Dorsch v HEAD Oceania Pty Ltd (Costs)

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FEDERAL COURT OF AUSTRALIA

Dorsch v HEAD Oceania Pty Ltd (Costs) [2024] FCA 832

File number: NSD 271 of 2022
Judgment of: RAPER J
Date of judgment: 31 July 2024
Catchwords: PRACTICE AND PROCEDURE – application for costs under s 570 of the Fair Work Act 2009 (Cth) – whether it was unreasonable for the applicant not to accept the respondent’s monetary settlement offers – where the offers included the release of non-parties - whether costs to be raised on an indemnity basis – costs awarded on a party/party basis
Legislation:

Fair Work Act 2009 (Cth) ss 62, 361, 570, 570(1), 570(2), 570(2)(b)

Federal Court Rules 2011 (Cth) r 1.37
Cases cited:

Australian Competition and Consumer Commission v Colgate-Palmolive Pty Ltd (No 5) [2021] FCA 246; 151 ACSR 26

Calderbank v Calderbank [1976] Fam 93; [1975] 2 All ER 333

Celand v Skycity Adelaide Pty Ltd [2017] FCAFC 222; 256 FCR 306

Dorsch v HEAD Oceania Pty Ltd (Penalty) [2024] FCA 484

Dorsch v HEAD Oceania Pty Ltd [2024] FCA 162

Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20; 229 FCR 221

Ryan v Primesafe [2015] FCA 8; 323 ALR 107

Sabapathy v Jetstar Airways (No 2) [2021] FCAFC 68

Salama v Sydney Trains (No 2) [2021] FCA 1200

Stratton Finance Pty Ltd v Webb [2014] FCAFC 110; 314 ALR 166
Division: Fair Work Division
Registry: New South Wales
National Practice Area: Employment and Industrial Relations
Number of paragraphs: 51
Dates of hearing: 28 June 2024
Counsel for the Applicant: Mr A Britt
Solicitors for the Applicant: Harmers Workplace Lawyers
Counsel for the Respondent: Mr S Meehan SC with Ms Wallis
Solicitors for the Respondent: Hall & Wilcox

ORDERS

NSD 271 of 2022
BETWEEN:

MATTHIAS DORSCH

Applicant
AND:

HEAD OCEANIA PTY LTD

Respondent

ORDER MADE BY:

RAPER J

DATE OF ORDER:

31 JULY 2024

THE COURT ORDERS THAT:

1.The applicant pay the respondent’s costs incurred from 14 June 2023 (save for any costs associated with the penalty aspect of the proceedings) on a party/party basis, to be assessed on a lump sum basis in an amount to be determined by a Registrar of the Court.

2.The Registrar be directed pursuant to r 1.37 of the Federal Court Rules 2011 (Cth) to determine the quantum of the lump sum for costs payable pursuant to order 1 above in such manner as he or she deems fit including, if thought appropriate, on the papers.

3.The Registrar be directed pursuant to r 1.37 of the Rules, at the conclusion of the quantification process, to order that the applicant is to pay whatever sum has been quantified pursuant to order 2 above within 28 days from the date of the Registrar’s order.

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


REASONS FOR JUDGMENT

RAPER J:

  1. The respondent, HEAD Oceania, seeks an order that Mr Dorsch pay its costs of the proceedings (other than the penalty hearing and costs incidental to…

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Details
Case
[2024] FCA 832
Decision Date

CaseChat Overview and Summary

The respondent, HEAD Oceania, sought an order that Mr Dorsch pay its costs of the proceedings from 14 June 2023 (or alternatively 20 June 2023) on an indemnity basis. The court was required to determine whether it was unreasonable for Mr Dorsch to have rejected two offers of compromise from HEAD Oceania, which included the release of non-parties, and whether the costs should be awarded on a party/party or indemnity basis. The court found that Mr Dorsch should pay the costs incurred by HEAD Oceania from 14 June 2023 on a party/party basis, except for any costs related to the penalty aspect of the proceedings, which were to be paid on a lump sum basis.

The court examined the two offers made by HEAD Oceania to Mr Dorsch. The first offer was made on a without admission basis and included Mr Dorsch discontinuing the proceeding, HEAD Oceania making payment of $80,000 within 21 days, and Mr Dorsch releasing all entities within the HEAD Oceania corporate group. The second offer was similar but with a reduced payment of $50,000. Mr Dorsch made a counteroffer which was rejected by HEAD Oceania. The court considered the reasonableness of Mr Dorsch’s rejection of the offers, taking into account the principles in Calderbank v Calderbank. The court found that it was not unreasonable for Mr Dorsch to reject the offers, as the terms were not sufficiently advantageous, and the offers did not include a reciprocal release of Mr Dorsch. Therefore, HEAD Oceania was not entitled to indemnity costs. The court ordered that Mr Dorsch pay HEAD Oceania’s costs from 14 June 2023 on a party/party basis, with the exception of costs related to the penalty aspect, which were to be paid on a lump sum basis. The Registrar of the Court was directed to determine the quantum of the costs and the payment timeline.

Orders

Orders of the court

1. The applicant pay the respondent’s costs incurred from 14 June 2023 (save for any costs associated with the penalty aspect of the proceedings) on a party/party basis, to be assessed on a lump sum basis in an amount to be determined by a Registrar of the Court.

2. The Registrar be directed pursuant to r 1.37 of the Federal Court Rules 2011 (Cth) to determine the quantum of the lump sum for costs payable pursuant to order 1 above in such manner as he or she deems fit including, if thought appropriate, on the papers.

3. The Registrar be directed pursuant to r 1.37 of the Rules, at the conclusion of the quantification process, to order that the applicant is to pay whatever sum has been quantified pursuant to order 2 above within 28 days from the date of the Registrar’s order.

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

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

The respondent, HEAD Oceania, seeks an order that Mr Dorsch pay its costs of the proceedings (other than the penalty hearing and costs incidental to it) on or after 14 June 2023, or alternatively on and after 20 June 2023, on an indemnity basis or as agreed or assessed following the dismissal of his claims (save in one admitted respect) in Dorsch v HEAD Oceania Pty Ltd [2024] FCA 162 (liability judgment or LJ). Familiarity with that judgment is assumed and the abbreviations within it are adopted here. The liability judgment found that Mr Dorsch has been lawfully summarily dismissed by two of his concurrent employers; HEAD Oceania and Mares Asia Pacific (who was not a co-respondent in the proceeding). Mr Dorsch had asserted numerous contractual and statutory claims, all of which failed save for in one admitted respect: HEAD Oceania had failed to pay Mr Dorsch the amount that would have been payable to him had he taken his accrued but untaken annual leave entitlement at the time of his employment coming to an end: s 90(2) of the Fair Work Act 2009 (Cth); LJ at [331], [445]. HEAD Oceania was ordered pay $10,000 in general damages to Mr Dorsch arising from this claim and also a pecuniary penalty of $17,000 on account of this contravention, which was the subject of a subsequent decision: Dorsch v HEAD Oceania Pty Ltd (Penalty) [2024] FCA 484. In support of its application, HEAD Oceania relied upon the affidavit of Mr Aaron Dearden, a partner of Hall & Wilcox lawyers, affirmed 16 May 2024 in which Mr Dearden deposes to HEAD Oceania having made two offers of compromise to Mr Dorsch on a without prejudice basis save as to costs: the first on 7 June 2023, one week prior to the first day of the trial (first offer); the second, on 16 June 2023 (second offer). For the reasons which follow, I find that Mr Dorsch should pay the costs incurred by HEAD Oceania from 14 June 2023 (upon the expiry of the first offer) on a party/party basis, save for any costs incurred in relation to the penalty aspect of the proceedings, on a lump sum basis. It is worthwhile first considering the two offers made by HEAD Oceania, as well as the intervening counteroffer made by Mr Dorsch. HEAD Oceania’s first offer HEAD Oceania’s first offer to Mr Dorsch (through their respective legal representatives) was made on a without admission basis and was subject to Mr Dorsch executing a deed accompanying the letter of offer within a period of six days. The terms of the offer included: Mr Dorsch discontinuing the proceeding; HEAD Oceania making payment of $80,000 (inclusive of costs) within 21 days; and Mr Dorsch releasing all entities within the HEAD Oceania corporate group (as defined). The offer contained no reciprocal release of Mr Dorsch. It is useful to extract aspects of the letter and certain clauses of the deed in full. HEAD Oceania’s first letter of offer contained the following: 2 Offer of compromise 2.1 Whatever the result of the proceedings, the parties are likely to incur further substantial costs in connection with the proceedings, and the proceedings are likely to be disruptive to both HEAD Oceania’s business and Mr Dorsch. Naturally HEAD Oceania would prefer that the parties avoid those costs and the expenditure of time and resources. HEAD Oceania is confident it will be successful in the proceedings however it is prepared to take a commercial approach to the proceedings. 2.2 For these reasons, and to avoid the time and cost of preparing for and attending the hearing, HEAD Oceania is prepared to resolve this matter on the terms set out in the enclosed deed of release.2.3 This offer is open for acceptance until 12 noon on Tuesday, 13 June 2023, after which it will automatically lapse without further notice.2.4 This offer is made on a without prejudice and without admissions basis and is strictly conditional on the parties executing the deed of release referred to above.2.5 This offer is made in accordance with the principles set out in Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586.3 Cost consequences 3.1 If Mr Dorsch does not accept this offer HEAD Oceania will continue to vigorously defend the proceedings. If Mr Dorsch is unsuccessful in the proceedings or obtains relief less than the value of the payment described above (which we consider to be likely), HEAD Oceania reserves its rights to produce and rely on this letter on the question of costs, including seeking and obtaining:(a) an order that Mr Dorsch pay HEAD Oceania’s costs pursuant to s.570 of the Fair Work Act including on the basis that Mr Dorsch’s failure to accept the offer constituted an unreasonable act or omission for the purposes of the Fair Work Act; and/or (b) an order that Mr Dorsch pay HEAD Oceania’s costs on an indemnity basis on and from the above date in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333; [1975] 3 WLR 586.

Ratio Decidendi

Legal Principle Established

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