Cincotta v Sunnyhaven Limited (No.2)
[2012] FMCA 420
•23 May 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CINCOTTA v SUNNYHAVEN LIMITED (No.2) | [2012] FMCA 420 |
| HUMAN RIGHTS – Application for costs – whether indemnity costs appropriate in the circumstances – order for costs to be taxed. |
| Federal Magistrates Act 1999 (Cth), s.79 Federal Magistrates Court Rules 2001 (Cth), rr.1.05, 21.15, 21.16, Pt.21 Federal Court Rules 2011, rr.1.35, 10.32, 25.14 Australian Human Rights Commission Act 1986 (Cth), s.46PO |
| Cincotta v Sunnyhaven Limited [2012] FMCA 110 Cann v Commonwealth Bank of Australia (No.6) [2011] FMCA 912 Freemantle’s Pastoral Pty Ltd v Hyett [1999] VSC 188 Calderbank v Calderbank [1975] 1 All ER 333; [1975] 3 WLR 586 CGU Insurance Limited v Corrections Corporation of Australia Staff Superannuation Pty Ltd [2008] FCAFC 173 SMEC Testing Services Pty Ltd v Cambelltown City Council [2000] NSWCA 323 Perry v Comcare [2006] FCA 33 Perry v Comcare [2006] FCA 481 Clack v Command Recruitment Group Pty Ltd & Anor (No.2) [2010] FMCA 198 |
| Applicant: | JOANNE CINCOTTA |
| Respondent: | SUNNYHAVEN LIMITED |
| File Number: | SYG 626 of 2011 |
| Judgment of: | Nicholls FM |
| Hearing dates: | 20, 21, 22 September 2011 |
| Date of Last Submission: | 9 May 2012 |
| Delivered at: | Sydney |
| Delivered on: | 23 May 2012 |
REPRESENTATION
| Counsel for the Applicant: | Ms L Doust |
| Solicitors for the Applicant: | Santone Lawyers |
| Counsel for the Respondent: | Mr G Boyce |
| Solicitors for the Respondent: | Hancock Alldis & Roskov |
ORDERS
The respondent pay the applicant’s costs as assessed or as agreed by the parties on a party-part basis.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 626 of 2011
| JOANNE CINCOTTA |
Applicant
And
| SUNNYHAVEN LIMITED |
Respondent
REASONS FOR JUDGMENT
This is an application for costs made by the applicant on 5 April 2012, following the handing down of judgment in this matter (Cincotta v Sunnyhaven Limited [2012] FMCA 110 – “Cincotta (No.1)”)) on 8 March 2012. The parties have agreed that this matter does not require an oral hearing and is to be decided on the basis of written submissions. The applicant filed written submissions on 5 April 2012. The respondent filed written submissions on 9 May 2012. An affidavit of Ms Tina Santone was also filed with the Court’s Registry. While the affidavit has not formally been read into evidence, I note that the respondent referred to, and did not object to, that affidavit as evidence before the Court. For the purposes of this judgment, I will treat it as such.
Following the findings and outcome in Cincotta (No.1), the applicant seeks costs on an indemnity basis, a course of action the respondent opposes.
I note at the outset that I did not consider the applicant’s submissions to be particularly helpful in addressing the considerations going to the application for indemnity costs.
In considering this issue, I note, as the applicant submits, what has been said by Lucev FM on the issue of the award of indemnity costs in Cann v Commonwealth Bank of Australia (No.6) [2011] FMCA 912:
“[13] In determining whether to award indemnity costs the Court has a very wide discretion, to be exercised judicially.[22] What is an appropriate costs or indemnity costs order depends on the circumstances of the case.[23] The normal practice, not to be lightly departed from, is to provide for costs to be on a party – party basis.[24] There are however certain issues to which the Court will give consideration, and weigh, when determining whether to make an indemnity costs order, and the extent of any such order. The issues must establish special or unusual circumstances warranting an indemnity costs order.[25] Those issues include:
[22] PCRZ Investments Pty Ltd v National Golf Holdings [2002] VSCA 24 at para 32 per Chernov JA (“PCRZ Investments”) applied in D’Souza v Pattison [2007] FMCA 116 at para 24 per McInnis FM; Bhagat v Global Custodians Ltd [2002] FCA 223 at para 60 per O’Loughlin, Whitlam and Marshall JJ (“Bhagat”); Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd& Ors [1988] FCA 202; (1988) 81 ALR 397 at 401 per Woodward J (“Fountain Selected Meats”)
[23] PCRZ Investments at para 32 per Chernov JA; Colgate-Palmolive at 227 per Sheppard J.
[24] Colgate-Palmolive at 230 and 233 per Sheppard J; Davids Holdings Pty Ltd v Coles Myer Limited & Ors (1995) ATPR 41-383 at 40, 298 per Drummond J (“Davids Holdings”).
[25] Fountain Selected Meats at 400 per Woodward J; Colgate-Palmolive at 233 per Sheppard J; Davids Holdings at 40, 298 per Drummond J.
a. whether a party should have known that there was no prospect of success in the case;[26]
[26] Fountain Selected Meats at 401 per Woodward J; Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (unreported, Federal Court of Australia, 3 May 1991) at 8 per French J. (“Tetijo Holdings”)
b. where a party alleges fraud or forgery, knowing the accusation to be false, or irrelevant to the issues;[27]
[27] Australian Guarantee Corporation Ltd v De Jager [1984] VR 483 (“De Jager”); Fountain Selected Meats at 401 per Woodward J.
c. where a party precipitately punctuates proceedings by resiling from a previously adhered to view;[28]
[28] Bass Coast Shire Council v King [1977] 2 VR 5 at 28-30 per Winneke P.
d. where a party acts in a high handed manner;[29]
[29] De Jager at 502 per Tadgell J; Fountain Selected Meats at 401 per Woodward J.
e. whether the party against whom indemnity costs is sought is a self-represented litigant, and whether the self-represented litigant ought escape the consequences of indemnity costs;[30]
[30] Bhagat at para 57 per O’Loughlin, Whitlam and Marshall JJ.
f. where a party proceeds ‘vexatiously’ that is ‘without sufficient grounds for the purpose of causing trouble or annoyance’;[31]
[31] Fountain Selected Meats at 400 per Woodward J.
g. where a party proceeds for no good purpose at all due to inertia and carelessness;[32]
[32] Fountain Selected Meats at 400 per Woodward J.
h. where a party persists in the making of allegations which ought not to have been made, or in undue prolongation of groundless contentions;[33]
[33] Colgate-Palmolive at 233 per Sheppard J.
i. where a party’s conduct causes loss of time to the Court, and to other parties;[34]
[34] Ugly Tribe Co Pty Ltd v Sikola & Ors [2001] VSC 189 at para 7 per Harper J.
j. where a party imprudently refuses an offer to compromise;[35]
k. whether the award of indemnity costs is sought against a contemnor;[36] and
l. having regard to the objects of:
i. encouraging savings of private costs and avoidance of inherent risks, delays and uncertainties of litigation;
ii. saving public cost necessarily incurred in litigation which events demonstrate to have been unnecessary; and
iii. indemnifying one party where the real cause and occasion of the litigation is the attitude adopted by the other party.[37]
[14] The bases for the exercise of the discretion in relation to indemnity costs are not closed. Nor are they so circumscribed that an indemnity costs order ‘may only be made against an ethically or morally delinquent party’.[38] Other elements of litigious misconduct may be considered in the exercise of the Court’s discretion.[39]”
I adopt, for the purposes of this judgment, and to the extent relevant, the schema set out by Lucev FM.
[35] Colgate-Palmolive at 233-234 per Sheppard J (and cases there cited).
[36] Colgate-Palmolive at 234 per Sheppard J.
[37] Rouse v Shepherd [No. 2] (1994) 35 NSWLR 277 at 279 and 281 per Badgery-Parker J.
[38] Botany Municipal Council v Secretary, Department of Arts, Sport, Environment, Tourism & Territories (1992) 34 FCR 412 at 415 per Gummow J.
[39] Tetijo Holdings at 8 per French J.
Applicant’s Case for Indemnity Costs
In support of an award of indemnity costs, the applicant has drawn attention to two offers of settlement. The first, made while the matter was before the then Human Rights and Equal Opportunity Commission (“HREOC”), for $10,000, which was rejected by the respondent. The second, made on 5 September 2011, for $40,000 with an additional $1,470 in interest, to which the respondent offered no response.
Noting the final award of $44,701.65 (inclusive of interest), the applicant argues that her costs in (the entire) proceedings were incurred as a result of the respondents “imprudent refusal to accept her offer of compromise”. She should, therefore, be awarded her costs, for the entire proceedings, on an indemnity basis, or, alternatively, that costs be awarded in the ordinary course up to 5 September 2011, and thereafter on an indemnity basis.
The applicant argues, recalling (a) of Lucev FM’s non-exhaustive list at [3] above, that, at least as of 5 September 2011, given the proximity to the hearing of this matter, “it could not be said… that the Respondent was not then in a position to make a proper assessment of prospects” ([11] of the applicant’s written submissions filed on 5 April 2012).
The applicant further raises in support the Court’s findings in relation to the (respondent’s) Management Board’s handling of the applicant’s complaint (at [357] – [360], and particularly [327] of Cincotta (No 1)). The applicant argues that, had the Management Board behaved otherwise, the current litigation could have been averted, or “it may have become apparent that each of the Applicant’s offers were reasonable offers of compromise”.
The third basis upon which the applicant argues for the imposition of indemnity costs is the approach taken by Mr Mendis (the CEO of the respondent – see [23] of Cincotta (No.1)) to the evidence that he gave in the proceedings, and that the Court made findings contrary to that evidence “in circumstances where the divergence between the facts as found and Mr Mendis’ account of those matters could not be attributed to forgetfulness, genuine mistake, a difference of perception, or the ordinary tendency of witnesses to regard their conduct in the most favourable light”.
The applicant argues that, both separately and cumulatively, these features of the proceedings justify an award of costs on an indemnity basis.
The Respondent’s Answer
In relation to the first offer, made in the course of proceedings before HREOC, the respondent notes the requirement that consideration is to be made upon the respective knowledge of the parties at the time the offer was made, not with the benefit of hindsight (relying on Freemantle’s Pastoral Pty Ltd v Hyett [1999] VSC 188 at [10]). In the absence of evidence establishing the reasonableness of the offer, made orally and at a time before an application to the Court had been made or pleadings drafted, the respondent’s submit that there is no basis upon which the Court may ground a finding that it was unreasonable or imprudent to reject such an offer.
In addressing the second offer that was made to the respondent, Mr Boyce (on behalf of the respondent) notes that this offer was made by way of facsimile transmission dated 5 September 2011. While no express reference is made, per r.10.32(b) of the Federal Court Rules 2011 (“FC Rules”), this is therefore taken to have been served on 6 September 2011. As such, the reference to the offer being “open to be accepted for 14 days after service” includes 20 September 2012, the first day of the hearing before this Court. The respondent submits that, therefore, it was not unreasonable for the offer to be declined or, in the alternative, that any claim for indemnity costs should only commence from the expiry of the offer, that is 20 September 2011.
In response to the applicant’s third basis, the respondent submits that neither the conduct of the respondent, nor Mr Mendis, in the course of proceedings establishes fraud, or conduct that extended Court time. Nor does it indicate that the respondent had adopted a “heavy handed” approach to proceedings. Likewise, Mr Boyce, while acknowledging the criticism of the respondent and Mr Mendis by the Court, notes that the applicant’s evidence was similarly held to be not “without fault”.
Indemnity Stemming from HREOC Offer
The first offer of settlement, upon which the applicant relies to argue for indemnity costs for the entire proceedings, was an offer made while the parties were before HREOC. That offer was rejected.
In my view, it is clear that the offer was made for the purposes of the proceedings before HREOC. It should not, and in the absence of any evidence to the contrary cannot, be assumed that the offer was made equally in relation to any proceedings envisaged to be brought before the Court at a time prior to the termination of the complaint giving rise to the jurisdiction of this Court under s.46PO of the Australian Human Rights Commission Act 1986 (Cth). The mere subsequent availability of coming to this Court upon termination of a compliant is insufficient for this purpose. The applicant has provided no probative, reasonable basis for seeking indemnity costs for the entire proceedings stemming from the initial offer made prior to the initiation of proceedings before this Court.
In this respect, I agree with Mr Boyce that there is no basis upon which the Court can conclude that the rejection of the earlier offer was unreasonable or imprudent. In relation to this part of the claim, the applicant is not successful.
The Second Letter of Offer
In the context of Calderbank offers (Calderbank v Calderbank [1975] 1 All ER 333; [1975] 3 WLR 586), the Full Court of the Federal Court in CGU Insurance Limited v Corrections Corporation of Australia Staff Superannuation Pty Ltd [2008] FCAFC 173 (“CGU”) at [75] per Moore, Finn and Jessup JJ noted that:
“From the tenor of claims which have come before the court in recent years, there appears to be a view abroad that the failure of a party who has rejected a Calderbank offer ultimately to achieve a better outcome than provided for in the offer leads to a presumptive entitlement to indemnity costs with respect to the period subsequent to the offer. Such a view would be mistaken…”
Their Honours went on to say:
“… it is necessary for the party seeking indemnity costs to demonstrate that the other party’s refusal of the Calderbank offer was unreasonable: Black v Lipovac (1998) 217 ALR 386 at 432; Maniotis v JH Lever & Co Pty Ltd (No 2) [2006] FCAFC 28. It is not sufficient that the offer was a reasonable one: Alpine Hardwoods (Aust) Pty Ltd v Hardys Pty Ltd (No 2) (2002) 190 ALR 121 at 128 [35]; Dais Studio Pty Ltd v Bullet Creative Pty Ltd [2008] FCA 42, [11]. In considering this question in a particular case, the matter of unreasonableness will be judged by reference to the circumstances facing the offeree at the time of the offer. While the eventual outcome in the case may go part of the way in this regard, there is no presumption that ultimate success in the proceeding for the offeror necessarily renders the offeree’s rejection unreasonable.”
As Giles JA stated, again in the context of a Calderbank offer, in SMEC Testing Services Pty Ltd v Cambelltown City Council [2000] NSWCA 323 (at [37]):
“In the end the question is whether the offeree’s failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs, and that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure: see for example, John S Hayes & Associates Pty Ltd v Kimberley-Clarke Australia Pty Ltd (1994) 52 FLR 201; MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (1996) 70 FLR 235.”
I note that neither of the two offers made by the applicant to the respondent was in the nature of a Calderbank offer. In this regard, however, I note what was said by Greenwood J in Perry v Comcare [2006] FCA 33 at [57] (not disturbed in judgment on an application for leave to appeal per Kiefel J in Perry v Comcare [2006] FCA 481):
“Two further things should be remembered. First, very often the question of whether a particular offer qualifies for consideration as a Calderbank letter arises on an application by the offeror for indemnity costs of the proceedings consequent upon a result less favourable to the offeree than the offer. Offers that are not clear and do not provide the offeree with an informed choice fail. It seems those principles going to the requirement of certainty and precision, equally apply where what is sought is simply deprivation of the Applicant’s costs from the date of the offer. Secondly, the authorities demonstrate that even if a letter of offer qualifies as a Calderbank letter, the mere refusal of such an offer does not of itself result in an order for indemnity costs. The offeror has an onus of showing that the conduct (that is, rejection of the offer and other relevant conduct) was unreasonable. Although this notion of the offeror demonstrating that the conduct of the offeree was unreasonable has a correspondence with an offeror seeking indemnity costs, the general principle that rejection of a qualifying Calderbank letter does not result in automatic orders, that is, a fettered exercise of discretion, seems consistent with a more general principle that the underlying question in the exercise of the costs discretion by Courts is whether the offeree acted reasonably. Reasonableness therefore needs a framework or as Finn J observed in GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Limited & Ors (2003) 201 ALR 55 at p63 [34]: ‘The reasonableness of the rejection of an offer is to be considered in the light of the circumstances which existed at the time of the rejection. And, relevant in that consideration are the terms of the offer and the circumstances of the litigations, ‘including the time at which the offer is made and the understanding of the parties as to the strengths and weaknesses of their respective cases’: Australian Competition and Consumer Commission v Amcor Printing Papers Group Ltd [2000] FCA 163’.”
[Emphasis added.]
The applicant has offered nothing, other than that “it could not be said by that stage, shortly prior to the hearing, that the Respondent was not then in a position to make a proper assessment of prospects”, beyond the mere fact that a better outcome than that offered was eventually obtained, in support of her application for indemnity costs. In such circumstances, the applicant has not demonstrated that the respondent’s action in refusing the offer, at the time of refusal (and without the benefit of hindsight), was unreasonable (CGU).
In relation to this part of the claim, the applicant also is not successful.
For the sake of completeness, I note r.25.14(3) (and the reference therein to r.1.35) of the FC Rules:
“Costs where offer not accepted
…
(3) If an offer is made by an applicant and not accepted by a respondent, and the applicant obtains a judgment that is more favourable than the terms of the offer, the applicant is entitled to an order that the respondent pay the applicant’s costs:
(a) before 11.00am on the second business day after the offer was served – on a party and party basis; and
(b) after the time mentioned in paragraph (a) – on an indemnity basis.
…
Note 2 The Court may make an order inconsistent with these rules – see rule 1.35.”
Even without recourse to r.1.35 of the FC Rules, I am of the opinion that s.79 of the Federal Magistrates Court Act 1999 (Cth) and Pt.21 of the Federal Magistrates Court Rules 2001 (“the Rules”) sufficiently and appropriately address the issues currently before the Court, such that recourse to the FC Rules, per r.1.05(2) of the Rules, is not necessary.
The Conduct of the Respondent in Resolving the Complaint
The applicant refers to [357] to [360] of Cincotta (No 1) to argue that, had the respondent adopted an alternative approach to Ms Cincotta, “litigation could have been averted” or that “it may have become apparent” to the respondent that the applicant’s offers of settlement were reasonable. Ultimately, such arguments do not rise above mere speculation. Reference to the Court’s comments at [327] of Cincotta (No 1) in this regard does not assist.
Similarly, as Mr Boyce submits, that the Court made findings contrary to the evidence given by Mr Mendis (with particular reference to [147] of Cincotta (No.1)) does not establish fraud or a “heavy handed approach” to the proceedings on which to found an order for indemnity costs.
In relation to this part of the claim, the applicant also is not successful.
Conclusion
It is trite to say that, in this Court, costs follow the event. It is only in exceptional circumstances that any departure from the ordinary course would be contemplated. An order that an unsuccessful party pay indemnity costs must be regarded as akin to a penalty. Indeed, the Butterworths Australian Legal Dictionary (1997) notes that:
“Indemnity costs are ordinarily awarded only in circumstances involving misconduct, for example, to penalise a party where they have: maintained a cause of action with no real prospect of success (Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397) or for some ulterior motive or with wilful disregard for known facts or clearly established law (J-Corp Pty Ltd v Australia Builders Labourers Federation Union of Workers (WA) (No 2) 2993 46 IR 301 at 303), made deliberately false allegations of fact (Degmam Pty Ltd (in liq) v Wright (No.2) [1983] 2 NSWLR 1 at 34) or have unreasonably rejected an offer of compromise not bettered in litigation: Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425…”
This is not such a case.
A costs order should be made. The respondent has not opposed such a course. However such an order should not be on an indemnity basis. In the circumstances, it is appropriate that an order be made that the respondent pay the applicant’s costs as taxed pursuant to the FC Rules.
Certification under r.21.15
In submissions the applicant also seeks the issuing of a certificate, pursuant to r.21.16 of the Rules. In context, this must be taken as seeking an order under r.21.15 certifying it was reasonable in the circumstances to employ an advocate to appear for a party. The respondent in submissions in reply did not address this issue.
In the context of the application before the Court, I adopt the reasoning of Smith FM in Clack v Command Recruitment Group Pty Ltd & Anor (No.2) [2010] FMCA 198 at [16], and likewise indicate that I am of the view that the engagement of counsel by the applicant was reasonable in the proceedings before this Court. I note that a Registrar of the Court, if they consider it necessary on taxation, has the power to issue a certificate under r.21.15 of the Rules.
I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of Nicholls FM
Date: 23 May 2012
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