Cugura v Frankston City Council (No.5)
[2012] FMCA 1212
•20 December 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CUGURA v FRANKSTON CITY COUNCIL (No.5) | [2012] FMCA 1212 |
| INDUSTRIAL LAW – General protections court application – application dismissed – costs ordered – appeal by applicant – matter remitted to deal with respondent’s application for costs – whether unreasonable act or omission by applicant – applicant to pay respondents costs – appropriate order as to costs. |
| Fair Work Act 2009 (Cth) s. 570(2), (b) Federal Magistrates Act 1999 (Cth) s.79(3) Federal Magistrates Court Rules 2001 (Cth) 21.02(2)(a) |
| Cugura v Frankston City Council(No.1)[2012] FMCA 340 Cugura v Frankston City Council(No.2) [2012] FMCA 530 Cugura v Frankston City Council(No.3) [2012] FMCA 614 Cugura v Frankston City Council(No.4) [2012] FMCA 708 Cugura v Frankston City Council [2012] FCA 1299 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 Pierson’s Pro-Health Pty Ltd & Ors v Silvex Nominees Pty Ltd & Anor (No.3) [2010] FMCA 250 Rentuza v Westside Auto Wholesale [2009] FMCA 1022 Factory 5 Pty Ltd (in Liq) v State of Victoria (No.3) [2012] FCAFC 167 Australian and International Pilots Association v Qantas Airways Ltd (No.3) [2007] FCA 879 Hobson v BWL Pty Ltd & Ors (No.3) [2012] FMCA 439 Latoudis v Casey (1990) 170 CLR 534 Lee v Procter & Gamble Australia Pty Ltd & Anor(No.2) [2012] FMCA 1075 |
| Applicant: | LUDWIG CUGURA |
| Respondent: | FRANKSTON CITY COUNCIL |
| File Number: | (P)MLG 1724 of 2010 |
| Judgment of: | O'Sullivan FM |
| Hearing date: | 7 December 2012 |
| Date of Last Submission: | 7 December 2012 |
| Delivered at: | Melbourne |
| Delivered on: | 20 December 2012 |
REPRESENTATION
| Counsel for the Applicant: | Ms Aufgang |
| Solicitors for the Applicant: | AED Legal Centre |
| Counsel for the Respondent: | Ms Bingham |
| Solicitors for the Respondent: | M & K Lawyers Pty Ltd |
ORDERS
The applicant pay the respondent’s costs fixed in the sum of $2,913.00 within 60 days.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
(P)MLG 1724 of 2010
| LUDWIG CUGURA |
Applicant
And
| FRANKSTON CITY COUNCIL |
Respondent
REASONS FOR JUDGMENT
These reasons for decision concern the question of costs arising from proceedings between Ludwig Cugura (“the applicant”) and Frankston City Council (“the respondent”).
The respondent sought that the Court make an order for costs against the applicant following on from the decision of the Court in Cugura v Frankston City Council [2012] FMCA 340 (“the substantive decision”).
For the reasons referred to in Cugura v Frankston City Council(No.2) FMCA 530 (“the costs decision”) on 20 June 2012 the following orders were made:
“1.The applicant pay the respondent’s costs calculated in accordance with Schedule 1 of the Federal Magistrates Rules 2001.
2.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.
3.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.”
On 10 July 2012 the applicant sought to appeal from the orders made in the costs decision on 20 June 2012 to the Federal Court of Australia.
Subsequent to the costs decision, but before the applicant’s appeal was determined, the parties made further submissions addressing the quantification of the respondent’s costs.[1] Ultimately that issue remained unresolved and the parties appeared content to await the outcome of the appeal before asking the Court to determine the matter.[2]
[1] see Cugura v Frankston City Council(No.3) [2012] FMCA 614
[2] see Cugura v Frankston City Council(No.4) [2012] FMCA 708
The Appeal
On 20 November 2012 and for the reasons published in Cugura v Frankston City Council [2012] FCA 1299 (“the appeal decision”) Tracey J made the following orders:
“1.The appeal be allowed.
2.The orders made by the Federal Magistrates Court on 20 June 2012 be set aside.
3.The respondent’s application for costs be remitted to the Federal Magistrates Court for determination.”
The Appeal Decision
In the appeal decision Tracey J addressed the background[3], including the decision in the substantive decision[4], that there was no challenge to the orders made in the substantive decision[5], the costs provisions under the Fair Work Act 2009 (Cth) (“the Fair Work Act”)[6] and then dealt with the costs decision the subject of the appeal.
[3] see paragraph 1-2 of appeal decision
[4] ibid
[5] see paragraph 3 of appeal decision
[6] see paragraph 8 of appeal decision
His Honour said:
“9.The Federal Magistrate dismissed the Council’s costs claim insofar as it relied on s 570(2)(a). No cross appeal is brought from this aspect of his Honour’s decision.
10.His Honour accepted that the Council was entitled to its costs on the normal basis under s 570(2)(b).
11.The Federal Magistrate accepted submissions from the Council that Mr Cugura had been responsible for a number of unreasonable acts or omissions which had caused it to incur the costs.
12.The acts and omissions on which the Council relied were:
·Notwithstanding the abandonment on the first day of the four day trial of a number of claims made in pre-trial contentions of fact and law, Mr Cugura required the attendance for cross-examination of a number of the Council’s witnesses who had filed defensive affidavits which had dealt only with the abandoned claims. (the first basis)
·The failure of Mr Cugura to respond to an offer by the Council, made well before trial, to settle the proceeding on the basis that Mr Cugura would discontinue the proceeding and each party would bear its own costs. (the second basis)” (emphasis added)
As is clear from the last mentioned paragraph extracted from the appeal decision His Honour observed, in relation to what can conveniently be described as the first basis the respondent relied on for awarding costs under s.570(2)(b) of the Fair Work Act, that:
“13.In his pre-trial contentions Mr Cugura had alleged that the Council had done a number of things which constituted adverse action against him within the meaning of s 342 of the Act. His affidavit material identified the individuals concerned and the prejudicial action which he said each had taken against him.
14.On the first day of the trial he abandoned all of his allegations of adverse action save termination of his employment. In doing so he narrowed significantly the issues in dispute in the proceeding. What remained was the issue of whether he had been terminated for one of two proscribed reasons. He claimed that his employment had been terminated because of a physical disability from which he suffered and his parental responsibilities.
15.The Council filed affidavit material which responded to the full range of Mr Cugura’s original claims. In all there were eight deponents to these affidavits. Once the issues had been narrowed the evidence of three of these deponents was no longer of any relevance. Significant parts of the evidence of some of the other deponents was also no longer relevant.
16.Despite this Mr Cugura required all of the deponents to attend for cross-examination and his counsel cross-examined these witnesses on matters which were no longer relevant. The result was that the trial took almost a day longer than it would have otherwise have done.
17.Mr Cugura submitted that he was entitled to require the attendance of all of the Council’s witnesses and to cross-examine them on all issues.
18.Not surprisingly, the Federal Magistrate disagreed. He said:
‘… 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 filed 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 disassociated from the reason/s for his termination.’
His Honour accepted that, “the applicant’s approach to the conduct of the trial resulted in the respondent incurring legal costs.”
His Honour found:
“19The power to award costs under s 570 of the Act is discretionary in nature. The exercise of that discretion will not lightly be interfered with. Any such intervention could only occur if one or more of the errors identified in House v The King (1936) 55 CLR 499 at 504-5 is established. No such error is apparent in his Honour’s reasons in relation to this first basis on which he determined to award costs against Mr Cugura.”
His Honour also addressed what can conveniently be described as the second basis the respondent relied on for awarding costs under s.570(2)(b) of the Fair Work Act at paragraphs 20 to 30 of the appeal decision and found in relation to that issue that:
“31To this extent I consider that the Federal Magistrate exercised his discretion on the basis of a material and wrongful finding of fact. A deliberate decision to refuse a reasonable offer of settlement is a factor which would normally weigh more heavily in favour of a finding of unreasonable action than would a mere failure to respond by an unrepresented litigant.”
Ultimately in the appeal decision His Honour said:
“32I have considered the possibility that his decision to make an order under s 570(2)(b) of the Act could have been supported by his findings in relation to the conduct of the trial standing alone. His reasons do, however, suggest that he treated the two major considerations in a cumulative manner. So much is suggested by the fact that his consideration of the two issues is linked by a paragraph which reads: “[h]owever this isn’t the only argument the respondent has on this ground” and the fact that his ultimate finding was only made after he had considered both bases for the costs claim.
33His Honour conducted the trial. He is far better placed than I am to make an assessment of the way in which Mr Cugura conducted his case, the extent to which this unnecessarily extended the trial and whether this conduct, either standing alone or in conjunction with Mr Cugura’s failure to respond to the Council’s 2 September 2011 offer, constituted unreasonable acts or omissions for the purposes of s 570(2)(b).
34In my view the appropriate course is for the appeal to be allowed and the matter remitted to the Federal Magistrate for further consideration.”
As the orders made in the appeal decision make clear the matter was remitted to this Court to determine the respondent’s application for costs.
Hearing on remittal
As a result of the orders made for the reasons set out in the appeal decision the matter was listed for mention before this Court on 5 December 2012.
Both parties were represented by Counsel who accepted the matter had been remitted to the Court and that the Court was, as was clear from the appeal decision, required to determine the respondent’s application for costs.
The parties agreed the appropriate course was for both parties to make submissions to the Court on this issue in light of the appeal decision. Given this the following orders were made:
“1.The matter be listed on Friday 7 December 2012 at 2:15pm at the Federal Magistrates Court of Australia at Melbourne to hear oral submissions in relation to costs.”
Submissions at hearing
At the hearing on 7 December 2012 the respondent relied on:
a)an outline of submissions marked exhibit R1;
b)the affidavit of Michelle Dawson sworn 7 December 2012 filed in Court without objection; and
c)two decisions of the Federal Court in Factory 5 Pty Ltd (in Liq) v State of Victoria (No.3) [2012] FCAFC 167 and Australian and International Pilots Association v Qantas Airways Ltd (No.3) [2007] FCA 879.
At the hearing on 7 December 2012 the applicant relied on:
a)an outline of submissions marked as exhibit A1.
Counsel for each of the parties then made submissions to the Court by reference to their respective outlines referred to above.
Importantly in light of the appeal decision the applicant submitted:
a)in relation to what was described earlier as “the second basis” for awarding costs the Court was bound by the findings in the appeal decision at paragraphs 20 to 31; and
b)in relation to what was described as “the first basis” for awarding costs in light of what were said to be findings in the appeal decision at paragraph 16, in the event this Court found there had been unreasonable acts or omissions by the applicant (in his approach to the conduct of the trial the subject of the substantive decision) then the maximum costs the respondent was put to amounted to its costs for the trial taking “almost a day longer”.
Also of importance for the purpose of these reasons the respondent, by reference to the appeal decision at paragraph 33, contended:
a)this Court was required to determine whether the way the applicant conducted his case and the extent to which this unnecessarily extended the trial was “standing alone” sufficient to constitute unreasonable acts or omissions which caused the respondent to incur costs for the purpose of s.570(2)(b) of the Fair Work Act; and
b)if the Court so found its discretion to award costs was then at large.
Whilst the respondent made submissions and sought to lead evidence relevant to “the second basis” for awarding costs canvassed in the appeal decision in light of that decision and the findings made by Tracey J Counsel for the respondent didn’t press an argument for costs on that ground.
Approach to costs
The respondent’s application for costs falls to be determined by reference to the provisions of s.570 of the Fair Work Act. So far as is relevant for present purposes s.570(2) of the Fair Work Act provides:
(2)The party may be ordered to pay the costs only if:
(a)…
(b)the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; or
…
In the costs decision the authorities on how the Court should approach consideration of this matter were considered at paragraphs 17 to 24. There was no suggestion either in the appeal decision or in submissions before the Court that the approach set out therein was wrong.
Moreover in submissions before the Court on 7 December 2012 the applicant did not take issue with the finding made in the appeal decision at paragraph 19 in relation to what was described as the first basis for awarding costs under s.570(2)(b) of the Fair Work Act.
Consideration
In the costs decision the Court has addressed “the first basis” for awarding costs at paragraphs 17 to 29.
The Court then, as was noted in the appeal decision at paragraph 32 observed that “this wasn’t the only argument the respondent has” and then went on to “the second basis” for awarding costs at paragraphs 30 to 43.
As Tracey J noted in the appeal decision the manner in which the costs decision considered “both bases” (herein referred to as the first and second basis respectively) before making the ultimate finding suggested the two were treated in a “cumulative manner”.
It is of course most unfortunate that the infelicitous expression in the costs decision hadn’t made clear the two basis were for the purposes of the argument made by the respondent on costs separate issues and basis that stood alone and were considered by the Court in the costs decision in that order for that reason.
Neither party in submissions at the hearing in 7 December 2012 suggested otherwise and the focus of and manner in which they made their submissions made this clear and I am satisfied that is the case.
It is however necessary for “further consideration to be given” to the respondent’s claim for costs. The Court has done so in light of the submissions of the parties and the appeal decision.
At the hearing on 7 December 2012 the respondent submitted that in the appeal decision it had been found:
“8.On 20 November 2012 the appeal of Cugura v Frankston City Council (No.2) was heard by his Honour Justice Tracey. His Honour handed down an extempore decision in which he made findings inter alia:
(a)Mr Cugura required all of the deponents to attend for cross examination and his counsel cross examined those witnesses on matters which were no longer relevant. The result was that the trial took almost a day longer than it would have otherwise done.[7]
(b)The applicant’s approach to the conduct of the trial resulted in the respondent incurring legal costs.[8]
(c)The power to award costs under s570 of the Act is discretionary in nature. The exercise of that discretion will not be likely interfered with. Any intervention could occur only if one or more of the errors identified in House v The King (1936) 55 CLR 499 at 504 to 505 is established. No such error is apparent in his Honour’s reasons in relation to the first basis upon which he determined to award costs.[9]
(d)The decision to make an order under s570(2)(b) of the Act could have been supported by his findings in relation to the conduct of the trial standing alone.[10]
[7] Cugura v Frankston City Council [2012] FCA 1299 at [16]
[8] Ibid [18]
[9] Ibid [19]
[10] Ibid [32]
The respondent submitted:
“11.The respondent repeats and relies upon its submissions of 8 May 2012, paragraphs 9-14 and 16 and 17. In light of his Honour Justice Tracey’s comments regarding the act or omission, namely requiring the respondent to call witnesses for cross examination with respect to claims that had been abandoned on the first day of the trial, the respondent further submits that his Honour Federal Magistrate O’Sullivan's findings in Cugura v Frankston City Council (No.2) should in this regard remain undisturbed. No error was identified in the exercise of the Federal Magistrates’ discretion in this regard.
12.Further it is submitted that this act or omission is a matter that supports a decision to make an order under s570(2)(b) standing alone.[11]
13.In this regard, by way of analogy see Australian and International Pilots Association v Qantas Airways Ltd that acts and omissions stand separately with respect to the exercise of the discretion under s570(2)(b).
14.At the hearing of the Appeal, Justice Tracey requested that the respondent provide him with a table that related to the time taken in cross examination of witnesses with respect to claims that that had been abandoned. The respondent produced the table as requested. The time wasted amounts to the equivalent of almost a hearing day.[12]
15.It is submitted that his Honour’s finding with respect to extending the trial by one day is a matter that falls within the second limb of s570(2)(b), namely that the act or omission resulted in the respondent incurring costs.[13]
16.It is submitted that the matter as to what costs are payable by the applicant with respect to this act or omission remains a discretionary matter for the Federal Magistrate.[14]”
[11] Ibid [32]
[12] Attachment 1 Table "Cross-Examination of the Respondent's Witnesses at the Federal Magistrates Court Hearing - MLG1724/2010"
[13] Cugura v Frankston City Council (No.2) paras 23 to 24
[14] Australian and International Pilots Association v Qantas Airways Ltd [2007] FCA 879 paragraph [38]
Given the findings in the appeal decision on “the second basis” for awarding costs and notwithstanding the further material it sought to rely on Counsel for the respondent didn’t pursue an argument for costs on “the second basis” again.
As a result and given the respondent’s position referred to above and in light of the appeal decision the applicant wasn’t required to address the Court on issue of costs on “the second basis”. In light of the appeal decision and on what is before the Court I am not satisfied it would be appropriate to award costs on that basis in any event.
Turning then to the respondent’s argument for costs under s.570(2)(b) of the Fair Work Act on what has been described as “the first basis” for awarding costs. As noted earlier in light of the appeal decision the applicant did not quarrel with the respondent’s position that in that decision His Honour found the trial took almost a day longer than it would otherwise have done because of acts or omissions by the applicant. It was submitted however this effectively set the upper limit for any costs order.
Notwithstanding this concession both in exhibit A1[15] and before the Court Counsel for the applicant did initially (and by reference to matters elsewhere in exhibit A1[16]) seek to make submissions there were no costs incurred by the respondent as a result of any unreasonable act or omission by the applicant. The applicant also sought to submit that to the extent there were problems at the trial the subject of the substantive decision these were the fault of how the respondent had advanced its case.
[15] see paras 7 to 12 of exhibit A1
[16] see paras 26-40 of exhibit A1
Ultimately however Counsel for the applicant acknowledged the difficulty with advancing such an argument particularly in light of the findings in the appeal decision and the position both parties took that it was binding on this Court. As a result the applicant didn’t press the argument.
In the costs decision it was noted:
“29.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.”
In the appeal decision it was observed:
“13In his pre-trial contentions Mr Cugura had alleged that the Council had done a number of things which constituted adverse action against him within the meaning of s 342 of the Act. His affidavit material identified the individuals concerned and the prejudicial action which he said each had taken against him.
14On the first day of the trial he abandoned all of his allegations of adverse action save termination of his employment. In doing so he narrowed significantly the issues in dispute in the proceeding. What remained was the issue of whether he had been terminated for one of two proscribed reasons. He claimed that his employment had been terminated because of a physical disability from which he suffered and his parental responsibilities.
15The Council filed affidavit material which responded to the full range of Mr Cugura’s original claims. In all there were eight deponents to these affidavits. Once the issues had been narrowed the evidence of three of these deponents was no longer of any relevance. Significant parts of the evidence of some of the other deponents was also no longer relevant.
16Despite this Mr Cugura required all of the deponents to attend for cross-examination and his counsel cross-examined these witnesses on matters which were no longer relevant. The result was that the trial took almost a day longer than it would have otherwise have done.
17Mr Cugura submitted that he was entitled to require the attendance of all of the Council’s witnesses and to cross-examine them on all issues.
18Not surprisingly, the Federal Magistrate disagreed. He said:
‘… 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 filed 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 disassociated from the reason/s for his termination.’
His Honour accepted that, “the applicant’s approach to the conduct of the trial resulted in the respondent incurring legal costs.
19The power to award costs under s 570 of the Act is discretionary in nature. The exercise of that discretion will not lightly be interfered with. Any such intervention could only occur if one or more of the errors identified in House v The King (1936) 55 CLR 499 at 504-5 is established. No such error is apparent in his Honour’s reasons in relation to this first basis on which he determined to award costs against Mr Cugura.”
In Hobson v BWL Pty Ltd & Ors (No.3) [2012] FMCA 439 Lucev FM considered the issue of costs for proceedings under the Fair Work Act and having set out the section of the Fair Work Act referred to above and the Federal Magistrates Court Rules 2001 said:
“59.The policy underlying s.570 of the FW Act remains as it was under predecessor legislation, namely, to limit the ability of courts to award costs in workplace relations matters as part of a policy of discouraging legalism in workplace relations proceedings.[17]
[17] See Fair Work Bill 2008 (Cth), Explanatory Memorandum para 2228
…
62.Whether a party has engaged in “an unreasonable act or omission” depends upon the particular circumstances of the case,[18] and extends to unreasonable acts or omissions in connection with interlocutory applications.[19]
63.In a costs application to which s.570 of the FW Act has application the respondent bears the onus of proof.[20] In many cases it may be necessary for evidence to be led to establish:
[18] Australian and International Pilots Association v Qantas Airways Ltd (No.3) (2007) 162 FCR 392; [2007] FCA 879
[19] Paras v Public Service Body Head of the Department of Infrastructure & Anor (No.3) [2006] FCA 745
[20] Howard v Cummins (1988) 27 IR 109 at 111-112 per Keely J
(a) the act or omission alleged to be unreasonable; and
(b)how the allegedly unreasonable act or omission resulted in costs being incurred.[21]
[21] see for example, Australian Licensed Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd (No.2) [2011] FCA 934 at para 31 per Barker J
The Court has considered the respondent’s application for costs in light of the approach in 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 and Rentuza v Westside Auto Wholesale [2009] FMCA 1022.
In light of those principles and bearing in mind the need to be careful before exercising the undisputed discretion the Court has to award costs the conduct of the trial by the applicant resulted in acts or omissions which unnecessarily prolonged the trial and resulted in the respondent incurring costs. As was noted in both the costs and the appeal decision the applicant abandoned a number of claims, persisted with evidence in relation matters which weren’t relevant to whether his employment was terminated for a prohibited reason and required witnesses of the respondent whose evidence didn’t go to that to attend for the purposes of cross examination.
I accept that applicant’s approach to the conduct of the trial the subject of the substantive decision resulted in the respondent incurring costs for the trial taking almost a day longer.[22] I am satisfied the respondent’s claim for costs on this (the first) basis (which had always been a separate or stand alone basis) stands alone[23] and warrants an order for costs against the applicant.
[22] see attachment 1 to exhibit R1
[23] Australian and International Pilots Association v Qantas Airways Ltd (No.3) [2007] FCA 879 at 36
The applicant had submitted that the upper limit for any costs was the costs associated with the trial taking almost a day longer. However there is authority of the decision in Australian and International Pilots Association v Qantas Airways Ltd (No.3) [2007] FCA 879 to consider where at paragraph 38 Tracey J accepted that if in what in this case would be the requirements of s.570(2)(b) of the Fair Work Act are met then the Court enjoys wide discretionary power on the issue of costs.
Quantification of costs
Given the conclusion reached above the issue of what costs order should be made arises. This issue had been addressed in the costs decision where the Court said:
“45.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.
46.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.[24]
47.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.”
[24] see Hatchett v Bowater Tutt Industries Pty Ltd(No.2) (1991) 28 FCR 32 for statements on predecessor provisions dealing with costs
48.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.”
Each of the parties had the opportunity to make submissions on costs under Schedule 1 of the Rules.[25] At the hearing on 7 December 2012 neither party sought to make further submissions or revisit the issue in light of the appeal decision or the submissions already filed. Given the provisions of the Rules referred to earlier and the history of this matter it is appropriate for the Court to proceed to determine the costs in accordance with the Rules.
[25] see submissions referred to in Cugura v Frankston City Council (No.3)
As has been noted earlier the applicant submitted that the upper limit for the costs that the respondent incurred was one day. The applicant submitted that this set the maximum costs that could be ordered. The respondent submitted the Court should either order the applicant to pay the respondent’s costs on a solicitor and own client basis[26] or alternatively that those costs should “be apportioned” and the applicant should pay 25% of the respondent’s costs.[27]
[26] see para 27 exhibit R1
[27] see para 28 exhibit R1
In the costs decision the Court had referred to the decision of Lucev FM in Pierson’s Pro-Health Pty Ltd & Ors v Silvex Nominees Pty Ltd & Anor (No.3) [2010] FMCA 250 (Pierson’s) where His Honour said:
“...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…”
Notwithstanding the authority the respondent referred the Court to[28] the costs scale in Schedule 1 of the Rules is an event based costs scale under which a party receives a fixed sum in respect of specified events and is more appropriate in the context of this matter. Such a sum may be varied by the Court in the exercise of its discretion.[29] It is open to the Court to set the amount of the costs under rule 21.02(2)(a) as well as to set a time for the payment of costs.[30]
[28] see Factory 5 Pty Ltd (in Liq) v State of Victoria (No.3) [2012] FCAFC 167
[29] see s.79(3) of the Federal Magistrates Act 1999
[30] see rule 21.02(2)(a) of the Federal Magistrates Court Rules 2001
In relation to the issue of the respondent’s costs as a matter of general principle, the Court should have regard to whether the costs were reasonably and properly incurred and reasonable and proportionate in amount.
In that regard the Court also bears in mind that in Latoudis v Casey (1990) 170 CLR 534 McHugh J, said of the rationale for an order that costs follow the event 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.”
Insofar as the respondent relies on the fact that costs have been incurred substantially in excess of the schedule amounts, that is not of itself a basis for seeking actual costs or even a percentage of them (see Lee v Procter & Gamble Australia Pty Ltd & Anor (No.2) [2012] FMCA 1075 at [32]).
As has been made clear earlier the Rules of this Court provide an event based costs scale and in this case the Court is not satisfied it is appropriate to depart from it. Moreover, having regard to the nature of the proceedings and the operation of s.570 of the Fair Work Act the matter is not such as to warrant the Court exercising its discretion to make an order that the applicant pay the respondent’s actual costs or even a percentage of them.
Given the position of the parties before the Court, in light of the appeal decision, the provisions of the Rules and bearing in mind this is a matter where in the particular circumstances of the matter a measure of estimation is required the appropriate order is that the applicant meet the respondent’s costs for one hearing day (as the trial took almost a day longer than it would have otherwise done because of the applicant’s acts or omissions) calculated in accordance with Schedule 1 of the Rules.
The costs for a solicitor attending the hearing are covered by the daily hearing fee and counsel’s fee is provided for in the advocacy loading. I have considered whether it is important to award a separate amount referrable to the stages set out in the Rules. However given the findings referred to above I don’t believe it is appropriate to do so. In addition in light of the parties positions referred to above it is also not appropriate to fix an amount for disbursements referrable only to the extra day. There were no submissions made in relation to time for the payment of any costs order however in the particular circumstances of this matter I will allow 60 days.
The applicant should pay the respondent’s costs calculated as follows:
Daily hearing fee –1day
$1,942.00
Advocacy loading
$971.00
Total
$2,913.00
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 fifty-eight (58) paragraphs are a true copy of the reasons for judgment of O'Sullivan FM
Date: 20 December 2012
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