Harding-Smith v AMA Group Solutions Pty Ltd
[2023] FedCFamC2G 485
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Harding-Smith v AMA Group Solutions Pty Ltd [2023] FedCFamC2G 485
File number(s): SYG 623 of 2021 Judgment of: JUDGE D HUMPHREYS Date of judgment: 9 June 2023 Catchwords: PRACTICE AND PROCEDURE – COSTS – Application by respondent where substantive proceedings discontinued and judgment on cross-claim – whether there was rejection of a reasonable settlement offer – whether proceedings brought vexatiously and without reasonable cause – whether applicant’s unreasonable conduct cause for costs incurred by respondent. Legislation: Fair Work Act 2009 (Cth) ss 361, 570
Federal Circuit and Family Court of Australia (Division2) (General Federal Law) Rules 2021 (Cth) r 1.04, 13.01, 13.02, 22.02, 22.03
Cases cited: Australian and International Pilots Association v Qantas Airways (No 3) [2007] FCA 879
Australian Workers Union v Leighton Contractors Pty Limited (No 2) [2013] FCAFC 23
Australian Workers Union v Leighton Contractors Pty Limited (No 2) [2013] FCAFC 23
Baker v Patrick Projects Pty Ltd (No2) [2014] FCAFC 166
Construction, Forestry, Mining and Energy Union v Clarke (2008) [2008] FCAFC 143
Construction, Forestry, Mining and Energy Union v Corinthian Industries (Australia) Pty Ltd (No 2) [2014] FCA 351
Cross v Harbour City Ferries Pty Ltd (T/A Harbour City Ferries) (No 2) [2017] FCCA 1713
Health Services Union v Jackson (No 5) [2015] FCA 1467
Kanan v Australian Postal and Telecommunications Union [1992] FCA 539 at 264 and Reeve v Ramsay Health Care Australia Pty Ltd (No 2) [2013] FCAFC 23
Loukis v Compaction Soil Testing Services Pty Ltd (No 2) [2021] FedCFamC2G 185
McLoughlin v Randstad Pty Ltd (No 2) [2021] FCAFC 177
Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20
Ryan v Primesafe [2015] FCA 8
Shea v Energy Australia Services Pty Ltd (No 2) [2015] FCAFC 14
Torpia v Zarfati [2009] FMCA 166
Trustee for the MTGI Trust v Johnson (No 2) [2016] FCAFC 190
Veda Advantage Limited v Malouf Group Enterprises Pty Limited (No 2) [2016] FCA 470
Division: Division 2 General Federal Law Number of paragraphs: 75 Date of last submission/s: 26 May 2023 Date of hearing: 26 May 2023 Place: Parramatta Counsel for the Applicant: Mr Phillips SC Solicitor for the Applicant: Kennedys Law Firm Counsel for the Respondent: Mr Furlan Solicitor for the Respondent: Seyfarth Shaw Australia ORDERS
SYG 623 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: STEPHEN JAMES HARDING-SMITH
Applicant
AND: AMA GROUP SOLUTIONS PTY LTD (ACN 124 094 739)
Respondent
order made by:
JUDGE D HUMPHREYS
DATE OF ORDER:
9 June 2023
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 D HUMPHREYS
INTRODUCTION
This judgement concerns an application for costs made by AMA Group Solutions Pty Ltd (“AMA”) in respect of proceedings under the Fair Work Act 2009 (Cth) (“the Act”) instituted by Mr Harding-Smith.
On 6 April 2021, Mr Harding-Smith commenced proceedings alleging, inter alia, that AMA took adverse action against him by summarily terminating his employment with them for alleged serious and wilful misconduct. It was alleged that Mr Harding-Smith had made three unauthorised payments to the benefit of Mr Andrew Hopkins, a Director of AMA. These were as follows:
a. On 3 March 2017, $36,000 for the purchase of a motor vehicle.
b. On 18 October 2017, $69,241.40 for the purchase of another motor vehicle; and
c. On 22 July 2018, $150,910 for the purchase of a third motor vehicle.
It is common ground between the parties that there were some negotiations between the parties in terms of Mr Harding-Smith being allowed to resign, however these foundered. On 10 February 2021, Mr Harding-Smith gave his written resignation from AMA. This was rejected and AMA summarily dismissed him from his position as Chief Financial Officer (“CFO”) of the Panel Division of AMA.
Following the commencement of proceedings, AMA filed a cross-claim against Mr Harding-Smith seeking repayment of a loan made by AMA to him in 2019 in the sum of $68,002.70.
After one vacated trial date in 2022, the matter was set down for a five day hearing before the Court on 11 April 2023. In the lead up to that date there was quite acrimonious correspondence between the solicitors acting for Mr Harding-Smith and AMA in which various allegations were made of non-compliance with Court orders for the production of documents and other issues. Counsel for AMA submits that this correspondence, which included an attempt to have the matter transferred to the Federal Court, can be inferred as evidence of repeated attempts to cause the trial date of 11 April 2023 to be vacated.
MEDICAL ISSUES WITH MR HARDING SMITH
When the matter was called on the 11 April 2023, the Court was advised that on the previous evening, Mr Harding-Smith had attended Royal Prince Alfred Hospital emergency Department, complaining of chest pain. A medical certificate was produced to the Court that stated he was treated at the hospital on 10 April 2023. No diagnosis was provided. The medical certificate further stated “he will be unable to attend work/school from 10/4/2023 to 12/4 /2023”.
Given the unsatisfactory nature of the medical certificate, the matter was adjourned until the next day with a request that a further medical report be provided.
On 12 April 2023, a medical certificate was provided from a Dr James Muang. That medical certificate indicated that Mr Harding-Smith had attended hospital on the evening of 10 April 2023 with chest pain. He was having heart attack like symptoms and has a strong family history of heart issues. It stated “his risk of a heart attack is high and he needs further investigations and treatment from the above issues”. The medical certificate stated he was unfit to attend Court for the period 11 April 2023 to 21 April 2023 inclusive. It later became apparent that Dr Muang at no point physically examined Mr Harding Smith, and that the medical certificate was provided after a telehealth consultation.
Given the contents of the medical report from Dr Muang, the Court felt it had no option other than to vacate the April hearing dates and relisted the matter for five days commencing on 22 May 2023. A case management hearing was set down for 5 May 2023 and then on 15 May 2023.
At the 15 May 2023 hearing, further medical certificates were produced from a Dr Nicholas Lubke, of Benowa Queensland. Dr Lubke indicated that, in his view, Mr Harding-Smith would be unable to participate in Court appearances (including via video link), on 22 May 2022. He noted however, that Mr Harding-Smith had been having cardiac investigations and he had returned a normal stress echocardiogram and 24-hour holter monitor. Dr Lubke stated that a further CT coronary calcium score test was recommended and that he anticipated that if the score was reassuring, Mr Harding-Smith would be fit to participate in Court from 29 May 2023. The Court notes, of course, this was after the conclusion of the time that have been set aside for the trial.
By this stage, that Emergency Department discharge summary had been obtained via a notice to produce from the applicant’s solicitors. Mr Harding-Smith had been provided with this document following his attendance at Royal Prince Alfred emergency department. For reasons unknown, this additional document was not provided by Mr Harding-Smith to his solicitors when the adjournment of the hearing in April was being sought. It is significant to note that the diagnosis, was noted as “atypical chest pain”. He was not currently hypertensive nor did he have high cholesterol. It was determined that the chest pain was unlikely to be associated with a heart attack and most likely a component of anxiety related to what was described as a family meeting, but in reality the Court case commencing the following day.
On 15 May 2023, noting that Mr Harding-Smith had returned negative tests (with the exception of the calcium CT scan) and that his symptoms seemed associated with stress from the upcoming Court case, the Court, over objection from Mr Harding Smith’s representation, confirmed the hearing dates commencing 22 May 2023.
It was necessary for there to be yet a further urgent directions hearing on Friday 19 May 2023, following correspondence from the applicant’s solicitors to the respondent solicitors, in which it was stated that Mr Harding-Smith “intended to give his evidence via video link”. Following a short hearing, in which the Court noted that it was not a matter for the applicant to determine unilaterally the manner in which he gave his evidence, the Court ordered that the applicant would be required to attend in person for the hearing.
The matter commenced on 22 May 2023. On 23 May 2023, Mr Harding-Smith discontinued his proceedings against AMA. Judgement for the cross-claim was entered against Mr Harding-Smith. It was indicated however, by the respondents, that they wished to pursue the issue of costs. Accordingly, the matter was stood over to 26 May 2023 for hearing on the issue of costs only.
THE RESPONDENT’S COSTS APPLICATION
The respondent sought the following orders:
a. That the applicant pay the whole of the Respondent’s costs pursuant to section 570(2)(a) or 570(2)(b) of the Fair Work Act 2009 (Cth) on a party party basis from the commencement of the proceedings.
b. That the Applicant pay the whole of the Respondent’s costs in respect of the breach of contract claim / wrongful dismissal claim, on an indemnity basis pursuant to section 570(2)(a) or 570(2)(b) of the Fair Work Act 2009 (Cth) from the commencement of the proceedings.
c. That, in the alternative, pursuant to section 570(2)(b) of the Fair Work Act 2009 (Cth), the Applicant pay the Respondent’s costs thrown away by reason of the adjournment of the trial commencing 11 April 2023 the party party basis.
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; 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.
The Court operates under rules contained within Federal Circuit and Family Court of Australia (Division2) (General Federal Law) Rules 2021 (Cth) (“the Rules”). Rule 1.04 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 resolution 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 13.01(2) of the Rules provides that a party may apply to the Court for an order for costs where the other party discontinues an application. Rule 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 be 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.
Rule 22.03 reads as follows:
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. 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 preferred by the respondent, would be to allow costs on an indemnity basis.
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 Limited (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
The above principles 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: 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 (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) [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 Corinthian Industries (Australia) Pty Ltd (No 2) [2014] FCA 351 (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:
[6] 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 it had decided not to press the Union membership claim or the allegation that Corinthian had contravened the Fair Work Act 2009 (Cth) 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 to reduce costs and unnecessary inconvenience to other parties…
[11] Corinthian also relied upon s 570(2)(b) to seek its 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: '[e]ven 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 or seeking a costs order bears the onus of establishing that the offeree’s refusal was unreasonable: 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) (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 (“Veda”) in holding that: in deciding whether it is unreasonable for an offer to be rejected, the following matters should ordinarily be considered:
a. the stage of proceeding when the offer was made;
b. the time afforded to the offeree to consider the offer;
c. the extent of the compromise involved;
d. the offeree’s prospects of success, assessed as at the date of the offer;
e. the clarity with which the terms of the offer were expressed; and
f. 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: 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) disregarded 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 justify the Court in departing from the ordinary practice: Australian International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879.
CONSIDERATION
Ground 1: Rejection of a Reasonable Settlement Offer
AMA accepts that the mere fact of the withdrawal of the Applicant’s proceedings is insufficient, in and of itself, to justify an order for costs in proceedings to which s 570 of the Act applies: Morris v McConaghy Australia Pty Ltd [2018] FCA 2099 at [5]-[6].
It is firstly submitted that AMA made a settlement offer to the applicant to resolve all matters on the basis that first, the applicant would resign his employment. Secondly, he would receive an ex-gratia payment of 3 months’ salary. Thirdly, he would repay the balance of his shareholder loan and lastly other unrelated items in the draft settlement deed. The applicant rejected that settlement offer.
The outcome of the proceedings is clearly less favourable than the settlement offer. It is thus appropriate to conclude that the applicant, in having commenced and continued the proceedings was an unreasonable act which caused the respondent to incur costs: Ryan v Primesafe [2015] FCA 8 at [114].
The Court does not accept this submission. In terms of the matters outlined in Veda, the Court notes that only one offer of settlement was made. This took place in a meeting between the respondents and the applicant on 22 January 2021. There have been no prior warning of the subject matter of the meeting. The offer was due to expire on 25 January 2021, being the following Monday. At that time, the applicant was made aware of the nature of the allegations against him. The applicant sought legal advice and a letter was sent on his behalf “requesting all facts and circumstances of the allegations”. His solicitors were provided with a bundle of documents on 3 February 2021 and the offer was extended until 5 February 2021. However, a copy of the forensic accountant’s investigation was not provided. On 10 February 2021, the applicant sent in a letter of resignation and he was summarily dismissed later that afternoon. No further offers of compromise been made by the respondent since that time.
The Court notes that the settlement offers took place at the very initial stages of the matter and prior to the instigation of proceedings. At that stage, the applicant was not aware of the full extent of the matters against him. The offer of compromise only went to the applicant resigning and being granted three months’ pay on an ex-gratia basis. There was no indication, at that stage, as proceedings had not been commenced, that application for costs would be made in respect of legal proceedings if the offer was refused.
In the Court’s view, the rejection of the settlement offer at the time it was made was not unreasonable. The applicant was not in a position to make a fully informed decision in respect of the settlement offer. The Court adopts the principle set out in Loukis v Compaction Soil Testing Services Pty Ltd (No 2) [2021] FedCFamC2G 185 at [29] where Driver J stated:
In the present case, the company was resolute that no money would be paid to Ms Loukis. While there were numerous invitations to her to discontinue, those offers should in my view be seen as an indication of the clear preference of the company for an early resolution, but one which did not involve the payment of any money. As I have already noted, Ms Loukis had an arguable case and she was entitled to have that case heard and determined by the Court. I ordered the parties to mediation early in the proceedings, which was not successful. As already noted, I also made observations at the interlocutory stage which were intended to stimulate further consultation which in fact occurred. Again, however, the company was resolute in refusing any settlement which involved the payment of money. That was the company’s right but the company cannot expect Ms Loukis to now be the insurer of its choice of position (emphasis added).
The Court adopts this reasoning in the present matter.
Ground one has no merit.
Ground Two: The Wrongful Dismissal Claim
Ground two seeks a costs order in respect of the whole of the wrongful dismissal claim on a part-party basis or, in the alternative, on an indemnity basis. The rationale for this claim is that the applicant instituted the proceedings vexatiously and without reasonable cause and that this caused the respondent to incur costs.
AMA submitted that the basis for his termination was clearly set out in the summary termination letter of 10 February 2021. That included knowledge of unauthorised payments in the form of motor vehicles purchased by AMA for the benefit of Mr Andrew Hopkins.
In the course of his Affidavit evidence, the applicant stated that he understood Mr Hopkins was entitled to a car allowance of $100,000 per annum and that all times, when Mr Hopkins requested that he make a payment for the motor vehicles, that Mr Hopkins was authorised to receive the payments.
During cross-examination, the applicant made a number of concessions including that he caused $100,000 to be paid in June 2018 to Mr Hopkins and then later in July 2018, (the Court notes a new financial year) he caused the company to pay $150,910 for a car for Ms Rachel Hopkins. The applicant stated that he knew the purchase of the vehicle for Ms Hopkins exceeded the amount he understood to be the amount payable under the car allowance. The applicant also conceded that by not checking (with the finance area of AMA in relation to Mr Hopkin’s entitlements), he was acting improperly.
It was submitted that there was no proper basis for the applicant to deny that his actions amounted to serious misconduct and that his claim never enjoyed any reasonable prospects of success and was thus vexatious.
Whether a proceeding was instituted “without reasonable cause’, can be tested by asking “whether, upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success”: Kanan v Australian Postal and Telecommunications Union [1992] FCA 539 at 264 and Reeve v Ramsay Health Care Australia Pty Ltd (No 2) [2013] FCAFC 23 at [29].
It was submitted that in light of the applicant’s concession, as to his state of mind the time he made the $150,910 payment, it must have been apparent to him (properly advised) that the time he commenced proceedings that they had no reasonable prospect of success.
On behalf of the applicant, it was submitted that the concessions made by the applicant must be viewed with his evidence as a whole in the context of which it was made. Critically, the concession occurred during rigorous cross-examination by both Counsel for the respondent together with some questions asked by the Court. It was in the light of these answers, that the parties were invited to undertake further discussions as to whether or not the matter might be resolved.
It was submitted that whilst the time for the assessment of reasonableness or otherwise of the conduct is the time in which the proceedings were instituted, this principle relates only to whether the discretion to award costs is enlivened. It is not determinative of whether the discretion should be exercised. The court retains the discretion to refrain from exercising in an appropriate case: Australian Workers Union v Leighton Contractors Pty Limited (No 2) [2013] FCAFC 23 at [8]. Further, the concession made, mid cross-examination, is actually to the benefit of AMA and, notwithstanding any additional costs that were incurred by AMA, its lateness cannot be characterised as unreasonable in the circumstances of the proceedings.
It is perhaps useful when considering whether or not the proceedings were unreasonably instituted or vexatious, to consider the terms of the contract of employment that governed the applicant. Under item 4.1(a), the applicant was required to exercise powers and carry out duties “as directed by the contact person”. Further, the applicant was also required under item 4.1c “to comply with all lawful orders and instructions given to him by the contact person”.
The applicant stated that all times he acted in accordance with directions received from Mr Hopkins and that it was Mr Hopkins who authorised the payments. The applicant claims that he merely acted at the direction of Mr Hopkins who was the ‘contact person’ for the purposes of the employment contract. Further, whilst he had been told Mr Hopkins had a car allowance of $100,000 per annum, the applicant was unaware of the full nature of the contract between AMA and Mr Hopkins, which may have made provision for further payments.
The applicant received no benefit from the payments, and followed the directions of Mr Hopkins. Mr Hopkins had previously been the principal of the company that had been bought out by AMA. Mr Hopkins occupied a position as a director of AMA when he directed the payments be made.
The Court is satisfied it was only after all of the evidence became available, that issues relating to the lawfulness of the directions given by Mr Hopkins would have become apparent. The Court is not satisfied that the proceedings, at the time they were instituted, meet the very high test of vexatious or that they had no reasonable prospects of success.
Even if the Court is wrong on this, the Court would not exercise its discretion to award costs in any event, due to, what it is satisfied was, a genuine but misconceived belief by the applicant that he was acting in accordance with his duties and making payments as directed by Mr Hopkins.
In these circumstances, the Court is not satisfied that it is appropriate to make an order for party-party costs. That being the case, it is not necessary to consider whether not cost should be ordered on an indemnity basis.
Ground 3: Costs Thrown Away by Reason of the Adjournment
The factual background with of the matter has been set out above. AMA submits that there has been conduct by the applicant largely concerning the adjournment of the trial fixed for 11 April 2023, (but continuing on and after that date) that meets the statutory description of unreasonable.
AMA note that on 6 April 2023, the applicant’s solicitors wrote a letter making serious allegations that have been failure to comply with orders of the court for the production of documents. This letter asserted the trial would not be able to proceed for this reason. A comprehensive response was provided rejecting the allegation, however, there was no response to this and a subsequent letter.
On 9 April 2023, the applicant’s then Senior Counsel contacted AMA’s Counsel with a request that AMA consent to an order that the proceedings be transferred to the Federal Court. This was not provided. It was later clarified that no application would be made to this Court for the transfer of the proceedings.
The Court notes at this point, that even if such an application had been made, it would most likely have been refused.
The applicant arrived in Sydney on Sunday, 10 April 2023. He then attended Royal Prince Alfred Hospital Emergency Department complaining of chest pain. He underwent some tests but was discharged noting that his chest pain was unlikely to be coronary artery disease related and that he had undertaken an echocardiogram.
AMA submits the applicant must have been told his test results indicated he was not having, and had not had, a heart attack. This is pure speculation on the part of AMA. In light of the subsequent medical evidence that was put before the Court, that in view of his familial history of heart issues, Dr Muang certified in a medical certificate that the applicant was unfit to attend Court and needed “further investigations and treatment for the above issues”.
Counsel for AMA submit that the Court was not told that Dr Muang only conducted a tele-health conference with the applicant. It may be inferred that his medical opinion was based on the material that was conveyed to him by the applicant.
Further, the Emergency Department Discharge Summary was only of provided to AMA after a Notice to Produce served upon it.
There was yet a second attempt to adjourn the trial on medical grounds when on 15 May 2023 the applicant proffered a further medical certificate. That medical certificate was the subject of a directions hearing on 19 May 2023, and the application for adjournment was refused.
On 17 May 2023, the applicant solicitors wrote to AMA repeating the serious allegation of non-compliance by the respondent with the Court’s orders for the production of documents, however again, this matter was not ventilated when the trial commenced.
Counsel for AMA submit there has been an ongoing strategy from about 6 April 2023 to cause the adjournment of the trial. This inference can be supported by:
a. the subsequent conduct of the applicant seeking to adjourn the trial again (after it was fixed the 22 May 2023), without proper ground supported by evidence; and
b. the continuing attempts to pressure the respondent to agree to adjournment on other, unrelated grounds, just before the 11 April 2023 trial was to commence and again just prior to the commencement of the trial on 22 May.
On behalf of the applicant, it was submitted that there had been no strategy to cause an adjournment of the trial. Further, the medical certificate provided by Royal Prince Alfred Hospital Emergency Department, although unsatisfactory, indicated that the applicant was not fit to attend work on the day the trial was to commence.
It was submitted that, as identified by his treating physician Dr Lubke, in a subsequent medical report, the state of the applicant’s physical health was likely a result of significant stress and anxiety. It was possible that the applicant experienced a severe panic attack on 10 April 2023 which can often replicate the symptoms of a heart attack. During the period that he continued to undergo a cardiac investigations, it was therefore imperative that he avoid stressful situations which could have exacerbated his symptoms.
Given the state of the medical evidence that was available to the Court when the original trial date of 11 April was adjourned, as set out above, the Court felt it had no option other than to adjourn the matter. To not adjourn the matter would have been unreasonable in the Court’s part.
The medical advice to undertake further tests to ensure that the applicant was not suffering from a heart condition, to the Court’s mind, was both prudent and reasonable. Once he had undertaken a “stress echocardiogram test” and a ‘24 hour holter monitor test’ which return normal results, the Court was satisfied that there was no need for any further adjournment due to the medical issues.
Whilst AMA claim there was a deliberate strategy to try and avoid the matter coming to trial, the Court is not satisfied on the evidence before it, that it can make such a positive finding. Whilst it is clear there was acrimonious correspondence between the parties and various accusations being made as to non-compliance, this is perhaps not unusual in hard fought litigation where parties seek to take every point to gain a forensic advantage.
The Court is not satisfied that the applicant’s conduct in relation to medical issues, which certainly caused an adjournment, meets the stringent threshold of unreasonable conduct such that a costs order would be justified under s 570 the Act.
Ground three has no merit.
CONCLUSION
For the reasons given above, the Court is not satisfied it is appropriate to make any order for costs in favour of AMA. The application for costs is dismissed.
I certify that the preceding seventy-five (75) numbered paragraphs are a true copy of the Reasons for Judgment of Judge D Humphreys. Deputy Associate:
Dated: 9 June 2023
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