Green v Preston Motors Pty Ltd (No 2)
[2022] FedCFamC2G 840
Federal Circuit and Family Court of Australia
(DIVISION 2)
Green v Preston Motors Pty Ltd (No 2) [2022] FedCFamC2G 840
File number: MLG 2653 of 2020 Judgment of: JUDGE BLAKE Date of judgment: 13 October 2022 Catchwords: INDUSTRIAL LAW – COSTS – s 570(2)(b) of Fair Work Act 2009 – whether failure to reconsider claims in light of Amended Defence constitutes an act or omission for the purposes of s 570(2)(b) – whether rejection of offer of compromise constitutes an unreasonable act or omission for the purposes of s 570(2)(b) – Held s 570(2)(b) not engaged – application for costs dismissed. Legislation: Fair Work Act 2009 (Cth), ss 341, 341(1), 361, 570, 570(1), 570(2).
Federal Court Rules 2011, r 25.01.
Cases cited: Australian and International Pilots Association v Qantas (No 3) [2007] FCA 879
AWU v Leighton Contractors Pty Ltd (No 2) (2013) 232 FCR 428
Calderbank v Calderbank [1975] 3 All ER 333
Celand v Skycity Adelaide Pty Ltd [2017] FCAFC 222
Colgate Palmolive v Cussons Pty Ltd (1993) 46 FCR 225
Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority [2005] VSCA 298
Health Services Union v Jackson (No 5) [2015] FCA 1467
McDonald v Parnell Laboratories (Aust) (No 2) (2007) 164 FCR 591
Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20
Mutch v ISG Management Pty Ltd (No 2) [2020] FCA 954
PIA Mortgage Services Pty Ltd v King (No 2) [2020] FCAFC 53
Ryan v Primesafe (No 2)(2015) 323 ALR 107
Shea v TRU Energy Services Pty Ltd (No 6) (2014) 314
Tucker v State of Victoria (No 2) [2021] VSCA 182
Veda Advantage Ltd v Malouf Group Enterprises Pty Ltd (No 2) [2016] FCA 470
Division: Division 2 General Federal Law Number of paragraphs: 33 Date of last submission: 15 August 2022 Date of hearing: 1 August 2022 Place: Melbourne Counsel for the Applicant: Mr A Galbraith Solicitor for the Applicant: Maddison & Associates Counsel for the Respondent: Mr T Donaghey Solicitor for the Respondent: Kalus Kenny Intelex ORDERS
MLG 2653 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: CHRIS GREEN
Applicant
AND: PRESTON MOTORS PTY LTD
Respondent
order made by:
JUDGE BLAKE
DATE OF ORDER:
13 OCTOBER 2022
THE COURT ORDERS THAT:
1.The Respondent’s application for costs filed 22 April 2022 be 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 BLAKE
Chris Green commenced proceedings against Preston Motors Pty Ltd (‘Preston Motors’). The proceedings were brought relying upon, inter alia, certain causes of action available under the Fair Work Act 2009 (‘Act’). The claims proceeded to trial. On 25 March 2022, I delivered written reasons for judgment in which I dismissed Mr Green’s claims in their entirety. Preston Motors now seeks an order for costs against Mr Green on an indemnity basis.
For the reasons that follow, I have decided to dismiss the application for costs.
background
On 23 July 2020, Mr Green commenced proceedings in the then Federal Circuit Court of Australia. The proceeding was commenced by way of Application and the filing of a Form 2. Ultimately, however, Mr Green filed a Statement of Claim on 2 October 2020. Preston Motors filed a Defence on 6 November 2020.
On 15 December 2020, orders were made by the Court for, among other things, Preston Motors to give discovery by filing a list of documents. The list of documents was to be filed by 25 February 2021.
On 19 January 2021 at approximately 12:28pm, the solicitors for Preston Motors sent an email to Mr Green’s solicitors. Attached to the email was an offer of compromise. The offer was made pursuant to Rule 25.01 of the Federal Court Rules 2011 (‘FCA Rules’).
The offer of compromise was rejected by Mr Green (through his solicitors) some three hours later at 3:46pm on 19 January 2021.
On 18 June 2021, Preston Motors filed an Amended Defence in the proceeding.
On 25 March 2022, I delivered judgment in which I dismissed all of Mr Green’s claims. Preston Motors subsequently filed an application for costs on 22 April 2022.
An Application Book was prepared for the hearing in relation to costs. Preston Motors relies on the contents of that book, namely the application for costs, the affidavit of Jessica Seferis, its written submissions and its list of authorities. Mr Green relies on his written submissions and an affidavit of John Douglas. I have considered all of this material.
relevant principles
The application pursued by Preston Motors arises within a proceeding to which section 570 of the Act applies. Section 570 of the Act relevantly provides as follows:
570 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.
(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…
It is apparent from the terms of section 570(1) that the Court lacks jurisdiction to award costs unless one of the limbs of subsection (2) is satisfied. In the event that the Court is satisfied of one of the matters in subsection (2), the Court may still decide not to order costs.
The purpose, principles and approach to the application of section 570(2)(a) and (b) of the Act in any particular case was summarised recently by the Victorian Court of Appeal in Tucker v State of Victoria (No 2) [2021] VSCA 182 (‘Tucker’) at [30]-[32].
[30]It is convenient briefly to summarise the approach to be taken to each paragraph.
[31]Section 570(2)(a) asks whether a party has instituted the proceedings ‘vexatiously or without reasonable cause’. The following principles emerge from the authorities:
(a)The purpose of s 570(2)(a) is to protect parties from the risk of adverse costs in matters arising under the FWA, while also affording costs protection to parties forced to defend proceedings instituted vexatiously or without reasonable cause.
(b)A proceeding will have been instituted vexatiously if it is scandalous, oppressive, embarrassing, discloses no reasonable cause of action, or is otherwise an abuse of the process of the Court.
(c)A proceeding will have been instituted without reasonable cause if the proceeding lacked reasonable prospects of success at the time it was instituted, having regard to the facts apparent to the instituting party at that time. The focus is on the circumstances of the commencement of the proceeding; the manner in which the proceeding is conducted after it is commenced is irrelevant to para (a) but is instead relevant to para (b).
(d)That the proceeding ultimately fails is not decisive. Nor is it enough that a proceeding is merely misconceived. However, a proceeding will lack reasonable prospects of success where, on the instituting party’s own version of the facts, it is doomed to fail.
(e)Where the proceeding at issue is an appeal, the above test as to the absence of reasonable cause applies with minor modifications. The relevant enquiry is whether, having regard to the facts apparent to the applicant at the time of instituting the appeal there were no reasonable prospects of success. In evaluating those prospects, regard may be had to the reasons for judgment or decision under appeal and the grounds relied on to challenge the judgment or decision.
[32] The following principles apply in the case of s 570(2)(b):
(f)Paragraph (b) is enlivened when two criteria are satisfied:
(i)one party has engaged in an ‘unreasonable act or omission’; and
(ii)that unreasonable act or omission has caused the other party to incur costs.
(g)Unreasonableness is to be determined objectively. It is a question of impression and degree, to be assessed by reference to the particular circumstances of a given case.
(h)Unreasonableness is not to be confused with negligence or inefficiency. A failure to conduct litigation in the most efficient way does not, without more, enliven the paragraph. The fact that a party has conducted litigation inefficiently, made belated concessions, or adopted a misguided approach may be relevant to, but will not be conclusive of, the question of unreasonableness.
(footnotes omitted)
In Ryan v Primesafe (No 2)(2015) 323 ALR 107 (‘Ryan’), Mortimer J stated at [64]:
[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 s 570(2) of the Fair Work Act. Although some of the authorities relied on dealt with the predecessor provisions to s 570, there is no difference in substance in the way the threshold is expressed. 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. In so far 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 s 611 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 s 570, are traced by the Full Court in Australasian Meat Industry Employees’ Union v Fair Work Australia (No 2) (2012) 203 FCR 430; 289 ALR 552; [2012] FCAFC 103 at [3]–[4] per Jessup and Tracey JJ.
A question arises as to what is meant by the term ‘unreasonable’ within section 570(2)(b). Some guidance can be found from Tucker: see above. Note also the following: whether an act is ‘unreasonable’ is informed by its context and requires an assessment of all of the circumstances: see Celand v Skycity Adelaide Pty Ltd [2017] FCAFC 222 at [163]; Australian and International Pilots Association v Qantas (No 3) [2007] FCA 879 at [32]. ‘Unreasonable’ does not equate to exceptional: see AWU v Leighton Contractors Pty Ltd (No 2) (2013) 232 FCR 428 at 430 [7]; however see also Mutch v ISG Management Pty Ltd (No 2) [2020] FCA 954 at [7]-[8], particularly where Bromberg J notes that the occasions upon which costs will be awarded under section 570 are likely to be exceptional. A failure to accept an offer of compromise is capable of constituting an unreasonable act or omission for the purposes of section 570(2) of the Act: see Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20 and also McDonald v Parnell Laboratories (Aust) (No 2) (2007) 164 FCR 591 at 598-9. Whether the refusal to accept an offer of compromise is reasonable is to be determined in light of the circumstances that existed at the time that the rejection occurred. The party seeking a costs order bears the onus of establishing that the refusal of the offer was unreasonable: see Health Services Union v Jackson (No 5) [2015] FCA 1467 at [46].
There is then the question of whether any costs order, if made, should be made on an indemnity basis. In Ryan, while Mortimer J considered that the proceedings against the respondent’s lawyer were instituted without reasonable cause and the unreasonable conduct in joining the respondent’s lawyer caused him to incur costs, without more, those factors did not justify what would be, in substance, a second departure from the underlying policy evidenced in section 570 of the Act. Mortimer J awarded costs on a party/party basis. The principles relating to awarding costs on an indemnity basis are summarised conveniently by Shepherd J in Colgate Palmolive v Cussons Pty Ltd (1993) 46 FCR 225.
consideration
Preston Motors identified two unreasonable acts or omissions of Mr Green that are said to engage and satisfy section 570(2)(b) of the Act. It is convenient to deal with each of them in turn.
The Amended Defence of Preston Motors
Preston Motors submit that the contents of the Amended Defence put Mr Green on notice that the ‘workplace right’ aspect of his case would ‘be under sustained challenge’ beyond merely denials which existed previously. Further, it was submitted that when confronted with the Amended Defence, Mr Green did nothing in response. For example, he did not review his claims, or amend them, or reconsider them according to the law as it prevailed. He simply did nothing. This is said to constitute an omission for the purposes of section 570(2)(b) of the Act.
In order to understand this submission, it is necessary to understand the claims advanced by Mr Green. In the Statement of Claim, Mr Green alleged various complaints and enquiries in respect of his employment. These complaints were alleged to be complaints or enquiries within the meaning of section 341(1)(c) of the Act. Among the complaints identified by Mr Green in his Statement of Claim were complaints in respect of a meeting that occurred on 14 February 2020 in relation to marketing overspend (paragraph 24 (d) and (f) of the Statement of Claim), a complaint about employees being stood down that occurred at a meeting on 26 March 2020 (paragraph 30 (b) of the Statement of Claim), a complaint about the accuracy of financial data and a complaint about the management team managing the business, both of which occurred at a meeting on 28 March 2020 (paragraph 36 (e) and (f) of the Statement of Claim).
At paragraph 48A of the Amended Defence, Preston Motors pleaded for the first time that none of the alleged workplace rights set out in the paragraph above have as their underpinning any right or entitlement in the sense contemplated by Dodds-Streeton J in Shea v TRU Energy Services Pty Ltd (No 6) (2014) 314 or the majority in PIA Mortgage Services Pty Ltd v King (No 2) [2020] FCAFC 53 and that therefore none of those matters were capable of being found to be workplace rights within the meaning of section 341 of the Act. As none of these were found to be an exercise of workplace rights, it is submitted inter alia that section 570(2)(b) is engaged.
In my view, none of the matters raised above by Preston Motors engage section 570(2)(b) of the Act.
The allegations referred to above and raised by Mr Green in the Statement of Claim were not just claims in relation to the content of what was said or complained about. Mr Green also complained about the manner of Mr Gattereder and the way Mr Gattereder treated him. The Court was required first to make findings of fact about what occurred. It was then required to assess whether that finding gave rise to a workplace right within the meaning of section 341 of the Act. For example, it is true that ultimately the Court found that Mr Green’s complaints about what occurred at the meeting on 28 March 2020 were not complaints that fall within section 341 of the Act. That conclusion was based on findings made about what occurred at the meeting. The conclusion that the complaints did not fall within the meaning of section 341 of the Act may have been different, however, had the Court found as a matter of fact that Mr Gattereder behaved as alleged. In other words, this is not a case where it could be said Mr Green ought to have looked at the pleadings and reassessed his position. He could not do that because the Court was first required to determine what occurred as a matter of fact.
The other aspect that arises here is that Preston Motors submission in respect of the Amended Defence focused on what was pleaded in five subparagraphs of what was otherwise a lengthy statement of claim. Many other claims were advanced by Mr Green and some of the workplace rights pleaded were relevantly admitted by Preston Motors in the Amended Defence, or upheld by the Court. When the entirety of the claim is examined, it can be seen that the point raised by Preston Motors affects only a small number of the claims as pleaded.
Given what I have set out above, the failure to revisit the claims identified in the Amended Defence does not constitute an unreasonable act or omission for the purposes of section 570(2)(b) of the Act. Furthermore, I conclude that any failure or omission (if it occurred) to revisit the claims did not cause Preston Motors to incur costs, given the circumstances of the case and the scope of the overall claims being advanced in the proceeding.
The failure to accept the offer of compromise
The second alleged unreasonable act said to satisfy section 570(2)(b) is what Preston Motors describe as a ‘combined series of events’ relating to the offer of compromise served in January 2021. In summary, it is submitted that the offer itself was reasonable, there was a failure by Mr Green to consider the implications of the offer evidenced by his almost immediate rejection of the offer, and that no counter offer was ever put. The failure to accept the offer of compromise is said to be an unreasonable act or omission that caused Preston Motors to incur costs within the meaning of section 570(2)(b).
The offer of compromise was sent by email from the solicitors for Preston Motors to Mr Green’s solicitors by email at 12:28pm on 19 January 2021. The covering email simply stated ‘please see attached, by way of service, offer of compromise’. The offer was then in the following terms:
TAKE NOTICE that the Respondent offers to compromise all claims in this proceeding on the basis that:
1. The Respondent pays to the Applicant:
(a)the sum of $75,000, inclusive of interest, in full and final settlement of all claims arising in the proceeding (Settlement Sum); and
(b)the Applicant’s costs on a party - party basis to the date the offer is accepted, to be assessed failing agreement.
2.This offer of compromise is open to be accepted for 14 days after service of this offer.
3.If this offer of compromise is accepted, the Settlement Sum will be paid within 28 days after written notice of the Applicant’s acceptance of this offer is served on the Respondent.
This offer of compromise is served in accordance with Rule 25.01 of the Federal Court Rules 2011.
As I have noted above, a failure to accept an offer of compromise is capable of constituting an unreasonable act or omission for the purposes of section 570(2) of the Act.
In Veda Advantage Ltd v Malouf Group Enterprises Pty Ltd (No 2) [2016] FCA 470 Katzmann J was asked to determine a costs application where two offers of settlement had been made in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333. Katzmann J, at [31], and quoting the statements of the Victorian Court of Appeal in Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority [2005] VSCA 298 stated as follows:
[31]In contrast, however, to an offer of compromise made under r 25.01, refusal 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.
See Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) (2005) 13 VR 435 at [25].
There are aspects of the offer and the circumstances in which it was sent that suggest the refusal to accept the offer may have been unreasonable. The amount offered clearly exceeded what Mr Green ultimately obtained at trial. Mr Green submitted that the amount of the offer was but a fraction of the amount he was seeking and could not on that view be seen to be reasonable. I disagree. Not only does the amount of the offer exceed what Mr Green obtained, but it was an amount that would have covered his claim for notice of termination as well as potentially some other aspects of his claim, and under which he also received his costs. The amount offered was reasonable. The offer was also clearly expressed. It delineated between the amount offered to compromise the claim and included an offer in respect of costs. It was also open for acceptance for a reasonable period being 14 days. While the offer did not foreshadow an application for indemnity costs, it did not need to. The FCA Rules make it plain that a failure to accept an offer made under the Rules may result in an award of indemnity costs.
There are other matters, however, that need to be considered. The offer was made early in the proceedings. The pleadings had just closed. Affidavit evidence had not been filed. Orders for discovery had been made, but discovery itself had not occurred, and Mr Green had therefore not seen any discovered documents. In this context, it is also important to observe that a substantial number of the claims advanced by Mr Green had the effect of invoking the operation of section 361 of the Act. Section 361 is an important section in respect of claims made under Part 3-1 of the Act. Section 361 relevantly provides that where it is alleged that a person took action for a particular reason in contravention of Part 3-1 of the Act, it is presumed that the action was taken for that reason unless the person proves otherwise. In other words, and in the context of this case, once Mr Green had made his allegations that particular conduct occurred for a particular reason, it was incumbent on Preston Motors because of the operation of section 361 of the Act to prove it was acting for or motivated by a different reason. At the stage of the proceeding that the offer was made, Mr Green had made his claims but had not seen any evidence from, or documents from, Preston Motors which might cause him to reconsider his claim, particularly in circumstances where he had the benefit of section 361.
The stage of the proceedings at which the offer was made, and the fact that Mr Green had not seen any evidence from Preston Motors or had the benefit of discovery orders which had been made, is compounded by the following. Preston Motors made no attempt to explain to Mr Green, or to persuade him, as to why the offer of compromise was a reasonable one. No reference was made in the offer or in correspondence accompanying it as to why particular claims were weak or would not succeed. No reference was made to why any defence mounted by Preston Motors was likely to succeed. No explanation was offered as to why the $75,000 offered was a reasonable amount given what was contained within the pleadings. Furthermore, given the operation of section 570 of the Act, no attempt was made by Preston Motors at the time it delivered the offer to explain to Mr Green why he was at risk of not being able to rely on the terms of section 570(1) of the Act. In all of these circumstances, it was not possible for Mr Green to properly understand the offer or to be able to realistically assess his prospects of success.
Preston Motors criticised Mr Green’s peremptory rejection of the offer three hours later. In the ordinary course, I may well have been persuaded that a peremptory rejection of an offer of compromise provides an indication that an offeree did not properly consider his or her prospects for success in light of the offer in hand. I may also have given some weight to the fact that no counter offer was made. Here however, I would not reach the conclusion that Mr Green failed to properly consider the offer he had before him. Mr Green cannot be criticised for his peremptory rejection of the offer, or failing to make a counter offer, in circumstances where he had the benefit of section 361 of the Act, discovery had been ordered but not yet provided, Preston Motors had not filed any evidence and there was no analysis or explanation at all from Preston Motors as to why Mr Green’s position was weak and its position was so strong such that it would enliven an order for costs in a jurisdiction in which costs are not ordinarily ordered.
When all the circumstances are considered, in my view, Mr Green’s failure to accept the offer of compromise does not constitute an unreasonable act or omission that caused Preston Motors to incur costs within the meaning of section 570(2)(b).
Preston Motors did not advance any other submission as to why or how it is able to satisfy or engage the terms of section 570(2)(b) of the Act. It follows that Preston Motors has not satisfied the criteria set out in section 570(2)(b) of the Act. The Court’s power to award costs in this matter is not enlivened. For these reasons, I dismiss the application for costs.
I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Blake. Associate:
Dated: 13 October 2022
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