties
The respondents seek an order that Ms Adams pay its costs by reference to s 570(2)(b) of the FW Act and in particular, what they contend was the unreasonable act or omission of Ms Adams in failing to accept what it characterised as a series of reasonable offers for settlement.
The Court has been informed that there were five offers (and counter-offers) exchanged between the parties prior to and during the course of the proceedings, noting that Ms Adams’ application was filed on 16 March 2021 and the hearing took place on 23-25 February 2022.
The offers and responses are described in the respondents’ submissions as follows:
(a)On 8 February 2021, following an unsuccessful conciliation conference on 3 February 2021 in the Fair Work Commission (FWC), the respondents made an offer to pay the applicant $10,120.10, which was open for acceptance for 4 days.
(b)On 15 February 2021, the applicant rejected the respondents’ offer of $10,120.10, and made a counter-offer of $23,000.
(c)On 31 March 2021, the respondents made an offer to pay the applicant $15,180.00, which was open for acceptance for 12 days.
(d)On 12 April 2021, the applicant rejected the respondents’ offer of $15,180 and made a counter-offer of $23,000.
(e)On 7 May 2021, following an unsuccessful mediation in this Court, the applicant made an offer of $22,000.
(f)On 7 June 2021, the respondents rejected the applicant’s offer of $22,000, and made an offer to pay the applicant $19,000, which was open for acceptance for 4 days.
(g)On 8 June 2021, the applicant rejected the respondents’ offer of $19,000, made a counter-offer of $22,000, and stated that the applicant would not entertain any offer below that amount.
(h)On 14 October 2021, after both parties had filed evidence, the respondents made an offer to pay the applicant $20,000, which was open for acceptance for 7 days.
(i)On 16 October 2021, the applicant rejected the respondents’ offer of $20,000 and made a counter-offer of $55,000.
(j)On 21 October 2021, the respondents rejected the applicant’s counter-offer of $55,000 made on 16 October 2021 and made an offer to pay the applicant $25,000, which was open for acceptance for 7 days.
Ms Adams does not join issue with the identification of the offers in these terms but as will later become apparent, makes submissions that invite the Court to take a different approach to how they should be construed for the purpose of the respondents’ costs application.
It is not contested that the proceedings engaged s 570 of the FW Act. Accordingly, it is common ground that the Court is not empowered to order costs unless its discretion is enlivened by its satisfaction as to one or more of the criteria in s 570(2).
Legal principles
Section 570 of the FW Act provides as follows:
a)A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.
b)The party may be ordered to pay costs only if:
a.the Court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or
b.the Court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs; or
c.the Court is satisfied of both of the following:
i.the party unreasonably refused to participate in a manner before the FWC; and
ii.the matter arose from the same facts as the proceedings.
The policy behind s 570 is to ensure that the spectre of costs being awarded against an unsuccessful litigant does not loom so large in the mind of potential applicants that those with genuine grievances and arguable evidentiary and legal bases for them are put off commencing or continuing proceedings.[1]
[1] Trustee for the MTGI Trust v Johnson (No 2) [2016] FCAFC 190 at [8] referring to the observations of Mortimer J (as her Honour then was) in Ryan v Primesafe [2015] FCA 8 at [64].
For that reason, the threshold set by s 570(2) is high and the Court’s discretion to award costs is to be exercised with caution and in a clear case,[2] in part to avoid discouraging parties from completely and robustly pursuing claims or in equally robustly pursuing their defence of such claims.[3] Even where the threshold is met, the Court retains a discretion.
[2] Saxena v PPF Asset Management Ltd [2011] FCA 395 at [5]-[6].
[3] Richens v Commonwealth of Australia (as represented by the Commissioner of the Australian Federal Police) [2018] FCA 1276 at [23].
The applicant for costs bears the onus of establishing that one or more of the criteria in s 570(2) are met.
It is well established that a failure to accept a Calderbank offer may justify the exercise of the Court’s discretion to award costs on an indemnity basis. However, in determining whether the Court should exercise its discretion and order indemnity costs in light of a rejection by the unsuccessful party of a Calderbank offer, a key question for consideration by the Court is whether the Calderbank offer was reasonable and proposed a genuine compromise of a case brought without a realistic prospect of success.[4]
SUBMISSIONS
[4] Trustee for The MTGI Truste v Johnston (No 2) [2016] FCAFC 190 at [21]-[22].
General approach
It is broadly agreed that the Court should consider the following factors in determining whether Ms Adams’ refusal to accept one or more of the offers referred to above involved an unreasonable act or omission for the purposes of s 570(2)(b) of the FW Act:[5]
(a)the stage of the proceeding when the offer was made;
(b)the time afforded to the offerees to consider the offer;
(c)the extent of compromise involved;
(d)the offeree’s prospects of success, assessed at the date of the offer;
(e)the clarity with which the terms of the offer were expressed;
(f)whether the offer foreshadowed an application for indemnity costs in the event of refusal.
[5] Veda Advantage Ltd v Malouf Group Enterprises Pty Ltd (No 2) (2016) 118 IPR 156 at [31].
Unreasonable act or omission causing other party to incur costs s 570(2)(b)
The respondents submit that each offer made by them involved a genuine element of compromise, because on each successive occasion the offer made increased by reference to the applicant’s counter-offer. The respondents’ first offer (made on 8 February 2021) was for the amount of $10,120.10 and the final offer (made on 21 October 2021) was for the amount of $25,000.
The respondents say that the applicant, by contrast, made offers that demonstrated inflexibility and a lack of genuine intent to settle the proceeding. This was evident from the fact that the applicant maintained offers of $23,000 on two occasions, $22,000 on two occasions and finally increased her offer to $55,000.
The respondents identified the following characteristics which they were said were common to each of the offers made by them to Ms Adams[6]:
(a)all were marked “without prejudice except as to costs”;
(b)all referred the applicant to the costs provisions within the FW Act;
(c)all referred to the principles of the judgment of Calderbank v Calderbank [1975] 3 All ER 333;
(d)all clearly expressed the terms of the offer; and
(e)each afforded the offeree reasonable time to consider the offer.
[6] A copy of each of the offers was annexed to the affidavit of Mr Hassall.
The respondents submit – and I accept, having reviewed the correspondence – that the offer of settlement made on 8 February 2021 clearly, and with significant detail, articulated the respondents’ position as to the claim and documented the deficiencies that the respondents had identified in the applicant’s claim.
The respondents submit that the offers of settlement made on 8 February 2021 and on 31 March 2021 were made at the earliest possible opportunities: respectively, (i) following an unsuccessful conciliation in the FWC on 3 February 2021 and (ii) after a further unsuccessful conciliation conference in the FWC on 3 March 2021 and the filing by the applicant of her application in this Court on 16 March 2021. The respondents also emphasise that each of these offers of settlement put the applicant on notice regarding the prospects of her success should the matter proceed to final hearing, foreshadowing that the claim would be “wholly unsuccessful” and clearly stipulated that in the event that the applicant did not accept the offers and failed to obtain a more favourable outcome at hearing, the respondents reserved their rights to rely upon the correspondence on the question of costs.
The respondents submit that each offer of settlement made to Ms Adams involved a substantial compromise because – aside from increasing in quantum on each occasion – each represented the equivalent of several weeks, up to several months, of Ms Adams’ wages. The respondents submit that it was unreasonable for Ms Adams to refuse each one of the offers, including because, her claim had no reasonable prospects of success.
The respondents acknowledge that an order for indemnity costs requires some “special or unusual feature” but submit that this feature can be supplied through “an imprudent refusal of an offer of compromise” (referring to Buksh v Holmesglen Institute (No 3) [2022] FedCFamC2G 339 at [20]) which, for the reasons set out above, was said to have occurred in this case.
Ms Adams submits that no order for costs should be made. Her submission invites the Court to take a cautious approach to the exercise of the discretion and identifies the following considerations as militating against a finding that she acted unreasonably by not accepting any of the respondents’ settlement offers.
The stage when offers were made
Ms Adams submits that the offers made by the respondents prior to 7 May 2021 were made at a time when no evidence had been filed by either party. However, it is not clear what point Ms Adams wishes to make about this circumstance. While I accept that the fact that evidence had not yet been filed might be a consideration that bears on the ability of a party to make projections about their likelihood of success at final hearing, the submission instead extracts a paragraph from a letter sent by Ms Adams’ lawyer to the respondents’ lawyer that refers to the need to undertake work in preparation for trial and the attendant incurring of further costs should the proceedings continue[7].
[7] Applicant’s written submissions at [11] and annexure “AA-4” to the affidavit of Ms Adams.
The suggestion appears to be (including from what is recorded in the next paragraphs of the written submissions) that the failure of the respondents to accept Ms Adams’ offer made on 7 May 2021 was unreasonable, given the stage of the proceedings, and that it was also unreasonable for the respondents not to make a further offer until 7 June 2021 given that by this date, Ms Adams had incurred “considerable further costs” in preparing her affidavit affirmed 9 June 2021 and that the respondents had been on notice to this eventuality in the correspondence sent by Ms Adams’ lawyers on 7 May 2021.
Ms Adams describes the offer made by the respondents on 14 October 2021 as “unreasonably delayed” given that by this time, all parties had filed their evidence. Ms Adams submits that her rejection of this offer, and the subsequent offer made on 21 October 2021, cannot be characterised as unreasonable given that “costs had massively overrun the quantum of the offer”.
The extent of compromise involved
Ms Adams submits that the extent of compromise must be assessed having regard to the escalation in costs that occurred over the life of the proceeding. She resists the characterisation of her attitude to settlement as demonstrating “inflexibility”. Instead, she invites the Court to find that the increased quantum of her last offer (made on 16 October 2021) was commensurate with the amount of costs expended by the parties at this stage of the proceeding.
Ms Adams invites the Court to find that the respondents’ various offers were “cynical and strategic attempts to pressure the applicant into submission, at the threat of a costs application” given that they did not make appropriate allowance for the significant costs that the applicant was progressively incurring.
Prospects of success
Ms Adams submits that at no stage in the proceeding could it be said that her prospect of success was anything less than “very arguable”. While acknowledging that she was ultimately unsuccessful, Ms Adams submits that it is significant that her lack of success only occurred following three days of evidence and extensive written submissions.
Ms Adams invites the Court to reflect on the findings contained in the substantive judgment at [103], [108] and [109] which she submits are critical of Makita’s manner of dealing with her performance and conduct and identify numerous failings of its processes. Ms Adams submits that this demonstrates that her case was clearly arguable.
Ms Adams submits, alternatively, that the Court should refrain from exercising its discretion to order costs, having regard to the policy that underscores the default no-cost jurisdiction of the FW Act. As far as the respondents seek an order for indemnity costs, she resists such an order on the basis that the circumstances identified in Melbourne City Investments Pty Ltd v Treasury Wine Estates Ltd [2017] FCAFC 116 at [5] are not present in this case.
These circumstances were described by Ms Adams as:
(a)where allegations were made which should not have been made;
(b)where the applicant properly advised should have known that there was no chance of success; and
(c)persisting with a hopeless case.
CONSIDERATION
The respondents have incurred costs in defending the proceeding commenced and prosecuted by Ms Adams to final hearing and substantive judgment.[8] The question that the Court must consider is whether there is a relationship between the incurring of such costs in the proceeding and any unreasonable act or omission attributable to Ms Adams.
[8] See paragraph [21] and annexure 9 to the Hassall affidavit wherein Mr Hassall deposes to the respondents having incurred legal costs in the amount of $189,363.73 and annexes copies of the relevant tax invoices.
I am not satisfied that this relationship exists because I am not satisfied that the rejection by Ms Adams of any one or more of the offers made by the respondents, over the life of the proceeding, involved an unreasonable act or omission.
While this is not intended as a criticism of the respondents, there was nothing especially alluring about any of the offers made by the respondents when regard is had to the stage at which such offers were made, the extent of the compromise involved, and Ms Adams’ prospects of success, assessed at the time of the offer.
In arriving at this conclusion, I have taken out of account the offer made by the respondents prior to the commencement of this proceeding, on 8 February 2021. Section 570 of the FW Act is engaged only once a proceeding is instituted in a court (as defined), including this Court. While the fact of an offer having been rejected prior to the commencement of a proceeding may have some contextual significance (although none was identified here), it cannot, of itself constitute an unreasonable act or omission for the purpose of s 570(2)(b)(ii) of the FW Act.
The next offer (made on 31 March 2021) was contained in correspondence that referred to the respondents’ letter of 8 February 2021.[9] The letter of 8 February 2021[10] contained a clear statement of the respondents’ assessment of the weaknesses in Ms Adams’ claim. However, the same correspondence also contained important concessions, namely, that Ms Adams had made a complaint to Ms Newell alleging mistreatment on 5 June 2020 and that Makita had terminated Ms Adams’ employment on 11 December 2020. The same correspondence (as well as the letter sent on 31 March 2021) contained an acknowledgement that the case would essentially be won or lost on the ability of Makita to discharge the reverse onus in s 361 of the FW Act.
[9] Annexure 3 to the Hassall affidavit
[10] Annexure 1 to the Hassall affidavit
In these circumstances and having regard to the quantum offered at this time ($15,180) I do not consider it was imprudent or unreasonable for Ms Adams to refuse this offer. There was at this time (and remained throughout) a substantive legal and factual basis for the claims made and arguments put by Ms Adams and the concessions (properly made) by the respondents may well have justifiably emboldened her in the maintenance of her application.
The paradigm did not alter in any material way over the course of the proceeding and, reflective of this, the substantive judgment records that Makita discharged its onus only following a comprehensive evaluation of documentary and oral evidence, including responses given during cross-examination of the respondents’ three witnesses. The substantive judgment also records that there was broad agreement between the parties about a number of contextual matters and key events leading to the termination of Ms Adams’ employment with Makita (substantive judgment at [9]-[27]).
None of the successive offers made by the respondents – being those made on 7 June 2021, 14 October 2021 and 21 October 2021 – having regard to the stage at which they were made, and importantly, the costs expended by Ms Adams by the time of their communication (Ms Adams filed her substantive affidavit on 9 June 2021) and the defensibility of Ms Adams’ claim (adjudged at the time at which each offer was made) were offers the refusal of which constitutes an unreasonable act or omission.
In these circumstances and having regard to the entreaty to depart from the usual order as to costs in this jurisdiction only in a clear case, I will dismiss the respondents’ application for costs. For the avoidance of doubt, the parties are to bear their own costs of the proceeding, including the costs application.
I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Symons . Associate:
Dated: 4 March 2024
0
7
1