Commonwealth of Australia v Sluggett
[2012] FMCA 283
•5 April 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| COMMONWEALTH OF AUSTRALIA v SLUGGETT | [2012] FMCA 283 |
| HUMAN RIGHTS – Costs in discrimination cases – no sufficient public interest to mitigate usual order for costs – offer to settle case made – offer not accepted – whether indemnity costs should be awarded. |
| Federal Magistrates Act 1999, s.79 Federal Court Rules, rules:23, 25 |
| Sluggett v Commonwealth of Australia [2011] FMCA 609 Latoudis v Casey (1990) 170 CLR 534 Oshlack v Richmond River Council (1998) 193 CLR 72 Ruddock v Vadarlis (2001) 188 ALR 143 Minns v State of New South Wales (Department of Education and Training) [2002] FMCA 197 Sluggett v Human Rights and Equal Opportunity Commission [2002] FCA 1060 Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225 |
| Applicant: | COMMONWEALTH OF AUSTRALIA |
| Respondent: | CHANDRAKANTHI SLUGGETT |
| File Number: | ADG 129 of 2008 |
| Judgment of: | Brown FM |
| Hearing date: | 17 February 2012 |
| Date of Last Submission: | 17 February 2012 |
| Delivered at: | Adelaide |
| Delivered on: | 5 April 2012 |
REPRESENTATION
| Counsel for the Applicant: | Dr Bleby |
| Solicitors for the Applicant: | Australian Government Solicitor |
| Counsel for the Respondent: | In Person |
ORDERS
The applicant pay the respondent’s costs on a party and party basis.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADG 129 of 2008
| COMMONWEALTH OF AUSTRALIA |
Applicant
And
| CHANDRAKANTHI SLUGGETT |
Respondent
REASONS FOR JUDGMENT
Introduction
On 30 August 2011, following a lengthy hearing, I delivered judgment in respect of Ms Sluggett’s case against the Commonwealth of Australia, arising from her claim that she had been illegally discriminated against, due to her disability, whilst employed by various departments of the Commonwealth. I dismissed each aspect of her claim.[1]
[1] See Sluggett v Commonwealth of Australia [2011] FMCA 609
In its initial response to Ms Sluggett’s claim, filed on 4 July 2008, the Commonwealth sought the dismissal of Ms Sluggett’s application on the basis that it was trivial, vexatious, misconceived and lacking in substance. The Commonwealth chose not to proceed with any application for summary dismissal. However, at an early stage, it sought the payment of costs, from Ms Sluggett, on a solicitor and own client basis.
I did not deal with the Commonwealth’s application for costs in the Reasons for Judgment of 30 August 2011. Rather, I directed that if the Commonwealth wished to pursue its application for costs, it should make a formal application to this effect, supported by any relevant evidence in affidavit form.
On 26 September 2011, the Commonwealth filed an application in which it seeks the following orders:
“1. The applicant pay the respondent’s costs:
1.1.before 11.00 am on 9 December 2009 – on a party and party basis
1.2.after the time mentioned in paragraph 1.1 above – on an indemnity basis
2.In the alternative, the applicant pay the respondent’s costs on a party and party basis.”
This application was supported by an affidavit of Michael La Vista, the solicitor within the Australian Government Solicitor’s Office, who has the conduct of the proceedings on behalf of the Commonwealth.
Ms Sluggett has responded to this application. She did so on 7 December 2011. She is currently unrepresented and was unrepresented through the latter part of the hearing before me. At the commencement of her case, Ms Sluggett did have access to legal representation.
Ms Sluggett has not been in paid employment since her termination of employment with the Australian Public Service in May of 2008. It is common ground, between all concerned in this case, that Ms Sluggett is not in a secure financial position. Given the length of the proceedings before me, the potential amount of costs to be awarded against her, is beyond the means of the majority of individuals in this country to satisfy.
Ms Sluggett, whilst realising that she has been totally unsuccessful in the proceedings to date and acknowledging the general rule that costs follow the event, opposes the making of an order for costs on the basis of her strained financial circumstances and the subject matter of the litigation in question, which centred on the application of beneficial legislation designed to assist persons who suffer discrimination because of their legal of disability.
There is no doubt that Ms Sluggett is a person who suffers from a significant level of disability. In the past, she has brought other claims against other institutions regarding her allegations that she has been the subject of illegal discrimination because of her disabilities. The current decision is subject to an appeal, by Ms Sluggett, to the Federal Court.
In the Reasons for Judgment, which resulted in the dismissal of Ms Sluggett’s claim for discrimination against the Commonwealth, I said as follows:
“There remains the issue of costs. The Commonwealth has sought costs on a solicitor and own client basis.[2] The hearing before me occupied thirty one sittings days. Accordingly the potential quantum of costs, if any are awarded, is significant. Ms Sluggett is not a person of means. She is currently unemployed. She is also significantly disabled. It also seems likely that she has incurred her own liability in respect of costs, although I am unaware of the basis on which she has been granted legal assistance to advance her complaint before me.
The Commonwealth rigorously contested these proceedings, as it was entitled to do. The proceedings were also of great significance to Ms Sluggett herself and touched on an issue of public importance. The purpose of the Disability Discrimination Act 1992 is to outlaw discriminatory behaviour on the basis of a person’s disability. Through the legislation, the Government of Australia has recognised that such discrimination is a societal evil. As such, the legislation is remedial in nature and it is in the public interest that the victims of such discrimination are encouraged to come forward.
On any view, there is a marked discrepancy in the financial resources available to the parties in this case. Although it is a legal cliché, when compared to Ms Sluggett, the resources of the Commonwealth can be said to be limitless. These are relevant considerations to the question of costs.
Pursuant to section 79 of the Federal Magistrates Act 1999 I have jurisdiction to make an award of costs in favour of the respondent. Such an award is discretionary. At this juncture, I do not consider that I have sufficient material before me to be able properly to exercise such a discretion.”[3]
[2] See Response filed 7 July 2008
[3] Ibid at paragraphs 743 - 746
These Reasons for Judgment are concerned with finalising this issue regarding costs and my involvement in the matter.
The legal provisions applicable
The Federal Magistrates Court has jurisdiction conferred upon it in respect of both family law proceedings and matters of more generalised federal jurisdiction. In regards to matters arising under its general federal law jurisdiction, the Court is awarded the authority to make an order for costs by virtue of section 79 of the Federal Magistrates Act 1999.
The relevant provisions read as follows:
“(2)The Federal Magistrates Court or a Federal Magistrate has jurisdiction to award costs in all proceedings before the Federal Magistrates Court (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which any other Act provides that costs must not be awarded.
(3)Except as provided by the Rules of Court or any other Act, the award of costs is in the discretion of the Federal Magistrates Court or Federal Magistrate.”
The applicable Rules of Court are set out in part 21 of the Federal Magistrates Court Rules. In particular, pursuant to order 21.02(2), in making an order for costs, the Court may do any of the following:
“(2)In making an order for costs in a proceeding, the Court may:
(a) set the amount of the costs; or
(b)set the method by which the costs are to be calculated; or
(c)refer the costs for taxation under Order 62 of the Federal Court Rules or under Chapter 19 of the Family Law Rules; or
(d)set a time for payment of the costs, which may be before the proceeding is concluded.”
Pursuant to its inaugurating legislation, the Federal Magistrates Court is directed to operate “as informally as possible” and utilise streamlined procedures.[4] Accordingly, the Federal Magistrates Court does not have as extensive and exhaustive rules as do the Federal Court or the Family Court.
[4] See Federal Magistrates Act 1999 at section 3(2)
However, pursuant to order 1.05 of the Federal Magistrates Courts Rules, the Court is authorised to apply either the Federal Court Rules of the Family Law Rules if the Court’s own rules are insufficient or inappropriate.
In this particular case, the Commonwealth made an offer to compromise Ms Sluggett’s claim on 16 November 2009. In so doing, as the Federal Magistrates Court Rules do not specifically deal with such offers, part 25 of the Federal Court Rules 2011 is engaged. In particular, pursuant to rule 25.14(2):
“(2)If an offer is made by a respondent and an applicant unreasonably fails to accept the offer and the applicant’s proceeding is dismissed, the respondent is entitled to an order that the applicant pay the respondent’s costs:
(a)before 11.00 am 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.”
The application of this rule, to the circumstances of the present case, are the rational for the Commonwealth seeking indemnity costs from 11.00 am on 9 December 2009 onwards.
Other relevant factors
The hearing before me commenced on 16 November 2009 and thereafter occupied some 31 days, which were spread out over 2010 and 2011. The finalisation of the case was delayed as a result of Ms Sluggett suffering an accident in mid 2010.
However, I explained the major reason for the lengthy hearing, as follows, in the Reasons for Judgment:
“However, the major factor contributing to the length of the proceedings was the inchoate nature of Ms Sluggett’s complaint against the Commonwealth. This led the Commonwealth to examine every aspect of Ms Sluggett’s case to determine where her complaints of discrimination under the DDA precisely lay. Cross-examination of Ms Sluggett alone occupied eight days, after her evidence in chief took around four.” [5]
[5] Ibid paragraph 223
On 30 September 2009, the Commonwealth indicated it was willing to pay Ms Sluggett the total sum of $40,000 to compromise her action. This sum was to be allocated as to $30,000 for Ms Sluggett’s costs and a further sum of $10,000 for Ms Sluggett herself, which latter sum was said to be “in recognition of [the Commonwealth’s] slight risk of liability if the matter proceeds to trial”.[6]
[6] See Annexure MLV2 to the affidavit of Michael La Vista filed 26 September 2011
This offer was rejected by Ms Sluggett on 27 October 2009 in a letter written by her then solicitors. This rejection led to the Commonwealth making a formal notice of offer to settle the proceedings, pursuant to order 23 of the Federal Court Rules on 16 November 2009. The quantum of this offer was $80,000, of which $63,000 was in respect of costs.
Discussion
The general rule, in General Federal Law proceedings, is that costs follow the event. The purpose of an award of costs is to partially reimburse a litigant for costs actually incurred and provide compensation for the financial disadvantage arising as a result of being a successful litigant in proceedings. The rationale for such an order being that it is:
“… just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred. The order is not made to punish the unsuccessful party. Its function is compensatory.”[7]
[7] See Latoudis v Casey (1990) 170 CLR 534 per McHugh J
In Oshlack v Richmond River Council[8] McHugh J cautioned about the inherent dangers arising from courts departing from what he characterised as the “usual order as to costs” in matters which were said to involve matters of the public interest. In this regard, McHugh J pointed out that many ordinary civil actions and administrative matters may potentially raise matters of public interest and as such it was “probably impossible” to establish clear criteria to be applied to distinguish “public interest litigation from other litigation where the usual order for costs applies…”
[8] Oshlack v Richmond River Council (1998) 193 CLR 72
The danger being that:
“Without an organising principle to apply or a set of criteria to guide, there is a real danger that, by invoking the ‘public interest litigation’ fact in cases that affect the public interest or involve a public authority, an award of costs will depend on nothing more than the social preferences of the judge, a dependence that will be masked by reliance on the protean concept of public interest litgation.”[9]
[9] Ibid at 100
In the same case, Kirby J also acknowledged the great difficulty in defining with precision what was meant by the expression “public interest litigation”. However Kirby J also considered that there was a class of case where occasionally it was a proper exercise of jurisdiction to spare a party to such litigation from the burden of a costs order. One of the matters attaching to such a discretion being that the litigation in question was not brought for personal gain.
Referring to authorities in Australia, Canada, New Zealand and England, Kirby J said as follows:
“…a discrete approach has been taken to costs in circumstances where courts have concluded that a litigant has properly brought proceedings to advance a legitimate public interest and has contributed to the proper understanding of the law in question and has involved no private gain. In such cases the cost incurred have, occasionally been described as incidental to the proper exercise of public administration.”[10]
[10] Ibid at 124
Ruddock v Vadarlis[11] was a case in which the Commonwealth had been successful in defending mandamus and habeas corpus proceedings, brought by an individual, which related to 433 non citizens then said to be illegally detained as a result of actions of the Australian Government on the Norwegian vessel, MV Tampa, off the coast of Christmas Island in 2001. It was a matter of some controversy in public discourse in Australia at the time.
[11] Ruddock v Vadarlis (2001) 188 ALR 143
Factors identified by the Full Court of the Federal Court supporting an award of costs in the Commonwealth’s favour included that the Commonwealth had been wholly successful and it was to be expected that the Commonwealth had incurred substantial costs in the proceedings in question. As such, the “usual rule” militated in favour of an award of costs being made in the Commonwealth’s favour. Both these factors are present in the current matter involving Ms Sluggett.
However the Full Court of the Federal Court also identified a number of factors which weighed in Mr Vadarlis’ favour that there be no order for costs against him. These factors included that the proceedings were both novel and important; the issue divided judicial opinion; there was no financial gain to Mr Vadarlis and the organisation which he represented; and the case was pursued with efficiency and expedition.
Balancing these various considerations, the Full Court characterised the case as follows in its determination not to make an award of costs against Mr Vadarlis:
“This is a most unusual case. It involved matters of high public importance and raised questions concerning the liberty of individuals who were unable to take action on their own behalf to determine their rights. There was substantial public and, indeed, international controversy about the Commonwealth's actions. The proceedings provided a forum in which the legal authority of the Commonwealth to act as it did with respect to the rescued people was, and was seen to be, fully considered by the Court and ultimately, albeit by majority, found to exist. The case is quite different in character from the predominantly environmental litigation in which may of the previous decisions concerning the impact of public interest considerations on costs awards have been made. Having regard to its character and circumstances the appropriate disposition is that there be no order as to the costs of the appeal or the application before North J.”[12]
[12] Ibid at paragraph 29
Raphael FM in Minns v State of New South Wales (Department of Education and Training)[13] indicated that the applicable authorities (including Vadarlis) pertaining to the mitigation of cost orders, due to the public interest, established that :
“…if public interest is to be used to mitigate the normal order for costs then that public interest must go further than mere precedent value. There must be a public interest in the subject of the proceedings and once some exclusively personal benefit is sought the prospects of the proceedings having the necessary quality of public interest is much diminished.”
[13] Minns v State of New South Wales (Department of Education and Training) [2002] FMCA 197 at [13]
One of the cases cited by Raphael FM in support of this proposition was an earlier case involving Ms Sluggett herself, namely Sluggett v Human Rights and Equal Opportunity Commission[14]. Reference to this case was made in the principle reasons for judgement delivered on 30 August 2011.[15] Ms Sluggett was wholly unsuccessful in her application, which related to alleged incidents of discrimination arising from her disability brought against Flinders University primarily. Accordingly the case is largely congruent with the present matter.
[14]Sluggett v Human Rights and Equal Opportunity Commission [2002] FCA 1060
[15] See Sluggett v Commonwealth of Australia [2011] FMCA 609 at [152-153]
In the case, Drummond J considered that it was “difficult to characterise the litigation in this Court as public interest litigation” on the basis that Ms Sluggett had sought damages for herself and other orders which would have resulted in her being able to have her academic record amended.
Conclusions
I do not consider that the current proceedings can be characterised as public interest litigation. The issues raised in the case were specific to Ms Sluggett herself. She sought damages; reinstatement in her previous employment; and an apology; in her application. If successful in her application, the only person who would have benefitted directly from the litigation was Ms Sluggett herself.
I acknowledge that the Disability Discrimination Act is to be characterised as beneficial legislation, which is designed to encourage those suffering illegal discrimination, because of their disabilities, to come forward and seek redress. As such, the public is likely to be interested in seeing those discriminated against being compensated and those who have discriminated against them being censured. However this characterisation of the applicable legislation does not result in all litigation arising under its provisions as being related to public interest.
Ms Sluggett brought a long series of grievances against her former employer to court. She was critical of very many of her former workmates and supervisors, who were compelled to defend their conduct toward her. As a result, the case consumed a considerable period of time. Ms Sluggett was entirely unsuccessful in her claims against the Commonwealth.
Although to adapt the legal cliché, the Commonwealth’s economic resources are close to boundless, it was still put to considerable expense. That expense is borne by the public purse. As matters ultimately transpired, the Commonwealth made prudent and pragmatic offers to Ms Sluggett to compromise the action, which would have avoided the bulk of this public expense. Each of the offers concerned was rejected by Ms Sluggett.
In my view, these factors mandate that I should follow the ordinary practice and order that Ms Sluggett pay the Commonwealth’s costs. Ms Sluggett’s straitened financial circumstances are not a relevant factor.
The intent of Part 25 of the Federal Court Rules is to facilitate the appropriate settlement of matters in order to spare both the parties concerned and the Court itself from the financial burden of litigation which can be potentially avoided. This intent is achieved, in part, through a mechanism which makes concrete the financial perils implicit in all litigation. If an offer to settle is unreasonably rejected, the party making the offer is entitled to indemnity costs.
When the second and formal offer to settle was made, Ms Sluggett was legally represented. Judged objectively, in the light of the ultimate outcome of the proceedings, it was neither reasonable nor prudent for Ms Sluggett to have rejected the offer to settle which was made to her, which would have relieved her of some, if not all, of her own costs and left her with a modest sum in her hand. Certainly, she would not be faced with the prospect, as she is now, of a costs order which would financial crush all but the wealthiest persons in the Australian community.
In Colgate-Palmolive v Cussons Pty Ltd[16] it was held that indemnity costs are not commonly ordered and will only be ordered if the Court is satisfied that there is “some special or unusual feature of the case to justify the Court in departing from the ordinary practice” of ordering the costs be paid on a party and party basis.
[16] See Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225
There is no closed category of cases in which indemnity costs might appropriately be ordered, but in Colgate Palmolive v Cussons Pty Ltd, the Court said that the kinds of situation in which indemnity costs might be considered were where a litigant had:
·commenced or continued an action knowing it to have no chance of success;
·made false or irrelevant allegations of fraud;
·made groundless allegations which prolong a case; and
·imprudently refused an offer to compromise.
I have no doubt that Ms Sluggett continues to hold the view that the Commonwealth treated her very harshly during her employment with it. As such, she is likely to have held the view, in November of 2009, that her proceedings were meritorious. Although Ms Sluggett has many criticisms of the Commonwealth and its servants, she stopped short of alleging fraud against them.
However because of the multiplicity of her allegations against the Commonwealth, the case was undoubtedly prolonged. Numerous documents were subject to scrutiny and many interactions between Ms Sluggett and her work supervisors and colleagues were closely examined. For reasons all ready provided, it was objectively imprudent of her to have refused the offer to compromise.
However the purpose of a costs order is not to punish Ms Sluggett for bringing her action. Rather it is to compensate the Commonwealth in part for the expense and burden involved in its successful defence of the proceedings.
Other than the length of the proceedings concerned, there was nothing particularly out of the ordinary in the case before me in terms of other discrimination cases. Ms Sluggett has a disability. She was and remains disgruntled at what she perceives to have been the Commonwealth’s treatment of her. As has been the case in the past, she wanted her day in court. This is a common scenario so far as large employers, such as the Commonwealth, are concerned. Like Ms Sluggett, many such litigants are determined people.
In all the circumstances of the case, I have come to the conclusion that it would not be an appropriate exercise of my discretion to award costs to order Ms Sluggett to pay costs on an indemnity basis after 9 December 2009.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding forty eight (48) paragraphs are a true copy of the reasons for judgment of Brown FM
Date: 5 April 2012
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