Lu v Ao-Zhong International Mineral Resources Pty Ltd (No.2)
[2015] FCCA 2453
•11 September 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LU v AO-ZHONG INTERNATIONAL MINERAL RESOURCES PTY LTD (No.2) | [2015] FCCA 2453 |
| Catchwords: COSTS – Indemnity costs – non-appearance of lawyers – lawyers ceasing to act – whether proper procedure followed by lawyers ceasing to act – whether lawyers remained on record at date of hearing – whether lawyers should be liable for costs. LAWYERS – Where lawyers file written submissions concerning costs and conduct – where lawyers fail to attend hearing concerning costs and conduct – whether the Court should refer the conduct of lawyers to the appropriate professional disciplinary body. |
| Legislation: Australian Solicitors’ Conduct Rules |
| Australian and International Pilots Association v Qantas Airways Ltd (No.3) [2007] FCA 879; (2007) 162 FCR 392, (2007) 165 IR 464 Autodesk Inc & Ors v Ginos Engineers Pty Ltd & Anor [2007] FMCA 1848 CEPU of Australia v CJ Manfield Pty Ltd [2011] FMCA 374; (2011) 63 AILR 101-370 CEPU of Australia v CJ Manfield Pty Ltd (No.2) [2011] FMCA 724 Colgate-Palmolive Co & Anor v Cussons Pty Ltd (1993) 46 FCR 225; (1993) 118 ALR 248; (1993) 28 IPR 561 Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143; (2008) 170 FCR 574; (2008) 176 IR 245 Cutler v Trustee for McKenzie & Baird Unit Trust [2010] FCA 988 Dain v Mark Group Australia Pty Ltd (No.3) [2013] FCCA 78 Davids Holdings Pty Ltd v Coles Myer Ltd [1995] ATPR 41-383 De Pardo v Legal Practitioners Complaints Committee [2000] FCA 335; (2000) 97 FCR 575; (2000) 170 ALR 709; (2000) 26 Fam LR 254 Fair Work Ombudsman v Fortcrest Investments Pty Ltd [2010] FMCA 18; (2010) 190 IR 422 Fair Work Ombudsman v RHD Pty Ltd & Ors [2009] FMCA 1139 Future Entertainment Pty Ltd v Cold Rock Management Pty Ltd [2013] FCA 922 Genovese v BGC Constructions Pty Ltd (No.2) [2007] FMCA 601 Gray v Richards (No.2) [2014] HCA 47; (2014) 89 ALJR 113; (2024) 315 ALR 1 Hansen v Border Morning Mail Pty Ltd (1987) 9 NSWLR 44 Hoskin v Ernst & Young Services Pty Ltd & Ors [2010] FMCA 947 Lemoto v Able Technical Pty Ltd [2005] NSWCA 153; (2005) 63 NSWLR 300 Lu v Ao-Zhong International Mineral Resources Pty Ltd [2014] FCCA 2841 Mitry Lawyers v Barnden [2014] FCA 918 National Mutual Holdings Pty Ltd & Ors v Sentry Corporation & Anor (1988) 19 FCR 155 PCRZ Investments Pty Ltd v National Golf Holdings [2002] VSCA 24 Perez v Northern Territory Department of Correctional Services [2015] FCCA 1384 Picos v HealthEngine Pty Ltd & Anor [2014] FCCA 640 Pierson’s Pro-Health Pty Ltd & Ors v Silvex Nominees Pty Ltd & Anor (No.3) [2010] FMCA 250 Rentuza v Westside Auto Wholesale [2009] FMCA 1022; (2009) 190 IR 207; (2009) 236 FLR 231 Robinson v Blackheart Industries Pty Ltd & Ors [2014] FCCA 1353; (2014) 286 FLR 277 Runge v Dentakos [2007] FMCA 997 Sibert v Tiwi Island Shire Council [2012] FMCA 1099 Sibert v Tiwi Island Shire Council (No.2) [2012] FMCA 1100 SZQOG v Minister for Immigration & Anor (No.2) [2013] FCCA 689 Welsh v Allblend Holdings Pty Ltd (No.4) [2010] FMCA 521; (2010) 196 IR 114 |
| Applicant: | SHASHA LU |
| Respondent: | AO-ZHONG INTERNATIONAL MINERAL RESOURCES PTY LTD |
| File Number: | PEG 183 of 2014 |
| Judgment of: | Judge Antoni Lucev |
| Hearing date: | 22 December 2014 |
| Date of Last Submission: | 22 December 2014 |
| Delivered at: | Perth |
| Delivered on: | 11 September 2015 |
REPRESENTATION
| Counsel for the Applicant: | Ms Barsby and Mr Atchamah |
| Solicitors for the Applicant: | MDC Legal |
| For the Respondent: | No Appearance |
| For the Respondent’s former lawyers, Wang & Associates Solicitors, and Ms S Song: | No appearance |
ORDERS
That:
(a)the respondent’s former lawyers, Wang & Associates Solicitors; and
(b)Ms Sisi Song, a lawyer with Wang & Associates Solicitors,
be jointly and severally liable to pay the applicant’s costs, in the sum of $5460, to be paid to the applicant by 25 September 2015.
That the Principal Registrar of this Court is to refer these Reasons for Judgment, and the Reasons for Judgment in Lu v Ao-Zhong International Mineral Resources Pty Ltd [2014] FCCA 2841, to the Office of the Legal Services Commissioner in New South Wales for such action as that body considers appropriate in relation to Wang & Associates Solicitors and Ms Sisi Song.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 183 of 2014
| SHASHA LU |
Applicant
And
| AO-ZHONG INTERNATIONAL MINERAL RESOURCES PTY LTD |
Respondent
REASONS FOR JUDGMENT
Application
Relevant background
These proceedings alleging dismissal of the applicant from employment with the respondent in contravention of a general protections provision of the Fair Work Act 2009 (Cth) (“FW Act”) were commenced by way of an Application filed in the Perth Registry of the Court on 30 June 2014 (“Application”) and served on the respondent’s lawyers, Wang & Associates (“Respondent’s Lawyers”), on 2 July 2014.
Venue change application
On 16 July 2014 the Respondent’s Lawyers, filed, but did not serve, a Notice of Address for Service and the Response which, relevantly, stated:
2. The Respondent seeks to have the proceedings transferred to Sydney because the respondent’s preferred legal representatives are in Sydney and further it is more convenient for the respondent’s representatives that the matter be dealt with in Sydney.
(“Venue Change Application”).
Contrary to r.4.03 of the Federal Circuit Court Rules 2001 (Cth) (“FCC Rules”) the respondent did not serve the Response (which it filed with the Court on 15 July 2014), or the Venue Change Application contained therein, on the applicant within 14 days of service of the applicant’s Application.
The respondent did not serve its Response prior to the first directions hearing in the proceedings, which occurred on 4 August 2014 (“First Directions Hearing”).
The respondent also failed to put the applicant, or her lawyers, on notice, ahead of the First Directions Hearing, that it had made the Venue Change Application. This was notwithstanding the Respondent’s Lawyers’ email of 3 August 2014 (10:45am) to Mr Mark Cox of MDC Legal, (“Applicant’s Lawyers”), which attached proposed consent orders for the First Directions Hearing that made no mention of the Venue Change Application.
The first time the applicant, and the Applicant’s Lawyers, became aware of the Venue Change Application was when the Court raised it at the First Directions Hearing. The applicant was taken by surprise and the matter was programmed through to a hearing of the Venue Change Application listed for 4 December 2014 (“Venue Change Hearing”) without any conferral between the parties. At the First Directions Hearing, the respondent’s Counsel sought to have the proceedings transferred to the Darwin Registry of the Court rather than the Sydney Registry of the Court.
Orders were made at the First Directions Hearing requiring the parties to file and serve affidavits and outlines of submissions in relation to the Venue Change Application. No orders were made listing the matter for mediation, and costs, if any, were reserved.
By email of 4 August 2014 (2:28pm), the Respondent’s Lawyers served the Notice of Address for Service and the Response on the Applicant’s Lawyers. Notwithstanding the respondent’s Counsel’s submissions at the First Directions Hearing, the Response stated that the respondent sought to have the proceedings transferred to the Sydney Registry of the Court.
In an email to the Respondent’s Lawyers of 4 August 2014 (6:46pm) the Applicant’s Lawyers requested that the respondent:
a)clarify which Registry of the Court it sought to transfer the proceedings to, so that the applicant could consider her position; and
b)if the respondent sought to transfer the proceedings to the Darwin Registry of the Court, that it file an amended Response reflecting this.
The Applicant’s Lawyers received no response to their email of 4 August 2014 (6:46pm).
By email to the Respondent’s Lawyers of 8 August 2014 (7:15am), the Applicant’s Lawyers again asked the respondent to clarify the venue to which the respondent sought to transfer the proceedings.
The Applicant’s Lawyers received no response to their email of 8 August 2014 (7:15am).
By letter to the Respondent’s Lawyers dated 28 August 2014, the Applicant’s Lawyers again asked the respondent to clarify the venue to which the respondent sought to transfer the proceedings. Further, the Applicant’s Lawyers:
a)requested the respondent state the basis for its Venue Change Application to enable the Applicant’s Lawyers to seek instructions from the applicant; and
b)put the respondent on notice that the above request was made in the interests of avoiding costs and that the applicant would rely on the request on the question of costs.
The Applicant’s Lawyers received no response to their letter dated 28 August 2014.
The Venue Change Hearing
Prior to the Venue Change Hearing on 4 December 2014, the parties filed and served outlines of submissions and supporting affidavits.
The respondent filed submissions and Sisi Song (“Ms Song”), a lawyer at the Respondent’s Lawyers filed an affidavit (Ms Song’s Affidavit”). The submissions identified r.8.01(2) of the FCC Rules, which provides as follows:
(2) In considering an application, the Court must have regard to:
(a) the convenience of the parties; and
(b) the limiting of expense and the cost of the proceeding; and
(c) whether the matter has been listed for final hearing; and
(d) any other relevant matter.
The respondent’s submissions went on to indicate that ultimately it was a matter of balance of convenience as to where proceedings were heard and determined, citing Hansen v Border Morning Mail Pty Ltd (1987) 9 NSWLR 44 (“Hansen”), and that the balance of convenience in any particular case was to be determined by the nature of that case, including the residence of the parties and any other particular circumstances: Hansen at 47 per Hunt J.
The respondent’s submission noted the following as relevant matters:
a)the respondent’s workplace was in Darwin, where it was registered and operated;
b)the applicant undertook her duties as general manager of the respondent in Darwin;
c)the respondent’s office in Darwin was small and staffed by two full-time employees, and it was conceivable that both of those employees may be required to be in Perth as witnesses for up to one week whilst the proceedings were being heard which had the potential to cause great difficulty in the running of the respondent’s business;
d)additional accommodation and travel costs would be incurred if the proceedings were to be heard in Perth rather than Darwin, and there was an unknown and unquantifiable cost and disruption to the respondent’s business by having employees in Perth whilst the proceedings were being heard;
e)the numbers of documents that may have to be utilised made it problematic for the proceedings to take place in Perth, particularly where the documents which may be needed were commercial in confidence and required for the running of the business in Darwin;
f)in relation to the documents it was relevant that there were also proceedings currently on foot in China between the applicant and the respondent’s parent company; and
g)there was no forensic reason for the proceedings to take place in Perth, and noting that the workplace which was the source of the dispute was Darwin, it was contended that Darwin was more appropriate for the hearing of the proceedings.
In relation to the Venue Change Application the applicant filed submissions submitting that:
a)because of a lack of conferral there was a lack of clarity on the Venue Change Application;
b)the Applicant’s Lawyer’s enquiries indicated that there was no capacity in the Court to have a Judge available to hear a fair work matter in the Darwin Registry;
c)the relevant test was that set out by the Full Court of the Federal Court in National Mutual Holdings Pty Ltd & Ors v Sentry Corporation & Anor (1988) 19 FCR 155 (“Sentry Corporation”), together with other factors outlined by this Court in Picos v HealthEngine Pty Ltd & Anor [2014] FCCA 640 at [78] per Judge Lucev (“Picos”);
d)although the respondent’s registered office was in Darwin the applicant travelled regularly and performed work in Perth, Darwin and China, and that the persons who made decisions on behalf of the respondent to take the actions the subject of the proceedings were based in China and it would be equally inconvenient for them for the matter to be heard in either Perth or Darwin;
e)the majority of the applicant’s work for the respondent was performed in Perth, and the applicant entered into residential tenancy agreements for accommodation in Perth during the course of her employment;
f)whether the witnesses are in Perth or Darwin they will be equally inconvenienced by a requirement to attend any hearing;
g)the applicant intends to call witnesses ordinarily resident in Perth, Darwin and China, and on the pleadings it is conceivable that the respondent may call witnesses currently resident in Perth and China;
h)it is conceivable that the respondent could bring an application for witnesses in Darwin to give evidence via video-link to reduce the cost and expense of the proceedings;
i)the applicant is presently more often in Perth than Darwin, and the Applicant’s Lawyers are in Perth, whilst the Respondent’s Lawyers are in Sydney, and it would be equally inconvenient for them to travel to Perth or Darwin;
j)the need to monitor and provide copies of documents are matters of logistics and it makes little difference whether the hearing was in Perth or Darwin, and whether the hearing is in Perth or Darwin did not likely increase the convenience because the parties would be required to copy documents regardless of venue;
k)acknowledged that the governing law of the employment contract was the law applicable in the Northern Territory, but the proceedings relate to matters arising under federal legislation and at common law; and
l)the respondent’s submissions failed to address the Sentry Corporation test as elaborated on by this Court in Picos.
After the Applicant’s Lawyers emailed a request to the Deputy Associate to the presiding Judge on 3 December 2014 (12:00pm), that the applicant attend by phone if she was required to be cross examined (as she faced travel restrictions in China), the Respondent’s Lawyers notified the Court that they would not be attending the Venue Change Hearing. In an email of 3 December 2014 (4:38pm) to the Deputy Associate to the presiding Judge, Ms Song said that the Respondent’s Lawyers would not appear on behalf of the respondent at the Venue Change Hearing due to unpaid legal fees. Ms Song attached a Notice of Intention to Cease to Act, which she advised had been served on the respondent that day.
An email of 3 December 2014 (5:29pm) from the Deputy Associate to the presiding Judge, to Ms Song at the Respondent’s Lawyers, and copied to the Applicant’s Lawyers, amongst other things:
a)advised Ms Song that the Notice of Intention to Cease to Act did not remove the Respondent’s Lawyers from the Court record as the respondent’s representatives; and
b)informed Ms Song that the Court expected her to appear as the respondent’s legal representative at the hearing on 4 December 2014, drawing her attention to her professional responsibility to the respondent and her duty as an officer of the Court.
On 4 December 2014, at the listed time for the hearing of the Venue Change Hearing neither the Respondent’s Lawyers, nor any other representative of the respondent, were in attendance at the Sydney Registry which was connected to the Perth Registry by video-link for the purposes of the Venue Change Hearing.
On 4 December 2014 the Deputy Associate to the presiding Judge therefore made several attempts to contact the Respondent’s Lawyers by phone: Lu v Ao-Zhong International Mineral Resources Pty Ltd [2014] FCCA 2841 at [11] per Judge Lucev (“Lu (No.1)”). Those attempts were unsuccessful.
The Court’s judgment in Lu (No.1) noted that:
a)a lawyer on the record in this Court does not cease to be the lawyer on the record until such time as a Notice of Withdrawal as Lawyer is filed in accordance with r.9.03 of the FCC Rules;
b)the purpose of the Notice of Intention to Withdraw as Lawyer is to ensure that a litigant receives at least seven days’ notice of the lawyer’s intention to cease acting, and to ensure that appropriate evidence is on the Court file in the event that the litigant appears in person claiming to have received no notice of the lawyer’s intention to cease acting, and that if r.9.03 of the FCC Rules is not complied with, the lawyer is obliged to attend and seek leave to withdraw from acting;
c)a lawyer who fails to comply with r.9.03 of the FCC Rules, and fails to appear, will be committing an ethical breach which may be referred to the appropriate professional body;
d)the failure to comply may result in a personal costs order against the lawyer if the matter has to be adjourned; and
e)notwithstanding the email from the Deputy Associate to the presiding Judge the night prior to the Venue Change Hearing the Respondent’s Lawyers did not appear at the Venue Change Hearing.
See Lu (No.1) at [5]-[10] per Judge Lucev.
In Lu (No.1) the Court went on to observe as follows:
11. Two questions therefore arise: one with respect to costs, the other with respect to the professional conduct of both the firm of lawyers and the lawyer acting within that firm. The Court notes that endeavours were made by the Deputy Associate this morning to contact the firm concerned. The Court is informed that contact was made with administrative personnel of the firm concerned, who advised the Deputy Associate that the lawyer with conduct for the matter was at lunch, and that when further contact was made with the firm, the Deputy Associate was advised that all of the solicitors for the firm were at lunch. Notwithstanding the marvels of modern technology, the lawyer with conduct of the matter did not answer her mobile phone when rung by the Deputy Associate, and it would appear that no other contact was able to be made with any of the other lawyers for the firm by the administrative personnel who were contacted by the Deputy Associate.
12. The question therefore arises as to whether the costs of today ought to be paid by the respondent or the respondent’s lawyers, and whether those costs should be on an indemnity basis. A question also arises as to whether the conduct of the lawyers concerned ought to be referred to the appropriate New South Wales professional body. In order to afford all concerned appropriate procedural fairness, the Court will list this matter for a further hearing with respect to those issues at 11.30am (WST) on 22 December 2014, with orders that the applicant, and the respondent, and the respondent’s lawyers, both the firm and the lawyer acting in the matter, file and serve submissions as to costs and professional conduct, including whether costs ought to be awarded on an indemnity basis, and whether the respondent’s lawyers – either the firm or lawyer acting – should bear any costs, and whether the lawyer’s conduct ought to be referred to the appropriate professional body. Those submissions are to be filed and served by 18 December 2014.
See Lu (No.1) at [11]-[12] per Judge Lucev.
The Court made orders on 4 December 2014 as follows:
1. The respondent’s interim application for the transfer of proceedings to the Darwin Registry be dismissed pursuant to r.13.03C(1)(c) of the Federal Circuit Court Rules 2001 (Cth).
2. The matter be referred for mediation before a Registrar of this Court at a date to be fixed by that Registrar.
3. If the matter does not resolve at mediation, the matter be listed for further directions at a time to be fixed by the Court.
4. The applicant, respondent and respondent’s lawyers (both the firm and the lawyer with conduct of the matter), file and serve submissions as to;
a) costs;
b) whether costs ought to be awarded on an indemnity basis;
c) whether the respondent’s lawyers (both the firm and the lawyer with conduct of the matter) should be liable for those costs; and
d) whether the Court should refer the conduct of the respondent’s lawyers (both the firm and the lawyer with conduct of the matter) in this matter to the appropriate professional disciplinary body,
by 18 December 2014.
5. The matter be listed for a hearing on the costs and conduct issues at 11.30am on 22 December 2014.
On 17 December 2014 the Respondent’s Lawyers filed a Notice of Withdrawal of Lawyer, advising of their withdrawal as lawyers for the respondent in the proceedings.
Submissions of the Respondent’s Lawyers on costs and conduct
The Respondent’s Lawyers filed submissions on their own behalf on 18 December 2014 in relation to the hearing on the costs and conduct issues (“Costs and Conduct Hearing”). Those submissions are set out below. Notwithstanding that the Costs and Conduct Hearing involved the conduct of the Respondent’s Lawyers, and gave rise to the possibility of costs being awarded against them, the Respondent’s Lawyers did not attend, and were not otherwise represented at the Costs and Conduct Hearing.
The Respondent’s Lawyers submitted as follows:
a)the Respondent’s Lawyers sent a cost agreement to the respondent on 21 February 2014 setting out the terms by which the Respondent’s Lawyers would perform work at the respondent’s instructions;
b)the respondent subsequently accepted that costs agreement by instructing the Respondent’s Lawyers to perform a considerable amount of work thereafter for the respondent;
c)the respondent also sent the executed costs agreement to the Respondent’s Lawyers on 14 March 2014;
d)consistent with the terms of the Respondent’s Lawyer’s costs agreement, the Respondent’s Lawyer sent tax invoices which set out work that the Respondent’s Lawyers performed at the instruction of the respondent between 21 February 2014 and 10 October 2014 on the following occasions:
i)on 11 March 2014, the Respondent’s Lawyers sent a tax invoice to the respondent for the work performed during the period between 21 February 2014 and 28 February 2014;
ii)on 6 April 2014, the Respondent’s Lawyers sent a tax invoice to the Respondent for the work performed during the period between 1 March 2014 and 31 March 2014;
iii)on 4 June 2014, the Respondent’s Lawyers sent a tax invoice to the respondent for the work performed during the period between 1 April 2014 and 31 May 2014;
iv)on 3 July 2014, the Respondent’s Lawyers sent a tax invoice to the respondent for the work performed during the period between 1 June 2014 to 30 June 2014 (“June Tax Invoice”);
v)on 7 August 2014, the Respondent’s Lawyers sent a tax invoice to the respondent for the work performed during the period between 1 July 2014 to 31 July 2014 (“July Tax Invoice”);
vi)on 14 August 2014, the Respondent’s Lawyers sent the June Tax Invoice to the respondent again and reminded the respondent about payment of the Respondent’s Lawyer’s professional fees;
vii)on 17 September 2014, the Respondent’s Lawyers sent the tax invoice for the work performed during the period between 1 August 2014 and 31 August 2014 (“August Tax Invoice”). By the same email, the Respondent’s Lawyers also attached the June Tax Invoice and July Tax Invoice and reminded the respondent about payment;
viii)on 5 November 2014, the Respondent’s Lawyers sent the tax invoice for the work performed during the between 1 September 2014 to 10 October 2014 (“September and October Tax Invoice”). By the same email, the Respondent’s Lawyers also attached the June Tax Invoice, July Tax Invoice and August Tax Invoice and reminded the respondent about payment;
ix)on 24 November 2014, the Respondent’s Lawyers sent the June Tax Invoice, July Tax Invoice, August Tax Invoice and September and October Tax Invoice to the respondent again and reminded the respondent for payment; and
x)on 27 November 2014, the Respondent’s Lawyers forwarded the email dated 24 November 2014 to the respondent again and reminded the respondent about payment; and
e)the June Tax Invoice, July Tax Invoice, August Tax Invoice and September and October Tax Invoice remained unpaid as at 18 December 2014.
The Respondent’s Lawyers’ submissions sought orders that:
a)the respondent shall bear the costs for the proceedings on 4 December 2014; and
b)the Respondent’s Lawyers shall not be liable for the costs for the proceedings on 4 December 2014.
Costs
The Court has jurisdiction to award costs against:
a)the respondent under the exceptions “carved out” in s.570 of the FW Act, although the usual rule is that proceedings under the FW Act are “no-costs” proceedings: Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143; (2008) 170 FCR 574; (2008) 176 IR 245 at [28] per Tamberlin, Gyles and Gilmour JJ (“Clarke”); and
b)the Respondent’s Lawyers pursuant to its implied incidental power to regulate the conduct of legal practitioners who appear before the Court: s.81(1)(b) of the Federal Circuit Court of Australia Act 1999 (Cth) (“FCCA Act”) and r.21.07 of the FCC Rules; Robinson v Blackheart Industries Pty Ltd & Ors [2014] FCCA 1353; (2014) 286 FLR 277 at [125]-[128] per Judge Manousaridis; De Pardo v Legal Practitioners Complaints Committee [2000] FCA 335; (2000) 97 FCR 575; (2000) 170 ALR 709; (2000) 26 Fam LR 254 at [53] per French J, and, therefore, against:
i)the Respondent’s Lawyers at the time of the hearing of the Venue Change Application; and
ii)Ms Song, the lawyer with conduct of the proceedings at the Respondent’s Lawyers, and who was representing the respondent at the time of the Venue Change Hearing.
Costs against the respondent – section 570 of the FW Act
The applicant seeks a costs order against the respondent under s.570(2)(b) of the FW Act.
For the purposes of s.570(2)(b) of the FW Act, two criteria must be fulfilled:
a)a party must have engaged in an unreasonable act or omission; and
b)that unreasonable act or omission must have caused another party to incur costs in connection with the proceeding: Clarke at [28] per Tamberlin, Gyles and Gilmour JJ.
Whether a party has engaged in an unreasonable act or omission requires an objective analysis of the particular circumstances of the case: Australian and International Pilots Association v Qantas Airways Ltd (No.3) [2007] FCA 879; (2007) 162 FCR 392, (2007) 165 IR 464 at [32] per Tracey J.
The Court notes that the respondent failed:
a)to confer at all with the applicant regarding its Venue Change Application;
b)to serve its Response on the applicant until 19 days after it was filed (in breach of r.4.03 of the FCC Rules);
c)to place the applicant on notice of its Venue Change Application prior to the First Directions Hearing, despite conferral between the Applicant’s Lawyers and the Respondent’s Lawyers ahead of the First Directions Hearing on the usual orders;
d)to clarify which venue it sought to have the proceedings transferred to, and failed to confer on its reasons for doing so, notwithstanding the Applicant’s Lawyers’ attempts at conferral prior to the filing of the respondent’s submissions; and
e)to address the Sentry Corporation test in the respondent’s submissions filed in support of the Venue Change Application on 19 September 2014.
The Court further notes that:
a)Ms Song’s Affidavit contained hearsay and irrelevant evidence, and statements of fact which were not in the deponent’s personal knowledge and which had not been pleaded in the Defence;
b)on 7 October 2014, the applicant filed submissions in relation to the Venue Change Application which:
i)at [18] placed the respondent on notice that the respondent’s submissions failed to address the Sentry Corporation test; and
ii)at [16] placed the respondent on notice that, on the applicant’s enquiries, fair work proceedings were not heard by a judge of the Darwin Registry, and that either a judge had to travel from Adelaide, or the matter would be transferred to Adelaide; and
c)without any notice to either the applicant, or the Court, save for Ms Song’s email to the Court of 3 December 2014 (12:00pm), both the respondent and the Respondent’s Lawyers failed to appear at the Venue Change Hearing on 4 December 2014. This is an unreasonable omission: Welsh v Allblend Holdings Pty Ltd (No.4) [2010] FMCA 521; (2010) 196 IR 114 at [18] per Lucev FM; Cutler v Trustee for McKenzie & Baird Unit Trust [2010] FCA 988 at [23] per Tracey J.
The applicant incurred costs in connection with the proceedings as follows:
a)noting that the only orders made at the First Directions Hearing related to the respondent’s Venue Change Application:
i)costs in attending the First Directions Hearing on 4 August 2014;
ii)costs in getting up for the First Directions Hearing on 4 August 2014, including by conferring with the Respondent’s Lawyers on the usual orders for the matter to be referred to mediation; and
iii)costs corresponding with the Respondent’s Lawyers regarding the Venue Change Application; and
b)noting that the Venue Change Application was dismissed, and the respondent and the Respondent’s Lawyers failed to appear at the hearing of the Venue Change Application:
i)costs having to read and deal with the respondent’s submissions and Ms Song’s Affidavit;
ii)costs preparing and filing the applicant’s submissions and supporting affidavits; and
iii)costs getting up for and attending the Venue Change Hearing.
The applicant also incurred the costs of:
a)preparing submissions pursuant to paragraph 4 of the Court’s orders of 4 December 2014; and
b)getting up for and appearing at the Costs and Conduct Hearing on 22 December 2014.
The respondent also caused the applicant to incur greater costs than it would otherwise have incurred because the respondent:
a)failed to confer with the applicant on the Venue Change Application, and had it done so the Venue Change Application may have been avoided or, at least, the issues to be addressed in the parties’ submissions and at the Venue Change Hearing could have been narrowed, which would have reduced the costs incurred by the applicant;
b)filed Ms Song’s Affidavit that contained hearsay, irrelevant evidence and statements of fact not in the deponent’s knowledge and which had not been pleaded, thereby causing the applicant to incur unnecessary cost reviewing and responding to that material; and
c)failed to appear at the Venue Change Hearing, as a consequence of which the hearing was initially, unable to proceed, and subsequently, the Venue Change Application was dismissed for non-appearance by the respondent. In circumstances where the Respondent’s Lawyers were requested to attend the Venue Change Hearing, the respondent failed to advise the Court ahead of the Venue Change Hearing of its intention not to appear after being requested to appear and, further, has subsequently failed to contact either the Court or the applicant to explain its non-appearance, save for what is said in the Respondent’s submissions filed on 18 December 2014, as set out above: see [29] above.
On an objective analysis of the circumstances of these proceedings, the respondent and more particularly, the Respondent’s Lawyers, have engaged in unreasonable acts and omissions that have caused the applicant to incur unnecessary costs in connection with the proceedings by not appearing at the Venue Change Hearing on 4 December 2014, resulting in the dismissal of the Venue Change Application for non-appearance, and also at the subsequent Costs and Conduct Hearing on 22 December 2014. These were unreasonable acts or omissions of the type that attracted a costs order in Rentuza v Westside Auto Wholesale: [2009] FMCA 1022; (2009) 190 IR 207; (2009) 236 FLR 231 at [29] per Lucev FM. The Court is therefore of the view that it should exercise its discretion under s.570(1) and (2)(b) of the FW Act to order the respondents to pay costs incurred by the applicant. The question arises whether those costs ought to be paid on an indemnity basis.
Whether costs ought to be awarded on an indemnity basis
The Court has jurisdiction, and a wide discretion in determining whether, to award indemnity costs: Genovese v BGC Constructions Pty Ltd (No.2) [2007] FMCA 601 at [47] per Lucev FM (“Genovese (No.2)”); PCRZ Investments Pty Ltd v National Golf Holdings [2002] VSCA 24 at [32] per Chernov JA (“PCRZ Investments”). The discretion is absolute and unfettered, but must be exercised judicially: Colgate-Palmolive Co & Anor v Cussons Pty Ltd (1993) 46 FCR 225; (1993) 118 ALR 248; (1993) 28 IPR 561; FCR at 230 per Sheppard J (“Colgate-Palmolive”). What is an appropriate costs or indemnity costs order depends on the circumstances of the case: Genovese (No. 2) at [47] per Lucev FM; PCRZ at [32] per Chernov JA. The normal practice, not to be lightly departed from, is to provide for costs to be on a party – party basis: Colgate-Palmolive FCR at 230 per Sheppard J. There must be some special or unusual feature which entitles the successful party to indemnity costs: Davids Holdings Pty Ltd v Coles Myer Ltd [1995] ATPR 41-383 at [7] per Drummond J.
The circumstances which may qualify as special or unusual circumstances warranting an indemnity costs order relevantly include:
a)whether a party should have known that there was no prospect of success in the case;
b)where a party alleges fraud, knowing the accusation to be false, or irrelevant to the issues;
c)where a party proceeds for “no good purpose at all due to inertia and carelessness”;
d)where a party’s conduct causes loss of time to the Court, and to other parties; and
e)having regard to the objects of:
i)encouraging savings of private costs and avoidance of inherent risks, delays and uncertainties of litigation; and
ii)saving public cost necessarily incurred in litigation which events demonstrate to have been unnecessary: Genovese (No. 2) at [47] per Lucev FM.
The discretionary categories are not closed, and other elements of litigious misconduct may be relevant: Genovese (No.2) at [48] per Lucev FM.
As to whether the respondent should have known that there was no prospect of success, the applicant submitted that if the respondent had informed itself of the relevant legal principles as set out in Sentry Corporation, it would have known the Venue Change Application had no prospect of success, especially given there is no available Judge at the Darwin Registry to hear fair work proceedings.
The applicant’s submissions adopt an incorrect premise (and perhaps an incorrect premise propagated by advice from an officer in the Court’s Registry): that there is no Judge available in Darwin in this Court to hear fair work proceedings. It is, and remains the case, and has always been the case, that the Court either has a Judge available in Darwin, or makes a Judge available in Darwin (either in person or by video-link), to hear fair work proceedings. See, for example, Sibert v Tiwi Island Shire Council [2013] FCCA 745; Perez v Northern Territory Department of Correctional Services [2015] FCCA 1384, and previously as the Federal Magistrates Court in Sibert v Tiwi Island Shire Council [2012] FMCA 1099; Sibert v Tiwi Island Shire Council (No.2) [2012] FMCA 1100; CEPU of Australia v CJ Manfield Pty Ltd [2011] FMCA 374; 2011) 63 AILR 101-370; CEPU of Australia v CJ Manfield Pty Ltd (No.2) [2011] FMCA 724; Fair Work Ombudsman v Fortcrest Investments Pty Ltd [2010] FMCA 18; (2010) 190 IR 422; Fair Work Ombudsman v RHD Pty Ltd & Ors [2009] FMCA 1139. The latter two cases were heard by the Federal Magistrate then resident in Darwin. In a more complex or document rich case it is almost inevitable, if the case is not heard by the Judge resident in Darwin, that a Judge would have to travel to Darwin to hear the case, if Darwin was the appropriate venue.
In the Court’s view it was not the case that the respondent should have known that there was no prospect of success concerning the Venue Change Application. There was a reasonably substantial link between the parties involved in the litigation and Darwin: the respondent had an office and transacted business there, there were other employees (who were prospective witnesses) in the Darwin office and, at least from time to time, the applicant worked there, and that misconduct by the applicant alleged in the Defence took place in Darwin. It would appear that most of the relevant documents were physically located in the Darwin office, and, if, for example, originals had to be inspected, Darwin would have to be the venue for that inspection. Even on that very brief analysis of the objective facts it is apparent that the Venue Change Application was not one which was without prospects, or which had no reasonable prospect, of success. See, for example, Autodesk Inc & Ors v Ginos Engineers Pty Ltd & Anor [2007] FMCA 1848 at [20] per Lloyd-Jones FM; Hoskin v Ernst & Young Services Pty Ltd & Ors [2010] FMCA 947 at [39] per Lucev FM. Whether it would have succeeded is, of course, an entirely different matter, upon which it is unnecessary for the Court to now comment.
As to alleging fraud, the applicant says that in Ms Song’s Affidavit (at [21] to [23(i)]) the respondent gratuitously raised imputations of fraud against the applicant when it knew, or ought to have known, that that allegation was false and or irrelevant to its submissions on the Venue Change Application (and was not pleaded in the Defence). In the Court’s view the matters raised at [21]-[23(i)] of Ms Song’s Affidavit do not allege fraud by the applicant, either in their terms, or by any necessary imputation. Reading Ms Song’s Affidavit from [20] she seeks to answer claims of breach of the applicant’s contract of employment made by the applicant in the Statement of Claim, by asserting that the applicant breached the contract of employment with the respondent as set out in the Defence (which does not allege fraud, as is acknowledged by the applicant). Reference is then made at [21] of Ms Song’s Affidavit to “alleged misconduct by the applicant”, being “events [which] largely took place in Darwin”. In [22] of Ms Song’s Affidavit reference is made to the “need [to] access … large amounts of documents that are kept in the Darwin office of the respondent”. Further reference is made to those documents at [23] of Ms Song’s Affidavit, and at [23(i)] of Ms Song’s Affidavit it is said that some of those documents relate to “Payments made and authorised by the applicant for her own remuneration from the funds of the respondent”. That allegation is not an allegation of fraud, and as is acknowledged by the applicant no allegation of fraud is raised by the Defence. What is said at [23(i)] of Ms Song’s Affidavit is consonant with the allegation by the respondent that the applicant breached her contract of employment, and was guilty of misconduct, by authorising payment for her own remuneration from the respondent’s funds. It is not apparent to the Court that fraud is being alleged or imputed in those passages from Ms Song’s Affidavit.
As to whether the respondent proceeded for no good purpose at all due to inertia and carelessness, the applicant says that, notwithstanding being served with the applicant’s submissions on 7 October 2014, the respondent proceeded with its Venue Change Application:
a)without conferring with the applicant on the contents of the applicant’s submissions; and
b)with an apparent disregard for the contents of the applicant’s submissions (particularly the applicant’s submissions regarding the respondent’s failure to address the Sentry Corporation test and the availability of a Judge in Darwin to hear fair work proceedings).
The failure to confer, of itself, is not a matter likely, absent a persistent and deliberate failure to confer over a period, or other aggravating factors, to warrant indemnity costs. Insofar as the respondent failed to address the Sentry Corporation test, its submissions did refer to Hansen, a New South Wales Supreme Court case, in which some of the factors addressed in Sentry Corporation were also addressed. It may be passing strange that both Counsel and the Respondent’s Lawyers failed to refer to Sentry Corporation, but it is hardly a warrant to impose indemnity costs. For reasons discussed above, the issue of the availability of a Judge in Darwin to hear fair work proceedings is a matter in respect of which the applicant has proceeded on a false premise.
As to whether the respondent’s conduct caused loss of time to the Court, and to the other parties, and resulted in the unnecessary incursion of private and public costs in the litigation, the applicant says that by failing to appear at the Venue Change Hearing:
a)the respondent caused a loss of time to the Court and to the applicant, in relation to preparation for and attendance at both that hearing and the First Directions Hearing on 4 August 2014;
b)the Respondent’s Lawyers’ failure to appear at the Venue Change Hearing was not only a breach of rr.9.03 and 21.07 of the FCC Rules, but was further in contempt of the direction from the Court contained in the Deputy Associate to the presiding Judge’s email of 3 December 2014 (5:29pm) to Ms Song;
c)having regard to the respondent’s conduct generally in these proceedings as detailed above, and having regard to the objects of encouraging the saving of private costs and the avoidance of the inherent risks, delays and uncertainties of litigation, and having regard to the objects of saving public cost necessarily incurred in litigation, the respondent’s conduct outlined above warrants an order for indemnity costs because it caused:
i)private costs to be incurred by the applicant;
ii)a delay in the proceedings (including a delay in the proceedings being listed for mediation: see the Court’s orders of 4 December 2014); and
iii)public cost to be incurred by the Court at the First Directions Hearing and the Venue Change Hearing, which costs are now thrown away; and
d)the respondent has treated the applicant “shabbily” and has “treated the court with contempt,” justifying an indemnity costs order: Future Entertainment Pty Ltd v Cold Rock Management Pty Ltd [2013] FCA 922 at [20] per Murphy J (“Future Entertainment”).
Future Entertainment was a case where the applicant sought declarations and injunctions in intellectual property proceedings with respect to the use of the name “Future Music Festival”. The applicant did not attend the first directions hearing, or at an application by the respondent for security for costs, which were awarded in the sum of $88,000, or at a second directions hearing on 30 August 2013, in circumstances where there was an order dated 7 August 2013 indicating that if the applicant did not attend at the second directions hearing on 30 August 2013 the proceedings may be dismissed. Hence, the applicant in the proceedings failed to attend three court hearings, and also failed to comply with a Notice to Produce, all in circumstances where the subject matter of the proceedings were already the subject of a contract of sale entered into by the applicant transferring the relevant trademarks to another entity at the time the proceedings were commenced: see Future Entertainment at [4]-[10] and [15]-[22] per Murphy J.
The acts or omissions of the respondent in the present proceedings are of a significantly lesser order of magnitude in terms of default and non-cooperation than was the case in Future Entertainment. Here, the proceedings had been advanced to a stage where a Statement of Claim, Defence and Reply had all been filed. The Venue Change Application was not of itself bound to fail, for reasons briefly expressed above: see [46] above and the authorities there cited. Furthermore, the Respondent’s Lawyers did indicate to the Court that they did not intend to attend at the hearing on 4 December 2014, before they were directed by the Court to attend, and then failed to do so, both at the Venue Change Hearing on 4 December 2014 and again at the Costs and Conduct Hearing on 22 December 2014. On 17 December 2014 the Respondent’s Lawyers had also filed a Notice of Withdrawal as Lawyer for the respondent. The Respondent’s Lawyers did file submissions in relation to the 22 December 2014 hearing, even though they did not attend at the Costs and Conduct Hearing. It is evident from those submissions that, at least in part, their reason for not attending at the Venue Change Hearing or the Costs and Conduct Hearing is the alleged failure of the respondent to pay fees rendered by the Respondent’s Lawyers. Albeit that the subordination of the Respondent’s Lawyers’ duty to the Court to the commercial considerations of the Respondent’s Lawyers cannot be countenanced, it does provide some explanation for the Respondent’s Lawyers’ conduct, albeit one that is inadequate, and wrong in principle.
The Court must bear in mind that indemnity costs are the exception rather than the rule, and that the imposition of indemnity costs should not occur too readily, and remains a matter of discretion, judicially exercised, for the Court.
Although not without some misgivings, the Court considers that, whilst the unreasonable acts and omissions of the respondent (and they appear primarily to be of the Respondent’s Lawyers) are sufficient to warrant an award of costs for the purposes of s.570 of the FW Act, they are not sufficient for the Court, on this occasion, to make an order for indemnity costs to be payable. In so doing, the Court has considered the matters set out above, and in particular the nature of the hearings concerned, the progress which has been made in the litigation, and the circumstances in which the Respondent’s Lawyers did not appear and subsequently withdrew, namely, the alleged non-payment of their costs by the respondent, as well as the general rule that indemnity costs are the exception and not the rule in civil litigation. It follows that there will not be an order for indemnity costs in these proceedings.
Whether the Respondent’s Lawyers (both the firm and the lawyer with conduct of the matter) should be liable for those costs
The applicant submits that:
a)the Respondent’s Lawyers and, in particular, Ms Song, were the lawyers representing the respondent up to and including the date of the Venue Change Hearing. Between the commencement of the proceedings and the Venue Change Hearing, the Respondent’s Lawyers and, in particular, Ms Song:
i)in breach of rr.4.03 and 21.07(2)(b) of the FCC Rules, failed to serve the Response on the applicant within the required timeframe;
ii)in breach of r.4.1.2 of the New South Wales Professional Conduct and Practice Rules 2013 (“NSW Professional Conduct Rules”) failed to put the Applicant’s Lawyers on notice of the Venue Change Application ahead of the First Directions Hearing and in fact proposed consent orders making no mention of the Venue Change Application;
iii)in breach of r.4.1.2 of the NSW Professional Conduct Rules, failed to confer with the Applicant’s Lawyers on the Venue Change Application and, in particular, failed to respond to or acknowledge receipt of the Applicant’s Lawyers’ conferral correspondence;
iv)in breach of r.21.07(2)(c) of the FCC Rules, prepared and filed the respondent’s submissions without informing themselves, or with an apparent disregard for, the legal principles relevant to venue change applications;
v)in breach of r.21.07(2)(c) of the FCC Rules, prepared and filed (and in Ms Song’s case affirmed) an affidavit in support of the respondent’s submissions that contained, firstly, hearsay and irrelevant evidence, and secondly, statements of fact which were not in the deponent’s knowledge, had not been pleaded and which raised an imputation of fraud on behalf of the applicant, in circumstances where such alleged conduct had not been pleaded and was, in any event, irrelevant to the Venue Change Application;
vi)continued to fail to confer with the Applicant’s Lawyers before proceeding with the Venue Change Application, notwithstanding the contents of the applicant’s submissions and, in particular, the applicant’s submissions regarding the availability of a Judge at the Darwin Registry to hear fair work proceedings;
vii)in breach of r.9.03 of the FCC Rules, failed to properly seek to withdraw from the record in the Proceedings prior to failing to attend the Venue Change Hearing; and
viii)in breach of rr.9.03 and 21.07(2)(a) of the FCC Rules, and in contempt of the Court’s direction contained in the email of 3 December 2014 (5:29pm), to Ms Song, from the Deputy Associate to the presiding Judge, failed to appear at the Venue Change Hearing;
b)the Respondent’s Lawyers and, in particular, Ms Song, by reason of the matters outlined above, have engaged in unreasonable conduct with an apparent disregard for any proper consideration of the prospects of success of the Venue Change Application;
c)further, with regard to r.21.07(1) of the FCC Rules, the Respondent’s Lawyers and, in particular, Ms Song, by reason of the matters outlined above, have caused costs to be incurred by the applicant and have incurred costs to be thrown away because of their wilful or negligent conduct of the matter amounting to improper conduct;
d)the failure of Ms Song, or another lawyer employed by the Respondent’s Lawyers to appear at the Venue Change Hearing, despite the Deputy Associate’s email of 3 December 2014 (5:29pm) to Ms Song, and telephone calls to the Respondent’s Lawyers on the morning of the hearing, is a significant breach of Ms Song and the Respondent’s Lawyers’ obligations to the Court: Runge v Dentakos [2007] FMCA 997 at [12] per Riethmuller FM (“Dentakos”); and
e)in the circumstances, it is open to and appropriate for the Court to exercise its discretion under r.21.07 of the FCC Rules to order Ms Song and the Respondent’s Lawyers, jointly and severally, to pay the costs incurred and thrown away by the applicant.
Consideration
Rule 21.07(1) of the FCC Rules provides that a Court may make an order for costs against a lawyer if the lawyer, or an employee or agent of the lawyer, has caused costs:
a)to be incurred by another person; or
b)to be thrown away because of undue delay, negligence, improper conduct or other misconduct or default.
Rule 21.07(2) of the FCC Rules provide that a lawyer may be in default if a hearing may not proceed conveniently because the lawyer has unreasonably failed:
a)to attend, or send another person to attend, the hearing; or
b)to file, lodge or deliver a document as required; or
c)to prepare any proper evidence or information; or
d)to do any other act necessary for the hearing to proceed.
The power to award costs against a lawyer must be exercised with care and discretion and only in clear cases: Mitry Lawyers v Barnden [2014] FCA 918 at [39] per Wigney J (“Mitry”). The relevant principles applicable under r.21.07 of the FCC Rules were summarised in Mitry at [42] per Wigney J, and include:
a)a requirement for something involving “unreasonable conduct”, with what constitutes unreasonable conduct depending on the circumstances of the particular case;
b)acting unreasonably involves some deliberate or conscious decision taken by reference to circumstances unrelated to the prospects of success, with either a recognition that there is no chance of success, or an intention to use the proceeding for an ulterior purpose, or to abuse the processes of the court, or with a disregard of any proper consideration of the prospects of success;
c)the circumstances must involve or result in a serious dereliction of duty owed to the court, or serious misconduct in promoting the course of, and the proper administration of, justice; and
d)pursuit of an unmeritorious case is insufficient, because the courts are concerned to avoid the risk of a practice of lawyers endeavouring to browbeat opponents into abandoning clients or particular arguments for fear of personal costs orders against them.
The applicant alleges a plethora of unreasonable conduct by the Respondent’s Lawyers, some of which has been the subject of adverse comment above by the Court, and some of which would have passed unnoticed if this matter had proceeded on a more normal litigation pathway. The unreasonable conduct which in the Court’s view necessitates an order that the Respondent’s Lawyers pay the applicant’s costs in these proceedings includes:
a)the Respondent’s Lawyers’ non-attendance at the Venue Change Hearing when they were:
i)still on the record as lawyers for the respondent; and
ii)requested to attend by the Court,
where had they attended, and sought an adjournment of the Venue Change Hearing it would in all likelihood have been granted, and would also have meant that the Venue Change Application would not have been dismissed for non-appearance by the respondent;
b)the reason for the non-attendance the Venue Change Hearing was, on the evidence, solely because the Respondent’s Lawyers put their own commercial interests, in relation to non-payment of invoiced fees, above:
i)their overriding duty to the Court, particularly in circumstances where the Court had requested the attendance of the Respondent’s Lawyers; and
ii)their duty to the respondent, for whom they were still the lawyers on the Court record, and in respect of which the Respondent’s Lawyers’ attendance would, as indicated above, probably have resulted in the adjournment of the Venue Change Hearing, rather than the dismissal of the Venue Change Application, a dismissal which may disadvantage the respondent in the future; and
c)not attending the Costs and Conduct Hearing when:
i)both the respondent’s (by then the former client of the Respondent’s Lawyers) and the Respondent’s Lawyers’ exposure to costs were in issue;
ii)the issue of the Respondent’s Lawyers’ conduct was in issue, and in respect of which the Court might have expected the attendance of the Respondent’s Lawyers given that submissions had been filed by them, and it was plain from the Reasons for Judgment in Lu (No. 1) that it was possible that the Court might be critical of their conduct; and
iii)there had been no attempt by the Respondent’s Lawyers to agree, or suggest alternative, orders which, if the Respondent’s Lawyers were not going to attend, might have enabled the matter to be dealt with on the papers without an attendance, and which therefore resulted in the Applicant’s Lawyers attending, and the Court unnecessarily organising a video-link with the Sydney Registry from the Perth Registry for the purpose of enabling the Respondent’s Lawyers to be heard.
In all of the above circumstances, there was a dereliction of the Respondent’s Lawyers’ overriding duty to the Court in their non-attendance at both the Venue Change Hearing and the Costs and Conduct Hearing, and, or alternatively, a failure to advance the interests of the administration of justice by taking proper steps to have the Venue Change Hearing and the Costs and Conduct Hearing conducted at less expense to the applicant and the Court, and in a manner which, particularly in relation to the Venue Change Hearing, might have better protected the interests of the respondent, for whom they were still the lawyers on the Court record at the time.
It is, in the above circumstances, therefore, appropriate that an order be made that the Respondent’s Lawyers and Ms Song, jointly and severally, be responsible for the payment of the applicant’s costs.
What costs are to be awarded?
The issue arises as to what costs the Respondent’s Lawyers ought to be liable to pay.
Having met one of the carved-out exceptions to s.570(2) of the FW Act, and it having been determined that the Respondent’s Lawyers ought to pay any costs payable, the discretion to award costs is unfettered, but to be exercised judicially in a manner which reflects a broader evaluative judgment of what justice requires: Colgate-Palmolive FCR at 230 per Sheppard J; Gray v Richards (No.2) [2014] HCA 47; (2014) 89 ALJR 113; (2014) 315 ALR 1 at [2] per French CJ, Hayne, Bell, Gageler and Keane JJ.
The issue then becomes what are the applicant’s costs? Those costs are to be assessed on the basis of the fixed costs event based schedule set out in Schedule 1, Part 1 of the FCC Rules. Although a fixed costs event based schedule, the Court retains a discretion to vary the amounts, either up or down, in appropriate circumstances, but departure from the event based scale is the exception rather than the norm: FCCA Act, s.79; Pierson’s Pro-Health Pty Ltd & Ors v Silvex Nominees Pty Ltd & Anor (No.3) [2010] FMCA 250 at [43] per Lucev FM; SZQOG v Minister for Immigration & Anor (No.2) [2013] FCCA 689 at [9] per Judge Lucev (“SZGOG (No.2)”). SZQOG (No.2) indicates that the circumstances need not be exceptional, but rather such as to justifiably or reasonably warrant the setting of costs in an increased or decreased amount.
In the circumstances of this case, the Court having determined that indemnity costs ought not be awarded, considers it is appropriate to assess costs on the usual basis, that is on the basis of the fixed costs event based schedule set out in Schedule 1, Part 1 of the FCC Rules.
The question then becomes which of the events which have occurred in this matter ought to be the subject of an award of costs, bearing in mind that it is essentially in relation to unreasonable acts or omissions that costs ought to be awarded.
In the Court’s view there should be no award of costs for initiating of or opposing the application up to the completion of the first court date. Although there were a number of minor transgressions by the respondent or the Respondent’s Lawyers in terms of time and procedural matters, and which, as the Court has observed above: see [59] above, might otherwise have passed unnoticed, that is not necessarily unusual in this Court up to the time of the first directions hearing where the Court usually puts in place programming orders. As the Court also observed above: see [46] above, the Venue Change Application was not one which did not have any prospect of success, and it was therefore appropriate that it be listed for a separate interlocutory hearing at the first directions hearing before the Court. What constituted the unreasonable acts or omissions were the failure of the Respondent’s Lawyers to properly deal with and attend at the Venue Change Hearing and the Costs and Conduct Hearing, as is explained above: see [59] above. It is for those two hearings that the Respondent’s Lawyers ought to pay costs on the scale set out in Part 1 of Schedule 1 to the FCC Rules.
Both the Venue Change Hearing and the Costs and Conduct Hearing are interim hearings as discrete events under Item 3 of Part 1 of Schedule 1 of the FCC Rules. The costs for each of those hearings are therefore $1706 plus the daily hearing fee mentioned in Item 13 that applies to the hearing. Neither hearing was a short mention, both being listed for half-day hearings. The daily hearing fee that is appropriate is therefore $1024 for each of the hearings. The costs for each hearing are therefore $2730. The total costs for the two hearings are therefore $5460.
Whether the Court should refer the conduct of the Respondent’s Lawyers (both the firm and the lawyer with conduct of the matter) in this matter to the appropriate professional disciplinary body
Save to say that it is open to the Court to refer the conduct of the Respondent’s Lawyers and Ms Song in these proceedings to the appropriate professional disciplinary body, the applicant made no submission as to whether there should be a referral.
The NSW Professional Conduct Rules comprise the Australian Solicitors’ Conduct Rules adopted by the Law Council of Australia, and apply to all Australian Solicitors within Australia (r.1.1) in addition to the common law (r.2.2).
A breach of the NSW Professional Conduct Rules is capable of constituting unsatisfactory professional conduct or professional misconduct, and may give rise to disciplinary action by the relevant regulatory authority (r.2.3).
Relevantly, the NSW Professional Conduct Rules provide that a “solicitor’s duty to the court and the administration of justice is paramount and prevails to the extent of inconsistency with any other duty” (r.3.1).
Rule 4.1.2 of the NSW Professional Conduct Rules provides that a solicitor must “be honest and courteous in all dealings in the course of legal practice”.
Integral to a legal practitioner’s duty to the Court is the obligation to ensure the business of the courts is conducted with the “expediency consistent with the due administration of justice”: Lemoto v Able Technical Pty Ltd [2005] NSWCA 153; (2005) 63 NSWLR 300 at [97] per McColl JA.
In Dentakos lawyers for a party failed to appear before the Federal Magistrates Court despite directions from the Federal Magistrate’s Associate to do so. The Federal Magistrates Court found that the lawyers’ conduct was in breach of their obligations to the Court, ordered the lawyers to pay the applicant’s costs, and further directed that a copy of the reasons for judgment be provided to the Law Institute in Victoria and to the state’s disciplinary body regarding the conduct of the law firm and the lawyers involved: Dentakos at [12]-[19] per Riethmuller FM.
A solicitor who fails to comply with r.9.03 of the FCC Rules, and fails to appear, will also be committing an ethical breach, which may be referred to the appropriate professional body: Dain v Mark Group Australia Pty Ltd (No.3) [2013] FCCA 78 at [21] per Raphael J; Lu at [8] per Judge Lucev.
In the Court’s view, the Respondent’s Lawyers and Ms Song were in breach of various professional conduct rules and obligations, as set out above. Most notably, and concerningly, is their breach of their duty to the Court in relation to both the Venue Change Hearing and the Costs and Conduct Hearing, and at the time of the Venue Change Hearing, to the respondent for whom they were still the lawyer on the Court record. Of further concern to the Court is the fact that the Respondent’s Lawyers and Ms Song have exhibited no contrition in relation to these issues, nor any appreciation of their duties and obligations to the Court or to the respondent when they were still the lawyers on the Court record. Significantly in this regard, the Respondent’s Lawyers’ submissions for the Costs and Conduct Hearing address only the issue of the non-payment of their professional fees by the respondent, and not the Respondent’s Lawyers professional duties and obligations, of which they must at that time have been well aware in light of the Court’s Reasons for Judgment in Lu (No.1) and the applicant’s submissions in relation to the Costs and Conduct Hearing. The failure to attend at the Costs and Conduct Hearing against that background is all the more concerning. It reveals either a complete lack of appreciation of the seriousness of the situation, and the breach of duties and obligations involved, or a deliberate avoidance of having to face the Court in relation to those professional duties and obligations at the Costs and Conduct Hearing.
In the circumstances, it is appropriate that there be an order that the Principal Registrar of this Court refer these Reasons for Judgment, and the Reasons for Judgment in Lu (No.1) to the Office of the Legal Services Commissioner in New South Wales for such action as is considered appropriate by that body in relation to the Respondent’s Lawyers and Ms Song.
Conclusions and orders
The Court has concluded that:
a)the Respondent’s Lawyers and Ms Song are to be jointly and severally responsible for payment of the applicant’s costs in the sum of $5460 by 25 September 2015; and
b)the Principal Registrar of this Court is to refer these Reasons for Judgment, and the Reasons for Judgment in Lu (No.1), to the Office of the Legal Services Commissioner in New South Wales for such action as that body considers appropriate in relation to the Respondent’s Lawyers and Ms Song.
There will be orders accordingly.
I certify that the preceding seventy-nine (79) paragraphs are a true copy of the reasons for judgment of Judge Antoni Lucev
Associate:
Date: 11 September 2015
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