Descon Group Australia Pty Ltd v Rodd

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FEDERAL COURT OF AUSTRALIA

Descon Group Australia Pty Ltd v Rodd [2023] FCA 1494

Appeal from: Application for leave to appeal: Wavish v Descon Group Australia Pty Ltd [2022] FedCFamC2G 912
File number(s): VID 741 of 2022
Judgment of: MCELWAINE J
Date of judgment: 29 November 2023
Catchwords: COSTS –application for leave to appeal and appeal from a decision of the Federal Circuit and Family Court of Australia (Division 2)– where primary judge made an order for indemnity costs against first applicant and second applicant, being the first applicant’s solicitors – costs order made on grounds of unreasonable conduct pursuant to s 570(2) of the Fair Work Act 2009 (Cth) and s 191 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) – where cross-claim in first instance proceeding brought vexatiously and without reasonable cause – application for leave to appeal by first applicant dismissed – where primary judge engaged in speculation contrary to the onus of proof – where error in primary judge’s reasoning relating to waiver of legal professional privilege – application for leave to appeal by second applicant and appeal each allowed
Legislation:

Fair Work Act 2009 (Cth) s 570

Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 190, 191

Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) r 22.06

Cases cited:

ALDI Foods Pty Ltd v Transport Workers’ Union of Australia [2020] FCAFC 231; 282 FCR 174

Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225

Construction, Forestry, Maritime Mining, and Energy Union v Quirk [2023] FCAFC 163

Gronow v Gronow (1979) 144 CLR 513

Harvey v Dioceses of Sale Catholic Education Ltd (St Joseph’s Primary School Wonthaggi) (No 3) [2021] FCA 1420

Holloway v McFeeters (1956) 94 CLR 470

House v The King (1936) 55 CLR 499

Lemoto v Able Technical Pty Ltd [2005] NSWCA 153; 63 NSWLR 300

Mitry Lawyers v Barnden [2014] FCA 918

Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1997) 186 CLR 622

Ryan v Primesafe (No 2) [2015] FCA 8; 323 ALR 107

Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2015] FCAFC 157; 234 FCR 549

Tu’uta Katoa v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2022] HCA 28; 96 ALJR 819

Wavish v Descon Group Australia Pty Ltd [2022] FedCFamC2G 912

White Industries (Qld) v Flower & Hart (a firm) (1998) 156 ALR 169
Dal Pont GE, Law of Costs (3rd ed, LexisNexis, 2013)
Division: Fair Work Division
Registry: Victoria
National Practice Area: Employment and Industrial Relations
Number of paragraphs: 85
Date of hearing: 17 October, 2 November 2023
Counsel for the First Applicant: Mr D Freeman
Solicitor for the First Applicant: Kanther Law
Counsel for the Second Applicant: Mr AJH Morris KC
Solicitor for the Second Applicant: Irish Bentley Lawyers
Counsel for the Respondent: Ms P Ahern
Solicitor for the Respondent: Hall &…
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Details
Case
[2023] FCA 1494
Decision Date

CaseChat Overview and Summary

The decision in Descon Group Australia Pty Ltd v Rodd involved a dispute between Descon Group Australia Pty Ltd and Mr Rodd. Descon, a construction company, had terminated the employment of Mr Wavish, a Site Manager, and subsequently filed a cross-claim against Mr Wavish and Mr Rodd, a former Project Manager. Descon's cross-claim alleged that Mr Wavish had taken leave without proper authority and engaged in misconduct, and sought damages and declarations. Mr Rodd filed an affidavit supporting Mr Wavish's position, and the case was heard in the Federal Circuit and Family Court of Australia.

The legal issues before the court included whether Descon's cross-claim was vexatious and without reasonable cause, justifying an indemnity costs order against Descon and its solicitors, Irish Bentley. The court also had to determine if there were any errors in the primary judge's reasoning, particularly concerning the waiver of legal professional privilege. The primary judge had made an order for indemnity costs against Descon and Irish Bentley under sections 570(2) of the Fair Work Act 2009 and 191 of the Federal Circuit and Family Court of Australia Act 2021. Descon and Irish Bentley challenged this decision, seeking leave to appeal and appealing the primary judge's ruling.

The court found that the primary judge had engaged in speculation contrary to the onus of proof and had erred in his reasoning regarding the waiver of legal professional privilege. The court dismissed Descon's application for leave to appeal and denied its appeal, but granted leave to appeal and upheld the appeal by Irish Bentley. The court's reasoning was that the primary judge had not properly considered the evidence and had made findings that were not supported by the material before the court. The court also noted that the cross-claim was vexatious and without reasonable cause, but this did not affect the outcome in relation to Irish Bentley's appeal.

The court ordered that Descon's application for leave to appeal be dismissed, while Irish Bentley's application for leave to appeal and its appeal were allowed. The matter was adjourned for further submissions on consequential orders, including those relating to costs. The case was also listed for further case management to address these orders.

Orders

Orders of the court

1. The first applicant’s amended application for leave to appeal filed on 27 July 2023 is dismissed.

2. The second applicant’s amended application for leave to appeal filed on 23 June 2023 is allowed.

3. The second applicant’s appeal is allowed.

4. The matter is adjourned for further submissions, or a hearing if necessary, in relation to all consequential orders, including as to costs.

5. The matter is listed for further case management at 10.15 am AEDT on 8 December 2023.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

The applications for leave to appeal and the putative appeals were heard concurrently by me conformably with s 25(1AA) of the Federal Court of Australia Act 1976 (Cth). For the reasons that follow, I have decided to dismiss the application for leave by Descon, grant leave to Irish Bentley and uphold its appeal. A consequential question is whether the costs order made against Descon can stand because of the outcome in the Irish Bentley appeal. I will hear from the parties as to appropriate consequential orders.BACKGROUND Mr Wavish was employed by Descon as a Site Manager until 1 June 2020, when his employment was terminated. During his employment at Descon, Mr Wavish reported to Mr Rodd, who was employed by Descon as a Project Manager until 30 April 2020, and then was contracted as a consultant until 10 July 2020. On 16 October 2020, Mr Wavish commenced proceedings in the then Federal Circuit Court of Australia seeking damages for breach of contract as well as declarations and orders to the effect that Descon had contravened the FW Act by first, reducing his contract and/or unlawfully varying his contract and second, terminating his employment for serious misconduct. Descon alleged that Mr Wavish failed to attend work and provide supervision to high risk works on 30 May 2020. On 13 January 2021, Descon filed its response to Mr Wavish’s claim, admitting that it had reduced Mr Wavish’s salary and terminated his employment, but denying any breach of Mr Wavish’s contract or the FW Act. In particular, Descon pleaded that Mr Rodd did not have the “requisite authority to excuse” Mr Wavish from work on 30 May 2020, and that following an “investigation” it had become aware that Mr Wavish had “failed to attend for work without lawful justification on 49 days, including 30 May 2020”. Descon identified each day that it said Mr Wavish was absent without lawful justification. On 15 February 2021, Mr Rodd filed an affidavit in support of Mr Wavish deposing to first, that he was authorised by Descon to make decisions with respect to Mr Wavish’s employment, including the approval of leave; second, Descon applied the CFMMEU RDO calendar; third, Mr Wavish often worked hours in excess of his contract and fourth, he had discussed and approved each absence with Mr Wavish, including his absence on 30 May 2020. On 1 April 2021, Descon filed a cross-claim against Mr Wavish and Mr Rodd. By its amended statement of cross-claim dated 2 July 2021, Descon asserted a breach of contract by Mr Wavish for taking 49 days of leave in breach of the leave conditions of his employment contract and for failing to obtain the necessary authority from, amongst others, Mr Rodd. Descon further alleged that Mr Wavish: failed to complete any leave application, took days without authority, failed to give a reasonable basis for the leave and took the leave in circumstances where he “knew or ought to have known his actions were covert and were concealed to his superiors”. Descon also claimed that Mr Wavish engaged in serious misconduct by failing to attend work on 30 May 2020, despite Saturdays being “usual work days according to industry standards and the practices of” Descon and despite high risk work requiring his direct supervision as site manager. Descon claimed loss consequent upon these breaches by Mr Wavish, particularised as a (novel) general claim for unliquidated damages for breach of contract as well as a liquidated claim for compensation for unlawful leave.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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