Lees v Asaleo Personal Care Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Lees v Asaleo Personal Care Pty Ltd [2023] FCA 334

Appeal from: Lees v Asaleo Personal Care Pty Ltd(No 3) [2022] FedCFamC2G 488
File number(s): VID 404 of 2022
Judgment of: HESPE J
Date of judgment: 14 April 2023
Catchwords:

COSTS – appeal against order dismissing an application for costs under s 570(2) of the Fair Work Act 2009 (Cth) – whether primary judge erred in failing to find that a refusal to accept a Calderbank offer was unreasonable

PRACTICE AND PROCEDURE – whether costs decision final or interlocutory in nature – whether extension of time to seek leave to appeal and leave to appeal required
Legislation:

Fair Work Act 2009 (Cth) s 570

Federal Court Act 1976 (Cth) ss 37M, 37N

Taxation Administration Act 1953 (Cth)

Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) rr 1.05, 4.01, 4.06

Federal Court Rules 2011 (Cth) rr 35.12, 35.14
Cases cited:

ALDI Foods Pty Ltd as General Partner of ALDI Stores (A Ltd Partnership) v Transport Workers’ Union of Australia [2020] FCAFC 231; (2020) 282 FCR 174

Avon DownsPty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353

Caratti v Commissioner of the Australian Federal Police [2021] FCA 1067

Les Laboratoires Servier v Apotex Pty Ltd [2016] FCAFC 27; (2016) 247 FCR 61

Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20; (2015) 229 FCR 221

Probiotec Ltd v University of Melbourne [2008] FCAFC 5; (2008) 166 FCR 30

Tucker v State of Victoria [No 2] [2021] VSCA 182

Division: Fair Work Division
Registry: Victoria
National Practice Area: Employment and Industrial Relations
Number of paragraphs: 29
Date of hearing: 22 March 2023
Counsel for the Appellant: Ms S Platel
Solicitor for the Appellant: McDonald Murholme
Counsel for the Respondent: Mr L Howard
Solicitor for the Respondent: Clayton Utz

ORDERS

VID 404 of 2022
BETWEEN:

STUART LEES

Appellant
AND:

ASALEO PERSONAL CARE PTY LTD (ACN 005 442 375)

Respondent

ORDER MADE BY:

HESPE J

DATE OF ORDER:

14 APRIL 2023

THE COURT ORDERS THAT:

1.The application for an extension of time and leave to appeal be dismissed.

2.The appeal is otherwise dismissed.

3.There be no order as to costs.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

HESPE J:

  1. Mr Lees filed a notice of appeal appealing a judgment of the Federal Circuit and Family Court of Australia (Division 2) (Circuit Court) made on 21 June 2022 and reported as Lees v Asaleo Personal Care Pty Ltd (No 3) [2022] FedCFamC2G 488 on 19 July 2022, within 28 days of judgment. The order appealed was in the following terms: “The applicant’s costs application, being the application in a proceeding filed on 11 May 2022, be dismissed”.

  2. In the lead up to a case management hearing held on 9 November 2022, the Court raised with the parties the question of whether the order…

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Details
Case
[2023] FCA 334
Decision Date

CaseChat Overview and Summary

In the matter of Lees v Asaleo Personal Care Pty Ltd, Mr Lees, the appellant, sought to appeal the dismissal of his application for costs under section 570(2) of the Fair Work Act 2009 (Cth). The primary judge had rejected Mr Lees' application for costs on the basis that the respondent, Asaleo Personal Care Pty Ltd, did not act unreasonably in rejecting a settlement offer made by Mr Lees. The legal issues in this case revolved around whether the primary judge erred in concluding that the respondent's refusal to accept Mr Lees' settlement offer was not unreasonable. Mr Lees argued that the primary judge had erred by considering the potential taxation consequences of his proposed settlement as a reason for rejecting the offer, whereas the respondent had rejected the offer due to its belief that Mr Lees' claim lacked merit. Additionally, the court had to consider whether the refusal to accept a Calderbank offer was unreasonable and if the primary judge's decision was subject to appeal.

The court held that the primary judge did not err in concluding that the respondent did not act unreasonably in rejecting Mr Lees' settlement offer. The court found that the primary judge correctly assessed the reasonableness of the respondent's conduct at the time the offer was rejected, and not with the benefit of hindsight. The court also held that the potential taxation consequences of Mr Lees' proposed settlement were a relevant consideration in determining the reasonableness of the respondent's conduct. Furthermore, the court found that the primary judge's decision was not subject to appeal because it did not involve any error of law or misapplication of the principles governing the assessment of unreasonable conduct.

The court dismissed the application for an extension of time and leave to appeal. The court also dismissed the appeal on the merits, finding that it did not have sufficient prospects of success. Finally, the court made no order as to costs.

Orders

Orders of the court

1. The application for an extension of time and leave to appeal be dismissed.

2. The appeal is otherwise dismissed.

3. There be no order as to costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

However, given the parties were heard on the applications for an extension of time to seek leave to appeal and leave to appeal together with the substantive appeal, these reasons address both the issues of leave and the substantive grounds of appeal. For the reasons set out below, the merits of the substantive grounds of appeal do not enjoy sufficient prospects of success to warrant an extension of time or the grant of leave to appeal. For the same reasons, any appeal would also be dismissed.Relevant factual background On 30 March 2020, Mr Lees was dismissed from employment with the Respondent, Asaleo Personal Care Pty Ltd. On 25 June 2020, Mr Lees commenced a proceeding in the Circuit Court in respect of this dismissal, alleging that Asaleo had contravened s 340 of the FW Act by taking adverse action against him and breached his contract of employment by failing to undertake a formal performance review. He also claimed an entitlement to a redundancy payment on termination under s 119 of the FW Act. Before the Circuit Court, Mr Lees succeeded in relation to his s 340 claim but not in respect of his claim for a redundancy payment or his claim for breach of contract. Mr Lees was awarded $22,552.80 in economic loss, $7,500 in non-economic loss, and $2,669.26 of interest on those amounts. Two pecuniary penalties in the sum of $44,100 and $22,050 were imposed. The total sums ordered to be paid by Asaleo amounted to $98,872.06. On 11 May 2022, Mr Lees applied for an order that Asaleo pay his legal costs on an indemnity basis on and from 17 September 2021, which was the date on which Mr Lees had sent Asaleo a Calderbank letter. In this letter, Mr Lees offered to settle the proceeding on the following basis:(a)Mr Lees be provided with a statement of service confirming that his employment ended by reason of redundancy;(b)Mr Lees receive payment of $61,788.46, as “a genuine redundancy”;(c)if requested to do so, Mr Lees execute a deed of release; and(d)payment be made within seven business days following the Respondent’s receipt of an executed deed of release. The offer remained open for seven days. By letter dated 29 September 2021 (after Mr Lees’ offer had lapsed), the Respondent confirmed its rejection of the offer and counter-offered with a final offer to settle on the basis that Mr Lees’ dismissal would be re-characterised as a resignation but not offering to pay Mr Lees any amount. This counter-offer was described in the letter as “reasonable given the lack of merit in the claim”.Costs proceedings before the primary judge In support of his application for an order for costs under s 570(2) of the FW Act, Mr Lees relied upon two acts or omissions of the Respondent which he contended were unreasonable:(1)the Respondent’s refusal to accept Mr Lees’ “reasonable” Calderbank offer; and(2)the Respondent’s counter-offer to settle the case on “a walk-away basis”. The primary judge quoted (at [15]) the following principles from Tucker v State of Victoria [No 2] [2021] VSCA 182 at [32] (Kyrou, McLeish and Sifris JJA), as applying to s 570(2)(b):(f) Paragraph (b) is enlivened when two criteria are satisfied:(i)one party has engaged in an “unreasonable act or omission”; and(ii)that unreasonable act or omission has caused the other party to incur costs.(g)Unreasonableness is to be determined objectively. It is a question of impression and degree, to be assessed by reference to the particular circumstances of a given case.(h)Unreasonableness is not to be confused with negligence or inefficiency. A failure to conduct litigation in the most efficient way does not, without more, enliven the paragraph. The fact that a party has conducted litigation inefficiently, made belated concessions, or adopted a misguided approach may be relevant to, but will not be conclusive of, the question of unreasonableness.(Footnotes omitted.)

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

As elaborated in oral submissions, the essence of Mr Lees’ contentions is that the primary judge erred in relying on the potential taxation treatment of his proposed settlement to conclude that the Respondent did not act unreasonably in failing to accept that offer for three reasons:(1)As a matter of fact, the Respondent did not reject the offer because of the taxation treatment that would follow, but because of the Respondent’s unreasonable view that Mr Lees’ claim lacked merit.(2)It could not be said that, at the time the offer was made, agreeing to represent that Mr Lees had been made redundant would constitute a fraud on the Commonwealth because, at the time the offer was made, whether Mr Lees had been made redundant was a matter in issue and which was yet to be determined.(3)The fact that it was subsequently found by the Court that Mr Lees had not been made redundant was irrelevant to determining whether the Respondent had acted unreasonably in rejecting Mr Lees’ offer. The reasonableness of the Respondent’s conduct must be assessed at the time the offer was rejected and not with the benefit of hindsight.Consideration of the merits of the grounds of appeal The making of a costs order is generally a matter of discretion. The Court’s power to make a costs order under s 570(2)(b) of the FW Act is predicated on the Court being satisfied that a party’s unreasonable act or omission caused the other party to incur costs. The circumstances in which a Court, on appeal, might interfere with a decision based on the formation of a state of satisfaction by the decision-maker were set out by Dixon J in Avon DownsPty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353, where his Honour stated (at 360):If he does not address himself to the question which the sub-section formulates, if his conclusion is affected by some mistake of law, if he takes some extraneous reason into consideration or excludes from consideration some factor which should affect his determination, on any of these grounds his conclusion is liable to review. Moreover, the fact that he has not made known the reasons why he was not satisfied will not prevent the review of his decision. The conclusion he has reached may, on a full consideration of the material that was before him, be found to be capable of explanation only on the ground of some such misconception. If the result appears to be unreasonable on the supposition that he addressed himself to the right question, correctly applied the rules of law and took into account all the relevant considerations and no irrelevant considerations, then it may be a proper inference that it is a false supposition. It is not necessary that you should be sure of the precise particular in which he has gone wrong. It is enough that you can see that in some way he must have failed in the discharge of his exact function according to law. There was no error of this kind in the primary judge’s reasons. There were two aspects to Mr Lees’ offer:(a)a quantitative aspect, being the monetary sum; and(b)a qualitative aspect, being its characterisation as a redundancy payment.