Dennington v Pee Cee Pty Ltd (No.2)
[2008] FMCA 336
•20 March 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DENNINGTON v PEE CEE PTY LTD (No.2) | [2008] FMCA 336 |
| INDUSTRIAL LAW – Costs application – penalty proceedings – notice to admit – unreasonable act or omission – application dismissed. |
| Workplace Relations Act 1996 (Cth), ss.824(1), 824(2) Federal Magistrates Court Rules 2001 (Cth), r.15.31 |
| Ansari v Commonwealth Bank of Australia Limited [2007] FCA 1908 Australian and International Pilots Association v Qantas Airways Ltd (No.3) [2007] FCA 879 Hatchett v Bowater Tutt Industries Pty Ltd (No. 2) (1991) 28 FCR 324 Lee Conversancy Board v Button (1897) 12 Ch D 383 McAleer v University of Western Australia (No. 2) [2007] 161 IR 151 Paras v Public Service Body Head of the Department of Infrastructure (No.3) [2006] FCA 745 Tristar Steering and Suspension Australia Limited v Industrial Relations Commission of New South Wales (No.2) [2007] FCAFC 95 |
| Applicant: | SALLY DENNINGTON |
| Respondent: | PEE CEE PTY LTD (ACN 069 384 572) |
| File Number: | LNG 20 of 2007 |
| Judgment of: | O’Sullivan FM |
| Hearing date: | Written submissions |
| Date of Last Submission: | 13 March 2008 |
| Delivered at: | Melbourne by telephone link to Hobart |
| Delivered on: | 20 March 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr Justin Zeeman |
| Solicitors for the Applicant: | Zeeman & Zeeman |
| Counsel for the Respondent: | Mr Craig Green |
| Solicitors for the Respondent: | Page Seager |
ORDERS
There be no order for costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
LNG 20 of 2007
| SALLY DENNINGTON |
Applicant
And
| PEE CEE PTY LTD (ACN 069 374 572) |
Respondent
REASONS FOR JUDGMENT
These reasons for decision concern an application for costs arising from proceedings which Sally Dennington, a workplace inspector (“the applicant”), commenced in 2007. In those proceedings, the applicant sought inter alia penalties against Pee Cee Pty Ltd (“the respondent”) for breaches of the Workplace Relations Act 1996 (“the WR Act”).
The proceedings were heard in Hobart on 9 January 2008. On 6 February 2008, reasons for decision were published and orders made including that the applicant had liberty to apply in relation to any application for costs.
It was subsequently confirmed that the applicant sought costs and accordingly directions were made for filing of submissions on the issue on 14 February 2008 as follows:
“1. The Applicant file and serve submissions in writing in relation to costs by 18 February 2008.
2. The Respondent file and serve submissions in writing in relation to costs by 4 March 2008.
3. The Applicant file and serve any submissions in reply by
7 March 2008.
4. The costs application will be dealt within on the papers in chambers.”
Costs Application
In civil proceedings, costs usually follow the event. Costs in proceedings (other than proceedings in relation to termination of employment) under the WR Act are governed by section 824 which provides:
“(1) A party to a proceeding (including an appeal) in a matter arising under this Act (other than an application under section 663) must not be ordered to pay costs incurred by any other party to the proceeding unless the first‑mentioned party instituted the proceeding vexatiously or without reasonable cause.
(2) Despite subsection (1), if a court hearing a proceeding (including an appeal) in a matter arising under this Act (other than an application under section 663) is satisfied that a party to the proceeding has, by an unreasonable act or omission, caused another party to the proceeding to incur costs in connection with the proceeding, the court may order the first‑mentioned party to pay some or all of those costs.
(3) In subsections (1) and (2):
"costs" includes all legal and professional costs and disbursements and expenses of witnesses.”
Whilst this provision could be described as, a provision that precludes costs as will be seen from the above, section 824 of the WR Act does give the Court power to award costs in certain circumstances. In this case, the applicant seeks costs and relies on section 824(2) of the WR Act. The applicant contends that there were acts or omissions by the respondent that were unreasonable within the meaning of section 824(2) of the WR Act.
In order to deal with the application it is necessary to record, in somewhat greater detail the circumstances leading up to the hearing on
9 January 2008.
The background was summarised in Dennington v Pee Cee Pty Ltd [2008] FMCA 79 as follows:
“5. The application as filed had sought penalties and orders that the respondent pay Ms Durkin’s outstanding entitlements. By the time of the hearing the respondent had remedied the underpayments and admitted seven breaches of applicable provisions under the Act. Accordingly, the Court was required to determine the appropriate penalty to be imposed on the respondent.
6. The applicant sought penalties for breaches of the Act, the Australian Fair Pay and Conditions Standard and the applicable provisions in the Tasmanian Hairdressing and Beauty Industry Award (now a Notional Agreement Preserving State Award (NAPSA)) that governed Ms Durkin’s employment.
7. The hearing proceeded on the basis of a statement of agreed facts (“SAF”) …
8.…
9. The application was filed on 13 June 2007. There was a response filed on 28 June 2007. The proceedings were the subject of a directions hearing on 20 July 2007. A Notice to Admit was filed on 19 July 2007 and there was a response to this on 2 August 2007. There was a further directions hearing on 15 August 2007 and the matter was listed for hearing on 9 January 2008. At the hearing the applicant was represented by Mr Zeeman of Counsel and the respondent by Mr Green of Counsel.
10. As well as the SAF there was before the Court by way of evidence a summary of the underpayments to Ms Durkin[1] as well as affidavits filed by the applicant Sally Dennington, along with Phillipa Anne Salewicz, Beverley Challenger, Jacqueline Crane, Tiffany Jane Durkin and Glenn Jordan and for the respondent from John Langridge.
11. The applicant prepared a casebook that was taken into evidence and outlines of submissions on penalty were also tendered by both parties.[3] These were all referred to in submissions before the Court.
12. The respondent did not require any of the applicant’s witnesses for cross-examination and accordingly the affidavits referred to in paragraph 13 above were taken into evidence.”
[1] Exhibit A1
[3] Applicant’s Outline was Exhibit A8 and the Respondent’s Outline was Exhibit R2
In summary, the hearing was ultimately only in relation to the question of penalty as by that time the respondent had admitted and remedied the breaches of the WR Act and the parties had filed a Statement of Agreed Facts (“SAF”). For present purposes the import of the above background is that whilst the parties came before the Court with a SAF in January 2008, at least at 2 August 2007 that was not the case.
It is not necessary to set out paragraphs 7 to 14 of the Notice to Admit filed 19 July 2007 which in the response filed on 2 August 2007 the respondent did not admit. However, those provisions, which are relevant for the purposes of this application, ultimately found their way into the SAF.
Applicant’s submissions
In accordance with the directions made on 14 February 2008 for the determination of this costs application the applicant filed submissions that inter alia said:
“The application
11.The applicant seeks its costs associated with the proof of the facts contained in paragraphs 7 to 14 of its notice to admit facts dated 19 July 2007. Those costs are those costs associated with the preparation and filing of the affidavit of Tiffany Jane Durkin sworn on 20 December 2007.
12.In particular, the evidence of Ms Durkin was required to prove that she should have been classified as a Beautician under the preserved APCS and the notional agreement preserving State awards (both derived from the Tasmanian Hairdressing, Health and Beauty Industry Award), as referred to in paragraphs 7 to 14 in the notice to admit facts.
13.The respondent’s response to paragraphs 7 to 14 of the notice to admit facts was to dispute these paragraphs.
14.Whilst ultimately the respondent agreed to the facts contained in paragraphs 7 to 14 of the notice to admit facts, a further five months elapsed from the date of the respondent’s response before the statement of agreed facts was filed by the parties.
Facts surrounding respondent’s failure to admit
15.The affidavit of John Langridge sworn on 6 July 2007 provides at paragraphs 60 to 66 that he made two payments to the Office of the Workplace Ombudsman: $3,000.00 on
18 June 2007, and $612.00 on 29 June 2007.
16.These sums ($3,612.00) were agreed by the parties as the net underpayment owed to Ms Durkin at paragraph 35 of the statement of agreed facts.
17.It follows that, as at 18 June 2007, the respondent was aware of the breaches of the Australian Fair Pay and Conditions Standard and the notional agreement preserving State awards derived from the Tasmanian Hairdressing, Health and Beauty Industry Award.
18.Further, given that the affidavit of Mr Langridge was filed by the respondent’s legal representatives, it is reasonably open to conclude that at the date Mr Langridge swore the affidavit, the respondent was able to obtain legal advice in respect to its breaches of the Australian Fair Pay and Conditions Standard and the notional agreement preserving State awards.
19.It is also reasonably open to conclude that the respondent obtained legal advice in respect to the notice to admit facts, including paragraphs 7 to 14, given that the response to the notice was filed on its behalf by its legal representatives.
20.As at 2 August 2007 (the date that the respondent’s response to the notice to admit facts was filed), the facts supporting the admission of paragraphs 7 to 14 of the notice to admit facts were uncontroversial. It was therefore an unreasonable act within the meaning of subsection 824(2) for the respondent to dispute paragraphs 7 to 14 of the notice to admit facts.”
The applicant in submissions also referred to the provisions of Rule 15.31 of the Federal Magistrates’ Court Rules 2001 (“the Rules”) which provides as follows:
“(1)A party to a proceeding (the first party) may, by notice in accordance with the form of notice set out in Part 1 of Schedule 2, ask another party to admit, for the proceeding, the facts or documents specified in the notice.
(2)If the other party does not, within 14 days, serve a notice on the first party disputing the fact or the authenticity of the document, the other party is taken to admit, for the proceeding only, the fact or the authenticity of the document.
(3)The other party may, with the Court’s leave, withdraw an admission taken to have been made under subrule (2).
(4)Unless the Court otherwise orders, if the other party serves a notice disputing a fact or the authenticity of a document and the fact or the authenticity of the document is later proved in the proceeding, the party must pay the costs of the proof.”
The applicant submitted that any fact genuinely not in dispute between the parties to litigation should be admitted and relied on the decision in Lee Conversancy Board v Button (1897) 12 Ch D 383 at 398:
“Every fact stated in the statement of claim is denied. Would it have been proper in an answer to have done so? Nothing could have been more improper. A man is not at liberty in his defence to deny such things as these…because it only obliges the other parties to put in affidavits to prove these facts, which would have been saved if they had been admitted.”
In the applicant’s submission, section 824(2) of the WR Act recognises that the application was made to the Court where the Rules apply. The applicant relied on decisions such as Thompson Brindal Limited v McLachlan [2000] SASC 58 to submit that the respondent’s actions in disputing the relevant paragraphs in the Notice to Admit amounted to an unreasonable act or omission.
It was submitted that consistent with the Rules it should be open for a party to utilise a Notice to Admit facts, to narrow the issues, and where the denial of the facts contained in that notice is unreasonable, the party who issued the notice should be able to recover its costs.
In essence the applicant’s contention was that the respondent’s failure to admit the facts contained in the Notice to Admit was an unreasonable act for the purposes of section 824(2) of the WR Act.
In relation to its contentions about section 824(2) of the WR Act the applicant relied on the decisions in Paras v Public Service Body Head of the Department of Infrastructure (No.3) [2006] FCA 745 and Ansari v Commonwealth Bank of Australia Limited [2007] FCA 1908 (“Ansari”).
Respondent’s submissions
In its submissions, which were filed by consent on 6 March 2008, the respondent relied upon the chronology and facts set out below:
“1. The Applicant served a Notice to Admit Facts on 19 July 2007.
2. The Response to the Notice to Admit Facts was filed on
2 August 2007.
3. At the time the Response to the Notice to Admit Facts was filed the parties had not discussed the issue of the number of breaches of the Award, which was a central feature of the litigation, being the imposition of a penalty and/or penalties for breaches of the Australian Fair Pay and Conditions Standard and the Award.
4. The Applicant filed an Outline of Submissions on 10 August 2007 which contained paragraphs 7 to 14 which appeared in the Notice to Admit Facts.
5. The Respondent filed an Outline of Submissions on
10 August 2007 which did not dispute the matters contained in the Applicant’s Outline of Submissions but instead raised a number of issues, particularly matters omitted from the Affidavit sworn by Ms Dennington, such as the Respondent’s claim to have made an offer to make payments by instalments, which essentially remained a ‘live’ issue until Mr Jordan’s Affidavit was filed and served on 20 December 2007.6. On 2 August 2007 the Respondent sought the listing of the matter for mediation.
7.Mediation was conducted in the Federal Magistrates Court on 30 August 2007.
8. The mediation did not resolve the matter but thereafter discussions took place between the Mr Zeeman and Mr Green with respect to the issues arising from the Affidavits of Ms Dennington and Mr Langridge and the development of a Statement of Agreed Facts.
9. By letter dated 7 December 2007 Mr Green confirmed with Mr Zeeman that a draft Statement of Agreed Facts would be provided to him by the close of business on 11 December 2007.
10. A draft Statement of Agreed Facts was provided to Mr Zeeman on 12 December 2007.
11.Mr Zeeman and Mr Green met on 20 December 2007 to discuss the draft Statement of Agreed Facts.
12.By letter dated 20 December 2007 the Applicant filed five Affidavits including the Affidavit of Tiffany Jane Durkin sworn 20 December 2007.
13.Mr Zeeman had not previously raised the fact that Affidavits were being prepared.
14.Mr Zeeman and Mr Green exchanged several drafts of the Statement of Agreed Facts between 21 December 2007 and 7 January 2008 and the Statement of Agreed Facts was filed at the Court on 7 January 2008.”
The respondent’s submissions, in light of the above chronology, on this issue were:
“15.The Respondent submits that given the chronology outlined above, it was not unreasonable for the Respondent to dispute paragraphs 7 to 14 of the Notice to Admit Facts on the basis that:
·The Notice to Admit Facts was served very early in the litigation and before comprehensive discussions between Mr Zeeman and Mr Green about all aspects of the litigation had taken place.
·From late July 2007 onwards, during discussions with Mr Zeeman, Mr Green indicated to the Mr Zeeman that the Respondent was prepared to develop a comprehensive Statement of Agreed Facts to be filed with the Court.
·The parties were actively discussing the Statement of Agreed Facts but some issues were potentially in dispute until early January 2008 when the Statement of Agreed Facts was settled.
·The Statement of Agreed Facts went considerably further than the Notice to Admit Facts, and included the parties agreeing that for the purposes of assessing penalty, there were seven (7) applicable provisions that had been breached by the Respondent (paragraph 18, Statement of Agreed Facts filed 7 January 2008), which the Respondent submits is the ‘heart’ of the litigation.
·Mr Zeeman gave no indication to Mr Green that he was preparing Affidavit material before 20 December 2007, the day the Affidavits were filed and served.
·It has been common practice for the parties in this type of litigation to file Statements of Agreed Facts, which largely eliminates the need for Affidavit material to be filed (see, for example, Coles v Elsen Bros Pty Ltd t/as Brisbane Rock Sales & Heidon Dimensional Sandstone [2007] FMCA 1838).”
As a result of an exchange between Counsel for each of the parties after the respondent’s submissions were filed the respondent forwarded correspondence to the Court seeking to delete paragraph 3 of the above submissions in its entirety.
The Court was then provided, by way of evidence, with an email dated 29 June 2007 from the applicant’s solicitors to solicitors for the respondent which attached a draft statement of agreed facts.[4]
[4] Email dated 28 June 2007 marked ‘A tendered 13 March 2008
Applicant’s submissions in reply
Given the delay in receipt of the respondent’s submissions the applicant was given to 13 March 2008 to file any submissions in reply. The applicant submitted that the respondent did not appear to take issue with its submission that the failure to admit items in a Notice to Admit may constitute an unreasonable act for the purposes of section 824 of the WR Act. The applicant also objected to what was said to be the respondent’s attempt to rely on a number of matters not in evidence.
The applicant submitted that the receipt of the email, referred to in paragraph 20, by the respondent’s solicitors makes plain that the respondent’s refusal to admit paragraphs 7 to 14 of the Notice to Admit was unreasonable and it had been on notice of the matters contained therein for some 20 days before it was filed.
Consideration
In Paras v Public Service Body Head of the Department of Infrastructure (No.3) [2006] FCA 745 Young J considered the application of these provisions in the context of an application for costs including costs of interlocutory proceedings. In doing so His Honour reviewed the background to section 824(2) of the WR Act and said:
“5. Subsection (1) of s 824 was based upon an earlier provision in s 347(1) of the WRA: see the Explanatory Memorandum to the Workplace Relations Amendment (Work Choices) Bill 2005 (Cth). It appears that subs (2) of s 824 was based upon the provision now found in s 666(1) of the WRA.
6. The Explanatory Memorandum describes s 824(2) (then numbered s 347(1A)) as an exception to subs (1):
‘2642.Pre-reform subsection 347(1) provides that a party to proceedings under the WR Act shall not be ordered to pay the costs of another party unless the first party instituted the proceedings vexatiously or without reasonable cause.
2643.Proposed subsection 347(1A) would serve as an exception to subsection 347(1). It would enable a court hearing proceedings in a matter arising under the WR Act to order one party to pay the costs of another party where that first party has, by unreasonable act [or] omission, caused the second party to incur otherwise unnecessary costs. A costs order under this subsection could be made irrespective of the outcome of the proceedings.’
7. As to the scope of s 824(1), the respondents submitted that the exception it makes for proceedings instituted vexatiously or without reasonable cause only has application to the originating application, and not to interlocutory applications made by the respondents in the course of the principal action.
8. The respondents also contended that s 824(2) does not apply to the costs of a particular aspect of the proceedings, such as an unsuccessful motion to discharge or stay an earlier interlocutory order. They submitted that subs (2) is only concerned with acts or omissions in the practical sense of things done or omitted to be done which do not accord with reasonable notions of the conduct of proceedings, such as failing to turn up at a hearing, failing to meet deadlines laid down in court directions and not giving timely notice. This submission was said to be supported by an illustrative example given in the Explanatory Memorandum.
9. In my opinion, these submissions do not accord with the authorities.”
His Honour then went on to consider the provisions of section 824(1) in the light of the authorities and continued:
“17. The illustrative example given in the Explanatory Memorandum concerns costs incurred as a result of a party’s non-compliance with Court directions. The example is consistent with the construction I have placed on s 842(2). But I do not accept that the illustrative example was intended to be exhaustive of the type of circumstances in which s 824(2) would apply.
18. In support of a narrow construction of s 824(2), the respondents referred me to several authorities that had considered the former provisions of s 170EHA, which effectively continued as s 170CS (now s 666 of the WRA): see Thomas v School of Mines Services Pty Ltd (unreported, Industrial Relations Court of Australia, Farrell JR, 5 August 1996); Turner v Composite Buyers Ltd (unreported, Industrial Relations Court of Australia, Millane JR, 28 January 1997) and Fenech v Perfect Health Medical Centres Pty Ltd (unreported, Industrial Relations Court of Australia, Ryan JR, 12 June 1998) (‘Fenech’). These cases do not support the contention that s 824(2) should be narrowly construed. In fact, in Fenech, Ryan JR referred to an earlier order made by Marshall J in the proceedings, to the effect that the respondent should pay costs pursuant to s 170EHA as a result of the dismissal of its application for an interlocutory injunction.
…
21. The respondents submitted that the notice of motion was not unreasonable. They contended that they considered, bona fide, that the Court had a discretion to reconsider its earlier order to the extent that it was based upon a less than complete appreciation of the facts concerning the breakdown in the relationship between the applicant and her immediate superiors. Notwithstanding that they consciously determined not to refer to certain facts on the earlier injunction application, they considered that, in their own interests and in accordance with their duty to the Court, they should place those facts before the Court.
22. My reasons for judgment of 26 May 2006 explain why I rejected the application to discharge the interlocutory injunction. In my opinion, the application had very limited prospects of success in the absence of evidence establishing new facts or changed circumstances. There is, however, a distinction between an application that proves unsuccessful and an application or argument that is so misconceived that it can be characterised as unreasonable or vexatious. An order for costs might be made under s 824 in the latter case but not the former: see Standish v University of Tasmania [1989] FCA 166; (1989) 28 IR 129 at 138-139 per Lockhart J; and Foxcroft v Ink Group Pty Ltd (1994) 57 IR 65 at 69. This case comes very close to the line, but in the end I am not persuaded that the motion was vexatious or unreasonable within the meaning of s 842(1), or that the pursuit of the motion involved unreasonable acts or omissions by the respondents that inflicted costs on the applicant in such a way as to attract s 824(2).”
Section 824(2) of the WR Act was also considered in McAleer v University of Western Australia (No.2) [2007] 161 IR 151. In that case Siopsis J considered an application for costs on amongst other grounds an unreasonable act by the respondent resulting in the applicant incurring costs with the proceedings.
Ultimately, His Honour was not persuaded to make an order for costs. His Honour rejected contentions of the applicant in that case regarding alleged unreasonable acts or omissions by the respondent as follows:
“6.The second contention made by the applicant is that the failure by the University, prior to 11 September 2006, to accept the applicant’s contention that the University had breached cl 6 of Sch D of the 2004 certified agreement by failing to provide particulars of the allegations made against the applicant, was an ‘unreasonable omission’ und s.824(2) of the Act, which caused the applicant to incur costs in connection with the proceeding.
7.The applicant said that he had, after the hearing of the interim injunction, which the University had opposed, in March 2006, found it necessary to file five further affidavits. This was, he said, because he carried the evidential burden. The applicant said that the University should bear these costs, which could have been avoided by an earlier concession by the University.
8.An examination of the affidavits filed after 20 March 2006, shows that the evidence deposed to, in those affidavits, deals with the events which occurred at, or which related to, the hearings of the Committee. The evidence was relied upon by the applicant at trial in support of further declarations sought by him, that the University had acted in breach of cl 11 and cl 13 of Sch D of the 2005 certified agreement by the manner in which it had acted or failed to act in relation to the proceedings before the Committee. I declined to make the declarations which were sought by the applicant.
9.Therefore, any omission by the University did not, in my view, cause the applicant to incur costs in connection with the proceedings. It was the applicant’s desire to advance claims at trial for breaches of other clauses of the 2004 certified agreement which led the applicant to incur the costs of making of the affidavits which were ultimately relied upon by him at the trial.
10.Thirdly, the applicant contended that the University should pay the costs of the steps taken in the proceeding, after the University’s rejection of the applicant’s settlement offer as being an unreasonable act. This because the applicant offered to settle the proceeding on the basis that the University would pay to him the sum of $150000 in respect of costs, and also that the maximum penalty under the Act be imposed and be paid to him. At trial, I imposed a penalty of $20000 payable to the applicant.
11.However, I am unable to characterise the University’s rejection of the applicant’s settlement offer as being an unreasonable act. This is because the applicant offered to settle the proceeding on the basis that the University would pay to him the sum of $150 000 in respect of costs, and also that the maximum penalty under the Act be imposed and be paid to him. At trial, I imposed a penalty of $20 000 payable to the applicant.
12.The fourth contention was that it was unreasonable for the University to oppose the imposition of a penalty and to put the applicant to proof on this issue. In my view, it cannot be said that it was unreasonable for the University to oppose the imposition of a penalty. Whether to impose a penalty and, if so, the amount, requires the Court to weigh several competing factors. The Court was assisted by the university’s submissions in this respect.
13.Finally, the applicant contended that the claim made by the University in its counterclaim, regarding the proper construction for the transitional provisions in the 2006 certified agreement, amounted to an unreasonable act because it ‘depended upon the abstruse proposition that the defective nature of the appointment of the Committee members by the respondent rendered the proceedings nugatory’. I have already found that the making of that argument by the University did not amount to an ‘unreasonable act’ under the Act.”
In Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879 Tracey J said in relation to the section of the WR Act presently under consideration:
“28.Section 824(2) is cast more widely. It applies if a party "has, by an unreasonable act or omission, caused another party to the proceeding to incur costs ...". A party may potentially be liable to pay costs under this sub-section even if it did not institute the proceeding in which the relevant conduct occurred. That conduct may be an act or an omission. The liability may arise, as Young J noted in Paras (at 538 [16]), "irrespective of the outcome of the particular application in question and of the proceeding as a whole.”
As noted at paragraph 16 the applicant also referred to the decision in Ansari at [44]. In that case Ryan J said on the issue of whether after a particular stage in the proceedings the applicant had caused the respondent to incur costs by an unreasonable act or omission that:
“…In my view, such a point was reached after the Banks last offer of settlement made on 13 August 2007. By then, the applicant had received the benefit of independent legal advice from pro bono Counsel experienced in Industrial law. That advice, and the further exploration of the problems which confronted her which,
I infer, occurred during the mediation, should have made it clear to the applicant that it was hopeless to continue her proceedings in this Court. Accordingly, I consider it a proper exercise of the discretion recognised by s.824(2) to order that the applicant pay such of the banks’ costs of the proceedings as have been incurred after 20 August 2007.”
Given the authorities set out above, and save for what follows, the question in this application would be whether the respondent’s conduct in refusing to admit the facts contained in the Notice to Admit was an unreasonable act or omission.
In this case the respondent’s actions in disputing paragraphs 7 to 14 of the Notice to Admit (filed on 19 July 2007) did prolong the proceedings. Furthermore, the respondent’s actions required the applicant to make preparations for trial and as the applicant submitted the respondent’s conduct given the stage of the proceedings and the subsequent admissions contained in the SAF did cause the applicant to incur costs.
The respondent’s submissions do not take issue with:
a)the applicant’s submissions concerning the purpose of a Notice to Admit and the ability of the Court to make an order for costs where a party by reason of an unreasonable act or omission causes another party to incur unnecessary costs; and
b)the applicant’s reliance on the facts in paragraphs 7-14 of the Notice to Admit as being uncontroversial as at 2 August 2007.
The respondent’s position was there was no unreasonable act or omission on its part that caused the applicant to incur costs and no agreement on the number of breaches of the WR Act until the SAF and its conduct could not be viewed as unreasonable in that light.
Nonetheless even looked at in that light it is hard not to characterise the respondent’s conduct, being the refusal to admit the facts contained in the Notice to Admit (even if the Court were to take the reasons essayed in paragraph 3-13 of its submissions set out at paragraph 18 above into account), as unreasonable for the purposes of section 824(2) of the WR Act.
However, for the reasons that follow in my view it is not necessary, at least for the purposes of the determination of this application, to express a concluded view on that.
Firstly, the issue of the respondent’s conduct has already been taken into account at the penalty phase in the principal proceedings. At paragraph [58] in Dennington v Pee Cee Pty Ltd [2008] FMCA 79 it was said:
“58. The applicant’s submissions on this issue were in effect that the respondent’s cooperation and contrition were all forthcoming very late in the proceedings. The respondent’s submissions were inter alia that the matter had not been “scruffed” early enough and this accounted for the delay.
59. In Sharpe at [17] Gyles J said;
“There has been some cooperation with the enforcement authorities although, as I have indicated, it was belated and, is effect, forced by the imminence and existence of this proceeding. Nonetheless, cooperation both as to the acceptance of liability and as to the agreement as to facts, is a matter to be taken into account in favour of the respondent.”
60. As appears from the SAF the respondent cooperated with both the enforcement authorities and in the context of these proceedings, and by virtue of the admissions made, that cooperation has confined the scope of the matter to penalty but only late in the proceedings and this should be weighed along with the other matters in determining any penalty.” (emphasis added)
Secondly, even in the event that the respondent’s actions were found to be unreasonable given the discretionary nature of a costs order that would not dispose of the matter.
In Tristar Steering and Suspension Australia Limited v Industrial Relations Commission of New South Wales (No.2) [2007] FCAFC 95 a Full Court of the Federal Court considered the principles relating to the discretion to award costs in the context where there had been no application for costs made at the hearing, but they had been awarded, and it was subsequently confirmed that costs were sought in any event.
The Full Court held that given the relief which had been granted in the principal proceedings did not involve the vindication of a right or duty under the WR Act the issue of costs did not fall to be determined under section 824 of the WR Act. However, and relevantly for present purposes, at paragraph 26 Buchanan J, said:
“26.…The Court expects parties to deal with issues relating to costs in a timely and efficient way. Normally this means that the Court should be in a position to deal with the question of costs in its judgment unless there is a particular reason to reserve that question for later, and separate, consideration (see ACCC v Daniels Corporation Pty Limited [2001] FCA 936; see also Grygiel v Baine (No 2) [2005] NSWCA 434).
27. In the present case the applicants failed to state any claim for costs in the application or to otherwise indicate before judgment that costs were sought. It has therefore been necessary for the matter to receive separate attention but it should not have been.”
Whilst there was an order for costs made in the principal proceedings, and an order that the application to set aside the order for costs that had been made was dismissed (as Buchanan J said, “not without some reservations”) there was no costs order made in relation to that application. In this case the application for costs was not foreshadowed until the date of the making of the orders (not made until 6 days from that date), almost 8 months after the application in the principal proceedings was filed.
Conclusion
The Court’s power to award costs is discretionary and the use of the word ‘may’ in the provision of section 824(2) makes that much clear. In Hatchett v Bowater Tutt Industries Pty Ltd (No.2) (1991) 28 FCR 324 von Doussa J said at 326 of the predecessor provisions to section 824 of the WR Act that:
“The Court may in the exercise of it’s discretion, and having regard to the general policy of the Act, expressed in s347, that parties will usually be freed from the traditional risk of an order for costs following the event, make no order as to costs.”
In this case there was no application for costs made at the time the application was filed in June 2007. The issue of costs was not referred to in the applicant’s material filed with the Court in the principal proceedings or in submissions before the Court on her behalf. The first occasion that the issue of costs was raised was at the hearing for the making of final orders on 6 February 2008 when orders were made by way of payment of penalties to the Commonwealth. In determining those penalties the Court considered the respondent’s conduct.
The applicant correctly made the point that the Rules make provision for the use of the Notice to Admit to properly define issues between the parties and limit the ambit of the proceedings. However, for the same reason, I am not satisfied having regard to the stage in proceedings when costs where sought, the absence of an explanation for the failure to make that application beforehand and the issues set out above, including that the provisions in the Rules should defer to those in the WR Act, that it is appropriate to award costs in this matter.
Given this, it is not necessary to consider the costs claimed nor whether it would have been appropriate to depart from the event based costs scale in Schedule 1 to the Federal Magistrates Court Rules 2001.
It follows, that the application fails. There should be no order as to costs.
I certify that the preceding forty-four (44) paragraphs are a true copy of the reasons for judgment of O’Sullivan FM
Associate: Rachelle Lombardo
Date: 20 March 2008
[2] Exhibits A2-A7 and R1 respectively
2