Buksh v Holmesglen Institute (No 3)
[2022] FedCFamC2G 339
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Buksh v Holmesglen Institute (No 3) [2022] FedCFamC2G 339
File number(s): MLG 1802 of 2020 Judgment of: JUDGE BURCHARDT Date of judgment: 13 May 2022 Catchwords: INDUSTRIAL LAW – Application for costs in circumstances where applicant failed to beat offers of compromise – whether offers to compromise can operate given terms of s 570 Fair Work Act – whether failure to accept offers of settlement was imprudent – court finding that applicant entitled to proceed to judgment – costs application dismissed. Legislation: Fair Work Act 2009 (Cth)
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)
Federal Court Rules 2011 (Cth)
Cases cited: Anchorage Capital Partners Pty Limited v ACPA Pty Ltd (No 2) [2018] FCAFC 112
Heldberg v Rand Transport (1986) Pty Ltd (No 2) [2018] FCA 1224
Joseph v Parnell Corporate Services Pty Ltd [2021] FCAFC 67
Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20
Division: Division 2 General Federal Law Number of paragraphs: 30 Date of last submission/s: 4 May 2022 Date of hearing: 22 April 2022 Place: Melbourne The Applicant: The Applicant is self-represented Counsel for the Respondent: Mr Denton Solicitor for the Applicant: MinterEllison ORDERS
MLG 1802 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: BEN BUKSH
Applicant
AND: HOLMESGLEN INSTITUTE
Respondent
ORDER MADE BY:
JUDGE BURCHARDT
DATE OF ORDER:
13 MAY 2022
THE COURT ORDERS THAT:
1.The respondent’s application for costs be dismissed.
2.Each party bear their own costs of the application.
THE COURT NOTES THAT
A.These orders do not operate to set aside the order made on 26 July 2021 (stayed until final judgment) for the applicant to pay respondent’s costs fixed at $5,000.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE BURCHARDT
At the conclusion of the trial in this matter, the respondent indicated a desire to make an application for costs. I had hoped to deal with the matter on the day, but it became impracticable to do so. I furthermore formed the view that since the outcome of such an application could be very significant for Mr Buksh, it was more appropriate to proceed by way of written submissions, which is what has occurred.
The respondent's written submissions in support of its application for costs note that on 26 July 2021, the court ordered Mr Buksh to pay the respondent's costs of an application in a case fixed at $5000, stayed pending final judgment. The submissions also noted that on 22 April 2022, the court imposed pecuniary penalties on the respondent, a total of $2000. The written submissions referred to s 570 of the Fair Work Act 2009 (Cth) and also noted that pursuant to r 25.14(1)(b) of the Federal Court Rules 2011 (Cth), that there was an entitlement to indemnity costs if a party obtains judgment less than the offer made.
Rule 25.14 of the Federal Court Rules (there is no equivalent rule in the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)) provides, indeed, that if an offer is made by a respondent and not accepted and the applicant obtains a judgment that is less favourable in the terms of the offer, the respondent is entitled to an order that the applicant pay the respondent's costs after that time, on an indemnity basis. It should be noted, however, that Note 2 to the Commonwealth Consolidated Regulations observes, entirely accurately, of course, that the court may make an order inconsistent with those Rules, pursuant to r 1.35.
That note accords with my general understanding of the terms of provisions such as r 25.14. They are construed as creating a rebuttable presumption in favour of an indemnity cost order in the event that the offer is not overcome.
Section 570 of the Fair Work Act provides that:
(1)A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.
(2)The party may be ordered to pay the costs only if:
(a)the court is satisfied that the party instituted 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..
There is an obvious tension between the overarching legislative provision in the Fair Work Act, which is essentially against applications for costs, and the rebuttable presumption created by r 25.14. The matter was considered by the Full Court and the Federal Court in Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20. That was a case in which the applicant, Mr Sautner, relied on three causes of action, two of which were brought under the Fair Work Act and the third was a common law contractual claim. The Full Court noted at [140]:
Section 570 operates as an express limitation on the broad discretion to award costs which is conferred on this Court by s 43 of the Federal Court of Australia Act 1976 (Cth) and on the County Court by s 78A of the County Court Act 1958 (Vic).
Having noted that the County Court judge dealt with an offer of compromise made in that case and that Mr Sautner had obtained an award well in excess of the amount offered by way of compromise, the court went on to observe at [143]-[144]:
In these circumstances, the primary judge held that Mr Sautner was entitled to an order, under r 26.08(2)(b) of the County Court Civil Procedure Rules 2008 (Vic) (“the County Court Rules”) in respect of his contractual claim, for costs “before 11:00 am on the second business day after the offer was served, taxed on a party and party basis and for the plaintiff’s costs thereafter taxed on an indemnity basis.”
His Honour also held that MSL’s failure to accept the offer was an “unreasonable act or omission [which] caused the other party to incur costs” (at [33(b)]) and that, as a result, the exception, provided for in s 570(2)(b) of the Fair Work Act, applied.
The Full Court noted at [150]:
Mr Sautner argued that the primary judge had been correct to hold that s 570 of the Fair Work Act did not apply to the contract claim. He contended that the County Court had jurisdiction to hear and determine this claim pursuant to s 4 of the County Court Act. That jurisdiction was conferred independently of the County Court’s jurisdiction to deal with the claims made under the Fair Work Act. The County Court also had an unfettered discretion to award costs “of and incidental to all proceedings” before it under s 78A of the County Court Act. Relying on observations of the Full Court of this Court in Construction, Forestry, Mining and Energy Union v Director of the Fair Work Building Industry Inspectorate (No 2) (2013) 209 FCR 464 at 484, he contended that the two Acts which conferred jurisdiction on the County Court should be read together such that they operated “harmoniously”. This could be done, in the present case, by restricting the operation of s 570 of the Fair Work Act to those “matters” arising in the proceeding under the Fair Work Act and allowing the costs regime, provided for under the County Court Act, to operate in respect of the contractual claim.
At [151], the Full Court rejected those contentions. At paragraphs [156]-[157], the court observed:
The word “proceeding” is not defined in the Fair Work Act. In the context of s 570 it bears a different meaning from the word “matter”. “Matters”, in the sense of claims or causes of action or their underlying controversies, are raised in the “proceeding” or “proceedings” which is or are prosecuted in the Court: cf Shea v Energy Australia Services Pty Ltd (No 7) [2014] FCA 1091 at [22] (Jessup J). As Gray J said in Geneff v Peterson (1986) 19 IR 40 at 90, in dealing with the construction of s 197A of the Conciliation and Arbitration Act 1904 (Cth) (a predecessor of s 570):
“[T]he section operates in relation to a ‘proceeding’. There is only one proceeding before the Court, although that proceeding involves a number of separate claims, each of which might have been the subject of a separate proceeding. … In my view, it is impossible to split the claims within a proceeding for the purpose of the application of s 197A.”
There was a single proceeding which was commenced and prosecuted to judgment in the County Court. Mr Sautner made claims under the Fair Work Act and at common law. The claims under the Fair Work Act were “matters” within the meaning of s 570(1) of the Fair Work Act. The proceeding was, as a result, a proceeding in relation to a matter arising under that Act. Section 570(1) operated to preclude the Court from ordering MSL (‘another party to the proceedings’) to pay any costs incurred by Mr Sautner in prosecuting his claims unless he could satisfy the Court that one of the exceptions, provided for in s 570(2), applied.
The Full Court went on to say relevantly at [166]-[168]:
It is well established that a failure to accept a reasonable offer of compromise may constitute an unreasonable act for the purposes of s 570(2) and its predecessors: see, for example, McDonald v Parnell Laboratories (Aust) (No 2) (2007) 164 FCR 591 at 598-9 (Buchanan J);
Even if it be accepted that Mr Sautner’s offer was a reasonable one it does not necessarily follow that MSL’s failure to accept it constituted an unreasonable act: Alpine Hardwoods (Aust) Pty Ltd v Hardys Pty Ltd (No 2) (2002) 190 ALR 121 at 128.
This is also a case in which the Full Court’s counsel of caution in Stratton Finance Pty Limited v Webb (2014) 314 ALR 166 is particularly apposite. In that case a Calderbank offer had been made by the applicant in a case in which he made claims under the Fair Work Act and for breach of contract. The Full Court noted that Calderbank letters presupposed the existence of a “costs jurisdiction”. No such jurisdiction existed (subject to s 570(2)) where claims are made under the Fair Work Act.
Sautner has been cited with apparent approval on a number of occasions since then, including perhaps mostly recently in Joseph v Parnell Corporate Services Pty Ltd [2021] FCAFC 67 at [91], a case in which the Full Court of the Federal Court also said at [115]:
On any view, s 570 is remedial and beneficial and should therefore be interpreted beneficially. That means that it should be given “a fair, large and liberal” interpretation: IW v City of Perth [1997] HCA 30; (1977) 191 CLR 1 at 11 (McHugh J).
From these authorities, it seems clear to me that the bold reliance, if I may so describe it, of the respondent upon its offer of compromise made pursuant to the Federal Court Rules is misconceived. That rule simply cannot operate to read down s 570 of the Fair Work Act. The question then becomes, clearly, whether Mr Buksh's failure to accept the various offers of compromise made to him constitute an unreasonable act or omission within the meaning of s 570(2)(b). It is appropriate to look at the offers that were actually made. These have been put on affidavit by Jessica Louise Dallimore by affidavit dated 27 April 2022. The first letter of offer, from which in a sense all the others sprang was dated 31 March 2021. The letter of offer offered $41,150 inclusive of costs and was open for 14 days. It did not state in terms that a failure to accept it would give rise to an indemnity costs application. However, correspondence sent with that offer made it clear that this was so.
The letter that accompanied the offer traversed the merits of the claim and said relevantly:
Our client does not suggest that you did not make complaints or inquiries in the course of your employment. However, there is not, as is required for your claim to succeed, any evidence of a causal relationship between those complaints or inquiries and our client's decision to terminate your employment. The decision to terminate your employment was motivated by the factors set out in the termination letter and conveyed to you at the termination meeting on 17 December 2019, being our client's concerns with your teaching performance, attendance and honesty regarding workload and start/finish times on campus. There is simply no proper basis for an assertion otherwise
The offer was, of course, inclusive of costs. And as was said by White J in Heldberg v Rand Transport (1986) Pty Ltd (No 2) [2018] FCA 1224 at [9]:
Rand faces the difficulty that its offer was expressed to be inclusive of costs. The difficulties which offers of that kind can cause in a context like the present are well known. A principal problem with an all‑inclusive offer is that it can make it difficult for a recipient to assess its effect and, in particular, the net amount after costs have been deducted. Another problem is the difficulty for a court later in making an assessment on whether the offer has been bettered without receiving detailed evidence concerning the costs incurred to the date of the offer by the recipient (authorities omitted).
By the time this offer was made, the proceedings had been under way for some time, albeit that affidavit material had not yet been filed. In assessing the offer, the fact that it was inclusive of costs is, in my view, a relevant consideration.
By further correspondence, dated 5 August 2021, between the solicitors of the parties, a further offer was made, pursuant to r 25, offering $41,150, again inclusive of costs. The offer was open for two weeks, in my view a reasonable amount of time. The offer referred to the fact that if the matter did not resolve, the respondent would be put to the costs of preparing the witness material required for trial.
A further letter, dated 22 September 2021, between the solicitors relevantly stated in respect of Mr Buksh's case, "After all, his claim may well not succeed." A further offer of $45,000 was made. And the letter drew attention to the costs that would be likely incurred if the matter went to trial.
On 6 January 2022, the solicitors for the respondent wrote to the applicant personally, as he was by then self-represented, and made a further offer of $48,000, less any applicable tax.
In further correspondence, dated 17 January 2022, the offer was increased to $50,000. But the respondent was not prepared to give the applicant an apology as he sought, nor acknowledge any unlawful action against him.
Matters that arise for consideration might be approached, at least to an extent, by analogy with the authorities developed to assess Calderbank offers. In Anchorage Capital Partners Pty Limited v ACPA Pty Ltd (No 2) [2018] FCAFC 112 at [6]-[18], the Full Court of the Federal Court set out a number of considerations which are often referred to in the authorities.
A well-established circumstance justifying an award of indemnity costs is an imprudent refusal of an offer to compromise. In such cases, a key question is whether the offeree’s refusal of the offer was “unreasonable” when viewed in light of the circumstances existing at the time the offer was rejected.
The circumstances to be taken into account in determining whether rejection of an offer was “unreasonable” cannot be stated exhaustively but may include, for example:
(a) the stage of the proceeding at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(c) the extent of the compromise offered;
(d) the offeree’s prospects of success, assessed as at the date of the offer;
(e) the clarity with which the terms of the offer were expressed; and
(f)whether the offer foreshadowed an application for an indemnity costs in the event of the offeree rejecting it.
An unsuccessful party is not liable to pay indemnity costs merely because it received an offer to settle on terms more favourable than it achieved at trial and rejected that offer. As we observed in the Appeal Reasons, albeit in the context of r 25.14(2) of the FCRs, assessment of the “unreasonableness” of an offeree’s refusal of a settlement offer is a broad-ranging inquiry that is not restricted to consideration of the extent or quantum of the compromise offered (authorities omitted).
It needs to be born steadily in mind that, pursuant to Sautner, of course, the court is concerned first and last with the terms of s 570 of the Act. It is possible to be misled by the catalogue of matters for consideration, in light of the authorities relating to Calderbank offers.
Here, on any view of the matter, the offers were open for a reasonable period of time and did sufficiently clearly make it apparent that indemnity costs would be sought if not accepted. The offers made were, at least in the case of the formal offers of compromise, made inclusive of costs, with the difficulties that that might be thought to give rise to, especially since the applicant had been legally represented for some of those times and would have incurred costs.
However, having said that, on any view of the matter, the ultimate outcome has been entirely detrimental from Mr Buksh's point of view. He has obtained a judgment at best of $2000 and still faces a cost order of $5000.
What one needs to consider, therefore - and this is an area where I think the Calderbank principles, if I may so describe them, are of some significance - it is whether the rejection of the offers of compromise by the applicant, Mr Buksh, was unreasonable in the light of how he might reasonably have seen the matter at the time the offers were made.
Here, at all times, Mr Buksh has very clearly fervently believed that he is telling the truth and that the witnesses called by the respondent are not. Indeed, correspondence addressed to my chambers (albeit inappropriately) after judgment was delivered suggests that he still remains fervently of that view. He has made references to perjury.
While self-evidently I have comprehensively found against any such assertion, the fact is that that is the prism through which he has viewed the matter. At the time the offers were made, his beliefs had, of course, not been tested in court. He would, no doubt, have strongly believed that he was going to succeed. By the time some of the later offers were made, if I understand the matter correctly, he was self-represented. Any assessment of his chances of success would have been unaffected by legal advice.
Furthermore, Mr Buksh always knew that he was going to have a measure of success in the case because the respondent's defence admitted infractions of the Fair Work Act. He would have had no means of evaluating the level at which those penalties might have been imposed. Further again, he knew, rightly enough, and as the respondent's correspondence itself revealed, he had, indeed, made complaints about his work during the occurrence of his employment. He had complained about his pay, and in one guise or another, he was ultimately successful in that regard. Furthermore, although the respondents made it clear that their offers of compromise were, essentially, commercial ones, he may well have felt that a party offering him $50,000 suggested that he had a strong case. While viewed in the light of legal experience, this would have been a complete misapprehension, it was something that may well have operated reasonably enough upon his mind.
It needs to be born in mind that s 570 is to be given the broad and liberal interpretation referred to by the Full Court of the Federal Court. The general premise that underpins s 570 is, as the respondents' written submissions very properly concede, to "serves a protective purpose to allow parties to conduct litigation in a manner they deem best without fear of an adverse costs order". The scale of costs that Mr Buksh has engendered for the respondent is, of course, a matter of significant concern. A public body has been put to very considerable expense.
In my view, and bearing in mind all the matters I have set out above, I think it is not possible for the court to find in these circumstances that Mr Buksh's rejection of the various offers constitutes an unreasonable act or omission within the meaning of s 570(2)(b). For the purposes of clarity, the particular matters on which I would give more emphasis are:
(a)The offers to compromise proceeded on a wrong footing in that they contained the wrong implication that they would, as it were, override or be read together with section 570 of the Act.
(b)The offers of compromise were inclusive of costs.
(c)Mr Buksh has always genuinely and fervently believed in his own case and was entitled to take it to judgment.
(d)Mr Buksh had, indeed, made complaints during his brief period of employment, and in respect of pay, he was ultimately, at least in part, successful.
(e)Mr Buksh always knew he was going to have some measure of success. He had no means of reasonably evaluating in advance of the event what the quantum of the penalties might be (bearing in mind that the maximum the court could have imposed was over $300,000).
I will therefore order that the application for costs be dismissed. The application itself was plainly a reasonable one even though it has been unsuccessful. Each party will bear their own costs of it.
I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Burchardt. Associate:
Dated: 13 May 2022
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