Barnes v Hatch Associates Pty Ltd (No.2)

[2016] FCCA 497

FEDERAL CIRCUIT COURT OF AUSTRALIA

BARNES v HATCH ASSOCIATES PTY LTD (No.2) [2016] FCCA 497

Catchwords:
COSTS – Reserved costs – costs pursuant to schedule 1 of Federal Circuit Court Rules 2001 – unreasonable act.

Legislation:

Fair Work Act 2009 (Cth), s.570
Federal Circuit Court Rules 2001 (Cth)

Baker v Patrick Projects Proprietary Limited [2014] FCAFC 166
Shea v Energy Australia Services Pty Ltd [2014] FCA 1091
CFMEU v Clarke [2008] FCAFC 143

Applicant: ANTHONY JOSEPH BARNES

Respondent: HATCH ASSOCIATES PTY LTD

File Number: BRG 1036 of 2012

Judgment of: Judge Vasta

Hearing date: 5 February 2016

Date of Last Submission: 5 February 2016

Delivered at: Brisbane

Delivered on: 5 February 2016

REPRESENTATION

Solicitors for the Applicant: Slater & Gordon Lawyers

Counsel for the Respondent: Mr Copley

Solicitors for the Respondent: Milner Lawyers

ORDERS

1. That the Applicant pay the costs of the Respondent for the 1^st, 2^nd and 3^rd of December 2015 as agreed or if not agreed to be taxed as per Schedule One of the Federal Circuit Rules 2001 and in addition, the Applicant pay the sum of $26,984.59 being the costs of Senior Counsel, Junior Counsel and the Solicitors for the hearing on the 13 July 2015.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE

BRG 1036 of 2012

ANTHONY JOSEPH BARNES

Applicant

And

HATCH ASSOCIATES PTY LTD

Respondent

REASONS FOR JUDGMENT

(Ex tempore)

1. After an 11 day trial in this matter, I handed down my judgment and reasons for judgment on 18 December 2015.  Because there had been a submission at the conclusion of the matter that, notwithstanding whatever decision I came to, the Respondent wanted to put matters before me regarding costs. When handing down the decision, I adjourned a costs application until today 5 February.  It seems that on 23 December, after my chambers had finished for the year, an email was sent to my associate asking this:-

   “Dear Associate,

   I refer to the above matter and to His Honour’s Orders dated 18 December 2015.

   His Honour has listed the matter for the hearing of any costs application on 5 February 2016.

   The Respondent has previously indicated to the Court that it proposes to seek its costs in relation to various applications made by my client in the course of the proceeding during the period when I represented Mr Barnes.  There were also a significant number of applications and appearances prior to my commencing to act for Mr Barnes.  Should application be made for costs in relation to any applications made during this period, I will need reasonable notice in order to seek instructions so as to properly respond.  It may also be that the Respondent seeks its costs in the matter generally, which will also affect how my client decides to respond.

   Therefore, and given that the usual rules as to costs do not apply in relation to general protections dispute applications under the Fair Work Act, in order that my client may be in a position to respond fairly to any application that is brought, I request that this matter be listed for directions during the week commencing 11 January 2015 in relation to any costs application that the Respondent may wish to bring. I note that I am on leave the week prior and the week following.

   Yours faithfully,

   Andrew Rich

   Principal Lawyer”

2. As I was on special assignment with the Court on the week of 11 January.  My Associate wrote back saying that I was unavailable during the week and that I had several trials in the week of 18 January, and then I was on leave for judicial education on the week of 25 January. Therefore any such directions for the costs application would have to be made on 5 February unless the parties were able to agree on directions prior to this date.

3. There is obviously a miscommunication with what was said by my Associate.  It was never the intention that this matter do anything but proceed on this day.  I should say that after 4.30pm, after the Registry had closed for the day, an email was sent to my Associates that was picked up by them this morning saying that there had been agreement as to directions.  This would have meant further delay in this matter and far more costs being incurred.

4. I came into court at the appointed time and was met by Ms Milner for the Respondent and Mr Rich for the Applicant.  I told them both that I was not disposed to adjourn the matter further and that I would accept Ms Milner’s material and adjourn the matter until 11.30am.  I did that, and upon resumption, Mr Copley appeared for the Respondent.  Mr Rich still appeared for the Applicant.  My chambers received an email during the course of the hearing from the Applicant himself asking for an adjournment because he was not ready.

5. Notwithstanding those things, for the reasons that I had earlier spoken of, I refused any adjournment and proceeded to hear the matter.  With the greatest respect to both practitioners before me, I sincerely doubt that if I had given the adjournment that the submissions that they made before me today could have been any better or more fulsome.  I was greatly assisted by those submissions.

6. The application is one by the Respondent for their costs, including reserved costs, as agreed or assessed pursuant to Schedule 1 Part 1 of the Federal Circuit Court Rules 2001 together with certificates that it was reasonable for Mr Copley to be engaged and Mr Traves QC to be engaged on the one application, and that the report of Dr Larder was reasonably required.  Alternatively, that the Applicant pay costs with regards to the proceedings from 5 May 2015 as well as other sundry matters.

7. Section 570 of the Fair Work Act 2009 (Cth) states:

   “570 Costs only if proceedings instituted vexatiously etc.

   (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.

   Note: The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 569A.

   (2) The party may be ordered to pay the 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 matter before the FWC;

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

8. With regard to the first aspect, it has been submitted that the proceedings were instituted vexatiously or without reasonable cause.  The support for this comes from the manner in which that the matter was instituted.  This was a claim for adverse action.  Notwithstanding that this is what it was, the statement of claim and the supporting affidavit proceeded to recite almost chapter and verse the history of the Applicant’s contact with members of the TSM group in the respondent company, and especially all the conflicts that had been had with the witness, Vanessa Visman.

9. It is trite to say that those matters really were not essential at all to this claim.  The claim was that the Applicant had been dismissed because he was exercising a workplace right.  The fact that he was exercising the workplace right was conceded by the Respondent.  So, therefore, the question really was whether the Respondent had acted in an adverse way or for an impermissible reason.

10. The Respondent submits that the great majority of the statement of claim consists of scandalous accusations against Ms Visman that could only be calculated to try and embarrass her and therefore the Respondent, and was not done for the purpose of genuinely proceeding with a claim.  The second aspect to this was that, as emerged during the trial, but not before the trial, the Applicant had written on his CV that he was the holder of a Masters’ degree in project management.  This was not correct and, as was said in evidence here, that if it were known that he had not been the holder of such a degree, he would not have been offered employment in the first place.

11. So for those two reasons especially and there are some others, the Respondent says that I could easily conclude that the proceedings were instituted vexatiously or without reasonable cause.  The Applicant pointed me very helpfully to two authorities; the first is Baker v Patrick Projects Proprietary Limited [2014] FCAFC 166. At paragraph 9 of that judgment, the Court there looked at the phrase “without reasonable cause” in s.570.

    “The meaning and application of the phrase “without reasonable cause” in s 570 and its predecessors has been considered in many cases. The effect of these authorities was recently summarised by Pagone J in Construction, Forestry, Mining and Energy Union v Corinthian Industries (Australia) Pty Ltd (No 2) [2014] FCA 351. His Honour said (at [8]) that:

    ‘To exercise the discretion conferred by [s 570(2)(a) of the FW Act] the Court must be satisfied that the claims were, relevantly, instituted without reasonable cause. That is not established merely because a party fails in the claims: R v Moore; ex parte Federated Miscellaneous Workers Union of Australia [1978] HCA 51; (1978) 140 CLR 470, 473. The relevant provisions reflect ‘a policy of protecting a party instituting proceedings from liability for costs’ and costs will rarely be awarded unless justified by exceptional circumstances: see Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission (2006) 156 FCR 275 at [60]. In Kangan Batman Institute it was said by the Full Court at [60] that ‘a proceeding will be instituted without reasonable cause if it has no real prospects of success, or was doomed to failure’. In Kanan v Australian Postal and Telecommunications Union [1992] FCA 539; (1992) 43 IR 257 Wilcox J indicated at 264 that one way of testing whether a proceeding was instituted ‘without reasonable cause’ was to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no ‘substantial prospect of success’. His Honour went on to say that a proceeding lacks a reasonable cause where it is clear that it must fail on the applicant’s own version of the facts.’”

12. In this case on the Applicant’s own versions of the facts which I must say, were discredited, but on those versions of the facts, the case was one that did have some prospect of success.  As far as whether this was vexatious, in Shea v Energy Australia Services Pty Ltd [2014] FCA 1091, Justice Jessup said at paragraph 17:

    “I accept, of course, that recourse to the process of a court in order to achieve a purpose collateral to any remedy or outcome legitimately available in such a proceeding will amount to an abuse of process. I am also prepared to take the further step pressed upon me by counsel for the respondent, and assume that a proceeding brought in such circumstances would be a vexatious one within the meaning of s 570 of the FW Act. However, where the applicant concerned genuinely seeks a remedy or outcome which is within the conventional curial jurisdiction which he or she invokes, the question whether the contemporaneous harbouring of a desire to achieve some collateral or incidental advantage will necessarily amount to an abuse of process has a less obvious answer: Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509, 526-527. In the present case, there is no suggestion that the applicant was using the court process to achieve some remedy or outcome separate from, or collateral to, those conventionally available to her in the event that she succeeded in the case. She might well have introduced into her case allegations which were embarrassing – even scandalous – but, so long as her project was to achieve a successful outcome on a cause of action properly open to her, I cannot see that the introduction of such allegations would make the proceeding itself an abuse of process, or a vexatious one.

13. In this case, whilst I do agree that many of the allegations were scandalous and totally unnecessary, and that it was obvious that the Applicant harboured a lot of ill will towards Ms Visman and to other people whom he felt were protecting Ms Visman within Hatch, the Applicant was still attempting to prosecute a case that he had been the subject of adverse action.  So notwithstanding there was, what may be seen as a vexatious quality to the institution of these proceedings, it was not one that was one where the vexatious quality outweighed any other aspect of the prosecution of these proceedings.  Therefore, I cannot be satisfied that the party instituted the proceedings vexatiously or without reasonable cause.

14. The second aspect in looking at whether to award costs is this:  under subsection 2(b), the court must be satisfied that the party’s unreasonable act or omission caused the other party to incur costs. 

15. In this case, there are a number of unreasonable acts alleged by the Respondent.  The first unreasonable act alleged is that the Applicant did not take the offers to settle.  On the material before me there was an offer to settle made on 23 October 2012 for settling of the matter for $10,000.00.  According to the material the Applicant wanted either $89,000.00 or $87,000.00.  It doesn’t really matter which but settlement did not occur on that date.

16. I do note that that date, 23 October 2012, was before these proceedings were instituted.  They were instituted on 21 November 2012.  The second offer to settle was on 6 May 2015.  On that day, Ms Milner wrote to the Applicant directly and offered to settle the matter on the basis that each party walk away from the action and pay their own costs and that the matter be dismissed.  This offer was also rejected.  The Respondent says that those are unreasonable acts. 

17. The next matter that caused that is alleged to be an unreasonable act are the number of amendments made to the statement of claim together with the very nature of what was being alleged in the statement of claim.  The next matter that was alleged to have been an unreasonable act is failure to appear on 24 May 2013 and 8 December 2014 as well as on 27 July 2015 during the trial that I was hearing.  The next unreasonable act was the very late application to amend the statement of claim changing it in a very material way a particular that was foreshadowed on 12 May 2015 and lead to a hearing on 13 July 2015 where the Respondent sought to strike out the amended statement of claim.

18. What was being said to be unreasonable about that was, firstly, how late such a change was.  Secondly, that it was a change that was specifically disavowed by the Applicant on 6 March 2013 and, thirdly, that the parties had already been ready to proceed on 11 May 2015.  They had actually started the trial but were still engaged in, what I might call, housekeeping matters of going through objections to the evidence when this foreshadowed change was given. This caused the adjournment and lead to the application to strike out on 13 July 2015. The last unreasonable act was that the Applicant failed to disclose to his legal advisors and to Dr Mathew a previous history of mental illness or the fact that he had been treated for such mental disturbances.

19. As to what an unreasonable act or omission is, I have been helpfully referred to by both legal representatives to CFMEU v Clarke [2008] FCAFC 143. At paragraph 28 the Court talks about a similar provision to s.570(2):

    “We turn now to s 824(2) of the WR Act. This provision carves out another exception to the usual rule in s 824(1) that costs orders are not to be made in respect of proceedings in a matter arising under the WR Act. The exception applies when two criteria are satisfied. The first criterion is that one party must have engaged in "an unreasonable act or omission". As the reasoning of Tracey J in Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879; (2007) 162 FCR 392 and Siopis J in McAleer v The University of Western Australia (No 2) [2007] FCA 247; (2007) 161 IR 151 demonstrates, whether a party has conducted itself or its litigation in such a way as to cross this threshold will depend on the particular circumstances of the case. The second criterion is that the act or omission of one party must have "caused another party to the proceeding to incur costs in connection with the proceeding". Once both criteria are satisfied, then the Court "may" in its discretion order the party which has engaged in the unreasonable act or omission to pay some or all of the costs of the other party.”

20. In that particular case the unreasonable act or omission was alleged to have been an appeal to the Full Court against a decision of the single judge who was, in effect, exercising the powers of the Full Court sitting as a single judge of appeal.  A notice was given in that matter.  The Court there, at paragraph 29, said:

    “In our view, the respondent has not engaged in "an unreasonable act or omission". As the authorities indicate, there is a distinction between a party who pursues arguments which are ultimately abandoned or rejected by the Court and a party who commences a proceeding which is misconceived in the sense of being incompetent or unsupportable: Australian and International Pilots Association 162 FCR at 402; Standish v University of Tasmania (1989) 28 IR 129 at 138-139. Simply because a party does not conduct its litigation in the most efficient way does not mean that the Court should exercise its discretion in s 824(2) of the WR Act to make a costs order. In our view, neither the late abandonment of some of its defence, nor the use of a notice of contention to advance a previously minor and ultimately unsuccessful argument, crosses the threshold of being "an unreasonable act or omission" for the purposes of s 824(2). True it is that the concession ultimately given by the respondent that it regarded the decision of Nicholson J as erroneous could have been given earlier. However, it was a concession which was, in light of the decision of this Court on the substantive appeal, properly made and beneficial to the appellants. Although it is arguable that the lateness of the concession may have put the appellants to some extra costs, we are of the view that it cannot be characterised as "unreasonable" in the circumstances of this case. Indeed, while courts should use the discretion in s 824(2) to ensure that parties to litigation arising from the WR Act do not engage in unreasonable acts and omissions which put the other party to undue expense, they should also be careful not to exercise the discretion with too much haste, given that such haste may discourage parties, for fear of an adverse costs order, from pursuing litigation under the WR Act in the manner which they deem best.”

21. There were two other cases that I was referred to that really show that in looking at whether an act is unreasonable, or an act or omission is unreasonable, that I have to look at the matter objectively.  Nevertheless, it is an extremely high threshold that should only occur in exceptional cases.  For those reasons I am not of the view that the non-acceptance of an offer to settle was unreasonable.  I am not of the view that the way in which the Applicant, even though he was self-represented, conducted preliminary matters was unreasonable, nor, when I have a look at the evidence of his attempts to contact the court on 24 May 2013 and 8 December 2014, do I find that those failures to appear were unreasonable.

22. On 27 July 2015 the Applicant was hospitalised.  I do not see that that is an unreasonable act.  The whole institution of these proceedings I do not see as an unreasonable act either as is clear from the reasons for judgment.  Even though the matter came about because of a late amendment, one could see that I had certainly quite a deal of trouble when looking at whether the Respondent had acted to the Applicant’s detriment in acceding to his request to be moved from the TSM project back to the PRG area.

1. That aspect alone would say to me that it was not unreasonable for the applicant to have gone ahead with that particular aspect of the case. 

2. However, the other matters that I’ve alluded to do cause me some trouble.  The matter had proceeded, as I say, since it had been instituted on 21 November 2012.  Going through the record there have been a number of mentions, reviews and other appearances before this Court.  There were times where the Applicant was represented, then unrepresented, then represented again.  It was as if this litigation was never going to start.  However, the litigation was going to start on 11 May 2015. 

3. Everyone was ready.  The litigation commenced and then, on day two of the litigation, it was foreshadowed that there was going to be an amendment, again, to the statement of claim.  That amendment was going to rely upon an aspect of the trial that was specifically disavowed on 6 March 2013. 

4. To my mind that action was unreasonable.  It had no regard to the history of this matter where a matter needing to be decided by the Court has to have some finality to it.

5. Notwithstanding that I later did not strike out those amendments as I had been asked to by the Respondent, I am still of the view that such an act was unreasonable and that it caused the Applicant to engage in the hearing that occurred on 13 July 2015.  In considering whether the actions of the Applicant were unreasonable, a consideration of the merits of the application is irrelevant.

6. The unreasonableness comes about solely from the circumstances in which the application is made, not in whether the application was successful or not.

7. It caused the solicitor and Counsel here to totally look at not the merits of this matter, but put them into a whole different frame of mind and caused them to engage Senior Counsel.  So, as I say, that was an unreasonable act and it did cause the other party to incur the costs of Senior Counsel, Mr Traves QC, of $17,934.59, Junior Counsel, Mr Copley, of $4,950.00 and solicitor’s fees of $4,100.00.  A total of $26,984.59 that I find directly attributable to that unreasonable act.

8. The other unreasonable act I find is that the Applicant did not disclose to his legal representatives, or to Dr Mathew, a forensic psychiatrist, that he had a previous history of mental illness.  As can be seen from what I wrote in the judgment, this aspect was pivotal to whether or not there was a psychiatric injury that had been caused by the Respondent. 

9. It did cause a lengthier trial and it caused quite a deal of time to be taken up.  However, I am very mindful of what it was that was said by the solicitor representing the Applicant; that following CFMEU v Clarke (Supra), I must find that the unreasonable act is linked to the incurring of the costs.

10. In this case what can be seen is that the trial started on the main issue of whether there was adverse action.  The Applicant gave evidence and he was cross-examined fully on that matter.  He then stood down and all other witnesses with regard to the issue of the adverse action were called and cross-examined, even though it took some time, with the exception of Mr Brown.  When the trial resumed on 30 November 2015 Mr Brown gave evidence. 

11. It was then after Mr Brown had finished that this issue of the psychiatric aspect was then litigated.  To my mind it is very easy for me to see that if the Applicant had been truthful to Dr Mathew and to his solicitors that there would have been a significant saving of Court time.

12. There would have been minimal psychiatric evidence called and submissions could have been made.  That would mean that the trial would have, in my view, finished on 30 November 2015.  I therefore find that the unreasonable act has caused the Respondent to incur the costs associated with sitting on Tuesday, 1 December, Wednesday, 2 December and Thursday, 3 December 2015. 

13. The next question for me is having been satisfied of the unreasonable act causing the other party to incur the costs, is whether I order that costs be paid. Ordering payment is a discretionary decision.

14. In this case, whilst Counsel for the Respondent put it that s.570 does not entitle the Applicant to a free swing, as it were, there does need to be a mechanism by which the integrity of proceedings in this Court can be protected.

15. The one way in which that can be done is to use, in the proper circumstances, the power of s.570(2) of the FW Act. In this case, given the manner in which these unreasonable acts were made and what has been the manner in which the Applicant has conducted the proceedings, I think it is proper that I do order that he pay the costs.

16. I therefore order that the Applicant pay the costs of the Respondent associated with the trial on 1, 2 and 3 December 2015 as agreed, or if not agreed, to be taxed on the schedule 1 of the Federal Circuit Rules and also that he pay the sum of $26,984.59 being the costs of Senior Counsel, Junior Counsel and the solicitors for the hearing on 13 July 2015.

I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of Judge Vasta

Date: 15 March 2016