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
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…
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- Case
- [2023] FedCFamC2G 485
- Decision Date
CaseChat Overview and Summary
The Court considered whether the rejection of a reasonable settlement offer by the applicant could justify an order for costs. The respondent submitted that it had made a settlement offer which the applicant rejected, and the outcome of the proceedings was less favourable than the offer. However, the Court found that the settlement offer was made at an early stage of the matter, prior to the commencement of proceedings, and the applicant was not fully informed about the allegations against him at the time. Consequently, the rejection of the settlement offer was not deemed unreasonable.
In light of the above, the Court dismissed the application for costs. The Court emphasised that the rejection of the settlement offer was not unreasonable given the circumstances, and the applicant was entitled to have his case heard and determined by the Court. The Court also noted that the respondent had consistently refused to offer any settlement that involved the payment of money, and the applicant could not be expected to be the insurer of the respondent's choice of position.
The Court concluded that the justice of the case did not require the award of indemnity costs, and there were no special or unusual features of the case to justify departing from the ordinary practice. Therefore, the application for costs was dismissed.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
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.CONSIDERATIONGround 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).