Broumos v Henry Simon Automotive Pty Ltd and Ors (No.2)
[2019] FCCA 3214
•8 November 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BROUMOS v HENRY SIMON AUTOMOTIVE PTY LTD & ORS (No.2) | [2019] FCCA 3214 |
| Catchwords: INDUSTRIAL LAW – Adverse action claim dismissed – mutual costs applications. |
| Legislation: Fair Work Act 2009 (Cth), s.570 |
| Cases cited: Broumos v Henry Simon Automotive Pty Ltd & Ors [2019] FCCA 1825 Carr v ILSC (Brisbane) Pty Ltd & Anor [2019] FCCA 1028 City Ferries Pty Ltd t/as Harbour City Ferries & Ors (No. 2) [2017] FCCA 1713 McDonald v Parnell Laboratories (Aust) (No.2) (2007) 164 FCR 591 Stanley v Service to Youth Council Incorporated (No. 3) [2014] FCA 716 |
| Applicant: | EVAN BROUMOS |
| First Respondent: | HENRY SIMON AUTOMOTIVE PTY LTD (ACN 135 651 142) |
| Second Respondent | JERRY RIZZA |
| Third Respondent | JOE VALVO |
| File number: | MLG 1855 of 2017 |
| Judgment of: | Judge Riley |
| Hearing date: | On the papers |
| Date of last written submission: | 30 August 2019 |
| Delivered at: | Melbourne |
| Delivered on: | 8 November 2019 |
REPRESENTATION
| Counsel for the applicant: | Sarala Fitzgerald |
| Solicitors for the applicant: | Maurice Blackburn Lawyers |
| Counsel for the respondents: | None |
| Solicitors for the respondents: | Colin Biggers & Paisley Lawyers |
ORDERS
There be no order as to the costs of the proceeding.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1855 of 2017
| EVAN BROUMOS |
Applicant
And
| HENRY SIMON AUTOMOTIVE PTY LTD |
First Respondent
And
JERRY RIZZA
Second Respondent
And
JOE VALVO
Third Respondent
REASONS FOR JUDGMENT
Introduction
This is an application for costs following the dismissal of an adverse action claim. Judgment in the substantive application was given in Broumos v Henry Simon Automotive Pty Ltd and Ors [2019] FCCA 1825 on 1 July 2019. The parties agreed that the question of costs would be determined on the papers on the basis of written submissions and affidavits.
The respondents sought a costs order against the applicant on the basis that he refused a number of Calderbank offers and his case was obviously going to fail. The applicant sought a costs order against the respondents on the basis that they failed to provide discovery in a timely manner.
The applicant’s principal position in the substantive proceeding was that, following a knee injury making him temporarily unfit for his usual duties, his role as pre-delivery manager had been permanently assigned to Martyn Stanley. The court found that part of the applicant’s pre-delivery role had been permanently assigned to Martyn Stanley, but that the bulk of the applicant’s pre-injury pre-delivery manager role would have still been available to him, once his knee had sufficiently recovered. The court found that the assignment of part of the applicant’s duties to Martyn Stanley constituted adverse action, in that the applicant had been injured in his employment and his position had been altered to his prejudice, but that the adverse action was not taken against him for a prohibited reason.
Material relied on
The respondents relied on:
a)their written submissions filed on 29 July 2019;
b)their written submissions in reply filed on 30 August 2019; and
c)the affidavit sworn by Cathryn Patricia Prowse on 29 July 2019.
The applicant relied on:
a)his written submissions filed on 26 August 2019; and
b)the affidavit affirmed by Joshua Bevan Bornstein on 23 August 2019.
Legislation
The parties agreed that costs applications in matters such as this are governed by s.570 of the Fair Work Act2009 (“the Act”), which relevantly provided that:
(1)A party to proceedings … 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) … .
…
(2)The party may be ordered to pay the costs only if:
…
(b)the court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs; …
Authorities
The effect of s.570(2)(b) of the Act was described in Stanley v Service to Youth Council Incorporated (No. 3) [2014] FCA 716 at [40] as follows:
Ordinarily, the question of whether an act or omission is unreasonable is to be determined as a matter of fact having regard to the circumstances of each case. That is the approach which I will adopt in the present case but having regard to the evident policy of s 570, as identified in Clarke, that the Court should not too readily find conduct of a litigant to be unreasonable.
The applicant summarised the relevant authorities as follows, in paragraphs 4 to 6 of his written submissions:
4. The question of whether an act or omission is unreasonable is to be determined as a matter of fact having regard to the circumstances of each case.3 In doing so the Court must have regard to the “evident policy of s 570… that the Court should not too readily find conduct of a litigant to be unreasonable”.4 In light of this legislative policy, the courts have discerned that any discretion to award costs ought not be exercised with too much haste as that would discourage parties from pursuing litigation in the manner which they deem best, for fear of an adverse costs order.5
5. The Full Court of the Federal Court has determined that section 570 “reflects a policy of protecting a party instituting proceedings from liability for costs” and that “costs will rarely be awarded under the section and exceptional circumstances are required to justify the making of such an order”.6 The Respondents have not pointed to any exceptional circumstances in this case. In particular, the making of a series of Calderbank offers during the course of litigation is a routine practice. The making of offers that should, with the benefit of hindsight, have been accepted, is wholly unexceptional. The failure to accept those offers was not unreasonable in the circumstances as they were known to the Applicant at the time. (emphasis in original)
6.Justice Tracey has noted that ‘the pursuit of a contentious, and ultimately unsuccessful, argument is not an unreasonable act’.7 The Full Court has endorsed these observations in CFMEU v Clarke:8
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: Australia 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.
3 Stanley v Service to Youth Council Incorporated (No 3) [2014] FCA 716 at [40].
4 Stanley v Service to Youth Council Incorporated (No 3) [2014] FCA 716 at [39].
5 Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143 at [29]; (2008) 170 FCR 574 at 582.
6 Ashby v Slipper (No 2) [2014] FCAFC 67 at [35].
7 Australian and International Pilots Assn v Qantas Airways Ltd (No 3) (2007) 162 FCR 392 at 402.
8 (2008) 170 FCR 574 at 582.
Whether the outcome was obvious
The respondents argued that it should have been plainly clear to the applicant before the hearing that his pre-injury role had not been replaced, based on the following items of evidence:
(a)On 10 August 2016, Mr Valvo told him his job was safe;5
5 Affidavit of Valvo at [22] CB 227.
(b)On 10 August 2016, Ms Millikin told him his job was safe;6
(c)On 6 February 2016, Mr Pumpa told Mr Broumos that the Pre-Injury Role would be available to him for at least 52 weeks;7
(d)On 16 February 2017, Mr Brett Jefferson greeted Mr Broumos and told him he couldn’t wait until he was better because the business needed him back;8
(e)On 10 March 2017, Ms Millikin sent an email to Mr Valvo and Mr Tranter stating her intent to return Mr Broumos to the Pre Injury Role and suggested moving Mr Broumos back to the Pre-Delivery office on level 3;9
(f)On 22 March 2017, Mr Pumpa told Mr Broumos that HSA was required to keep the Pre Injury Role open for him;10
(g)On 23 March 2017, Ms Millikin emailed Mr Pumpa and explained that all duties he was performing (including the warranty work) was temporary until he returned to a suitable level of fitness;11
(h)On 28 March 2017, Ms Millikin told him the modified duties were temporary and the objective was to ultimately return him to full time duties; 12
(i)On 4 April 2017, Mr Rod Tranter emailed Mr Broumos and told him the Pre Injury Role was still his official role;13
(j)On 13 April 2017, WorkAble provided a report to Mr Broumos that confirmed that the Pre-Injury Role was still available to him; 14
(k)On 27 April 2017, his new prospective employer (which had purchased HSA) advised Mr Broumos that his role was still open to him. 15
6 Affidavit of Millikin at [5] CB 253.
7 Transcript at page 2 of Exhibit 13 (DVM-13 to the Affidavit of Declan Murphy).
8 XXN Broumos (Day 2, 19 March 2019).
9 CB 318 (Affidavit of Millikin).
10 Exhibit 1 at [60], CB 70 (Affidavit of Broumos sworn 12 July 2016).
11 CB 327 (Affidavit of Millikin).
12 Exhibit 1 at CB 109 (Affidavit of Broumos).
13 Exhibit 1 at CB 113 (Affidavit of Broumos).
14 CB 344 (evidence it was sent to Mr Broumos is at CB 346).
15 Exhibit 17 (letter dated 27 April 2017 from Rod Ayoubi to the Applicant headed "Letter of Offer").
The respondents went on to submit at paragraph 11 of their written submissions filed on 29 July 2019 that:
There was no direct evidence contrary to these points adduced at
trial and the Applicant's contrary circumstantial evidence was not compelling.
In response, the applicant said in his written submissions filed on 26 August 2019 that the respondents went to trial:
a)asserting that the applicant’s role had not changed at all, when in fact it had, as found by the court;
b)denying that the applicant’s role had changed because the VDQI role was created, when in fact it had changed for that reason, as found by the court;
c)saying that the VDQI role had been created because of an increase in new car sales and therefore an increase in pre-delivery work, but they produced no documentary evidence of that until the eve of the trial, and their own witnesses disagreed significantly in oral evidence about how much the increase had been;
d)saying that the new VDQI role was created to address VDQI audit shortcomings, but they only produced documentary evidence relating to that issue shortly prior to trial and, notwithstanding requests, did not explain the relevance of that material until the trial was underway; and
e)relying on an email from the HR manager which said that the applicant would be permanently located in an office other than his own office as pre-delivery manager, when, in oral evidence, it was explained that permanently meant permanently until the applicant was able to access his own office, as opposed to desk hopping, which he had found humiliating.
In addition, the applicant said at paragraphs 9 and 10 of his written submissions:
9.Although the Applicant was ultimately not successful, he succeeded in proving a number of contested facts that each had the potential to make out his claim. In particular:
a. That the Respondents were frustrated with his slow recovery.10
10 See paragraph 314 of judgment.
b. That his position was altered to his prejudice after he returned to work because “he did not do his own job as pre-delivery manager and used car reconditioning manager at Elizabeth Street”.11
11 See paragraph 334 of judgment.
c. That he was humiliated by being required to sit in an open plan area at someone else’s desk.12
12 See paragraphs 355 and 356.
d. That each of the following negative comments were made to him:
“this isn’t a fucking holiday camp, get back inside”13
13 See paragraph 379 of judgment.
“wow, I must be working you too hard”14
14 See paragraph 380 of judgment.
“what’s the difference?”15
15 See paragraph 381 of judgment.
“what the hell are you doing down here? I’ve told you to go upstairs, don’t you understand what upstairs means?”16
e.The Applicant also succeeded on a key point: that Mr Stanley’s new role had taken over part of the Applicant’s role, and that this constituted adverse action.17 This was a finding that the ‘evolution’ in Evan’s duties was because a new role had been created for Martyn.18
10. The fact that the Applicant succeeded on these points suggests that the application did not “fail completely” as the Respondents’ submissions contend. The application had a reasonable basis because it was able to establish that adverse action did occur. That the application failed to establish that the adverse action was for a prohibited reason does not make the application unreasonable. The reverse onus provision in section 361 reflects Parliament’s recognition that an employee is at an evidentiary disadvantage in establishing the reasons why adverse action was taken, because an employee cannot see inside other people’s minds and can only surmise from the evidence that they have at the time.19
(emphasis in original)
16 See paragraph 382 of judgment
17 See paragraph 322: “it seems to me that Evan was injured in his employment and his position was altered to his prejudice when Martyn was appointed as VDQI manager. That is because a part of his role was taken away.”
18 See paragraphs 349-350 of judgment.
19 Explanatory Memorandum, Fair Work Bill 2008 (Cth), 1461.
Although the applicant was given verbal and written assurances that his job was safe, he obviously did not trust them because there were also indications going the other way. I am not persuaded that it was obvious prior to trial that the applicant would lose.
Whether the applicant lost on all points
The respondents argued that the applicant should pay their costs because the applicant lost on all points. It is true that the applicant lost on all compensable points. However, as the applicant explained, he won on a number of factual issues, and the result of other factual disputes was not obvious prior to trial. In these circumstances, it was not unreasonable in the necessary sense for the applicant to have proceeded to trial.
The Calderbank offers
The respondents made Calderbank offers as follows:
a)$10,000 on 9 March 2018, which lapsed without acceptance on 23 March 2018;
b)$25,000 on 11 July 2018, which was rejected on 19 July 2018;
c)$40,000 on 26 February 2019, which was rejected on 5 March 2019; and
d)$65,000 on 14 March 2019, which lapsed at 5pm on 15 March 2019, the trial being scheduled for Monday 18 March 2019.
The respondents noted that their Calderbank offers included a reference to McDonald v Parnell Laboratories (Aust) (No.2) (2007) 164 FCR 591, which, the respondents submitted, and the applicant did not dispute, stood for the proposition that:
a failure of a party to accept a reasonable offer to settle enlivens the jurisdiction of the court in matters arising under the FW Act to award costs against that party.
In McDonald, Buchanan J said at [25] and [26]:
25.It should be apparent from the reasons stated in the earlier judgment that, apart from the question of summary dismissal, the remaining claims were, in my view, ambitious. Even if Ms McDonald had been able to make good the proposition that she should not have been summarily dismissed it would have been necessary to secure an award of additional damages or compensation on some other basis to exceed the terms of the offer. The prospect of Ms McDonald succeeding in other claims (and to the extent which would be necessary) must be regarded as relatively slim. Some of her claims were plainly without merit. Some of them relied upon propositions of law which were far from settled. In addition, as will be apparent from the earlier judgment, I concluded that such claims were not made out on the facts. There was no issue in the principal proceedings about the basis for the termination of employment. For reasons given in the earlier judgment, the uncontradicted explanation for termination of Ms McDonald’s employment defeated, at the outset, any premise upon which some of the other claims depended. Moreover, it would have been necessary to secure an award of additional damages or compensation in excess of $10,000. Having regard to the nature of the claims and the facts of the case that was an ambitious project.
26.I think it was very imprudent of Ms McDonald not to have accepted the offer. I do not need to decide whether it was ‘plainly unreasonable’ not to do so. In my view, the respondents are entitled to an order for the costs I am discussing at the moment (i.e. from 4 October 2007) on an indemnity basis, whatever may be the effect of s 824 of the WR Act on the proceedings before that time. It would be unjust to deny the respondents indemnity costs, having regard to the terms of the offer, the outcome of the proceedings and the reasons for the result.
In written submissions, the respondents also referred to Cross v Harbour City Ferries Pty Ltd t/as Harbour City Ferries & Ors (No. 2) [2017] FCCA 1713. In that case, the application was dismissed. The court found that:
a)the first claim was not supported by evidence and was baseless;
b)the second claim was fabricated;
c)the third claim was without reasonable cause;
d)the fourth claim was not supported by evidence; and
e)the fifth claim, that a statement was misleading, was contrary to the applicant’s own evidence.
The respondents relied on Carr v ILSC (Brisbane) Pty Ltd & Anor [2019] FCCA 1028, where Judge Cameron said:
19 The sums which were offered to the applicants, even if not large, were not tokenistic. That fact is significant given the applicants’ total failure in the proceedings, which I infer was not unrelated to their failure to attend to the detail of the litigation and its informed prosecution. For instance in that connection, at the trial Mr Carr conceded that he had not read Mr Keith’s analysis of his payments which summarised his hours worked and wages paid for October 2013 to April 2018 because, he said, he had not had the time and Mr Pathik conceded that although he had deposed that from May 2017 until about December 2017 he was not paid for marking assessments, he had in fact been paid his full rate for that work from January 2017. Further, although the applicants claimed that their work hours had been reduced because they sent the 14 November 2017 email to ILSC, this contention was contradicted by para.2 of that very email which said:
2.Furthermore, at our trainers meeting on 23rd of October, you said to us “if you don’t provide us with a signed copy of the new contract by the 3rd of November (later changed to 23 November [sic]), we will not be able to provide you with any teaching hours”, ie effectively terminating our employment. That is not legal under the Fair Work Act.
If the applicants had tested their impressions and perceptions against the information which was available to them at the time the offers were made, they might not have rejected those offers or at least might not have shut the door on settlement quite so firmly.
…
21It is apparent that the offers were rejected with little reflection. The speed with which the rejections were communicated and the terms in which they were made, by counter — offers to accept amounts which could not have been achieved in the compensation proceedings, bespeak a lack of willingness to consider settlement in a serious way. That behaviour was unreasonable given the parties’ obligation under r.1.03(4) to facilitate the just resolution of disputes by avoiding undue delay, expense and technicality.
…
26 In this matter, the applicants’ failures to accept the offers were unreasonable on two bases. The first is that proper consideration was not, I conclude, given to the offers. The second is that it was unreasonable to not accept the offers given the weakness of the applicants’ cases, both as to substance and as to the care and attention given to their preparation. If the latter deficiency had been addressed the applicants might have understood the weaknesses in their cases and acted differently.
27Consequently, I find that the applicants should pay costs on the indemnity basis from the date of the service of the Calderbank letters. In those circumstances, the Court’s event-based party and party costs scale cannot apply as a matter of logic and so it is appropriate that costs be taxed.
The respondents also argued that they had made clear in the Calderbank offers why the applicant’s claim could not succeed.
The applicant emphasised in reply that exceptional circumstances are required to make a costs order in fair work proceedings. The applicant submitted that Calderbank offers are routine, and it is not exceptional to reject them in circumstances in which, with the benefit of hindsight, they should have been accepted.
In my view, the cases relied on by the respondents in relation to the Calderbank offers had facts that were quite extreme. I do not consider that the circumstances of the present case reach that level. Most significantly, the court did not accept all of the facts that the respondents put forward in their material, and the respondents did not discover some key evidence until very shortly prior to trial, and nor did they explain its significance prior to trial. In these circumstances, I do not consider that the rejection of the respondents’ Calderbank offers was unreasonable in the necessary sense.
Whether the respondents should pay the applicant’s costs
Although the applicant lost in the substantive proceeding, the applicant argued that the court of its own motion should order the respondents to pay his costs because their delay in discovering key documents robbed the applicant of the opportunity to understand the case against him prior to trial.
The respondents replied that:
a)they were hampered in their discovery by the fact that the first respondent had sold the relevant business, and they had to obtain documents from the current owners;
b)the applicant discovered documents late as well; and
c)the allegedly late discovered documents would not have made the applicant more likely to settle in any event.
I do not consider that the respondents’ late discovery in this case was so unreasonable that it would justify a costs order against the respondents. I do not consider that earlier discovery would have resulted in a settlement. It seems to me that the applicant was adamant about his perception of events. It was only with the benefit of a trial that his misapprehensions became apparent.
Conclusion
In my view, in this case, there should be no order as to costs.
I certify that the preceding twenty six (26) paragraphs are a true copy of the reasons for judgment of Judge Riley.
Associate:
Date: 8 November 2019
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