O'KANE v Freelancer International Pty Ltd & Anor (No.3)
[2019] FCCA 2727
•27 September 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| O'KANE v FREELANCER INTERNATIONAL PTY LTD & ANOR (No.3) | [2019] FCCA 2727 |
| Catchwords: INDUSTRIAL LAW – COSTS – Application under s.570(2)(b) of the Fair Work Act 2009 (Cth) (FW Act) by successful first respondent for costs it claims to have incurred because of the applicant’s unreasonable conduct in connection with the claims the applicant brought under the FW Act – whether the first respondent established it incurred any of the costs it claims to have incurred – whether any such costs as the first respondent established it incurred were incurred because of any unreasonable act or omission of the applicant – application for costs unfounded – whether the first respondent’s application for costs was itself an unreasonable act for which an order under s.570 of the FW Act ought to be made against the first respondent – order under s.570 of the FW Act made against first respondent. |
| Legislation: Fair Work Act 2009 (Cth), ss.570(1), 570(2), 570(2)(b) Federal Circuit Court Rules 2001 (Cth), Schedule 1, Part 1 |
| Cases cited: Aucare Dairy (Aust) Pty Ltd v Huang (No.4) [2019] FCA 1187 |
| Applicant: | MATTHEW O'KANE |
| First Respondent: | FREELANCER INTERNATIONAL PTY LTD (ACN 134 845 748) |
| Second Respondent: | ROBERT MATTHEW BARRIE |
| File Number: | SYG 3488 of 2016 |
| Judgment of: | Judge Manousaridis |
| Hearing date: | 23 October 2018 |
| Date of Last Submission: | 23 October 2018 |
| Delivered at: | Sydney |
| Delivered on: | 27 September 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr G Boyce |
| Solicitors for the Applicant: | Solve Legal Pty Ltd |
| Counsel for the First Respondent: | Mr C Waterstreet and Mr A Guy |
| Solicitors for the First Respondent: | Longton Legal |
| No appearance by or on behalf of the Second Respondent |
ORDERS
The respondents’ application for costs pursuant to s.570(2)(b) of the Fair Work Act 2009 (Cth) (FW Act) is dismissed.
Pursuant to s.570(2)(b) of the FW Act the first respondent pay the applicant’s costs of the respondents’ application for costs set in the amount of $17,371.77.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 3488 of 2016
| MATTHEW O'KANE |
Applicant
And
| FREELANCER INTERNATIONAL PTY LTD (ACN 134 845 748) |
First Respondent
| ROBERT MATTHEW BARRIE |
Second Respondent
REASONS FOR JUDGMENT
Introduction
On 27 April 2018, for the reasons set out in a judgment I published on that day (earlier reasons),[1] I dismissed an application for relief under the Fair Work Act 2009 (Cth) (FW Act) Mr O’Kane brought against the first respondent (Freelancer) and the second respondent, Mr Barrie. I made no order for costs, but reserved to the parties liberty to apply for an order for costs.
[1] O’Kane v Freelancer International Pty Ltd & Anor [2018] FCCA 933
On 18 May 2018 Freelancer and Mr Barrie (the respondents) exercised that liberty by filing an application in a case. As initially framed, the respondents claimed that Mr O’Kane pay their costs of the proceeding. In the circumstances I set out later in these reasons, Mr Barrie did not pursue his application for costs because he accepted he had not been issued with any invoice for legal fees in relation to the proceeding; and Freelancer limited its claim for costs to discrete issues.
On 17 June 2018 Mr O’Kane filed a response in which he claimed an order that the respondents pay his costs of the application for costs. Mr O‘Kane claims that the respondents’ application for costs constitutes vexatious and unreasonable conduct by them.
I heard Freelancer’s and Mr O’Kane’s applications for costs on 23 October 2018. It was accepted by all parties that whether I should make any order for costs turns on the application of s.570 of the FW Act, and, in particular, on s.570(2)(b) of the FW Act, which provides that the Court may order one party to pay the other party’s costs if “the party’s unreasonable act or omission caused the other party to incur the costs”.
In these reasons for judgment, therefore, I consider whether either or both Freelancer or Mr O’Kane committed the unreasonable acts or omissions each alleges the other committed and, if so, whether such acts or omissions caused the other to incur costs. Before I consider these questions, it will be necessary first to set out the relevant text of s.570 of the FW Act and what some authorities have said about that provision, and then to set out the course of the application for costs that Freelancer and Mr Barrie initiated.[2]
[2] These reasons for judgment assume familiarity with my earlier reasons.
Section 570(2)(b) of the FW Act
Both Freelancer and Mr O’Kane rely on s.570(2)(b) of the FW Act. That paragraph must be read with s.570(1):
(1)A party to proceedings . . . in a court . . . 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 costs . . .
From the text of s.570(1) and s.570(2)(b), it will be seen that the power to award the costs provided for by s.570(2) arises only if all of the following events are present:
a)First, the party seeking an order for costs has incurred costs in the proceeding. This ordinarily requires the identification of some act or omission by that party that has led it to incur legal costs in the proceeding. It would be useful to describe these acts or omissions as “costs generating activities”.
b)Second, the costs generating activities were caused by the other party’s act or omission.
c)Third, the other party’s act or omission that caused the costs generating activities was unreasonable.
There was no issue between the parties about the principles that govern the exercise of the power to award costs under s.570(2) of the FW Act. Freelancer in its written submissions accepted that the discretion to award costs in a FW Act matter is not one that should be exercised with “too much haste”;[3] and that “costs will rarely be awarded under the section and exceptional circumstances are required to justify the making of such an order”.[4] Freelancer submitted, however, that in addition to these observations, the correct approach to determining whether a party has engaged in an unreasonable act or omission depends on an objective analysis of the circumstances of the case before the court.[5] It is also useful to bring to mind the following observations of the Full Federal Court in Construction, Forestry, Mining and Energy Union v Clarke:[6]
As the authorities indicate, there is a distinction between a party who pursues arguments which are ultimately abandoned or rejected by the Court and a party who commences a proceeding which is misconceived in the sense of being incompetent or unsupportable: . . . Simply because a party does not conduct its litigation in the most efficient way does not mean that the Court should exercise its discretion in s.824(2) of the WR Act to make a costs order. In our view, neither the late abandonment of some of its defence, nor the use of a notice of contention to advance a previously minor and ultimately unsuccessful argument, crosses the threshold of being “an unreasonable act or omission” for the purposes of s.824(2). . . . Indeed, while courts should use the discretion in s. 824(2) to ensure that parties to litigation arising from the WR Act do not engage in unreasonable acts and omissions which put the other party to undue expense, they should also be careful not to exercise the discretion with too much haste, given that such haste may discourage parties, for fear of an adverse costs order, from pursuing litigation under the WR Act in the manner which they deem best.
[3] Respondent’s Outline of Submissions on Costs, [11], quoting from Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143, at [29]
[4] Respondent’s Outline of Submissions on Costs, [11], quoting from Council of Kangan Batman Institute of Technology and Further Education v Australian Industrial Relations Commission [2006] FCAFC 199 at [60]
[5] Respondent’s Outline of Submissions on Costs, [12]
[6] [2008] FCAFC 143, at [29] (references omitted). The Full Court considered s.824(2) of the Workplace Relations Act 1996 (Cth) which is the predecessor of s.570(2) of the FW Act.
Course of application for costs
Freelancer and Mr Barrie exercised the liberty to apply for costs on 18 May 2018 by filing a document titled “Application in a Case for Costs”. That document sets out the grounds on which Freelancer and Mr Barrie contend Mr O’Kane should pay their costs. Mr Barrie claimed Mr O’Kane joined Mr Barrie as a respondent to harass and embarrass him and, for that reason, Mr O’Kane’s proceeding against Mr Barrie was vexatious and unreasonable.
The application for costs first came before me on 20 June 2018. Mr Hanby, solicitor, appeared for the respondents, and Mr Boyce, counsel, appeared for Mr O’Kane. The parties provided me with proposed directions for the filing of evidence, and the setting down for hearing of the application for costs. I indicated to the parties, however, that I was not prepared to make such directions because I was not satisfied the respondents had properly considered whether they had reasonable grounds for claiming that Mr O’Kane pay their costs. I raised a number of matters with Mr Hanby:
a)The first was whether any fee note had been issued to Mr Barrie in relation to the proceeding. Mr Hanby confirmed that no fee note had been issued to Mr Barrie. I asked whether in those circumstances Mr Barrie should be applying for an order for costs.
b)The second was whether Mr Hanby agreed that most of the hearing of Mr O’Kane’s claims under the FW Act was devoted to defences the respondents had raised, and that most of the findings I made in my earlier reasons in relation to those defences were adverse to the respondents.
c)The third matter I raised was the grounds on which the respondents could claim Mr O’Kane’s case, which depended on my accepting his account of the conversation he had with Mr Barrie on 17 August 2016, was bound to fail, given “I devoted many, many paragraphs and many hours of analysis to conclude that I” should not accept Mr O’Kane’s account of the conversation.
d)The fourth matter I raised was whether, to the extent the respondents rely on s.570(2)(b) of the FW Act, they were required to identify the particular costs incurred, the act or omission they claimed caused them to incur those costs, and particulars of why the act or omission was negligent.
e)The fifth and final matter related to the unparticularised allegations of theft made in the Application in a Case for Costs.
I directed the respondents file and serve by 18 July 2018:
a)points of claim specifying the costs the respondents contend they incurred which they contend Mr O’Kane should pay, and the facts and matters on which they rely for so contending; and
b)all affidavits on which the respondents intend to rely (other than affidavits that have already been read in the proceeding) in support of the application for costs.
I also ordered that the matter be listed for further directions before me on 27 July 2018. The respondents did not comply with the orders I made, and on 27 July 2018, when the matter next came before me, and over objection, I permitted the respondents to file their points of claim and affidavits by 15 August 2018, and listed the matter for further directions on 22 August 2018.
The respondents did not file points of claim. Instead, on 17 August 2018 Freelancer filed a document titled “Respondent’s Outline of Submissions on Costs”. That document confirmed that it is only Freelancer who applies for an order for costs. The submissions Freelancer made in that document may be summarised as follows:
a)Mr O’Kane “led affidavit evidence that was inherently unlikely to ever be accepted by an arbiter of fact”.[7] That forced Freelancer to respond to Mr O’Kane’s material through its own affidavits, and required Freelancer’s counsel to cross-examine Mr O’Kane “on the inherently unlikely evidence which generated more costs by extending the length of the hearing”.[8]
b)Mr O’Kane acted unreasonably by deposing in his second affidavit that the effect of the email chain to which I refer in paragraph 59 of my earlier reasons was that Mr Barrie and Mr Koch advised Mr O’Kane to “leave him [that is, Mr X] be”; and that is because I found in my earlier reasons that Mr O’Kane’s interpretation of those emails was not one that was reasonably open to him.[9]
c)Mr O’Kane acted unreasonably “with regard to his evidence in respect of the Respondent’s attitude toward the Applicant’s safety”.[10] More generally, this part of Freelancer’s submission is directed to the claim made in paragraph 31 of the Form 2[11] that Ms Olsen seemed uninterested, and was dismissive of Mr O’Kane’s complaint for his safety, and the findings I made about this claim at paragraph 76 of my earlier reasons. Freelancer submits that Mr O’Kane’s putting forward an affidavit that was not consistent with the documentary evidence “is an unreasonable act on the part of the Applicant that put the Respondent to additional cost”.[12]
d)Mr O’Kane acted unreasonably by presenting two inconsistent accounts of his meeting with Mr X’s mother on 17 August 2016.[13]
e)Mr O’Kane acted unreasonably by leading evidence of his account of his meeting with Mr Barrie on 17 August 2016 that was lacking in credit.[14]
f)Mr O’Kane acted unreasonably by alleging in the Form 2 that he exercised five workplace rights but only relied on the exercise of one of these asserted rights at the hearing.[15]
g)Mr O’Kane acted unreasonably by deposing to irrelevant, scandalous and irresponsible matters in his affidavit of 14 July 2017.[16]
h)On 20 September 2017 Mr O’Kane applied and obtained discovery of documents. Mr O’Kane acted unreasonably because he “only relied on a small portion of this vast array of documents”.[17]
[7] Respondent’s Outline of Submissions on Costs, [17]
[8] Respondent’s Outline of Submissions on Costs, [18]
[9] Respondent’s Outline of Submissions on Costs, [19]
[10] Respondent’s Outline of Submissions on Costs, [23]
[11] Filed by the applicant on 8 December 2016
[12] Respondent’s Outline of Submissions on Costs, [29]
[13] Respondent’s Outline of Submissions on Costs, [31] - [34]
[14] Respondent’s Outline of Submissions on Costs, [35]-[37]
[15] Respondent’s Outline of Submissions on Costs, [38]
[16] Respondent’s Outline of Submissions on Costs, [41]-[44]
[17] Respondent’s Outline of Submissions on Costs, [46]
In addition to filing the submissions on costs, Freelancer filed an affidavit made by Ms Sharon Lea Drew on 20 August 2018. Ms Drew is a costs assessor. It appears that Mr Drew prepared this affidavit on the basis of instructions contained in an email Mr Coyle, Freelancer’s lawyer, sent to Ms Drew on 6 August 2018:[18]
[18] Exhibit B, page 1 of 192
I am instructed to act for Freelancer International Pty Ltd to recover costs pursuant to section 570 of the Fair Work Act for a proceeding commenced by the applicant Mr O’Kane in the federal Circuit Court of Australia in Sydney.
. . . .
The Court has indicated that only the legal costs of Freelancer are recoverable if the threshold of section 570 is crossed.
I request you to please provide your estimate of the fees for you to review the tax invoices from Piper Alderman and to work out the Federal Circuit Court regulated costs on these matters.
On 22 August 2018 I made further directions, which included permitting Freelancer to file further affidavits by 29 August 2018, and I set down for hearing the application for costs on 5 October 2019.
On 28 August 2018 Freelancer filed two further affidavits of Ms Drew, one made on 21 August 2018, and a second made on 24 August 2018. Ms Drew made these affidavits after she had sent the following email to Mr Coyle on 15 August 2018:[19]
[19] Exhibit C, page 1
I have drafted a table detailing the applicable Federal Circuit Court schedule fees for the various periods which these proceedings span, and a table with the estimated total costs and disbursements recoverable by Freelancer in accordance with FCC schedule.
. . . .
The way the FCC scale works with costs being event-based will make it difficult to identify costs which would not have been incurred but for any unreasonable act or omission of Mr O’Kane. The best methodology I can think of would be to demonstrate that the hearing length was increased by reason particulars [sic] issues having to be addressed – there are 7 hearing days, and if we can establish that the total hearing time was increased by 1 day (for example) we can claim the costs of one day which would be $7,584.50 including counsel’s fees.
The only other discrete events from a costing perspective are the mediation (which is not likely to be unreasonable), application for discovery and the application for anti-suit injunction – only the application for discovery seems potentially to be classified as unreasonable.
Freelancer filed the affidavit Ms Drew made on 24 August 2018 after Ms Drew sent an email to Mr Coyle on 23 August 2018.[20] By that email Ms Drew attached a “draft affidavit plus redacted invoices”, referred to an invoice that had been issued by Piper Alderman to an insurer, indicating that 60% had been invoiced to Freelancer and 40% had been invoiced to the insurer, and explained “the methodology I used to calculate the indemnity costs for each of the Grounds”.
[20] Exhibit C, page 12
On 12 September 2018 Mr O’Kane filed an affidavit made by his solicitor, Mr Kutasi and, on 2 October 2018, Mr O’Kane filed written submissions. Freelancer filed a further affidavit made by Ms Drew on 21 September 2018.
The application for costs came before me for hearing on 5 October 2018. I read the affidavits of Ms Drew made on 21 August, 24 August, and 21 September 2018, and the affidavit of Mr Kutasi made on 12 September 2018. Counsel for Mr O’Kane called on a notice to produce which was answered by Freelancer producing documents. I adjourned the hearing for a short time to permit counsel for Mr O’Kane to inspect the documents produced, and to make a copy of those he proposed to use. When the matter resumed, it became apparent that a contested question of privilege arose. Further, counsel for Mr O’Kane said that he wished to cross-examine Ms Drew, but Freelancer had not arranged to have Ms Drew available for cross-examination. I ordered that the hearing be adjourned, set down for hearing on 17 October 2018 the question of privilege, and I made directions for the filing of evidence on the question of privilege.
On 17 October 2018 I heard argument on the question of privilege. I handed down my judgment on that question on 19 October 2018.[21] I rejected Freelancer’s claim for privilege, ordered that it grant to Mr O’Kane access to the documents over which Freelancer had claimed privilege, and set down for hearing on 23 October 2018 Freelancer’s application for costs.
[21] O’Kane v Freelancer International Pty Ltd & Anor (No.2) [2018] FCCA 3021
Evidence at hearing
Freelancer relied on all three affidavits Ms Drew made. In her affidavit made on 21 August 2018 Ms Drew says that Freelancer provided her with tax invoices, and that she had been instructed to assess Freelancer’s “scale costs and indemnity costs resulting from the alleged unreasonable conduct of the Applicant Mr O’Kane in respect of 7 grounds of unreasonable act or omissions which caused Freelancer to incur costs”.[22] By “scale costs” it is apparent that Ms Drew intended to refer to the costs allowed by Part 1 of Schedule 1 to the Federal Circuit Court Rules 2001 (Cth) (Schedule costs); and the “grounds” to which Ms Drew refers are those Freelancer identifies in the Respondent’s Outline of Submissions on Costs. Ms Drew assessed scale costs and indemnity costs for each ground as follows:
[22] Affidavit of S L Drew 21.08.2018, [10]
Ground
Description
Scale amount
Indemnity amount (exclusive of GST)
1
June 2016 email and handling of Mr X’s personal items
NIL
$1,901.70
2
Allegations re: attitude towards applicant’s safety
$2,750
$3,876.72
3
Meeting with Mr X’s mother
NIL
$2,775.77
4
Exchange with Barrie 17 August 2016
NIL
$1,596.95
5
Abandonment of workplace rights issues
NIL
NIL
6
Irrelevant evidence
NIL
NIL
7
Discovery
$4,421.50
$7,219.50
TOTAL
$7,171.50
$17,370.64
In her affidavit made on 24 August 2018 Ms Drew attempts to explain how she assessed some of Freelancer’s costs on an indemnity basis. In relation to the costs she assessed as Grounds 1, 3, and 4, Ms Drew deposed that she identified “the portions of the affidavit evidence of Mr Barrie and Mr Koch affirmed 5 September 2017 which clearly related to that Ground” noting, as an example, that her “review identified 10 paragraphs of Mr Barrie’s affidavit and 5 paragraphs of Mr Koch’s affidavit relating to Ground 1”.[23] Ms Drew says she then reviewed the invoices from Piper Alderman, the lawyers who acted for Freelancer during the hearing, relating to the preparation of affidavit evidence. Ms Drew annexed a copy of the relevant invoices. Ms Drew says the work described in the invoices falls into three categories, being work that relates solely to Mr Barrie’s affidavit, work that relates solely to Mr Koch’s affidavit, and “shared work relating to consideration and preparation of evidence including but not solely Mr Barrie’s and Mr Koch’s affidavits”. Ms Drew allocated the shared work between the work done on Mr Barrie’s and Mr Koch’s affidavit, and Ms Drew then assessed the costs likely to be allowed on an indemnity basis for preparing Mr Barrie’s affidavit evidence at $25,348.13, and Mr Koch’s affidavit at $12,918.13. Ms Drew then “apportioned the total cost of each affidavit in proportion to the percentage of content relating to each specific Ground, in order to calculate the costs calculated on the indemnity basis for each ground which is deposed to in my earlier affidavit”.
[23] Affidavit of S L Drew 28.08.2018, [5]
In relation to ground 2 Ms Drew says she was instructed that in addition to providing affidavit evidence one half day was devoted to oral evidence relating to this ground; and for this Ms Drew allowed three hours for the solicitor with carriage of the matter, and $1,500 for counsel. Finally, in relation to ground 7 (discovery), Ms Drew says she reviewed the invoices of Piper Alderman relating to Mr O’Kane’s affidavit, and she had not been provided with information about counsel’s fees for discovery.
In evidence given under cross-examination, Ms Drew confirmed that she did not consider whether the seven grounds reflected any unreasonable act or omission by or on behalf of Mr O’Kane. Ms Drew was unable to recall from the witness box the paragraphs of the affidavits of Mr Barrie and Mr Koch she assessed; although Ms Drew in her affidavit of 21 August 2018 says she reviewed the transcript of oral evidence from 30 October 2017, she could not recall the length of the transcript she reviewed; although Ms Drew deposed she had reviewed affidavits of Mr O’Kane, Mr Barrie, Mr Koch, and Mr de Jong, she could not recall the dates of Mr O’Kane’s affidavits she reviewed; and Ms Drew acknowledged she did not set out in her affidavits the analysis or calculation by which she assessed indemnity costs. Counsel for Mr O’Kane put to Ms Drew particular entries in the invoices which referred to the drafting of affidavits of persons in addition to Mr Barrie and Mr Koch, and Ms Drew accepted that when she allocated work relating to the other witness to work associated with the preparation of Mr Barrie’s and Mr Koch’s affidavit she could not tell from the invoices how much time was taken in preparing each of the affidavits. Ms Drew accepted the allocation was an “educated guess”, noting that such guesswork was based on the overall time that the invoices showed had been devoted to preparing the affidavits of Mr Barrie and Mr Koch.
Freelancer’s claims for costs
It is apparent from Freelancer’s written submissions, and Ms Drew’s affidavits, that Freelancer claims costs in relation to costs claimed to arise from the seven discrete events or issues Ms Drew has classified according to grounds.
Ground 1 - June 2016 email and handling of Mr X’s personal items
The costs generating activities to which Ground 1 purports to apply are Mr Barrie and Mr Koch putting on evidence in affidavits they each made on 5 September 2017. [24] The act or omission Freelancer claims caused these costs generating activities is Mr O’Kane’s having deposed in paragraph 45 of his affidavit of 3 October 2017 that he believed the effect of certain emails to be “leave him [Mr X] be”.[25]
[24] Respondent’s Outline of Submissions on Costs, [21]
[25] Respondent’s Outline of Submissions on Costs, [19]
The difficulty with Freelancer’s claim is that the costs generating activities – preparing evidence that came to be included in affidavits of both Mr Barrie and Mr Koch made on 5 September 2017 – occurred before Mr O’Kane made his affidavit of 3 October 2017. It is not open to me to find that an act that occurred on 3 October 2017 caused costs generating activities that occurred one month before that act. For this reason alone, the costs Freelance says it incurred that are intended to be covered by Ground 1 cannot be recovered by an order under s.570 of the FW Act.
Even if the costs generating activities on which Freelancer relies could be said to have been caused by Mr O’Kane’s deposing as he did in paragraph 45 of his affidavit of 3 October 2017, I am not satisfied that the costs Freelancer has incurred have been established. Ms Drew does not sufficiently describe the bases on which she assessed those costs. She does not identify the paragraphs she assumed was produced by the costs generating activities she assessed; she does not identify with any precision the nature or the amount of the work that went into producing those paragraphs; and Ms Drew allocates work which she accepts did not specifically refer to Mr Barrie’s and Mr Koch’s affidavits.
Given these conclusions, it is unnecessary to determine whether Mr O’Kane’s deposing as he did in paragraph 45 of his affidavit of 3 October 2017 was unreasonable. I should, however, say something about this. It is true that in paragraph 60 of my earlier reasons I found that it was not reasonably open to Mr O’Kane to interpret the emails in the manner in which he deposed he did. That, however, is not the same thing as finding that Mr O’Kane’s so deposing constituted an unreasonable act. It is a commonplace of litigation that parties genuinely perceive reality in a way that a judge, after hearing the evidence and submissions, and after reserving judgment, finds implausible. I arrived at my finding about Mr O’Kane’s evidence in paragraph 45 of his affidavit of 3 October 2017 after I considered the evidence in detail. It is not a finding I would have felt at liberty to make before considering the evidence in the manner set out in my earlier reasons.
There is one final matter to note. Ms Drew has purported to assess the costs generating activities covered by Ground 1 on an indemnity basis. Freelancer, however, has made no submission to the effect that, assuming it is entitled to an order for costs it has incurred as a result of those costs generating activities, those costs should be assessed on an indemnity basis. Freelancer appears to assume that if an act is unreasonable within the meaning of s.570(2)(b) of the FW Act that by itself would empower the Court to assess the costs such act has caused on an indemnity basis. That assumption is incorrect.
The principles governing the court’s discretion to award costs “are well-established”; costs “ordinarily follow the event and are awarded on a party-party basis unless there are particular or special circumstances which would warrant the Court making a special costs order, including an order that costs be assessed on an indemnity basis”.[26] The relevant principles were summarised by Sheppard J in Colgate‑Palmolive Company v Cussons Pty Limited:[27]
[26] Aucare Dairy (Aust) Pty Ltd v Huang (No.4) [2019] FCA 1187, at (Davies J)
[27] (1993) 46 FCR 225, at pages 222-224; [1993] FCA 536, at [24]
It seems to me that the following principles or guidelines can be distilled out of the authorities to which I have referred:-
. . . .
2. The ordinary rule is that, where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis. In this Court the provisions of Order 62, rules 12 and 19, and the Second Schedule to the Rules will apply to the taxation. In many cases the result will be that the amount recovered by the successful party under the Order will fall short of (in many cases well short of) a complete indemnity.
3. This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of Court) or a decision of an intermediate court of appeal or of the High Court would be required to alter it. . . .
4. In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v. Barnes (39 Ch D at 141) said the Court had a general and discretionary power to award costs as between solicitor and client “as and when the justice of the case might so require.” Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v. Preston ((1982) 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo, “The categories in which the discretion may be exercised are not closed”. Davies J expressed (at 6) similar views in Ragata.
5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud . . . ; evidence of particular misconduct that causes loss of time to the Court and to other parties . . . ; the fact that the proceedings were commenced or continued for some ulterior motive . . .) or in wilful disregard of known facts or clearly established law . . . ; the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions; an imprudent refusal of an offer to compromise . . . and an award of costs on an indemnity basis against a contemnor . . . . Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.
6. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.
I accept that in an appropriate case a party’s unreasonable act or omission might engage the discretion to order that costs be assessed on an indemnity basis. But given the breadth of the discretion, and the range of circumstances in which the power to assesses costs on an indemnity basis can arise, it cannot be assumed that one unreasonable act that causes a cost generating activity would warrant an order that the costs incurred as a consequence of the costs generating activity should be assessed on an indemnity basis.
I conclude that Freelancer’s claim for the costs covered by Ground 1 is unsupportable. For that reason, I also find that Freelancer’s making this claim itself constitutes an unreasonable act for the purposes of s.570(2)(b) of the FW Act.
Ground 2 – Allegations re: attitude towards applicant’s safety
In her affidavit of 24 August 2018 Ms Drew describes the costs generating activities covered by Ground 2 as an additional three hours’ worth of hearing time. Freelancer does not in the Respondent’s Outline of Submissions on Costs identify the costs generating activities; it does, however, identify the acts it alleges gave rise to its incurring costs. The first consists in the allegations Mr O’Kane made in paragraph 31 of the Form 2 that he had complained to Ms Olsen in relation to his personal safety, and that Ms Olsen was not interested in Mr O’Kane’s safety.[28] The second is Mr O’Kane’s maintaining the position that he did not receive any assistance from Ms Olsen, despite the emails that were put to him at the hearing.[29] The ground on which Freelancer claims these acts were unreasonable is the findings I made in paragraph 75 and 76 of my earlier reasons.
[28] Respondent’s Outline of Submissions on Costs, [24], [25]
[29] Respondent’s Outline of Submissions on Costs, [28]
I do not accept that Mr O’Kane’s having made the allegations in paragraph 31 of the Form 2, and his maintaining he did not receive any assistance from Ms Olsen, resulted in the addition of three hours’ worth of hearing time. There is no evidence of the basis on which the three hours estimate was arrived, other than an opinion Ms Drew in cross-examination said was conveyed to her over the telephone by counsel who appeared for Freelancer at the hearing. Even if Mr O’Kane’s allegation and maintenance of his position did result in an additional three hours of hearing time, that is not something that could reasonably be attributed to Mr O’Kane. I assessed the credibility of this part of Mr O’Kane’s evidence by reference to its inconsistency with undisputed email communications. The demonstration of such inconsistency did not require three hours’ worth of cross-examination, if that is the costs generating activity Freelancer claims was caused by Mr O’Kane’s acts or omissions.
I also do not accept that the findings I made in paragraphs 75 and 76 of my earlier reasons by themselves establish that the allegations Mr O’Kane made in paragraph 31 of the Form 2 were unreasonable. I arrived at my findings after I considered the evidence in detail; and they are not findings I would have felt at liberty to make before considering the evidence in the manner set out in my earlier reasons.
Finally, I repeat here what I said above about indemnity costs. Freelancer has assumed that it would be entitled to an order for indemnity costs on its establishing that it incurred costs because of the unreasonable conduct of Mr O’Kane. That assumption is incorrect.
I conclude, therefore, that Freelancer’s claim for the costs covered by Ground 2 is also unsupportable. For that reason, I also find that Freelancer’s making this claim itself constitutes an unreasonable act for the purposes of s.570(2)(b) of the FW Act.
Ground 3 - Meeting with Mr X’s mother
Freelancer does not in the Respondent’s Outline of Submissions on Costs identify the costs generating activities covered by Ground 3. Freelancer’s submissions, however, identify the act or omission it alleges caused it to incur costs; and these are Mr O’Kane’s having given inconsistent accounts of his meeting with Mr X’s mother. In her affidavit of 24 August 2018 Ms Drew sets out how she assessed these costs. That involved allocating costs charged for preparing the affidavits of Mr Barrie, Mr Koch, and others. Ms Drew, however, does not identify the particular paragraphs that are said to have been prepared in response to or because of Mr O’Kane’s inconsistent accounts of his meetings with Mr X’s mother.
There is, therefore, no evidence on the basis on which I could make a finding that Mr O’Kane’s giving inconsistent accounts of his meeting with Ms X’s mother caused any costs generating activities by Freelancer; and for this reason alone, this part of Freelancer’s claims for costs is unsupportable. I also find that Freelancer’s making this unsupportable claim itself constitutes an unreasonable act for the purposes of s.570(2)(b) of the FW Act.
Ground 4 - Exchange with Mr Barrie 17 August 2016
As with Ground 3, Freelancer does not in the Respondent’s Outline of Submissions on Costs identify the costs generating activities covered by Ground 4. The Respondent’s Outline of Submissions on Costs, however, does identify the act or omission it alleges caused it to incur costs; and these are Mr O’Kane’s having put forward a version of his conversation with Mr Barrie which I did not accept. That by itself does not indicate Mr O’Kane acted unreasonably.
Freelancer does not the Respondent’s Outline of Submissions on Costs identify the costs generating activities it claims Mr O’Kane caused. In her affidavit of 24 August 2018 Ms Drew sets out how she assessed these costs. That involved allocating costs charged for preparing the affidavits of Mr Barrie, Mr Koch, and others. Ms Drew, however, does not identify the particular paragraphs that are said to have been prepared in response or because of Mr O’Kane’s account of his conversation with Mr Barrie.
Ground 4 of Freelancer’s claims for costs is also unsupportable. For that reason, I also find that Freelancer’s making this claim itself constitutes an unreasonable act for the purposes of s.570(2)(b) of the FW Act.
Grounds 5 and 6
Ms Drew has assessed the additional costs covered by grounds 5 and 6 to be nil. Those claims, therefore, are also unsupportable and, for that reason, Freelancer’s making these claims also constitutes an unreasonable act for the purposes of s.570(2)(b) of the FW Act.
Ground 7 - discovery
The costs generating events covered by Ground 7 is Freelancer’s responding to a call for the production of documents made on 20 September 2017. The documents are described in paragraph 45 of the Respondent’s Outline of Submissions on Costs. The ground on which Freelancer claims Mr O’Kane’s calling for the documents was unreasonable is that “[u]ltimately the Applicant only relied on a small portion of this vast array of documents sought in his call”. That does not suggest any unreasonableness. Whether Mr O’Kane’s call for the documents was reasonable depends on whether he had a legitimate forensic purpose for calling for them. That question is not determined by reference to the extent to which documents that have been produced have been tendered into evidence; it turns on whether the documents had an apparent relevance to the issues in the proceeding. Freelancer does not submit the documents called for did not have an apparent relevance to any issue in the proceeding.
This part of Freelancers’ claim, therefore, is also unsupportable. For that reason, I also find that Freelancer making this claim itself constitutes an unreasonable act for the purposes of s.570(2)(b) of the FW Act.
Conclusion
Each of Freelancer’s claims for costs is unsupportable. It follows that its application for costs must be dismissed.
Mr O’Kane’s claims for costs
Mr O’Kane claims that Freelancer’s application for costs was made without reasonable cause or vexatiously. He also claims Freelancer’s application for costs as a whole constituted an unreasonable act. Mr O’Kane submits that from the outset Freelancer’s costs were brought to punish or harass Mr O’Kane, and that Freelancer’s application has maintained that character. Mr O’Kane relies on the extravagant allegations contained in The Application in a Case for Costs which the respondents have established, and the disparity between the amount Freelancer claims it incurred as a result of the unreasonable conduct of Mr O’Kane and the costs it has incurred in bringing such application.
I am satisfied that Freelancer filed its application in a case for costs to punish Mr O’Kane. More particularly, I find that Freelancer commenced this application in a case for costs to punish Mr O’Kane because, or at least substantially because, he included Mr Barrie as a respondent in the proceeding. That is apparent from a number of matters. First, in its Application in a Case for Costs, Freelancer and Mr Barrie claimed that the joinder of Mr Barrie personally as a respondent was “vexatious or without reasonable cause”, [30] and “was calculated without proper reason to embarrass, harass and pursued for a collateral purpose to the proper conduct of proceedings”.[31]
[30] Application in a Case for Costs, [2]
[31] Application in a Case for Costs, [3]
Second, the Application in a Case for Costs contains extravagant and unparticularised allegations against Mr O’Kane. Freelancer and Mr Barrie asserted:
a)Mr O’Kane made no effort to mediate a reasonable solution or to stop wasting the Court’s time, noting:[32]
The Act does cherish and allow employees and the like a platform but not a nursery, or creche [sic] or a crying room for aggrieved people irritated by life and its cruel randomness to continue agitating lost causes just for their own emotional disordered purposes.
b)Numerous examples “infect the transcript where tainted evidence and irresponsible evidence was attempted to be tendered and of feather weight gravity in the litigation and no convincing basis for its inclusion in the evidence in the first place can be established”.[33]
c)Mr O’Kane’s affidavit evidence and his counsel’s cross-examination “was peppered with salacious material of no evidentiary weight but calculated to embarrass” Mr Barrie “and another employee by implying drug use and conveying sexual innuendo”.[34]
d)Mr O’Kane “deliberately took company information which could not be condoned in any way even by the advice of his counsel”, and that “[t]heft [is] theft and cannot be painted as self protection by the gyrations of game playing of his counsel”.[35]
e)Mr O’Kane “is a straw man discontent with his lot in life and exercising no grace, conducted himself from beginning to end wrongly as a victim prepared to point his fingers at anyone without a thought or if a thought be given he wagged his finger in malice”.[36]
[32] Application in a Case for Costs, [6]
[33] Application in a Case for Costs, [7]
[34] Application in a Case for Costs, [11]
[35] Application in a Case for Costs, [14]
[36] Application in a Case for Costs, [17]
Third, Freelancer and Mr Barrie applied for an order for costs based on what the Application in a Case for Costs claimed were vexatious proceedings Mr O’Kane brought against Mr Barrie in circumstances where Mr Barrie had not incurred any costs in relation to the proceedings. That suggests that the purpose of Freelancer and Mr Barrie applying for costs was not to obtain an order for costs for the purpose of indemnifying Mr Barrie against any loss he may have suffered by incurring costs in defending what he claimed to be a vexatious proceeding against him, but to punish Mr O’Kane for having brought the proceeding against him.
Fourth, the Application in a Case for Costs applied for all of the respondents’ costs of the proceeding. Such an application was bound to fail because many of the matters on which the respondents relied in their defence were decided against them; and the determination of these matters constituted a significant proportion of the proceeding. This fact was immediately recognised by the respondents when I pointed this out to Mr Hanby at the directions hearing on 20 June 2018. That indicates that the respondents had not given any thought to whether they would reasonably be entitled to claim an order under s.570 of the FW Act which in turn indicates that the purpose of bringing the claim for costs was to punish Mr O’Kane.
In his oral address Mr Waterstreet, counsel for Freelancer, said he bore responsibility for the Application in a Case for Costs. That may be so; but there is nothing to suggest that the Application in a Case for Costs was not drawn, filed, and served, in accordance with the instructions of the respondents. Given that Freelancer is a public company, and Mr Barrie is its chief executive officer, the inference that is available to be drawn, and which I do draw, it that Freelancer and Mr Barrie knew of the contents of the Application in a Case for Costs, authorised their lawyers to file and serve it, and agreed to its author being briefed to appear at the hearing of the application for costs.
Mr Waterstreet also submitted that the Application in a Case for Costs “was in the form of an ambit claim”; and that it was “an ambit claim based on the whole of the material that was available rather than the entry point of costs”. These statements suggest that in deciding to apply for an order for costs, the respondents did not at the time before they filed the Application in a Case for Costs turn their mind to the requirements of s.570 of the FW Act, and in particular to the requirements of s.570(2)(b).
Mr Waterstreet further submitted that after the respondents recognised that Mr Barrie had no right to claim costs, and that Freelancer could not reasonably claim an order in relation to all of the costs of the proceeding, Freelancer’s application for costs “proceeded normally after that, in which the parties joined issue and the evidence was given”. It appears that what Mr Waterstreet intended to convey by this was that Freelancer sought only to recover those costs for which it had a reasonably arguable case to recover under s.570 of the Act. If that is what Mr Waterstreet intended to convey, I do not accept it. I find that the intention that animated the respondents’ intention to file the Application in a Case for Costs continued throughout the course of the application, including after Mr Barrie acknowledged he did not have a right to claim an order for costs, and after Freelancer accepted that it could not reasonably claim an order for all of the costs it incurred in the proceeding.
a)First, all but one of the alleged unreasonable acts of Mr O’Kane on which Freelancer relied were based on findings adverse to Mr O’Kane that I had made in my earlier reasons. As I have already noted, however, the fact a court makes an adverse finding against a party does not necessarily indicate that the party acted unreasonably in maintaining a position that has been determined adversely to that party.
b)Second, it was only after Freelancer identified what it claimed to be unreasonable acts by Mr O’Kane that it attempted to determine whether it had incurred any costs in relation to those acts. That is made apparent by the email from Ms Drew sent on 15 August 2018 to which I have already referred where Ms Drew discusses a particular methodology for seeking to identify costs that had been incurred because of a particular act or omission.[37]
c)Third, in relation to Grounds 5 and 6 of the costs Freelancer claims, Ms Drew has been unable to assess any Schedule costs or assess costs on an indemnity basis; and it is only in relation to Grounds 2 and 7 that Ms Drew was able to assess Schedule costs.
d)Fourth, I have already found that each of Freelancer’s claims for costs is unsupportable and, for that reason, Freelancer’s making each of those claims constituted an unreasonable act for the purposes of s.570(2)(b) of the FW Act.
[37] Exhibit C, page 1
Even if I were not to find that Freelancer’s intention in bringing and maintaining the application in a case for costs was to punish Mr O’Kane, I have already found that each of the each of Freelancer’s claims for costs is unsupportable and, for that reason, each claim for costs constitutes an unreasonable act. That by itself would render Freelancer’s entire application for costs an unreasonable act for the purposes of s.570(2)(b) of the FW Act and, for that reason, all costs Mr O’Kane has incurred as a consequence of Freelancer applying for costs are costs it would be open to me to order Freelancer pay Mr O’Kane. I am satisfied it is appropriate that I make such an order.
Even if I am incorrect in finding that the application for costs as a whole constitutes an unreasonable act, there are aspects of the proceeding for costs in which Freelancer engaged in unreasonable acts. This at the very least includes the costs thrown away because of Freelancer’s abandonment of its “ambit claim” after the directions hearing of 20 June 2018; and the costs thrown away of the directions hearing on 27 July 2018 because Freelancer had not complied with previous directions I made.
Assessment of Mr O’Kane’s costs
Mr O’Kane has sought to assess costs on the basis of the Schedule costs. Mr Kutasi, in his affidavit of 21 October 2018, has assessed those costs to be $27,048.68. Ms Drew, in her affidavit made on 22 October 2018 assessed those costs to be $16,640. The differences between the two assessments, and my findings on those differences are as follows:
a)Mr O’Kane claims an advocacy loading of $149.50 for the directions hearing of 20 June 2018 (item 12) whereas Ms Drew would not allow it because it should only be allowed if it is certified as reasonable to employ an advocate. In my opinion, it was reasonable for Mr O’Kane to retain an advocate to appear, given the breadth and nature of the allegations made in the “Application in a Case for Costs”, including allegations of theft.
b)As for the directions hearing on 27 July 2018 Mr O’Kane claims $1,867 (item 3 - interim or summary hearing), $305 (short mention, item 13), and $152.50 (item 12 - advocacy loading). Ms Drew would only allow $299, being item 13 of the Schedule costs as they stood before 4 August 2018. Given 27 July 2018 was only a directions hearing, it is not appropriate that I should allow Mr O’Kane to claim anything for item 3. I will allow, however, $299 (item 13 as it stood before 4 August 2018), and, for reasons I have already given, an advocacy loading of $149.50.
c)As for the directions hearing on 22 August 2018 Mr O’Kane claims $1,867 (item 3 - interim or summary hearing) and $305 (short mention, item 13), Ms Drew would only allow $305. I agree with Ms Drew, and I propose to allow $305.
d)As for the hearing on 5 October 2018 Mr O’Kane claims $1,867 (item 3 - interim or summary hearing), $1,120 (item 13 – half day hearing), and $560 (item 2 – advocacy loading). Ms Drew does not disagree with these claims, and I propose to allow them.
e)As for the hearing on 17 October 2018 Mr O’Kane claims $1,867 (item 3 - interim or summary hearing), $1,120 (item 13 – half day hearing), and $560 (item 2 – advocacy loading). Ms Drew does not disagree with these claims, and I propose to allow them.
f)Mr O’Kane claims $6,728 (item 6 – preparation for final hearing—one day matter). Ms Drew would not allow this because, she says, item 6 applies to final hearings, not to hearings for costs. Ms Drew would allow, however, $1,867. I agree. I propose, therefore, to allow $1,867.
g)As for the hearing on 23 October 2018 Mr O’Kane claims $305 (item 9 – final hearing costs for attendance of solicitor), $2,241 (item 13 – full day hearing), and $1,120.50 (item 12 – advocacy loading). Ms Drew does not disagree with these claims, and I propose to allow them.
h)Mr O’Kane claims the costs of the transcripts of hearings on 20 June, 27 July, 22 August, 5 October, and 17 October 2018. Ms Drew would only allow the transcript of the hearing on 20 June 2018. In my opinion, it was reasonable for Mr O’Kane to obtain the transcripts of all hearings other than for the hearing of 17 October 2018. I will therefore allow Mr O’Kane his claims for the cost of the transcript for all hearings other than on the hearing on 17 October 2018. That means I propose to disallow $1,072.91, being the costs of the transcript for 17 October 2018, namely.
I therefore assess the costs Mr O’Kane incurred as a consequence of the application the respondents made to be $17,371.77. Given that Mr Barrie withdrew his application for costs shortly after 20 June 2018, it is appropriate that I only order Freelancer pay those costs.
Disposition
I propose to order that the respondents’ application in a case for costs be dismissed, and that Freelancer pay Mr O’Kane’s costs of that application set in the amount of $17,371.77.
I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of Judge Manousaridis
Associate:
Date: 27 September 2019
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