Dubow v Fitness First Australia Pty Ltd (No.2) - [2010] FMCA 286

FEDERAL MAGISTRATES COURT OF AUSTRALIA

DUBOW v FITNESS FIRST AUSTRALIA PTY LTD (No.2)

[2010] FMCA 286

HUMAN RIGHTS – Costs applications – statements in judgment setting aside default costs order – would not cause reasonable apprehension of bias – application for disqualification of docket judge refused.

Federal Magistrates Court Rules 2001 (Cth), Sch.1

Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577
Dubow v Fitness First Australia Pty Ltd [2010] FMCA 56
Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337
Johnson v Johnson (2000) 201 CLR 488

Applicant:

YOLANDE VICTORIA FRANCES DUBOW

Respondent:

FITNESS FIRST AUSTRALIA PTY LTD ACN 094 778 622

File Number:

SYG 2624 of 2009

Judgment of:

Smith FM

Hearing date:

12 April 2010

Delivered at:

Sydney

Delivered on:

12 April 2010

REPRESENTATION

Counsel for the Applicant:

Applicant in person

Counsel for the Respondent:

Mr T Orlizki

Solicitors for the Respondent:

Kent Attorneys

ORDERS

Order 1 sought in the application filed on 26 February 2010 is refused.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 2624 of 2009

YOLANDE VICTORIA FRANCES DUBOW

Applicant

And

FITNESS FIRST AUSTRALIA PTY LTD
ACN 094 778 622

Respondent

REASONS FOR JUDGMENT

(revised from transcript)

This is a judgment I delivered at the commencement of the hearing, after considering Ms Dubow’s application that I should recuse myself from further involvement as docket judge in the matter.
I previously delivered a reserved judgment on 8 February 2010 (see Dubow v Fitness First Australia Pty Ltd [2010] FMCA 56). The judgment addressed Ms Dubow’s application to set aside a costs order I made on 10 March 2006 in the principal proceedings, SYG1510 of 2005. The order was made in her absence, following her discontinuance of the principal proceedings. I shall not repeat the background explained in that judgment.
When delivering judgment, I made orders setting the matter down today for determination of all outstanding issues on costs. Those issues relate to a number of costs applications. There is Fitness First’s 2006 costs application, in relation to which I have set aside the previous order. There are then issues in relation to the costs of that application, including its costs incurred in relation to the hearing on 10 March 2006 and today. As I understand it, both parties are in dispute in relation to those costs and seek costs on their own part.
There are costs arising from my judgment on 8 February 2010, in relation to the costs of the set‑aside application and the costs applications in that respect. Both sides are seeking their costs in relation to those matters.
Then there are two separate costs applications which have been listed today in relation to procedural events. Ms Dubow seeks a costs order in relation to proceedings before Registrars on 22 December 2009 and 18 January 2010, concerning a notice to produce. Finally, a costs application by the solicitor on the record for Fitness First seeks his costs in relation to compliance with a subpoena to produce and attend at the hearing on 19 January 2010 of the set‑aside application. These costs applications are also contested.
Ms Dubow has given notice prior to today that she seeks that I should disqualify myself or, using the currently more popular term, recuse myself from hearing all of these costs applications on principles of apprehended bias by reason of prejudgment.
The formulation of the principle has now been firmly established in the High Court, for example in the joint reasons of Gleeson CJ, McHugh, Gummow and Hayne JJ in Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 344. It was recently extracted in the judgment of Kirby and Crennan JJ in Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577 at [110]:
The appeal involves the application of well‑established principles, which were not in dispute and were both reiterated and explained in Ebner v Official Trustee in Bankruptcy in the joint reasons of Gleeson CJ, McHugh, Gummow and Hayne JJ:
“Where, in the absence of any suggestion of actual bias, a question arises as to the independence or impartiality of a judge …, a judge is disqualified if a fair‑minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide. That principle gives effect to the requirement that justice should both be done and be seen to be done, a requirement which reflects the fundamental importance of the principle that the tribunal be independent and impartial. It is convenient to refer to it as the apprehension of bias principle …
(citation omitted)
The judgment of Kirby and Crennan JJ in Concrete Pty Ltd (supra) also referred to the joint reasons of the High Court in Johnson v Johnson (2000) 201 CLR 488, concerning the assumptions to be made as to the knowledge of a notional “fair‑minded lay observer”. As they point out, the lay observer is not assumed to be a lawyer or have a detailed knowledge of the law or of the particular judge, but “… the reasonableness of any suggested apprehension of bias is to be considered in the context of ordinary judicial practice”.
In Concrete Pty Ltd, the judgments of all the justices point out that current judicial practices, particularly of case management through a docket system, commonly lead to one judge considering all interlocutory applications as well as the final trial and costs issues in a proceeding, absent any particular reason for the judge to become unavailable. In the present matter, the fair‑minded lay observer would be aware that it would be usual practice for me to continue as docket federal magistrate in the matter and to determine all the costs issues arising in the proceedings, including from my previous judgment.
Concrete Pty Ltd concerned judicial observations in the course of a trial which, it was unsuccessfully contended, might have given rise to a reasonable apprehension of prejudgment in the mind of a fair‑minded lay observer. In the present application, Ms Dubow does not submit that any part of my conduct of the present matter might give rise to a relevant apprehension, before I gave judgment on 8 February 2010. However, she points to parts of that judgment which she submits might cause in the mind of a fair‑minded lay observer, an apprehension that the costs applications which I have identified above might not be decided by me with an impartial mind, but that I may have predetermined them.
In her written submission, she identifies the particular parts of my judgment which might give rise to that apprehension:
1.Service of the Application for Costs by the Respondent. [Para 3]
2.“…she overlooked the listing as a result of confusion on her part, to which Fitness First did not contribute.” [Para 3]
3.“I remain unpersuaded that she has a good prospect of emerging with a lesser liability for Fitness First’s costs – including its costs of obtaining and quantifying a costs order.” [Para 4]
4.“Ms Dubow at all times was not represented by a solicitor…” [Para 8]
5.“I am satisfied that Fitness First’s costs application and the supporting affidavit were served on Ms Dubow on or about 27 February 2006…” [Para 26]
6.“Mr Kent has now given sworn evidence, confirming evidence he gave informally to me on 10 March 2006, that he posted the documents to Ms Dubow’s Berala address under cover of a letter dated 27 February 2006. He also gave evidence, and I accept, that he personally placed a copy of the documents in her letter box on his way home.” [Para 27]
7.“…the affidavit (7 March 2006) gives no acknowledgement that Ms Dubow was aware of Garnama’s application…” [Para 31] but [Para 29] (28 February 2006), she ‘rang and notified court she has glandular fever’, and the file contains an email sent…on that day at 8.51am attaching an illegible medical certificate.”
8.“I find confidently that Ms Dubow’s 7 March 2006 affidavit establishes that in fact…particularly since those solicitors deny acting for her in this Court and deny having any documents concerning the matter in this Court.” [Para 32]
9.“My order was entered at the conclusion of the hearing, and at all subsequent times it has been available to the parties on the Court’s file and through its ‘e‑search’ internet facility.” [Para 36]
10.“…Mr Kent, remains available as a witness, and appears still to have an excellent recollection of the matter…and it was not submitted that his file and notes upon which it was based are unavailable.” [Para 42]
11.“I would therefore approach the setting aside of the 10 March 2006 order upon the basis that any hardship to Fitness First could be sufficiently addressed by an award of costs in its favour in relation to the hearing on 10 March 2006 and Ms Dubow’s present application.” [Para 42]
12.“…the prospects of Ms Dubow totally avoiding an adverse costs order appear to me to be remote, though arguable.” [Para 43]
13.“She has also failed to persuade me that it is inconceivable that she could be found liable for a costs order in a substantial amount.” [Para 43]
14.“Undoubtedly, the filing by Ms Dubow of a non‑consensual notice of discontinuance represented an unconditional success for Fitness First…” [Para 44]
15.“The fact that no costs were awarded in the preceding administrative proceedings, nor were usually awarded under previous legislation when rights to compensation for discrimination were determined by an administrative tribunal, is, in my opinion, irrelevant.” [Para 45]
16.“Ms Dubow argues that the options under r.21.02(2) are unavailable after the filing of a notice of discontinuance, because the award of costs in such a situation would not occur ‘at any stage in a proceedings’ within r.21.02(1)(a)…I consider that this argument has little prospect of success…” [Para 49]
17.“…find difficulty applying its terms so as to arrive at a party and party costs award which would serve the normal purposes of such an award…In this situation, it has been my own usual practice to fall back on the provisions of O.62 of the Federal Court Rules, sometimes with a 20% discounting of its scales of professional costs…” [Para 51]
18.“…it is likely that Fitness First’s allowable costs will substantially exceed the award to Garnarma, whatever approach to assessment were followed.” [Para 52]
19.“Moreover, it is by no means apparent to me that an application of Sch.1 in such circumstances would provide an appropriate measure of a costs award in its favour.” [Para 53]
20.“I am satisfied that it is more likely that I would not take the same broad‑brush approach to costs…with her participation. The most likely outcome appears to me…” [Para 54]
21.“I am therefore inclined to think that Fitness First should have an award of costs for the hearing on 10 March 2006, and that its costs in the setting aside application should be its costs in its costs application.” [Para 60]
(the quotations from the judgment have been corrected)
In her oral submissions today, Ms Dubow particularly identified [50]‑[54] of my judgment:
50.The Rules contain in Sch.1 an ‘event based costs scale’, apparently designed to assist lump‑sum costs awards in normal or routine proceedings in the Court. The scale applies ‘unless the Court otherwise orders’ in relation to costs for which a party is automatically entitled under the Rules (see r.21.10). However, its presence does not, in my opinion, carry any implication confining the breadth of discretion expressly conferred by r.21.02(2) in relation to alternative methods for quantifying or taxing costs when exercising the Court’s s.79 discretionary power.
51.Some of my colleagues have no difficulty detecting how Sch.1 should be applied in proceedings which have not followed a ‘normal’ path to a final order. Other federal magistrates, including myself, find difficulty applying its terms so as to arrive at a party and party costs award which would serve the normal purposes of such an award. The Federal Court registrars, upon whose services the Federal Magistrates must rely, disclaim any capacity to apply Sch.1 under their delegated powers, notwithstanding that they are expert taxing officers. I do not myself have expertise in the assessment of solicitor’s costs, since my professional life omitted experience in relation to the preparation and taxation of solicitor’s bills of costs on normal party and party principles. In this situation, it has been my own usual practice to fall back on the provisions of O.62 of the Federal Court Rules, sometimes with a 20% discounting of its scales of professional costs, where I have concluded that a taxation process by an experienced costs assessor would be warranted. At other times, I have determined a lump sum at a heavily discounted level, if I am confident it would not exceed the costs recoverable on taxation.
52.Ms Dubow contended that she has a prospect of suffering a lower costs award if Sch.1 were applied in the present case, rather than under the broad approach I took on 10 March 2006 to discounting Mr Kent’s bill of costs. She pointed to Raphael FM’s subsequent award of costs to Garnarma, and suggested that it illustrated disproportionality arising from his application of Sch.1. However, as the history of the proceedings against both respondents explains, it is likely that Fitness First’s allowable costs will substantially exceed the award to Garnama, whatever approach to assessment were followed. After Garnama escaped from Ms Dubow’s proceedings, Fitness First was required to meet Ms Dubow’s application for summary judgment, and then to prepare all its evidence in chief for an imminent hearing set down for a three day trial.
53.Moreover, it is by no means apparent to me that an application of Sch.1 in such circumstances would provide an appropriate measure of a costs award in its favour. Even in relation to the relatively clearer position of Garnama’s costs, Raphael FM acknowledged that Sch.1 was “not always easy to understand” and that preparation costs “are not very well covered by the schedule” (see paragraphs [1] and [4] of his judgment cited above). I find it impossible to predict that Ms Dubow has good prospects of suffering a liability less than the amount previously ordered by me, if a different approach to assessment is taken in a rehearing of Fitness First’s costs application.
54.However, it is undoubted that a significant factor in my mind when adopting the option of assessing costs as a lump sum amount, was that Ms Dubow’s absence from the hearing suggested that she had lost interest in engaging in a detailed contest over Fitness First’s costs award, and was content to allow the Court to exercise its costs discretions in her absence. She has now established that I was mistaken in thinking that this was her position. I am satisfied that it is more likely that I would not take the same broad‑brush approach to costs, were Fitness First’s costs application to be re‑litigated with her participation. The most likely outcome appears to me that I would award costs to be assessed by a registrar under O.62, with a 20% discounting of the Federal Court scales of professional costs to reflect the nature of the proceedings in this Court. The outcome of such an exercise is necessarily obscure at present.
55.Neither party has, in the present application or previously, put any calculations or other material before me to allow me to conclude whether such an approach would produce an outcome greater or less than $18,000, including the costs of the taxation. Nor, have either of the parties presented calculations based on Sch.1 of the Federal Magistrates Court Rules, to show the likely outcome of that approach.
56.I am not positively persuaded by the contention of Fitness First that Ms Dubow has no prospect of a better outcome, if she were heard in relation to the assessment of its costs to be awarded against her. It remains possible in my mind that Ms Dubow may achieve a reduction in the costs previously ordered, if the costs application were re‑considered.
57.Ms Dubow has therefore established a probability that a different approach would be taken to a costs award, if I set aside the previous costs order. That approach would involve a more detailed examination of the bill of costs of Fitness First’s solicitor, and would also afford Ms Dubow an opportunity to present her various general arguments against an award of costs. I consider that she has sufficiently established the second of the ‘critical’ considerations supporting the setting aside of a default order.
58.Of particular weight in my mind in favour of setting aside the previous order, are that it was broadly based upon a consideration of a bill of costs of which she was given no notice prior to the listing on 10 March 2006, and that it took a lump‑sum approach upon an assumption that Ms Dubow had deliberately declined to contest the costs application.
Ms Dubow submits that from reading those paragraphs, a fair‑minded lay observer might apprehend that I had decided against her submissions, which had been made to me in writing and orally at the hearing on 19 January 2010 and which she relies upon again today, that any award of costs against her should be determined by reference to Sch.1 of the Federal Magistrates Court Rules 2001 (Cth), and not on any other of the approaches which are opened up by the Federal Magistrates Court Rules.
Ms Dubow also identified my statements at the end of my judgment in which I gave tentative opinions about the costs consequences of my judgment in relation to the costs of the set‑aside application, and Fitness First’s costs thrown away at the hearing on 10 March 2006. In those paragraphs, I said:
59.Weighing up all of the considerations and circumstances which I have discussed above, I have decided that it is desirable in the interests of justice that Ms Dubow should be allowed the opportunity she now desires: fully to contest Fitness First’s application for costs at a hearing and in any costs assessment process. I therefore would exercise the power to set aside the order I made on 10 March 2006.
60.On my above findings, the making of that order, and the necessity for Ms Dubow’s present application to set it aside, arose from Ms Dubow’s oversight in relation to the listing, and not from any fault of Fitness First for which it should be penalised. I am therefore inclined to think that Fitness First should have an award of costs for the hearing on 10 March 2006, and that its costs in the setting aside application should be its costs in its costs application. However, if the parties are unable to agree upon this, I shall consider any additional submissions the parties wish to make in relation to these costs, including their quantification, in the course of a re‑hearing of Fitness First’s 2006 costs application.
Both Ms Dubow and the solicitor for Fitness First have presented written submissions in relation to the issue of disqualification, and I have considered those submissions and the authorities which are cited, as well as the authorities I have cited above.
I am not persuaded that anything in my judgment might give rise to the relevant apprehension of bias in relation to how I might decide the matters which I had listed for hearing today. In relation to [50]‑[58] of my judgment extracted above, these paragraphs addressed the merits of setting aside the previous costs order. Under the principles which I referred to in that judgment, it was necessary for a judge hearing a set‑aside application to form a provisional view as to the merits of reinstating a matter. When doing this, it was necessary for me to consider how Ms Dubow might fare in relation to costs on the discontinuance, if I gave her the opportunity to be heard which she did not obtain at the hearing on 10 March 2006. I endeavoured when writing those paragraphs not to appear to have formed a concluded view on any of the options upon which the parties had addressed me. As my orders showed, I then decided to set aside the default order and that Ms Dubow should have the future opportunity to address me at a final hearing on Fitness First’s costs application. In these circumstances, and taking into account the tentative and provisional language of my findings, I do not consider that a fair‑minded lay observer might think that I had precluded further consideration, in the sense of predetermined, that Ms Dubow would not be awarded costs, or that costs would not be awarded against her assessed by reference to Sch.1 or any other manner.

As I pointed out in my judgment, I had not at that stage been given any calculations by either party as to the likely outcomes of using that schedule, and I was undecided whether it would lead to an outcome greater or lesser than the amount I had previously ordered as a lump sum. I was also uncertain whether it would produce a lesser or greater amount than might emerge under a process of taxation by reference to the Federal Court Rules. Ms Dubow had, however, established that my previous broad‑brush lump‑sum approach was an approach that I would probably not take when conducting a reconsideration.
In my opinion, a fair reading of my judgment would cause a fair‑minded lay observer to conclude that I had not predetermined any issue in relation to costs on the discontinuance. I do not consider that a fair‑minded lay observer might conclude that I might not be open to giving full consideration to all of Ms Dubow’s submissions on whether Fitness First should be given a costs award, and if so, on how that should be quantified or assessed.
It is inevitable that a consequential costs order will be influenced by the findings previously announced by the judge when determining the principal application, whether final or interlocutory. I consider that a fair‑minded lay observer would think it ridiculous to contemplate the judge disqualifying himself by reason of those findings, so that another judge could decide those issues afresh in the course of deciding consequential costs issues. The observer would accept that it is inevitable, under the current practices of courts when addressing costs arising from the delivery of a reserved judgment, that the judge who has given that judgment will decide the consequential costs issues and will decide them by reference to the judge’s findings on the issues which he has decided in his judgment.
In the present case, those findings concerned the circumstances of Ms Dubow’s absence from the hearing on 10 March 2006. In my opinion, it would be astonishing if principles of apprehended bias required a different judge to reconsider or readdress those factual issues as to the circumstances of Ms Dubow’s absence, for the purpose of deciding how to award costs in relation to the set‑aside application. I therefore would not accept Ms Dubow’s submissions that seem to suggest that this was necessary.
In relation to [59] and [60] of my earlier judgment, I accept that they, unlike the previous paragraphs, do contain an opinion suggesting that Fitness First should have an award of costs in relation to the hearing on 10 March 2006 and the set‑aside application, although they do not venture to suggest how this might be quantified. However, the tentative and qualified language of my opinion to that effect would show to a fair‑minded lay observer that I had not arrived at any concluded opinion on that matter, and that, indeed, I wished to receive additional submissions from the parties if they could not reach agreement.
It is not uncommon for judges to include such tentative opinions about costs outcomes when giving judgment, and in my opinion a fair‑minded lay observer might be aware of that practice. It is intended to focus the minds of the parties, and to encourage them to reach agreement on the costs consequences of the judge’s principal findings without incurring additional substantial costs. A fair‑minded lay observer would be aware of this, and, in my opinion, would not conclude that the judge was not open to considering the parties submissions on costs in the event that they could not reach agreement.
I therefore do not accept that anything in my judgment explaining my reasons for setting aside my previous costs order should cause me to disqualify myself from deciding the costs issues arising from that judgment.
My findings on the events concerning Ms Dubow’s absence from the hearing on 10 March 2006 have no bearing on the other costs applications which are before me today. In my opinion, a fair‑minded lay observer would not consider that any findings or opinions in my judgment might give rise to any apprehension of prejudgment in relation to those other costs applications. In particular, I note that I made no findings of general adverse credit in relation to Ms Dubow, particularly since she had no recollection of the reasons for her absence. My findings did reject her contention that she had not been served with notice of the listing on 10 March 2006, but did so by reference to contemporaneous documents, including her own affidavit. In those circumstances, I do not consider that a fair‑minded lay observer might apprehend that anything in my judgment concerning the set‑aside application might give rise to an apprehension that other costs applications before me today might be decided unfavourably to Ms Dubow by reason of a prejudgment of any issue arising in them.
For the above reasons, I refuse the application by Ms Dubow that I should recuse myself, and I propose to proceed with the hearing of the costs applications today.

I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of Smith FM

Associate: Lilian Khaw

Date: 30 April 2010