Cavanagh-Downs v Insightsoftware Australia Pty Ltd
[2024] FCA 1067
•13 September 2024
FEDERAL COURT OF AUSTRALIA
Cavanagh-Downs v Insightsoftware Australia Pty Ltd [2024] FCA 1067
File number: NSD 1182 of 2023 Judgment of: KATZMANN J Date of judgment: 13 September 2024 Catchwords: PRACTICE AND PROCEDURE – where expert evidence adduced by applicant conceded to be inadmissible – whether leave should be granted to applicant to adduce other expert evidence and, if so, on what conditions
COSTS – application for costs in proceeding arising under Fair Work Act 2009 (Cth) – whether acts or omissions of applicant unreasonable and, if so, whether they caused respondent to incur costs
Legislation: Fair Work Act 2009 (Cth) s 570
Federal Court of Australia Act 1976 (Cth) ss 37M, 37N
Federal Court Rules 2011 (Cth) rr 23.11, 23.13
Cases cited: Australian and International Pilots Association v Qantas Airways Ltd (No 3) (2007) 162 FCR 392
Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (2015) 230 FCR 337
Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574
Ryan v Primesafe [2015] FCA 8; 323 ALR 107
Saxena v PPE Asset Management Pty Ltd [2011] FCA 395
Tsilibakis v Transfield Services (Australia) Pty Ltd (No 2) [2015] FCA 1048
Division: Fair Work Division Registry: New South Wales National Practice Area: Employment and Industrial Relations Number of paragraphs: 61 Date of hearing: 10 September 2024 Counsel for the Applicant: Mr I Neil SC with Mr R Millar Solicitor for the Applicant: McDonald Murholme Counsel for the Respondent: Mr M Foran Solicitor for the Respondent: DLA Piper ORDERS
NSD 1182 of 2023 BETWEEN: PAUL CAVANAGH-DOWNS
Applicant
AND: INSIGHTSOFTWARE AUSTRALIA PTY LTD
Respondent
ORDER MADE BY:
KATZMANN J
DATE OF ORDER:
13 SEPTEMBER 2024
THE COURT ORDERS THAT:
1.The applicant have leave to serve an expert report concerning his alleged mental disability and any ensuing loss or damage on the following conditions:
(a)that it be in a form that complies with r 23.13 of the Federal Court Rules 2011 (Cth) and the Expert Witness Practice Note (GPN-EXPT);
(b)that it be annexed to an affidavit from the expert;
(c)that the affidavit be served by 4pm on 15 October 2024;
(d)that no expert evidence be filed thereafter without obtaining the leave of the Court; and
(e)that the applicant pay the costs incurred by the respondent as a result of serving the report of Dr Huang including the costs of that part of the amended interlocutory application which challenged the admissibility of the report.
2.By 4pm on 20 September 2024 or such further time as the parties may agree, the applicant file and serve copies of the affidavits he intends to read at the trial redacting those parts he has agreed not to read.
3.The interlocutory application, filed by the respondent on 24 May 2024 (as amended on 5 July 2024) otherwise be dismissed.
4.By 4pm on 15 October 2024 the applicant file and serve an amended statement of particulars of disability, loss and damage which specifies with particularity the nature of the disability; the amount claimed for economic loss and the foundation for that claim; together with the documents that support the claim and records of earnings since the termination of his employment, including group certificates and tax returns.
5.The matter be listed for case management before Judicial Registrar Hammerton-Cole at the earliest mutually convenient date and time after 15 October 2024.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
KATZMANN J:
Introduction
This is a proceeding under the Fair Work Act 2009 (Cth) (FW Act). The applicant seeks various forms of relief for several kinds of “adverse action” alleged to have been taken against him for prohibited reasons. One of the applicant’s claims is that the respondent had contravened s 351 of the FW Act by taking adverse action against him because of his “mental disability”. When the proceeding was commenced, the applicant alleged that the same actions were taken against him because of his “physical disability”. Pleadings closed on 20 November last year and on 4 December, I made orders referring the matter for mediation and, in order to facilitate the mediation, requiring the applicant to file and serve a statement of agreed facts and issues no later than seven days before the mediation (the December orders). At the same time, I made orders programming the proceeding right up until a pre-trial case management conference in July this year. The applicant did not comply with the order that he file and serve a statement of agreed facts and issues, the mediation failed, and the progress of the proceeding stalled.
The December orders required the applicant to file by 23 February 2024 any affidavits upon which he wished to rely at the hearing. On that day the applicant filed three affidavits. On 6 March 2024, without seeking an extension of time, the applicant filed and served two additional affidavits. Nearly two weeks later, on 18 March 2024, the applicant’s lawyers sent an email to the Court attaching “proposed consent orders” providing for “the extension” of the timetabling orders with a commensurate extension of time for the respondent to file its evidence, requesting that the orders be made in chambers.
Unhappy with this cavalier approach to Court orders, I called the parties back for a case management hearing at 9.30am on 21 March 2024. The email sent from my chambers on 18 March 2024 to advise them of the listing also included a request that by return email I be provided with a copy of the statement of agreed facts and issues that was required to be filed by order 3 of the December orders. Two days later, I received an email from Alan James McDonald, the principal lawyer at McDonald Murholme, the solicitors on the record for the applicant in which he indicated he would offer the Court a sincere apology for the non-compliance with that order and would answer any questions I had about it. He also advised that he was unable to provide a copy of the document because the applicant’s draft had been provided to the respondent’s lawyers at 9.53 that morning and they were seeking instructions. Less than 15 minutes before the case management hearing was due to start, an unsigned copy of a statement of agreed facts and issues was emailed to my associate. I was told that the respondent had not signed it “due to last minute very small changes being made in the document”. A statement of agreed facts and issues is yet to be filed.
At the case management hearing I also raised concerns about a number of other matters, including the preponderance of apparently inadmissible material in the affidavits. I also queried whether the applicant intended to file additional evidence to support the pleaded claim that adverse action had been taken against the applicant on the ground of a physical and mental disability in the absence of expert evidence that he had such disabilities. In the circumstances, I took the extraordinary step of vacating the orders requiring the respondent to file its evidence and referred the matter to a Registrar of the Court to assist the applicant to get his house in order. The applicant subsequently abandoned his physical disability claim, filed an amended statement of claim, obtained a report from the applicant’s general practitioner ostensibly in support of his mental disability claim, and indicated he would not read one of the affidavits and several parts of the others.
Dissatisfied with the applicant’s conduct, the respondent filed an interlocutory application on 24 May 2024 which was superseded by an amended interlocutory application filed on 5 July. This judgment relates to the amended interlocutory application.
The interlocutory proceeding
By the interlocutory application the respondent sought the following orders:
1.The Applicant not be granted leave to amend his Statement of Claim in the form of the proposed Amended Statement of Claim served on the Respondent on 10 May 2024.
2.Pursuant to section 570 of the Fair Work Act 2009 (Cth) the Applicant pay the Respondent's costs incurred from 4 December 2023 to 24 May 2024, to be paid forthwith.
3.That the Court provide an advance ruling in respect of the parts of the affidavits filed by the Applicant to the date of this application identified at Schedule 1 of this application pursuant to section 192A (a) of the Evidence Act 1995 (Cth).
4.The Applicant pay the Respondent's costs of an[d] incidental to this application.
5.Such further or other orders as the Court deems fit.
The amended interlocutory application deleted the first paragraph, extended to 5 July 2024 the period the subject of the order contained in the second paragraph, amended the third, and sought two additional orders. It reads as follows:
2.Pursuant to section 570 of the Fair Work Act 2009 (Cth) the Applicant pay the Respondent’s costs incurred from 4 December 2023 to 5 July 2024, to be paid forthwith.
3. That the Court provide an advance ruling in respect of:
a.the parts of the affidavits filed by the Applicant to the date of this application identified at Schedule 1 of this application pursuant to section 192A(a) of the Evidence Act 1995 (Cth).
b. the letter of Dr Huang dated 14 June 2024 which is annexed to the particulars by the Applicant on 14 June 2024 identified at Schedule 1 of this application pursuant to section 192A(a) of the Evidence Act 1995 (Cth).
4.If the advance ruling in relation to 3(b) finds that the letter of Dr Huang is inadmissible, then paragraphs 12, 28, 36, 38 and 40 of the amended statement of claim filed by the Applicant be struck out pursuant to rule 16.21 of the Federal Court Rules 2011 (Cth).
5.In respect of those affidavits that the Applicant still proposes to read at trial, within 7 days of these orders the Applicant file and serve redacted copies of those affidavits reflecting those parts of the affidavits that are not being read or that the Court has ruled are inadmissible.
6.The Applicant pay the Respondent’s costs of an[d] incidental to this application.
7. Such further or other orders as the Court deems fit.
The interlocutory application was supported by two affidavits affirmed by Clancy Helen Goslett-King, a solicitor and a partner of DLA Piper Australia, the solicitors on the record for the respondent. The applicant sought to rely on two affidavits sworn by Mr McDonald. The respondent objected to the applicant reading the second, filed on the eve of the hearing without leave, and it was not read. Neither deponent was required for cross-examination.
At the outset of the hearing, senior counsel for the applicant, Mr Neil SC, who had apparently been briefed only recently and for the purpose of the hearing, conceded that “salient aspects” of the letter from Dr Huang (Huang report) were inadmissible and that the applicant would not rely on the report “at least in its present form”. In those circumstances, proposed order 4 fell away and the respondent did not press order 3. The applicant applied for leave to file and serve a further or replacement expert report. The respondent opposed the application.
Consequently, three issues arise for resolution: first, whether the applicant should be ordered to pay the respondents’ costs from 4 December 2023 to 5 July 2024; second, whether the applicant should have leave to adduce further evidence to compensate for the deficiencies in the Huang report, and third, whether the applicant should be ordered to pay the costs of the interlocutory application.
For the reasons that follow the applicant should have leave to adduce expert evidence concerning his alleged “mental disability” but only on certain conditions, including conditions to compensate the respondent for the costs it incurred in having to deal with the Huang report. Otherwise, the interlocutory application should be dismissed.
The costs applications
Section 570 of the FW Act prohibits a court from making a costs order except in particular circumstances. It relevantly provides that:
(1)A party to proceedings … in a court … 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) ...
(2) The party may be ordered to pay 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.
As White J explained in Tsilibakis v Transfield Services (Australia) Pty Ltd (No 2) [2015] FCA 1048 at [7], s 570, like its predecessors, reflects a legislative policy of protecting parties to proceedings arising under the FW Act from costs orders so that those with a genuine grievance will not be discouraged from seeking a remedy or pursuing litigation in the way they deem best, for fear of an adverse costs order. See also Ryan v Primesafe[2015] FCA 8; 323 ALR 107 at [64] (Mortimer J).
A party’s failure to comply with the obligations imposed by s 37N of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act) is a relevant consideration: Tsilibakis at [7]. Section 37N requires the parties to a civil proceeding in the Court to conduct the proceeding, including any negotiations for a settlement of the dispute to which the proceeding relates, in a way that is consistent with the overarching purpose of the civil practice and procedure provisions (as defined in s 37M). That purpose is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. A failure to comply with the obligation in s 37N may be relevant to the reasonableness of the party’s conduct. It will certainly be relevant to whether, if the power is enlivened, the discretion should be exercised.
In Primesafe at [66], Mortimer J emphasised that “s 570 … is not a licence to parties to ignore the requirements of s 37M … or [scil.] the Court’s power to order costs against parties who fail to comply with their obligations under s 37N”. Her Honour went on to observe:
The content of ss 37M and 37N, and parties’ obligations to assist the Court in achieving the objectives set out in s 37M, must be reconciled with access to justice provisions such as s 570(1). That reconciliation occurs through a focus on the reasonableness of parties’ conduct, the appropriateness of the Court processes undertaken by them, the timeliness of their compliance with Court orders or steps in the proceeding, and the existence of a substantive legal and factual basis for the claims made and arguments put.
Although the occasions on which an order for costs will be made in a matter arising under the FW Act are likely to be exceptional, there is no superadded requirement of “exceptional circumstances”. See Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd (2015) 230 FCR 337 at [13]–[17] (Logan, Bromberg and Katzmann JJ). The power to award costs is enlivened if any of the conditions set out in the subsection are established to the satisfaction of the Court.
Whether a party behaved unreasonably and, if so, caused the other party to incur costs will obviously turn on the facts and circumstances of the particular case. Matters of the following kind are relevant but not conclusive: the fact that a party conducted the litigation inefficiently, belatedly made concessions, could have acted differently or in a more timely fashion, or adopted a genuine but misguided approach to the case or an issue: see Tsilibakis at [8], citing Construction, Forestry, Mining and Energy Union v Clarke(2008) 170 FCR 574 at [29] (Tamberlin, Gyles and Gilmour JJ).
The respondent relies on s 570(2)(b). It submitted that the following acts and omissions of the applicant were unreasonable:
(1)the applicant’s failure to file and serve the statement of agreed facts and issues, reducing the prospects that the mediation would result in a settlement, and the applicant’s insistence that Meg Christman (the person who allegedly took the adverse action) attend the mediation in person, requiring the respondent to seek a Court order;
(2)the failure of the applicant to properly plead his case in the first place, requiring the respondent to deal with the statement of claim and object to it, review the proposed amended statement of claim and object to it, file an interlocutory application to deal with its “manifest inadequacies”; and file a defence to the amended statement of claim — all of which would have been unnecessary if the applicant had complied with his obligations under Pt 16 of the Federal Court Rules2011 (Cth);
(3)filing inadmissible material and failing to adequately identify the parts of his affidavits that would not be read, causing the respondent to perform the task for itself, prepare the interlocutory application and then the amended interlocutory application; and
(4)filing the inadmissible expert evidence, despite a warning from the Court, the extended timetable, and representations that compliant expert evidence would be filed, causing the respondent to incur the expense associated with the correspondence about it and the amended interlocutory application.
For these reasons the respondent initially sought its costs “for all the procedural steps it undertook after 4 December 2023”, contending that the applicant’s unreasonable acts and omissions caused it to incur those costs. It argued that, had the applicant acted consistently with his obligations under the Federal Court Act, noting that he had elected to bring the proceeding in this Court rather than in the more informal forum of the Federal Circuit and Family Court of Australia (Div 2), the matter could have resolved at mediation or proceeded in the ordinary course with the exchange of evidence rather than requiring such active case management.
The respondent relied on the following remarks of Bromberg J in Saxena v PPE Asset Management Pty Ltd [2011] FCA 395 at [5]–[9]:
5The predecessor provision to s 570 was considered by a Full Court of this Court in Construction, Forestry, Mining and Energy Union and Others v Clark[e] (2008) 170 FCR 574 where at [29] the Court said:
Indeed, while courts should use the discretion in section 824(2) to ensure that parties to litigation arising from the WR Act do not engage in unreasonable acts and omissions which put the other party to undue expense, they should also be careful not to exercise a discretion with too much haste, given that such haste may discourage parties, for fear of an adverse costs order, from pursuing litigation under the WR Act in the manner which they deem best.
6With great respect to the observations made in CFMEU v Clark, I wholeheartedly agree that this Court ought be very careful indeed to exercise the discretion provided by s 570(2) and should not do so other than in a clear case. The limited discretion conferred on the Court by that subsection ought not become the basis for arguments about costs in relation to any and every transgression in the conduct of a case.
7However, the failure by a party to comply with orders of the court is a matter of some seriousness. The overarching objectives outlined in section 37M of the Federal Court Australia Act 1976 (Cth) (“the Federal Court Act”) make it abundantly clear that proceedings before the Court should be conducted as efficiently as possible, with an eye to the expense involved in the conduct of the litigation.
8That provision supports the case management objectives of the Court and it is beyond argument that the case management requirements of the Court will not be achieved if parties fail to act in compliance with orders of the Court and do so for extended periods of time, without seeking to rectify those circumstances by approaching the Court for orders varying the requirement of those orders which have not been complied. In this case, over three months went by between the time when compliance was due and when the respondents first approached the Court for orders which would have rectified that non-compliance.
9Whilst I accept, to some extent, the respondents’ criticism of the conduct of the applicant, which I think was at times heavy handed, I do nevertheless regard the failure by the respondents to comply with the Court’s order, for the very extended period of non-compliance that occurred, to have been an unreasonable act or omission within the terms of s 570(2)(b) of the Fair Work Act.
Although no application was made to further amend the interlocutory application, in its written submissions the respondent also sought an order that its costs be paid on an indemnity basis. In the alternative that the Court were minded to make a percentage or lump sum costs order, the respondent relied on Ms Goslett-King’s second affidavit in which she deposed that:
From 4 December 2023 to 5 July 2024, I have:
(a)undertaken, directed, instructed, or reviewed, all external legal work performed for the Respondent in these proceedings; and
(b)reviewed and settled all charges invoiced to the Respondent for all legal costs and disbursements incurred by the Respondent to defend the proceedings and participate in alternative dispute resolution in the proceedings.
To date, DLA Piper has issued invoices to the Respondent in the amount of approximately $145,000 for legal work to defend the proceedings and participation in alternative dispute resolution between 4 December 2023 to 5 July 2024 (Fees). The Fees are inclusive of disbursements including counsel fees, filing fees in respect of the interlocutory application, and transcript fees.
None of the invoices were annexed to the affidavit. In these circumstances, the respondent’s request was audacious to say the least and I indicated during the course of argument that I was not minded to make either order.
Consequently, the respondent did not press its claim for indemnity costs and proposed alternative orders in the following form:
1.That the Applicant pay the Respondent’s costs of and incidental to:
(a)preparing for and attending the mediation on 9 February 2024 and 24 February 2024;
(b)attendance at the case management hearing on 21 March 2024;
(c)25% of the preparation of the interlocutory application, filed on 24 May 2024;
(d)the Applicant not reading the parts of the evidence on which he proposes to rely, identified in correspondence from the Applicant to the Respondent dated 10 May 2024 at CHK-16 of the Affidavit of Clancy Helen Goslett-King (King Affidavit) affirmed 24 May 2024 and 17 July 2024 at AJM-14 of Affidavit of Alan James McDonald, sworn 9 August 2024 (McDonald Affidavit);
(e)the correspondence identified at CHK-17 to CHK-21 of the King Affidavit;
(f)preparation of the Defence to the Amended Statement of Claim filed on 24 June 2024;
(g)responding and objecting to the letter from Dr Robert Huang, dated 14 June 2024 including 50% of the preparation written submissions filed 29 August 2024;
(h)the filing of AJM-15 to AJM-27 of the McDonald Affidavit, sworn 9 August 2024; and
(i)the filing of the Affidavit of Alan James McDonald sworn 9 September 2024.
2.That the Applicant pay the Respondent’s costs of appearing at the Amended Interlocutory Application dated 5 July 2024.
The respondent carries the burden of proving that its costs were incurred because of an unreasonable act or omission on the part of the applicant. Despite my misgivings about the way in which the applicant’s case has been conducted, with one qualification I am not persuaded to make a costs order either in the original form it was sought or as revised. The qualification relates to the costs incurred by the respondent caused by the applicant’s decision to serve the report of Dr Huang. I deal with that question later in these reasons.
The failure to file a statement of agreed facts and issues
Order 3 of the December orders required that the applicant file and serve the statement seven days before the mediation. The mediation took place over two days, on 9 and 24 February 2024. That meant that the statement should have been filed and served by 2 February 2024. It was a breach of the Court’s order not to do so. No application was made to the Court to vary or remove the order. Those circumstances alone may be enough to warrant a finding that the applicant acted unreasonably in this respect: see Australian and International Pilots Association v Qantas Airways Ltd (No 3) (2007) 162 FCR 392 at [37] (Tracey J).
On the other hand, while it was a breach of the Court’s order not to file the statement, there is no evidence that the mediation was compromised by its absence or that the respondent incurred costs because of the omission. It was I who proposed that such a document be filed, not the respondent. And it was I who raised concerns about the applicant’s non-compliance with the order, not the respondent. Moreover, as the applicant submitted, it was not suggested that the respondent raised the absence of the statement as an impediment to the mediation proceeding. It was to be an agreed statement, which was required to be served on the respondent, so the respondent would have been well aware of the omission before the mediation and could have taken steps to bring it to the Court’s attention or seek an order postponing the mediation.
Further, the proposition that the matter would have been more likely to settle at mediation if the statement of agreed facts and issues had been filed is no more than a hypothesis unsupported by evidence. After the statement of agreed facts and issues was provided to the Court, the evidence does not indicate that any steps were taken to resume the mediation or settlement negotiations and I was informed by counsel that the respondent has not made an offer (at least since the mediation).
It follows that I am not satisfied that any costs were incurred as a result of the failure to file the statement of agreed facts and issues in accordance with the December orders.
The respondent also submitted that, if the applicant had asked for $40,000 in general damages, as he did in his statement of particulars, rather than the $100,000 he originally sought in his statement of claim, “that could have materially affected the mediation”. I reject the submission. There was no evidence to support it.
The applicant’s insistence that Ms Christman was required to attend the mediation in person (albeit that she was based in the United States) appears to have arisen from a misunderstanding on the part of the applicant (or his lawyers) of the order that she attend the mediation. I did not require in-person attendance. I would not characterise the applicant’s conduct as unreasonable. The applicant was merely misguided. Even if it could be said to be unreasonable for the purposes of s 570(2)(b), I would decline to exercise the discretion to make the applicant pay the respondent’s costs incurred on this account.
The costs of the case management hearing on 21 March 2024
Mr Neil submitted that no act or omission was identified which caused the respondent to incur those costs.
I reject the submission. In all likelihood, the March case management hearing would not have been convened if the applicant filed the statement of agreed facts and issues in accordance with the December orders and adhered to the timetable for the filing of evidence in the December orders. It was the email from the applicant’s lawyers proposing orders giving the applicant the opportunity to file affidavits outside the time prescribed by those orders that prompted a review of the file which revealed that the order for the filing of the statement of agreed facts and issues had not been complied with and the problems with the applicant’s pleading and evidence that I raised at the case management hearing.
It follows that there was a causal connection between the applicant’s failure to comply with court orders and the costs the respondent incurred in attending the case management hearing. Moreover, no explanation was provided for the applicant’s failure to file the two additional affidavits in accordance with the orders.
On the other hand, Mr McDonald informed the Court at the March case management hearing that the failure to file the statement of agreed facts and issues was an oversight on his part. The respondent did not challenge what he said at the time and did not require him for cross-examination on the present application.
In the circumstances, on the assumption that the discretion is enlivened, I decline to order that the applicant pay the costs of the case management hearing.
Twenty-five percent of the costs of preparing the interlocutory application filed on 24 May 2024
The costs of correspondence in May 2024 regarding the applicant’s proposed amended statement of claim
It is convenient to deal with these two items together.
It will be recalled that the original interlocutory application sought three substantive orders: (1) that the applicant not be granted leave to amend his statement of claim in the form of the proposed amended statement of claim; (2) that the applicant pay the respondent’s costs from 4 December 2023 to 24 May 2024; and (3) that the Court provide an advance ruling in respect of the parts of the affidavits to which the respondent took objection.
The respondent’s request that the applicant pay 25 percent of the costs of preparing the interlocutory application is intended to compensate the respondent for having to draft the interlocutory application and prepare the supporting affidavit, a course it was seeking to avoid. As Ms Goslett-King explained in her first affidavit:
25On 10 May 2024, I received an email from the Applicant's solicitors attaching the Applicant's proposed Amended Statement of Claim (Proposed ASOC) and identifying parts of the affidavits filed by the Applicant to date that would not be read in the proceedings. Annexed to this affidavit and marked “CHK-16” is a copy of that email and the Proposed ASOC.
26On 16 May 2024, I caused a letter to be sent to the Applicant's solicitors (16 May Letter) identifying:
(a)issues extant in the Applicant’s pleadings which had not been adequately addressed by the Proposed ASOC and inviting the Applicant to amend the Proposed ASOC; and
(b)further parts of the affidavits filed by the Applicant to date which were inadmissible and inviting the Applicant to confirm that thee parts would also not be read by the Applicant in the proceedings.
Annexed to this affidavit and marked “CHK-17” is a copy of the 16 May Letter and its covering email.
27On 21 May 2024, I received a letter from the Applicant's solicitors stating they would provide a response to the 16 May Letter by “close of business tomorrow” (i.e. 22 May 2024). Annexed to this affidavit and marked “CHK-18” is a copy of that letter and its covering email.
In fact, on 21 May 2024 the applicant’s solicitors replied that they were “currently conferring with counsel in respect of the matters … raised in [the 16 May Letter]” and “expect[ed] to be in a position to respond by close of business tomorrow”.
No response was provided either by close of business the next day or at all, despite two follow‑up emails, the last of which went unanswered. Instead, on 24 May 2024 the applicant filed an amended statement of claim and the respondent filed its interlocutory application. The interlocutory application was filed at 3.37pm, the amended statement of claim at 3.54pm. The same day unsealed copies of both documents were served. The unsealed copy of the interlocutory application was served by email on the applicant’s lawyers at 5.15pm. The unsealed copy of the amended statement of claim was apparently also served by email. A letter from the applicant’s lawyers to the respondent’s lawyers, included in Mr McDonald’s affidavit, indicates as much but the covering email appears in none of the affidavits. The time the email sent was not disclosed. The letter reads as follows:
Thank you for your letter of 16 May 2024 and subsequent correspondence to us.
We have further considered the matters raised in your letter of 16 May 2024 and have conferred with our counsel Mr Rohan Millar.
We do not agree that further amendments are required, but we have taken into account your comments in your letter of 16 May 2024 and made some further amendments.
We now enclose a copy of the Amended Statement of Claim pursuant to the Orders of Registrar Hammerton-Cole dated 24 April 2024 that was filed this afternoon. We have not yet received a stamped copy of the Amended Statement of Claim, however, we will provide you with a stamped copy once it is available.
With respect to your comments raised in respect of the Applicant's Evidence at paragraphs 3.1 to 3.4 of your letter, we have endeavoured in good faith to identify paragraphs that will not be relied upon at trial in accordance with the Orders of Registrar Hammerton-Cole dated 24 April 2024. We note your further objections, but regrettably as no details have been provided as the basis of those objections raised in your letter, we do not propose any further evidence to not be read at this stage.
The respondent submitted that the delay in responding to the 16 May 2024 letter necessitated the filing of the interlocutory application. Plainly that is not so. True it is that the Registrar’s orders required any interlocutory application to be filed by 24 May 2024 but they also required the amended statement of claim to be filed by the same date. In the circumstances as they obtained on 23 May 2024, the parties should have approached the Registrar seeking an extension of time; the respondent should not have filed the interlocutory application before it saw the version the applicant intended to file; and the applicant should not have filed the amended statement of claim without first informing the respondent that it had taken on board a number of their criticisms.
The respondent also submitted that the applicant was in breach of the Registrar’s orders because they required the applicant to serve the respondent with the proposed amended statement of claim before filing it. That is also incorrect. The applicant complied with the orders in that respect.
Further, there is no evidence that an interlocutory application would not have been prepared but for the delayed response and such evidence as there is indicates otherwise.
I conclude that the applicant was imprudent, but I am not satisfied that its conduct is sufficient to warrant an adverse costs order.
The costs associated with reviewing and responding to those parts of affidavits that would not be read
Nor am I satisfied that the applicant should be ordered to pay these costs.
It is part and parcel of the ordinary costs of litigation for a lawyer to review affidavits and, where appropriate, to take objections to them or parts of them. It would not be a proper exercise of the discretion to award the respondent costs for undertaking such an exercise. What is more, it is the kind of conduct that the Full Court in Clarke (at [29]) did not regard as unreasonable within the meaning of the word in the analogue of s 570(2) in the Workplace Relations Act 1996 (Cth).
The costs of preparation of the defence to the amended statement of claim
For much the same reason I am not satisfied that the applicant should be ordered to pay these costs. Pleadings are often amended in litigation. The applicant acted reasonably in amending his pleading. I cannot see any basis for awarding costs to the respondent for preparing its defence to the amended pleading.
The costs of responding and objecting to the Huang report
This matter is considered below.
The costs of reviewing and responding to annexures AJM-15 to AJM-27 of the McDonald Affidavit, sworn 9 August 2024
This was an opportunistic request. The respondent did not object to any of these documents. Nor was there any response to the annexures. Rather, I asked Mr Neil what relevance they had. He conceded that all but AJM-19 were irrelevant. While there is no evidence about this, I accept that some costs would have been incurred in reviewing the documents, but in the scheme of things they would have been minimal. While I incline to the view that it is unreasonable to file irrelevant evidence, I decline to exercise my discretion to order costs on this basis.
The costs of reviewing and responding to the affidavit of Mr McDonald sworn 9 September 2024
This affidavit was filed on the eve of the hearing without leave (or even applying for leave) and with no explanation. The respondent objected to the applicant reading it on the ground that it had not been able to obtain instructions. The applicant did not press the tender, save for one paragraph. Ultimately, none of it was read after the contents of that paragraph were reduced to an agreed fact in the following terms:
On 30 November 2023 the applicant offered to participate in a private mediation to take place before the Court-appointed mediation, and on 1 December 2023 the respondent declined that offer.
The relevance of this fact is obscure. None of the submissions addressed it. The evidence does not suggest that the respondent was unwilling to mediate, only that it did not wish to pay for a private mediation.
I should record that, through Mr Neil, Mr McDonald assured the Court that the applicant had not been, and will not be, billed for any of the work involved in the preparation of either of his affidavits.
The costs of appearing at the hearing
By proposed order 2, the respondent sought its costs of appearing at the hearing of its amended interlocutory application. Mr Neil conceded that the respondent was partially successful because of the applicant’s concession that Dr Huang’s report was inadmissible but submitted that was not sufficient to meet the unreasonableness test in s 570(2)(b) of the FW Act. I agree. Although the concession was late in coming, there is no reason to suppose that the respondent would not have pressed on with its costs application had it been made earlier.
I would make no order in relation to the costs of the hearing.
The application to adduce further expert evidence
The application was opposed. Since the only prejudice identified by the respondent was in costs, however, as I indicated at the hearing, I propose to accede to the application albeit on appropriate terms. Mr Neil said he would not wish to be heard against a guillotine order but submitted that there should be no order as to costs. I disagree. In this instance I am satisfied that the discretion to award costs has been enlivened and that it should be exercised against the applicant.
The applicant consented to a proposal by the respondent that he file and serve any affidavits on which he intended to rely by 23 February 2024. An order to that effect was one of the December orders. None of the affidavits he filed in accordance with the order included a report from an expert to support the s 351 claims. Despite that, at the case management hearing in March, and then only in response to a direct inquiry I made of Mr McDonald, was the respondent informed that the applicant intended to adduce expert evidence. An order was made by Judicial Registrar Hammerton-Cole on 24 April 2024 that the applicant file any such evidence by 14 June 2024. It was on that day that the Huang report was filed and served.
With respect, the deficiencies in the Huang report should have been apparent to any competent lawyer. They were well explained in the respondent’s submissions. In view of the concession, it is unnecessary to detail them. It is sufficient to note that the respondent contended that the report was inadmissible for a number of reasons: first, because it was irrelevant as it did not include a diagnosis or an opinion that any of the alleged adverse action had caused or contributed to the applicant’s reported symptoms; second, because it did not satisfy the terms of s 79 of the Evidence Act 1995 (Cth), citing Lang v The Queen [2023] HCA 29; 97 ALJR 758 at [223]–[225]; and third, because it did not comply with the Expert Evidence Practice Note (GPN-EXPT) and, in particular, cl 5.2 of the Expert Witness Code of Conduct. Notably, r 23.11 of the Federal Court Rules only permits a party to call an expert to give expert evidence at a trial if the party has served an expert report that complies with r 23.13. Rule 23.13 relevantly provides that an expert report must contain a number of matters, several of which were missing from the Huang report. Critically, the Huang report did not identify the factual findings or assumptions on which his opinions were based, contrary to r 23.13(1)(e).
Yet until the morning of the hearing the applicant maintained that the report was not inadmissible, including in submissions filed (late) at 1.03am three days earlier and despite the fact that the submissions did not address any of the respondent’s objections except for the failure to comply with the Code of Conduct.
By serving the Huang report with all its deficiencies, maintaining it was admissible, then abandoning reliance on it at the last minute, the applicant behaved unreasonably. There was no real dispute that the respondent incurred costs on account of this conduct. While I fully accept that the Court should only exercise the discretion in a clear case, I am satisfied that this is such a case.
It follows that I will order that the applicant have leave to serve an expert report on the following conditions:
(a)that it is in a form which complies with r 23.13 of the Federal Court Rules and Practice Note GPN-EXPT;
(b)that it is annexed to an affidavit from the expert;
(c)that the affidavit is served by 4pm on 15 October 2024.
(d)that no expert evidence be filed thereafter without obtaining the leave of the Court; and
(e)that the applicant pay the costs incurred by the respondent as a result of serving the report of Dr Huang, including the costs of that part of the amended interlocutory application which challenged the admissibility of the report.
I do not propose to order that the costs be paid forthwith.
I certify that the preceding sixty-one (61) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Katzmann. Associate:
Dated: 13 September 2024
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