MCGOWAN v Direct Mail and Marketing Pty Ltd (No.2)

[2016] FCCA 2548

FEDERAL CIRCUIT COURT OF AUSTRALIA

MCGOWAN v DIRECT MAIL AND MARKETING PTY LTD (No.2) [2016] FCCA 2548

Catchwords:
INDUSTRIAL LAW – Costs – whether unreasonable acts of omissions caused the respondent to incur costs- refusal to accept an offer of settlement.

Legislation:

Fair Work Act 2009 (Cth), ss.340, 341, 361, 570(2)(b)

Federal Circuit Court Act 1999 (Cth), s.86

Federal Circuit Court Rules 2001(Cth),  Sch. 1

Cases cited:

Shea v Energy Australia Services Pty Ltd (No 7) [2014] FCA 1091

Applicant: DAVID MCGOWAN

Respondent: DIRECT MAIL AND MARKETING PTY LTD

File Number: MLG 107 of 2015

Judgment of: Judge McNab

Hearing date: 28 June 2016

Date of Last Submission: 29 June 2016

Delivered at: Melbourne

Delivered on: 6 October 2016

REPRESENTATION

Counsel for the Applicant: Mr Jewell

Solicitors for the Applicant: McDonald Murholme Solicitors

Counsel for the Respondent: Mr Donaghey of Counsel

Solicitors for the Respondent: McKean Park Lawyers

ORDERS

1. The respondent’s application for costs filed 2 September 2016 be dismissed.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 107 of 2015

DAVID MCGOWAN

Applicant

And

DIRECT MAIL AND MARKETING PTY LTD

Respondent

REASONS FOR JUDGMENT

Reasons in relation to costs

1. On 30 August 2016, the court made orders dismissing the applicant’s application and invited the parties to make written submissions in relation to costs for the purposes of the question of costs to be determined on the papers by the court.

2. The respondent filed a written submission dated 2 September 2016 and submissions in reply dated 16 September 2016. The respondent also filed an affidavit of a solicitor, Mr Germano, sworn 2 September 2016 which deposed to the fact that on 20 May 2016 the solicitors for the respondent sent an email to the solicitors for the applicant attaching a letter of offer which amongst other things made an offer that the respondent would pay the applicant $2000 in full and final settlement of the proceeding. That offer was rejected by the applicant on the 14 June 2016.

3. The applicant filed written submissions dated 9 September 2016.

   a)By its written submissions dated 16 September 2016, the respondent submitted that it made an application for costs pursuant to s.570(2)(b) of the Fair Work Act 2009 (Cth)(“the Act”) and submitted that the court ought to be satisfied that the applicant’s unreasonable acts or omissions caused the respondent to incur costs. It was submitted that after 20 May 2016:

   i)the applicant could not have reasonably considered the court would find in favour of the applicant’s claim for reasonable notice; 

   ii)the applicant unreasonably failed to discontinue a redundancy claim until the applicant’s claim for redundancy was abandoned on 14 June 2016 by its written submissions;

   iii)the applicant unreasonably failed  to accept an offer to settle the proceedings on the payment by the respondent in the sum of $2000 made on 20 May 2015; and

   iv)the adverse action claim on the basis of breaches of ss.340 and 341 of the Act became wholly unarguable and unreasonable after 20 May 2016.

4. The respondent made submissions that it sought solicitor/client costs or failings that party/party costs. The submission in relation to the estimate of costs was as follows: 

   a. for the redundancy claim – the costs of the appearance on 1 June 2015, part of the drafting of correspondence in respect of the issue and seeking particulars of paragraph 20 of the Claim. The ‘solicitor-client’ costs would be $13,000-$15,000 and the ‘party-party’ costs two-thirds of this sum.

   b. for the adverse action claim, from 20 May 2016 – these are the partial costs of 2 pleadings, the evidence and the submissions. The ‘solicitor-client’ costs would be $38,000-$45,000 and the ‘party-party’ costs two-thirds of this sum.

   c. for the whole proceeding since 20 May 2015 – this would involve witness consultation and preparation (four witnesses), court book preparation, other general preparation for the hearing and the appearance .The ‘solicitor-client’ costs would be $53,000-$57,000 and the ‘party-party’ costs two-thirds of this sum.

5. Schedule 1 of the Federal Circuit Court Rules 2001 (“the Rules”) sets out the scale of costs for family law proceedings and General Federal law proceedings. The dictionary contained in the Rules provides that a “general federal law proceedings means a proceeding other than the family law or child-support proceedings.” The Court’s power to make rules in relation to costs derives from s.86 of the Federal Circuit Court Act 1999 (Cth)(“FCC Act”).

6. The sums claimed by the respondent bear no relation to the scale of costs. This may have arisen because of a misunderstanding based on a view that the scale of costs did not apply. Section 79 of the FCC Act provides:

   (1) This section does not apply to family law or child support proceedings or proceedings in relation to a matter arising under the Fair Work Act 2009 or section 14, 15 or 16 of the Public Interest Disclosure Act 2013.

   Note: See section 117 of the Family Law Act 1975 in relation to family law or child support proceedings. See section 570 of the Fair Work Act 2009 for proceedings in relation to matters arising under that Act. See section 18 of the Public Interest Disclosure Act 2013 for proceedings in relation to matters arising under section 14, 15 or 16 of that Act.

   (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.

7. As the note to s.79(1) of the FCC Act makes plain, the power to award costs in Fair Work Act proceedings is governed by s.570 of that Act. In the event that the court determines that costs are to be ordered pursuant to that section, the costs fixed by the rules of the court (made pursuant to s.86 of the FCC Act) become relevant to the exercise of discretion in relation to the quantum of costs.

8. This matter involved a 2 day hearing. The scale party/party costs for the preparation for the final hearing of a two day matter is $9,756. The daily hearing fee is $2162 and is subject to a 50% advocacy loading giving a total of $3243.  Similar points can be made in relation to each of the claims for costs raised and I am surprised that a claim for party/party costs was made in the quantum claimed in circumstances where a scale of costs applied and the court was not referred to that scale.

9. The respondent claimed party/party costs about $36,000 for the preparation and hearing when the scale costs for same was about $16,500. A more extreme differential applied when considering the claimed costs of pleadings and attendance at a directions hearing ($13,000-$15,000 solicitor/client costs or two-thirds of that sum for party-party costs). In that instance, the scale of costs for the appearance at a short directions hearing on 1 June 2016, where orders were made by consent, was $441 on a short mention. The scale costs for opposing an application including the first court date is $3613.

10. Having considered the submissions of the parties, I am not minded to exercise my discretion to make an order for costs in favour of the respondent.

11. The claim for reasonable notice was arguable and did not become unarguable simply because an offer of settlement was made.

12. In relation of the claim for redundancy, I do not accept the submission that the applicant acted unreasonably in either instituting the claim or pressing for the production of documents directly relevant to the claim. The claim was abandoned prior to the trial. Claims relating to redundancy are complex and often turn on the detail of evidence revealed through discovery and cross examination.

13. The claim for redundancy occupied very little in terms of pleadings and the discovery in relation to that claim was constituted by the provision of four reasonably brief documents. The redundancy claim did not take up any court time at the hearing.

14. I do not regard the failure on the part of the applicant to accept an offer of $2000 in May 2016 as an unreasonable act. The respondent referred the court to Shea v Energy Australia Services Pty Ltd (No 7) [2014] FCA 1091. At [30] Jessup J made the following remarks in relation to the failure on the part of an applicant to accept an offer to be paid $440,000 in order to settle that proceeding:

    [30] I regard the respondent’s offer of 17 December 2012 as a reasonable, even an attractive, one. There is, however, a distinction between failing to accept a reasonable offer and acting unreasonably in refusing an offer: see Alpine Hardwood (Aust) Pty Ltd v Hardys Pty Ltd (No 2) [2002] FCA 224; (2002) 190 ALR 121, 128 [34]-[35]. Notwithstanding the criticisms of the substance of the applicant’s case which the respondent justifiably makes, it would be a considerable step for the court to take to hold that the applicant acted unreasonably in failing to abandon what was the primary remedy which she sought, in a proceeding in which she had the benefit of s.361 of the FW Act, in return for a payment of money, however generous. In the circumstances of the case, I am not persuaded that it is a step which should be taken.

    [31] The second circumstance upon which the respondent relies under s.570(2)(b) of the FW Act is the applicant’s rejection of a later settlement offer made to her on 15 August 2013. This time, acceptance of the offer would have involved her receiving the sum of $200,000, inclusive of costs and interest, to be taxed as an “employment termination payment”. It will be clear from my reasons above that I would not hold it to have been an unreasonable act when the applicant rejected this later offer.

15. The applicant’s claim that he was subjected to adverse action because he made a workplace complaint was not hopeless and depended to a great extent on the evidence given at trial and the findings made in relation to that evidence. It also depended on findings in relation to the credibility of witnesses. The applicant had the benefit of s.361 of the Act. In those circumstances I do find that the Applicant acted unreasonably in refusing to accept an offer of $2000.

Conclusion

1. In these circumstances, I make no order as to costs.

I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of Judge McNab

Date: 6 October 2016