Ali v Racebolt Pty Ltd Trading as Casali's (No.2)

[2016] FCCA 744

FEDERAL CIRCUIT COURT OF AUSTRALIA

ALI v RACEBOLT PTY LTD TRADING AS CASALI’S (No.2) [2016] FCCA 744

Catchwords:
COSTS – Fair Work small claims – costs pursuant to Federal Circuit Court Rules 2001.

Legislation:

Fair Work Act 2009 (Cth), s.570

Federal Circuit Court Rules2001 (Cth), sch.1

Transport Workers’ Union of Australia v Coles Supermarkets Australia Pty Ltd [2014] FCCA 4
Colgate Palmolive Company & Colgate Palmolive Limited v Cussons Pty Limited [1993] FCA 536
Kohan & Kohan (1993) FLC 92-340

Applicant: BEVERLEY MAY ALI

Respondent: RACEBOLT PTY LTD TRADING AS CASALI'S

File Number: BRG 258 of 2014

Judgment of: Judge Willis

Hearing date: By written submission

Date of Last Submission: 2 March 2016

Delivered at: Cairns

Delivered on: 6 April 2016

REPRESENTATION

Solicitors for the Applicant: Miller Harris Lawyers

Solicitors for the Respondent: Peters Bosel Lawyers

ORDERS

1. That the respondent pay to the applicant the sum fixed at $13,342.50 in full and final settlement of all costs applications within 45 days of the date of this Order.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT CAIRNS

BRG 258 of 2014

BEVERLEY MAY ALI

Applicant

And

RACEBOLT PTY LTD TRADING AS CASALI'S

Respondent

REASONS FOR JUDGMENT

1. This is an application for costs following on from reasons for judgment issued on 18 December 2015.

2. The original Small Claims application was filed in the Federal Circuit Court on 24 March 2014 after the applicant had lodged a complaint with the Fair Work Ombudsman on 20 June 2013.

3. The applicant, Ms Ali has sought costs fixed in the sum of $29,745.00 on an indemnity basis; or in the alternative, on an indemnity basis to be taxed or otherwise agreed; or in the alternative, calculated in accordance with Schedule 3 of the Federal Circuit Court Rules 2011 (Cth) [sic] to be taxed or otherwise agreed. The respondent, Racebolt Pty Ltd, asks that any costs application is dismissed.

4. The applicant submits that costs should be awarded pursuant to section 520 (2)(b) of the Act because:

   3.1.1      the respondent failed to make any reasonable concessions about the nature of the applicant’s employment, in particular her role and responsibilities;

   3.1.2.     the respondent’s position to classify the applicant as a level 1 employee was unreasonable when having regard to the applicant’s evidence and the fact that it was open to the respondent to at least classify the applicant as a level 2 employee;

   3.1.3.     Mr Arena’s evidence was unreasonable and his failure to make any concessions about the respondent’s employment prolonged the hearing; and

   3.1.4.     the evidence of Mr Neville, Mr Barbieri and Ms Camilleri added little to the proceeding and served more to prolong the hearing that it did to provide any assistance. 

5. The costs application is opposed by the respondent on the basis as set out in the written submissions of the respondent which I rely upon but do not repeat. Reference is made to the timing of the applicant’s offer to settle, the applicant’s final position being based on agreement as to the appropriate award which was not the position at the time the offer was made and to a dispute between the applicant and respondent about the terms of a release in relation to finally settling the matter.

6. The respondent asserts that there has been no unreasonable act or omission which has caused the other party to incur costs and the discretionary nature of the jurisdiction to award costs noting section 570 of the Fair Work Act 2009 and contends that this section reflects a general policy that the parties involved in proceedings under that legislation will usually be freed from the traditional risk of an order for costs following the event. Moreover, the respondent submits that the Court should not exercise its discretion to award costs to the applicant and that the respondent’s conduct during the hearing could not be considered unreasonable in all of the circumstances.  

7. In the event that the Court determines that costs ought to be awarded, the respondent submits that this should be on a standard basis only. Further, in the event the Court does exercise its discretion to award indemnity costs it is submitted that the amount sought by the applicant of $29,745.00 greatly exceeds the amount awarded to the applicant. It is contended that the amount exceeds the maximum amount of compensation that could be awarded to the applicant as the proceedings were dealt with by the Court exercising its small claims jurisdiction in which compensation is limited to $25,000.00.

Relevant Law

1. Section 570 of the Fair Work Act 2009 reads as follows:

   (1) 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,

   (2)The party may be ordered to pay the costs only if:

   (a) the court is satisfied that the party instituted 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 matter before the FWC;

   (ii) the matter arose from the same facts as the proceedings.

2. I have had regard to the cases the applicant and respondent have each respectively referred me to and their written submissions.

Offers to settle

1. In terms of the Court’s requirement to consider a party’s unreasonable act, each of the parties refer me to offers to settle.

2. On 30 September 2013 the Solicitors for the respondent wrote to the Applicant offering to settle the Applicant’s claim with a payment, by the Respondent to the Applicant in the sum of $2,854.61.[1]

   [1] Respondent’s submissions, 9. 4 paragraph 17.

3. I note that this offer was made prior to proceedings commencing in the Federal Circuit Court of Australia and was considerably less than the amount awarded by the Court of $10,568.84.

4. The applicant then made an offer to settle by letter addressed to the solicitor for the respondent on 19 December 2014. The offer was open for a period of 14 days which means that the offer expired on Friday 2 January 2015. The offer was for the amount of $8,000.00 plus superannuation.

5. The solicitor for the respondent contends that:

   “The Applicant’s Offer to Settle was received by the Respondent’s solicitor on 23 December 2014.

   It is common for professional service businesses in Cairns to close over the Christmas period. In fact, the office of the Respondent’s solicitor was closed from 24 December 2014 until 11 January 2015 (inclusive).

   As a result of the Applicant’s Offer to Settle being received by the Respondent two days period to Christmas, and one day prior to the closure of its solicitor’s office, the Respondent was effectively provided with one business day to review, consider, seek advice and respond to the Applicant’s Offer to Settle.

   Accordingly, it is submitted that the rejection of the Applicant’s Offer to Settle, should not be considered unreasonable.”[2]

   [2] Respondent’s submissions, p 3 and 4, paragraphs 9 -14.

6. This offer was rejected on 14 January 2015 in the following terms:

   “We refer to your letters dated 19 December 2014 and 9 January 2015.

   We advise that our client is not willing to settle this matter on the terms set out in your letter dated 19 December 2014.” 

7. I note reference to a second letter of 9 January 2015 which is seemingly a further letter in relation to the letter of offer sent on 19 December 2014. I do not regard the fact that there were public holidays in the interim period as depriving the respondent of accepting the offer which was seemingly still being followed up on 9 January 2015.

8. Further, there was every opportunity to contact the applicant and request further time given the Christmas closure if that had genuinely represented a difficulty for the respondent.  There was no evidence that this occurred. 

9. There was in any event, plenty of opportunity for the respondent to make a further offer to settle. However, the response is categorical, namely that the respondent is not willing to settle the matter on the terms sought by the applicant. The amount sought by the applicant was much more in line with judgment amount and in hindsight, was not an unreasonable offer. I consider that this refusal of offer was an unreasonable act and that it led to the applicant incurring legal costs.

Dispute to applicable Award

1. This issue of the applicable award had remained in dispute between the parties given the retrospective nature of the application and the relevant changes in awards during that time. Also, I note initially that the applicant intended for her claim to be retrospective to a time far beyond what was provided for in the legislation. Ultimately the applicant conceded that her application could not succeed in this regard (as was contended for by the respondent) and agreement was reached as to the time frame which could apply to the applicant’s claim.

2. I accept the submission that there was a dispute between the parties as to which award applied. Ultimately however, the Court did not have to determine this issue (contrary to the assertion in paragraph 23 by the respondent that this issue was decided by the Court) as the respondent conceded at the conclusion of the trial that the Retail Industry Award – State is the relevant award and the Clerks – Private Sector Award 2010 is the appropriate modern award as set out at paragraph 25 of the judgment.   

Legal Representation

1. The respondent submits that the applicant filed a Notice of Address for Service identifying lawyers representing her on 11 February 2015 and this was the first occasion that the respondent was informed of the fact that the applicant was legally represented. The respondent also contends that he was not aware that the applicant was going to be represented by a barrister until after 9 March 2015 some 3 days before the hearing commenced. 

2. It is also submitted that at the time the applicant’s offer to settle was made (in December 2014) the respondent was not aware that the applicant was legally represented and therefore was not aware that its act in rejecting the offer of settlement would cause the applicant to incur costs.

3. I do not accept this submission as being in any way persuasive in terms of the Court not exercising its discretion to order costs. The history of this litigation shows that the respondent made an application to have legal representation given the complexity of the matter. The applicant opposed that application in September 2014. The Court heard the respective applications and submissions and on 4 September 2014 issued orders granting leave for the applicant and respondent to be legally represented in these proceedings. When pronouncing those orders for the reasons given at the time, I made it specifically clear that whilst the application for legal representation was made by the respondent, that the orders issued would grant leave to both parties.  The applicant indicated in open court that she would consider her own position in terms of obtaining legal representation now that orders had been made.

4. I reject the suggestion that because the respondent was not aware that the applicant had legal representation or was obtaining legal representation until just prior to the trial, that this should somehow justify their refusal to accept the applicant’s offer to settle. The applicant made it clear that she would consider seeking her own legal representation given that the respondent was legally represented and that was always open to her.

5. Reference is made by the respondent that it was not until 17 February 2015 that the applicant filed a substantial affidavit detailing specifically her duties and therefore, the respondent did not have a realistic opportunity to consider the strength or otherwise of its own position or the applicant’s case at the time of the applicant’s offer to settle.

6. I do not accept that this position is valid. The parties had an opportunity to have full and frank discussions on a without prejudice basis at the Court ordered mediation on 2 December 2014 conducted by Registrar Belcher, a very experienced Registrar with the Federal Court of Australia.

7. I made the observation in my judgment that the respondent’s evidence was affected by his unfailing belief that all of the tasks undertaken by the applicant are simple, or that the computer does the work with those using the computer (including the applicant) being regarded as something akin to an automaton. I also noted that whilst the respondent was stressed, he was also very reluctant to willingly acknowledge any complexity or difficulty in the work undertaken by the applicant throughout his evidence and he was quick to find criticism in the work performed by the applicant. I noted that the respondent was routinely dismissive of the level or work and responsibility undertaken by the applicant.

8. It seems to me that the respondent had every opportunity to mediate and settle this matter with the applicant however, as seen in the witness box he steadfastly refused to acknowledge or give any credibility to the applicant’s claim.

9. In terms of the submission regarding the increase in the hearing time which as stated in my judgment I considered the respondent’s stubborn refusal to acknowledge most aspects of the applicant’s work and the subsequent time wasting involved in that exercise, I do not accept that (as submitted) the increased time was not an unreasonable act on behalf of the respondent.

10. Quite the contrary is the position.

11. I consider that it was an unreasonable act for the respondent to adopt what I regard as an entirely unreasonable position towards the applicant’s claim and to hold steadfastly to it throughout the contested hearing. This was then compounded by the respondent’s attempts to have current employees involved in the trial in an endeavour to corroborate his unreasonable position. Unfortunately, when there were opportunities for the respondent to make concessions before an during the hearing, the respondent could not bring himself to do this. His version of events was rejected by the Court and in my view he left the applicant no alternative other than to litigate the matter.

12. In the knowledge that he was legally represented, the respondent sought the leave of the Court to have legal representation in order to further deny the applicant’s claim.  The Court agreed that the case had some complexity and for the reasons given, leave would be granted for legal representation, to both parties.

13. The respondent now complains that he was surprised that the applicant also obtained legal representation and he didn’t know this when he rejected her offer. I am somewhat  troubled by this submission as it leaves the impression that he was prepared to deny what was a reasonable offer to settle by the applicant, assuming that the applicant was self-represented, but that he might have done otherwise if he had known she had legal representation. Given that leave was granted to both parties to be legally represented I am left wondering if the respondent, having secured his own legal representation, considered that he could apply more pressure on the applicant (who he thought was self- represented leading up to the final contested hearing) to settle on his terms.

14. In any event, overall I am satisfied in this case that the respondent’s unreasonable act as seen in his conduct throughout these proceedings as I have referred to has caused the other party to incur legal costs.  

15. Overall, I am satisfied that it is appropriate for the court to exercise its discretion to order that the respondent pay the applicant’s costs of and incidental to the proceedings.

Discussion

1. The applicant seeks costs on an indemnity basis.  I have had regard to the leading authority of Colgate Palmolive Company & Colgate Palmolive Limited v Cussons Pty Limited[3] and to the issues raised for consideration when dealing with an application for indemnity costs.

   [3] [1993] FCA 536.

2. I am not satisfied that this is a matter where indemnity costs are appropriate. The respondent has been unreasonable in not acknowledging as he ought to have, the nature of the work undertaken by the applicant. In his evidence he was unshakeable on issues which were not accepted by the Court and which was time wasting as referred to in my judgment. I consider that the time waster in cross-examination due to the respondent’s failure to make reasonable concessions resulted in the matter not concluding in 2 days. However, his opposition was not entirely unmeritorious.  There was a genuine disagreement about which award was relevant, and also the applicant’s claim was initially for a far greater period that was ultimately agreed to be the position.

3. I am aware that the Court should not depart lightly from the ordinary rules relating to costs between party and party and that the circumstances justifying the departure should be of an exceptional kind as stated in Kohan & Kohan (1993) FLC 92-340. In that matter, their Honours referred to Sheppard J in Colgate Palmolive Co & Anor v Cussons Pty Ltd (1993) 46 FCR 225. His Honour stated that it was useful to list some of the circumstances in which it was thought to warrant the exercise of the discretion. Those instances included:

   a) Making allegations of fraud and knowing them to be false and the making of irrelevant allegations of fraud;

   b) Evidence of particular misconduct that causes loss of time to the Court and to the  parties;

   c) The fact that proceedings were commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law;

   d) The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions; and 

   e) An imprudent refusal of an offer to compromise. 

4. There are no allegations of fraud made by the respondent. I have taken account of his rather stubborn approach to cross-examination. I am not satisfied that the respondent acted in wilful disregard of known facts and I do not consider that the respondent made groundless contentions.

5. This matter was conducted under the Fair Work division of the Court’s jurisdiction for small claims applications. The amount awarded to the respondent $10,568.84. The applicant claims her costs on an indemnity basis in the sum of $29,745.00 which is disproportionate to the amount of the judgment and I note greater than the jurisdiction of the Court.

6. The application in a case filed 24 March 2016 seeks orders in the alternative at order 1 (c) that costs be calculated in accordance with Schedule 3 of the Federal Circuit Court Rules 2011(Cth) [sic] to be taxed or otherwise agreed or further order the Court deems meet. I note that the relevant Federal Circuit Court Rules are dated 2001 and provide for costs in schedule 1, not 3.

7. I also note that the written submissions of the applicant at paragraph 3.2.3 seek similar orders but make reference to schedule 3 of the Federal Court Rules 2011.

8. Having regard to the scale for general federal law matters in the Federal Circuit Court Rules 2001 (schedule 1) which I consider to be the appropriate scale in this matter, the costs would appear to be as follows, save and except for preparation for final hearing which I will address separately:

   Item 3 Daily hearing fee      - 1^st day      $2,048.00

   - 2^nd day   $2,048.00

   - 3^rd day (½ day)   $1,024.00

   Item 12 Advocacy loading 50% of item 13 - 1^st day              $1,024.00

   -2^nd day        $1,024.00

   -3^rd day (½ day) $512.00

   Item 9 (a) & (b) Costs for attendance judgment and item 13 (a)  

   $556.00

   Total:  $8,236.00

9. In relation to preparation I note that the applicant engaged lawyers on 21 January 2015. A notice of address for service was filed on 11 February 2015. The affidavit of George Tsogas, solicitor for the applicant, filed on 11 March 2015 explains that the applicant was admitted to hospital in the week commencing 2 February and was unavailable for the remainder of that week. Subsequently, on 14 February 2015, further instructions were provided in order to prepare further affidavit material and that affidavit material was sent to the respondent on 17 February 2015 and filed on 18 February 2015. The additional affidavit consists of 41 paragraphs and voluminous payslips (pages 29-175 of the annexures), the Fair Work complaint form, copy of training agreement and certificates in business administration were also attached. 

1. Having perused all of this material, a case outline was prepared and written submissions in relation to costs, I am not prepared to provide for an allowance of full preparation of a 2.5 day matter as anticipated under schedule 1. However, in the circumstances I intend to allow 50% of the amount for preparation for trial in the sum of $5,106.50.

2. Adding $5,106.50 for preparation together with the costs outlined at paragraph 43 pursuant to schedule 1 of the Federal Circuit Court Rules 2001 results in a total amount of $13,342.50.

3. I therefore order that the respondent pay to the applicant the sum fixed at $13,342.50 in full and final settlement of all costs applications within 45 days of today’s date.

I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of Judge Willis

Date: 6 April 2016