Golowenko v Clime Investment Management Ltd
[2021] FedCFamC2G 241
•10 November 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Golowenko v Clime Investment Management Ltd [2021] FedCFamC2G 241
File number(s): SYG 2954 of 2019 Judgment of: JUDGE HUMPHREYS Date of judgment: 10 November 2021 Catchwords: INDUSTRIAL LAW – Fair work – Fair Work proceedings – application for costs – party-party or indemnity costs sought – whether actions of applicant so unreasonable as to allow indemnity costs – actions not unreasonable – no costs awarded – application dismissed. Legislation: Fair Work Act 2009 (Cth), ss 361, 570
Federal Circuit Court of Australia Act 1999 (Cth), s 34
Federal Circuit Court of Australia Rules 2001 (Cth), r 21.02
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021, r 1.04, 13.02, 22.02
Cases cited: Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879
Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879
Australian Workers Union v Leighton Contractors Pty Ltd (No 2) [2013] FCAFC 23
Baker v Patrick Projects Pty Ltd (No2) [2014] FCAFC 166
Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143
Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143
Cross v Harbour City Ferries Pty Ltd T/A Harbour City Ferries & Ors (No 2) [2017] FCCA 1713
Health Services Union v Jackson (No 5) [2015] FCA 1467
McLoughlin v Randstad Pty Ltd (No 2) [2021] FCAFC 177
Shea v Energy Australia Services Pty Ltd (No 2) [2015] FCAFC 14
Simic & Norton [2017] FamCA 1007
Torpia v Zarfati [2009] FMCA 166
Trustee for the MTGI Trust v Johnson (No 2) [2016] FCAFC 190
Division: Division 2 General Federal Law Number of paragraphs: 63 Date of last submission/s: 4 November 2021 Date of hearing: 7 October 2021 Place: Parramatta Counsel for the Applicant: Mr Lloyd Counsel for the Respondent: Mr Fogarty ORDERS
SYG 2954 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: ANTHONY JOHN GOLOWENKO
Applicant
AND: CLIME INVESTMENT MANAGEMENT LTD
Respondent
ORDER MADE BY:
JUDGE HUMPHREYS
DATE OF ORDER:
10 NOVEMBER 2021
THE COURT ORDERS THAT:
1.The application for costs is dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE HUMPHREYS
INTRODUCTION
On 13 November 2019, Anthony Golowenko (“the applicant”) commenced proceedings in this Court in the Fair Work Division alleging breaches of the Fair Work Act 2009 (Cth) (“the Act”) by the Clime Management Ltd and Mr Rod Bristow (“the respondents”) by the taking adverse action against him, including his unlawful termination from the first respondent.
The applicant sought the following orders:
1. That the respondents breached s 340 of the Act;
2. That the respondents pay the applicant compensation pursuant to s 545(1) and s 545(2)(b) of the Act;
3. That the respondents pay pecuniary penalties pursuant to s 547 of the Act;
4. Orders for the payment of interest on the order for compensation together with damages for breach of contract.
On 11 December 2019, the Court made a number of orders for the filing and serving of evidence. The Court further directed that pursuant to s 34 of the then Federal Circuit Court of Australia Act 1999 (Cth) (“FCC Act”) the matter be referred to a Registrar of the Court for a mediation between the parties. A mediation took place between the parties on 20 November 2020, having been delayed by the imposition of various Public Health orders by the NSW government as a result of the COVID 19 pandemic. That mediation was unsuccessful.
On 26 February 2021 the matter returned before Judge Humphreys for further directions to prepare the matter for trial. The matter was listed for hearing for a 3 day period over 2, 5 and 6 August 2021. On 8 July 2021, the applicant filed a Notice of Discontinuance of the proceedings.
On 4 August 2021, the respondents filed an Application in a Case seeking certain orders. Due to the merger of the Federal Circuit Court and Family Court of Australia, leave was granted to amend the application to the following orders:
1. The applicant pay the First and Second Respondents’ costs as follows:
a) From 13 November 2019 to 12 pm on 22 February 2021, on an indemnity basis, or in the alternative, on a party-party basis, pursuant to subsections 570(2)(a) and/or 570(2)(b) of the Fair Work Act 2009 (Cth) and rules 13.02(1) and 22.02 of the Federal Circuit and Family Court and Australia (Division 2) (General Federal Law) Rules 2021 (Cth); and
b) From 12pm on 22 February 2021 to 3.45 pm on 8 July 2021, on an indemnity basis or, in the alternative, on a part-party basis, pursuant to subsections 570(2)(a) and/or 570(2)(b) of the Act and rules 13.02(1) and 22.02 of the FCFCOA Rules.
The total amount of legal costs sought by the respondent on an indemnity basis in orders ‘a’ and ‘b’ above is, to the Court’s mind considerable, being some $281,000 (excluding GST), noting that this was a matter that did not proceed to trial, having been discontinued approximately four weeks prior to the listed hearing dates. The total Court time allocated to the matter was a one day mediation and two telephone mentions/directions hearings, on 12 and 26 February 2021, all other orders having been made on the basis of consent orders between the parties.
THE LAW
Section 570 of the Act is as follows:
Costs only if proceedings instituted vexatiously etc.
(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.
Note: The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 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;
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.
The Court now operates under new Rules contained within the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (“the Rules”). In so far as they relate to General Federal Law, the new Rules to a large extent replicate the previous Federal Circuit Court Rules2001 (Cth).
Rule 1.04 of the Rules states as follows:
Overarching Purpose.
(1) The overarching purpose of these Rules, as provided in section 190 of the Act, is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.
(2) To assist the Court, the parties must:
(a) avoid undue delay, expense and technicality; and
(b) consider options for primary dispute as early as possible
Rule 13.02(1) of the Rules reads as follows:
(1)If a party discontinues an application, or part of an application, another party to the proceeding may apply for costs.
Rule 13.02(2) provides that a party may apply to the Court for an order for costs where the other party discontinues an application. Rule 21.02 of the Rules, as it was previously, is now reproduced as r 22.02 of the Rules. It and r 22.02 reads as follows:
Order for costs
(1) An application for an order for costs may be made:
(a) at any stage in a proceeding; or
(b) within 28 days after a final decree or order is made; or
(c) within any further time allowed by the Court.
(2) In making an order for costs in a proceeding, the Court may:
(a) set the amount of the costs; or
(b) set the method by which the costs are to calculated; or
(c) refer the costs for taxation under Part 40 of the Federal Court Rules; or
(d) set a time for payment of the costs, which may be before the proceeding is concluded.
(a)set the amount of the costs; or
(b) set the method by which the costs are to be calculated; or
(c) refer the costs for taxation under Part 40 of the Federal Court Rules;
Determination of maximum costs
(1)The Court may specify the maximum costs that may be recovered on a party and party basis:
(a)by order at the first court date; and
(b)on its own initiative or on the application of a party.
(2)However, an amount specified must not include an amount that a party is ordered to pay because the party:
(a) has failed to comply with, or has sought an extension of time for complying with, an order or any of these Rules; or
(b) has sought leave to amend a document; or
(c) has otherwise caused another party to incur costs that were not necessary for the economic and efficient progress of the proceeding or hearing of the proceeding.
(3)The Court may vary the maximum costs specified if, in the Court’s opinion, there are special reasons and it is in the interests of justice to do so.
It is common ground between the parties that where an order is made for the payment of costs, the manner in which the amount of those costs may be set is a discretionary matter for the Court. In this case three methods are available.
The first being, an amount fixed by reference to the relevant Scales of Costs contained within the Rules. It is not disputed by the respondent that this would be in the order of $10,000.
The second method, would be to refer to matter for as assessment/ taxation of costs on a party-party basis.
The third method, and that sought by the respondent, would be to allow costs on an indemnity basis from 13 November 2019 in the amount of $281,000 plus GST.
The discretion to award costs pursuant to s 570 of the Act should be exercised with some caution. In Trustee for the MTGI Trust v Johnson (No 2) [2016] FCAFC 190 at [8] the following was said:
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 case for its exercise should be clearly demonstrated: Saxena v PPF Asset Management Ltd [2011] FCA 395 at [6].
The relevant principles were summarised in Australian Workers Union v Leighton Contractors Pty Ltd (No 2) [2013] FCAFC 23 at [7]:
(1)The purpose or policy of the section is to free parties from the risk of having to pay their opponents’ costs in matters arising under the Act, while at the same time protecting those parties who are forced to defend proceedings that have been instituted vexatiously or without reasonable cause.
(2)It follows from the protection offered by s 570(2) that a person will rarely be ordered to pay the costs of a proceeding. But it is not necessary to prove that there are exceptional circumstances warranting the making of an order.
(3)The relevant question is whether the proceeding had reasonable prospects of success at the time it was instituted, not whether it ultimately failed.
That can be tested by asking whether the party bringing the action, on the facts apparent to the party and its lawyers, properly advised, should have known the claim had no reasonable prospects of success: (see; Baker v Patrick Projects Pty Ltd (No2) [2014] FCAFC 166 at [9]-[10]).
In relation to s 570(2)(b) of the Act, whether a party engaged in an ‘unreasonable act or omission’ will depend upon the particular circumstances of the case. In Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879 at [36] it was held that “prosecution of any incompetent or hopeless case can be regarded as ‘an unreasonable act’ … Conversely… the pursuit of a contentious, and ultimately unsuccessful argument is not an unreasonable act”.
In Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143 at [29] the following was said:
In our view, the respondent has not engaged in an ‘unreasonable act or omission”. As the authorities indicate, there is a distinction between a party who pursues arguments which are ultimately abandoned or rejected by the Court and a party who commences a proceeding which is misconceived in the sense of being incompetent or unsupportable.
In Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143 (“Corinthian”), Pagone J refused to award costs against a union for bringing unsuccessful adverse action claims where the claims were abandoned at the trial after witness evidence in circumstances where s 361 of the Act imposed a reverse onus on the respondent. At [6] the following was said:
It was not until the second day of the hearing, and after the conclusion of the witness evidence, that the union informed the court that he did decided not to press the union membership claim or the allegation that Corinthian had contravened the Fair Work Act in relation to the Canning Vale and Regency Park strikers concessions of that kind are generally to be encouraged for the efficient and prompt determination of disputes, to promote the efficient use of court time and reduce costs an unnecessary inconvenience to other parties…
[11] Corinthian also relied upon s 570(2)(b) to seek costs in respect of the claim in relation to the Canning Vale and Regency Park employees, contending that after discovery on 31 January 2014 the Union unreasonably acted or omitted to act by not abandoning the claim promptly after discovery…. The late abandonment of a claim does not establish that it was unreasonable to have maintained it until then…. The relevant decision by Corinthian which was challenged by the Union was not that made by the general managers at those sites, but had been made by Mr Bruce in consultation with, amongst others, Messrs Grundy and Webster. That emerged from the oral testimony at trial and, until then, it was not clear who had been the relevant decision maker.
In McLoughlin v Randstad Pty Ltd (No 2) [2021] FCAFC 177 at [4] the Full Federal Court cited with approval the above adding:
Importantly, the Court went on to emphasise that such circumstances enlivened the jurisdiction and that: “even if the Court has jurisdiction to make a costs order, it retains the discretion to refrain from exercising it in an appropriate case.
In Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20, the Full Federal Court stated at [166] that:
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) and its predecessors: see, for example, McDonald v Parnell Laboratories (Aust) (No 2) (2007) 164 FCR 591 at 598-9 (Buchanan J).
In relation to offers of compromise, the reasonableness of the refusal or non-acceptance must be determined the light of the circumstances that existed at the time that the rejection or failure to accept occurred and the offer. The parties seeking a costs order bears the onus of establishing that the offeree’s refusal was unreasonable: (see; Health Services Union v Jackson (No 5) [2015] FCA 1467 at [46]).
In Cross v Harbour City Ferries Pty Ltd T/A Harbour City Ferries & Ors (No 2) [2017] FCCA 1713, Smith J adopted the reasoning of Katzmann J in Veda Advantage Limited v Malouf Group Enterprises Pty Limited (No 2) [2016] FCA 470 in holding that, in deciding whether it is unreasonable for an offer to be rejected, the following matters should ordinarily be considered:
•the stage of proceeding when the offer was made;
•the time afforded to the offeree to consider the offer;
•the extent of the 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; and
•whether the offer foreshadowed an application for indemnity costs in the event of refusal.
Once the power to award costs is enlivened under s 570(2) of the Act, the Court can make an order for costs to be paid on an indemnity basis, as it could, and often would, in litigation with the general law principles as to the award of such costs applied: (see; Shea v Energy Australia Services Pty Ltd (No 2) [2015] FCAFC 14 at [10]. In Torpia v Zarfati [2009] FMCA 166, Barnes FM noted at [14] that:
There is also authority … that indemnity costs should not be ordered in the absence of a presumption that the action was commenced for some ulterior motive or because of a wilful (as distinct from inadvertent) disregard of known facts or established law.
The test as to whether indemnity costs should be awarded, is whether the justice of the case might so require or, whether there exists some special or unusual feature of the case to justice for the Court in departing from the ordinary practice: (see; Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879).
THE EVIDENCE AND CONSIDERATION
To a large extent there is little disagreement as to the pertinent facts. From 1 June 2016 until 31 January 2019, the applicant was employed by the respondent in the position of Chief Investment Officer.
For the vast majority of this time, the applicant reported to Mr Abernathy, in his capacity as the company’s executive director. The financial year ended on 30 June 2017, and the applicant received a significant cash bonus and the issuance of long-term share incentives and salary increase.
In respect of the financial year ending 30 June 2018, the applicant received a significant cash bonus and salary increase. The applicant claims that he received positive feedback concerning his work performance conducted by Mr Abernathy in 2017. Arising out of his employment, in March 2018, the applicant became a Director of Foreign Capital Ltd, as a representative of the first respondent and was reappointed to this position in October 2018.
The second respondent, Mr Bristow, commenced employment as the first respondent’s Chief Executive Officer (“CEO”) in September 2018. The applicant reported to Mr Bristow until his employment terminated in January 2019. It is quite clear that issues arose between the applicant and the first and second respondent almost immediately after the second respondent commenced in his role as CEO. The applicant pleaded that the first respondent took “adverse action” against him because of his exercisable workplace right to complain in September 2018. The applicant alleges that in January 2019 he made a further complaint or enquiry concerning the fairness and reasonable framework timelines for the first respondent’s management of his work performance.
The applicant pleaded that the first respondent took an unlawful adverse action against him and terminated his employment because of his exercisable workplace rights in September 2018 and in January 2019. The applicant was advised that his employment would be terminated in January 2019, due to the reason of redundancy. It took the applicant some two years to find comparable employment.
The applicant’s position was that his termination was referable to actions taken by Mr Bristow. It was put to the Court that any issues with the applicant’s performance were not raised with him and that issues only commenced after Mr Bristow commenced employment with the first respondent.
It is common ground that an initial offer of settlement was made by the respondents prior to the commencement of the proceedings. Following the commencement of proceedings, and after an unsuccessful Court ordered mediation, in February 2021 a settlement offer of $35,000 (less any applicable tax and inclusive of costs) was made, with the amount to decrease by $5,000 per week commencing 7 days after the offer was made. The Court understands that this is commonly referred to as a ‘cascading offer’. The amount of $35,000 was only marginally above the initial pre litigation settlement offer made by the respondents. It was well below the amount sought by the applicant of initially $239,998 and later $189,984 (less applicable tax and inclusive of costs).
A significant number of documents were tendered to the Court including Affidavits from a number of the first respondent’s officers, an Affidavit from Mr Bristow, and an Affidavit from Ms Dianne Banks, the Partner from Gilbert and Tobin with carriage of the matter. On behalf of the applicant, there was a sole Affidavit from Mr Robert Reinoso, the Solicitor for the applicant. Mr Reinoso was the only witness cross examined. Mr Reinoso’s evidence was unshaken in that it was not until the respondent’s evidence in chief was filed and served upon him that he had concerns as to the applicant’s prospects of success. It was at that point it became clear that that more company officers than Mr Bristow had been decision makers in relation to the termination of the applicant. Further, there had been concerns as to his performance for some time, noting that these do not appear to have been clearly conveyed to the applicant.
After considering the evidence in chief provided by the respondents and after advice from Counsel, an offer by the applicant to settle with each party to pay their own costs was rejected. Upon receipt of this rejection on 8 July 2021, on instructions from the applicant, a Notice of Discontinuance was filed.
It is clear that there was a large amount of correspondence from both parties’ solicitors. Ms Banks, from Gilbert and Tobin, maintained from the beginning that on her instructions, the applicant’s employment was terminated for underperformance. This is notwithstanding that the initial reason he was told, was for redundancy. Documents were sought by the applicant from the respondent and it took some considerable time for them to be provided. The legal representatives suggested that the documents could be inspected but not copied at the respondents Counsel’s chambers. The reluctance to provide these documents, if the respondent’s case was as strong as it apparently was, is difficult to understand.
The starting point for the consideration of this application is that Fair Work is a no costs jurisdiction. It is for the respondent to show that the applicant has commenced the proceedings vexatiously or without reasonable cause. Based on the totality of the material before the Court, it is not satisfied that this has been proven. While the first respondent clearly has concerns as to the applicant’s performance, these were no communicated to him at any time prior to Mr Bristow commencing employment as the CEO of the first respondent. In fact the applicant’s performance appraisals had been positive as evidenced by the payment of bonuses.
It was reasonable in the Court’s view, given what had occurred for the applicant, for the applicant to perceive that his termination lay at the hands of Mr Bristow and could be related to his complaints about the interactions that he had with Mr Bristow. There is no basis for the Court to order costs pursuant to s 570(2)(a) of the Act. The Court is not satisfied the proceedings were instituted vexatiously or without reasonable cause.
That leaves s 570(2)(b) of the Act. To succeed, the respondent’s need to show that the applicant had acted unreasonably through act or omission. On behalf of the respondent, it was submitted that the failure to accept the settlement offers was unreasonable. The Court needs to place itself in the shoes of the respondent as at the time the offer was rejected, to determine if the rejection with the knowledge available to the applicant, was unreasonable.
In each case, given the salary of the applicant, the settlement offers, less applicable tax and legal costs, could be regarded as on the low side. The cascading offer of $35,000 could be viewed as playing very tough. At that stage, evidence had not been filed. By the time evidence was filed, the cascading offer had expired. It was put to Mr Reinoso in cross examination that at any time he could have sought to reopen settlement negotiations. He agreed with this proposition.
In the Court’s view, given the way the litigation had run, it is more than likely that any settlement offer would have been rebuffed. This was implicit from the cascading offer made in February. The respondents were intent on playing ‘hard ball’. There was no offer of settlement by the respondent on the table, the cascading offer having been put on the basis that it was a ‘final offer’.
What is clear is that as soon as the evidence in chief was filed, the true nature of the strength of the respondent’s case became clear. Action was taken swiftly to discontinue the proceedings.
The Court is not satisfied that the actions of the applicant were unreasonable such that costs should be ordered, let alone costs on an indemnity basis. The rejection of the settlement offers was based on what the applicant at that time thought the respondent’s case was. The offers were low, in the region of one month’s pay initially and more in the second offer, but not by a great deal. If the applicant was successful, any damages ordered would have been significantly in excess of those amounts, given that the applicant had been unemployed for nearly 2 years. The offers were clearly not made with an eye as to what the cost of preparing the matter for trial would be and what a commercial settlement might involve.
Applying the principles in Corinthian cited above, the Court is not satisfied that it would be appropriate to order costs against the applicant. As the Court indicated, the starting point is that Fair Work is a no costs jurisdiction. The applicant proceeded upon an assumption as to what the case was he was pursuing. The Court has already found that he initiation of the matter was not unreasonable. That state of affairs continued until the evidence in chief for the respondents was filed. When it became clear that the applicant could not succeed, the applicant promptly discontinued the matter, well prior to the work that usually takes place immediately before the trial dates. These are concessions that should be encouraged for the reasons outlined by Pagone J in Corinthian.
The Court is not satisfied that a basis exists for ordering costs pursuant to s 570(b)(2) of the Act.
The application for costs is dismissed. It is thus not necessary to consider on what basis, costs would be payable, that is by reference to the Court scale, party-party or on an indemnity basis
ISSUES AS TO THE PROPORTIONALITY OF THE COSTS SOUGHT BY THE RESPONDENT
It is not often, in the General Federal Law jurisdiction that this Court is privy to the size of the solicitor-client costs being charged in proceedings.
At the commencement of the proceedings seeking costs, the Court raised with the respondent its concern as to the size of the indemnity costs order that was being sought, being some $281,000 plus GST, or a total of $309,401 inclusive of GST. This amount consisted approximately of $236,000 solicitors costs. They respondent’s solicitors used 13 different fee earners on the matter. Approximately $104,000 (excluding GST) was billed by the two most senior fee earners, a Partner and a Special Counsel who charged hourly rates of, respectively $800 and $710 (increasing to $760), excluding GST. This compares to, as advised to the Court, the hourly rate for Chambers work charged by Counsel briefed in the matter of $400 (excluding GST).
Given these concerns, the Court granted leave for additional written submissions to be filed in relation to the quantum costs sought.
Counsel for the applicant observed that some of the charge out rates for fee earners were increased during the course of the matter, from 2019 when the matter substantively commenced before this Court until it was discontinued in August 2021, on a percentage basis ranging from 7% to 25%. The Court notes that this was during a period of particularly low annual inflation due to the economic effects of the Covid 19 pandemic.
Prior to the Application in a Case, which was the subject of the hearing leading to this Judgement, the proceedings had occupied the Court’s time only in respect of a one-day mediation on 20 November 2020, and two telephone mentions/directions on 12 and 26 February 2021. All other procedural orders had been made by the Court in Chambers on the basis of consent orders.
The discontinuance of the proceeding occurred prior to the time when the parties might be reasonably expected to incur a considerable part of the necessary pre-trial work, preparing submissions, objections to evidence, and cross examination. The respondents argue that the majority of their costs relate to the necessary preparation of the evidence in chief of the various witnesses that were to be relied upon by the respondents.
In June 2019, prior to formal proceedings being commenced in this Court, the applicant put forward a settlement offer seeking the sum of $239,998, being the equivalent to 10 months’ pay. In July 2019, the respondents offered a settlement amount of $23,998 less any tax, being the equivalent of one month’s pay, with each party to pay their own legal costs.
Later that month, the applicant responded offering to settle for an amount of $191,984 (less tax), with no reference as to costs. No further settlement negotiations took place prior to the proceedings being instituted. Following the failure of the mediation, in February 2021, the respondents offered to settle the matter on the basis of $35,000 (less any applicable tax) and each party to pay their own costs. It was further stipulated that the offer was open until 12.00 pm 22 February 2021, then ratcheting down $5000 per week every 7 days thereafter, and lapsing to nil at 12.00 pm 12 April 2021. This might be viewed as playing ‘hard ball’ by a reasonable bystander. No other offers of settlement were made prior to the matter being discontinued
Given that the applicant was prepared to settle the matter prior to the commencement of litigation for the amount of $191,000, the Court would understand if there was a legitimate sense of grievance by the respondents in that they have now incurred legal costs including GST of approximately $120,000 in excess of the first settlement offer put by the applicant. It may well be that had serious negotiations taken place, the matter may have settled for an amount well less than the $191,000 offered by the applicant.
The Court is not privy to what discussions took place between the respondent’s legal advisers and the respondents as to what the likely costs of litigating the matter would be as compared to the costs of a generous but commercial settlement.
The Court is aware, however, that likely future costs is a matter that needs to be raised and reviewed as necessary by a Solicitor under the relevant legal profession legislation. Given that the respondent is a commercial organisation, it seems difficult for the Court to accept that, given the litigation was taking place in a no costs jurisdiction, that the respondent would have instructed their solicitors to continue with the litigation in circumstances where they were likely to be substantially worse off than settling the matter at an early point of time for an amount that might have been greater than the $35,000 offered in the last settlement offer.
The Court has concerns that the amount of resources and the costs incurred by the legal representatives for the respondent are significantly disproportionate, to the substance of the case that was before this Court.
In Simic & Norton [2017] FamCA 1007 (“Simic & Norton”), Benjamin J expressed concern that;
In the Sydney Registry of the Family Court I have observed what seems to be a culture of bitter, adversarial and highly aggressive family law litigation. Whether this win at all costs, concede little or nothing, chase every rabbit down every hole and hang the consequences approach to family law litigation is a reflection of a Sydney-based culture by some or many litigants or whether it is an approach by some legal practitioners or combination of both, I do not know.
This is not a family law matter. The Court is not in a position to make a comment as to whether the circumstances, as they appear in this case, are a reflection on simply the legal representatives for the respondent or are symptomatic of a wider culture within commercial litigation within Sydney. Given that this matter did not proceed to trial, and substantial costs as a result were avoided, it seems to the Court, however, that the amount of costs incurred and being sought on an indemnity basis by the respondent’s solicitors are significantly at odds with the aims of this Court as expressed in the Rules “To facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible” (my emphasis).
Benjamin J in Simic & Norton referred the respective solicitors for the parties to the relevant professional disciplinary bodies for investigation as to whether the legal costs and disbursements were fair, reasonable and proportionate to the overall issues to be determined in the proceedings. This Court does not propose to make a similar referral.
The Court hopes, however, that these observations might cause some reflection by those involved in the matter.
I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Humphreys. Associate:
Dated: 10 November 2021
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