Huntley v State of NSW, Department of Police and Justice (Corrective Services NSW) (No. 2)
[2016] FCCA 146
•4 February 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HUNTLEY v STATE OF NSW, DEPARTMENT OF POLICE AND JUSTICE (CORRECTIVE SERVICES NSW) (No. 2) | [2016] FCCA 146 |
| Catchwords: HUMAN RIGHTS – Costs application – whether indemnity costs should be awarded – three settlement offers made to respondent all more favourable to the respondent – indemnity costs awarded. |
| Legislation: Australian Human Rights Commission Act 1986 (Cth), ss.46PH, 46PO Disability Discrimination Act 1992 (Cth), ss.4, 5, 6, 15, 21A, 21B, 42 Federal Circuit Court of Australia Act 1999 (Cth), ss.37N, 79 |
| Huntley v State of NSW, Department of Police and Justice (Corrective Services NSW) [2015] FCCA 1827 SZRTP v Minister for Immigration & Anor (No. 2) [2013] FCCA 711 Burns v Media Options Group Pty & Ors (No.2) [2013] FCCA 2016 Washington v Qantas Airways Limited [2014] FCCA 1413 Merost Pty Ltd v CPT Custodian Pty Ltd (No 2) [2014] FCA 594 Roland Ofria v Robert William Cameron (No 2) [2008] NSWCA 242 Globaltech Pty Ltd v Pareek [2006] WASC 30 Colgate-Palmolive v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225 Commonwealth of Australia v Gretton [2008] NSWCA 117 Jacomb v Australian Municipal Administrative Clerical & Services Union [2004] FCA 1600 Calderbank v Calderbank [1976] Fam 93 Jones v Bradley (No 2) [2003] NSWCA 258 Nobrega v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (No 2) [1999] NSWCA 133 Little on behalf of the Djaku:nde People v State of Queensland [2015] FCA 287 Australian Competition and Consumer Commission v Australia and New Zealand Banking Group Limited (No. 2) [2010] FCA 567 Nelipa v Dr Robertson and Commonwealth of Australia [2008] ACTSC 16 Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd [2007] FCA 1844 Ng v Chong [2005] NSWSC 385 Pascoe & Anor v National Futrax Pty Ltd & Ors [1995] FCA 1679 Freemantle’s Pastoral Pty Ltd v Hyett [1999] VSC 188 Thomas William Vale v Timothy David Eggins (No 2) [2007] NSWCA 12 Kismet International Pty Ltd v Guano Fertilizer Sales Pty Ltd (No 2) [2013] FCA 705 Julstar Pty Ltd v Hart Trading Pty Ltd [2014] FCA 108 Murphy v Westpac Banking Corporation (No 2) [2015] FCA 266 Dennis v Chambers Investment Planners Pty Ltd (Administrators Appointed) (No 4) [2014] FCA 784 Selig v Wealthsure Pty Ltd (No 2) [2013] FCA 770 Metz Holdings Pty Ltd v Simmac Pty Ltd (No 3) [2011] FCA 1450 Robinson v Kenny (No 2) [2015] FCA 2 Lift Shop Pty Ltd v Easy Living Home Elevators Pty Ltd (No 2) [2013] FCA 1220 Chen v Monash University (No 2) [2015] FCA 552 Dye v Commonwealth Securities Limited (No 2) [2012] FCA 407 Richardson v Oracle Corporation Australia Pty Limited (No 2) [2013] FCA 359 Apotex Pty Ltd v Les Laboratoires Servier (No 5) [2015] FCA 334 Brooke & Mackenzie Pty Ltd v El-Gra Engineering Pty Ltd [2015] FCA 1495 Nextra Australia Pty Limited v Fletcher (No 2) [2014] FCA 682 Visscher v Teekay Shipping (Australia) Pty Ltd (No 5) [2013] FCA 28 Aqua-Marine Marketing Pty Ltd v Pacific Reef Fisheries (Australia) Pty Ltd (No 6) [2012] FCA 1048 Kassem and Secatore v Commissioner of Taxation (No 2) [2012] FCA 293 Insight SRC IP Holdings Pty Ltd v The Australian Council for Educational Research Limited (No 2) [2012] FCA 1063 Jordan v HLB Mann Judd Wealth Management (NSW) Pty Ltd (No 2) [2013] FCA 381 Tamaya Resources Limited (in liq) v Claymore Capital Pty Ltd (No 2) [2015] FCA 637 Apotex Pty Ltd v AstraZeneca AB (No 5) [2013] FCA 560 Australian Health & Nutrition Association Limited trading as Sanitarium Health Food Company v Irrewarra Estate Pty Limited trading as Irrewarra Sourdough (No 2) [2012] FCA 892 Corbett v Corbett Court Pty Limited, in the matter of Corbett Court Pty Limited (No 2) [2015] FCA 1298 Skyy Spirts LLC v Lodestar Anstalt (No 2) [2015] FCA 575 Tamawood Limited v Habitare Developments Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) (No 6) [2013] FCA 1383 Tivo Inc v Vivo International Corporation Pty Ltd (No 2) [2012] FCA 33 Stephen Wayne Velik & Anor v Noreen Steingold (No. 2) [2012] NSWSC 1347 Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 Britten v CPT Manager Ltd [2009] QSC 336 Groves v Matt O’Connor & Associates Pty Ltd (No. 2) [2015] NSWSC 817 Specsavers Pty Limited v Luxottica Retail Australia Pty Limited (No 2) [2013] FCA 807 Mgica (1992) Ltd v Kenny & Good Pty Ltd (No 4) [1996] FCA 862; (1996) 140 ALR 707 |
| Applicant: | CARYN HUNTLEY |
| Respondent: | STATE OF NSW, DEPARTMENT OF POLICE AND JUSTICE (CORRECTIVE SERVICES NSW) |
| File Number: | SYG 1537 of 2013 |
| Judgment of: | Judge Nicholls |
| Hearing dates: | On the papers |
| Date of Last Submission: | 14 August 2015 |
| Delivered at: | Sydney |
| Delivered on: | 4 February 2016 |
REPRESENTATION
| Counsel for the Applicant: | Ms C Ronalds SC |
| Solicitors for the Applicant: | PCC Lawyers |
| Counsel for the Respondent: | Ms T Jowett |
| Solicitors for the Respondent: | New South Wales Crown Solicitors |
THE COURT ORDERS THAT
The time to make the application for an order for costs to the Court is extended to 21 July 2015 pursuant to Rule 21.02(1)(c) of the Federal Circuit Court Rules 2001 (Cth).
The respondent pay the applicant’s costs on an indemnity basis from 11 AM on 3 June 2013 as assessed or agreed.
CERTIFICATION
Pursuant to Rule 21.15 of the Federal Circuit Court Rules 2001 (Cth), the proceedings reasonably required the employment of an advocate by the applicant.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1537 of 2013
| CARYN HUNTLEY |
Applicant
And
| STATE OF NSW, DEPARTMENT OF POLICE AND JUSTICE (CORRECTIVE SERVICES NSW) |
Respondent
REASONS FOR JUDGMENT
On 5 July 2013 Ms Caryn Huntley (“the applicant”) made an application to this Court pursuant to s.46PO of the Australian Human Rights Commission Act 1986 (Cth) (“the AHRC Act”). In the application, the applicant alleged that the respondent, State of NSW, Department of Police and Justice (Corrective Services NSW) (“the respondent”) unlawfully discriminated against Ms Huntley on the grounds of her disability in breach of the Disability Discrimination Act 1992 (Cth) (“the DDA”).
The applicant was successful in her application for relief. Judgment was handed down on 3 July 2015 and the applicant was awarded $191,241.97, including interest up to 17 July 2015 (see Huntley v State of NSW, Department of Police and Justice (Corrective Services NSW) [2015] FCCA 1827 (“Huntley No 1”) and [34] of the applicant’s initial submissions). The applicant now seeks costs in this matter.
Section 79 of the Federal Circuit Court of Australia Act 1999 (Cth) (“the FCCA Act”) and r.21.02 of the Federal Circuit Court Rules 2001 (Cth) (“the FCC Rules”) apply in the determination of this matter. Section 79 of the FCCA Act is, relevantly, in the following terms:
“…
(2) The Federal Circuit Court of Australia or a Judge has jurisdiction to award costs in all proceedings before the Federal Circuit Court of Australia (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which any other Act provides that costs must not be awarded.
(3) Except as provided by the Rules of Court or any other Act, the award of costs is in the discretion of the Federal Circuit Court of Australia or Judge.”
Rule 21.02 of the FCC Rules is in the following terms:
“(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 under Chapter 19 of the Family Law Rules; or
(d) set a time for payment of the costs, which may be before the proceeding is concluded.”
Rule 25.14(3) of the Federal Court Rules 2011 (Cth) (“the FC Rules”) is, relevantly, in the following terms:
“If an offer is made by an applicant and not accepted by a respondent, and the applicant obtains a judgment that is more favourable than the terms of the offer, the applicant is entitled to an order that the respondent pay the applicant’s costs:
(a) before 11.00 am on the second business day after the offer was served—on a party and party basis; and
(b) after the time mentioned in paragraph (a)—on an indemnity basis.”
As stated by this Court previously in SZRTP v Minister for Immigration & Anor (No. 2) [2013] FCCA 711 (“SZRTP (No 2)”), Burns v Media Options Group Pty & Ors (No.2) [2013] FCCA 2016 and Washington v Qantas Airways Limited [2014] FCCA 1413 (“Washington”), the discretion to award costs is unfettered, subject to exercising the discretion judicially. Further, in relation to the guidance provided in the FCC Rules, as I stated in SZRTP (No. 2) at [46] – [47]:
“[46] I take the view that the items set out in the relevant Schedule to the Rules are a guide to what may be generally considered to be reasonable in matters of this type. However, while the Schedule seeks to accommodate a number of scenarios (for example, a half day hearing or a full day hearing) it cannot be taken to cover the diversity and vagaries of each case in the relevant cohort of cases. The Court’s discretion should be exercised with reference to the actual circumstances presented in each case.
[47] In my view, the Schedule sets out a guide as to what may be reasonable for the Court to have regard to as a touchstone (a “reality check” if you like) to its consideration. However, the Court’s consideration cannot ignore the circumstances of each individual case.”
Before the Court
Pursuant to orders made by consent by the Court on 14 July 2015 the applicant filed submissions in relation to costs on 21 July 2015 (“the applicant’s initial submissions”), the respondent filed written submission on costs on 7 August 2015 (“the respondent’s submissions”) and the applicant filed further submissions in reply on 14 August 2015 (“the applicant’s submissions in reply”). This decision has been made “on the papers”, following those submissions. The parties had agreed to this course. I note that the applicant foreshadowed that an order would need to be made pursuant to r.21.02(1)(c) of the FCC Rules, extending the time within which to make an application for costs. For the reasons outlined below it is appropriate that such an order be made.
Applicant’s Submissions
In her submissions, the applicant drew to the Court’s attention three settlement offers made to the respondent, made prior to, and through, the duration of the proceedings before the Court. Evidence of these offers are annexed to the affidavit of Helen Katherine Carter, solicitor, made on 21 July 2015, filed by the applicant. These were made on:
1)3 June 2013, by letter dated 31 May 2013 (“the first offer”) (see annexure “HC-1” to Ms Carter’s affidavit).
2)29 November 2013 (“the second offer”) (see annexure “HC-2” to Ms Carter’s affidavit).
3)23 May 2015 (“the third offer”) (see annexure “HC-7” to Ms Carter’s affidavit).
The applicant submitted that the judgment awarded to her in Huntley (No 1) was “significantly more favourable” than the individual offers made by her (see [5] of the applicant’s initial submissions).
As such, the applicant seeks costs against the respondent on an indemnity basis from “11am on 5 June 2013 and party/party costs from the Commencement Date” in accordance with r.25.14 of the FCA Rules, due to what is said to be the respondent’s unreasonable failure to accept the first offer (see [13] of the applicant’s initial submissions). Although the matter was not entirely clear from submissions, on balance I understood the applicant to seek indemnity costs from, relevantly, 5 June 2013 (nothing that the commencement date was 5 July 2013). Alternatively, the applicant seeks costs on a party/party basis from the commencement date to either 11am on the second business day after the second or third offers, and indemnity costs thereafter due to the respondent’s unreasonable failure to accept the second or third offers.
It is important to note the relevant dates in this matter, in relation to the offers made. The applicant has included a convenient summary of those dates (see [6] – [12] of the applicant’s initial submissions):
“[6] The Applicant’s complaint to the Australian Human Rights Commission was terminated under section 46PH (2) of the Australian Human Rights Commission Act 1986 (Cth) (the AHRC Act) by a delegate of the President on 8 May 2013 after an unsuccessful conciliation. The Applicant had 60 days to file proceedings after this termination in accordance with section 46PO(2) of the AHRC Act.
[7] On 15 May 2013 the Applicant’s legal representatives commenced preparing the First Settlement Offer letter to the Respondents (the Commencement Date).
[8] The First Settlement Offer was made on 3 June 2013, via letter dated 31 May 2013, before any preparation commenced on drafting the Applicant’s Application - Human Rights for the Federal Circuit Court.
[9] The Applicant’s legal representatives commenced preparing her Application - Human Rights on 19 June 2013.
[10] The Application was filed with the Court on 5 July [2013].
[11] The Second Settlement Offer was made on 29 November 2013 after the Application - Human Rights and the Response - Human Rights had been filed. This offer was made before the Applicant’s evidence was prepared. Preparation of evidence commenced in late December and was filed on14 February 2014.
[12] The Third Settlement Offer was made on 23 May 2014 just over two weeks prior to the commencement of the hearing on 10 July [2014].”
With reference to r.25.14(3) of the FC Rules, the applicant noted that it created a “rebuttable presumption in favour of indemnity costs” and that no “exceptional reasons” existed such that the presumption should be rebutted (see Merost Pty Ltd v CPT Custodian Pty Ltd (No 2) [2014] FCA 594 (“Merost”) at [11]).
The First Offer
As stated above, the first offer was made prior to the filing of an application in the Court, and post the termination of the complaint before the Australian Human Rights Commission (“the AHRC”). This offer “made clear” that if the respondent did not accept the offer proceedings would be commenced in the Court, and if the applicant was successful before the Court, indemnity costs would be sought from the date the offer was made to the respondent (see “HC-1” and [32] of the applicant’s initial submissions).
The total amount payable in the first offer was “$75,127.98 plus a contribution of $20,000 for legal costs”. The applicant submitted that, not including the legal costs amount, this offer was $116,113.99 less than the amount awarded to the applicant in the judgment in Huntley (No 1). The first offer was “open for acceptance until 17 June 2013” (see [8] of Ms Carter’s affidavit).
No response was received from the respondent by that date (see [9] of Ms Carter’s affidavit). The respondent appeared to respond to the applicant’s first offer by letter dated 28 June 2013, received by the applicant on 9 July 2013 (see annexure “HC-8” to Ms Carter’s affidavit).
The applicant drew to the Court’s attention Roland Ofria v Robert William Cameron (No 2) [2008] NSWCA 242 (“Ofria”) at [27] for the principle that “offers made prior to the commencement of proceedings can be relevant to an issue of indemnity costs”. Further, she relied on Globaltech Pty Ltd v Pareek [2006] WASC 30 at [27] per Johnson J:
“In making an offer of this type at an early stage of the proceedings, the prospects of successfully seeking an order for indemnity costs would be increased if the offer had set out the strength of the plaintiff's case so that the defendant was informed of the degree of risk involved in proceeding. Indeed, if at this early stage the plaintiffs were aware of the proposed evidence of Beale, including the circumstances pertaining to him, it would have been prudent to include that information in the offer. In my view, if the plaintiff had been made aware of that evidence and the other strengths of the plaintiffs' case then the risks of proceeding would be substantially increased making it more likely that an order for indemnity costs would be made. An allegation that the defendant's case is without merit does not equate to identifying the strengths of the plaintiff's case.”
The applicant submitted, with reference to the differential at [14] above, that the respondent’s failure to accept the first offer was “unreasonable and imprudent” (see Colgate-Palmolive v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225 at [5] per Sheppard J and Commonwealth of Australia v Gretton [2008] NSWCA 117 at [4]), and that the offer was a “genuine offer to compromise”, issued with the “intention of avoiding the costs associated with commencing and running proceedings” (with reference also to Jacomb v Australian Municipal Administrative Clerical & Services Union [2004] FCA 1600 at [6]) (see further below).
The applicant also referred to the requirements in Calderbank v Calderbank [1976] Fam 93 (“Calderbank”) such that an offer would come within the direction provided in that case. She submitted that there is no requirement that any offer must “specify” that it is in accordance with Calderbank, and that the offer is not inadmissible or ineffective because it does not accord with these requirements. Specifically, the applicant relied on Jones v Bradley (No 2) [2003] NSWCA 258 (“Jones”) at [14] – [15] and Nobrega v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (No 2) [1999] NSWCA 133 (“Nobrega”) at [8] for this requirement.
As to the form of the letter, the applicant submitted ([51] of her initial submissions):
“On page one of the First Settlement offer in paragraph 3 of the letter, it clearly stated that this was ‘open correspondence’ which would be tendered to the Court ‘at the appropriate time in support of an application for indemnity costs against CSNSW’. In the covering letter to the Third Settlement Offer, the Respondent was advised that the Applicant was confident she would succeed in all portions of her claim (as has now occurred) and that she would seek ‘indemnity costs from 31 May 2013 when we initially made a settlement offer’.”
As such, the applicant submitted that costs should be awarded on an indemnity basis from 11am on 5 June 2013 (that is the second business day after the first offer was made with reference to r.25.14(3) of the FC Rules), including the costs of the costs application itself.
The Second Offer
As stated above, in the alternative, the applicant sought costs on a party/party basis from the commencement date (5 July 2013) and indemnity costs from 11 am on 3 December 2013, the second business day after the second offer was served on the respondent.
The applicant submitted that the second offer was made in accordance, and fully compliant, with the FC Rules. The applicant claims that the liability for the respondent in the second offer, if it had been accepted, would have been $76,221.98, plus costs. This amount was $115,019.99 less than the judgment awarded to the applicant (inclusive of interest up to 17 July 2015).
The applicant submitted that the second offer was also “reasonable and genuine” and the respondent’s failure to accept was again “unreasonable and imprudent” (see the authorities above).
In the circumstances, should the Court decide not to award indemnity costs from the date of the first offer, the applicant submitted that it “should order party/party costs from the Commencement Date to 11 am on 3 December 2013 and indemnity costs thereafter” ([60] of the applicant’s initial submissions).
The Third Offer
As stated above, in the further alternative, the applicant sought costs on a party/party basis from the commencement date (5 July 2013) and indemnity costs from 11 am on 27 May 2014, the second business day after the third offer was served on the respondent.
The applicant submitted that the third offer was made in accordance, and fully compliant, with the FC Rules. The liability for the respondent in the third offer, if it had been accepted, would have been $86,604.69, excluding costs. This amount was $104,637.28 less than the judgment awarded to the applicant (inclusive of interest up to 17 July 2015). The applicant submitted that the third offer had been served on the respondent two and a half weeks prior to the commencement of the hearing. At this stage, both parties had filed the evidence on which they intended to rely, and were preparing for the hearing. The applicant submitted, in these circumstances, that the respondent should have been “fully aware” of the applicant’s and respondent’s cases, and that the liability sought in the application to the Court “was at least equal to” the third offer ([63] of the applicant’s initial submissions).
The applicant submitted that, as such, the respondent’s failure to accept was again “unreasonable and imprudent” (see the authorities above).
In the circumstances, should the Court decide not to award indemnity costs from the date of the first or second offer, the applicant submitted that it “should order party/party costs from the Commencement Date to 11 am on 27 May 2014 and indemnity costs thereafter”.
The Respondent’s Offers to Settle
The applicant referred to the respondent’s offers to settle, made as follows (see [65] of the applicant’s initial submissions):
1)By letter dated 28 June 2013, received on 9 July 2013 for $13,115.53 (“the respondent’s first offer”) (see annexure “HC-8” to Ms Carter’s affidavit).
2)On 13 September 2013 for $36,067.68 (“the respondent’s second offer”) (see annexure “HC-10” to Ms Carter’s affidavit).
3)On 2 June 2014, by letter dated 30 May 2014 for $10,385.43 (“the respondent’s third offer”) (see annexure “HC-11” to Ms Carter’s affidavit).
The applicant submitted that the respondent’s first offer was received after the applicant commenced the proceedings before the Court and incurred legal costs (see [22] of Ms Carter’s affidavit), and that the respondent was on notice from the applicant’s first offer that she would commence proceedings if the first offer was not accepted. The applicant submitted that the respondent’s first offer, therefore, was not a genuine attempt to settle the matter.
The applicant submitted that both the respondent’s second and third offers were not genuine. First, the applicant’s legal fees had exceeded the amount of the respondent’s second offer. Second, the respondent’s third offer was received 8 days prior to the start of the hearing before the Court, at which point the majority of the preparation of the hearing had been completed. Further, that the respondent’s third offer was less favourable to the applicant than the judgement awarded by $180,856.64 (including interest up to 17 July 2015).
In all, the applicant submitted ([70] of the applicant’s initial submissions):
“…that the Court should give no consideration to the Respondent's Offers as they were not genuine attempts to settle the matter or offers which the Applicant should have accepted or could have accepted without seriously compromising her financial loss and adding further to her damage.”
Genuine Steps and Respondent as a Model Litigant
The applicant submitted that at all times during the proceedings before the Court, and in the making of the offers to the respondent, the applicant’s legal representative acted in according with s.37N of the Federal Court Act 1976 (Cth) and the Civil Dispute Resolutions Act 2011 (Cth) (“the CDR Act”), to make genuine steps to settle the matter.
Further, she submitted that the respondent had not made genuine offers of settlement, and that as a department of the New South Wales government, was not exempt from the obligations specified above (see Little on behalf of the Djaku:nde People v State of Queensland [2015] FCA 287 at [8] and [71]).
The applicant also submitted that the respondent did not conduct itself in accordance with the Model Litigant Policy for Civil Litigation (“the model litigant policy”) (see annexure “HC-12” to Ms Carter’s affidavit). The applicant submitted that the model litigant policy at cl.3.2(b) and (d) required the respondent, as a state agency, to ([83](a) and (b) of the applicant’s initial submissions):
“(a) Pay legitimate claims without litigation, including making partial settlements of claims or interim payments, where it is clear that liability is at least as much as the amount to be paid;
(b) Endeavour to avoid litigation, wherever possible.”
The applicant made a number of references to the respondent’s conduct during the proceedings, from the commencement to the hearing, and its failure to accept the offers, which she submitted exposed the respondent’s contravention of the model litigation policy (see [85] – [93] of the applicant’s initial submissions). Further, the applicant drew to the Court’s attention the Federal Court’s judgment in Australian Competition and Consumer Commission v Australia and New Zealand Banking Group Limited (No. 2) [2010] FCA 567 at [20] per Greenwood J, which endorsed Refshauge J’s observations in Nelipa v Dr Robertson and Commonwealth of Australia [2008] ACTSC 16 at [97], that stated that “…it is clear that the obligation to act as a model litigant and the failure to act in that way can be a relevant factor in considering the appropriate order as to costs”.
Party/Party Costs and Advocacy Certificate
The applicant submitted that, if the Court did not award costs on an indemnity basis for any period after the commencement date of the matter, regard would need to be had to Part 21 of the FCC Rules. In particular, that an advocate certificate be issued pursuant to r.21.15 of the FCC Rules and that the Court “approve” the costs incurred in the preparation of expert reports pursuant so r.21.13 of the FCC Rules.
In relation to the advocacy certificate, the applicant submitted that it was necessary in the initial interests of “quick resolution” and due to counsel’s specialisation in discrimination law. The applicant also submitted that she had attempted to reduce her legal costs, however, due to the respondent’s conduct her costs were “unavoidably incurred” ([106] of the applicant’s initial submissions).
The applicant provided three expert reports to the Court during the substantive proceedings (see annexure “HC-13” to Ms Carter’s affidavit). The applicant submitted that the reports were a “crucial element” to her case “in establishing that she would have been able to perform the inherent requirements of her job had reasonable adjustments been made” by the respondent ([110] of the applicant’s initial submissions). Further, the reports established the “damage” suffered by the applicant, assisting the Court to assess the quantum of damages to be awarded to her. The applicant submitted, therefore, that the costs incurred in the preparation were “reasonable”.
Respondent’s Submissions
The respondent submitted that the costs award should be as agreed or assessed pursuant to Part 1 of Schedule 1 of the FCC Rules. It submitted that the Court should not make an order for indemnity costs.
I note that the respondent used different terminology in its submissions for the offer (“the first offer of compromise”). For ease, I will continue to refer to each as “the first offer”, “the second offer” and “the third offer”.
The First Offer
The respondent submitted that the applicant’s contention that there was a “presumption in favour of indemnity costs in relation to each of the offers made”, was incorrect. It submitted that it did not “unreasonably fail to accept” the applicant’s first offer in circumstances where “the proceeding had not been commenced and no evidence had been filed”. It submitted that at this time it was not in a reasonable position to know the applicant’s case and accept any offer to settle. Further, that the test for “reasonableness” was “less stringent” and more categorical than the tests relied on by the applicant.
Further, the respondent referred to the comments of Justice Gray in Australian Competition and Consumer Commission v Leahy Petroleum Pty Ltd [2007] FCA 1844 (“Leahy Petroleum”) at [26]:
“It would be a rare case, however, in which any party proposing to commence litigation would be able to look at the material available to it as if it were a judge doing so at the end of a trial.”
The respondent also relied on Ng v Chong [2005] NSWSC 385 at [13] per Hamilton J:
“It is well established that the making of an offer better than the result ultimately obtained does not automatically translate into an indemnity costs order. At one stage there was a suggestion that such a letter raised a prima facie presumption: see Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425 at 451. However, the rule now applied was stated by Giles JA in SMEC Testing Services Pty Ltd Limited v Campbelltown City Council [2000] NSWCA 323 at [37]. This formulation was confirmed by the Court of Appeal in Jones v Bradley (No 2) [2003] NSWCA 258 at [8]. Multicon was explicitly disapproved at [9]. And Santow JA in Leichhardt Municipal Council v Green [2004] NSWCA 341 has counselled caution in departing from making costs orders on the usual basis.”
The respondent submitted that the burden of persuading the Court to exercise its discretion to award costs on an indemnity basis sat with the applicant, and that she had failed in this regard. The respondent submitted that the first offer made prior to the commencement date was made independent of any other proceedings of a similar nature, as such, distinguishing it from the principles in Ofria.
The respondent submitted that the only information that was “suggestive of evidence” was contained in the letter attached to the first offer. In these circumstances, the respondent submitted that it did not have all the necessary evidence to “assess” the first offer.
Further, the respondent submitted that the matter was “complex” and referred to a period of employment spanning two years, and, therefore, it was reasonable for it to not accept the first offer. The respondent refuted the applicant’s contention that the first offer was, and for that matter the second and third offers were, refused because of a misunderstanding of “reasonable adjustments” of the DDA by the respondent, and the respondent’s legal team.
In all, the respondent submitted that it was reasonable for it not to accept the first offer when it did not have an understanding of the applicant’s case and the evidence she relied on (see also Pascoe & Anor v National Futrax Pty Ltd & Ors [1995] FCA 1679). Further, that the first offer was only open for 14 days. In that circumstance it was unreasonable for the applicant to expect a response, particularly where the applicant suggested in the document that the respondent seek “experienced” legal advice which would have taken some time to arrange.
The Second Offer
The respondent made similar submissions as to the first offer in relation to the second offer. That is, at the time of the second offer the matter remained in a state that did not allow the respondent to properly consider the second offer. Therefore, it was reasonable of it not to accept it. The respondent did concede that the second offer was made in accordance with the requirements of Form 45, pursuant to r.25.01(1) of the FC Rules.
The respondent submitted that it did not close its pleadings until 13 November 2013, after filing an amended response following a request for further and better particulars from the applicant in relation to the initial response. The applicant then filed her reply on 21 November 2013. At the time of the second offer, therefore, the pleadings had just “closed” and no evidence had been filed. As such, it was again reasonable for it not to accept the second offer, assessed against the objective factors relevant at the time of the second offer (Freemantle’s Pastoral Pty Ltd v Hyett [1999] VSC 188 and Thomas William Vale v Timothy David Eggins (No 2) [2007] NSWCA 12). Without the applicant’s evidence the respondent was not able to “assess the merits of the applicant’s claim”.
Further, the respondent submitted that ([38] – [39] of the respondent’s submissions):
“[38] As with the Initial Settlement Offer, the First Offer of Compromise was only open for 14 days, although it was
re-opened on 16 December 2013 for a further 24 hours. It was left open only as a result of a request by the Respondent's solicitors for further particulars in relation to the factors the Applicant considered to be reasonable adjustments for the purpose of returning the Applicant to her substantive position. An email chain in relation to this request is provided at ‘HC-3’ to the affidavit of Helen Carter affirmed 21 July 2015. The Respondent only received the particulars in response to this request at 4:39pm on 16 December 2013, although the request for particulars had been made on 3 December 2013, an initial response from the Applicant's solicitors had been made on 5 December 2013, and a further response from the Applicant's solicitors was made on 10 December 2013. By the time the Applicant responded with particulars on 16 December 2013, the Respondent was already under the impression the offer of compromise had expired. It was unreasonable to expect the Respondent to be able to respond appropriately within 24 hours, which was the time frame given for the extension of time of the offer, from its re-opening at 4:39pm on the afternoon of 16 December 2013.
[39] While the length of time in which the offer was open, being 14 days, satisfied the base requirements of the FCR, little had changed in the circumstances of the case from the time of the Initial Settlement Offer but before the particulars were provided. No further evidence was served. The Respondent was in no better position to assess the Applicant's case than it had been at the time of the First Settlement Offer.”
The Third Offer
The respondent submitted that the timeframe of the third offer made two weeks prior to the commencement of the hearing before the Court, did not allow for it to make a “straightforward assessment in terms of risk, the potential upsides and downsides of proceeding to trial and the quantification of the amount of damages sought” by the applicant (see [41] of the respondent’s submissions).
The respondent also submitted that the applicant’s affidavit in reply, filed on 22 May 2014 was 30 pages long, and included “substantial evidence” which was “important” to the applicant’s claim. The respondent complained that this was only served on it the day before the third offer, which did not give them appropriate time to consider the offer “only 2 weeks from the start of the hearing and obtain instructions from the Minister” ([43] of the respondent’s submissions).
Genuine Steps and Model Litigant
In response to the applicant’s claims that the respondent did not make “genuine offers of settlement”, or “consider its obligations”, especially with regard to the applicant’s submissions in relation to the respondent’s legal representatives, the respondent submitted ([44] of the respondent’s submissions):
“Serious allegations with respect to the legal representation of a party without any supporting evidence is inappropriate in relation to an application for costs. There is nothing in his Honour's judgment that indicates that the Respondent was ill advised to file a defence in this proceeding, or, alternatively that its defence was hopeless or fanciful. That submission was not made by the Applicant at any time during the proceeding. If the Applicant makes such a submissions in all seriousness then why did the Applicant not move to have the Respondent's defence struck out.”
Further, the respondent submitted that the Court has a discretion to consider whether to take into account whether a party had filed a genuine steps statement and whether genuine steps were taken to resolve a dispute ([45] of the respondent’s submissions).
Therefore, while the respondent had not filed a genuine steps statement, it submitted that it took genuine steps over the course of, and before, the proceedings to resolve the dispute. Further, that the applicant had not “provided any evidence” that it had “failed to do any of the things given as examples of genuine steps” at s.4(1) of the CDR Act. The respondent submitted that the issues that were in dispute were “canvassed extensively” by it in the letter from its legal representative annexed to its submissions to the Court now (see letter from Ms Glenn Singer, sent in June 2012, see also at “HC-14” as annexed to Ms Carter’s affidavit).
Further, in response to the applicant’s allegation that the respondent did not act in accordance with the model litigant policy, the respondent “rejected” any such assertion. The respondent submitted that
([54] – [55] the respondent’s submissions):
“[54] The Applicant has provided no evidence to prove the Respondent did not act in accordance with the Model Litigant Policy. Rather it makes a bare assertion without substance.
[55] The determination of a proceeding depends on the resolution of disputed facts. The Applicant's evidence was served in February 2014 and May 2014. Despite this, the Applicant submits that the Respondent should have been able to assess its potential liability and make an offer closer to the amounts awarded in his Honour's judgment. It would be entirely inappropriate in the circumstances to suggest the Respondent failed in its obligations as a model litigant by defending proceedings in circumstances where the evidence of the Respondent contradicted the evidence of the Applicant. That his Honour preferred the evidence of the Applicant does not mean it was unreasonable for the Respondent to protect its interests by being the Respondent in the proceeding. As submitted above, the Respondents case was arguable and at no time did the Applicant seek to strike out the Respondent's defence.”
In all, therefore, the respondent submitted that the Court should not award costs on an indemnity basis from any of the dates requested by the applicant, and that costs should be only awarded as agreed or assessed pursuant to Part 1 of Schedule 1 to the FCC Rules.
Applicant’s Submissions in Reply
In reply, the applicant submitted that it was “disingenuous” of the respondent to contend that it did not “know the applicant’s case as at 3 June 2013”. The applicant submitted that the respondent’s assertion that it “had no notice of the substantive evidence upon which the applicant would rely” at 3 June 2013 contained “two fundamental errors” ([2] of the applicant’s submissions in reply):
“a. The Respondent was aware of the substantive evidence upon which the Applicant would rely prior to the Applicant’s First Settlement Offer,
b. From as early as 2012 the Respondent has sought to claim that its conduct toward the Applicant was not a breach of the Disability Discrimination Act 1992 (Cth) (the DDA) almost exclusively by reliance on section 21A of the DDA as it alleged that fieldwork was an inherent requirement of the position of Probation and Parole Officer. The facts and circumstances relevant to this issue were fully within the Respondent’s knowledge at all times.”
As to the first “error”, the applicant submitted that the respondent’s assertion of a lack of knowledge at the time of the first offer was “contrary to the history of the matter and the extensive correspondence” sent between the parties from 2012 onwards ([4] of the applicant’s submissions in reply).
The applicant submitted, as previously submitted in their initial submissions, that the dispute had been ongoing “since 2011”. The applicant had made a complaint in mid-2011 to the NSW Industrial Relations Commission (“the NSW IRC”), over 2 years prior to the first offer. Further, that the applicant’s solicitors wrote to the respondent on 4 May 2012 setting out the “significant factual background of the matter and the breaches of the DDA that were alleged to have occurred” ([6] of the applicant’s submissions in reply, and annexed to those submissions at “A”). Further, the applicant made a complaint to the AHRC approximately “8 months prior” to the first offer, which contained a “lengthy and clearly outlined” complaint against the respondent.
The applicant submitted that the first offer clearly outlined the alleged acts of discrimination and victimisation undertaken by the respondent in contravention of the DDA. The applicant submitted that this included a “significant analysis of sections 5, 6, 21A and 42 of the DDA”, and also provided case law to support the applicant’s claims ([8] of the applicant’s submissions in reply).
As such, the applicant submitted that the application filed in the Court on 5 July 2013 did not change the applicant’s case from what was contained in the first settlement letter “whatsoever”, or, for that matter, what had been raised “from 2012” ([9] of the applicant’s submissions in reply). Further, that the evidence in the applicant’s affidavit of 14 February 2014 did not “differ in material respects” from the complaints set out in the correspondence or the application to the Court ([9] of the applicant’s submissions in reply).
The applicant submitted that the respondent’s complaint, that it did not know the evidence that the applicant would provide to the Court, was “incorrect”. The applicant submitted that a “vast majority of the documents that were exhibited or annexed” to the applicant’s affidavits (of 14 February 2014 and 21 May 2014) were either the respondent’s “workplace documents or otherwise documents which had already been provided” to the respondent prior to the commencement date before the Court ([10] of the applicant’s submissions in reply).
As to the second “factual error”, the applicant submitted that ([16] of the applicant’s submissions in reply):
“The Respondent not only had access to the facts and circumstances which are relevant to this matter but should, if it had complied with its obligations under the DDA, have carefully considered those facts and circumstances in 2010 and 2011 to ensure its treatment of the Applicant was lawful. It cannot seriously be contended by the Respondent that these are matters it could not properly assess until receipt of the evidence of the Applicant in these proceedings.”
The applicant also submitted that the respondent’s submission as to the genuine steps taken by it was not a “proper explanation for its failure to comply with its obligation” to file a genuine steps statement pursuant to r.5.03 of the FC Rules ([18] of the applicant’s submissions in reply). Therefore, as a NSW Government department, and represented by experienced legal practitioners, the respondent’s lack of action in this regard was “not acceptable”.
Further, that the respondent’s first, second and third offers (see [29] above), did not reflect the actual economic loss that the applicant had suffered in the period between 10 May 2011 and 3 January 2012, nor did they take into account any of the other amounts claimed. The actual economic loss was awarded to the applicant in full in Huntley (No 1) in Order 5(b). The applicant submitted that the respondent could not assert that this amount was unknown to it, given that this amount was a direct reflection of the remuneration lost by her when she was removed from the workplace by the respondent in its capacity as her employer ([22] of the applicant’s submissions in reply).
The applicant agreed that the Court must exercise discretion when deciding to award indemnity costs. She submitted that the following features of the matter “justify” the award of indemnity costs from the second business day after the first offer, and should be considered by the Court ([24] of the applicant’s submissions in reply):
“a. This is human rights litigation and the Applicant is an individual who suffers from two disabilities,
b. The Applicant was at all times attempting to require the Respondent, an agency of the NSW Government, to comply with its important obligations under the DDA (which reflect the obligations of Australia under the Convention on the Rights of Persons with Disabilities) by making reasonable adjustments for her in her employment and to otherwise treat her in accordance with the law and her human rights and the Respondent’s own policies,
c. The Respondent clearly acted unreasonably in failing to accept the Applicant’s First Settlement Offer and the later settlement offers made during the proceedings and by failing to make any reasonable offer to settle the matter,
d. The length of the hearing (which greatly increased the Applicant’s costs) was primarily a result of the number of witnesses called by the Respondent.”
Consideration
A number of matters require note. First, the parties agree that as the successful party in the substantive proceedings, the applicant is entitled to costs on a party/party basis.
Second, the respondent emphasises that any such costs award should be assessed consistent with what is set out in the FCC Rules at Part 1 of Schedule 1, which are said to be amounts available for costs in general federal law proceedings. There is no dispute that the current case is such a proceeding.
Third, s.79 of the FCCA Act makes clear that the Court has jurisdiction to award costs in proceedings before the Court, other than where any Act of the Commonwealth may provide otherwise. The exercise of that jurisdiction is at the discretion of the Court “except as provided by the Rules of Court or any other Act…” (see s.79(3) of the FCCA Act).
Relevant to the current consideration, r.21.02 of the FCC Rules deals with the making of orders for costs. I do not understand r.21.02 of the FCC Rules (which the respondent replicates in its submissions at [7]) to seek to fetter the exercise of the discretion given by s.79 of the FCCA Act. In my view, r.21.02 of the FCC Rules seeks to establish a procedural framework within which the Court’s discretion can operate, nonetheless in a discretionary fashion.
The respondent refers to r.21.10 of the FCC Rules and appears to draw from this that unless the Court “otherwise orders” the applicant is entitled only to what is set out in Schedule 1 of Part 1 to the FCC Rules. The respondent does refer to what I relevantly said in SZRTP (No 2) regarding the Schedule (see above at [6]).
The FCC Rules, including the Schedules, seek to provide some level of consistency and certainty in the procedures of this Court and its practices. However, the exercise of the Court’s discretion is, as I said in Washington at [44] – [49] (see also [6] above):
“[44] Second, as I said in Burns v Media Options Group Pty & Ors (No.2) [2013] FCCA 2016, I do not comprehend that the Court’s discretion in relation to costs is other than unfettered, subject of course to exercising the discretion judicially (Ruddock & Ors v Vadarlis & Others (No 2) [2001] FCA 1865; (2001) 115 FCR 229 at [9] per Black CJ and French J (as he then was) and Oshlack v Richmond River Council [1998] HCA 11 at [66] per McHugh J).
[45] Third, and however, s.79(3) of the FCC Act directs attention to the FCC Rules:
‘Except as provided by the Rules of Court or any other Act, the award of costs is in the discretion of the Federal Circuit Court of Australia or Judge.’
[46] The words ‘...any other Act...’ may be put to one side for the purposes of this judgment. The words ‘[e]xcept as provided by the Rules of Court...’ may raise a concern that the discretion given by s.79(2) of the FCC Act is otherwise ‘fettered’ by the FCC Rules in its exercise.
[47] There are, at least two reasons to reject this. First, as Judge Barnes said in Noble v Baldwin & Anor (No.2) [2011] FMCA 700 at [9]:
“The Federal Magistrates Court has an unfettered discretion under s.79 of the Federal Magistrates Act 1999 (Cth) to award costs, provided such discretion is exercised judicially and in the context of the relevant court rules (see Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [65] per McHugh J).
[48] Second, the FCC Rules themselves contemplate and provide for the situation that the Court may dispense with compliance (or partial compliance) with the FCC Rules in the interests of justice (r.1.06(1) of the FCC Rules). Further, where the Court makes an order inconsistent with the FCC Rules, the order of the Court prevails (r.1.06(2) of the FCC Rules).
[49] In this light, what emerges is that the Court’s discretion is unfettered, its exercise must be done judicially and in the context of, or having regard to, the relevant FCC Rules.”
Therefore, submissions as to what a party may generally be entitled to as to costs are a distraction from the task for the Court. It is to the circumstances presented in each case to which the Court must have regard if it is to exercise its discretion judicially and not inflexibly impose some amount indicated in the Schedule to the FCC Rules.
Fourth, it is of particular note that the applicant seeks indemnity costs based on an offer that predates the initiation of proceedings in this Court. The award of costs on an indemnity basis in these circumstances is rare. A review of 27 cases over the last three years in the Federal Court where indemnity costs were considered, shows that all were in relation to offers of settlement made after the commencement of the proceedings (Kismet International Pty Ltd v Guano Fertilizer Sales Pty Ltd (No 2) [2013] FCA 705, Julstar Pty Ltd v Hart Trading Pty Ltd [2014] FCA 108, Murphy v Westpac Banking Corporation (No 2) [2015] FCA 266, Dennis v Chambers Investment Planners Pty Ltd (Administrators Appointed) (No 4) [2014] FCA 784, Selig v Wealthsure Pty Ltd (No 2) [2013] FCA 770, Metz Holdings Pty Ltd v Simmac Pty Ltd (No 3) [2011] FCA 1450, Robinson v Kenny (No 2) [2015] FCA 2, Lift Shop Pty Ltd v Easy Living Home Elevators Pty Ltd (No 2) [2013] FCA 1220, Chen v Monash University (No 2) [2015] FCA 552, Dye v Commonwealth Securities Limited (No 2) [2012] FCA 407, Richardson v Oracle Corporation Australia Pty Limited (No 2) [2013] FCA 359, Apotex Pty Ltd v Les Laboratoires Servier (No 5) [2015] FCA 334, Brooke & Mackenzie Pty Ltd v El-Gra Engineering Pty Ltd [2015] FCA 1495, Nextra Australia Pty Limited v Fletcher (No 2) [2014] FCA 682, Visscher v Teekay Shipping (Australia) Pty Ltd (No 5) [2013] FCA 28, Aqua-Marine Marketing Pty Ltd v Pacific Reef Fisheries (Australia) Pty Ltd (No 6) [2012] FCA 1048, Kassem and Secatore v Commissioner of Taxation (No 2) [2012] FCA 293, Merost, Insight SRC IP Holdings Pty Ltd v The Australian Council for Educational Research Limited (No 2) [2012] FCA 1063, Jordan v HLB Mann Judd Wealth Management (NSW) Pty Ltd (No 2) [2013] FCA 381, Tamaya Resources Limited (in liq) v Claymore Capital Pty Ltd (No 2) [2015] FCA 637, Apotex Pty Ltd v AstraZeneca AB (No 5) [2013] FCA 560, Australian Health & Nutrition Association Limited trading as Sanitarium Health Food Company v Irrewarra Estate Pty Limited trading as Irrewarra Sourdough (No 2) [2012] FCA 892, Corbett v Corbett Court Pty Limited, in the matter of Corbett Court Pty Limited (No 2) [2015] FCA 1298, Skyy Spirts LLC v Lodestar Anstalt (No 2) [2015] FCA 575, Tamawood Limited v Habitare Developments Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) (No 6) [2013] FCA 1383 and Tivo Inc v Vivo International Corporation Pty Ltd (No 2) [2012] FCA 336). In these circumstances guidance has been drawn from cases in various Supreme Courts in Australia where offers made prior to the commencement of proceedings were discussed.
However, while reliance on an offer made prior to commencing specific litigation is said to be “unusual”, as Slattery J said in Stephen Wayne Velik & Anor v Noreen Steingold (No. 2) [2012] NSWSC 1347 (“Velick”) at [8]:
“But it is useful to look at the relevant law first. The law on such matters is fairly sparse. It is unusual for parties to rely upon offers made before litigation, although it is certainly not unprecedented. The relevant authorities were recently reviewed by Ward J in Nu Line Construction Group Pty Ltd v Fowler (aka Grippaudo) [2012] NSWSC 587 (‘Nu Line’). The principles that emerge from her Honour's review may be shortly stated. A claim for indemnity costs, even in respect of an offer made prior to the commencement of litigation, comes within the court's discretion under the Civil Procedure Act, s 98. Relevant factors determining whether such costs order should be made depend in part upon determining whether the conduct of the party who rejected the offer was unreasonable.”
[Emphasis added.]
[In the current case this Court has a similar statutory discretion.] [I note that Velick was overturned on appeal of the substantive proceedings, thereby having the consequence of overturning the costs judgment, however no negative comment was made of Slattery J’s reasoning in relation to the costs judgment in the matter on appeal.]
Further, as was made clear in authorities such as Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 at [23], the central question is whether the rejection of the offer was “unreasonable in the circumstances”.
I note further what was said in Velik at [9] and [11]:
“[9] Relevant factors for determining unreasonableness were identified by the Court of Appeal in Victoria in Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298, (2005) 13 VR 435: the stage of the proceedings at which the offer was received; the time allowed to the offeree to consider the offer; the extent of the compromise offered; 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; and, whether the offer foreshadowed an application for indemnity costs in the event of the offeree rejecting it. In Nu Line Ward J then considered particular examples of the application of these general principles.
…
[11] As the learned author G E Dal Pont in his Law Of Costs (2nd ed) observed at [1362], offers made before or shortly after proceedings are commenced may be made at a time when it is difficult to make an informed assessment of the offeror's defence or the strength of the plaintiff's claim; but it is certainly true that the response of the offeree must be assessed at the time that it was made and not with the benefit of hindsight: cf Miwa Pty Ltd v Siantan Properties Pty Ltd (No 2) [2011] NSWCA 344. But as Basten JA observed in Elite Protective Personnel Pty Ltd & Anor v Salmon [2007] NSWCA 322 the fact that an offer is made early in the proceedings should not, by itself, be given significant weight in assessing the reasonableness of the plaintiff in rejecting it. Clearly it is one of a number of factors to be balanced.”
Further, in the current case the respondent accepts that the Court’s discretion in this regard is broad (see [15] of the respondent’s submissions) and it is to the circumstances of this case that the consideration must be directed.
In the current case, the applicant relied on what she says are compelling factors to support the award of costs on an indemnity basis from the relevant time from the making of the first offer.
In Britten v CPT Manager Ltd [2009] QSC 336 at [6], McMeekin J stated:
“The special reason that the plaintiff points to justifying the awarding of costs on the indemnity basis, and the decisive consideration in this case, it is said, is that the failure to accept the plaintiff’s offer was imprudent or unreasonable when judged on the facts then known to the parties. As Byrne J pointed out in Lawes the assessment of the reasonableness or otherwise of a defendant’s conduct ‘will often involve an attempt to form a view about the relevant strength and weaknesses of the cases that ought to have been apparent to the parties when the offer was made’.”
Fifth, as set out above the applicant’s legal representatives approached the respondent’s legal representatives on three occasions with certain offers. The applicant refers to these as the first, second and third offers. The respondent refers to the first offer as the initial settlement offer to distinguish it from the second and third offers which it describes as the first and second offers of compromise.
I understood the respondent’s use of the different descriptions between the first offer on the one hand, the second and third offers, on the other, to be in part to emphasise that the second and third offers were formal offers of compromise, made consistent with “Form 45” pursuant to r.25.02(1) of the FC Rules, which in the circumstances was the appropriate form for an offer of compromise in this Court. This is so given r.1.05 of the FCC Rules.
In that context, the first offer which was made prior to the commencement of proceedings was not made in that form. I understood the respondent, therefore, to seek to emphasise that this offer, made at such an early stage, should not be relied upon in relation to the issue of indemnity costs in the circumstances of this case (see further below).
Sixth, although given the findings made below, it is not necessary to determine the following dispute between the parties, it is nonetheless of assistance in the following consideration to clarify the dispute.
In her submissions, the applicant sought to argue that it was unreasonable, in part, of the respondent not to accept the first offer because the respondent proceeded on a misunderstanding of s.21A of the DDA (see the applicant’s initial submissions at [27] – [30]). The applicant referred to [290] of Huntley (No 1) to argue that there was support in the judgment for the proposition that the respondent failed to understand the consequences of s.21A of the DDA.
I agree with the respondent that [290] of Huntley (No 1) does not support the applicant’s submissions in this regard. The applicant’s submission was directed to what she says was the failure of the respondent’s legal representative to understand s.21A of the DDA, which led to the matter not settling during the course of the proceedings before the AHRC and the Court.
Huntley No 1 at [290] was not directed to the understanding of the respondent’s legal representatives or directed to events before the AHRC and the proceedings before the Court. Rather, it was directed to the lack of understanding of the respondent’s employees and managers during the course of the applicant’s employment.
As set out above, the applicant asks the Court to order costs in her favour on an indemnity basis from 11am on 5 June 2013, being the second business day after the first offer was served on the respondent. The applicant, relevantly, relies on r.25.14(3) of the FC Rules.
The respondent takes issue with what is said to be the apparent contention by the applicant that r.25.14(3) of the FC Rules creates a presumption in favour of indemnity costs in relation to the first offer.
The applicant does rely on Merost for the proposition that r.25.14(3) of the FC Rules creates a rebuttable presumption in favour of indemnity costs. Of course, subject to the matters set out in r.25.14(3) of the FC Rules being met. That is, that the applicant obtained a judgment that is more favourable than the offer made. Again, in reliance on Merost, the applicant says there are no exceptional reasons in this case to rebut this presumption.
The respondent’s response is set out in detail above. A number of elements are relevant to the disposition of the dispute between the parties.
First, the respondent says, in relation to the first offer, that no proceedings were on foot at the time and it was reasonable of the respondent to refuse the offer given no application, or evidence, had been filed. The respondent’s position was said to be that in the circumstances, it did not know the applicant’s case and was entitled to understand the applicant’s case so as to then be able to properly determine whether to accept the offer to settle. This was said to include the evidence the applicant was to rely on.
The dispute between the parties in the current case turns on the issue of what can be said to have been known to the respondent at the relevant time. The respondent says that the only information it had suggestive of evidence in this case was the information in the letter of 31 May 2013, that is, the letter containing the first offer. On the material before the Court, this submission must be rejected.
The dispute between the parties had a long history before the proceedings were commenced in this Court. It was common ground that the applicant had made a complaint to the NSW IRC in mid-2011. This was in relation to the respondent’s conduct in seeking to achieve the applicant’s retirement on medical grounds from her employment, and to utilise her leave entitlements for her absence from work in the meantime.
The applicant also made a complaint to the AHRC on 18 October 2012. The details and scope of that complaint was subsequently before the Court following the termination of the complaint before the AHRC.
The parties attended conciliation before both the NSW IRC and the AHRC. The import of this is that the respondent actively engaged with the applicant in the matters that subsequently became the focus of the litigation before the Court.
The applicant relied on Ofria to contend that Courts have acknowledged that offers made prior to the commencement of proceedings can be relevant to the issue of indemnity costs. The respondent sought to distinguish Ofria on the basis that the relevant offer in that case, although made before the commencement of the specific proceedings had been made in separate, albeit related proceedings, in the same cause of action.
It must be remembered that the rationale behind exercising caution about offers made before the commencement of proceedings is that the party receiving the offer may not be in a position to know the detail of the case raised against them. I respectfully understood what was said in Leahy Petroleum (at [26]) on which the respondent now relied, to include reference to this difficulty.
The current circumstances however are closer to Ofria because, as in that case, the respondent in this case would, or should, have been aware of the detail of the case raised given the proceedings in the NSW IRC, but particularly the AHRC, given that these proceedings before the Court are limited to the matters raised on the complaint to the AHRC (see s.46PO(3) of the AHRC Act). This is particularly so given that the detail in the applicant’s exposition and explanation of her complaints to the AHRC was clear and comprehensive. That application clearly outlined the “events” in relation to the applicant’s complaints, her supporting “evidence”, how it had affected her and the outcome which she was seeking (see as attached to the application to the Court).
As stated above the letter of 31 May 2013 contained the first offer. In this light, the respondent referred to Groves v Matt O’Connor & Associates Pty Ltd (No. 2) [2015] NSWSC 817 (“Groves”) at [26]:
“…It is well established that if a party does not have all the necessary evidence to assess a Calderbank offer, it would be reasonable for that party to wait until it had seen that evidence before agreeing to compromise the case: Chint Australasia Pty Ltd v Cosmoluce Pty Ltd [2008] NSWSC 768…”
In the circumstances of this case, however, I do not see that that assists the respondent. I did not respectfully understand the use of the word “evidence” as it appears in the extract from Groves, to necessarily refer to evidence either given by affidavit or after the testing of evidence in Court, or oral evidence in that context. If for no other reason, in my respectful view, the reference in that extract to assessing a “Calderbank offer” makes clear that the statement included reference to a time before hearing or a trial.
The respondent’s submissions do not satisfactorily explain or address what was available to it as a result of the NSW IRC and AHRC proceedings. Nor does it address earlier correspondence from the applicant’s legal representative to the respondent’s legal representatives of 4 May 2012 (see annexure A to the applicant’s submissions in reply).
The letter of 4 May 2012 sets out in detail the factual matters on which the applicant subsequently relied on in these proceedings, and on any fair reading exposes the causes of action on which she relied in her application to the Court.
The letter also made plain that the applicant’s complaint, in a legal context, was discrimination of her by the respondent, and that any perpetuation of what was said to be a breakdown of the employment relationship would result in her pursuing her legal rights.
Further, the letter of first offer itself made plain the legal action that the applicant may take, and again on any fair reading, the assessment of the strength or weight of her case was available to the respondent at that time.
In this context also the letter is consistent, in this regard, with the previous communication and what emerged before the AHRC. As stated above, I note that the AHRC complaint was attached to the application before the Court, and contained a thorough exposition of her complaints against the respondent.
As stated variously above, in its submissions the respondent submits that no proceedings were on foot at the time of the first offer. The respondent’s position appears to be that that in itself is a basis to say it had a lack of knowledge of the applicant’s case. It was, therefore not unreasonable of it to reject the offer. In that context, the following is of note.
The respondent made no submissions as to whether the letter of first offer was a “Calderbank” letter or not (see Calderbank). The applicant however did address the Calderbank question in the following way.
The applicant argued that there is no requirement that an offer must specify that it is in accordance with the requirements set out in Calderbank. Therefore, any such implication arising from the respondent’s submissions does not make the first offer “inadmissible or ineffective” as relevant to the issue of indemnity costs (Jones and Nobrega, see above at [18]).
In Specsavers Pty Limited v Luxottica Retail Australia Pty Limited (No 2) [2013] FCA 807 at [10], Griffiths J provided the following summary:
“The relevant principles may be summarised as follows:
- under s 43 of the Federal Court of Australia Act 1976 (Cth) (FCA Act), the Court has a power to award costs, which includes a power to award costs on an indemnity basis. The discretion to award costs must be exercised judicially;
- while various cases have identified various relevant factors, the presence or absence of which may be persuasive as to whether indemnity costs are appropriate, the exercise of the discretion in a particular case must depend on all relevant circumstances of that case (see MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (No 2) (1996) 70 FCR 236 at 238 per Lindgren J);
- the unreasonable or imprudent rejection of a Calderbank offer may result in indemnity costs being awarded. The mere rejection of a Calderbank offer followed by a result which is more favourable to the offeror and less favourable to the offeree than that represented by the offer does not automatically lead to the making of an order for payment of costs on an indemnity basis (MGICA at 239; Black v Lipovac [1998] FCA 699; (1998) 217 ALR 386 at 432 );
- Part 25 of the Federal Court Rules 2011 establishes a regime which, if utilised, gives rise to a presumptive entitlement to indemnity costs (see MGICA at 240 and Specsavers Pty Ltd v The Optical Superstore Pty Ltd [2012] FCAFC 183; (2012) 208 FCR 78). But that regime was not employed here. It might also be noted that, under that regime, an offer to compromise has to be open to be accepted for a period of not less than 14 days after the offer is made (r 25.05);
- the offeror needs to show that the conduct of the offeree was unreasonable and that conduct is to be viewed in light of the circumstances which existed at the time the offer was rejected. The fact that the offeree ultimately fails to make good their case does not mean that they acted unreasonably in rejecting an offer (Alpine Hardwoods (Aust) Pty Ltd v Hardys Pty Ltd (No 2) [2002] FCA 224; (2002) 190 ALR 121 at [28] per Weinberg J); and
- a helpful but non-exhaustive list of circumstances which may be relevant in determining whether the rejection of a Calderbank offer is reasonable or not is set out in Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435 at [25] and includes:
(a) the stage of the proceeding at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(c) the extent of the compromise offered;
(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 an indemnity costs in the event of the offeree’s rejection of it.”
For current purposes I respectfully draw from that, that if the offer to settle utilises the relevant regime in the FC Rules, then this gives rise to a “presumptive entitlement to indemnity costs”. Neither party argued that the first offer was in line with, or consistent with, this regime. The applicant’s submissions in this regard were not of assistance on this point. In the circumstances it is, therefore, not possible to find that the offer was utilised the regime and that the presumption to entitlement to indemnity costs should apply. However, for the reasons that follow, it is not necessary to proceed from this presumption to make the order in favour of the applicant.
The respondent also submitted that one element in the consideration in the current case, as to whether it was not unreasonable of it to reject the first offer, was that the proceedings were complex. In support of this proposition the respondent points to the applicant’s affidavit of 14 February 2014 which was over 60 pages, and included over 500 pages of annexures.
The respondent explained that the applicant’s complaints related to a period of employment over two years in duration, which, ultimately before the Court, led the respondent to need to rely on seven witnesses. Further, that the applicant’s case focussed on a period in mid-2009 to mid-2011, however, evidence for the matter before the Court was gathered three years later in 2014.
In these circumstances the respondent says it was reasonable to reject the first offer because the case was complex and the respondent had no notice of the evidence upon which the applicant would rely, nor the evidence it would be able to rely on. The respondent’s submissions in this regard must be rejected. The latter point is addressed above and for reasons set out there is not made out.
In raising the former matter the respondent has not satisfactorily addressed the central factual weakness of its argument. That is, that before the Court the applicant’s evidence was overwhelmingly the respondent’s own material, that is, its workplace documents or material otherwise provided to the respondent before the commencement of the proceedings, or enlivened during proceedings before the AHRC and the NSW IRC.
In this regard, I also agree with the applicant that many of the documents were policy and procedural documents of the respondent in existence at the time of the first offer. In my view, this also highlights the difficulty for the respondent. The respondent’s submissions took issue with what was said to be the applicant’s criticism of those who legally represented the respondent in these proceedings. As set out above, I agree with the respondent that the Court’s findings of lack of comprehension of relevant matters and assumptions made, were those of the respondent’s employees and managers at the relevant time, and not necessarily its legal representatives during the course of litigation. However, this nonetheless still emphasises the point that the respondent, through its managers and employees, should have been able to assess the factual strength of the applicant’s case given that, to a large extent, it derived from material that was either the respondent’s own material or in its possession. Therefore, the respondent should reasonably have known the context and basis for the case against it.
The importance of the respondent’s policy and procedural documents to the applicant’s case would have been, or should have been, apparent to those who instructed counsel in the matter before the Court. These were, after all, the respondent’s own documents, which plainly dealt with circumstances such as those raised by the applicant before the AHRC and the NSW IRC.
It must be said that it is difficult to understand the respondent’s reliance on the argument that it did not know the applicant’s case until she filed her evidence, and that the large volume of annexures to that evidence reveal complexity.
First, complexity in an intellectual sense, that is the capacity or otherwise to comprehend issues arising from material presented, does not necessarily, without more, derive from the volume of material presented.
Second, this is particularly so when the large bulk of the material presented by the applicant as annexures to her affidavit were the respondent’s own documents. This reflects the matter of the refusal to grant leave during the hearing for the filing of the affidavit of Ms Anita Borg (see [101] – [111] of Huntley (No 1)). I did not accept the proposition that the respondent would not have known who the relevant managers and supervisors were in what is after all a state government agency. I do not accept now that the respondent would not have known at the time of the first offer of the importance of its own documents and policies to the applicant’s case. This is especially the case given the ambit of the complaint that was made to the AHRC. It should have known, or more particularly those advising the relevant persons in the agency should have known. In that sense, it was not reasonable of the respondent to reject the first offer.
I also note, in this context, that the respondent submitted that the case against it was complex and, in part, this is revealed because the respondent was required to call seven witnesses to rebut the claims made by the applicant.
In this light, the respondent relied on what Lindgren J stated in Mgica (1992) Ltd v Kenny & Good Pty Ltd (No 4) [1996] FCA 862; (1996) 140 ALR 707 at 713:
“…Although it is possible to discern in MGICA's experts' affidavits the basis on which I found against the respondents, the evidence supporting liability assumed clear form only as the case, particularly the cross examination of Mr Kenny, progressed…”
As is clear, in that case, the relevant evidence only assumed “clear form” following the cross-examination of one of the principals of the respondent. That is not the situation in the current case. In the current case that “clear form” was available, and should have been known to the respondent, at the time of the first offer, given the relevant material, and the details of her complaint which the applicant had already exposed in the letter attached to the first offer and the complaint to the AHRC. It is the case that a number of weaknesses in the respondent’s case emerged during cross-examination of its witnesses. However, the “clear form” of the applicant’s case had already been provided. Given the involvement of counsel from the first Court date on behalf of the respondent, I cannot do other than presume that in all the circumstances much of those weaknesses would, or should, have been anticipated.
The respondent also submits that the first offer was said by the applicant at the relevant time to be only open for 14 days. This was said to be unreasonable in circumstances where the applicant asserted that the respondent should seek “experienced” legal advice regarding the fundamental principles of the DDA. The respondent submitted that the applicant would have known that this would take longer than 14 days. That may have been so, however there is nothing to suggest that the respondent sought further time.
In any event, when the respondent did make offers to settle, after the proceedings were commenced in relevant part, none of the offers reflected the actual economic loss suffered by the applicant for the period 10 May 2011 to 3 January 2012 (see Huntley (No 1) at [7] and above at [29] and [67]).
This is not a comment on the total amount of each of the respondent’s offers as compared to what the applicant was ultimately granted by the Court in the disposition of her application. Rather, the focus is on that particular component of the actual economic loss suffered by the applicant as a result of the conduct of the respondent (see order 5(b) to the judgement).
This loss was occasioned by the respondent’s removal of the applicant from the particular work location during that period. The actual amount was $52,603.50. The respondent’s total first offer was $13,115.53. In the applicant’s first offer (see “HC-8” annexed to Ms Carter’s affidavit), the applicant sought $51,986.02 for the relevant period, and a total amount of $34,619.67 for the other items. The respondent’s first offer, from the breakdown detail provided in that offer, appears to have addressed only the first item, that is the loss of accrued leave (see annexures “HC-1” and “HC-8” to Ms Carter’s affidavit).
Before the Court, the respondent did not subsequently challenge the quantum of the amount claimed by the applicant, and as derived from calculation based on her employment records.
In my view, the respondent should have known at the time when it made its first offer, which was said to be in response to the applicant’s first offer, that the amount it offered was not an accurate reflection of actual loss by the applicant. In fact it was significantly less. In that circumstance, this cannot be said to have been a reasonable offer to settle by the respondent.
However, the relevant point to be stressed is that, in this light, whether or not the applicant’s time limit set out in the first offer made the applicant’s offer unreasonable is not of assistance to the respondent. That is because its own offer was manifestly inadequate in the circumstances and should have been known to be so, given that the basis and source for the relevant calculations were its own employment records.
In their respective submissions, there appears to be some dispute between the parties as to the relevant test for the Court to apply now as to reasonableness in the exercise of its discretion (see the respondent’s submissions at [17] and [21] – [22], and the references there to the applicant’s submissions). However, it would appear that the distinction is one of expression, or emphasis, rather than substance.
However, even using the respondent’s articulation of the relevant test, I am satisfied on what is set out above, that the applicant has discharged the burden on her to persuade the Court that its discretion should be exercised in her favour and that indemnity costs should be granted from the relevant date calculated from the time of the first offer.
One further matter needs to be addressed. In her submissions the applicant makes reference to a letter in June 2012 from the respondent’s solicitor to the applicant’s solicitor (see annexure
“HC-14” to Ms Carter’s affidavit). The applicant says that (at [28] of the applicant’s submissions):
“In June 2012 the Respondent's solicitor in a letter to the Applicant's solicitors claimed that the Respondent was not required to consider making reasonable adjustments to the Applicant's position as she was unable to carry out the inherent requirements of the role due to her disabilities.”
The respondent submitted that the applicant did not specify which part of that letter was applicable to the “conclusion” that the applicant drew. It must be said that while the words in the applicant’s conclusion in her submissions are not taken verbatim from the respondent’s solicitor’s letter, any plain reading of the letter allows for the finding that the applicant’s conclusion was reasonably open on what the letter stated. In particular what is out, from the second full paragraph of page 2 of the letter to the fourth paragraph, is of sufficient “specificity” to make the relevant meaning clear. Although I understood the applicant’s conclusion also to derive from the totality of the letter.
In any event, the respondent’s real grievance with this part of the applicant’s submissions appears to be the applicant’s submission concerning the respondent’s legal representatives (at [27] of the applicant’s initial submissions, and see also [28] – [29] of the respondent’s submissions):
“It is the view of the Applicant's solicitors and Counsel that one of the reasons that the matter failed to settle throughout the course of proceedings with the AHRC and the Federal Circuit Court was because the legal representatives for the Respondent had a complete misunderstanding of the operation and ambit of section 21A of the DOA.”
I have already addressed above the applicant’s reliance on [290] of Huntley (No 1) and in that respect agree with the respondent. For the remainder, and in particular the question of whether the respondent’s legal representatives understood s.21A of the DDA, that is not a relevant matter in the exercise of the Court’s discretion in the current case. The issue is that, as set out in Huntley (No 1), the respondent was not successful in its reliance on s.21A of the DDA.
It must be said, however, that there has been an absence of any satisfactory explanation for the basis of the respondent’s reliance on s.21A of the DDA given the particular circumstances of this case as referred to in the substantive judgment. I agree with the applicant, that the approach at the relevant time by the respondent’s legal representatives, to the matters of inherent requirements and s.21A of the DDA appears to have influenced the respondent’s conduct in not accepting what was, in the circumstances, a reasonable offer by the applicant to settle.
As was set out in Huntley (No 1), the applicant at the relevant times suffered from two disabilities. I accept the applicant’s submissions, based on the evidence before the Court, and given the relevant findings in Huntley (No 1) that she attempted to persuade the respondent, through its various managers and supervisors, to comply with its obligations and responsibilities under the DDA towards the applicant.
Huntley (No 1) makes plain that the respondent’s various personnel failed to meet the obligations towards the applicant in important ways. Further, that some key personnel did not understand what the obligations where in the first place, and even further, proceeded on a number of factual misunderstandings of the relevant material (see, for example, the view taken of the medical report prepared by a Government Medical Officer for the respondent see in particular at [144] – [164] of Huntley (No 1)).
At the time of the applicant’s first offer to settle, the respondent, and it must be said its legal representatives, would have known, and should have known, of the detail and strength of the applicant’s case and the difficulties for the respondent in meeting that case. It can only be emphasised that by the time the proceedings commenced, and following, it cannot be said that the respondent would, could or should have been surprised by the applicant’s case. As set out above, the respondent’s claim, that it did not know the detail of the applicant’s case at the time of the first offer, cannot be accepted. The applicant has satisfied the Court that the respondent acted unreasonably in not accepting the first offer. I will make the consequent order for indemnity accordingly.
Advocacy Certificate and Expert Reports
The applicant also requests that the Court make the appropriate certification pursuant to r.21.25 of the FCC Rules. She submitted that her use of an experienced advocate was reasonable in the circumstances where the respondent had continually failed to understand its requirements under the DDA, and to ensure that a government agency’s serious breaches of the DDDA and employment contract were “effectively pursued”. Further, that the applicant took “all possible steps to reduce legal costs”, such as the lack of assistance of junior counsel and the use of a relatively inexperienced solicitor during the course of the proceedings. The relevant test for the Court is one of reasonableness. In the circumstances, given the nature of this case, and the issues raised, it was appropriate that counsel be engaged. The certificate should be issued.
In my view, it is not necessary, given the award of indemnity costs from 11am on 3 June 2013, prior to the making of the expert reports (see annexure “HC-13” to Ms Carter’s affidavit), to consider the “reasonableness” of the expert reports. Further, as no submissions were made by the respondent on this, I accept the applicant’s submissions on this point, particularly with reference to the reliance placed on Ms McIntyre’s report in Huntley (No 1).
Conclusion
In all, the applicant is entitled to her costs on an indemnity basis from 11am 3 June 2013, as assessed unless the parties can otherwise agree. I will make an order accordingly.
I certify that the preceding one hundred and forty-five (145) paragraphs are a true copy of the reasons for judgment of Judge Nicholls
Associate:
Date: 4 February 2016
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