Morris v A1 Colon Hydrotherapy Pty Ltd
[2019] FCCA 1552
•7 June 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MORRIS v A1 COLON HYDROTHERAPY PTY LTD | [2019] FCCA 1552 |
| Catchwords: INDUSTRIAL LAW – COSTS – Whether unreasonable act or omission. |
| Legislation: Fair Work Act 2009 (Cth), ss.293, 357, 570, 570(2)(b), 570(2)(d) Federal Court Rules 2011, r.40.13 |
| Cases cited: Ashby v Slipper (No.2) [2014] FCAFC 67 |
| Applicant: | NATALIE MORRIS |
| Respondent: | A1 COLON HYDROTHERAPY PTY LTD |
| File Number: | BRG 951 of 2018 |
| Judgment of: | Judge Jarrett |
| Hearing date: | 17 May 2019 |
| Date of Last Submission: | 17 May 2019 |
| Delivered at: | Brisbane |
| Delivered on: | 7 June 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr Ludwig |
| Solicitors for the Applicant: | BT Lawyers |
| Counsel for the Respondent: | Mr Massy |
| Solicitors for the Respondent: | Mozaik Lawyers |
ORDERS
The applicant pay the respondent’s costs of and incidental to the application in a case filed on 26 April, 2019 fixed in the sum of $3,547;
The payment of the costs the subject of order 1 hereof not be enforced until the applicant’s proceedings commenced by application filed on 13 September, 2019 is finished.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 951 of 2018
| NATALIE MORRIS |
Applicant
And
| A1 COLON HYDROTHERAPY PTY LTD |
Respondent
REASONS FOR JUDGMENT
On 26 April, 2019 the respondent filed an application in a case seeking orders that parts of the applicant’s amended claim be struck out. By the time the matter came before me on 17 May, 2019 the parties had agreed to resolve that application and I made directions to facilitate the further conduct of the proceedings. However, the parties remain at odds about the costs of that application. The respondent seeks an order that the applicant pay its costs of and incidental to the application in a case filed on 26 April, 2019. The applicant resists that order.
The substantive proceedings were commenced on 13 September, 2018. In them, the applicant alleges contraventions of ss.293 and 357 of the Fair Work Act2009 (Cth). She seeks compensation for the contraventions and the imposition of pecuniary penalties upon the respondent.
The application for costs falls to be determined by reference to the provisions of s.570 of the Fair Work Act which provides:
(1) A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.
(2) The party may be ordered to pay the costs only if:
…
(b) the court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs.
As Judge O’Sullivan recently recorded in Fair Work Ombudsman v NSW Motel Management Services Pty Ltd [2018] FCCA 508, in Ryan v Primesafe [2015] FCA 8, Mortimer J dealt with an application for costs arising from proceedings under the Fair Work Act. In relation to the provisions in s.570 of the Fair Work Act generally her Honour said:
[64] I accept the general import of the authorities relied on by the applicant and Mr McDonald in their written submissions about the significance of the threshold set by s 570(2) of the Fair Work Act. Although some of the authorities relied on dealt with the predecessor provisions to s 570, there is no difference in substance in the way the threshold is expressed. The discretion conferred by the confined terms of s 570(2) should be exercised cautiously, and the case for its exercise should be clear: see Saxena v PPF Asset Management Ltd [2011] FCA 395at [6] per Bromberg J. The reason for caution is the potential for discouraging parties’ pursuit in a complete and robust way of the claims for contravention which they seek to make under the Fair Work Act, or the defence of such claims. The policy behind s 570 is to ensure that the spectre of costs being awarded if a claim is unsuccessful does not loom so large in the mind of potential applicants (in particular, in my opinion) that those with genuine grievances and an arguable evidentiary and legal basis for them are put off commencing or continuing proceedings. It is an access to justice provision. Insofar as it operates to the benefit of respondents, it is designed to ensure respondents feel free to pursue arguable legal and factual responses to the claims made against them. There is an almost identical provision in s 611 of the Fair Work Act, giving the Fair Work Commission a similar costs power, conditioned by similarly-worded considerations. The predecessor provisions, and the conscious broadening of the statutory terms used in s 570, are traced by the Full Court in Australasian Meat Industry Employees’ Union v Fair Work Australia (No 2)(2012) 203 FCR 430;[2012] FCAFC 103 at [3]–[4] per Jessup and Tracey JJ.
[65] None of those propositions deny the court’s ability to find that one or both of the two preconditions expressed in ss 570(2)(a) and (b) exist where the factual circumstances warrant it. The legislative policy behind a provision such as s 570(1) is not inconsistent with the requirements for proceedings to be conducted reasonably, fairly and efficiently. As an access to justice provision, it contemplates parties and their legal representatives will access the court responsibly.
Further, in Tsilibakis v Transfield Services (Australia) Pty Ltd (No.2) [2015] FCA 1048, White J said:
[7] It is not necessary to canvass in detail the authorities bearing upon the application of s 570. The relevant principles are well established. Section 570 and its predecessors are to be understood as reflecting a legislative policy of protecting parties to proceedings under the FW Act from orders for costs so that parties with a genuine grievance will not be discouraged from pursuing a remedy to which they may be entitled, or from pursuing litigation in the manner which they deem best, for fear of an adverse costs order: Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143; (2008) 170 FCR 574, at [29]; Ashby v Slipper (No 2) [2014] FCAFC 67; (2014) 314 ALR 84 at [35]. The occasions upon which costs will be awarded under s 570 are likely to be exceptional: Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission [2006] FCAFC 199; (2006) 156 FCR 275 at [60].
[8] The questions of whether a party’s act or omission was unreasonable and whether such an act or omission has caused the other party to incur costs are to be determined having regard to the particular circumstances of each case: Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879; (2007) 162 FCR 392 at [27]–[28]. The fact that a party has conducted the litigation inefficiently, has made concessions relatively late, may have acted in a different or more timely fashion, or has adopted a genuine but misguided approach will be relevant to, but are not conclusive of, the party having acted unreasonably in the relevant sense: Clarke at [29]–[30]. A party’s failure to comply with the duties imposed by s 37N of the Federal Court Act is also a relevant consideration: Specsavers Pty Ltd v Optical Superstore Pty Ltd [2012] FCAFC 183; (2012) 208 FCR 78 at [57]–[58].
Before I can make an order for costs, I need to be satisfied and find that the applicant’s unreasonable act or omission has caused the respondent in the present proceedings to incur the costs which they claim in this application. Even if I am so satisfied, the order for any costs remains within the discretion of the Court: Ashby v Slipper (No.2) [2014] FCAFC 67.
Here, the respondent presses its application in light of the following facts (taken from the respondent’s written submissions, the accuracy of which was not challenged):
4. On 15 October 2018, the Respondent’s solicitors sent correspondence to the Applicant’s solicitors identifying certain deficiencies with the claim filed, including that no material facts were pleaded in support of the alleged contravention of s. 293 of the Act.
5. On 16 October 2018 the Respondent filed a Response in relation to the Application and Claim.
6. As a result of the correspondence identified in paragraph 4 above, the parties agreed to the Court issuing directions that included the following:
a. the Applicant file and serve a Statement of Claim setting out all the material facts relied upon by the Applicant and the relief sought by 2 November 2018;
b. the Respondent file and serve a Defence by 23 November 2018.
7. The directions required, amongst other things, that affidavits of evidence be filed by the parties, including evidence in reply by the Applicant and the matter be referred to a Registrar for mediation.
8. The Applicant filed an Amended Claim on 1 November 2018. This Amended Claim failed to address sufficiently the deficiencies identified in relation to paragraphs 19 and 20 of the Claim.
9. On 23 November 2018, the Respondent filed a Defence to the Amended Claim.
10. On 13 December 2018, the Applicant filed a single affidavit in support of her Amended Claim.
11. On 14 February 2018, the Respondent filed four affidavits in response to the Applicant’s case.
12. On 21 February 2018, the Applicant filed four further affidavits, purportedly in reply to the evidence of the Respondent. These affidavits are not in fact in reply to evidence of the Respondent but concern evidence in support of the Applicant’s claim.
13. On 20 March 2019 the Respondent’s solicitors sent further correspondence to Applicant’s solicitors identifying that, amongst other things, the amended claim was deficient in that it did not allege any material facts which:
a. Were said to ground the conclusion that the Health Professionals and Support Services Award 2010 (the Award) applied to either the Respondent’s business or the Applicant’s employment;
b. Identified which parts of the Award had been contravened; or
c. Identified how s. 293 of the Act had been contravened.
14. As at the time of filing this application, no response had been provided by the Respondent in relation to these issues.
15. A mediation occurred on 8 April 2019. The matter did not resolve.
16. On 10 April 2019 the respondent made a without prejudice, save as to costs offer to the applicant to the effect that:
a. The applicant provide a further amended claim including the material facts which grounded the claims of breach of the Award and s. 293;
b. Provided the further amended claim addressed the issues identified, the respondent agree that the applicant have leave to file the further amended claim;
c. The respondent file an amended defence; and
d. The parties reach agreement about further directions.
17. No response was received to this offer.
18. On 26 April 2019 the respondent filed this strike out application.
It is common ground that on 2 May, 2019 the applicant agreed to further amend her amended claim to address the respondent’s concerns. A draft further amended claim has been provided and the respondent has indicated that the draft addresses those concerns.
The respondent argues that the applicant’s conduct in delivering two defective versions of her claim was unreasonable because her case was pleaded in such a way that the respondent was not able to discern, with sufficient clarity, the case which was to be met. That assumes particular significance where a civil penalty is sought against the respondent.
The applicant’s claim, in part, is that she was entitled to be paid in accordance with the Health Professionals Award 2010, that she was not so paid and that the respondent had breached s.293 of the Fair Work Act by contravening the National Minimum Wage Order and failing to pay the applicant under the Award and for various other entitlements. The applicant alleged that she had suffered loss and damage as a result of that breach and she sought damages as a result. However, she did not plead any material facts establishing that she was covered by the Award, what her duties were, what her classification under the Award was, that the respondent’s business was one which fell within the definition of “health care” or that it operated within the “health industry” such that it was covered by the Award, in what way the Award was contravened or how s.293 of the Fair Work Act was contravened by the respondent. Those are all incontrovertible propositions given the form in which the claim and the amended claim was delivered by the applicant.
As the respondent points out, the applicant seems to accept those deficiencies in the amended claim and has undertaken to address them.
In the circumstances, the respondent argues that the applicant’s conduct was unreasonable because she:
29.
…
b. failed to address the deficiencies when given an opportunity to amend;
c. did not respond to correspondence of 20 March 2019 identifying the obvious deficiencies in the Amended Claim;
d. failed to accept or respond to the reasonable offer of 10 April 2019;
e. only conceded the obvious deficiencies when the strike out application was due to be heard; and
f. failed to accept the respondent’s reasonable offer of 10 May 2019.
The applicant opposes the respondent’s application for costs. However, the applicant’s submissions are difficult to follow. The applicant’s written submissions refer in many places to the position in respect of costs before “the Commission” which I take to be a reference to the Fair Work Commission. The approach before the Commission and the legislative provisions that apply to the Commission do not apply to the Court. This application is to be determined according to the provisions of s.570 of the Fair Work Act.
The applicant submits that the most appropriate time to consider any question of costs is after the conclusion of proceedings. I reject that submission. There is nothing to suggest that some matter will need to be resolved by the trial judge for example, which will impact upon a decision about the costs of the present application. A reserved costs order is inappropriate. The respondent is entitled to apply for its costs of the application and to have it dealt with and disposed of by the Court.
In my view, the applicant’s conduct here can be characterised as unreasonable for the purposes of s.570(2)(b) of the Fair Work Act. The delivery of the amended claim which did not address the issues that I have set out above, notwithstanding complaint from the applicant, meant that the respondent was not in a position to properly understand and respond to the applicant’s claims. The basis of them was not properly explained in the amended claim. The failure by the applicant to respond to the respondent’s complaints about those deficiencies, meant that the applicant’s continued reliance on the amended claim was unreasonable in all of the circumstances. It was, in light of the facts then facing the respondent, entirely appropriate to commence the application to strike out the offensive parts of the amended claim as the respondent did. It should be observed that the respondent’s application was focused and directed to only those deficiencies in the amended claim about which the respondent had complained. It was not an application to strike out the amended claim which was ill directed or general in nature. Having regard to the facts as I have set them out above (and with which the applicant did not cavil) it seems that the present application was the only way in which the respondent could obtain a response to its concerns.
I am satisfied in the circumstances and I find that the applicant’s failure to respond to or/and deal with the respondent’s concerns about the applicant’s amended claim was an unreasonable omission for the purposes of s.570(2)(d) of the Fair Work Act and that that unreasonable omission caused the respondent to incur costs and in particular, the costs of the application in a case filed on 26 April, 2019.
At the conclusion of the oral argument on this application, I raised with counsel for both of the parties whether it would be appropriate to adopt the approach set out in the Federal Court Rules 2011, r.40.13 which provides:
40.13 Taxation of costs awarded on an interlocutory application
If an order for costs is made on an interlocutory application, the party in whose favour the order is made must not tax those costs until the proceeding in which the order is made is finished.
It seems to me that it would be appropriate to adopt a similar course in this case although counsel for the respondent urged me to fix the costs so that there was some certainty about the amount that might be payable. I have resolved to adopt that course. Accordingly, I fix the costs of the application (by reference to Schedule 1 to the Federal Circuit Court Rules 2001) as follows:
Item 3 interim or summary hearing – as a discrete event
$1,867
Daily hearing fee (increased by 50% advocacy loading)
$1,680
TOTAL
$3,547
Consistent with the general approach taken in r.40.13 of the Federal Court Rules, I will order that the applicant pay the respondent’s costs of and incidental to the application in a case filed on 26 April, 2019 fixed in the sum of $3,547 but payment of such costs not be enforced until the applicant’s proceedings commenced by application filed on 13 September, 2019 is finished.
I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of Judge Jarrett
Associate:
Date: 7 June 2019
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