Buckingham v KSN Engineering Pty Ltd & Anor (No.2)

[2008] FMCA 1475

FEDERAL MAGISTRATES COURT OF AUSTRALIA

BUCKINGHAM v KSN ENGINEERING PTY LTD & ANOR (No.2) [2008] FMCA 1475

INDUSTRIAL LAW – Allegation of acts for prohibited reason.

COSTS – Whether unreasonable act or omission.

Workplace Relations Act 1996, ss.793(1)(j), 824

Australian International Pilots Association v Qantas Airways (No.3) (2007) 162 FCR 392; [2007] FCA 879
Buckingham v KSN Engineering [2008] FMCA 546
Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143
McAleer v University of Western Australia (No.2) (2007) 161 IR 151; [2007] FCA 247

Applicant: TERRY ALBERT BUCKINGHAM

First Respondent: KSN ENGINEERING PTY LTD

Second Respondent: KYUNG SAM NA

File Number: PEG 141 of 2007

Judgment of: Lucev FM

Hearing date: 6 October 2008

Date of Last Submission: 6 October 2008

Delivered at: Perth

Delivered on: 27 October 2008

REPRESENTATION

Counsel for the Applicant: Ms G A Archer SC

Solicitors for the Applicant: Blake Dawson

Counsel for the Respondents: Mr S J Wood

Solicitors for the Respondents: DLA Phillips Fox

ORDERS

1. That the first and second respondents’ application for the costs of the first and second respondents’ application in a case filed 21 September 2007 be dismissed.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
PERTH

PEG 141 of 2007

TERRY ALBERT BUCKINGHAM

Applicant

And

KSN ENGINEERING PTY LTD

First Respondent

KYUNG SAM NA

Second Respondent

REASONS FOR JUDGMENT

Introduction

1. On 29 August 2008 this Court delivered reasons for judgment in this matter on a strike-out application by the first and second respondents in relation to the amended statement of claim.[1]

   [1] Buckingham v KSN Engineering [2008] FMCA 546 (“KSN Engineering (No.1)”).

2. The Court struck out the following paragraphs of the claim (which are grouped by categories relevant in the strike-out application):

   a)paragraphs 22, 24 and 29;

   b)paragraphs 29B, 31, 33B, 35, 39, 43, 47 and 51;

   c)paragraphs 29C, 32, 33C, 36, 40, 44, 48 and 52;

   d)paragraphs 29D, 33, 33D, 37, 41, 45, 49 and 53;

   e)paragraphs 59, 60 and 61; and

   f)paragraphs 63-65.

3. Paragraph 28 was partially struck out.

4. The following paragraphs (again grouped by categories) were not struck out:

   a)29A, 30, 33A, 34, 38, 42, 46 and 50 (save that the words “and particulars” were struck out); and

   b)paragraphs 66-68; and

   c)parts of the Amended substantive application, including provisions as to penalties.

5. By the application presently before the Court, the first and second respondents seek the costs of the strike-out application.

Issues

1. The issue in these proceedings is whether costs ought to be awarded against the applicant, contrary to the normal rule in workplace relations proceedings, because there has been an unreasonable act or omission by the applicant.

Consideration

What constitutes an unreasonable act or omission under section 824(2) of the Workplace Relations Act

1. Section 824 of the Workplace Relations Act 1996 (Cth)[2] provides as follows:

   (1)A party to a proceeding (including an appeal) in a matter arising under this Act (other than an application under section 663) must 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.

   (2)Despite subsection (1), if a court hearing a proceeding (including an appeal) in a matter arising under this Act (other than an application under section 663) is satisfied that a party to the proceeding has, by an unreasonable act or omission, caused another party to the proceeding to incur costs in connection with the proceeding, the court may order the first‑mentioned party to pay some or all of those costs.

   (3)In subsections (1) and (2):

   costs includes all legal and professional costs and disbursements and expenses of witnesses.

   [2] “WR Act”.

2. Section 824(2) provides an exception to the usual rule that costs orders are not made in WR Act matters. Two criteria must be fulfilled before the exception applies. They are:

   a)that a party must have engaged in an unreasonable act or omission; and

   b)that the unreasonable act or omission must have caused another party to incur costs in connection with the proceeding.[3]

   [3] Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143 at para. 28 per Tamberlin, Gyles and Gilmour JJ (“Clarke”).

3. Whether a party has engaged in an unreasonable act or omission depends upon an objective analysis of the particular circumstances of the case.[4]

   [4] Australian International Pilots Association v Qantas Airways (No.3) (2007) 162 FCR 392 at 402 per Tracey J; [2007] FCA 879 at para. 32 per Tracey J; McAleer v University of Western Australia (No.2) (2007) 161 IR 151; [2007] FCA 247 (“McAleer (No.2)”).

4. The exercise of the discretion in s.824(2) is not necessarily engaged because:

   a)a party does not conduct litigation efficiently;[5]

   b)a concession is made late;[6]

   c)a party may have acted in a different or timelier fashion;[7]

   d)a party has adopted a genuine but misguided approach.[8]

   [5] Clarke at para. 29 per Tamberlin, Gyles and Gilmour JJ.

   [6] Clarke at para. 29 per Tamberlin, Gyles and Gilmour JJ.

   [7] Clarke at para. 30 per Tamberlin, Gyles and Gilmour JJ.

   [8] See, for example, the approach in Qantas (No.3) FCR at 403 per Tracey J; FCA at para. 39 per Tracey J.

First ground – provision of the pleading

1. The first basis upon which the first and second respondents say that the applicant acted unreasonably was in the provision of the pleading which was ultimately the subject of the decision. Leave was given to file and serve the amended statement of claim on 7 September 2007. Prior to that there was voluminous correspondence from the first and second respondents concerning the adequacy of the amended statement of claim, and earlier versions of the amended statement of claim.

2. In its judgment in KSN Engineering (No.1)[9] the Court did find that the amended statement of claim filed did not, in large part, fulfil the basic function of allowing the first and second respondents to know the case that they had to meet.

   [9] KSN Engineering (No.1) at paras. 21 and 95 per Lucev FM.

3. The fact that the pleading was, in large part, bad, does not of itself mean that the applicant was engaged in an unreasonable act or omission.[10] More must be made out. In this case, the applicant did amend the pleadings prior to 7 September 2007 in response to criticisms by the first and second respondents. Moreover, they agreed to pay the costs of those amendments (that is the first and second respondents’ costs thrown away) notwithstanding the provisions of the WR Act providing for it to be the exception rather than the rule that costs be paid in WR Act proceedings.[11] Further, whilst the pleading may have been bad, the voluminous correspondence between the parties cannot sustain a suggestion that the applicants either intentionally or unintentionally sought not to reveal the case that the first and second respondents had to meet. If anything, the contrary is the case.[12]

   [10] Qantas (No.3) FCR at 402 per Tracey J; FCA at para. 32 per Tracey J.

   [11] Compare Qantas (No.3) FCR at 402 per Tracey J; FC A at para. 33 per Tracey J.

   [12] See, for example, letters from applicant’s solicitors to first and second respondents’ solicitors dated 3, 9 and 27 August 2007.

4. The Court is satisfied that the applicant paid proper attention to, and properly considered the objections made, to various correspondence from the first and second respondents. It must be said that the applicant’s task in that regard was made inordinately more difficult than it ordinarily would have been by the turgid nature of the first and second respondents’ correspondence.[13] Thus, to the extent that the first and second respondents have incurred costs which are “very large”[14] those costs have been contributed to in no small measure by their own hand. Plainer, shorter letters could have performed the same task.

   [13] See for example first and second respondents’ solicitors’ letter of 6 September 2007 to the applicant’s solicitors.

   [14] Respondents’ submissions – costs, para. 37.

5. Analysis of the reasons for judgment in KSN Enginnering (No.1) indicates that much of the Court’s criticism of the pleading had its origins in the use of the phrase “had made or proposed to make an enquiry or complaint.” The applicant had a different view of the intention of those words in s.793(1)(j) of the WR Act from that of the first and second respondents. There is no basis for a finding that the applicant’s view of the legislation was not genuinely held. It may have been wrong, as the Court ultimately concluded, but that is not to say it is unreasonable.[15]

   [15] Qantas (No.3) FCR at 403 per Tracey J; FCA at para. 39 per Tracey J; McAleer (No.2).

6. The point made in the previous paragraph is exemplified by the fact that a number of objections to the pleading were not upheld. In particular, very detailed and technical objections to the way in which the penalties sought were pleaded were not upheld. Criticism of the way in which the penalties were pleaded occupied much of the correspondence between the applicant and first and second respondents in relation to the pleading of the amended statement of claim.

7. The first and second respondents also argued that the applicant could be seen to have acted unreasonably by reason of the fact that it was a very large well-resourced Commonwealth agency. In the Court’s view that argument fails in this case, because, as the Court has already found the applicant acted genuinely in relation to its view of how the matter ought to be pleaded, and was prepared to make amendments where appropriate. The mere fact that it is a very large Commonwealth agency which has prepared a bad pleading, or had it prepared for it, cannot, of itself, constitute an unreasonable act or omission under s.824(2). It might be different if there were evidence that such an agency had simply refused to expend resources upon a pleading or engage the other side in appropriate conferral. That is not the case here.

8. For all of the above reasons the Court is not satisfied that the applicant engaged in an unreasonable act or omission by providing the pleading which was ultimately filed and served on 7 September 2007 as the amended statement of claim.

Second ground – refusing to amend pleading between 21 August 2007 and 21 September 2007

1. The first and second respondents complain that the applicant ignored their correspondence between 21 August 2007 and 21 September 2007, that correspondence directed towards persuading the applicant to amend its pleading.

2. There is nothing raised by these grounds which has not already been addressed, in terms of principle, in relation to the first ground. Put simply, the Court is not persuaded that the applicant did not properly engage in conferral with the first and second respondents during this period. The fact that it did not agree with the position put by the first and second respondents does not mean, in the absence of the sort of factors discussed above, that the applicant acted unreasonably. The applicant genuinely believed that his amended statement of claim was in proper form, and as indicated above, had engaged with the first and second respondents in relation to the amended statement of claim, and had made changes to it as a consequence of that process of engagement. Multiple repetitions of the first and second respondents’ issues is not a basis for finding that the applicant ought to have conceded on those issues. As indicated above, the position was genuinely held, if wrongly, but not unreasonably.

3. The Court is not satisfied that the applicant engaged in an unreasonable act or omission by refusing to amend his pleading between 21 August 2007 and 21 September 2007.

Third ground – refusing to pay any costs arising from KSN Engineering (No.1)

1. The first and second respondents assert that the failure of the applicant to pay any costs arising from this Court’s reasons for judgment in KSN Engineering No.1) constitutes an unreasonable act. Given the findings made by the Court above that application cannot possibly succeed, and this ground is therefore not made out.

Conclusion

1. For the above reasons the Court concludes that the applicant did not engage in an unreasonable act or omission. The first and second respondents’ application for costs is dismissed.

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of Lucev FM

Associate:  Sandra Gough

Date:  27 October 2008