Govan v Health Services Union
[2015] FCCA 1244
•22 May 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| GOVAN v HEALTH SERVICES UNION (NO.1) BRANCH (No.2) | [2015] FCCA 1244 |
| Catchwords: INDUSTRIAL LAW – Costs application – where substantive application under the Fair Work Act 2009 (Cth) was dismissed– whether unreasonable acts or omissions – whether caused respondent to incur costs – no order for costs. |
| Legislation: Fair Work Act 2009 (Cth) ss.570, 570(2)(b) Federal Circuit Court Rules 2001 (Cth) r.21.02 |
| Govan v Health Services Union (No.1) Branch [2015] FCCA 491 Ryan v Primesafe [2015] FCA 8 |
| Applicant: | JAYNE FAYE GOVAN |
| Respondent: | HEALTH SERVICES UNION (NO.1) BRANCH |
| File Number: | MLG 1376 of 2013 |
| Judgment of: | Judge O'Sullivan |
| Hearing date: | On the papers |
| Date of Last Submission: | 18 May 2015 |
| Delivered at: | Melbourne |
| Delivered on: | 22 May 2015 |
REPRESENTATION
| Solicitors for the Applicant: | Maddison & Associates |
| Solicitors for the Respondent: | Holding Redlich |
ORDERS
The application for costs filed 4 May 2015 be dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1376 of 2013
| JAYNE FAYE GOVAN |
Applicant
And
| HEALTH SERVICES UNION (NO.1) BRANCH |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons concern an application for costs under the Fair Work Act 2009 (Cth) (“the FW Act”). On 28 August 2013 Jayne Faye Govan (“the applicant”) commenced proceedings in this Court against the Health Services Union Victoria (No.1) Branch (“the respondent”).
The applicant who had been employed by the respondent as an organiser was terminated in July 2013. In the substantive application the applicant alleged the respondent had breached the FW Act as it had terminated her employment because of what it was alleged the secretary of the respondent believed was the applicants’ sexuality or sexual preference and/or because her political beliefs were different to that of the ‘dominant’ view within the respondent.
For the reasons set out in Govan v Health Services Union (No.1) Branch [2015] FCCA 491 on 16 April 2015 that application was dismissed and directions were made for the filing of any application for costs.
Costs application and parties submissions
The respondent filed an application for costs, an affidavit of its solicitor, David Shaw and submissions in relation to its application for costs on 4 May 2015. The respondent’s submissions were:
“1.The Respondent seeks an order for the payment of its costs under s 570(2)(b) of the Fair Work Act 2009 (Cth) (FW Act). Relevantly that section provides:
(1)A party to proceedings … in a court ... exercising jurisdiction under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with sub-section (2) ...
(2)The party may be ordered to pay the costs only if:
…
(b) the court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs; or
2.The Respondent submits the Applicant’s unreasonable acts or omissions caused the Respondent to incur costs and relies on the affidavit of David Shaw dated 1 May 2015 (filed with these submissions) and the affidavit of Michael McIver dated 16 September 2014.
3.The Respondent submits the following acts and omissions of the Applicant were unreasonable:
(a)Failing to file and serve affidavit material on or before 2 May 2014 in accordance with the orders made by the Court on 14 March 2014.
(b)Failing to file and serve affidavit material on or before 23 May 2014 in accordance with the orders made by the Court on 14 May 2014.
(c)Failing to provide medical evidence in accordance with the orders made on 16 September 2014.
(d)Failing to provide consent orders following the hearing on 14 November 2014.
(e)Failing to respond to the Respondent’s offer to settle the matter made on 20 November 2014.
(f)Failing to file and serve affidavits in reply by 18 December 2014.
(g)Continuing proceedings after 20 November 2014 when the Respondent made an offer to settle the matter.
(h)Continuing proceedings after 10 February 2015 when the Respondent reiterated its earlier offer to settle the matter.
4.The Applicant’s unreasonable acts or omissions caused the Respondent to incur additional costs in the preparation of the matter including:
(a)The costs incurred by reason of the Applicant’s failure to file and serve affidavit material on or before 2 May 2014 in accordance with the orders made by the Court on 14 March 2014.
(b)The costs incurred by reason of the Applicant’s failure to file and serve affidavit material on or before 23 May 2014 in accordance with the orders made by the Court on 14 May 2014.
(c)The costs of the hearing on 16 September 2014.
(d)The costs of the hearing on 14 November 2014.
(e)The costs incurred in order to enter the consent orders made on 8 December 2014.
(f)The costs of preparing the Respondent’s affidavits and submissions.
(g)The costs incurred by reason of the Applicant’s failure to file and serve affidavits in reply by 18 December 2014.
(h)The costs of the hearing on 16 and 17 February 2015.
5.The Respondent submits that the offer made by the Respondent on 20 November 2014 and reiterated on 10 February 2015 was a “reasonable offer” and the failure of the Applicant to accept it constitutes an unreasonable omission within the meaning of section 570(2)(b) (see McDonald v Parnell Laboratories (Aust)(No 2) [2007] FCA 2086; (2007) 164 FCR 591 at [31]). The Applicant did not at any stage of the proceedings provide proper material or evidence about loss and mitigation. In that context, and in the absence of any attempt by the Applicant to make a counter offer, the Respondent submits that the offer made was reasonable. Further, the Applicant was on notice from the time that the Respondent filed its Response that the Respondent’s case was that the Applicant was dismissed due to unsatisfactory performance. Accordingly, the Applicant should have known, at least from the date of the filing and serving of the Respondent’s affidavits, that her prospects of succeeding in her claims were slim.
6.The Respondent asks the Court to set the amount of costs in accordance with Rule 21.02(a) and Schedule 1 of the Federal Circuit Court Rules 2001.”
The directions for the filing of any application for costs made on 16 April 2015 required any application to be filed and served within 14 days. The respondents’ application for costs was a few days late. On 5 May 2015 and given the provisions of Rule 21.02 of the Federal Circuit Court Rules 2001 (“the Rules”), time was extended for the applicant to file any response to the application for costs. The applicant filed written submissions on 18 May 2015 opposing the application for costs. The applicant’s submissions were:
“1.The application before the Court is an application seeking that the Court makes an order that the Applicant in the substantive proceedings Ms Govan pay to the Respondent costs.
2.The application is made pursuant to Section 570 (2) (b) of the Fair Work Act 2009.
3.It is put that the applicant was guilty of unreasonable acts and omissions that caused the respondent to incur costs.
4.The applicant submits that she was not guilty of unreasonable acts or omissions. The applicant was, it is true, late in filing various documents early in the proceedings. The Applicant explained to the Court that she was late in filing those documents because of the illness of her child.
5.The Applicant filed medical information in relation to the illness with the Court and the Court accepted that information. At the least the Court rescheduled the timetable to allow the matter to proceed to trial on 16 and 17 February 2015.
6.Costs in this jurisdiction are awarded rarely and in this case the applicant submits the Court should not award costs against her. The awarding of costs in matters pursuant to this Act has been discussed in various cases.
7.In Hobson v BWL Pty Ltd (No.3) (2012) 222 IR 48, the Court stated the following:
The policy underlying s 570 of the FW Act remains as it was under predecessor legislation, namely, to limit the ability of courts to award costs in workplace relations matters as part of a policy of discouraging legalism in workplace relations proceedings.
8.Further in Beggs v Login Systems Pty Ltd (No.2) [2013] FCCA 1761 it was said:-
The respondent acknowledged that the policy underpinning s.570 of the Act and its statutory forebears is to displace the common law rule that costs follow the event and to make an award of costs an unusual event predicated upon particular facts
9.Also, in Muzzicato v New Aged Cleaning Services Pty Ltd (2011) 214 IR 116:-
As I said before, it is a discretionary power that I have and as a general imperative, as I see it or a general thrust of the Act is to avoid costs where normally costs follow the event. That is not obviously the way costs are considered under the Act
10.It is Further said that the unreasonable acts or omissions fall into two categories they are:-
·Filing materials late; and
·Failing to accept an offer of settlement put in November 2014 and February 2015.
11.It is submitted that the late filing of documents as described in the application could not have caused the costs it is said were incurred by the respondent. The respondent would have needed to file responding documents in any event whether the applicant’s documents were filed late or on time. Also, the Applicant explained why the documents were filed late. Also in the case of the affidavits filed after the due date in December 2014. There was still more than sufficient time available for the Respondent to deal with the affidavit material that is to review and get instructions. It was clearly the case that the materials were included in the Court book and that the Respondent was able to cross examine the witnesses without any undue adjournments or any other interruption to the smooth running of the proceedings on the days listed for hearing.
12.Further, it is submitted that the offer made by the Respondent on two separate occasions was not in all of the circumstances of the case a reasonable offer. Nor was the offer rejected out of hand particularly the re offering of $2,000.00 in February. The Applicant clearly indicated that she was open to discuss the further offer and open to further offers. In email correspondence to Mr Shaw the Applicant through her representative said:-
“We are not opposed to settling the matter but it will not settle for that amount I would think that if you are serious you would look at a more realistic amount.”
13.Given the legal fees already involved at that point in the case it is submitted that the applicant’s response to the very low offer of $2,000.00 was not unreasonable.
14.In relation to the matters the Court needs to consider in relation to the Application the Full Federal Court said in Construction, Forestry, Mining and Energy Union & Ors v Clarke (2008) 170 FCR 574 when referring to the predecessor legislation containing essentially the same provisions:-
The exception applies when two criteria are satisfied. 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) [2007] FCA 879; (2007) 162 FCR 392 and Siopis J in McAleer v University of Western Australia (No 2) (2007) 161 IR 151 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.
15.As submitted above the acts and omissions of the applicant did not cause costs to be incurred by the respondent. Certainly the list of costs as set out in section 4 of the Respondents costs application were not incurred because of the late filing of documents. For instance the costs of the hearing on 16 and 17 February were not attributable to the any failing on the part of the applicant.
16.It is submitted that the costs application ought to be dismissed.”
Relevant provisions
The respondent’s application for costs falls to be determined by reference to the provisions of s.570 of the FW Act which provides:
“(1)A party to proceedings (including an appeal) in a court (including a court of a State or Territory) exercising jurisdiction 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
…”
In Ryan v Primesafe [2015] FCA 8, Mortimer J dealt with an application for costs arising from proceedings under the FW Act. In relation to the provisions in s.570 of the FW Act generally His Honour noted:
“64.I accept the general import of the authorities relied on by the applicant and Mr McDonald in their written submissions about the significance of the threshold set by s570(2) of the Fair Work Act. Although some of the authorities relied on dealt with the predecessor provisions to s570, there is no difference in substance in the way the threshold is expressed. The discretion conferred by the confined terms of
s570(2)should be exercised cautiously, and the case for its exercise should be clear: see Saxena v PPF Asset Management Ltd [2011] FCA 395at [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
s570 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. There is an almost identical provision in s611 of the Fair Work Act, giving the Fair Work Commission a similar costs power, conditioned by similarly-worded considerations. The predecessor provisions, and the conscious broadening of the statutory terms used in s570, are traced by the Full Court in Australasian Meat Industry Employees’ Union v Fair Work Australia (No 2) (2012) 203 FCR 430; [2012] FCAFC 103 at [3]- [4] per Jessup and Tracey JJ.65.None of those propositions deny the Court’s ability to find that one or both of the two preconditions expressed in
ss570(2)(a) and (b) exist where the factual circumstances warrant it. The legislative policy behind a provision such as s570(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.”The effect of s.570 is to limit the Court’s power in relation to any order for costs in respect of proceedings under the FW Act. As a result the Court may only order a party to such proceedings to pay the costs of another party only if the Court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause, or that the party’s unreasonable act or omission caused the other party to incur costs. It is the last mentioned ground that the respondent in this case contends warrants an order for costs. The provisions of ss.569, 569A and 570(2)(a) of the FW Act are not relevant for this application.
Consideration
The basis for an award of costs against the applicant under s.570(2)(b) of the FW Act that is alleged by the respondent is unreasonable acts or omissions by the applicant. The respondent relies on the affidavit of its solicitor in support of that application. The respondent alleged the following acts and/or omissions of the applicant were unreasonable:
a)failing to file and serve affidavit material on or before 2 May 2014 in accordance with the orders made on 14 March 2014;
b)failing to file and serve affidavit material on or before 23 May 2014 in accordance with the orders made by the Court on 14 May 2014;
c)failing to provide medical evidence in accordance with the orders made on 16 September 2014;
d)
failing to provide consent orders following the hearing on
14 November 2014;
e)failing to respond to the respondents offer to settle the matter which was made on 20 November 2014;
f)failing to file and serve affidavits in reply by 18 December 2014;
g)continuing proceedings after 20 November 2014 when the respondent made an offer to settle the matter; and
h)continuing proceedings after 10 February 2015 when the respondent reiterated its earlier offer to settle the matter.
Whilst pursuant to s.570(2)(b) of the FW Act the Court may order a party to pay costs if the Court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs such an order is discretionary and only if the Court is satisfied that is the case.
In Rentuza v Westside Auto Wholesale [2009] FMCA 1022 (“Rentuza”) Lucev FM (as His Honour then was) considered the issue of whether an unreasonable act or omission had caused a party to incur costs for the purposes of s.570(2)(b) of the FW Act.
At paragraphs [26] to [28] in Rentuza His Honour said:
“26.For the purposes of s.570(2)(b) two criteria must be fulfilled. They are:
(a) that a party must have engaged in an unreasonable act or omission; and
(b) that the unreasonable act or omission must have caused another party to incur costs in connection with the proceeding.
27.Whether a party has engaged in an unreasonable act or omission depends upon an objective analysis of the particular circumstances of the case.
28.The exercise of the discretion in s.570(2)(b) is not necessarily engaged because:
(a) a party does not conduct litigation efficiently;
(b) a concession is made late;
(c) a party may have acted in a different or timelier fashion;
(d) a party has adopted a genuine but misguided approach.” [Footnotes from original omitted]
For the purposes of s.570(2)(b) of the FW Act, the Court must be satisfied that two criteria have been fulfilled, as set out in Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574 (“Clarke”) they are:
“(a)that a party must have engaged in an unreasonable act or omission; and
(b)that the unreasonable act or omission must have caused another party to incur costs in connection with the proceedings.”
Whether a party has engaged in an unreasonable act or omission depends upon an objective analysis of the particular circumstances of the case (see Australian and International Pilots Association v Qantas Airways Ltd (No.3) [2007] FCA 879).
The provisions on which the respondent relies to ground its application for costs are one of the exceptions to the general rule that in proceedings under the FW Act each party bears its own costs. Moreover as the decision in Clarke (supra) makes clear the Court still retains a discretion on the question of costs.[1]
[1] See Clarke at [29].
In relation to the first two alleged acts or omissions at paragraphs 9(a) and (b) above, the delays referred to are now complained about by the respondent. However as correspondence between the parties bears out[2] the respondent had the opportunity to invoke the default provisions of the Rules but chose not to do so. Importantly, when the proceedings came before the Court on 16 September 2014 for trial that date was vacated by consent as neither party had complied with the orders and directions.
[2] See Annexure G to affidavit of Michael Joseph McIvor filed 16 September 2014
The next two alleged acts or omissions at paragraphs 9(c) and (d) fall into the same category. Whilst there may have been delays I am not satisfied, particularly given the consent orders of 9 December 2014, the respondent was prejudiced by this or that it caused the respondent to incur costs.
The alleged acts or omissions at paragraphs 9(e), (g) and (h) can be dealt with together. On the respondent’s own evidence the offer referred to in (e) was only open for 1 day and there is no evidence it was actually received before it expired. This deals with the matters referred to in 9(e) and (g). The offer referred to at paragraph 9(h) appears on the basis the correspondence annexed to Mr Shaw’s affidavit to have been viewed by the applicant’s solicitor as risible.
Usually a deliberate decision to refuse a reasonable offer of settlement is a factor which would weigh in favour of a finding of unreasonable action.[3] Whilst the substantive application was dismissed, I am not satisfied there was a reasonable offer which was rejected which caused the respondent to incur costs. Given this I am not satisfied there were acts or omissions as alleged in paragraphs 9(e), (g) and (h) or that they caused the respondent to incur costs.
[3] See Cugura v Frankston City Council [2012] FCA 1299 at para [31]
That leaves the alleged act or omission at paragraph 9(f). No complaint was made about this previously. The respondent could have invoked the default provisions of the Rules but did not do so. Given the time left to trial, there was no suggestion then, that it had been prejudiced. On the material before the Court I am not satisfied there was an act or omission in paragraph 9(f) which caused the respondent to incur costs.
In the circumstances of this particular case, I decline to exercise my discretion to order costs in relation to the alleged acts or omissions relied on by the respondent as:
·the delays the respondent now complains of, the respondent either acquiesced to, were addressed by court orders and/or were not of such moment that I could be satisfied that it has been established that they caused the respondent to incur costs; and
·the rejection of the offer (which on its face was modest to say the least) was not in and of itself in the circumstances an unreasonable act or omission; and
·none of the applicant’s claims were entirely misconceived in the sense that on the evidence on which the applicant relied there was no factual basis for the claim(s); and
·the substantive application was dismissed as the Court was satisfied the respondent had discharged the burden of proof under s.361 of the FW Act.
Conclusion
Accordingly there will be orders as set out at the beginning of these reasons for decision.
I certify that the preceding twenty-two (22) paragraphs are a true copy of the reasons for judgment of Judge O'Sullivan
Associate:
Date: 22 May 2015
12
3