Heathcote v University of Sydney
[2015] FCCA 243
•6 February 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HEATHCOTE v UNIVERSITY OF SYDNEY | [2015] FCCA 243 |
| Catchwords: COSTS – Application for indemnity cost and for costs thrown away – offer of settlement – late abandonment of certain claims – whether rejection of the offer and the late abandonment an unreasonable act or omission for the purposes of s.570 of the Fair Work Act 2009 (Cth) considered. |
| Legislation: Fair Work Act 2009 (Cth), s.570 |
| Australian and International Pilots Association v Qantas Airways Ltd (No.3) [2007] FCA 879; (2007) 162 FCR 392; 165 IR 464 Calderbank v Calderbank [1975] 3 All ER 333; [1976] Fam 93 McAleer v University of Western Australia (No.2) [2007] FCA 247; (2007) 161 IR 151 Ryan v Primesafe [2015] FCA 8 |
| Applicant: | ADRIAN HEATHCOTE |
| Respondent: | UNIVERSITY OF SYDNEY |
| File Number: | SYG 117 of 2013 |
| Judgment of: | Judge Driver |
| Hearing date: | 6 February 2015 |
| Delivered at: | Sydney |
| Delivered on: | 6 February 2015 |
REPRESENTATION
| Solicitors for the Applicant: | Mr B Hall of bph Legal |
| Solicitors for the Respondent: | Ms L Barel of the University of Sydney |
ORDERS
The applicant is to pay on a party/party basis the respondent’s costs thrown away in responding to claims commenced but abandoned at the commencement of the trial.
The costs awarded pursuant to order 1, if not agreed, are to be assessed and, if necessary, taxed in accordance with the Federal Court Rules.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 117 of 2013
| ADRIAN HEATHCOTE |
Applicant
And
| UNIVERSITY OF SYDNEY |
Respondent
REASONS FOR JUDGMENT
(revised from transcript)
I have before me an application for costs arising out of the principal proceedings in this matter. The respondent (University) was successful in those principal proceedings in terms of the judgment that I delivered on 14 November 2014[1]. The University now seeks its costs of the proceedings in two respects: first, in respect of costs thrown away by the University in responding to claims commenced but abandoned by the applicant (Dr Heathcote); and, secondly, in respect of costs incurred by the University from 18 February 2014. The significance of that date is that the University made an offer of settlement in writing on 10 February 2014, which was rejected. In the alternative, the University seeks a simple order for costs on a party-and-party basis.
[1] Heathcote v University of Sydney [2014] FCCA 613
The University’s application is supported by the affidavit of Jane Emma Wright, made on 11 December 2014. Dr Heathcote opposes any order for costs. He relies on his affidavit made on 3 February 2015. The parties also made both written and oral submissions.
The general background in relation to the claim is set out the University’s written submissions:
These submissions have been prepared on behalf of the University of Sydney (the University) in support of its application for costs in this matter.
The University seeks an order that:
a.Dr Heathcote pay the University 's costs on an indemnity basis:
i. in respect of the costs thrown away by the Respondent in responding to claims commenced but abandoned by the Applicant; and
ii. in respect of costs incurred by the Respondent from 18 February 2014.
b. In the alternative, Dr Heathcote pay the University's costs in respect of 2 (a)(i) and (ii) on a party-party basis.
This costs application is made in accordance with the orders of Judge Driver on 14 February 2014.
This application is made:
a.pursuant to section 79 of the Federal Circuit Court of Australia Act 1999 (Cth) (the FCCA Act) in respect of the claims made by Dr Heathcote that were not in relation to a matter arising under the Fair Work Act 2009 (Cth) (FW Act); and
b.pursuant to section 570 of the FW Act in respect of matters arising under the FW Act.
Dr Heathcote was not represented in the proceedings. The University submits that Dr Heathcote's status as an unrepresented litigant should afford him “no special privileges” and could not justify a “lack of proper attention to the interests of other parties”, namely the University, as set out below.[2]
[2] Bahonko v Sterjov [2008] FCAFC 30; (2008) 166 FCR 415 at [6]
Claims brought by Dr Heathcote
Based on the application and claim filed by Dr Heathcote on 22 January 2013 (Application), Dr Heathcote's response to request for further and better particulars dated 8 March 2013 (Response), the affidavits of Dr Heathcote dated 31 May 2013, 3 June 2013, 12 June 2013 and 30 July 2013 and Dr Heathcote's written submissions dated 10 March 2014 (Heathcote Submissions), the University understood that Dr Heathcote's causes of action up to the first date of hearing were as follows:
a.a claim under section 340 of the FW Act on the basis that:
i.Dr Heathcote exercised a workplace right by making a complaint against various senior academics, including Professor Stephen Garton (in his then capacity as Dean of Arts) on 5 July 2004;
ii.the University took adverse action against Dr Heathcote because of his complaint as a consequence of Professor Garton placing him on the redundancy list, failing to remove him from the redundancy list and blocking Dr Heathcote's application for the Vice-Chancellor's Teaching Award in 2005; and
iii.Dr Heathcote suffered damage as a result of this adverse action;
(the workplace right claim)
b. a claim under section 351 of the FW Act on the basis that:
i. Dr Heathcote's 'anti-extreme left and anti-extreme right' political view constitutes a political opinion;
ii.the University took adverse action against Dr Heathcote because of his political opinion as a consequence of Professor Garton (Provost and Deputy Vice-Chancellor) and Professor Duncan lvison (Dean of the Faculty of Arts and Social Sciences), placing him on the redundancy list and failing to remove him from the redundancy list, which led to the termination of his employment; and
iii.Dr Heathcote suffered damage as a result of this adverse action;
(the discrimination claim)
c.a claim that the University breached an implied term of Dr Heathcote's contract of employment on the basis that:
i. Dr Heathcote's contract of employment contained an implied duty of mutual trust and confidence;
ii. the University breached this implied term by failing to conscientiously seek redeployment opportunities for Dr Heathcote; and
iii.Dr Heathcote suffered damage as a result of this breach;
(the implied term contract claim)
d.a claim that the University breached an express term of Dr Heathcote's contract of employment on the basis that:
i. Dr Heathcote's contract of employment contained an express term that he would be employed for a 'tenured lectureship' which meant a guarantee of continued employment until retirement age;
ii. the University breached this express term by terminating Dr Heathcote's employment before the retirement age of 65; and
iii. Dr Heathcote suffered damage as a result of this breach; and
(the express term contract claim)
e.a claim that the University breached the University of Sydney Enterprise Agreement 2009-2012 (the Enterprise Agreement) on the basis that:
i. the Enterprise Agreement applied to Dr Heathcote;
ii. clause 284(b) of the Enterprise Agreement required the Review Committee to review the decision to declare Dr Heathcote's position redundant and prepare a report for the Delegated Officer in relation to whether fair and objective criteria were used to select Dr Heathcote for redundancy;
iii. fair and objective criteria were not used to select Dr Heathcote for redundancy; and
iv. Dr Heathcote suffered damage as a result of this breach;
(the Enterprise agreement claim)
f.a claim that Dr Heathcote's redundancy was harsh, unjust and unreasonable and not a genuine redundancy;
(the genuine redundancy claim)
g.a claim of defamation in respect of the University's execution of the redundancies (the defamation claim);
h.a claim of negligence in respect of the conduct of Professor Garton that was the subject of Dr Heathcote's complaint against him in 2004 (the negligence claim); and
i.a claim that the University's conduct in dealing with Dr Heathcote's complaints from 2003 onwards was negligent and unconscionable (the unconscionabiliy claim).
I agree, in general terms, with the principles set out in the University’s submissions. The University submits that, other than the workplace right claim, the discrimination claim and the enterprise agreement claim, all of the other claims brought by Dr Heathcote were not in relation to a matter arising under the Fair Work Act 2009 (Cth) (Fair Work Act) and, accordingly, costs in relation to these matters should be determined in accordance with s.79 of the Federal Circuit Court of Australia Act 1999 (Cth) (Federal Circuit Court Act).
The approach to be taken by this Court when dealing with multiple matters in a proceeding, some of which are in relation to a matter arising under the Fair Work Act and some of which are not, was considered in detail by Judge Cassidy in Dalgish v MDRN Pty Ltd(No.2)[3].
[3] [2014] FCCA 1969 (29 August 2014). This approach is, however, not free from doubt: see Ryan v Primesafe [2015] FCA 8 at [61]
Similarly to the approach in that matter, the University submits that:
a)in respect of the implied term contract claim, the express term contract claim, the defamation claim, the negligence claim and the unconscionability claim, these matters:
i)were distinct from, and relied on different factual matters, than the workplace right claim and the discrimination claim; and
ii)could not have been brought under the Fair Work Act;
b)in respect of the genuine redundancy claim:
i)such action was distinct from, and relied on different factual matters, than the workplace right claim and the discrimination claim;
ii)Dr Heathcote did not, at any time, identify the jurisdictional source of this purported cause of action;
iii)the University submits that while the subject matter was such as can be considered under the Fair Work Act as part of an unfair dismissal claim, there is no jurisdictional basis under the Fair Work Act for such an issue to be considered outside this specific jurisdiction. As such, this action could not have been brought under the Fair Work Act as pleaded by Dr Heathcote.
On this basis, the University submits that this is a case where there is more than one matter in the proceedings[4] and the Court can deal with the University's application for costs in respect of all claims other than the workplace right claim, the discrimination claim and the enterprise agreement claim (the excluded claims) under s.79 of the Federal Circuit Court Act. I agree, although for abundance of caution, I have considered in any event whether the Court’s power to award costs was enlivened pursuant to s.570 of the Fair Work Act.
[4] Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457
Costs under section 79 of the Federal Circuit Court Act
Dr Heathcote abandoned the excluded claims on the first day of the trial of this matter. Accordingly, the University was a "wholly successful defendant" in respect of the excluded claims[5].
[5] Milne v Attorney-General for the State of Tasmania [1956] HCA 48; [1956] 95 CLR 460 (at 477)
It follows that the usual principle that costs follow the event should apply in respect of the excluded claims[6].
[6] Ruddock & Ors v Vadarlis & Ors (No.2) (2001) 115 FCR 229 at 234-235 per Black CJ and French J; [2001) FCA 1865 at [11] per Black CJ and French J (Vadarlis (No.2)); rule 21.04 of the Federal Circuit Court Rules 2001 (Cth)
Costs under s.570 of the Fair Work Act
Section 570(2)(b) of the Fair Work Act allows the Court to order costs in respect of a matter arising under the Fair Work Act where, amongst other things, “the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs”.
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[7].
[7] Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574; 176 IR 245 at [28] per Tamberlin, Gyles and Gilmour JJ (Clarke)
Whether a party has engaged in an unreasonable act or omission depends upon an objective analysis of the particular circumstances of the case[8].
[8] Australian and International Pilots Association v Qantas Airways Ltd (No.3) [2007] FCA 879; (2007) 162 FCR 392; 165 IR 464 at [32] per Tracey J (Qantas (No.3)); McAleer v University of Western Australia (No.2) [2007] FCA 247; (2007) 161 IR 151
The University submits that the Court is empowered to order costs in this matter given the following unreasonable acts or omissions of Dr Heathcote that caused the University to incur costs:
a)Dr Heathcote's actions in commencing certain claims without a proper jurisdictional basis;
b)abandoning those claims on the first day of the trial after the University had incurred substantial time and expense in defending the claims; and
c)Dr Heathcote's actions in rejecting the University's reasonable settlement offer.
Claims initiated but not pursued by Dr Heathcote
Dr Heathcote abandoned all but the workplace right claim and the discrimination claim (the abandoned claims) on the first morning of the trial in this matter.
While it is accepted that there is authority for the proposition that mere inefficiency in conducting a case or late abandonment of claims does not necessarily constitute an “unreasonable act”[9], the University submits that Dr Heathcote's actions were unreasonable in circumstances where:
a)from the outset of this matter, the University submitted that Dr Heathcote had failed to clearly and properly articulate the claims forming part of his application and had failed to clearly and properly articulate the jurisdictional basis for the abandoned claims forming part of his application[10];
b)the University repeated this submission on a number of occasions and expressly invited Dr Heathcote to identify the jurisdictional basis for the abandoned claims or withdraw them and told Dr Heathcote that the continuation of these claims would lead to the University incurring costs. Notwithstanding these repeated submissions, Dr Heathcote failed to either identify the jurisdictional basis or withdraw the abandoned claims until the first day of the trial of this matter[11];
c)by this time, the University had already prepared and filed witness statements and submissions addressing the abandoned claims[12]. The costs of preparing this material was accordingly thrown away;
d)the abandoned claims were instituted without reasonable cause. In this regard, the University submits that, at the time of instituting the abandoned claims:
i)Dr Heathcote had not established any jurisdictional basis for the Court to hear the abandoned claims[13];
ii)on Dr Heathcote's material alone no proper basis for the abandoned claims can be made out[14]; and
iii)on the facts apparent to Dr Heathcote at the time of instituting the claims, it was clear that there were no substantial prospects of success in respect of the abandoned claims[15].
[9] Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574
[10] Affidavit of Ms Wright dated 11 December 2014 at [6]-[17] (Wright affidavit)
[11] ibid
[12] Wright affidavit at [18]-[22]; [26]-[29]
[13] Rentuza v Westside Auto Wholesale [2009] FMCA 1022 (21 October 2009)
[14] Jonsson v Theodore Hotel Co-Operative Associate Ltd [2007] FMCA 1199 at [31]
[15] Kanan v Australian Postal Telecommunications Union [1992] FCA 539; (1992) 43 IR 257; R v Moore; Ex parte Federated Miscellaneous Workers' Union of Australia [1978] HCA 51; (1978) 140 CLR 470 at 473 per Gibbs J, Thompson at 471 and Bostik at 262
The unreasonable act of Dr Heathcote in his initiation and abandonment of the abandoned claims caused the University to incur costs in defending the abandoned claims[16].
[16] Wright affidavit dated 11 December 2014 at [30]
I accept that Dr Heathcote’s claims, as pursued up until the date of the trial of this matter, included claims not falling under the Fair Work Act and, hence, at least arguably not subject to s.570 of the Fair Work Act. There was one element of Dr Heathcote’s claim that was instituted under the Fair Work Act, in which he alleged a breach of the enterprise agreement applicable to his circumstances. That claim was abandoned at the commencement of the trial but the balance of his claims under the Fair Work Act were pursued to judgment.
To the extent that the claims abandoned by Dr Heathcote fell without the Fair Work Act, s.570 arguably has no application. The usual costs principles would therefore apply. There were extensive discussions between the parties leading up to the trial and Dr Heathcote was given several invitations to abandon those parts of his claim that the University considered unarguable, either on a jurisdictional or other basis. Dr Heathcote should, in my view, have heeded the efforts by the University to confine the case, and should have acted more promptly. His late abandonment of those elements of his claim which were probably all doomed to fail caused the University to incur costs unnecessarily.
To the extent that that abandonment included a claim under the Fair Work Act, namely, the asserted breach of the enterprise agreement or that s.570 applied in any event, in my view, the University has satisfied the Court that the late abandonment of that element of his claims was an unreasonable act or omission for the purposes of s.570(2)(b) of the Fair Work Act. It follows that the Court’s discretion to award costs in respect of the abandoned elements of this claim is enlivened. I am persuaded that the University should receive an order on the usual party and party basis for its costs thrown away by reason of the abandonment of those elements of Dr Heathcote’s claim at the commencement of the trial.
The more difficult question is whether Dr Heathcote should be subject to an indemnity costs order in respect of costs incurred on and after 18 February 2014. That depends upon the consideration of Calderbank principles[17]. It would be troubling if, in proceedings instituted under the Fair Work Act, a party was liable to indemnity costs simply by rejecting or not accepting an offer of settlement. It cannot be said that the rejection or non-acceptance of an offer is unreasonable in general terms. Indeed, that would not be consistent with the principles enunciated by the courts in considering indemnity cost claims under the general law.
[17] Calderbank v Calderbank [1975] 3 All ER 333; [1976] Fam 93
The letter in which the University’s offer was made is annexed to the affidavit by Ms Wright. The letter states in its second paragraph:
As you know, this matter has been set down for a four-day hearing commencing on 24 March 2014 in the Federal Circuit Court. The University maintains its position as set out in the letter of 7 June 2013 from Herbert Smith Freehills to you that certain claims pressed by you have no proper jurisdictional basis. Further, even in respect of those matters that are properly before the court, the University considers that the overwhelming weight of evidence is in support of the University’s position.
The letter continued in its third paragraph:
The letter of 7 June 2013 invited you to withdraw the deficient parts of your claim to avoid the University incurring costs in responding to and making submissions in respect of these claims. To date, you have chosen not to respond to this invitation.
In the fourth paragraph, the University’s letter stated:
Given your refusal to properly articulate and particularise your claims, the University anticipates that the hearing of this matter will expend significant time and resources of the University. Purely in the interests of avoiding this expense and without any admission of liability, the University is willing to offer you the sum of $18,000 less tax subject to you agreeing to execute and return to the University the attached settlement and release agreement. (emphasis added)
The offer was to remain open for acceptance until 5.00pm on Monday, 17 February 2014, after which time it would lapse. Relevantly, the settlement and release agreement annexed to the University’s letter includes clause 2.1, which states:
The University will pay to or at the direction of Dr Heathcote the sum of $18,000 settlement sum less any applicable tax. (emphasis added)
The offer was not accepted by Dr Heathcote. Although the proceedings were resolved against Dr Heathcote, some of the University’s arguments, for example, whether Dr Heathcote was pursuing a workplace right in respect of his complaints, were not accepted. The judgment that I delivered in the case was a lengthy and substantial one, which provided guidance to the parties extending beyond the confines of the particular facts in issue. Dr Heathcote acted, albeit belatedly, to abandon those parts of his claim which the University had invited him to abandon several times. Those might loosely be described as the deficient parts of his claim.
In my view, the University’s letter served two purposes. The first purpose was to again invite Dr Heathcote to abandon the deficient parts of his claim. That he did, albeit belatedly. That belated abandonment supports a costs order in respect of costs thrown away by reason of that late abandonment. The letter also sought to bring the entire proceedings to a close, including those parts of the claim which were not deficient, upon payment of $18,000 less tax. The difficulty that I have with the letter in terms of general Calderbank principles are the words “less tax” in brackets and the words “less any applicable tax” in clause 2.1 of the settlement deed.
Those words were at least ambiguous. It is unclear whether the University was intending to indicate that some amount would be withheld from the settlement sum in respect of tax or whether the University was simply alerting Dr Heathcote to the fact that he may need to pay tax on the settlement sum. The University pressed upon me the view that the latter interpretation should be preferred. I disagree. It seems to me that on a fair interpretation, the letter and the settlement deed indicated that what was being offered was $18,000 less some amount that would have to be determined by somebody for taxation purposes.
In circumstances where the terms of settlement are unclear in as much as the amount being offered is not certain, it would not be appropriate for the court to order indemnity costs by reason of the rejection or non-acceptance of the offer because of the rejection or non acceptance of the offer is reasonable[18]. That is the view I have come to in respect of this offer.
[18] BHPB Freight Pty Ltd v Cosco Oceania Chartering Pty Ltd (No.4) [2009] FCA 1448 at [13]
I will order that the applicant is to pay on a party/party basis the respondent’s costs thrown away in responding to claims commenced but abandoned at the commencement of the trial. The costs awarded pursuant to order 1, if not agreed, are to be assessed and, if necessary, taxed in accordance with the Federal Court Rules.
I certify that the preceding twenty-nine (29) paragraphs are a true copy of the reasons for judgment of Judge Driver
Associate:
Date: 9 February 2015
0
18
5