Caden Group Pty Ltd v Shop, Distributive and Allied Employees Association
[2018] FCCA 577
•13 March 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CADEN GROUP PTY LTD v SHOP, DISTRIBUTIVE AND ALLIED EMPLOYEES ASSOCIATION & ORS | [2019] FCCA 577 |
| Catchwords: INDUSTRIAL LAW – Costs – application for declarations – applicant wholly unsuccessful – whether costs should be awarded to the respondents. |
| Legislation: Fair Work (Transitional Provisions and Consequential Amendments) Act 2009, Schedule 3 and Schedule 6 Federal Circuit Court Rules 2001, Part 1 of Schedule 1 |
| Cases cited: Australian and International Pilots Association v Qantas Airways Ltd (No.3) (2007) 162 FCR 392; (2007) 165 IR 464; [2007] FCA 879 |
| Applicant: | CADEN GROUP PTY LTD (ACN 168 989 286) |
| First Respondent: | SHOP, DISTRIBUTIVE AND ALLIED EMPLOYEES ASSOCIATION |
| Second Respondent: | AVA ELIZABETH HANDSLEY |
| Third Respondent: | SAVARNA LOUISE NOCK |
| File number: | MLG 1193 of 2017 |
| Judgment of: | Judge Riley |
| Hearing date: | Decided on the papers |
| Date of last submission: | 19 February 2018 |
| Delivered at: | Melbourne |
| Delivered on: | 13 March 2018 |
REPRESENTATION
| Counsel for the applicant: | Bruce Shaw |
| Solicitors for the applicant: | Scammell Black Mileo |
| Counsel for the first respondent: | No submission |
| Solicitors for the first respondent: | A J Macken & Co. |
| Counsel for the second respondent: | James Hooper |
| Solicitors for the second respondent: | Ryan Carlisle Thomas |
| Counsel for the third respondent: | James Hooper |
| Solicitors for the third respondent: | Ryan Carlisle Thomas |
ORDERS
The applicant pay the second and third respondent’s costs of the proceedings on scale.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1193 of 2017
| CADEN GROUP PTY LTD (ACN 168 989 286) |
Applicant
And
| SHOP, DISTRIBUTIVE AND ALLIED EMPLOYEES ASSOCIATION |
First Respondent
| AVA ELIZABETH HANDSLEY |
Second Respondent
| SAVARNA LOUISE NOCK |
Third Respondent
REASONS FOR JUDGMENT
Introduction
This is an application for costs in a matter arising under the Fair Work Act 2009 (“the Act”). Judgment in the principal proceeding was delivered as Caden Group Pty Ltd v Shop, Distributive and Allied Employees Association & Ors [2017] FCCA 3055. The applicant operated a number of Bakers Delight shops and had numerous employees.
Costs applications in Fair Work matters are subject to s.570 of the Act. That section provides as follows:
Costs only if proceedings instituted vexatiously etc.
(1)A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.
(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.
The second and third respondents sought costs:
a)under s.570(2)(a) of the Act, on the basis that the applicant instituted the proceedings without reasonable cause; or alternatively
b)under s.570(2)(b) of the Act, on the basis that the applicant’s unreasonable act or omission, consisting of not withdrawing the application after the second and third respondents sent the applicant:
i)a letter dated 28 August 2017; or alternatively
ii)a letter dated 17 November 2017,
caused the second and third respondents to incur costs.
Background
By an application filed on 6 June 2017, the applicant sought:
1.A declaration pursuant to section 21 of the Federal Circuit Court Act of Australia 1999 that The Bakers Delight Holdings Ltd Collective Agreement (Victoria) 2006+:
(a)is a transferrable instrument within the meaning of section 312 of the Fair Work Act 2009 (“the Act”) and
(b)is a transferrable instrument for the purposes of section 314 of the Act and
(c)covers the applicant and its non-transferring employees who were employed at the applicant's Jackson Court site.
2.A declaration pursuant to section 21 of the Federal Circuit Court Act of Australia 1999 that The Bakers Delight (Victoria) Enterprise Agreement 2011:
(d)is a transferrable instrument within the meaning of section 312 of the Fair Work Act 2009 (“the Act”) and
(e)is a transferrable instrument for the purposes of section 314 of the Act and
(f)covers the applicant and its non-transferring employees other than those employed at the applicant's Jackson Court site.
3.A declaration pursuant to section 21 of the Federal Circuit Court Act of Australia 1999 that there is no modern award that covers the applicant and non-transferring employees of the applicant.
The application as filed did not name a respondent. The court ordered that the Shop Distributive and Allied Employees Association (“the SDA”) be joined as the respondent to the proceeding. The court also required the applicant to give copies of the relevant documents to:
a)the SDA;
b)each current and former employee of the applicant;
c)United Voice; and
d)the Retail and Fast Food Workers Union (“the RFFWU”).
The SDA filed a submitting notice on 25 July 2017, in which SDA submitted to any order of the court save as to costs. No submissions were received from the first respondent.
Ava Elizabeth Handsley and Savarna Louise Nock, current employees of the applicant, applied to be and were joined to this proceeding as the second and third respondents respectively on 29 August 2017. In their response filed on 3 October 2017, the second and third respondents sought a declaration that:
the General Retail Industry Award 2010 applied to the Second and Third Respondents upon the commencement of their employment with Caden Pty Ltd.
On 12 September 2017, the applicant filed an amended application seeking declarations as follows:
1.A declaration pursuant to section 16
21of Federal Circuit Court of Australia Act 1999 that The Bakers Delight Holdings Ltd Collective Agreement (Victoria) 2006+(the “2006 Agreement”) :(a)was
isa transferrable instrument within the meaning of section 312 of the Fair Work Act 2009 (“the Act”) and(b)was
isa transferrable instrument for the purposes of section 314 of the Act; and(c)covered
coversthe applicant and its non-transferring employees who were employed at the applicant’s Jackson Court site between the date each such employee was employed by the applicant and 16 March 2017, being the date the 2006 Agreement was terminated by the Fair Work Commission.2.A declaration pursuant to section 16
21of the Federal Circuit Court Act of Australia 1999 that The Bakers Delight (Victoria) Enterprise Agreement 2011:(d)is a transferrable instrument within the meaning of section 312 of the Fair Work Act 2009 (“the Act”);
(e)is a transferrable instrument for the purposes of section 314 of the Act; and
(f)covers the applicant and its non-transferring employees other than those employed at the applicant's Jackson Court site.
3.A declaration pursuant to section 16
21of the Federal Circuit Court Act of Australia 1999 that there is no modern award that covers the applicant and non-transferring employees of the applicant, other than at the Jackson Court site since 17 March 2017.At the hearing, the second and third respondents sought a declaration in the alternative as follows:
The General Retail Industry Award 2010 applied to non-transferring employees as defined by s.314(2) of the Fair Work Act 2009, including the second and third respondents, upon the commencement of their employment with Caden Group Pty Ltd.
Judgment in the principal proceeding was delivered on 8 December 2017. In that judgment, the court made a declaration in the alternative terms sought by the second and third respondents.
The applicant’s preliminary arguments
The applicant argued that it had merely come to the court to clarify its legal obligations and to ensure that its employees were paid in accordance with the law. That submission is disingenuous. The applicant came to the court to get a declaration ex parte that certain types of its employees were not entitled to the pay rates in the relevant Award.
Moreover, the role of the court is not to give advisory opinions. The role of the court is to quell controversies between parties. An exception to that statement is that this court can give an advisory opinion to a trustee in bankruptcy, but there are particular public policy reasons for that exception and they do not apply in this case.
The applicant also argued that there was no evidence that the second and third respondents had actually incurred the claimed costs. That is not so. The affidavit sworn by the solicitor for the second and third respondents, Mark Anthony Comito, on 5 February 2018 specifically said at paragraph 18 that:
The Second and Third Respondents have together and jointly, incurred the following legal costs in relation to the Application:-
(a)
Application and Affidavit lodgement filing fee -
$360.00
(b)
Counsel’s fees for settling submissions, preparation and attendance at hearing -
$6,000.00
(c)
Solicitor fees as assessed by independent costs consultant -
$23,933.80
(d)
Counsel’s fees for preparing Submissions regarding costs
$1,500.00
Total
$31,793.80
It is true that Mr Comito’s statement was not supported by documentary evidence. However, a statement on oath in an affidavit is evidence nonetheless. There was no application to cross-examine Mr Comito. I take his evidence as truthful.
The applicant argued that the court should accept that the second and third respondents were recruited by the RFFWU. That may be so. However, the relevance of that submission was not explained to the court. It was not suggested that the RFFWU had undertaken to pay for the second and third respondents legal costs, and there is no evidentiary basis on which to draw that inference.
The applicant argued that the intervention of the second and third respondents served no useful purpose. I do not accept that submission. The second and third respondents were the only contradictors in the proceeding. The court was greatly assisted by the submissions of the second and third respondents. Indeed, without them, the court may well have fallen into error.
The applicant argued that authority supported the general proposition that interveners should not get costs. The applicant relied on Construction, Forestry, Mining and Energy Union v Queensland Coal and Oil Shale Mining Industry (Superannuation) Ltd (2003) 132 FCR 516; [2003] FCA 1174 where Wilcox J said at [12]:
In Kaycliff Pty Ltd v Australian Broadcasting Tribunal (1989) 19 ALD 315 at 317, Morling J expressed the view that:
[i]n the absence of special circumstances ... where proceedings under the [Administrative Decisions (Judicial Review) Act 1977 (Cth)] are competent in the sense that all persons against whom relief is sought are made respondents, the general rule should be that an additional respondent who is joined at his own request ought not to receive his costs if the application fails.
I agree with counsel for the applicants that there is no justification for confining this statement of principle to proceedings for judicial review.
The applicant also relied on the decision of the Full Court of the Federal Court in Ruddock v Vardalis (No.2) (2001) 115 FCR 229; (2001) 188 ALR 143; [2001] FCA 1865 (“the Tampa case”). The applicant said that the Tampa case stood for the proposition that the usual practice was that there be no costs order in favour of interveners. In fact, in the Tampa case, the interveners were on the losing side. Black CJ and French J (as his Honour then was) said at [28]:
... It is not in issue that no costs order should be made against the intervenors, the Human Rights and Equal Opportunity Commission and Amnesty International Ltd.
However, the applicant relied particularly on [53], where Beaumont J said:
North J ordered that the Commonwealth pay the costs of the intervenors (Amnesty International Limited (Amnesty) and the Human Rights and Equal Opportunity Commission (HREOC). However, upon the hearing of the appeal, both Amnesty and HREOC accepted, correctly, that his Honour’s order was contrary to the usual practice in this area. In accordance with that practice, I propose that there be no order for the costs of the intervenors, both at first instance and on the appeals.
Consequently, I accept that, in general, the usual practice is that there be no costs awarded in favour of intervenors. However, that general rule is presumably subject to the limitations expressed more fully in Kaycliff. The limitations expressed in Kaycliff were that:
a)there be an absence of special circumstances; and
b)all persons against whom relief was sought were made respondents.
In the present case, strictly speaking, no relief was sought against anyone, because the applicant only sought declarations ex parte. However, the declarations sought by the applicant would have had a significant and immediate effect on the second and third respondents, as the declarations would have adversely affected the second and third respondents’ entitlements.
It seems to me that the significant and immediate effect on the second and third respondents constitutes a special circumstance, particularly in combination with the fact that there was no union that wished to, or could, be the contradictor. The SDA, the union that could have represented the interests of the second and third respondents and others in their position, chose not to make submissions. The RFFWU could not participate in the proceedings as it is not a registered organisation. Without the second and third respondents, there would have been no contradictor, and, as mentioned above, the court may well have fallen into error. For these reasons, I do not accept that the usual rule in relation to the costs of intervenors should apply in this case.
Authorities on costs in fair work matters
In Tsilibakis v Transfield Services (Australia) Pty Ltd (No.2) [2015] FCA 1048, White J said:
7.It is not necessary to canvass in detail the authorities bearing upon the application of s 570. The relevant principles are well established. Section 570 and its predecessors are to be understood as reflecting a legislative policy of protecting parties to proceedings under the FW Act from orders for costs so that parties with a genuine grievance will not be discouraged from pursuing a remedy to which they may be entitled, or from pursuing litigation in the manner which they deem best, for fear of an adverse costs order: Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143, (2008) 170 FCR 574 at [29]; Ashby v Slipper (No.2) [2014] FCAFC 67, (2014) 314 ALR 84 at [35]. The occasions upon which costs will be awarded under s 570 are likely to be exceptional: Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission [2006] FCAFC 199; (2006) 156 FCR 275 at [60].
8.The questions of whether a party’s act or omission was unreasonable and whether such an act or omission has caused the other party to incur costs are to be determined having regard to the particular circumstances of each case: Australian and International Pilots Association v Qantas Airways Ltd (No.3) [2007] FCA 879; (2007) 162 FCR 392 at [27][28]. The fact that a party has conducted the litigation inefficiently, has made concessions relatively late, may have acted in a different or more timely fashion, or has adopted a genuine but misguided approach will be relevant to, but are not conclusive of, the party having acted unreasonably in the relevant sense: Clarke at [29]-[30]. A party’s failure to comply with the duties imposed by s 37N of the Federal Court Act is also a relevant consideration: Specsavers Pty Ltd v The Optical Superstore Pty Ltd [2012] FCAFC 183; (2012) 208 FCR 78 at [57]-[58].
In Fair Work Ombudsman v Skilled Offshore (Australia) Pty Ltd (No.2)[2015] FCA 1509, Gilmour J accepted the following legal principles as uncontroversial:
7.Satisfaction of s 570 of the FW Act [acts] as an express limitation on the Court’s broad discretion to award costs under s 43 of the Federal Court of Australia Act 1976 (Cth) (FCA Act): s 43(1)(c); Melbourne Stadiums Ltd v Sautner (2015) 229 FCR 221 at [140] per the majority.
8.The purpose of s 570 is to ensure that litigants, including respondents, are not deterred from “complete[ly] and robust[ly]” defending claims for contravention: Ryan v Primesafe (2015) 323 ALR 107 at [64].
...
10.That a party has a “self-evidently weak case” is not enough to warrant a costs order. There must be “a higher level of criticism or disapprobation”: Clarke v Dixie Cummings Enterprises Pty Ltd [2013] FCA 987 at [14]. Indeed, costs were not awarded against the FWO in Fair Work Ombudsman v Valuair Limited (No 3) [2014] FCA 1182 even though elements of the FWO’s case were “artificial and unsatisfactory” and “potentially bizarre”: at [12]-[17] cross-referencing to the liability decision – Fair Work Ombudsman v Valuair Ltd (No 2) (2014) 224 FCR 415.
...
13.Even if the Court is satisfied of a s 570(2) precondition, it retains a discretion not to order costs: Corinthian at [12].
In King v Patrick Projects Pty Ltd (No.2) [2017] FCA 388, Gilmour J said:
9.… it is well-established that the Court’s powers to make cost orders pursuant to s 570(2) of the Fair Work Act must be exercised cautiously for public interest reasons: Australian Workers Union v Leighton Contractors Pty Ltd (No 2) (2013) 232 FCR 428 at [7]–[8].
In Construction, Forestry, Mining and Energy Union v Corinthian Industries (Australia) Pty Ltd (No.2)[2014] FCA 351 Pagone J said at [8]:
... To exercise the discretion conferred by [s 570(2)(a) of the Fair Work Act 2009] the Court must be satisfied that the claims were, relevantly, instituted without reasonable cause. That is not established merely because a party fails in the claims: R v Moore; Ex parte Federated Miscellaneous Workers Union of Australia (1978) 140 CLR 470 at 473. The relevant provisions reflect “a policy of protecting a party instituting proceedings from liability for costs” and costs will rarely be awarded unless justified by exceptional circumstances: see Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission (2006) 156 FCR 275 at [60]. In Kangan Batman Institute it was said by the Full Court at [60] that “a proceeding will be instituted without reasonable cause if it has no real prospects of success, or was doomed to failure”. In Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 Wilcox J indicated at 264 that one way of testing whether a proceeding was instituted “without reasonable cause” was to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no “substantial prospect of success”. His Honour went on to say that a proceeding lacks a reasonable cause where it is clear that it must fail on the applicant’s own version of the facts.
In Baker v Patrick Projects Pty Ltd (No.2) (2014) 145 ALD 548; [2014] FCAFC 166 the Full Court of the Federal Court endorsed Pagone’s J’s approach in Corinthian, as did another Full Court in Kennedy v Secretary, Department of Industry (No.4)[2017] FCAFC 7, where Barker J said at [8] that the relevant question was:
… whether there were facts apparent to the party at the time of instituting the appeal that, viewed objectively, would demonstrate that there were no reasonable prospects of success …
In King v Patrick Projects, Gilmour J said:
15.It is worth also noting that courts have accepted that cost orders made pursuant to s 570(2)(a) of the Fair Work Act and which relate to proceedings instituted “without reasonable cause” are not restricted to exceptional cases. Although an award for costs under s 570 will generally be ‘an exceptional order’ in that it is a divergence from the usual course, it is now widely accepted that there is no need to demonstrate exceptional circumstances in order to enliven the Court’s jurisdiction to award costs: Spotless Services Australia Ltd v Marsh [2004] FCAFC 155 at [12] affirmed in Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No.2) (2015) 230 FCR 337 at [15]–[17].
Justice Wilcox said in Kanan v Australian Postal & Telecommunications Union (1992) 43 IR 257; [1992] FCA 539 at [29] as follows:
27.… A proceeding is not to be classed as being launched “without reasonable cause” simply because it fails. As Gibbs J said in The Queen v Moore; ex parte Federated Miscellaneous Workers’ Union of Australia [1978] HCA 51; (1978) 140 CLR 470 at 473, speaking of the Conciliation and Arbitration Act equivalent of s.357 (s.197A):
“... a party cannot be said to have commenced a proceeding ‘without reasonable cause’, within the meaning of that section, simply because his argument proves unsuccessful. In the present case the argument presented on behalf of the prosecutor was not unworthy of consideration and it found some support in the two decisions of this court to which I
have referred. The fact that those decisions have been distinguished, and that the argument has failed, is no justification for ordering costs in the face of the prohibition contained in s.197A.”28. In Standish v University of Tasmania [1989] FCA 166; (1989) 28 IR 129 at 139 Lockhart J applied the qualification in ordering costs against an applicant whose case he thought “misconceived”, rather than simply unsuccessful. But, as the Full Court pointed out in Thompson v Hodder (1989) 29 IR 339 at 342, “(t)here may be cases which could not be described properly as ‘misconceived’ but which would nevertheless be held to have been instituted without reasonable cause”.
29. It seems to me that one way of testing whether a proceeding is instituted “without reasonable cause” is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant’s favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being “without reasonable cause”. But where it appears that, on the applicant’s own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause. That is the situation in the present case. The qualification of s.347 applies. The Court has power to order costs against the applicant.
30. I see no discretionary reason to withhold such an order. It is not a matter of the applicant's motives but, rather, that he has put the respondent to the expense of resisting a claim which was always doomed to failure. There is no question of punishing the applicant for his unreasonable course of action. The rationale for making a costs order is that a measure of indemnity should be conferred upon the respondent for the costs it has been obliged to incur in responding to the unreasonably instituted proceeding. I propose to order that the principal proceeding be dismissed with costs. The costs of the motion will be costs in the principal proceeding and so covered by that order.
In Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission (AIRC) (2006) 156 FCR 275; (2006) 237 ALR 672; (2006) 160 IR 405; [2006] FCAFC 199, at [60] the Full Court of the Federal Court said in relation to a precursor of s.570 that:
... A party does not institute proceedings without reasonable cause merely because that party fails in the argument put to the Court: R v Moore; Ex parte Federated Miscellaneous Workers’ Union of Australia(1978) 140 CLR 470 per Gibbs J at 473. The section reflects a policy of protecting a party instituting proceedings from liability for costs, but that protection may be lost. Although costs will rarely be awarded under the section and exceptional circumstances are required to justify the making of such an order (see Heidt v Chrysler Australia Ltd(1976) 26 FLR 257; 13 ALR 365 per Northrop J), a proceeding will be instituted without reasonable cause if it has no real prospects of success, or was doomed to failure: see Kanan v Australian Postal and Telecommunications Union[1992] FCA 539; (1992) 43 IR 257 per Wilcox J; see also Bostik (Australia) Pty Ltd v Gorgevski (No 2) (1992) 36 FCR 439; and Nilsen v Loyal Orange Trust (1997) 76 IR 180.
In Australian and International Pilots Association v Qantas Airways Ltd(No.3) (2007) 162 FCR 392; (2007) 165 IR 464; [2007] FCA 879, Tracey J held at [36], in relation to a precursor of s.570 of the Act:
… The prosecution of any incompetent or hopeless case can be regarded as “an unreasonable act” within the meaning of s 824(2). Conversely, in my opinion, the pursuit of a contentious, and ultimately unsuccessful, argument is not an unreasonable act.
Were the proceedings instituted without reasonable cause?
The second and third respondents argued that the proceeding was instituted without reasonable cause because the applicant’s arguments were specious and had no prospect of success, and, even on the applicant’s own version of the facts, the application was bound to fail.
The applicant denied that the application was instituted without reasonable cause.
The circumstances of this case were that there was no dispute as to the facts. The case depended solely on questions of law. It became apparent during the hearing that the applicant was under a fundamental misapprehension about whether certain agreements were enterprise instruments within the meaning of the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (“the TPCA”). The applicant submitted that enterprise instrument was defined in Schedule 3 of the TPCA. In fact, enterprise instrument was defined in Schedule 6 of the TPCA. With that misapprehension removed, the matter was readily resolved by the application of s.48 of the Act.
I accept that transitional provisions can be very difficult to apply. However, ultimately, the submissions put by the applicant were unarguable. This is not a case where the applicant’s submissions about the law were soundly based but simply unsuccessful. On a proper reading of the applicable legislation, the applicant’s submissions were doomed to fail.
I accept that, even where an application is brought without reasonable cause, the court retains a discretion about whether to order costs. Relevantly, the second and third respondents were both about 18 years old and worked for the applicant part-time. In my view, this is one of those rare cases where it is appropriate to order costs against a party in proceedings under the Act.
Is it appropriate to order costs on an indemnity basis?
The second and third respondents sought their costs on an indemnity basis from the commencement of the proceeding. In Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 232-234; (1993) 118 ALR 248; (1993) 28 IPR 561 Sheppard J, set out the following principles relating to costs and indemnity costs:
2.The ordinary rule is that, where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis. In this Court the provisions of O 62, rr 12 and 19, and the Second Schedule to the Rules will apply to the taxation. In many cases the result will be that the amount recovered by the successful party under the Order will fall short of (in many cases well short of) a complete indemnity.
3.This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of Court) or a decision of an intermediate court of appeal or of the High Court would be required to alter it. …
4.In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. …
5.Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud …; evidence of particular misconduct that causes loss of time to the Court and to other parties …; the fact that the proceedings were commenced or continued for some ulterior motive … or in wilful disregard of known facts or clearly established law …; the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions …; an imprudent refusal of an offer to compromise … and an award of costs on an indemnity basis against a contemnor … . Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.
6.It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.
In Australian and International Pilots Association v Qantas Airways Ltd (No.3) (2007) 162 FCR 392; (2007) 165 IR 464; [2007] FCA 879, Tracey J said at [38], in relation to a precursor of s.570 of the Act:
The respondent seeks to have any costs order in its favour paid on an indemnity basis. I accept that costs might be awarded on such a basis under s 824(2) in appropriate cases. That is because, if the requirements of s 824(2) are satisfied, the fetter imposed by s 824(1) is removed and the Court enjoys the same wide discretionary power which is conferred by s 43 of the Federal Court of Australia Act.
That statement applies equally to this court and s.570 of the Act. However, I do not consider that the application in this case could properly be regarded as having been brought in wilful disregard of established law. The second and third respondents did not suggest that the relevant transitional provisions had been the subject of any previous authority. The transitional provisions were complex, and the applicant misunderstood them. However, there is no basis on which to conclude that the applicant misunderstood the transitional provisions wilfully. I cannot discern any other basis on which it would be appropriate to order costs on an indemnity basis from the commencement of this proceeding.
It was not entirely clear, but the second and third respondents might also have claimed indemnity costs from the date of their letter of 28 August 2017, or, alternatively, from the date of their letter dated 17 November 2017. Obviously, if the letters had been in the nature of Calderbank offers, there would have been some merit in that argument. However, the letters were not offers as such. Rather, they urged the applicant to withdraw the proceeding on the basis that it was misconceived. However, through no fault of the second and third respondents, the letters did not deal with the definition of enterprise instrument, which was the pivotal misapprehension on which the applicant’s case was based. Consequently, the letters did not persuade the applicant to withdraw.
In my view, the letters do not warrant a costs order on an indemnity basis, because, for whatever reason, they did not engage with the pivotal issue from the applicant’s point of view. Having said that, I accept that there was no reason for letters to engage with that pivotal issue because it was based on a misapprehension. In my view, the appropriate order in this case is for the applicant to pay the second and third respondent’s costs on scale.
The matter was listed for a final hearing for one day. However, the final hearing only took half a day. Consequently, I will allow only a half day for the solicitor.
There is no allowance in the scale for preparing written submissions on costs. However, it seems to me that it is appropriate to include a reasonable amount for that service. The amount claimed by counsel for preparing written submissions on costs is $1,500, which is less than the amount for a half day hearing with the 50% advocacy loading. I will allow $1,500 for the preparation of written submissions on costs.
Calculation of costs
By my calculation, the costs on scale are as follows:
Solicitor’s Costs
29 August 2017: application in a case for the second and third respondents to intervene
Item 3(a):
Interim or summary hearing – as a discrete event
$1,832
Item 3(b):
The daily hearing fee mentioned in item 13
Item 13(b):
Daily hearing fee for a half day hearing
$1,099
22 November 2017: final hearing
Item 6:
Preparation for final hearing – one day matter
$6,603
Item 13(b):
Daily hearing fee – for a half day hearing
$1,099
8 December 2017: taking judgment
Item 9(a):
Final hearing costs for attendance of solicitor at hearing to take judgment and explain orders
$299
Item 9(b):
The daily hearing fee mentioned in item 13 that applies to the hearing
Item 13(a):
Daily hearing fee for a short mention for judgment
$299
Total for Solicitor:
$11,231
Barrister’s Fees
22 November 2017: final hearing
Item 13(b):
Daily hearing fee for one day hearing
$2,199
Item 12:
Advocacy loading – 50% of the daily hearing fee mentioned in item 13 that applies to the hearing
$1,099.50
5 February 2018: preparing costs submissions
Preparing costs submissions
$1,500
Total for Barrister:
$4,798.50
Combined Total for Barrister and Solicitor:
$16,029.50
Before finalising the orders, I will hear the parties on the calculation of costs.
I certify that the preceding forty-five (45) paragraphs are a true copy of the reasons for judgment of Judge Riley
Associate:
Date: 13 March 2018
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