Cugura v Frankston City Council (No.2)
[2012] FMCA 530
•20 June 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CUGURA v FRANKSTON CITY COUNCIL (No.2) | [2012] FMCA 530 |
| INDUSTRIAL LAW – General protections court application – substantive application dismissed – application for costs by respondent – whether substantive application was instituted vexatiously or without reasonable cause – whether unreasonable act or omissions by applicant – applicant to pay respondent’s costs – appropriate order as to costs. |
| Fair Work Act 2009 (Cth) s.570(2)(a),(b) Federal Magistrates Court Rules, 21, 07, Sch 1. |
| Cugura v Frankston City Council (No.1) [2011] FMCA 195 Cugura v Frankston City Council (No.2) [2011] FMCA 259 Cugura v Frankston City Council [2012] FMCA 340 Nimmo in the matter of an application for an inquiry relating to an election for an office in the Australian Education Union (NT Branch) (No. 2) (2011) FCA 728 Khiani v Australian Bureau of Statistics [2011] FCAFC 109 Jonsson v Theodore Hotel Co-Operative Associate Ltd [2007] FMCA 1199 Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 Rentuza v Westside Auto Wholesale [2009] FMCA 1022 Australian and International Pilots Association v Qantas Airways Ltd (No.3) [2007] FCA 879 Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574 Saxena v PPF Asset Management Ltd [2011] FCA 395 Pierson’s Pro-Health Pty Ltd & Ors v Silvex Nominees Pty Ltd & Anor (No.3) [2010] FMCA 250 Genovese v BGC Construction Pty Ltd (No.2) [2007] FMCA 601 Saxena v PPF Asset Management Ltd [2011] FCA 395 Colgate & Palmolive Company & Anor v Cussons Pty Ltd (1993) 46 FLR 225 Imogen Pty Ltd v Sangwin (1996) 70 IR 254 Brown v DS & MJ Batten (No.2) [2012] FMCA 436 McDonald v Parnell Laboratories (Aust) (No. 2) [2007] FCA 2086 Construction, Forestry, Mining and Energy Union v CSBP Limited (No2)[2012] FCAFC 64 Hatchett v Bowater Tutt Industries Pty Ltd (No.2) 28 FCR 32 Attwood v Wangka Maya Pilbara Aboriginal Language Centre (No.2) [2010] FMCA 500 Mifsud v Veolia Transport Sydney Pty Ltd [2012] FMCA 167 |
| Applicant: | LUDWIG CUGURA |
| Respondent: | FRANKSTON CITY COUNCIL |
| File Number: | MLG 1724 of 2010 |
| Judgment of: | O'Sullivan FM |
| Hearing date: | On the papers |
| Date of Last Submission: | 22 May 2012 |
| Delivered at: | By telephone to Melbourne |
| Delivered on: | 20 June 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr A.Maule |
| Solicitors for the Applicant: | AED Legal Centre |
| Counsel for the Respondent: | Ms M.Dawson |
| Solicitors for the Respondent: | Macpherson & Kelley Lawyers |
ORDERS
THE COURT ORDERS THAT:
The applicant pay the respondent’s costs calculated in accordance with Schedule 1 of the Federal Magistrates Rules 2001.
The respondent file and serve within 7 days any submissions (but no more than 2 pages in length) in relation to the calculation of costs in accordance with Order 1.
The applicant file and serve 7 days thereafter any submissions in reply (but no more than 2 pages in length) to those in order 2.
AND THE COURT NOTES:
A.The parties submissions will be considered on the papers unless requested otherwise in submissions.
B.Any submission filed in accordance with orders 2 and 3 should be emailed in word format to associate.fmo’[email protected].
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 1724 of 2010
| LUDWIG CUGURA |
Applicant
And
| FRANKSTON CITY COUNCIL |
Respondent
REASONS FOR JUDGMENT
On 24 April 2012, the Court made orders for the reasons set out in Cugura v Frankston City Council [2012] FMCA 340 dismissing an application filed by Ludwig Cugura (“the applicant”) on 27 April 2011.
Background
The background to the proceedings is set out in Cugura v Frankston City Council [2012] FMCA 340 (“the substantive judgment”) at paragraphs [2] to [50] and for the purposes of these reasons it is unnecessary to repeat it.
Following on from the orders made for the reasons set out in the substantive judgment, Frankston City Council (“the respondent”) has now sought an order for costs.
The legislation
The substantive proceedings were brought under the Fair Work Act 2009 (Cth).[1] The provisions in relation to costs under the Fair Work Act 2009 (Cth) (“the Fair Work Act”) are governed by s.570 which provides:
[1] see Cugura v Frankston City Council (No.1) [2011] FMCA 195 and Cugura v Frankston City Council (No.2) [2011] FMCA 259 for background on earlier proceedings on interlocutory and jurisdictional issues. However see substantive judgment in Cugura v Frankston City Council [2012] FMCA 340 for background to these proceedings.
“(1)A party to proceedings (including an appeal) in a court (including a court of a State or Territory) exercising jurisdiction under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.
(2)The party may be ordered to pay the costs only if:
(a)the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or
(b)the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; or
(c)the court is satisfied of both of the following:
(i) the party unreasonably refused to participate in a matter before FWA;
(ii) the matter arose from the same facts as the proceedings.”
Submissions
The respondent relies in support of its application for an order for costs on section 570(2)(a) and (b) of the Fair Work Act. That is, the respondent says the applicant instituted these proceedings vexatiously or without reasonable cause and/or unreasonable acts or omissions by the applicant caused the respondent to incur costs.
I have had the benefit of written submissions settled by Counsel on behalf of the respondent in support of its argument that the Court should make an order for costs against the applicant. I have also had the benefit of written submissions settled by Counsel on behalf of the applicant opposing any such order. I will turn to consider those submissions.
Respondent’s submissions
The respondent’s submissions filed 8 May 2012 were:
“Introduction
1.This submission is made in accordance with the decision of his Honour Federal Magistrate O’Sullivan in the matter of Cugura v Frankston City Council [2012] 3 FMCA 340 at paragraphs [185] and [186].
2.On 2 May 2012 the respondent’s solicitors wrote to the solicitors for the applicant placing them on notice that it would be seeking to recover its costs incurred defending this matter. At the time these submissions were prepared no response had been received by the respondent's solicitors with respect to the correspondence of 2 May 2012.
Costs against the applicant pursuant to s570 of the Fair Work Act
3.The respondent seeks costs against the applicant pursuant to section 570(2)(a) and further or alternatively pursuant to s570(2)(b) of the Fair Work Act 2009 (FW Act).
Institution of the Proceeding without Reasonable Cause
4.It is submitted that the applicant instituted the proceedings, namely the third application of 13 April 2011 without reasonable cause.[2]
[2] Cugura –v- Frankston City Council [2012] FMCA 340 [52] (Cugura –v- FCC)
5.The test to be applied by the Court in determining whether the proceeding was instituted without reasonable cause is to ask “whether, upon the facts apparent to the applicant at the time of instituting proceedings, there was no substantial prospects of success.”[3]
[3] Kanan –v- Australian Postal and Telecommunications Union (1992) 43 IR 257 (Kanan) at 264 – 265, Re Ross; Exparte Crozier (2001) 111 IR 282 (Crozier) at [9], Nimmo, In the Matter of an Application for an Inquiry relating to an Election for an Office in the Australian Education Union (NT Branch) No 2 [2011] FCA 728 (Nimmo) at [28] – [30] , Khiani –v- Australian Bureau of Statistics [2011] FCAFC 109 (Khiani), at [51] – [52], and Cavar –v- Nursing Australia [2012] FCA 338 (Cavar) at [22]–[23].
6.The proceeding was subject to a reverse onus.[4] The Court, in accordance with authority, accepted that the applicant had an initial onus to discharge. It was found that the initial onus was discharged with respect to the claim based on physical disability, namely that the applicant had a disability known as parathesia, but found that the applicant on his own material was unable to discharge the initial onus with respect to the claim against the respondent as it pertained to family responsibilities.[5]
[4] s.361 FW Act
[5] Cugura –v- FCC at [165]–[168]
7.It is submitted that it should have been apparent to the applicant and at the very least his legal representatives, entering an appearance on the record on 20 September 2011, that this element of the applicant’s claim “could not possibly succeed”[6] or was “manifestly groundless”[7] and should have been withdrawn.
[6] Nimmo [30]–[31]
[7] ibid
8.It is submitted that upon applying the principles as set out in the authorities,[8] the Court should find that the applicant instituted proceedings against the respondent pursuant to s351 of the FW Act on the ground of family responsibility without reasonable cause and as such should exercise its discretion to award costs pursuant to s570(2)(a) of the FW Act to the respondent.
[8] Kanan, Crozier, Nimmo, Khiani, and Cavar
Unreasonable Acts and Omissions
9.Between 13 April 2011 and 20 September 2011 the applicant was an unrepresented litigant.
10.It is submitted that the applicant’s status as an unrepresented litigant bought him “no special privileges”[9] and could not justify a “lack of proper attention to the interests of other parties”[10], namely the respondent.
[9] Bahonko –v- Sterjov (2008) 166 FCR 415 at [6]
[10] ibid
11.The applicant failed to file the affidavit material upon which he sought to rely in compliance with the directions orders of the Court made on 9 June 2011 necessitating the abandonment of the trial that was to commence on 9 November 2011.
12.On 2 September 2011 the solicitors for the respondent wrote to the applicant inviting him, in light of the respondent’s overwhelming evidential case[11], to withdraw the proceeding against it on the basis that it would forgo making an application pursuant to s570 against him.[12] In light of the eight affidavits and supporting documentation filed by the respondent, the applicant and/or his solicitors should have been aware at this point of the overwhelming evidential case against the applicant and at the very latest discontinued at that time, without further costs being incurred. Neither the applicant nor his solicitors, after 20 September 2011 responded to the respondent’s offer.
13.The respondent complied with the 9 June 2011 directions order and filed its evidential case on 14 October 2011. As a result of the respondent’s compliance with the directions order of 9 June 2011 the applicant and the applicant's solicitors had from 14 October 2011, full knowledge of the respondent’s evidential case prior to preparing the applicant’s evidential material and submissions.
14.On 16 February 2012 the applicant filed and served its submission in this matter. In that submission the applicant sought to allege that the respondent engaged in adverse action other than dismissal.[13]These claims of adverse action were not pleaded and were subsequently abandoned by the applicant.[14] Despite the abandonment of these issues the applicant required all of the respondent’s witnesses for the purpose of cross examination even though the evidence did not go to the reasons for the dismissal but rather to those matters which had been abandoned.[15] The course taken by the applicant at trial resulted in unnecessarily prolonging the hearing, in reality it was the evidence of three witnesses that went to the central issue of the causal nexus between the applicant’s physical disability and the dismissal[16] and as such all eight witnesses should not have been required for the purpose of cross examination. The applicant’s approach to the conduct of the hearing resulted in the respondent incurring unnecessary legal costs and substantially disrupted the respondent’s business.
15.It is submitted that the failure to accept the offer to withdraw the proceeding on the terms contained in the respondent’s offer of 2 September 2011 was an unreasonable act or omission which resulted in the respondent incurring costs of complying with the Court’s further orders and preparing for and appearing at the trial of the matter. It is submitted that a critical examination of the respondent’s evidential material should have disclosed to the applicant and his solicitors that the respondent would be successful in discharging the reverse onus and the applicant’s case would be unsuccessful.[17] Neither the applicant nor his solicitors sought to have the respondent re-put the offer of 2 September 2011 in light of the respondent's evidential material or at all.
16.Further, the general conduct of the proceedings where particular claims of adverse action had been withdrawn but where witnesses were required for cross examination in circumstances where their evidence had no bearing on the claim before the Court, namely adverse action relating to the termination of the applicant’s employment, constitutes an unreasonable act or omission on an objective basis. This unreasonable act or omission, it is submitted, does not fall within the ambit of the applicant “pursuing a contentious but ultimately unsuccessful argument”. [18]
17.It is submitted that the Court should exercise its discretion under section 570(2)(b) of the FW Act and award costs in favour of the respondent on the basis that the applicant engaged in unreasonable acts and omissions from 2 September 2011 to date (including the failure to respond to the respondent’s correspondence of 2 May 2012[19]) which resulted in the respondent incurring costs.
Costs against a Practitioner
18.Should the Court be minded to exercise its discretion under s570 of the FW Act, it is submitted that it is open to the Court to consider on its own motion, making an order that the lawyer on the record (or her agent) pay the costs of the respondent or part of the costs of the respondent from 20 September 2011 or alternatively that the lawyer be ordered to pay the costs that the applicant is ordered to pay by reason of the matters referred to in paragraphs 7, 14, 15 and 16 of this submission.[20]
19.It should be noted that should the Court be minded to exercise this power that notice to the lawyer must be given.[21] Further such discretion should be exercised with a degree of caution and should not be considered a punitive measure.[22]
[11] Also see Cugura [178] regarding the evidential case against the applicant
[12] Schedule 1 to these submissions
[13] See paragraph 22 of the Submission of the Applicant dated 16 February 2012
[14] Transcript 5 March 2012 P-21 TT40 – P-24 TT15
[15] Transcript P-20 TT30, Cugura at [157], [158], [178]
[16] Cugura at [176], [178], [179] and [180]
[17] Muzzicato –v- New Age Cleaning Services [2011] FMCA 1044 at [15]–[16]
[18] Australian and International Pilots Association –v- Qantas Airways Ltd No 3 (2007) 162 FCR 392 at [33]–[36] and CFMEU –v- Clarke (2007) 162 FCR 574 [28]–[30]
[19] Schedule 2 to these submissions
[20] Order 21.07(1), (2)(c), (2)(d), (3), (4)(b) and 4(c) Rule of the Federal Magistrates Court
[21] Order 21.07(5)
[22] Re Bendeich (1994) 53 FCR 422 at 426 – 427, White Industries (Qld) Pty Ltd –v- Flower & Hart (a Firm) (1998) 156 ALR 229-231 at 229 -231 and Naeb –v- Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 945 [2]
Applicant’s submissions
The applicant’s submissions were to be filed by 22 May 2012. The applicant’s responses to the respondents costs submissions were:
“Introduction
1.On 24 April 2012, His Honour Federal Magistrate O’Sullivan handed down his decision in this matter.[23] In accordance with paragraph 186 of that decision the Respondent made submissions on costs on 8 May 2012. These submissions on behalf of the Applicant are provided in response.
[23] Cugura v Frankston City Council [2012] FMCA 340 (“the Decision”)
2.The Respondent claims costs pursuant to subsections 570(2)(a) and/or 570(2)(b) of the Fair Work Act 2009 (“the Act”).
3.The Applicant opposes the ordering of those costs.
Section 570(2)(a) - Proceedings instituted without reasonable cause
4.To determine whether the Applicant instituted the proceedings without reasonable cause “the relevant question is whether the proceedings had reasonable prospects of success at the time they were instituted, not whether they ultimately failed”[24].
[24] Nimmo, in the matter of an application for an enquiry relating to an election for an office in the Australian Education Union (NT Branch) (No 2) (2011) FCA 728 (“Nimmo”) at [28]
5.Another formulation of the test of “whether a proceeding is instituted ‘without reasonable cause’ is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success.”[25]
[25] Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 at 264-265, cited in Re Ross; Ex Parte Crozier [2001] FCA 1665 (2001) 111 IR 282 at [9]
6.The proceedings commenced at Fair Work Australia (“FWA”) with applications before both Deputy President Hamilton and Commissioner Roe. Both separately issued certificates pursuant to section 369 of the Act. If either had thought that a general protections court application would not have had a reasonable prospect of success then they were bound to advise the parties accordingly pursuant to section 370 of the Act. Neither did so.
7.It is submitted that the material in the current proceedings was the same as that before FWA and therefore the Applicant naturally believed that these proceedings had reasonable prospects of success.
8.Further, ‘the test to be applied in relation to the expression “without reasonable cause” is similar to that adopted in an application for summary judgment, viz. “so obviously untenable that it cannot possibly succeed”, “manifestly groundless” or “discloses a case which the Court is satisfied cannot succeed”’[26].
[26] Nimmo at [30]
9.The Court found that the action taken against the Applicant (the termination) was adverse action within the meaning of that term as set out in section 341 of the Act.[27]
[27] At paragraph 158 of the Decision
10.Further, the Court found that the Applicant had a physical disability and that this was well known to the Respondent.[28]
[28] At paragraph 163 of the Decision
11.The Court did find that there was no evidence to support a finding in relation to family responsibilities[29] but it is submitted that this did not of itself cause the institution of the proceedings as a whole to be “without reasonable cause”. The failure to establish one proscribed reason, and by far the more minor of the two in terms of the evidence led by both parties, had no effect on the establishment of the other proscribed reason.
[29] See paragraph 166 of the Decision
12.It is submitted that the proceedings were not “manifestly groundless” as the findings of the adverse action of termination and the proscribed reason of physical disability were sufficient for the onus of proof to then shift to the Respondent pursuant to section 361 of the Act.[30]
[30] See paragraph 169 of the Decision
13.The Court was satisfied on the balance of probabilities that the Respondent had discharged its onus of proof under section 361 of the Act. This was a factual finding based on the Court’s assessment of the evidence. However, this does not mean the proceedings had been commenced “without reasonable cause”. Nowhere in the Decision is it suggested that the proceedings had been instituted without some chance of success.
14.In view of the above, it is submitted that this first leg of the Respondent’s submissions for costs must fail.
Section 570(2)(b) - Unreasonable acts or omissions incurring costs
15.The Applicant failed to file his affidavit material in accordance with the Court’s directions of 9 June 2011. However, it appears that rather than ask for the proceeding to be dismissed pursuant to Rule 13.03B, the Respondent chose to file its own affidavit material. It is submitted that the Applicant cannot be held responsible or be expected to pay the costs for the Respondent’s course of action.
16.Further, the Respondent in its affidavit material well understood the Applicant’s claim and responded to it in considerable detail. This was hardly the action of a Respondent who considered that the Applicant’s claim was “without reasonable cause”.
17.In paragraph 12 of its submissions, the Respondent seeks to rely on correspondence it sent to the Applicant on 2 September 2011 claiming that it had an “overwhelming evidential case”. The Applicant was not in a position to assess this until at least 14 October 2011 when the Respondent filed and served its affidavit material. Further, the Applicant maintained a contrary view up until judgment.
18.In paragraph 14 of the Respondent’s submissions it is alleged that the Applicant should not have required all of the Respondent’s witnesses for cross-examination when there were only three “that went to the central issue of the causal nexus between the applicant’s physical disability and the dismissal”.
19.First, at no time did the Respondent offer to withdraw those witness statements, presumably because it had determined that the evidence contained in the statements had some probative value to the facts in issue. The Applicant cross-examined those witnesses for the purpose of establishing the causal nexus. That the Court was not satisfied that the nexus existed does not mean that it was a futile exercise or a waste of the Court’s and the Respondent’s time. As in any proceeding, some evidence presented in this proceeding supported one party and some the other.
20.Secondly, it was the Respondent’s actions that wasted a considerable amount of the Court’s time in attempting to establish that the Applicant had lied either in this proceeding or in another unrelated proceeding. The cross-examination of the Applicant concerning, inter alia, exhibits from the unrelated proceeding was “not of any assistance in determining the matter”.[31]
21.With respect to paragraph 15 of the Respondent’s submissions, the Court should rest assured that the Respondent’s evidential material was critically examined but it was not conclusive that the Respondent would successfully discharge the reverse onus. Much of that material was controversial and needed to be tested. Further, it is submitted that the material could have supported the Applicant’s view that his disability was at least one reason for his termination, even if that view was ultimately unsuccessful.
22.It is therefore submitted that this second leg of the Respondent’s submissions for costs must fail.
Costs against a Practitioner
23.At no time did the lawyer on the record for the Applicant (“the Lawyer”) or her agents cause the Respondent to incur costs or have costs thrown away for any undue delay, negligence, improper conduct or other misconduct or default.
24.Further, neither the Lawyer nor her agents prevented the hearing from proceeding conveniently by any means whatsoever.
25.By reason of the matters raised above in response to the Respondent’s submissions, the Lawyer submits that this is a completely unwarranted attack on her professional reputation and that of her agents and, as such, no order should be made for costs against her.
26.However, should the Court consider making such an order then, pursuant to Rule 21.07(5)(a), the Court must give the Lawyer a reasonable opportunity to be heard.
[31] See paragraph 57 of the Decision
Discretion as to costs
27.As Bromberg J has stated: “this Court ought to 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.”[32]
[32] Saxena v PPF Asset Management Ltd [2011] FCA 395 at [6]
Conclusion
28.For the reasons stated in these submissions it is respectfully submitted that there should be no order as to costs against the Applicant.”
The applicant made it clear that he opposed the orders sought by the respondent. The applicant denied that the proceedings were instituted vexatiously or without reasonable cause or that unreasonable acts or omissions caused the respondent to incur costs.
Consideration
In Khiani v Bureau of Statistics [2011] FCAFC 109, the Full Court of the Federal Court at paragraphs [50] to [53] dealt with an application for costs on the basis that the appeal which had been dismissed was instituted without reasonable cause. The Full Court said:
“51.The submission on behalf of the respondent was based on the proposition that the appeal was instituted without reasonable cause. Counsel for the respondent invoked what was said by Wilcox J in Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 at 264-265, cited in Re Ross; Ex parte Crozier [2001] FCA 1665 (2001) 111 IR 282 at [9]:
[O]ne way of testing whether a proceeding is instituted ‘without reasonable cause’ is to ask whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant’s favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being ‘without reasonable cause’. But where, on the applicant’s own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause.
The authorities are summarised in Nimmo, in the matter of an application for an inquiry relating to an election for an office in the Australian Education Union (NT Branch) (No.2) [2011] FCA 728 at [27]-[30] per Reeves J.
52.It is true that the appellant has failed in her appeal. This does not of itself establish that she instituted the appeal without reasonable cause. In passing up the opportunity to seek costs from the primary judge, the respondent appears to have conceded that the appellant’s case was arguable at that point. If that were the case, it is hard to see how the appellant’s case became unarguable on appeal. Although the grounds she argued demonstrated her lack of understanding of the operation of Pt 3-1 of the Fair Work Act, the appellant did have in her favour the primary judge’s error as to the onus of proof on the causation issue. Although the appellant has failed on that issue, it might be said to have afforded her an arguable case on appeal. In the circumstances, the better view is that s 570(1) of the Fair Work Act operates to deprive the Court of the normal power to award costs in favour of the successful respondent.
53.There can be no order as to the costs of the appeal.”
Relevant to the first mentioned ground on which the respondent sought costs is the decision of Reeves J in Nimmo in the matter of an application for an inquiry relating to an election for an office in the Australian Education Union (NT Branch) (No. 2) (2011) FCA 728. In particular for the purposes of assessing the application for costs, paragraphs 28-30. That decision provided:
“28.In determining an application to which this section applies, the relevant question is whether the proceedings had reasonable prospects of success at the time they were instituted, not whether they ultimately failed: see R v Moore; Ex parte Federated Miscellaneous Workers’ Union of Australia [1978] HCA 51; (1978) 140 CLR 470 at 473 per Gibbs J, Thompson at 471 and Bostik at 262. I might add that this principle must apply with even more force in the present type of inquiry where an applicant may succeed in showing a number of irregularities happened in the election and yet fail to persuade the Court they could have affected the result of the election as a real possibility under s 206(5) of the Act.
29.It is also relevant to consider whether the application for the inquiry depended upon the determination of the disputed facts, or the resolution of arguable points of law: see Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 at 264–265 and Spotless at [10]. This has to be established as a matter of objective fact: see Spotless at [13] and Automotive, Food, Metals, Engineering, Printing and Kindred Industry Union v Nestle Australia Limited [2005] FCA 717 at [3]–[4].
30.Finally, the test to be applied in relation to the expression “without reasonable cause” is similar to that adopted in an application for summary judgment, viz “so obviously untenable that it cannot possibly succeed”, “manifestly groundless” or “discloses a case which the Court is satisfied cannot succeed”: see Heidt at 272–273; Geneff v Peterson (1986) 19 IR 40 at 87–88; Hatchett at 327 and Crozier at [12]. I might add that these statements express the test for a summary judgment before the introduction of s 31A of the Federal Court of Australia Act 1976 (Cth). However, I consider they are apt under s 329 of the Act because s 31A of the Federal Court of Australia Act 1976 (Cth) uses the expression “no reasonable prospects of success”, rather than “no reasonable cause” and, more importantly, s 31A also contains an express statutory exclusion (not present in s 329) of the need to show the proceedings are hopeless or bound to fail: see s 31A(3).”
Relevant to this ground is also the well known authority of Kanan v Australian Postal and Telecommunications Union[33]. In Kanan Wilcox J said:
“It seems to me that one of testing whether the proceedings are instituted without reasonable cause is to ask whether, upon the facts apparent to the Applicant at the time of instituting proceedings there were no substantial prospects of success. If such depends upon the resolution in the Applicant’s favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being “without reasonable cause” where on the Applicant’s own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceedings lacks reasonable cause”.[34]
[33] (1992) 43 IR 257.
[34] At 264 – 265.
In Jonsson v Theodore Hotel Co-Operative Associate Ltd [2007] FMCA 1199 Burnett FM applied Kanan and said at [31]:
“…in order to determine whether the proceeding was commenced without reasonable cause it is necessary to consider whether or not on the Applicant’s material alone a proper basis for the proceeding can be made out.”
It follows that in order to determine whether the proceeding was commenced without reasonable cause it is necessary to consider whether or not on the applicant’s material alone a proper basis for the proceeding can be made out. If not then it could be said the proceeding was commenced without reasonable cause.
Notwithstanding the respondent’s submissions that attempted to separate out the various claims made by the applicant the matters identified by the applicant in his application and affidavit identified the prescribed grounds in the Fair Work Act referred to in the substantive judgment. If at trial it had been accepted that his employment was terminated because of or for reasons including those proscribed grounds then that termination would have been in contravention of the relevant sections of the Fair Work Act.
In all of the circumstances given the parties material there was an issue concerning whether or not the applicant’s termination of employment was for a proscribed reason. In the circumstances I do not consider that the proceeding as a whole was one instituted without reasonable cause.
The Court may also order a party to pay costs if the Court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs. As the respondent’s submissions set out earlier make clear this was also a basis on which costs were sought.
In Rentuza v Westside Auto Wholesale [2009] FMCA 1022 (“Rentuza”) Lucev FM considered the issue of whether an unreasonable act or omission had caused a party to incur costs for the purposes of s.570(2)(b) of the Fair Work Act.
At paragraphs 26 to 28 in Rentuza His Honour said:
“26.For the purposes of s.570(2)(b) two criteria must be fulfilled. They are:
a)that a party must have engaged in an unreasonable act or omission; and
b)that the unreasonable act or omission must have caused another party to incur costs in connection with the proceeding.
27.Whether a party has engaged in an unreasonable act or omission depends upon an objective analysis of the particular circumstances of the case.
28.The exercise of the discretion in s.570(2)(b) is not necessarily engaged because:
a)a party does not conduct litigation efficiently;
b)a concession is made late;
c)a party may have acted in a different or timelier fashion;
d)a party has adopted a genuine but misguided approach.” [Footnotes from original omitted]
In submissions reference was made to the decision in Australian and International Pilots Association v Ltd (No.3) [2007] FCA 879 where Tracey J said:
“36.In dealing with an application for costs under s 347(1) of the Act, in Standish v University of Tasmania (1989) 28 IR 129, Lockhart J was called on to decide whether the proceeding had been instituted “without reasonable cause”. His Honour drew a distinction between the pursuit of an argument which does not succeed and the institution of a proceeding which is misconceived in the sense of being incompetent: see at 138–9. This distinction may, in my view, assist in determining whether conduct is unreasonable for the purposes of s 824(2). The prosecution of any incompetent or hopeless case can be regarded as “an unreasonable act” within the meaning of s 824(2). Conversely, in my opinion, the pursuit of a contentious, and ultimately unsuccessful, argument is not an unreasonable act. In my view the applicant’s defence of its pleadings in the first strike-out application falls into the latter category…”
In Rentuza the applicant was ordered to pay costs as the Court was satisfied the relevant provisions of the Fair Work Act had either not been read or that if they have been read they appeared to have been disregarded.[35]
[35] see para 29 in Rentuza
Whether a party has engaged in an unreasonable act or omission depends upon an objective analysis of the particular circumstances of the case; see Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879.
For the purposes of s.570(2)(b) of the Fair Work Act, the Court must be satisfied that two criteria have been fulfilled, as set out in Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574:
(a) that a party must have engaged in an unreasonable act or omission; and
(b) that the unreasonable act or omission must have caused another party to incur costs in connection with the proceeding.
As was noted by FM Lucev in Rentuza (supra) the exercise of the discretion in s.570(2)(b) is not necessarily engaged just because:
(a)a party does not conduct litigation efficiently;[36]
(b)a concession is made late;[37]
(c)a party may have acted in a different or timelier fashion;[38]
(d)a party has adopted a genuine but misguided approach;[39]
[36] see Clarke FCR at 582 per Tamberlin, Gyles and Gilmour JJ
[37] see Clarke FCR at 582 per Tamberlin, Gyles and Gilmour JJ
[38] see Clarke FCR at 582-583 per Tamberlin, Gyles and Gilmour JJ;
[39] see for example, the approach in Australian and International Pilots Association v Qantas Airways Ltd (No.3) [2007] FCA 879 at para.39 per Tracey J.
In this case it was the respondent’s position that the applicant’s failure to respond to the offer made by the respondent was an unreasonable act or omission. As the respondent noted in submissions:
“12On 2 September 2011 the solicitors for the respondent wrote to the applicant inviting him, in light of the respondent’s overwhelming evidential case[40], to withdraw the proceeding against it on the basis that it would forgo making an application pursuant to s570 against him.[41] In light of the eight affidavits and supporting documentation filed by the respondent, the applicant and/or his solicitors should have been aware at this point of the overwhelming evidential case against the applicant and at the very latest discontinued at that time, without further costs being incurred. Neither the applicant nor his solicitors, after 20 September 2011 responded to the respondent’s offer.
13The respondent complied with the 9 June 2011 directions order and filed its evidential case on 14 October 2011. As a result of the respondent’s compliance with the directions order of 9 June 2011 the applicant and the applicant's solicitors had from 14 October 2011, full knowledge of the respondent’s evidential case prior to preparing the applicant’s evidential material and submissions.
14On 16 February 2012 the applicant filed and served its submission in this matter. In that submission the applicant sought to allege that the respondent engaged in adverse action other than dismissal.[42]These claims of adverse action were not pleaded and were subsequently abandoned by the applicant.[43] Despite the abandonment of these issues the applicant required all of the respondent’s witnesses for the purpose of cross examination even though the evidence did not go to the reasons for the dismissal but rather to those matters which had been abandoned.[44] The course taken by the applicant at trial resulted in unnecessarily prolonging the hearing, in reality it was the evidence of three witnesses that went to the central issue of the causal nexus between the applicant’s physical disability and the dismissal[45] and as such all eight witnesses should not have been required for the purpose of cross examination. The applicant’s approach to the conduct of the hearing resulted in the respondent incurring unnecessary legal costs and substantially disrupted the respondent’s business.
15It is submitted that the failure to accept the offer to withdraw the proceeding on the terms contained in the respondent’s offer of 2 September 2011 was an unreasonable act or omission which resulted in the respondent incurring costs of complying with the Court’s further orders and preparing for and appearing at the trial of the matter. It is submitted that a critical examination of the respondent’s evidential material should have disclosed to the applicant and his solicitors that the respondent would be successful in discharging the reverse onus and the applicant’s case would be unsuccessful.[46] Neither the applicant nor his solicitors sought to have the respondent re-put the offer of 2 September 2011 in light of the respondent's evidential material or at all.
16Further, the general conduct of the proceedings where particular claims of adverse action had been withdrawn but where witnesses were required for cross examination in circumstances where their evidence had no bearing on the claim before the Court, namely adverse action relating to the termination of the applicant’s employment, constitutes an unreasonable act or omission on an objective basis. This unreasonable act or omission, it is submitted, does not fall within the ambit of the applicant “pursuing a contentious but ultimately unsuccessful argument”. [47]
17It is submitted that the Court should exercise its discretion under section 570(2)(b) of the FW Act and award costs in favour of the respondent on the basis that the applicant engaged in unreasonable acts and omissions from 2 September 2011 to date (including the failure to respond to the respondent’s correspondence of 2 May 2012[48]) which resulted in the respondent incurring costs.”
[40] Also see Cugura [178] regarding the evidential case against the applicant
[41] Schedule 1 to these submissions
[42] See paragraph 22 of the Submission of the Applicant dated 16 February 2012
[43] Transcript 5 March 2012 P-21 TT40 – P-24 TT15
[44] Transcript P-20 TT30, Cugura at [157], [158], [178]
[45] Cugura at [176], [178], [179] and [180]
[46] Muzzicato –v- New Age Cleaning Services [2011] FMCA 1044 at [15]–[16]
[47] Australian and International Pilots Association –v- Qantas Airways Ltd No 3 (2007) 162 FCR 392 at [33]–[36] and CFMEU –v- Clarke (2007) 162 FCR 574 [28]–[30]
[48] Schedule 2 to these submissions
Under this ground the respondent relied on claims raised by the applicant in submissions filed prior to the trial which had not been pleaded and which were subsequently abandoned. The respondent’s position was that despite abandoning these claims the applicant required all of the respondent’s witnesses for the purposes of cross- examination. The respondent’s argument was where the central issue before the Court was whether there was a causal nexus between the applicant’s termination and his physical disability the applicant’s approach, referred to above, to the conduct of the trial resulted in the respondent incurring unnecessary legal costs.
Consistent with the position taken by the applicant that the Court should not make an order for costs the applicant’s submissions took issue with this argument raised by the respondent in support of an order for costs on this ground.
In Construction Forestry Mining and Energy Union v Clarke (2008) 170 FCR 574, the Full Court of the Federal Court said, in relation to what were analogous provisions under the Workplace Relations Act 1996 (Cth) that:
“Simply because a party does not conduct its litigation in the most efficient way does not mean that the Court should exercise its discretion in s 824(2) of the WR Act to make a costs order. In our view, neither the late abandonment of some of its defence, nor the use of a notice of contention to advance a previously minor and ultimately unsuccessful argument, crosses the threshold of being "an unreasonable act or omission" for the purposes of s 824(2). True it is that the concession ultimately given by the respondent that it regarded the decision of Nicholson J as erroneous could have been given earlier.
Although it is arguable that the lateness of the concession may have put the appellants to some extra costs, we are of the view that it cannot be characterised as "unreasonable" in the circumstances of this case. Indeed, while courts should use the discretion in s 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 the 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.”
Notwithstanding the applicant’s submissions on this issue I don’t accept it was necessary to require all of the respondent’s witnesses for cross examination in the face of the applicant abandoning those parts of the claim referred to in submissions filled prior to trial. This occurred on the first day of the trial and before the evidence had begun. The weakness of the applicant’s claims was recognised by abandoning those matters on the first day of the trial. However, a very large proportion of evidence at the trial was not relevant to the ultimate question the Court was required to consider in the context of whether the applicant’s physical disability was dissociated from the reason/s for his termination. In light of paragraphs [59] to [60], [115] and [172] to [180] in the substantive judgment I accept that the applicant’s approach to the conduct of the trial resulted in the respondent incurring legal costs.
However this isn’t the only argument the respondent has on this ground.
The respondent also relied on the offer made to the applicant on
2 September 2011 which was in the followings terms:
“We are of the firm view that your claim in this matter cannot succeed, particularly given that:
a.there is no evidence that an individual flexibility arrangement at any time existed between you and Frankston city Council (“Council”)- whether in relation to your work hours or otherwise;
b.there is no evidence that the council discriminated between you and other employees; and
c.there is no evidence which supports your claim that the termination of your employment was adverse action taken by the Council.
This being said, on a commercial basis alone, Council has instructed us that it would be prepared to settle this matter on the basis that the parties walk away and bear their own costs. Accordingly, we invite you to discontinue your claim. In our view, a failure by you to do so would constitute an unreasonable act or omission for the purposes of the Fair Work Act 2009 (Cth). On this basis, in the event that you do not discontinue your claim and it becomes necessary to proceed to hearing, we intend to seek an order that you pay Council’s costs. In this regard, we expect that in proceeding to a hearing council will incur further costs in the range of $110, 000 to $130, 000.
In the event that it should become necessary, we intend to rely upon this letter in support of our application for an order that you pay Council’s costs
The above offer was not expressed to expire at a particular point in time. The respondent’s submissions noted neither the applicant nor his solicitors “sought to have the Respondent re-put the offer.”
The submissions filed on behalf of the applicant acknowledged it was in a position to assess the respondent’s case from the time the respondent’s affidavit material was filed and served.[49] By this time the applicant was and has at all times been represented.
[49] see para [17] of the applicant’s submissions
In McDonald v Parnell Laboratories (Aust) (No. 2) [2007] FCA 2086 Buchanan J considered inter alia issues the circumstances of an applicant in the matter before the Court in that case failing altogether to obtain any relief after a respondent has made an offer or compromise. His Honour said;
“21.In Coshott v Learoyd [1999] FCA 276 (‘Coshott’) Wilcox J reviewed a number of cases discussing the circumstances in which rejection of an offer of compromise (whether pursuant to O 23 or a Calderbank offer), followed by complete failure at trial, should lead to the award of indemnity costs against an unsuccessful applicant. His Honour doubted that an applicant’s conduct in rejecting the offer must be ‘plainly unreasonable’ before indemnity costs will be ordered. Observing that the Court must look at the whole situation, including the circumstances that applied at the time of non-acceptance of the offer, his Honour also said:
‘whether or not it is correct to talk about a "prima facie presumption", non-acceptance of an Order 23 offer should at least be regarded as providing to the offeror a good start in the task of persuading the court to award more than party-party costs’.
22.In Dukemaster Pty Ltd v Bluehive Pty Ltd [2003] FCAFC 1 (‘Dukemaster’) Sundberg and Emmett JJ said, in a case like the present where O 23 r 11 did not apply because an applicant had been wholly unsuccessful, that an applicant for a more generous award of costs than party-party costs ‘must show that the rejection of the offer was imprudent or plainly unreasonable’ (see at [7]). There has been doubt expressed about the soundness of the statement in Dukemaster that rejection of an offer, if unreasonable, must be ‘plainly unreasonable’ in the light of the earlier judgment of a Full Court in Black v Lipovac (1998) 217 ALR 386 at [217] – [218], to which Wilcox J also referred in Coshott (see Seven Network Limited v News Limited [2007] FCA 1489 at [59] – [62] (‘Seven Network’)). I do not need to express any view on this issue because, as will be seen, even if the stricter test of ‘plainly unreasonable’ is to be applied where appropriate, I do not need to apply it to my consideration of the present application. It will be sufficient to assess whether rejection of the offer was imprudent (see also APF Properties Pty Ltd v Kestrel Holdings Pty Ltd (No 3) [2007] FCA 2016 at [24] – [25]).
23.If an offer is made under O 23 and an applicant is partially successful, although falling short of the offer, there is a presumptive right in the respondent to indemnity costs (see O 23 r 11(5)). In the present case the offer was a substantial one. Had Ms McDonald had a good measure of success, but not achieved a result exceeding the offer, the respondent’s presumptive right would have been enlivened. The absence of some provision accommodating the circumstance that an applicant fails altogether is anomalous (see also Seven Network at [57] – [59]). Like Sackville J in Seven Network, I regard myself as bound by Dukemaster not to approach the matter on the basis of a presumption, despite the anomaly. Nevertheless, I do not regard it as inconsistent with authority to follow the approach indicated by Wilcox J in Coshott which was also referred to with apparent approval in Dukemaster. The respondents therefore have a ‘good start’ but I must also consider whether Ms McDonald was imprudent or (plainly) unreasonable to reject the offer at the time it was made.
24. It is true that in the present case the offer was made before the proceedings were transferred to this Court and before the issues had been finally refined. At the time the offer was made the applicant had survived a strike-out application and had filed and served Amended Points of Claim which provided the foundation for the application that the matter be transferred to this Court. The application for transfer itself was founded upon the proposition that some of the claims raised important issues of law. On the other hand, the offer, in my view, was a very reasonable one. It accommodated the prospect that Ms McDonald would succeed in her claim that she should not have been summarily dismissed. It accommodated the possibility of damages or compensation on some other ground as well.
25.It should be apparent from the reasons stated in the earlier judgment that, apart from the question of summary dismissal, the remaining claims were, in my view, ambitious. Even if Ms McDonald had been able to make good the proposition that she should not have been summarily dismissed it would have been necessary to secure an award of additional damages or compensation on some other basis to exceed the terms of the offer. The prospect of Ms McDonald succeeding in other claims (and to the extent which would be necessary) must be regarded as relatively slim. Some of her claims were plainly without merit. Some of them relied upon propositions of law which were far from settled. In addition, as will be apparent from the earlier judgment, I concluded that such claims were not made out on the facts. There was no issue in the principal proceedings about the basis for the termination of employment. For reasons given in the earlier judgment, the uncontradicted explanation for termination of M McDonald’s employment defeated, at the outset, any premise upon which some of the other claims depended. Moreover, it would have been necessary to secure an award of additional damages or compensation in excess of $10,000. Having regard to the nature of the claims and the facts of the case that was an ambitious project.
26.I think it was very imprudent of Ms McDonald not to have accepted the offer. I do not need to decide whether it was ‘plainly unreasonable’ not to do so. In my view, the respondents are entitled to an order for the costs I am discussing at the moment (i.e. from 4 October 2007) on an indemnity basis, whatever may be the effect of s 824 of the WR Act on the proceedings before that time. It would be unjust to deny the respondents indemnity costs, having regard to the terms of the offer, the outcome of the proceedings and the reasons for the result.
In this case the offer was made early in September 2011. In late September 2011 the applicant was represented and has remained so since. In early October 2011 the applicant had all of the respondent’s affidavit evidence and would, properly advised, have been able to understand the case he would face. As is clear from the substantive judgment the evidence of the respondent available to the applicant at that time was the evidence on which the respondent relied at trial. Notwithstanding this, the matter proceeded to a trial which lasted 4 days and as set out in the substantive judgment the respondent’s evidence on the reason for the applicant’s termination was not challenged by the applicant.[50]
[50] See para [176] to [180] in Cugura v Frankston City Council (2012) FMCA 340
There is no evidence before me that the applicant gave any consideration whatsoever to the offer in the letter from the respondent’s solicitor. It may have been completely ignored. It may have been considered and rejected. The applicant’s submissions failed to engage with the respondent’s submissions on this issue and the respondent’s argument for costs under the provisions of s.570(2)b of the Fair Work Act in reliance on that offer.
In Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd (No.2) [2011] FCA 934 at [31] Baker J held it was open to have regard to without prejudice correspondence exchanges culminating in rejection of a final offer of settlement when considering whether a party has engaged in “an unreasonable act or omission”.
In that case after referring to the decision in McDonald v Parnell Laboratories (Aust) (No. 2) (supra) Barker J was considering an argument that a party’s failure to settle on the terms outlined constituted an unreasonable act or omission. His Honour considered the proposals of settlement made in that case and whilst finding the first was more than reasonable found the further “composite” proposal not a reasonable offer.
As set out in the substantive judgment at inter alia paras [59] to [60], [115] and [172] to [180] it was the evidence on behalf of the respondent, all of which was on affidavit in October 2011 that was central to the disposition of the application.
The applicant did not challenge that evidence at the trial but all of the respondent’s witnesses were required for cross examination. In the circumstances referred to in the substantive judgment (even allowing for the operation of the reverse onus under s.361 of the Fair Work Act) in light of the offer referred to above, where the applicant did not challenge the evidence of respondent’s witnesses at trial in relation to the reason for the termination it is a concern the applicant did not provide any evidence to contradict the respondent’s submissions for costs on this basis.
I bear in mind what Bromberg J said in Saxena v PPF Asset Management Ltd [2011] FCA 395 at paragraphs 5-6. However I also note Raphael FM said in Brown v DS & MJ Batten (No.2) [2012] FMCA 436:
“3.The court accepts that the purpose of s.570 is to make the court’s jurisdiction under the Fair Work Act a no costs jurisdiction except in special circumstances. These circumstances can have temporal differences so that those falling under sub-s.2(a) are limited to the institution of the proceedings and those falling under sub-s.2(b) can continue through the proceedings so that whilst a party may not have instituted the proceedings without reasonable cause it may become clear during the course of those proceedings that the action was untenable so that by not withdrawing the whole of part of the proceedings the party acted or omitted to act unreasonably thus causing the other party to incur costs.”[51]
[51] See also Construction, Forestry, Mining and Energy Union v CSBP Limited (No2)[2012] FCAFC 64 where a Full Court of the Federal Court considered inter alia the discretion in s.570 of the Fair Work Act at 31.
Finally I remind myself in Imogen Pty Ltd v Sangwin (1996) 70 IR 254 at [261] it was said in the context of unlawful termination proceedings (which were analogous to the proceedings in the substantive judgment) that:
“Although the issues are often of great importance to the parties, the monetary amounts at stake in unlawful termination cases are usually relatively small. From the viewpoint of a dismissed employee, $16,900 is no doubt a significant sum of money. For a small company such as Imogen, it may also be a significant amount. Regrettably, however, it is a sum that may readily be consumed, or heavily eroded, by litigation. Parties to unlawful termination claims, and their legal advisers, need to be constantly aware of this point, and do whatever they can to avoid costs on the opposing party, they must expect the Court to exercise its powers and discretions in such a way as to allow recovery of those costs.”
The letter from the respondent to the applicant was an offer to terminate the proceedings in their entirety in return for both parties bearing their own costs. I accept that the application faced a number of hurdles and certainly with the benefit of hindsight the offer should have been considered when the respondent’s case was known to the applicant. Whilst the refusal of the offer at the time it was made may not have been unreasonable given the evidential case of the respondent as to the reason for the termination was not challenged by the applicant and the way the trial was conducted on behalf of the applicant its refusal appears in light of those matters more so.[52]
[52] see Mifsud v Veolia Transport Sydney Pty Ltd [2012] FMCA 167 at [48] where costs were awarded for unreasonable omission for refusing offer of settlement
In this matter, having regard to the above matters and reasons set out in the substantive judgment in Cugura v Frankston City Council [2012] FMCA 340 in particular those set out at paragraphs [58] to [60], [114] to [115] and [165] to [184] inclusive I am satisfied, the respondent has made out a basis upon which the Court should make an order for costs under s.570(2)(b) of the Fair Work Act.
What order for costs should be made
In relation to what order for costs should be made section 79 of the Federal Magistrates Act 1999 provides in subsections (2) and (3) 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.”
As noted earlier in these reasons the Fair Work Act provides for costs in s.570 and is often referred to as reflecting general policy in relation to proceedings under this legislation that parties will usually be freed from the traditional risk of an order for costs following the event.[53]
[53] see Hatchett v Bowater Tutt Industries Pty Ltd (No.2) (1991) 28 FCR 32 for statements on predecessor provisions dealing with costs
Costs are dealt with in Part 21 of the Federal Magistrates Court Rules 2001 (“the Rules “) Rules of Court. Rule 21.02(2) provides:
“(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.”
Rule 21.10 provides:
“Unless the Court otherwise orders, a party entitled to costs in a proceeding (other than a proceeding to which the Bankruptcy Act applies) is entitled to:
(a) costs in accordance with Part 1 and 2 of Schedule 1; and
(b) disbursements properly incurred.”
There was a reference in the respondent’s submissions that it “was open to the Court to consider on it’s own motion making an order that the lawyer on the record (or her agent) pay the costs of the respondent”[54].
[54] see paragraph 18-19 of respondent’s submissions
In the submissions filed on behalf of the applicant any such order was resisted and it was noted that were the Court to consider doing so the lawyer concerned would need to be afforded the opportunity to be heard first.[55]
[55] see paragraphs 23-26 of applicant’s submissions
The Court has power to order costs against a lawyer and that is set out in Rule 21.07 which provides:
“Order for costs against lawyer
1.The Court or a Registrar may make an order for costs against a lawyer if the lawyer, or an employee or agent of the lawyer, has caused costs:
a.to be incurred by a party or another person; or
b.to be thrown away;
because of undue delay, negligence, improper conduct or other misconduct or default.
2.A lawyer may be in default if a hearing may not proceed conveniently because the lawyer has unreasonably failed:
a.to attend, or send another person to attend, the hearing; or
b.to file, lodge or deliver a document as required; or
c.to prepare any proper evidence or information; or
d.to do any other act necessary for the hearing to proceed.
3.An order for costs against a lawyer may be made on the motion of the Court or Registrar, or on application by a party to the proceeding or by another person who has incurred the costs or costs thrown away.
4.The order may provide:
a.that the costs, or part of the costs, as between the lawyer and party be disallowed; or
b.that the lawyer pay the costs, or part of the costs incurred by the other person; or
c.that the lawyer pay to the party or other person the costs, or part of the costs, that the party has been ordered to pay to the other person.
5.Before making an order for costs, the Court or Registrar:
a.must give the lawyer, and any other person who may be affected by the decision, a reasonable opportunity to be heard; and
b.may order that notice of the order, or of any proceeding against the lawyer be given to a party for whom the lawyer may be acting or any other person.”
However, this issue requires only passing mention as not only was there no application made for costs on this basis but the Court had not raised the issue and there is no evidence capable of grounding consideration of such a course of action.
I turn to deal with the issue of indemnity costs next. The usual order is for costs to be calculated on a party/party basis and this should only be departed from if there are significant reasons for so doing.
The circumstances giving rise to an order for indemnity costs were discussed by Lucev FM in Genovese v BGC Construction Pty Ltd (No. 2) [2007] FMCA 601 at [47] where His Honour said:
“47.In determining whether to award indemnity costs the Court has a very wide discretion, to be exercised judicially.[56] What is an appropriate costs or indemnity costs order depends on the circumstances of the case.[57] The normal practice, not to be lightly departed from, is to provide for costs to be on a party – party basis.[58] Nevertheless, there are certain issues to which the Court will give consideration, and have to weigh, when determining whether to make, and the extent of, an indemnity costs order, which should only be made where the issues establish special or unusual circumstances warranting an indemnity costs order.[59] Those issues include:
[56] 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) 81 ALR 397 at 401 per Woodward J (“Fountain Selected Meats”).
[57] PCRZ Investments at para 32 per Chernov JA; Colgate-Palmolive at 227 per Sheppard J.
[58] 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”).
[59] 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; [60]
[60] Fountain Selected Meats at 401 per Woodward J; Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (unreported, Federal Court, 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;[61]
[61] 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;[62]
[62] 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;[63]
[63] 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;[64]
[64] 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”;[65]
g.where a party proceeds for no good purpose at all due to inertia and carelessness;[66]
h.where a party persists in the making of allegations which ought not have been made, or in undue prolongation of groundless contentions;[67]
i.where a party’s conduct causes loss of time to the Court, and to other parties;[68]
j.where a party imprudently refuses an offer to compromise;[69]
k.whether the award of indemnity costs is sought against a contemnor;[70] 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.[71]
[65] Fountain Selected Meats at 400 per Woodward J, citing the Shorter Oxford Dictionary definition of “vexatious”.
[66] Fountain Selected Meats at 400 per Woodward J.
[67] Colgate-Palmolive at 233 per Sheppard J.
[68] Ugly Tribe Co Pty Ltd v Sikola & Ors [2001] VSC 189 at para.7 per Harper J.
[69] Colgate-Palmolive at 233-234 per Sheppard J (and cases there cited).
[70] Colgate-Palmolive at 234 per Sheppard J.
[71] Rouse v Shepherd [No 2] (1994) 35 NSWLR 277 at 279 and 281 per Badgery-Parker J.
This Court’s can make an award for indemnity costs. However, and not withstanding the comments of Buchanan J in McDonald v Parnell Laboratories (supra) referred to above, I am not satisfied it is appropriate to do so in the particular circumstances of this matter.
Whilst the application in the substantive judgment was dismissed I am not satisfied it was made in wilful disregard of known facts.[72] Moreover the mere making of an offer of compromise and its non acceptance does not automatically lead to an order for payment of costs on an indemnity basis.[73] Nor am I satisfied in the exercise of the discretion it is appropriate to order indemnity costs in the context of a statutory regime such as that provided for in the Fair Work Act where the normal rules in relation to costs do not apply.[74]
[72] Colgate & Palmolive Company & Anor v Cussons Pty Ltd (1993) 46 FLR 225
[73] see Dukemaster Pty Ltd v Bluehive Pty Ltd [2003] FCAFC1. at [7] per Sundberg and Emmett JJ.
[74] see Attwood v Wangka Maya Pilbara Aboriginal Language Centre (No.2) [2010] FMCA 500 for discussion on interaction with relevant Federal Court Rules and orders for costs under Workplace Relations Act1996 (Cth)
Turning then in light of the above to how any order for courts should be calculated. In Pierson’s Pro-Health Pty Ltd & Ors v Silvex Nominees Pty Ltd & Anor (No.3) [2010] FMCA 250 Lucev FM observed
“...that it is well established and well known that the primary source used for fixing costs in general federal law proceedings (other than, arguably, in bankruptcy) in this Court is the event-based scale in Schedule 1 of the FMCA Rules. Whilst there is discretion to depart from the event-based scale, that is the exception rather than the norm. The event-based scale under Schedule 1 of the FMCA Rules exists to provide simplicity and certainty in determining costs…”
Schedule 1 of the Rules provides an event based costs scale and governs proceedings in this Court. In this matter even having had regard to the matters raised in the parties’ submissions, I can see no exceptional reason to depart from it here. In relation to the calculation of costs I am satisfied that the applicant should pay the respondent’s costs calculated in accordance with Schedule 1 of the Rules.
I will give the parties the opportunity to provide brief written submissions (of no more than 2 pages) on the calculation of costs in accordance with Schedule 1 of the Rules.
Conclusion
For the reasons set out above there will be orders as set out at the beginning of these reasons for decision.
I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of O'Sullivan FM
Date: 20 June 2012
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