Bognar v Merck Sharp and Dohme (Australia) Pty Ltd (No.2)
[2008] FMCA 749
•10 June 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BOGNAR v MERCK SHARP & DOHME (AUSTRALIA) PTY LTD (No.2) | [2008] FMCA 749 |
| INDUSTRIAL LAW – Application for costs – whether vexatious or without reasonable cause – whether unreasonable act or omission – application dismissed. |
| Workplace Relations Act 1996 (Cth) ss.666, 666(1)(a), 347, 824 Federal Magistrates Act 1999 (Cth) ss.342 Federal Magistrates Court Rules 2001 (Cth) r.1.03, schedule 1 Industrial Relations Act 1988 (Cth) ss.170CS, 170DF, 170DF |
| Bahonko v Sterjov [2007] FCA 1341 Bahonko v Sterjov [2008] FCAFC 30 Imogen Pty Ltd v Sangwin (1996) 70 IR 254 Goldman Sachs JB Were Services Limited v Nikolich [2007] FCAFC 120 Regional Express Holdings Ltd (ACN 099 547 270) v Clarke [2007] FCA 957 Hatchett v Bowater Tutt Industries Pty Ltd (No.2) (1991) 28 FCR 324 Abrahams v Qantas Airways Ltd [2007] FMCA 634 Goodall v Nationwide News Pty Ltd [2007] FMCA 218 Mahmoud v Owners Corporation Strata Plan No 811 [2007] FMCA 131 Kangan Batman v AIRC (2006) 156 FCR 275 Maritime Union of Australia v Geraldton Port Authority [2000] FCA 16 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Nestle Australia Ltd (2005) 146 IR 379 Spotless Services Australia Ltd v Marsh SDP [2004] FCAFC 155 Sperandio v Lynch (No.3) [2007] FCA 1243 Seven Network (Operations) Ltd v Media Entertainment and Arts Alliance [2004] FCA 637 Hadgkiss v Construction, Forestry, Mining and Energy Union (No. 4) [2007] FCA 425 McDonald v Parnell Laboratories (Aust) (No 2) [2007] FCA 2086 Hadgkiss v Construction, Forestry, Mining and Energy Union (No. 4) [2007] FCA 425 |
| Applicant: | STEPHEN BOGNAR |
| Respondent: | MERCK SHARP & DOHME (AUSTRALIA) PTY LTD |
| File number: | MLG 1485 of 2006 |
| Judgment of: | O’Sullivan FM |
| Hearing date: | Written submissions |
| Date of last submission: | 30 May 2008 |
| Delivered at: | Melbourne |
| Delivered on: | 10 June 2008 |
REPRESENTATION
| Solicitors for the Applicant: | Max Legal |
| Solicitors for the Respondent: | Freehills |
ORDERS
There be no order as to costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 1485 of 2007
| STEPHEN BOGNAR |
Applicant
And
| MERCK SHARP & DOHME (AUSTRALIA) PTY LTD |
Respondent
REASONS FOR JUDGMENT
Introduction
On 16 May 2008 the Court made orders, for the reasons set out in Bognar v Merck Sharp & Dohme (No.1) [2008] FMCA 571, dismissing the applicant’s amended application filed 29 January 2007.
Directions were made for the filing of submissions in relation to any application for costs the respondent wished to make. Those directions were:
“(1)The respondent have 7 days to file and serve any submissions in relation to costs.
(2)The applicant have a further 7 days to file and serve any submissions in reply.
NOTATION
(A)Unless otherwise requested in written submissions the issue of costs will be determined on the papers.”
These reasons for decision concern the respondent’s application for costs. For the reasons set out below the respondent’s application for costs fails as the Court is not persuaded it is appropriate to award costs in the particular circumstances of this matter.
The respondent made an application for costs being half a days costs thrown away by reason of what was submitted to be the applicant’s unreasonable conduct and the costs attributable to what was submitted were claims instituted without reasonable cause. For the purposes of that application the respondent filed written submissions and relied on the affidavit of Kristina Vermay sworn 23 May 2008.
The applicant filed written submissions and relied on the affidavit of Terry McHugh sworn 30 May 2008.
The law
In civil proceedings, costs usually follow the event. However in this case section 666 of the WR Act, which is a costs precluding provision provides:
“Section 666- Costs
(1)Subject to this section, a party to a proceeding under section 663 must not be ordered to pay costs incurred by any other party to the proceedings unless the Court hearing the matter is satisfied that the first-mentioned party:
(a)instituted the proceedings vexatiously or without reasonable cause; or
(b)caused the costs to be incurred by that other party because of an unreasonable act or omission of the first-mentioned party in connection with the conduct of the proceedings.
(2)Subsection (1) does not empower a court to award costs in circumstances specified in that subsection if the court does not have the power to do so.
(3)In this section:
costs includes all legal and professional costs and disbursements and expenses of witnesses.”
In Hatchett v Bowater Tutt Industries Pty Ltd (No.2) (1991) 28 FCR 324 von Doussa J said at 326 of the predecessor provisions to section 824 of the WR Act (which is expressed in similar terms to s.666) that:
“The Court may in the exercise of it’s discretion, and having regard to the general policy of the Act, expressed in s.347, that parties will usually be freed from the traditional risk of an order for costs following the event, make no order as to costs.”
In Imogen Pty Ltd v Sangwin (1996) 70 IR 254 at paragraph 261 it was said in the context of unlawful termination proceedings that:
“Although the issues are often of great importance to the parties, the monetary amounts at stake in unlawful termination cases are usually relatively small. From the viewpoint of a dismissed employee, $16,900 is no doubt a significant sum of money. For a small company such as Imogen, it may also be a significant amount. Regrettably, however, it is a sum that may readily be consumed, or heavily eroded, by litigation. Parties to unlawful termination claims, and their legal advisers, need to be constantly aware of this point, and do whatever they can to avoid costs on the opposing party, they must expect the Court to exercise its powers and discretions in such a way as to allow recovery of those costs.”
In Maritime Union of Australia v Geraldton Port Authority [2000] FCA 16 (“Geraldton Port Authority”) at [61] to [78] Nicholson J considered the question of costs in the context of s.347(1) of the WR Act as it then was which provided:
(1) A party to a proceeding (including an appeal) in a matter arising under this Act (other than an application under section 170CP) shall not be ordered to pay costs incurred by any other party to the proceeding unless the first-mentioned party instituted the proceeding vexatiously or without reasonable cause.
At [74] in Geraldton Port Authority His Honour dealt with the contention by the fourth respondent in that case that it should have its costs for the period prior to the addition of federal claims to the proceedings. His Honour held:
“74. The power to award cost arises pursuant to s 347(1).
It arises for application at the conclusion of the proceeding. It applies to "a proceeding ...in a matter arising under this Act". No basis of principle is made evident in the submissions for the fourth respondent to support any notion or division of proceeding according to temporal steps taken in relation to it. There is therefore no evident basis upon which the alternative submission can be accepted.”
At [78] in Geraldton Port Authority His Honour dealt with the fourth respondent’s contentions in support of its claim for costs associated with the statutory compensation claim which had been made by the applicant and dismissed and said:
“78. In my opinion these contentions cannot succeed because they fail to identify "the proceeding" which was instituted vexatiously or without reasonable cause. The submissions rely on identification of part of a proceeding and consequently do not come within the ambit of the exception set out in s 347(1).”
In Seven Network (Operations) Ltd v Media Entertainment and Arts Alliance [2004] FCA 637 (‘Seven Network”) Gyles J held that a separate federal statutory claim was not a matter arising under the WR Act for the purposes of s.347(1) (now s.824).
In Hadgkiss v Construction, Forestry, Mining and Energy Union (No. 4) [2007] FCA 425 at [101] to [102] Graham J having considered the decision in Seven Network said:
“101. It is clear in the present case that the proceeding which was instituted by the applicant was in a ‘matter arising under’ the Act. Whatever other ‘matters’ may be inherent in the one legal controversy, the present case involved a proceeding in respect of a controversy which arose under the Act, whether the claims for relief be expressed as being made under s 170NC, s 298S(2)(a) or s 298SC(c).
102. Section 347(1) does not allow for separate determinations to be made in respect of costs by reference to different statutory claims arising from the one legal controversy. For the respondents to succeed in securing an order for costs they must demonstrate that the whole of the proceeding was instituted vexatiously or without reasonable cause. They cannot secure an order for costs referrable to the success or failure of individual claims within the one proceeding in the one matter arising under the Act.”
In Goldman Sachs JB Were Services Limited v Nikolich [2007] FCAFC 120 (“Nikolich”) Black CJ dealt with the “policy debate” behind the costs exclusionary provision in section 666 at [91]-[93]:
“91.The policy debate about the respective merits of regimes in which costs follow the event and ‘no-costs’ regimes is wide ranging and of long-standing. In relation to s170CS in its application to s 170CP, the reason for the policy choice in favour of a no-costs regime seems plain enough. Section 170CP(1) gave a right to apply to the Court to an employee who claims to have been the subject of an unlawful termination of employment. In some circumstances, an inspector, a trade union or a trade union officer could apply under s 170CP in respect of an alleged contravention but the primary focus was upon the employee.
92.The application of a ‘no-costs’ regime in such circumstances suggests that the object was to facilitate the exercise of an employee’s right to apply for an order under s 170CR in respect of an alleged contravention. Without the threat of a potentially disabling costs penalty, an employee may feel better able to assert the rights given to him or her by the WRA.
93.It is not difficult to envisage circumstances in which an employee might bring proceedings in the Federal Court consequent upon the termination of employment in which causes of action in addition to those arising under the unlawful termination provisions of the WRA might be relied upon. Consistently with the broad policy of litigation that multiple proceedings relating to the one matter advanced by interpreting the section in the same way as s 347 has been interpreted in its broader context. It would be a very strange result if a person whose employment had been terminated unlawfully would be protected from an adverse costs order by s 170CS in a proceeding not instituted vexatiously or without reasonable cause, and yet would be deprived of that protection if, perfectly reasonably, a related common law claim in the accrued jurisdiction of the Court were joined in the same proceeding.”
Jessup J in Nikolich considered the background to section 170CS (which is now section 666). His Honour at [378] said in the context of the distinction between section 170CS (section 666) and section 347 (now section 824) that:
“378.However these considerations may be, there are sound reasons for giving s 170CS the same construction, relevantly to matters arising in the accrued jurisdiction, as was traditionally given to s 347. No substantive law reform was effected by the repeal of s 170EHA, and the provisions with which it was associated, in 1996. At least relevantly to the kind of claim which was previously covered by s 170DF of the IR Act (termination of employment for reasons of race, colour, sex, etc), the provisions in question were effectively re-enacted (the primary prohibition thereafter to be found in the new s 170CK(2)(f)). If s 170CS was intended to mark out a substantive departure from the previous no-costs regime set up by s 347, it was a departure which went unremarked in the parliamentary materials accompanying the amendment. Save in relation to the wording of the primary prohibition, the new s 170CS was effectively the same as a combination of the repealed s 170EHA and the unchanged s 347, albeit perhaps expressed in terms more in harmony with modern legislative drafting.”
In Nikolich, Jessup J said at [380]:
“I take the view that the prohibition on costs in s.170CS(1) extended to every part of a proceeding whose statutory basis was section 170CP of the WR Act, including claims in the accrued jurisdiction…”
In Bahonko v Sterjov [2007] FCA 1341 Jessup J considered a claim for costs involving proceedings concerning two separate claims under federal statutes. His Honour’s approach (which followed Seven Network) to the issue was upheld on appeal (see Bahonko v Sterjov [2008] FCAFC 30). In the course of his decision His Honour said:
“6. Where a proceeding involves claims in the accrued jurisdiction of the court, as well as claims under s 170CP of the WR Act, s 170CS will apply to the whole proceeding, including to claims of the former kind: Goldman Sachs JBWere Services Pty Ltd v Nikolich [2007] FCAFC 120. However, Goldman Sachs stands on a line of jurisprudence which, at least on one view of the matter, depends substantially upon the conclusion that claims in the accrued jurisdiction are properly brought before the court because they fall within the same "matter" (in the Chapter III sense) as the claims arising under the WR Act. Relevantly to the question of costs, Goldman Sachs was not concerned with claims brought under different federal statutes, where the jurisdiction of the court to hear each of them did not depend upon the existence of jurisdiction to hear the other.
7. The question of costs where separate federal statutory claims, including claims arising under the WR Act, are combined in a single proceeding was considered by Gyles J in Seven Network (Operations) Limited v Media Entertainment and Arts Alliance [2004] FCA 637; (2004) 148 FCR 145. A proceeding was commenced under the WR Act, and was subsequently amended to allege also contraventions of the Privacy Act 1988 (Cth) and of the Copyright Act1968 (Cth). The claims under the WR Act were dismissed, but those under the other legislation were upheld. The unsuccessful respondents submitted that they were protected from the making of any costs order because of the operation of s 347 of the WR Act. Gyles J rejected that submission. His Honour thought it difficult to see why a discrete federal claim that was pursued in the same proceeding as a claim under the WR Act should be affected by being caught up with that latter claim, even if arising out of the same "general course of events" (148 FCR at 169). His Honour continued (at 169):
‘I conclude that a separate federal claim is not ‘in a matter arising under’ the Workplace Relations Act within the meaning of s 347. I am not concerned with the accrued or associated jurisdiction. Thus, the claims for breach of the Copyright Act and breach of the Privacy Act are not caught by s 347.’
From the report of the judgment in Seven Network, it seems that Gyles J may not have been referred to the judgment of Moore J in Grout v Gunnedah Shire Council (No 2) (1995) 58 IR 67. As I mentioned in my judgment in Goldman Sachs ([2007] FCAFC 120 at [375]), Moore J drew attention to the significance of the reference to "a proceeding" in s 347. There is an argument that, by reason of that reference, s 170CS operates in the same way as s 347, notwithstanding the absence of any reference to "a matter arising" in the former. Indeed, in Goldman Sachs itself, the Chief Justice concluded that s 170CS should be given the same operation as s 347 (at [94]). My own conclusion was effectively the same (at [380]). Marshall J decided the question without the need to consider the jurisprudence which had developed under s 347 (see [164]).”
In McDonald v Parnell Laboratories (Aust) (No 2) [2007] FCA 2086 Buchanan J considered the above authorities (at [16] to [18]) and said at [27]:
“27. That leaves the question of costs prior to the abandonment of claims under the WR Act. The first question is whether it is possible to disentangle and separate the federal statutory claims prior to this date. In my view it is not possible to do that. All those claims invoked the jurisdiction of this Court, even to the extent they were made without reasonable cause. Consideration of all the claims, statutory and common law, required reference to the same substratum of facts. Accordingly, in my view, all the claims, federal and non-federal, should be regarded as arising in the one matter. Prior to the date of abandonment of the claims under the WR Act it was not possible to distinguish proceedings relating to the WR Act claims from proceedings concerning the others. For the reasons given by Nicholson J in Geraldton Port Authority it follows that s 824 of the WR Act was, prima facie, engaged with respect to the whole of the proceedings (to the extent that s 666 did not apply independently).”
Respondent’s submissions
The respondent accepted section 666 was (save for two exceptions) a costs exclusionary provision. The respondent accepted that this exclusion applied not only in respect of the unlawful termination claim but also claims brought in the accrued jurisdiction of the Court. (see Goldman Sachs JB Were Services Limited v Nikolich [2007] FCAFC 120 (“Nikolich”))
Nonetheless, the respondent contended there were two grounds on which it could seek costs and submitted:
a)the applicant’s unreasonable conduct caused it to incur costs by prolonging the hearing (“the first ground”); and
b)the applicant instituted claims without reasonable excuse in relation to which it incurred costs (“the second ground”).
In relation to the first ground the respondent submitted:
“Unreasonable conduct – costs thrown away
5.On 9 March 2007, the Court made orders setting the matter down for hearing, allocating two days. The Court also made other orders regarding the interlocutory steps that were to be completed by the parties to have the matter ready to proceed on the allocated days. One of those orders was:
‘2.On or before 30 March 2007, the Applicant file and serve any further affidavits and other evidentiary material upon which he intends to rely.’
6.The Applicant did not file and serve any further affidavits. (In October 2006, the Applicant had filed and served a six page affidavit with his application).
7.On 13 April 2007, the Applicant filed and served a large bundle of documents.
8.On 12 July 2007, on the first day of the trial, counsel for the Applicant lead oral evidence in chief from the Applicant and tendered 90 documents. At page 17 of the transcript of day one of the trial, the Respondent is recorded as registering its objection to this course and making the point that it would mean the case would probably not finish within the allocated days. Counsel for the Applicant acknowledged this.
9.The conduct of the Applicant in failing to comply with the directions was unreasonable. As the Court noted at page 17 of the transcript of 12 July 2007:
HIS HONOUR: Those are the standard directions. The rules of the court make it clear that – I appreciate there is a view that oral evidence is best, but the court has under both the act and the rules, the overriding obligation to minimize the cost and delay of proceedings and to ensure as best as is possible and [sic] expeditious hearing and so on. So the rules are designed to give effect to those overriding objectives.
10.The unreasonable conduct of the Applicant caused the respondent to incur additional costs, being half a day’s hearing “thrown away” as a result of the delays caused to the Applicant’s evidence in chief.
11.Had the Applicant complied with the directions of the Court in respect of the filing and serving of evidence and documents before trial, all documentation could have been exhibited to a second affidavit from the Applicant. It is likely that oral evidence in chief from the Applicant could have been completed in half an hour, replying to any matters raised by the Respondent’s affidavits.
12.Instead, the transcript records the Applicant’s counsel leading evidence in chief from the Applicant for three hours (i.e. from midday until 1.13pm and then from 2.38pm until approximately 4.30pm). A considerable part of this was taken by the Applicant’s counsel tendering the documents.
13.The evidence did not finish in the allocated hearing days. As a result, the case did not ultimately resume until 29 February 2008. The rest of the evidence was completed in a little over two hours.
14.Plainly enough, had the Applicant complied with the Court’s directions, it is likely that the evidence would have been heard within the two July hearing days. The obvious course at that point would have been for the Court to direct the submissions to be done in writing. (Indeed, that was the course taken by the Court with the consent of the parties at 12.30pm on 29 February 2008 when the evidence was finished.) Accordingly, there would have been no requirement for another hearing day.
15.The conduct of the Applicant in not complying with the directions of the Court directly caused the case to run for an extra hearing day, 29 January 2008. Counsel for the respondent was briefed for that day. Even allowing for the second half of that day to be productively spent on the written submissions (and therefore not “thrown away”), the first half day’s hearing of 29 January 2008 was costs “thrown away”.”
Turning to the second ground on which the respondent sought costs. The respondent submitted the applicant instituted claims without reasonable cause. The respondent submitted that the applicant’s claims for:
a)damages for breach of contract - reasonable notice;
b)statutory relief (unspecified) for contravention of the Australian Fair Pay and Conditions Standard (the Standard) in respect of sick leave;
c)damages for breach of contract – bonus and salary increase
were destined to fail on the facts and law objectively available at the time the proceedings were instituted.
Specifically the respondent submitted:
“20.The Respondent seeks the costs of and incidental to one-third of the proceedings, being the approximate proportion of the case consumed by those claims: (see affidavit of Kristina Vermey).
Reasonable notice
21.This claim was hopeless from the start. On the established facts and case law there was no need to imply a term of reasonable notice.
22.It was obvious that the award applied to the Applicant’s employment. The attempt of the Applicant to prove otherwise was never going to succeed.
23.The authorities bound the Court and the Applicant put nothing forward to distinguish the cases.
AFPC sick leave
24.Again, this claim was hopeless on the established facts and statutory provisions. The Applicant did not dispute the facts as to accrual of sick leave. The Applicant put nothing sensible on the construction of the regulations. The regulations clearly excluded pre-WorkChoices accruals from the AFPC on sick leave.
Damages – bonus and salary increase
25. The contractual claims for bonus and salary increase were made despite the clear words in the employment contract that these were discretionary, a fact acknowledged by the Applicant (Decision at [195] et seq).
26.Further, the Applicant brought no evidence that stood any realistic chance of providing a foundation for the argument that the Respondent had failed to apply the criteria for bonus or salary: (Decision at [204]-[206]).”
Whilst in submissions the respondent estimated the costs attributable to the above where approximately one third of its total costs the Court was not told what this figure was. The Court was also not told what the respondents costs would be calculated in accordance with schedule
1 of the Federal Magistrates Court Rules 2001.
Applicant’s submissions
The applicant’s submissions dealt firstly with the issue of whether the claims set out at paragraph 22 above were vexatious or without reasonable cause (i.e. the respondent’s second ground). The applicant did not take issue with the principles the respondent relied on regarding what was vexatious or without reasonable cause.[1]
[1] See paragraph 4 of respondent’s submissions siting Kangan Batman v AIRC (2006) 156 FCR 275 at [60] and Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v Nestle Australia Ltd (2005) 146 IR 379 at [4] and Spotless Services Australia Ltd v Marsh SDP [2004] FCAFC 155 at [13].
However, having referred to Regional Express Holdings Ltd (ACN 099547270) v Clarke [2007] FCA 957 (which considered what was section 347 (now section 824) of the WR Act) the applicant submitted:
“2.The respondent in paragraph 3 misconstrues [Nikolich]. While the Court recognised that claims in the accrued jurisdiction of the Court were likewise subject to the operation of section 666 WR Act, the respondent fails to differentiate between the claims and the proceeding. In [Nikolich] Jessup J said:
‘379.In my view, the 1996 legislature must be assumed to have been aware of the existence of the accrued jurisdiction of the court, and of the potential, to say the least, for non-statutory causes of action to be litigated in proceedings where the court had a statutory jurisdiction which arose under particular provisions of the WR Act. I do, with respect, agree with Moore J as to the connotation of the word "proceeding" in provisions such as s 347. I think that the legislature must be taken to have had it in contemplation that a single proceeding might have involved claims arising directly under s 170CK(2)(f) (or some other relevant provision) as well as claims in the accrued jurisdiction. That being so, it is a simple matter to read the word in s 170CS "a proceeding under s 170CP" as a reference to a proceeding which had its statutory basis under that section. The section was concerned with proceedings under s 170CP, not merely with claims under that section. A proceeding might well have involved claims in the accrued jurisdiction, and I can think of no reason why s 170CS should not be construed accordingly.
380 For the above reasons, like Moore J in Grout, I take the view that the prohibition on costs in s 170CS(1) extended to every part of a proceeding whose statutory basis was s 170CP of the WR Act, including claims in the accrued jurisdiction which, save for being part of a single "matter" in the constitutional sense, were unrelated to rights and obligations arising under federal statutory law. In the present case, the powers of court to award costs to the successful respondent were, in my view, blocked by s 170CS of the WR Act. I would allow the appeal against the costs orders made the trial Judge.
381 That leaves the question of the costs of the appeal. Here the parties were in furious agreement that s 170CS of the WR Act does not apply, on the basis that the proceeding – ie the appeal – is not "a proceeding under s 170CP". I think that the court should give effect to that agreement. We were referred to no judgment which has considered the operation of s 170CS in the context of an appeal challenging only so much of the disposition of a proceeding originally brought under s 170CP as involved the exercise of the court’s accrued jurisdiction.’
3.In paragraphs 16-26 the respondent makes it clear that it challenges claims in the proceedings and not the proceeding itself as being brought vexatiously or without reasonable cause. In the circumstances, as the applicant (sic) does not challenge the statutory cause of action of unlawful termination, which gave rise to the proceeding under section 663 of the WR Act, as being brought vexatiously or without reasonable cause, the application for costs under section 666(1)(a) WR Act must fail.”
In relation to the respondent’s claim for costs arising as a result of what was said to be the applicant’s unreasonable act or omission in pro-longing the hearing (the respondent’s first ground) the applicant submitted:
“5.The respondent’s application is misguided for a number of reasons:
(a)The Courts directions regarding filing of evidence and further affidavits, did not provide that the affidavits must form the evidence in chief and no further evidence could be called. Nor does it contemplate affidavits in reply – the further affidavits would have been affidavits from any other potential witnesses. None were called.
(b)While his Honour said they were standard directions there is no practice note to that effect and different federal magistrates adopt different approaches. See the affidavit of Terry McHugh, paragraph 2.
(c)The documentary evidence while large in number, were for the most part put into evidence not through the witness per se (TN36:41-44) and few were challenged. Thus it did not take anywhere near as long as stated by the respondent. Of those documents that were objected to by the respondent, if they were exhibits to an affidavit those paragraphs of the affidavit and the exhibits would likewise have been objected to as the respondent’s counsel object to certain paragraphs of the affidavits affidavit (TN35:7-36:39)
(d)The applicant had a large number of documents that were directly and indirectly relevant to his work performance, acquired over a long period of employment. Partly because of the application of the reverse onus provisions, it was not readily apparent to the applicant or his advisers, until the trial was underway, the extent to which the court would be inquiring into the performance issues and hence whether the fullest range of documents would be needed. The issue of which documents ought to be adduced and when was really a matter of professional judgment, and not in any way a matter of unreasonable conduct/ (Cf. conduct that involved blatant disregard of Court orders and was regarded as unreasonable, in Sperandio v Lynch (No.3) [2007] FCA 1243 at paras 13-31 inclusive).
(e)The respondent sought and was granted permission on the second day of the hearing to cross examine the applicant on a matter that did not form part of the stated reason for termination (TN 130:25-30) but rather for the purpose of challenging the applicant’s credibility and the broader performance issues (TN132:1-10). This cross examination lasted for a significant part of the morning (TN142-TN156) and morning which had an early start.
(f)The extra hearing days (two additional days set aside) were also to be for:
(i) closing submissions;
(ii) evidence from the expert witness of the respondent; and
(iii) evidence from Calum Cook, witness and solicitors of the respondent.” (emphasis added)
Reference was also made in submissions to Sperandio v Lynch (No.3) [2007] FCA 1243 (“Sperandio”) where Jessup J had ordered costs as a result of unreasonable acts or omissions by the respondent.
Finally, the applicant’s submissions also took issue with what was said to be omissions on the respondent’s part in connection with the calling of witnesses or the conduct of the hearing (see paragraph 6-10 of the applicant’s submissions).
Consideration
These proceedings were transferred from the Federal Court by order made 21 November 2006. There were directions on 15 December 2006 (that inter alia referred the matter to mediation) and on 9 March 2007.
On the first day of the hearing the applicant through his Counsel acknowledged he had not provided his evidence in chief by way of affidavit. The applicant’s reason for this was explained to the Court as follows:
“… what the purpose of particularly the extension of expansion of the evidence of the performance issues was to show …if you basically negate – if you the fact, or can substantially negate the fact that the performance issues were not justified, then it becomes sufficiently stronger that there has to be another purpose.”
Without revisiting the matters canvassed in Bognar (No.1) it is appropriate to note that the applicant through his Counsel had submitted he had sought at the hearing not only to show that the respondent’s reason for termination included the proscribed reason but that the reasons provided in the letter of termination were “a ruse” to hide the real reason. Ultimately, he was not successful and for the reasons that set out therein the Court was satisfied the respondent met the burden of proof in s.664.
At times the applicant’s submissions on this issue could be said to have a bet each way and in this regard I do note the applicant’s submissions that:
“Partly because of the application of the reverse onus provisions, it was not readily apparent to the applicant or his advisors, until the trial was underway, the extent to which the court would be inquiring into the performance issues and hence whether the fullest range of documents would be needed. The issue of which documents ought to be adduced and when was really a matter of professional judgement, and not in any way a matter of unreasonable conduct.”
I also note in this regard the applicant’s submissions at paragraphs 5(f), 7, 8, 9 and 10 of the written submissions filed on his behalf concerning the conduct by the respondent of its case during the hearing.
In the context of submissions concerning the respondent’s first ground for seeking costs both parties referred to the directions that had been made. Before considering this issue further it is appropriate to recall that this matter was transferred from the Federal Court. Whatever the reason once it was transferred it was subject to the approach as determined by the Court.
In context of a dispute over the necessary directions for the hearing of an unlawful termination claim Lucev FM in Abrahams v Qantas Airways Ltd [2007] FMCA 634 said in relation to the Federal Magistrates Act 1999 (“FM Act”) and the Federal Magistrates Court Rules 2001 (“FMC Rules”) that:
“21.In relation to the FM Act and the FMC Rules, s.42 of the FM Act provides that the Court:
‘Must proceed without undue formality and must endeavour to ensure that the proceedings are not protracted.’
22.Section 3 deals with the objects of the FM Act and provides that the objects of the FM Act include the following:
(a)to enable the Federal Magistrates Court to operate as informally as possible in the exercise of judicial power; and
(b) to enable the Federal Magistrates Court to use streamlined procedures.
23.Rule 1.03 of the FMC Rules deals with the objects of the FMC Rules and provides as follows:
(1)The object of these Rules is to assist the just, efficient and economical resolution of proceedings.
(2)In accordance with the objects of the Act, the Rules aim to help the Federal Magistrates Court:
to operate as informally as possible
to use streamlined processes
to encourage the use of appropriate dispute resolution procedures.
(3)The Court will apply the Rules in accordance with their objects.
(4)To assist the Court the parties must:
• avoid undue delay, expense and technicality
• consider options for primary dispute resolution as early as possible
24.In Mahmoud v Owners Corporation Strata Plan No 811 [2007] FMCA 131 at para.21 per Lucev FM the Court said:
Ultimately the Court's objective is the attainment of justice. The State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146. In the proper exercise of the judicial power under Chapter III of the Constitution, Chapter III Courts quell controversy: Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 70 IPR 146 at page 158 per Rares J.
25.The Court repeats what it said in Goodall v Nationwide News Pty Ltd [2007] FMCA 218 at para.21 per Lucev FM:
Reading together the objects of the FM Act in section 3, the mode of operation in section 42 and having regard to the objects of the FMC Rules and rule 1.03 it is apparent that the Court is intended to operate in a manner:
(a) as informal as possible in the exercise of judicial power;
(b) which is not protracted in its proceedings;
(c) which resolves proceedings justly, efficiently and economically;
(d) uses streamlined procedures; and
(e) avoids undue delay, expense and technicality.”
Mindful of those principles and that in this case the directions made on 9 March 2007 required both parties to file “any further affidavits and other evidentiary material upon which [they] intended to rely” I am not satisfied it is appropriate to award costs in relation to the first ground.
In coming to that view I have considered the issues raised in the submissions set out above. I also note that on the morning of 12 July 2007 following discussions between Counsel, at the urging of the Court, the applicant indicated he would narrow the compass of the evidence he sought to lead. During the course of the hearing at the urging of the Court both Counsel considered ways that the compass of the dispute could be narrowed to ensure the matter was resolved without undue delay, expense and technicality.
The conduct sanctioned by the costs order in Sperandio is in my view not analogous to the conduct complained of here. In that case His Honour was dealing with a delay in proceedings of over six months which His Honour found was due to the failure by the respondent in that case to file a defence.
In this case the applicant’s claim for unlawful termination required the Court to consider and weigh the evidence that the reason for termination was the applicant’s performance. Whilst the compliance of both parties with the directions made was not ideal the course of action ultimately taken was necessary to deal with the controversy between the parties.
On balance in relation to the applicant’s claim for its costs thrown away as a result of what was said to be the applicant’s unreasonable conduct (and despite what was said to be the non compliance with the directions) I am not convinced for the reasons set out above that this is sufficient to enliven the Court’s discretion to award costs in relation to the respondent’s first ground.
I accept the applicant’s submissions in relation to the respondent’s second ground for claiming costs that the cost exclusionary provision in s.666 should also apply to claims in the Court’s accrued jurisdiction by virtue of the authority in Nikolich.
Mindful of the approach taken in the authorities set out above there is a complicating factor here. In this case the respondent’s second ground for seeking costs included a claim that the applicant instituted a claim (seeking unspecified statutory relief for contravention of the Australian Fair Pay and Conditions Standard in respect of sick leave) without reasonable cause to which s.824 would apply were it the subject of separate proceedings.
In its written submissions the respondent contended:
“16. Given the constraints in section 666, and the fact that the Applicant had the benefit of the reverse onus, the Respondent accepts that the Court has no power to award costs against the Applicant in respect of the unlawful termination claim.
17. The Respondent is also prepared to concede that the contractual claim in respect of sick leave, while weak, was not so bad as to expose the Applicant to costs under section 666.
18.However, the same cannot be said for the other claims:
…”
The respondent then went on to contend that the claims referred to at paragraph 22 above had been instituted without reasonable cause. The respondent did not contend the proceedings had been instituted without reasonable cause. Leaving to one side for present purposes the claims in the Court’s accrued jurisdiction (which were determined on the evidence) the applicant’s claim in relation to sick leave under the Standard concerned events leading up to the termination of his employment. The Court was not referred to any authority considering the resolution of that particular question and the matter required reference to regulations made pursuant to the WR Act which had retrospective effect.
In my view and as in the case of McDonald v Parnell Laboratories (Aust) (No 2) [2007] FCA 2086 consideration of all the claims, statutory and common law in this case, required reference to the same substratum of facts to finally determine the controversy between the parties.
In Hadgkiss v Construction, Forestry, Mining and Energy Union (No. 4) [2007] FCA 425 at [102] Graham J noted that section 347 did not allow separate determinations to be made in respect of costs by reference to different statutory claims. His Honour noted to secure an order for costs the respondent in that case had to demonstrate the whole of the proceeding had been instituted vexatiously.
In Bahonko v Sterjov [2007] FCA 1341 at [7] Jessup J noted the conclusion of Black CJ in Nikolich that section 170CS (now section 666) should be given the same operation as section 347 (now section 824).
In this case the proceedings concerned the applicant’s claim made pursuant to section 663. By virtue of the respondent’s concession in submissions and the weight of authority set out above the respondent’s second ground for claiming costs (pursuant to s.666(1)(a)) is not made out as the costs exclusionary provision was prima facie engaged with respect to the whole of the proceedings in relation to those claims.
Moreover, in the event I am wrong and cognisant of the approach taken by the Federal Court in the cases referred to earlier in relation to the distinction between claims and the proceedings, that the Court’s power to award costs is any event discretionary, that ‘the usual’ course in matters under the WR Act is that there will be no order as to costs and that s.666 uses language that make clear that there “must not be” an order unless the Court is satisfied the requirements of s.666(1)(a) or (b) are met I would still not award costs.
In relation to the respondent’s grounds for claming costs whether taken individually or collectively I am not satisfied it is appropriate to award costs.
Conclusion
Having considered the submissions of each of the parties and mindful that the Court in any event still has a discretion whether to award costs I am not satisfied for the reasons set out above it is appropriate to award costs.
I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of O’Sullivan FM
Associate: R. Lombardo
Date: 10 June 2008
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