Coinvest Limited v Bestaff Australasia Pty Ltd
[2013] VCC 74
•15 February 2013
| Not restricted | |
| IN THE COUNTY COURT OF VICTORIA | Revised from transcript of oral reasons |
AT MELBOURNE
COMMERCIAL LIST
EXPEDITED CASES DIVISION
Case No. CI-12-00765
| COINVEST LIMITED (ACN 078 004 985) | Plaintiff |
| v. | |
| BESTAFF AUSTRALIASIA PTY LTD (ACN 099 01 943) | Defendant |
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JUDGE: | Her Honour Judge Kennedy | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 15 February 2013 | |
DATE OF RULING: | 15 February 2013 | |
CASE MAY BE CITED AS: | Coinvest Limited v Bestaff Australasia Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2013] VCC 74 | |
REASONS FOR COSTS RULING
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr N. Green QC Mr J. D’Abaco | Maddocks |
| For the Defendant | Mr C. O’Grady Mr T. Jacobs | Russell Kennedy |
HER HONOUR:
Following the issue of this proceeding and the determination of certain preliminary questions, the parties were able to agree on orders which finally disposed of all remaining issues, save for the question of costs which has been stood over for determination today.
The issue before me is therefore the appropriate orders to be made as to the costs of the proceeding.
This revised Ruling should be read together with the reasons delivered on 31 October 2012.
Background
The plaintiff is a trustee of a construction industry long service leave fund which is established by the Construction Long Service Leave Act 1997 (Vic), (“the 1997 Act”).
The current dispute arose because the parties were unable to agree on the correct method for the calculation of the long service leave charge payable by the defendant employer into the fund. Pursuant to section 4(2) of the 1997 Act, the date by which the charge is payable, the period in respect of which it is payable, the amount of the charge payable, and the method by which the amount was to be calculated was as determined by the plaintiff in accordance with its trust deed and its rules made there-under.
From about 2009 the parties have been in dispute about the application of the rules (see reasons at paragraph 114 of judgment dated 31 October 2012).
The defendant asserted that it had no liability to pay the charge in respect of casual employees engaged to perform construction work on the weekend which hours were outside "normal" weekly number of hours for the purposes of the rules.
The plaintiff rejected this construction. More particularly, the plaintiff submitted that
Rule 11.8(a) of its Rules made specific provision for the meaning of the phrase "normal weekly number of hours" where the terms of employment of the relevant casual employees did not fix a weekly number of hours.In February 2012 the plaintiff therefore brought this proceeding.
10.The claim in the proceeding sought damages and interest (as has been emphasised at the costs application by Counsel for the defendant). However, the plaintiff also sought declaratory relief, in particular, as to the application of its rules to weekend workers.[1]
[1] Writ dated 21 February 2012 at para A(iv).
11.The defendant continued to defend its construction of the rules. By its defence dated 27 April 2012 it further alleged that the plaintiff was estopped from maintaining its construction.[2]
[2] Defence dated 27 April 2012 at para 9A.
12.The plaintiff thereafter made application that the court determine certain preliminary questions turning on the proper construction of the Rules (see Summons dated
14 August 2012).13.In the result, by order of 3 September 2012, the court set down a number of preliminary questions for hearing in relation to a specified number of sample employees. This order was made in an endeavour to obviate the need for what otherwise appeared to be a considerably long trial (the case was listed with an estimate of some 5 – 10 sitting days).
14.An examination of the reasons delivered on 31 October 2012 reveals that in determining the answers to the questions set down for hearing there were three primary issues in the case for resolution.
15.Firstly, whether the normal weekly number of hours were fixed under the terms of employment of the sample employees for the purposes of Rule 11.8(a); secondly, whether the plaintiff's calculation was correct; and finally, whether any estoppel arose (see Reasons at paragraph 6).
16.In the result, the court resolved the issue of construction in favour of the plaintiff. Moreover, the court found in favour of the plaintiff generally in respect of the primary issues cited, save for one relatively minor aspect regarding the manner in which the averaging exercise is to be applied to the sample employees' weekly number of hours (see Reasons at paragraph 98).
17.Upon determination of the preliminary questions by formal order of 9 November 2012, the proceeding was adjourned for mention to 20 December 2012 in order to give the parties an opportunity to resolve the remaining issues between them. In the result this process enabled the parties to come to an agreement on the final form of orders, except for costs.
18.In accordance with this agreement then, the court was able to make orders of 19 December 2012 to the effect that, save for the answers to the preliminary questions, the plaintiff's claim was dismissed with an order on the counterclaim for $19,272.55 plus interest of $619.25.
19.The plaintiff now seeks its cost of the proceeding, although it accepts that it should pay the costs of the counterclaim (filed on 30 August 2012).
20.The defendant seeks an order that the plaintiff pay the defendant’s costs of the plaintiff's claim. It also seeks an order that costs be on an indemnity basis.
21.The two main issues therefore turn on who should bear the costs of the plaintiff's claim, and secondly, whether any special costs order should be made.
Costs of the claim
22.In written submissions, the defendant raised a number of matters in support of its application that the plaintiff should pay the defendant's costs of the plaintiff's claim.
23.These included as follows:
·That given its position was wholly vindicated, costs should follow the event;
·The “ultimate outcome” was that the plaintiff was ordered to pay monies to the defendant;
·That the claim and counterclaim were “inextricably intertwined”;
·That the plaintiff chose to litigate whereas the defendant had “no choice”; and
·That the defendant should not pay costs to extent that the proceeding was a test case.
24.I have considered these submissions as follows:
a. First, I do not consider that the defendant's position has been “wholly vindicated”; rather, in my view, the court upheld the primary issue of construction in favour of the plaintiff which I consider to have been the substantive issue necessary for the determination of the entire proceeding;
b. Although the plaintiff's claim was ultimately dismissed, the resolution of the parties' positions and quantum was only able to be determined on resolution of the central construction dispute. This dispute, however, was resolved in favour of the plaintiff;
c. There are different considerations relevant in relation to the costs of the counterclaim. While the plaintiff was not awarded any damages, its primary position was upheld. On the other hand, the counterclaim succeeded because ultimately the court found that the defendant had overpaid the plaintiff. In those circumstances, and consistent with the plaintiff’s concessions, it is appropriate for the plaintiff to be awarded the costs of its claim and the defendant awarded its costs for the counterclaim;
d. Given the defendant's stance of challenging the plaintiff's interpretation of the Rules, the plaintiff had little choice but to approach the court for an authoritative ruling on the construction point. This also flows from the terms of the1997 Act which binds the plaintiff to the amount and method by which the charge is to be calculated as that which is prescribed by the Rules. Moreover, as was evident by the course of this proceeding, until the construction issue was resolved, the parties could not move forward to resolve the ultimate amounts of charge payable;
e. Finally, although the resolution of this case may have implications for other employees, there was in fact no evidence before me that it was in any way a “test case”. Instead, there was a substantive dispute between these parties which was unable to be resolved without recourse to the court.
25.At the costs application, counsel for the defendant sought to raise some further matters by way of oral submission. These included the following:
a. Firstly, that the case was essentially a debt case and that the defendant was the successful party in relation to the case when so properly characterised;
b. Secondly, that the defendant had made clear that money would still be owed to it even if the plaintiff's construction was correct;
c. Thirdly, that there were other mechanisms for the resolution of this dispute including ADR and the amendment of the rules.
d. And finally, counsel for the defendant made reference to various authorities before the court to support the defendant's position including a decision of MyEnvironment Inc v VicForests [2012] VSC 111.
26.In relation to these further maters, I have considered them as follows:
a. Firstly, I reject the characterisation of this dispute as in substance a debt dispute. Rather, for reasons already expressed, I consider that the substantive dispute between these parties was about the construction of the Rules. In this way, and on this basis, the defendant has not succeeded and the plaintiff, in my view, is properly characterised as the successful party.
b. Secondly, regardless of whether the defence made clear that money was owed, even if the plaintiff's construction was correct, the defendant never abandoned its construction position up to the point where the matter was resolved by judicial determination. In those circumstances, any such stance does not assist the defendant.
c. In terms of the suggestion that other mechanisms should have been utilised, the correspondence available to the court suggests that the defendant's position on the construction point was relatively entrenched and had been maintained for several years since 2009. In those circumstances I consider that it was appropriate for the plaintiff to bring the proceeding.
d. In relation to the various authorities cited, I will consider the MyEnvironment decision, below. The other cases are distinguishable and of limited utility in resolving this case which turns on its own facts and context.
27.In terms of the MyEnvironment decision, there are two points that can be made.
28.Firstly, it is not clear that the construction point mentioned is as central as I have found it to be in the present case.
29.Secondly, His Honour Justice Osborn specifically refers to separate issues and notes that the case was not capable of analysis on the basis of a separate issues determination (see MyEnvironment at paragraph 20). This is clearly distinguishable from the present case where the resolution of the preliminary issues has proved to be determinative of the entire proceeding.
30.In my view, the plaintiff has succeeded on its principal submission and indeed has succeeded on the primary issues identified in the reasons of October save for one minor aspect. Accordingly, I consider, in the exercise of my discretion, that the plaintiff is entitled to the costs of its claim.
Appropriate costs basis
31.The defendant submitted that the plaintiff should pay indemnity costs on two bases:
a. Firstly, on the basis of the disparity between the costs of the proceeding and the amount likely to be obtained (the defendant highlighted in written submissions that the plaintiff only claimed $292.19 even if it was completely successful in relation to the sample employees); and
b. Secondly, on the basis of a Calderbank letter generally.
General basis
32.In relation to the first basis, I do not accept that an order for indemnity costs should be made (see generally Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR; and IMC Aviation Solutions Pty Ltd v Altain Khuder LLC [2011] VSCA 248 which provide for relevant categories when one considers indemnity costs).
33.As indicated already, I consider that the plaintiff was obliged to bring this proceeding given the stance of the defendant and its obligations to apply the rules.
34.The case was also run in an efficient, timely and cost-effective manner, consistently with the provisions of the Civil Procedure Act 2010 (Vic). Thus some 10 hearing days were saved by the preliminary questions procedure, which was first suggested by the plaintiff. No special costs order is justified simply because of the ultimate amounts involved.
Calderbank letter
35.By letter of 18 September 2012, the defendant's solicitors put a proposal wherein both parties walk away with a release, to the effect that the plaintiff agree to release the defendant from any liability concerning the subject matter of the proceeding. The offer was said to be open for 3 days until 5 pm on 21 September 2012.
36.In support of this offer the defendant maintained, with some detail, that its construction of the rules already described was correct.
37.In answering correspondence of 21 September, the plaintiff's solicitors rejected the offer and the plaintiff reiterated its position that the meaning of "normal weekly number of hours" was expressly defined in Rule 11.8(a) (see paragraph 1.5 of Letter dated 21 September 2012).
38.The terms of that rejection letter also include the following:
4.2 However, this proceeding was only commenced by our client after its significant efforts to reach a settlement in with your client over a period of more than 3 years failed.
4.3 Since 2009, at its substantial cost, our client met with your client or its representatives on more than 7 occasions and has engaged in extensive correspondence in an attempt to avoid the significant costs of litigation.
…
4.5As noted above, our client has a statutory obligation to administer the scheme in accordance with the Rules. Our client has no ability to agree to waive the liability of a particular employer where it considers that such a liability exists. Accordingly, after the extensive discussions between our clients failed to result in your client’s compliance with the Rules, the proper administration of the scheme left our client with no choice but to commence these proceedings.
39.The letter goes on to reject the offer in the absence of any basis on which the plaintiff could be satisfied that the defendant had no liability to pay the charge in accordance with the rules. However, the letter finishes with the following:
However, in the interests of minimising the costs of this proceeding, we are instructed to reiterate that our client remains willing to promptly consider any claim by your client that it has overpaid charges in respect of any worker with a view to refunding any such amounts to your client. To enable our client to do so, it requests that specific details be provided of any worker in respect of which it claims overpayment has been made, the amount of payment made and an explanation of the basis on which your client asserts that a refund is due.
40.No evidence was placed before the court as to any response to this request.
41.In considering whether a party should have their indemnity costs, the principles that guide the court are set out in a decision of the Court of Appeal in Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority [2005] VSCA 298.
42.The critical question is whether the rejection of the offer was unreasonable in the circumstances.
43.In Hazeldene, the court stated that a court should ordinarily have regard to a number of factors.
44.In terms of these factors, it is true that:
·time allowed: the offer allowed a reasonable time of 3 days;
·whether application for an indemnity costs was foreshadowed: an application for an indemnity costs was foreshadowed (see page 3).
45.However, other factors suggest that the plaintiff's rejection of the Calderbank offer was not unreasonable:
·Firstly, in terms of the stage of the proceeding, although the pleadings were finalised, any finalisation of amounts due could not be undertaken until the preliminary construction point that separated the parties could be resolved;
·Even leaving aside the question as to whether the offered “release” could in fact be given by the plaintiff, the extent of the compromise offered was not significant and was akin to a demand to capitulate (see discussion of Berrigan Shire Council v Ballerini & Anor (No 2) [2006] VSCA 65 in Commissioner of State Revenue v Challenger Listed Investments (No 2) [2011] VSCA 398 [14]). More significantly, however, there was no compromise on the crucial construction point;
·Regarding the plaintiff’s prospects of success, the defendant was able to review its construction position which did not ultimately turn on any unforeseen evidentiary matters. Despite this, it steadfastly continued to maintain its position which was ultimately rejected by the court;
·In terms of clarity of offer, although the offer was clear, it failed to address the ultimate basis on which final orders were made. It instead defended in some detail, a position which was ultimately rejected.
46.Overall then, I do not consider that the plaintiff's rejection of the offer was unreasonable. To the contrary, the plaintiff reasonably offered to consider any over-payment claim on the merits if details were provided as requested.
47.I therefore do not consider that any special costs order should be made.
Conclusion
48.The defendant is to pay the plaintiff’s costs of the claim and the plaintiff pay the defendant’s costs of the counterclaim.
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