Dahler v Australian Capital Territory and Anor (No.3)
[2015] FCCA 2615
•30 September 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| DAHLER v AUSTRALIAN CAPITAL TERRITORY & ANOR (No.3) | [2015] FCCA 2615 |
| Catchwords: COSTS – Costs in fair work proceedings – consideration of the application of s.570 of the Fair Work Act 2009 (Cth) – costs against a legal practitioner personally – consideration of the application of rule 21.07 of the Federal Circuit Court Rules 2001 (Cth). |
| Legislation: Fair Work Act 2009 (Cth), s.570 |
| Dahler v ACT Government t/as Community services Directorate [2014] FCA 210 Robinson v Blackheart Industries Pty Ltd & Ors [2014] FCCA 1353 |
| Applicant: | CLINTON DAHLER |
| First Respondent: | AUSTRALIAN CAPITAL TERRITORY |
| Second Respondent: | MINISTER FOR DISABILITY, CHILDREN & YOUNG PEOPLE (ACT) |
| File Number: | CAG 46 of 2013 |
| Judgment of: | Judge Driver |
| Decided on the papers |
| Date of Last Submission: | 16 August 2015 |
| Delivered on: | 30 September 2015 |
REPRESENTATION
| Counsel for the Applicant: | Miss J Keys |
| Counsel for the Respondents: | Dr D R Jarvis |
| Solicitors for the Respondents: | ACT Government Solicitor |
ORDERS
The applicant’s barrister, Judith Keys, personally pay the respondents’ costs of the following interlocutory proceedings:
(a)the application by the applicant to the Federal Court, filed on 3 March 2014;
(b)the applicant’s Application in a Case filed on 14 March 2014 (for costs relating to (a));
(c)the application by the respondents filed on 18 March 2014 to strike out parts of the applicant’s statement of claim;
(d)the applicant’s Application in a Case filed on 7 April 2014 (for joinder of CPM Reviews Pty Ltd); and
(e)the applicant’s Application in a Case filed on 31 October 2014 for the same purpose.
The costs awarded pursuant to order 1, if not agreed, are to be assessed and if necessary taxed, in accordance with the Federal Court Rules.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
CAG 46 of 2013
| CLINTON DAHLER |
Applicant
And
| AUSTRALIAN CAPITAL TERRITORY |
First Respondent
MINISTER FOR DISABILITY, CHILDREN & YOUNG PEOPLE (ACT)
Second Respondent
REASONS FOR JUDGMENT
Introduction and background
On 5 June 2015 I handed down judgment in the principal proceedings in this matter[1]. At [59] of my judgment I said that I would hear the parties as to costs, including costs of the interlocutory proceedings. The interlocutory proceedings I had in mind were dealt with by my first judgment in the case Dahler v Australian Capital Territory & Anor[2]. At [12] of that interlocutory judgment I said I would hear the parties as to any issue of costs and it was agreed that the issue of costs should await the outcome of the principal proceedings.
[1] Dahler v Australian Capital Territory & Anor(No.2) [2015] FCCA 845
[2] [2015] FCCA 30
The respondents, who were successful in the principal proceedings, considered their position after my judgment and sought an order for costs in respect of the following interlocutory proceedings:
a)the application by the applicant (Mr Dahler) to the Federal Court, filed on 3 March 2014;
b)Mr Dahler’s Application in a Case filed on 14 March 2014 (for costs relating to (a));
c)the application by the respondents filed on 18 March 2014 to strike out parts of Mr Dahler’s statement of claim; and
d)Mr Dahler’s Application in a Case filed on 7 April 2014 (for joinder of CPM Reviews Pty Ltd).
The parties proceeded on the basis that the costs of Mr Dahler’s further application to join CPM Reviews Pty Ltd (CPM), filed on 31 October 2014, were also in issue. All elements of the costs application are resisted by Mr Dahler through his counsel, Miss Keys, who, it should be noted, is exposed personally to a costs order.
Consideration
Section 570 of the Fair Work Act 2009 (Cth) (Fair Work Act) is in the following terms:
(1) A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising 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.
Note: The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 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 the FWC;
(ii) the matter arose from the same facts as the proceedings.
Rule 21.07 of the Federal Circuit Court Rules 2001 (Cth) (Federal Circuit Court Rules) provides as follows:
(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.
There is precedent for a personal costs order being made against counsel for Mr Dahler in these very proceedings[3]. In that case the Federal Court (Katzmann J) ordered that Mr Dahler’s counsel (Miss Keys) personally pay the respondents’ costs of Mr Dahler’s application for leave to appeal against interlocutory orders made by Judge Neville earlier in these proceedings.
[3] see Dahler v Australian Capital Territory & Anor (No 2) [2014] FCA 1154 (Dahler)
It was agreed between the parties that the issue of costs before me could be dealt with on the papers on the basis of written submissions.
Counsel for Mr Dahler (Miss Keys) made submissions on 16 August 2015 which raised several issues of principle. In fairness to her, I reproduce those submissions verbatim:
1.The Respondent's written submissions dated 10 February 2015 and 24 June 2015 seek costs against the Applicant pursuant to section 570(2) of the Fair Work Act and also against counsel for the Applicant pursuant to Federal Circuit Court Rule 21.07 in relation to five (5) interlocutory applications:
1.Two (2) of the interlocutory applications involve the Applicant's application for an extension of time and leave to appeal filed in the Federal Court on 3 March 2014, and his associated application filed on 14 March 2014 in these proceedings for costs arising from the Federal Court application[4] .
[4] Refer ‘applications (a) and (b)’ in paragraphs 2(a) and (b) of the Respondents’ written submissions dated 24 June 2015
2.Two (2) of the interlocutory applications involve the Applicant seeking to join CPM Reviews Pty Ltd as an accessorial party to these proceedings on 7 April 2014 and 31 October 2014[5].
[5] Refer ‘application (d)’ in paragraph 2(b) of the Respondents’ written submissions dated 24 June 2015 and paragraph 1 of their written submissions dated 10 February 2015.
3.One of the interlocutory applications involves the Respondent's application to strike out parts of the Applicant's statement of claim[6].
[6] Refer ‘application (c)” in paragraph 2(c) of the Respondents’ written submissions dated 24 June 2015.
2.In connection with their application pursuant to rule 21.07, the Respondents rely on the following findings made by His Honour Judge Manousaridis in Robinson v Blackheart [2014] FCCA 1353 at [34]-[37]:
“In Ridehalgh v Horsefield the Court of Appeal also considered the meaning of ‘negligent’. The Court said ([1994] Ch. 205 at page 232H-233C):
[W]e are clear that ‘negligent’ should be understood in an untechnical way to denote failure to act with the competence reasonably to be expected of ordinary members of the profession.
“A different construction was given to the word 'negligence' in Etna v Arif ([1999] 2 V.R. 353). In that case, Batt JA (with whose reasons Charles and Callaway JJA agreed) considered the construction of r.63.23 of Chapter I of the Supreme Court Rules (Vic) which empowered the Supreme Court of Victoria to make a costs order against a solicitor for a party where the solicitor caused costs to be incurred improperly or without reasonable cause or to be wasted by “undue delay or negligence or by any other misconduct or default”. Batt JA said (at page 383, [79])
I consider that 'negligence' in para.(1) connotes more than 'mere' or 'tortious' negligence: some kind of professional impropriety or 'gross' negligence is required. This follows from the language of the paragraph itself, the apparent history or source of the particular words, and such authorities as there are. As regards the language of para.(1), the word 'negligence' appears as one of the alternatives in the second limb (namely, that commencing 'to be wasted') of the introductory 'where' clause. It appears there in a context of words denoting blameworthy conduct: it is juxtaposed to the preceding 'undue delay' and the succeeding 'other misconduct or default' (emphasis added). That context suggests that its meaning is to be ascertained from that of its companion words or phrases. More importantly, the word 'other' suggests that 'undue delay' and 'negligence' are to be construed as being of the same kind as 'misconduct or default'. That 'negligence' connotes negligent misconduct or other negligent impropriety is shown, for a start, by decisions on forerunners or cognates of the present r.63.71(1).
“His Honour further said (at page 385 [82]):
So far as duty is concerned, it is the solicitor's duty to the court that is relevant. Thus, it seems to me, that the summary of Myers v. Elman by the Court of Appeal in Ridehalgh v Horsefield at 227 is, in essence, applicable to the Victorian rule. In particular, “[w]hile mere mistake or error of judgment would not justify an order, misconduct, default or even negligence is enough if the negligence is serious or gross.”
“The language of r.21.07 is closer to the language of the rule considered in Etna v Arif than the language of the rule considered in Ridehalgh v Horsefield. For that reason, in my opinion, 'negligence' for the purposes of r.21.07 means negligence that is 'serious or gross'.. .
3.The Respondents' submissions particularise the impugned conduct of counsel for the Applicant as follows -
1.In relation to the Federal Court application concerning the proper name of the employer, and the associated costs application, the Respondents submit that “the commencement of [those] applications … vexatiously and without reasonable cause was improper conduct or negligence [and] … were technical applications where the applicant would have been almost entirely reliant on counsel”[7].
[7] Refer [24] of the Respondents’ written submissions dated 24 June 2015 and section 570(2)(a) of the FW Act.
2.In relation to the applications made on 7 April and 31 October 2014 to re-join CPM Reviews as a party, the Respondents refer to those as the commencement of proceedings “vexatiously and without reasonable cause”, and, in relation to the second application, as an attempt “to re-litigate an issue that (on appeal in the Federal Court) had already been authoritatively decided against the applicant … [and is] vexatious and an abuse of process … [and] is improper conduct”[8].
[8] Refer [7], [9], [16] & [24] of the Respondents’ written submissions dated 24 June 2015 and section 570(2)(a) of the FW Act.
3.In relation to the Respondent's application to strike out parts of the Applicant's Statement of Claim, the Respondents classify this as the Applicant's “bad pleading of the statement of claim” and submit that “the pleadings were an act of gross negligence, since no counsel acting with due care could have prepared such defective pleadings …”[9].
[9] Refer [25] of the Respondent’s written submissions dated 24 June 2015 and section 570(2)(b) of the FW Act.
4.The Applicant submits that the following findings made by His Honour Judge Manousaridis in Robinson are also relevant [42]-[44] -
“In approaching applications for a personal costs order under r.21.07, it is important to bear in mind that such applications often involve serious allegations of misconduct against persons practising a profession which, if established, may have adverse consequences to that person's professional reputation. There are at least two consequences that flow from this. The first is the following observation of Macpherson of Cluny J speaking for the Court of Appeal in In re A Barrister (Wasted Costs Order) (No 1 of 1991) which, in my opinion, applies equally to applications made under r.21.07:[10]
[10] [1993] Q.B. 293 at page 301
There is a clear need for any judge or court intending to exercise the wasted costs jurisdiction to formulate carefully and concisely the complaint and ground upon which such an order may be sought. These measures are draconian, and, as in contempt proceedings, the grounds must be clear and particular.
“I would add that the obligation of the Court referred to in this passage obviously applies to legal practitioners who are instructed to apply for an order under r.21.07. Legal practitioners must formulate carefully and concisely the complaint upon which the order is sought.
“The second consequence relates to the standard of persuasion that is to be applied to claims under r.21.07. What standard is to be applied is governed by s.140(2)(c) of the Evidence Act 1995 (Cth) which requires the Court, when considering whether it is satisfied that a claim or defence has been proved on the balance of probabilities, to take into account 'the gravity of the matters alleged’”.
5.The Applicant submits that, rather than carefully and concisely formulating the complaints against counsel for the Applicant, the Respondents' complaints are merely couched in the terms of sub-sections 570(2)(a) and (b) of the FW Act (see [3] above).
6.In connection with the relationship between section 570 of the FW Act and FCC Rule 20.07, it was submitted in Robinson that:
“Section 570 of the FW Act is a provision "with respect to the practice and procedure in particular matters", namely, the payment of costs in proceedings in relation to a matter arising under the FW Act. Therefore, in such proceedings, r.21.07 has effect subject to s.570, which means that r.21.07 will not apply to the extent it is inconsistent with s.570.[11] And r.21.07 is inconsistent with s.570 because r.21.07 provides for the making of a costs order against a person who is a lawyer, whereas s.570 only provides for the making of a costs order against a party”[12].
[11] See Harding v Coburn [1976] 2 NZLR 577 at page 582 where Cooke J said that making one statutory provision “subject to” another provision is “a standard way of making clear which provision is to govern in the event of conflict.”
[12] Refer [166(e)]
7.In response to this submission, His Honour Judge Manousaridis said that “if the only sources of the Court's jurisdiction to award costs in a proceeding brought under the FW Act are s.79 of the FCCA Act and s.570 of the FW Act, [he] would feel bound to accept [that] submission”; however, “the question … is whether these two provisions are the only relevant sources of the Court's jurisdiction to order costs in proceedings under the FW Act”. His Honour then concluded at [125]-[128] -
“In my opinion, however, there is a source of power other than, or in addition to, s.79 of the FCCA Act that supports the making of r.21.07; and that is the implied incidental power of “a federal court to regulate the conduct of legal practitioners appearing before it to the extent necessary to ensure the observance of their duties to the court and the integrity of its procedures is an implied incidental power”.[13] The nature and source of this power was considered by French J (as his Honour then was) in De Pardo v Legal Practitioners Complaints Committee:[14]
[13] De Pardo v Legal Practitioners Complaints Committee (2000) 97 FCR 575 at pages 595, [53]
[14] (2000) 97 FCR 575 at pages 595-596, [53]. This part of his Honour’s reasons was referred to with approval by Gummow J in APLA Limited v Legal Services Commissioner (NSW) (2005) 224 CLR 322 at page 396, [186]
Like the power of the court to punish for contempt, even if such power is not to be found in some express statutory provision, it has its source in Chapter III of the Constitution. Like the power to deal with contempts, it is “inherent” and is “a power of self protection or a power incidental to the function of superintending the administration of justice” - Re Colina; Ex parte Torney (1999) 73 ALJR 1576 at 1580-1581; 166 ALR 545 at 551-552 (Gleeson CJ and Gummow J citing Porter v The Queen; Ex parte Chin Man Yee (1926) 37 CLR 432 at 443, see also McHugh J at 558 and Hayne J at 579-580).
“The existence of an implied incidental power is referred to or at least assumed in s.81(1)(b) of the FCCA Act which provides that ‘Rules of Court’ may be made:
making provision for or in relation to all matters and things incidental to any such practice or procedure [prescribed by rules made under s.81(1)(a)], or necessary or convenient to be prescribed for the conduct of any business of the Federal Circuit Court of Australia.
“In my opinion, s.81(1)(b) of the FCCA Act is broad enough to empower the Judges of the Court to make rules that specify the circumstances in which the Court may make an order for costs against a lawyer appearing before it. The power to order costs against lawyers that appear before the Court is a matter that is incidental to the practice and procedure of the Court fixed by rules made under s.81(1)(a); it is “a power of self protection or a power incidental to the function of superintending the administration of justice”. And r.21.07 is a rule that regulates the circumstances in which the Court may make an order for costs against a lawyer appearing before it.
“Accordingly, an order under r.21.07 of the FCCR may be made against a lawyer who represents a party in proceedings in relation to a matter under the FW Act. The source of the rule is not, or at least is not only, s.79 of the FCCA; the source or part of the source of the rule is the implied incidental power of the Court that includes the power to regulate legal practitioners who appear before the Court.
8.To the extent that the 'improper conduct' and 'gross negligence' alleged by the Respondent in their written submissions is the same conduct said to give rise to their claimed entitlement to costs under section 570(2) of the FW Act (see [3] & [5] above), the Applicant submits that if unreasonable conduct or the institution of proceedings vexatiously or without reasonable cause always amounts to gross negligence, then section 570(2) of the FW Act should not have been drafted to limit the making of a costs order against 'a party'.
9.Notwithstanding whether such conduct per se will always fall foul of rule 21.07, the Applicant does not accept either that he -
9.1“… commence[d] applications (a), (b) and (d) … vexatiously and without reasonable cause”[15]
[15] Refer [5], [23] & [24] of the Respondents’ written submissions dated 24 June 2015
9.1.1The Applicant submits that he did not make the Application for extension of time and leave to appeal to the Federal Court on 3 March 2015 vexatiously or without reasonable cause.
The Applicant made the application because Judge Neville had failed to make a decision in chambers on 17 December 2013 concerning the proper name of the employer as a consequence of the Applicant's Application in a case filed on 2 December 2015 and the submissions filed by the Respondent 14 days later[16]. The application was made because the progress of these proceedings was delayed, including the filing of the Applicant's a Statement of Claim and the Respondent's Defence which were scheduled to occur “within 14 days after the Court's determination of the name dispute” and 14 days thereafter, and only after the Respondent had requested the Registry vacate the mediation which had been listed on 6 March 2014 because the ‘name dispute’ had not been resolved and the pleadings were therefore not available.
[16] See Orders made on 2 December 2013
Immediately after the Applicant filed his Application for extension of time and leave to appeal from the failure of Judge Neville to make a decision on 17 December 2013, Judge Neville made an Order on 3 March 2014 that “the name of the Respondent be changed to the ‘Australian Capital Territory’”, which accorded with the Respondent's written submissions. The notes made as a preamble to the Orders made on 3 March 2014 do not fully describe the events preceding the Order - no account has been given to the Applicant's Application in a case filed 2 December 2013 which sought to identify his public sector employer as prescribed in section 795 of the FW Act and Schedule 6.3 of the Fair Work Regulations 2009, either in the preamble or the Order made.
When the Application was listed for directions on 6 March 2014, the cause for the Applicant making the application no longer existed because a decision had been made. The Applicant foreshadowed making an Application for leave to appeal from the Order made by Judge Neville on 3 March 2014; however, Justice Foster observed that “in this day and age, it is regrettable, to say the least, that a problem concerning the correct naming of a party to litigation has produced not only delay in the Court below but an application to this Court which is utterly misconceived”[17], and canvassed whether the Application might be able to be resolved by the Respondent's consent to the addition of the Minister as a party. When the Respondent advised that they would consent, His Honour made the following orders -
[17] Refer Dahler v ACT Government t/as Community Services Directorate [2014] FCA 210 at [4]; and quoted at [38] in Dahler v Australian Capital Territory & Anor [2014] FCCA 1675
1.The Application for an Extension of time and Leave to Appeal filed on 3 March 2014 be dismissed upon terms that both parties in this Court and the Minister for Community Services (A.C.T.) consent to an order being made in the Federal Circuit Court of Australia adding the Minister as a second respondent in proceeding No CAG46 of 2013 instituted by the applicant in that Court.
2.The costs of and incidental to the said application in this Court be costs in application No CAG46 of 2013 in the Federal Circuit Court of Australia.
There was no delay caused by the Applicant's Application for an extension of time and leave to appeal filed on 3 March 2014; rather, the Application prompted the proper identification of the Applicant's employer for the purposes of these proceedings on 3 March and 6 March 2014.
9.1.2The Applicant submits that his Application for costs filed 14 March 2014 does not constitute a 'proceeding' that was instituted either vexatiously or otherwise.
Further, at the time when this application was dismissed by Judge Neville on 31 July 2014, he expressly made “no order as to costs in relation to this particular Application” [46].
Notwithstanding that this Application was dismissed by Judge Neville on 31 July 2014 and that the Respondents refer to Justice Katzmann's description of the Applicant's leave to appeal from that interlocutory decision as 'doomed to fail', the Respondents submit that the Applicant's Application for costs “was superfluous, because the court (Foster J) had already made a costs order”[18].
The Applicant submits that, despite describing the Application for extension of time and leave to appeal as ‘utterly misconceived’, it is apparent from the terms of Order I made on 6 March 2014 that Justice Foster did not intend that the Respondents would have the benefit of the costs Order 2. Also, the Respondents appear to accept that the costs order made by Justice Foster on 6 March 2014 is in favour of the Applicant, because otherwise they would claim those costs in their Submissions as to costs, rather than seeking costs on the basis that the Applicant's application for costs was superfluous and therefore also vexatious and without reasonable cause.
At the time when the Applicant lodged his Application for costs on 14 March 2014, a sealed copy was not returned to him by the Court, and it was the Applicant's understanding that an order for costs pursuant to his Application in a case dated 14 March 2014 and Order 2 made by Justice Foster on 6 March 2014 would be made at the conclusion of the hearing of the substantive application. However, the Court did not seal and return the Application to the Applicant until 1 July 2014, that is, 3½ months after it was lodged with the Registry, with a notation and covering advice that it was listed for hearing on 21 July 2014.
Notwithstanding that the Applicant's Application in a case dated 14 March 2014 was dismissed by Judge Neville on 31 July 2014[19] , the Applicant now seeks an order pursuant to Order 2 made by Justice Foster on 6 March 2014 that the First Respondent pay the Applicant's costs of and incidental to the application filed in the Federal Court on 3 March 2014.
[18] Refer [10] of the Respondents’ written submissions dated 24 June 2015
[19] On the basis of misunderstanding about the cause of the delay from 17 December 2013 until 3 March 2014
9.1.3The Applicant submits that his Application in a case filed 7 April 2014 does not constitute a ‘proceeding’ that was instituted vexatiously or without reasonable cause.
The Application sought to re-join CPM Reviews as an accessorial party to the proceedings, and was made pursuant to rule 11.02, which proscribes:
(1) A party to a proceeding may include any person as a party by:
(a)naming the person as a party in the application, response or reply; and
(b)serving on the person a copy of the application, response or reply and all other relevant documents filed in the proceeding.
(2) A party may not include a person as a party after the first court date without the leave of the Court.
At the first court date on 21 October 2013, the Court made an order on the oral application of CPM Reviews Pty Ltd, who were then named as the second respondent, that they had “withdrawn and [were] hereby discharged from the proceedings”. A copy of the Orders made on 21 October 2013 are attached[20].
[20] The Orders made on 21 October 2013 appear to have been changed since that time. Order 1 now states, “The Second Respondent be removed as a party to the proceedings”; but there is no indication that the amended Order was entered at a later date, nor has the Applicant received any notification that the Order was to be, or had been changed.
Before making the Order on 21 October 2013, it is recorded in the Transcript that Judge Neville advised the Applicant as follows -
“… just say for the purposes of discussion, that I were to accede to Ms Brennan's application, there would appear to be nothing to stop you and your client at some later stage if, in the light of whatever else is formally pleaded, making an application to rejoin the second respondent”[21]
[21] Refer Transcript 21.10.13, page 6 lines 39 to 43. The Transcript for 21 October 2013 was provided to Judge Driver’s Chambers by the Respondent on 18 November 2014.
The Application in a case lodged on 7 April 2014 which sought to rejoin CPM Reviews on the basis that they were named as an accessorial party in the Applicant's Reply, was made in the context of the informality of the Order made on 21 October 2013 ‘discharging’ them from the proceedings (see attached) as well as His Honour's advice at the time that “there would appear to be nothing to stop [the Applicant and his counsel] … making an application to rejoin” CPM Reviews “at some later stage … in light of whatever … is formally pleaded”.
The Applicant submits that even if his Application in a case filed 7 April 2014 is a ‘proceeding’, it was not, given the above circumstances, instituted vexatiously or without reasonable cause.
9.2applied to re-join CPM Reviews as a party on 31 October 2014 in an attempt “to re-litigate an issue that (on appeal in the Federal Court) had already been authoritatively decided against the applicant … [was] vexatious and an abuse of process”[22].
[22] Refer [3], [4], [5], [8] & [9] of the Respondents’ written submissions dated 10 February 2015
9.2.1The Applicant submits that his Application in a case filed 31 October 2014 does not constitute the institution of a ‘proceeding’.
9.2.2The Applicant further submits that, even if making the Application is regarded as instituting proceedings, it was not made vexatiously nor was it re-litigating “an issue that (on appeal in the Federal Court) had already been authoritatively decided against the applicant”. The Respondents' reference to an ‘appeal in the Federal Court’ is incorrect; the Federal Court proceedings were an Application for leave to appeal from interlocutory judgments and, as a consequence, did not involve an ‘authoritative decision in connection with the re-joinder of CPM Reviews.
9.2.3Contrary to the statements made by the Respondents at [5] of their written submissions dated 10 February 2015 that this “Court observed (at paragraph 9) that there remained ‘no basis’ for the joinder of CPM and there was ‘nothing new’ (para 10), arising since the Federal Court's ruling, that would justify the joinder of CPM”, the Applicant submits that it was not an abuse of process to have claimed that there was a basis for the joinder of CPM Reviews by virtue of the amended Statement of Claim, and to have confirmed that the joinder was sought pursuant to section 362 of the FW Act, provisions that were considered to have been not relied upon by Justice Katzmann[23].
9.3failed to file “proper pleadings” which was “unreasonable”[24]
9.3.1The Respondents' Application in a case filed 18 March 2014 sought that numerous paragraphs of the Applicant's Statement of Claim filed 13 March 2014 be struck out. The Respondents' Application to strike out numerous paragraphs of the Statement of Claim, including paragraphs summarising the reasons for the termination of the Applicant's employment and the basis for claiming that those reasons contravened sections 340 & 351 of the FW Act, did not refer to any rule under which the pleadings should be struck out and did not provide the Applicant with any opportunity to amend the pleadings. These matters were raised in correspondence with the Respondents, to which the Respondents did not reply.
9.3.2Further, the Respondent's Application was made returnable at 9.30am on 2 June 2014[25], which was after the Defence and Reply were required to be filed.
The Statement of Claim was drafted in the context of Division 45.3 of the FCC Rules, as well as Rule 4.05(2)(c) and the fact that affidavit evidence was not to be filed before the mediation which had been relisted on 9 May, and then 14 June 2015[26]; the terms of documents were included in the Statement of Claim on the basis that they were material to the disciplinary process which was claimed to be the 'workplace right' in these proceedings. In any event, when the Respondents' reasons for seeking to strike out the offending paragraphs were explained at the hearing on 21 July 2014, the Applicant agreed to re-plead his Statement of Claim, and the disciplinary process in particular - but that opportunity was not open to the Applicant before 21 July 2014.
9.3.3The Applicant submits that, while his Statement of Claim filed on 13 March 2014 did not comply with the Federal Court Rules, it was not “unreasonable” in the context of proceedings commenced under Division 45.3 of the FCC Rules; and, in any event, the Statement of Claim filed by the Applicant on 13 March 2014 did not cause the Respondents to incur costs of their amended defence[27]. The costs associated with the Respondents' “amended defence” were incurred because they took no action to have their Application in a case filed on 18 March 2014 heard before 21 July 2014; and they failed to take any action to dispense with compliance with the Orders made by Judge Neville on 14 March 2014 regarding their filing of a Defence and the Applicant filing a Reply[28], both of which occurred more than 3 months before their strike out Application was heard.
9.3.4The Applicant submits that it is this omission of the Respondents which is unreasonable and caused the Applicant to incur and ‘throw away’ the costs of his Reply to the Respondents' Defence, as well as his Application to re-join CPM Reviews dated 7 April 2014 which was based on CPM Reviews being named as an accessorial party in the Applicant's Reply in accordance with FCC Rule 11.02(1)(a). The Applicant consequently seeks an order for those costs under section 570(2)(b) of the FW Act.
[23] See [83] in Dahler v Australian Capital Territory [2014] FCA 946
[24] Refer [7] & [13] of the Respondents’ written submissions dated 24 June 2015
[25] which was later adjourned until 21 July 2014
[26] See Orders made by Judge Neville on 14 March 2014
[27] Refer [15] of the respondents’ written submissions dated 24 June 2015
[28] Mr Dahler invited the respondents to do this in correspondence on 21 March 2014
To the extent that Mr Dahler is seeking a costs order against the respondents, I reject that application. The actions of the respondents’ legal representatives were perfectly reasonable in an attempt to obtain clarity in establishing the case they had to meet and to ward off the misguided attempts to join CPM as a respondent to the proceedings. That view is supported by the orders made by Judge Neville and the judgments made by Katzmann J and me.
As to the costs sought by the respondents, I accept the respondents’ submissions.
As to Mr Dahler’s application to the Federal Court on 3 March 2014, the Federal Court in Dahler v ACT Government t/as Community services Directorate[29] described the application as “utterly misconceived” at [4]. The Federal Court in Dahler (per Katzmann J) expressly agreed in this description at [33].
[29] [2014] FCA 210 (per Foster J)
The respondents submit and I accept that they are entitled to costs because an application that is utterly misconceived should be regarded as vexatious or made without reasonable cause for purposes of s.570(2)(a).
As to Mr Dahler’s costs application on 14 March 2014, the Federal Court in Dahler (per Katzmann J) described Mr Dahler’s application as “doomed to fail”[30]. It was an application to this Court for the costs of the very application that was dismissed by Foster J and described as “utterly misconceived”. It may not have been superfluous, because, although the Court (per Foster J) had already made a costs order, it was one which referred a costs outcome to this Court for determination. It was, nevertheless, utterly misconceived as it was clear from the reasons of Foster J that costs should await the outcome of the proceedings in this Court.
[30] at [33]
The respondents therefore submit that this application was also vexatious or without reasonable cause. I agree. Mr Dahler’s costs application was hopeless as well as being premature and should never have been made.
The bad pleadings were an unreasonable act or omission
As to the respondents’ application to strike out parts of the statement of claim, the Federal Court (per Katzmann J) described this Court’s order to strike out the pleadings as “entirely justified”. The Court concluded that there was “no prospect” of any appealable error being established[31].
[31] [2014] FCA 946, at [115]
The respondents submit that Mr Dahler’s failure to plead a statement of claim in proper form was an act or omission that caused the respondents to incur costs that were unnecessary, within the meaning of s.570(2)(b) of the Fair Work Act. There is support for that submission in the judgment of Katzmann J. This was a case where the pleadings were so grossly defective that they appeared to reflect a “lack of understanding” of the rules of pleading, failed to state material facts, pleaded evidence instead of material facts, failed to plead separate matters in separate paragraphs, and contained much irrelevant material[32].
[32] [2014] FCA 946, at [102]-[114]
The statement of claim was criticised in similar terms by Judge Neville at first instance[33].
[33] [2014] FCCA 1675 at [74]-[92]
Mr Dahler was ordered by Judge Neville to re-plead offending parts of his statement of claim, and the respondents were given leave to file an amended defence. The respondents also seek the costs of that amended defence, being costs incurred as a result of Mr Dahler’s failure to file proper pleadings.
I accept that the costs sought by the respondents should be paid pursuant to s.570(2)(b).
That leaves the Applications in a Case filed on 7 April 2014 and 31 October 2014 by Mr Dahler which sought the joinder of CPM to the proceedings.
The respondents submit that they are entitled to costs pursuant to s.570(2)(a) of the Fair Work Act because the applications were a proceeding instituted vexatiously or without reasonable cause. I agree.
CPM had previously been removed as a party by Judge Neville and Mr Dahler had sought to add it again. Judge Neville dismissed the application made on 7 April 2014 and ordered Mr Dahler to pay the costs of CPM. Katzmann J found at [87]-[88] of her judgment that there was no reason to doubt the correctness of Judge Neville’s decision.
In the light of that decision it was extraordinary that a fresh attempt to join CPM was made on 31 October 2014. Both applications showed a complete lack of understanding of the difference between a decision maker and an investigator in the context of an adverse action claim.
In addition, the second application was vexatious or without reasonable cause because it was instituted shortly after the Federal Court on appeal had ruled that there was no basis for the joinder of CPM[34].
[34] Dahler v Australian Capital Territory [2014] FCA 946
In dismissing the application, I observed[35] that there remained “no basis” for the joinder of CPM, and that there was “nothing new”[36] arising since the Federal Court’s ruling, that would justify the joinder of CPM.
[35] At [9]
[36] At [10]
Both applications were in my opinion made without reasonable cause within the meaning of s.570(2)(a).
Further, the second application was an attempt to re-litigate an issue that (on appeal in the Federal Court) had already been authoritatively decided against Mr Dahler. Attempting to re-litigate such a matter is vexatious and an abuse of process[37].
[37] Walton v Gardiner (1992-3) 177 CLR 378, 393
I reject the contention apparently made by counsel for Mr Dahler that interlocutory proceedings are not “proceedings” for the purposes of s.570. It is, in my view, plain from the wording of the section that the possibility of a costs order is enlivened not simply in relation to a principal proceeding but in relation to any component part of proceedings.
I accept that a costs order should not be made lightly and that the Court must be plainly satisfied that the necessary elements in paragraphs (a), (b) or (c) of s.570(2) are established. I am so satisfied.
Should the costs be paid by Miss Keys?
Section 570(2) Fair Work Act refers to costs against a “party”. That party is, relevantly, Mr Dahler.
However, in the light of Katzmann J’s decision to award costs against Miss Keys, the respondents submit that some or all of the costs now in issue should be paid by Miss Keys.
It should be noted that Mr Dahler was, in matter CAG 46 of 2013 and all interlocutory applications, not represented by a solicitor, but represented by counsel on a “direct access” basis.
In her judgment, Katzmann J decided that the costs of the application for leave to appeal from the orders of this Court in each of the interlocutory applications then before the Court, which fell within s.570(2)(a), should be paid by Miss Keys, pursuant to rule 40.07 of the Federal Court Rules[38].
[38] [2014] FCA 946
The Federal Court found that Mr Dahler was almost entirely dependent on his counsel for the application in question, and that therefore the responsibility for it being made without good cause should be Miss Keys’.
Rule 21.07 of the Federal Circuit Court Rules is very similar to rule 40.07. It permits such an order for costs to be made if a party has incurred costs due to the “negligence, improper conduct...or other...default” by a lawyer.
The costs incurred by the respondents, as stated above, were, for each of the applications identified at [2](a), (b) and (d) above. These were costs incurred in responding to proceedings that were vexatious or commenced without reasonable cause. In relation to (a), the respondents incurred (i) the costs of the application that pleadings in the statement of claim be struck out, and (ii) the costs of re-pleading their defence following Mr Dahler’s amended statement of claim.
The respondents submit that the commencement of the applications (a), (b) and (d) vexatiously or without reasonable cause was improper conduct or negligence[39]. I agree. These were technical applications where Mr Dahler would have been almost entirely reliant on counsel.
[39] There has been no suggestion at all that there was some innocent error or mistake
In relation to (c) (the bad pleading of the statement of claim) the respondents submit that the pleadings were an act of gross negligence, since no counsel acting with due care could have prepared such defective pleadings[40]. There would in most circumstances be force in Miss Keys’ submission that a costs order is not called for in fair work proceedings simply because of bad pleadings. In the ordinary course, corrective action should be available without the penalty of a costs order. The circumstances in issue, however, go beyond a simple case of a pleading that needed to be corrected. It was a pleading that was an embarrassment and which could not rationally be responded to. The corrective action called for was actively resisted by Mr Dahler through his counsel. Regrettably, Miss Keys could not see the wood for the trees, and the respondents were put to additional costs wholly unnecessarily.
[40] Robinson v Blackheart Industries Pty Ltd & Ors [2014] FCCA 1353 at [34]-[37]
I am satisfied that the necessary elements of rule 21.07 have been established. The offending statement of claim was so bad that the preparation of it can safely be described as negligent. The interlocutory applications were worse than foolish: they were nonsensical. The trenchant criticism of Miss Keys in this Court and in the Federal Court was entirely justified. It would be unjust if Mr Dahler had to bear himself the costs awarded inter partes because of the negligence of his counsel.
Mr Dahler, a former disability worker, would have been almost entirely dependent upon his legal representative, for advice about instituting the applications, and the preparation of the statement of claim and for the content of the applications[41] and the statement of claim.
[41] cf Dahler v Australian Capital Territory (No 2) [2014] FCA 1154 at [40]
Therefore, the responsibility for the institution of the applications and for the preparation of the statement of claim should lie with Mr Dahler’s legal representative, and the Court should order costs against the legal representative accordingly.
I will order that the applicant’s counsel, Judith Keys, personally pay the respondents’ costs of the proceedings sought by them.
I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of Judge Driver
Associate:
Date: 30 September 2015
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