Findley v MSS Security Pty Ltd and Ors (No.2)

[2020] FCCA 3029

FEDERAL CIRCUIT COURT OF AUSTRALIA

FINDLEY v MSS SECURITY PTY LTD & ORS (No.2) [2020] FCCA 3029

Catchwords:
INDUSTRIAL LAW – Costs – Respondents seeks costs on an indemnity basis or party/party basis – respondents seeks costs be taxed under part 40 of the Federal Circuit Court Rules 2001 – Calderbank offer made to the respondent – Calderbank offer refused – repudiation of Calderbank offer unreasonable – costs awarded on an indemnity basis.  

Legislation:

Fair Work Act 2009 (Cth), s.570.

Federal Circuit Court Rules 2001 (Cth), r.21.02.

Cases cited:

Abdi v Equitable Financial Solutions Pty Ltd & Anor [2020] FCCA 2521

Bashour v Australia and New Zealand Banking Group Limited [2017] FCA 183

Beach Petroleum NL v Johnson (No. 2) (1995) 57 FCR 119

Findley v MSS Security Pty Ltd [2020] FCA 952

Findley v MSS Security Pty Ltd & Ors [2019] FCCA 2291

Idoport Pty Ltd v the National Australia Bank Ltd [2007] NSWSC 23

Thompson & Finch & Ors [2020] FamCAFC 230

Applicant: JOSHUA DONALD FINDLEY

First Respondent: MSS SECURITY PTY LTD

Second Respondent: MARGARET STINSON

Third Respondent: MATTHEW LUDDINGTON

File Number: MLG 2411 of 2018

Judgment of: Judge McNab

Hearing date: On the Papers

Date of Last Submission: 3 October 2019

Delivered at: Melbourne

Delivered on: 11 November 2020

REPRESENTATION

Applicant appearing in person

Solicitors for the Respondents: Mills Oakley

ORDERS

1. The Applicant pay the Respondents’ costs on an indemnity basis on and from 21 September 2018, save that there be no order for costs of, and incidental to, the preparation of the affidavit of Jonathan Nguyen affirmed on 25 October 2018.

2. In default of agreement between the parties as to the amount of those costs within 21 days of the date of these orders, the proceeding be referred to a Registrar or Senior Registrar of the Federal Circuit Court of Australia for the determination of fixing a lump sum of costs, pursuant to Rule 21.02 of the Federal Circuit Court Rules 2001 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 2411 of 2018

JOSHUA DONALD FINDLEY

Applicant

And

MSS SECURITY PTY LTD

First Respondent

MARGARET STINSON

Second Respondent

MATTHEW LUDDINGTON

Third Respondent

REASONS FOR JUDGMENT

Introduction

1. In this proceeding, the Applicant filed a claim in this Court on 13 August 2018 alleging, amongst other things, that the First Respondent (“MSS Security”) contravened the Fair Work Act 2009 (Cth) (“the Fair Work Act”) and the MSS Security Victorian Enterprise Agreement 2011 (“the 2011 Agreement”).

2. The Applicant further alleged that the Second and Third Respondents, being employees of the First Respondent (collectively, “the Respondents”), were ‘involved in’ MSS Security’s contraventions, and therefore personally liable, pursuant to s550 of the Fair Work Act.

3. On 2 September 2019, in delivering reasons for Judgment, the Court made orders in the following terms:

   “THE COURT ORDERS THAT:

   1. The application filed 13 August 2018 be stayed as an abuse of process pursuant to r 13.10(c) of the Federal Circuit Court Rules 2001 (Cth).

   2. In the event that the Respondents wish to make an application for costs, they shall file a submission of no more than 2 A4 pages in length (1.5 spacing) by 4pm 16 September 2019 with any response to be filed by the Applicant by 4pm 23 September 2019, with this application being conducted on the papers.

   AND THE COURT NOTES THAT:

   3. The Applicant has given an undertaking that:

   1. I will not institute any proceeding in the Federal Circuit Court of Australia against any of the Respondents, or any employees of the First Respondent, in relation to my employment with MSS Security Pty Ltd, save:

   a. Any application (subpoena or alike) or appeal in connection with this proceeding – MLG2411/2018.”

4. Those orders were subsequently the subject of an application for leave to appeal to the Federal Court of Australia, which was dismissed by way of reason for judgment and orders made on 6 August 2020: see Findley v MSS Security Pty Ltd [2020] FCA 952 (“the Federal Court decision”).

5. The question of costs of the proceeding before this Court remained unresolved and I am now required to determine that issue. 

Background of Cost Submissions

1. The Respondents seek orders that:

   a)the Applicant pay the Respondents’ costs on an indemnity basis (or alternatively a party/party basis);

   b)alternatively the Applicant pay the costs of the Respondents on indemnity basis or alternatively a party/party basis on and from 20 September 2018; and

   c)in default of agreement between the parties as to the amount of those costs within 21 days of the date of this order, pursuant to r21.02 of the Federal Circuit Court Rules 2001 (Cth) (“the Federal Circuit Court Rules”), the Court refer the costs for taxation under Part 40 of the Federal Circuit Court Rules: see Respondents’ costs submissions filed on 20 September 2019.

2. The Respondents rely upon an affidavit of Mr Ross Levin sworn 20 September 2019 and an outline of submissions filed on the same day.  The Applicant relies upon an affidavit sworn 3 October 2019 and an outline of submissions filed on the same day.

3. Section 570 of the Fair Work Act provides that costs are the exception not the rule and are only to be ordered in circumstances where s570(2) applies. Section 570 provides:

   (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.

   (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.

(Note omitted)

1. In the reasons for judgment made on 2 September 2019 under the media neutral citation ‘Findley v MSS Security Pty Ltd & Ors [2019] FCCA 2291’ (“the Federal Circuit Court decision”) , the Court made findings that:

   a)Court procedure had been invoked for an improper purpose as the applicant was “seeking to use proceeding to advocate for others when he has no standing to do so”: see the Federal Circuit Court decision at [49]; and

   b)the proceeding was unjustifiably oppressive on the First Respondent given the applicant could have raised any of his underpayment claims in the earlier General Protections claim: see the Federal Circuit Court decision at [51].

2. At [3] of their submissions, the Respondents submit that the proceeding was instituted vexatiously because it was issued for an illegitimate purpose, that is to advocate on behalf of others when the applicant had no standing to do so. The Respondent also submits at [4] that the proceeding was instituted without reasonable cause as it was a proceeding that ought never to have been brought (in contrast to a case which, although arguable, ultimately proves unsuccessful).

3. In referring to s570(2)(b), the Respondent refers to Australian andInternational Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879 at [36] in support of the proposition that the “prosecution of any incompetent or hopeless case can be regarded as an unreasonable act”. 

4. Alternatively the Respondents refers to the terms of an open written offer which was made on 6 September 2018 and contained an offer to settle the proceeding on the payment of $5000 (“the Letter of Offer”), subject to the Applicant signing a Deed of Release (“the Deed of Release”). The Letter of Offer and the Deed of Release, which was proffered with the letter, is annexed to the affidavit of Mr Levin.

5. The Letter of Offer sets out in a comprehensive way the Respondents’ basis for resisting the claims made by the Applicant and why the Respondents were contending that the proceeding was an abuse of process or alternatively subject to be stayed on the basis of Anshun estoppel and issue estoppel: see page 1 of the Letter of Offer.

6. In addition to offering a settlement in the sum of $5000, the Letter of Offer included a reference to paying sums claimed by the Applicant, being a claim of $267 for the costs of travel to Melbourne to attend a training and disciplinary meeting and $4.44 at night time loading.  The Letter of Offer recorded that those sums had been paid to the Applicant, notwithstanding that the Respondents denied any liability for those amounts: see Letter of Offer at page 2.

7. The Letter of Offer was clear in its terms and provided at [33] – [34] that:

   “33. Notwithstanding our clients’ inclination to defend the claims brought by you, MSS Security is willing to make an offer to allow the parties an opportunity to end this proceeding and avoid unnecessary distraction, further disputation and incurring additional costs:

   ·     MSS Security will pay $5000 to end all current and future litigation with you exchange for you signing the enclosed Deed of Release. This sum is not subject to income tax.  It is a capital payment for you giving general releases.  You would be liable for any tax payable on that capital sum.

   34. The above offer is open for acceptance until 4.00pm on 20 September 2018 after which it will be withdrawn.”

8. The Letter of Offer then sets out at [35] the consequences of the Applicant’s failure to accept the offer, including the risk that the First Respondent would seek an order for indemnity costs against the applicant.

9. The Deed of Release included a release of the First Respondent and related parties from all “claims, suits, actions, demands, costs and other liabilities of any nature which Mr Findley now or at any time may have, or but for the execution of this Deed”: see Deed of Release at [5.1]. The Deed of Release also included a number of covenants and undertakings at [7.1] – [7.6], which are as follows:  

   “In executing this Deed, Mr Findley covenants and undertakes the following:

   7.1 Mr Findley will not in any Capacity make any complaint or enquiry about the Released Parties (or any of them), in relation to the facts or matters referred to in the Background, the Employment, the Findley Matters, the Termination, the Application, the Claims or any other associated matter (including in relation to business affairs, conduct or practices of the Company and its Associated Entities and Related Bodies Corporate) to any third party, including any trade union, trade union official or officer, employee association or an officer or employee of an employee association, media outlet or journalist, government department, commission, authority, agency or inspector, except strictly to the extent:

   (a)Mr Findley is compelled by law; and

   (b)in circumstances where Mr Findley does not have any ability to decline making such complaint or enquiry after taking all reasonable steps to both decline or oppose the making of such complaint or enquiry.

   7.2 Mr Findley will not in any Capacity volunteer to disclose any information about the Released Parties (or any of them) in relation to the facts or matters referred to in the Background, the Employment, the Findley Matters, the Termination, the Application, the Claims, or any other associated matter (including in relation to the business affairs, conduct or practices of the Company) to any third party, including any trade union, trade union official or officer, employee association or an officer or employee of an employee association, media outlet or journalist, government department, commission, authority, agency or inspector, except strictly to the extent:

   (a)Mr Findley is compelled by law; and

   (b)in circumstances where Mr Findley does not have any ability to decline such disclosure after taking all reasonable steps to both decline or oppose such disclosure.

   7.3 Mr Findley will not in any Capacity instigate, participate in or be in any way (directly or indirectly) involved in any claim, or Legal Proceeding against, in relation to or involving the Released Parties (or any of them) regardless of whether the claim or Legal Proceeding was brought by Mr Findley or any other person, except strictly to the extent:

   (a)Mr Findley is compelled by law; and

   (b)in circumstances where Mr Findley does not have any ability to decline compliance with such requirement at law after taking all reasonable steps to both decline or oppose such requirement.

   7.4 Mr Findley will not in any Capacity directly or indirectly induce, solicit or procure (or endeavour to induce, solicit or procure), counsel, advise, or in any way assist any person (including current, former or future employees of the Company) to bring, participate in or be in any way (directly or indirectly) involved in any claim, or Legal Proceedings against, in relation to or involving the Released Parties (or any of them), except strictly to the extent:

   (a)Mr Findley is compelled by law; and

   (b)in circumstances where Mr Findley does not have any ability to decline compliance with such requirement at law after taking all reasonable steps to both decline or oppose such requirement.

   7.5 Mr Findley will not in any Capacity represent, seek to represent, accept any proposal (in any form) for him to represent, counsel, advise, or in any way (directly or indirectly) assist any person (including current, former or future employees of the Company) who brings, participates in or is in any way (directly or indirectly) involved in any claim, or Legal Proceedings against, in relation to or involving the Released Parties (or any of them), except strictly to the extent:

   (a)Mr Findley is compelled by law; and

   (b)in circumstances where Mr Findley does not have any ability to decline compliance with such requirement at law after taking all reasonable steps to both decline or oppose such requirement.

   7.6 If Mr Findley is compelled by law to do any of the acts prohibited by clauses 7.1, 7.2, 7.3, 7.4 and/or 7.5 above (Prohibited Acts), he must:

   (a)notify the General Counsel of the Company in writing (or Mr Ross Levin, solicitor, if the General Counsel is not available) of the requirement to undertake the Prohibited Acts (whether actual or anticipated) within one (1) Business Day of becoming aware of the requirement;

   (b)use all lawful means to delay and refrain from taking the Prohibited Acts; and

   (c)work cooperatively with the Company to lawfully oppose or avoid any requirement to undertake the Prohibited Acts.”

10. The reasons for the Respondents framing the terms of release in the Deed of Release are made more apparent when having regard to the background in recital B included in the Letter of Offer, which lists eight previous applications or complaints that the Applicant had made to the Fair Work Commission and the Federal Circuit Court of Australia, either on his own behalf or on behalf of other people: see the Letter of Offer at [27].

11. The Applicant opposes the order for costs on the basis that he claims that the application was not instituted vexatiously, that the claim had a reasonable prospect of success and says that there were partial admissions made by the Respondents: see the Applicant’s submissions at [4] – [10].

12. The Applicant also characterises the offer of settlement as a means of extorting a settlement and thereby obtaining a result to ensure that the Applicant does not make further applications to the Fair Work Commission to “highlight to the Commission how MSS and their lawyers mislead the Commission”: see Applicant’s submissions at [10]. In relation to the Respondent’s costs in this proceeding, the Applicant submits at [11] that the costs were wasted by reason of the Respondent filing very lengthy affidavits which contained, in his view, largely irrelevant material.

Consideration

1. The Court is of the view that the failure on the part of Applicant to accept the written offer of settlement was an unreasonable act. 

2. The fact that the Respondent included as a term of the offer a requirement that the Applicant provide very broad releases and provide undertakings, as set out above, does not render the failure to accept the offer reasonable. The Respondents had set out in plain terms the basis of its defence to the Applicant's claims and enabled the Applicant to make an informed decision as to whether or not to proceed with the action. This was particularly in light of the payment made by the First Respondent of all of the sums claimed by the Applicant (even though liability to pay such sums was denied) and the offer of $5000. The fact that the Applicant was prepared to provide an undertaking in the form set out in the terms of the order made on 2 September 2019 does suggest that the undertakings sought in the release were not unreasonable, given the history of matters between the Applicant and First Respondent as set out in the Letter of Offer at [27].

3. As was stated by Tracey J in Bashour v Australia and New Zealand Banking Group Limited [2017] FCA 183 at [147]:

   “The costs consequences of a Calderbank offer lie in the discretion of the court. It will be exercised having regard to the particular circumstances of the case.”

4. The Applicant’s rejection of the offer was unreasonable when viewed in light of the circumstances existing at the time of this offer. The Applicant’s claims had been paid and given that he was self-represented, he had not incurred legal fees. In those circumstances, the sum of $5,000 was not derisory and the rationale for making the offer was fully and clearly explained as was the possible consequences of not accepting the offer.

5. I accept the Applicant’s submission that a considerable volume of the affidavit evidence filed by the Respondents was not referred to, in particular the affidavit of Mr Jonathan Nguyen affirmed on 25 October 2018. The Applicant should not be made to bear the cost of the preparation of that affidavit.

6. The Court has a discretion to award a lump sum amount for costs without formal assessment or taxation: see Beach Petroleum NL v Johnson (No. 2) (1995) 57 FCR 119 at [120]. In fixing that sum, although the Court must act judicially in awarding a lump sum amount, the Court is not required to do so in any "scientific or formulaic manner": see Idoport Pty Ltd v the National Australia Bank Ltd [2007] NSWSC 23 at [10]; see also Thompson & Finch & Ors [2020] FamCAFC 230 at [52] – [53].

7. In Abdi v Equitable Financial Solutions Pty Ltd & Anor [2020] FCCA 2521, Judge Kelly stated at [56] – [57] that:

   “56. Part 21 of the Rules, which concerns the issue Costs provides, in Div 21.02, that an application to costs may be made at any stage in a proceeding and that in making an order for costs, the Court may set the amount of those costs, set the method by which they are to be calculated, refer the issue for taxation or set a time for their payment: r 21.02(1)-(2). Where the Court determines that the power to order costs is engaged and that it should exercise its discretion to do so, it is the invariable practice of the Court to fix costs: Alrjoob v Minister for Home Affairs [2018] FCA 1144 [20] (Collier J). There is no requirement, in either the Act or the Rules, that as a condition to the exercise of its discretion to award costs there should first be production of an itemised bill: AOJ15 v Minister for Immigration and Border Protection [2017] FCA 675, [44] (Burley J).

   57. In fixing a lump sum for costs, the Court is to approach the task as one of estimation and assessment and not of arithmetic calculation or precision and is of a more broad brush approach than that which is to be taken upon taxation. Accepting those principles to be settled, the approach must be logical, fair and reasonable: Zaghoul v Jewellery & Gift Buying Service Pty Ltd [2020] FCA 1045, [172] (Banks-Smith J); see also BEL17 v Minister for Immigration and Border Protection [2020] FCA 1045, [26].”

1. For these reasons, the Court will make orders that:

   a)the Applicant pay the Respondents’ costs on an indemnity basis on and from 21 September 2018 save that there be no order for costs of, and incidental to, the preparation of the affidavit of Mr Nguyen affirmed on 25 October 2018; and

   b)in default of agreement between the parties as to the amount of those costs within 21 days of the date of these orders, the matter will be referred to a Registrar of the Federal Circuit Court of Australia for the determination of fixing the quantum lump sum of costs, pursuant to rule 21.02 of the Federal Circuit Court Rules.

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of Judge McNab

Associate:

Date: 11 November 2020

Correction

1. Order 2 amended to include “in default of agreement between the parties as to the amount of those costs within 21 days of the date of these orders”.