Gibbons v Vickers (No.2)
[2018] FCCA 1314
•28 May 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| GIBBONS v VICKERS (No.2) | [2018] FCCA 1314 |
| Catchwords: INDUSTRIAL LAW – Costs – application for contravention of Fair Work Act 2009 (Cth) – application dismissed – whether applicant commenced proceedings without reasonable cause – whether applicant caused costs by way of unreasonable acts or omissions – costs order made. |
| Legislation: Fair Work Act 2009 (Cth), ss.44, 45, 357, 535, 536, 570 Federal Circuit Court of Australia Act 1999 (Cth), s.79 |
| Cases cited: Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574; [2008] FCAFC 143 Gibbons v Vickers [2018] FCCA 327 |
| Applicant: | STEPHEN GIBBONS |
| Respondent: | CHRISTOPHER VICKERS |
| File Number: | SYG 3698 of 2016 |
| Judgment of: | Judge Smith |
| Hearing date: | Determined on the papers |
| Date of Last Submission: | 16 March 2018 |
| Delivered at: | Sydney |
| Delivered on: | 28 May 2018 |
REPRESENTATION
| Solicitors for the Applicant: | Mr R Thomas, RJ Thomas Solicitor |
| Counsel for the Respondent: | Mr B Miles |
| Solicitors for the Respondent: | Haywards Solicitors |
ORDERS
The applicant pay the respondent’s costs fixed in the amount of $36,863.96.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 3698 of 2016
| STEPHEN GIBBONS |
Applicant
And
| CHRISTOPHER VICKERS |
Respondent
REASONS FOR JUDGMENT
The applicant commenced these proceedings on 22 December 2016 claiming that the respondent had contravened a number of provisions in the Fair Work Act 2009 (Cth) (FW Act), namely, ss.44, 45, 357, 535 and 536 and sought the imposition of a civil penalty against the respondent. The Court delivered judgment in respect of the matter on 2 March 2018 after a two day hearing: Gibbons v Vickers [2018] FCCA 327 (substantive judgment). These reasons are to be read together with the reasons for the substantive judgment.
Upon delivery of the substantive judgment, orders were made for the parties to file and serve any affidavits and submissions concerning the question of costs by 16 March 2018.
The parties’ submissions
The respondent seeks an order that the applicant pay his costs from 22 December 2016 (the date on which the proceedings were commenced) on an indemnity basis or, in the alternative, in accordance with the Federal Circuit Court Rules 2001 (Cth) (FCC Rules) scale. A further alternative order sought by the respondent was that the applicant “pay his costs incurred as a result of the Applicant’s unreasonable acts or omissions”, being:
a)filing and serving a statement of claim that asserted facts at [18] that the applicant knew to be untrue;
b)filing and serving the affidavit of Ms Chan, an accountant, on 10 July 2017;
c)causing the issue of a subpoena to FD Browne & Co. Pty Limited on 10 July 2017;
d)the applicant opposed an order to give discovery;
e)the refusal of an offer of settlement made on 13 October 2017 and that the application be dismissed with no order for costs; and
f)the refusal of an offer of settlement made on 29 January 2018 on the basis that the respondent pay the applicant an amount of $10,000.
The respondent also sought an order that the applicant’s solicitor on the record be jointly and severally liable for the payment of any costs awarded. That issue has been deferred pending determination of the applicant’s liability for costs, if any.
The respondent’s primary submission was that the proceedings were brought without reasonable cause. He submitted at [15] of his submissions that the relevant principles were encapsulated in the following summary:
…
a.a proceeding will be instituted without reasonable cause if it has no real prospects of success, or was doomed to failure;
b.the question whether a proceeding lacks a reasonable cause is an objective one;
c.a proceeding lacks a reasonable cause where it is clear that it must fail on the applicant’s own version of the facts; or
d.whether there were facts apparent to the party at the time of instituting the appeal that, viewed objectively, would demonstrate that there were no reasonable prospects of success.
(Citations omitted)
The respondent submitted that the lack of reasonable basis for these proceedings was evident from the fact that the proceedings were resolved on the applicant’s own evidence, as well as the fact that the respondent had, in a detailed letter dated 5 December 2016, set out the reasons for which the applicant’s claims were ill-founded and notified the applicant that the respondent would, if successful, seek an order for costs.
The respondent also argued that the failure to accept a genuine offer of compromise may constitute an unreasonable act for the purposes of sub-s.570(2)(b) of the FW Act, particularly where the offer entails a substantial element of compromise. The respondent accepted that, in the present context, there had to be a potential entitlement to recover substantial costs before the Court could be satisfied that a refusal to accept a “walk-away” offer was unreasonable.
The respondent made submissions about each of the acts referred to at [3] above. It is unnecessary to examine those submissions in any detail.
In respect of the quantum of costs, the respondent submitted that the unreasonableness of the applicant’s conduct counted towards both the liability for costs and whether the costs should be awarded on an indemnity basis.
The applicant argued that his claim was not frivolous and that he believed his relationship with the respondent was one of employee and employer. He also argued that he is relatively impecunious, has no real estate in Australia and will be applying for the pension shortly.
Oddly, he also made the following submission:
The Fair Work Commission is a no costs jurisdiction and to find otherwise should only be in exceptional circumstances, this not being one.
This is not the Fair Work Commission. The applicant’s reliance on Timmins v Compass Security (2012) 219 IR 5; [2012] FWAFB 1093 is misplaced. Further, the Court does not need to be satisfied that there are “exceptional circumstances” before making an order for costs.
The applicant also submitted that the application for costs should fail because the respondent did not seek to have the proceedings summarily dismissed.
The relevant principles
In Cross v Harbour City Ferries Pty Ltd t/as Harbour City Ferries & Ors(No.2) [2017] FCCA 1713, I considered the question of the Court’s power to award costs in Fair Work proceedings. In brief, I found that this Court under s.79 of the Federal Circuit Court of Australia Act 1999 (Cth) has the power to make an order for costs in proceedings brought under the FW Act, but that the power was conditioned by s.570 of the FW Act.
Section 570 of the FW Act 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.
In Ryan v Primesafe (2015) 323 ALR 107; [2015] FCA 8, Mortimer J described the Court’s power under s.570 of the FW Act as follows at [64] to [66]:
64… The discretion conferred by the confined terms of s 570(2) should be exercised cautiously, and the case for its exercise should be clear: see Saxena v PPF Asset Management Ltd [2011] FCA 395 at [6] per Bromberg J. The reason for caution is the potential for discouraging parties’ pursuit in a complete and robust way of the claims for contravention which they seek to make under the Fair Work Act, or the defence of such claims. The policy behind s 570 is to ensure that the spectre of costs being awarded if a claim is unsuccessful does not loom so large in the mind of potential applicants (in particular, in my opinion) that those with genuine grievances and an arguable evidentiary and legal basis for them are put off commencing or continuing proceedings. It is an access to justice provision. Insofar as it operates to the benefit of respondents, it is designed to ensure respondents feel free to pursue arguable legal and factual responses to the claims made against them. …
65None of those propositions deny the Court’s ability to find that one or both of the two preconditions expressed in ss 570(2)(a) and (b) exist where the factual circumstances warrant it. The legislative policy behind a provision such as s 570(1) is not inconsistent with the requirements for proceedings to be conducted reasonably, fairly and efficiently. As an access to justice provision, it contemplates parties and their legal representatives will access the Court responsibly.
66Section 570, and the conditions it imposes on the Court’s general costs discretion under s 43 of the Federal Court Act, is not a licence to parties to ignore the requirements of s 37M of the Federal Court Act, nor the Court’s power to order costs against parties who fail to comply with their obligations under s 37N. The content of ss 37M and 37N, and parties’ obligations to assist the Court in achieving the objectives set out in s 37M, must be reconciled with access to justice provisions such as s 570(1). That reconciliation occurs through a focus on the reasonableness of parties’ conduct, the appropriateness of the Court processes undertaken by them, the timeliness of their compliance with Court orders or steps in the proceeding, and the existence of a substantive legal and factual basis for the claims made and arguments put.
Her Honour’s observations were expressly approved by a Full Court of the Federal Court in Trustee for The MTGI Trust v Johnston (No.2) [2016] FCAFC 190 at [8] where the Full Court (Siopis, Collier and Katzmann JJ) observed:
Section 570 of the FW Act confers discretion on the Court to order costs in Fair Work matters where proceedings were instituted vexatiously or without reasonable cause. Not only must this discretion be exercised judicially according to the terms defining it, it must be exercised with caution because of the exceptional nature of the power in an otherwise no-costs jurisdiction. …
The Full Court of the Federal Court in Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574; [2008] FCAFC 143 set out, at [28], the two criteria that must be satisfied before a costs order would be made under s.824 of the Workplace Relations Act 1996 (Cth):
… The first criterion is that one party must have engaged in “an unreasonable act or omission”. As the reasoning of Tracey J in Australian and International Pilots Association v Qantas Airways Ltd (No 3) and Siopis J in McAleer v University of Western Australia (No 2) demonstrates, whether a party has conducted itself or its litigation in such a way as to cross this threshold will depend on the particular circumstances of the case. The second criterion is that the act or omission of one party must have “caused another party to the proceeding to incur costs in connection with the proceeding”. Once both criteria are satisfied, then the Court “may” in its discretion order the party which has engaged in the unreasonable act or omission to pay some or all of the costs of the other party.
(Citations omitted)
These considerations continue to be applicable in the context of s.570(2) of the FW Act.
The relevant question to ask in determining whether a proceeding has been commenced without reasonable cause was stated by Wilcox J in Kanan v Australian Postal & Telecommunications Union (1992) 43 IR 257 at 264; [1992] FCA 539 to be:
… whether, upon the facts apparent to the applicant at the time of instituting proceeding, there was no substantial prospect of success.
Wilcox J went on to explain that:
… If success depends upon the resolution in the applicant’s favour of one or more arguable points of law, it is inappropriate to stigmatise the proceeding as being “without reasonable cause”. But where, on the applicant’s own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks a reasonable cause. …
Further, it is well established that a failure to accept a reasonable offer of compromise may constitute an unreasonable act for the purposes of s.570(2) of the FW Act. In this regard, in Veda Advantage Ltd v Malouf Group Enterprises Pty Ltd (No.2) (2016) 118 IPR 156; [2016] FCA 470, Katzmann J said, at [31]:
... [R]efusal to accept an offer not made in compliance with the rules (a Calderbank offer, see Calderbank v Calderbank [1975] 3 All ER 333) does not give rise to any presumption in favour of the offeror. The offeror needs to show that there was a genuine offer of compromise, and that it was unreasonable for the offeree not to accept it: Black v Lipovac at [217]–[218]. In deciding whether it is unreasonable for an offer to be rejected, the following matters should ordinarily be considered:
•the stage of the proceeding when the offer was made;
•the time afforded to the offeree to consider the offer;
•the extent of compromise involved;
•the offeree’s prospects of success, assessed as at the date of the offer;
•the clarity with which the terms of the offer were expressed;
•whether the offer foreshadowed an application for indemnity costs in the event of refusal.
...
Consideration
The applicant’s application was entirely dependent on establishing that the employment relationship he had had with the respondent was one of employer and employee and not principal and independent contractor. For the reasons I gave in the substantive judgment, I find that there was no reasonable basis for establishing the necessary relationship.
The applicant’s contentions were inconsistent with the objective material relied on by him and the shortcomings in his claim were drawn to his attention before commencement of the proceedings.
In those circumstances, I find that the Court has power to make an order for costs against the applicant and that it is appropriate that there be such an order. I reject the applicant’s submission that the respondent ought to have brought an application for summary dismissal. There is no onus on any respondent, let alone an individual respondent, to take such a step and the failure to do so here does nothing to undermine the lack of reasonable basis for the proceedings.
While I have considered the applicant’s claims about his financial status, I note that they do not mention any assets or income the applicant has overseas. His evidence was that he spends considerable time in Bali, Indonesia and I am not satisfied that he has no assets or income there.
In those circumstances I will order that the applicant pay the respondent’s costs of the proceedings.
While I accept that the conduct of the applicant in the conduct of the proceedings (as particularised at [3] above) was less than ideal, I do not consider that any of that conduct, taken individually or together, was sufficiently unreasonable to warrant an order for indemnity costs. Similarly, I am not satisfied that the applicant’s failure to accept either of the offers of compromise made by the respondent, given the costs regime to which the proceedings were subject, was sufficiently unreasonable to warrant an indemnity costs order.
In all the circumstances of this case, the appropriate order is that the applicant be ordered to pay the respondent’s costs set in an amount calculated by reference to the scale in sch.1 to the FCC Rules. A set amount will obviate the need for further time and money to be spent in the assessment or taxation of costs.
The respondent’s submissions included a summary of the costs incurred by reference to the FCC Rules. The applicant has not taken issue with anything in that summary and I accept that it is reasonable on the basis of the way in which the proceedings were conducted.
Conclusion
The applicant is ordered to pay the respondent’s costs set in the amount of $36,863.96.
I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of Judge Smith
Date: 28 May 2018
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