OLLIE & NORWOOD (No.2)
[2015] FCCA 716
•7 April 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| OLLIE & NORWOOD (No.2) | [2015] FCCA 716 |
| Catchwords: FAMILY LAW – Practice and procedure – application for costs with respect to unsuccessful jurisdiction proceedings under Part VIIIAB, Division 2 of the Family Law Act 1975 (Cth) – whether s.79 of the Federal Circuit Court Act 1999 (Cth) or s.117 of the Family Law Act 1975 (Cth) applies – provisions of s.117(2A) of the Family Law Act 1975 (Cth) considered – whether respondent entitled to costs on an indemnity basis – whether proceedings instituted without reasonable cause. |
| Legislation: Fair Work Act 2009 (Cth), s.570 Family Law Act 1975 (Cth), ss.90SB, 117 Federal Circuit Court Act 1999 (Cth), s.79 Federal Circuit Court Rules 2001 (Cth), r.21.02 |
| Australian and International Pilots Association v Qantas Airways Ltd (No 3) (2007) 162 FCR 392 Specsavers Pty Ltd v Luxottica Retail Australia Pty Ltd (No 2) [2013] FCA 807 |
| Applicant: | MS OLLIE |
| Respondent: | MR NORWOOD |
| File Number: | MLC 8579 of 2014 |
| Judgment of: | Judge Whelan |
| Hearing date: | 3 March 2015 |
| Date of Last Submission: | 3 March 2015 |
| Delivered at: | Melbourne |
| Delivered on: | 7 April 2015 |
REPRESENTATION
| Counsel for the Applicant: | Mr Brygel |
| Solicitors for the Applicant: | Brygel Lawyers |
| Counsel for the Respondent: | Mr Dudderidge |
| Solicitors for the Respondent: | Nevile & Co Lawyers |
ORDERS
The Application in a Case filed by the Respondent on 9 February 2015 be dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Ollie & Norwood (No.2)is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 8579 of 2014
| MS OLLIE |
Applicant
And
| MR NORWOOD |
Respondent
REASONS FOR JUDGMENT
Introduction
In this matter, the Respondent to the substantive proceedings, Mr NORWOOD (“the Respondent”), by way of an Application in a Case,[1] seeks an order for costs against Ms OLLIE, the Applicant to the substantive proceedings (“the Applicant”). In the substantive proceedings, the Applicant sought orders from the Court with respect to the property interests of the parties to a de facto relationship. The Court was not satisfied that the requirements of s.90SB of the Family Law Act 1975 (Cth) (“the Act”) had been met and therefore found that the Court had no jurisdiction to entertain the application.[2]
[1] Application in a Case filed 9 February 2015.
[2] Ollie & Norwood [2015] FCCA 71.
Background
The Initiating Application in these proceedings was filed on
24 September 2014 and sought final orders with respect to the proceeds of the sale of a property situate at [S] (“the [S] property”) and interim orders in the following terms:
1. That simultaneously with the settlement of the sale of [S], the proceeds be applied as follows:
a.firstly, all agents fees, adjustments and usual costs of sale;
b.secondly, all monies outstanding pursuant to the registered ANZ mortgage;
c.thirdly, the sum of $45,600 be deposited into a joint interest bearing trust account in the names of the parties pending written agreement or final order; and
d. fourthly, the balance be paid to the applicant.
2. That within 48 hours, the respondent collect all of his personal items located at [S];
3. That the respondent pay the applicant’s costs of, and incidental to, this application on an indemnity basis.
4. Such further or other orders as this Honourable Court deems appropriate.[3]
[3] Initiating Application filed 24 September 2014, at p.2.
The matter was set down for a first Court date on 25 November 2014.
It would appear that, on the same day, the Respondent filed an application in the Victorian Civil and Administrative Tribunal (“VCAT”).[4] The Applicant only became aware of this application
when her solicitors received a letter, dated 7 October 2014, on
10 October 2014 from VCAT enclosing the application and advising of a date for a directions hearing on 14 November 2014.[5]
[4] Affidavit of Ashley Brygel filed 2 March 2015, at Annexure “AB-4”.
[5] Ibid.
On 8 October 2014, through their solicitors, the parties entered into a Heads of Agreement[6] substantially in the terms of the interim orders proposed by the Applicant in which moneys from the sale of the [S] property were to be released to the Applicant with the sum of $46,430.00 being deposited in a joint interest bearing trust account in the names of the parties pending written agreement or final order. Clause 5 of the Heads of Agreement reads:
That the parties agree to dismiss the interim application returnable on 25 November 2014 in the Federal Circuit Court proceeding MLC 8579/2014 with no order as to costs.[7]
[6] Ibid, at Annexure “AB-6”.
[7] Affidavit of Ashley Brygel filed 2 March 2015, at Annexure “AB-6”.
On 25 November 2014, when the matter came before the Court,
the Respondent made an oral objection to jurisdiction on the grounds that the application did not meet the requirements of s.90SB of the Act. At that stage, no Response to the Initiating Application had been filed. The matter was adjourned until 18 December 2014 and orders made for the Respondent to file a Response and affidavit in support by
4 December 2014 and the Applicant to file any further affidavit material by 11 December 2014.[8]
[8] Interim Order of Judge Whelan made 25 November 2014.
The matter proceeded to a hearing on the jurisdictional issue on
18 December 2014 and judgment was handed down on
23 January 2015.[9] The Respondent did not appear on 23 January 2015 but subsequently filed an application for costs on 9 February 2015.[10]
[9] Ollie & Norwood [2015] FCCA 71.
[10] Application in a Case filed 9 February 2015.
The Respondent’s submissions
The Respondent submitted that, as the Court had found that the Applicant did not meet the threshold requirements of s.90SB of the Act and therefore the Court had no jurisdiction under the Act,
the application for costs could not be considered under s.117 of the Act. The application therefore fell to be considered under s.79 of the Federal Circuit Court Act 1999 (Cth) (“the FCC Act”) and r.21.02 of the Federal Circuit Court Rules2001 (Cth) (“the Rules”).
The Respondent referred the Court to the judgment of Judge Harman in Peake & Benedict (Costs) [2014] FCCA 2723 (“Peake”). The Respondent distinguished the circumstances in that case on the basis that the proceedings were under s.90RD, and not s.90SB, of the Act.
The Respondent submitted that, under s.79 of the FCC Act, the general principle that costs follow the event applies.[11] The Respondent referred to a letter to the Applicant’s solicitor dated 3 December 2014[12] which it was submitted was, in effect, a Calderbank[13] offer and referred the Court to the principles with respect to Calderbank offers as set out in Specsavers Pty Ltd v Luxottica Retail Australia Pty Ltd (No 2) [2013] FCA 807 at paragraph 10 and J & D Rigging Pty Ltd v Agripower Australia Limited & Ors [2014] QCA 23.
[11] See Latoudis v Casey (1990) 170 CLR 534; Brenner v First Artists’ Management Pty Ltd& Anor (1993) 2 VR 221.
[12] Affidavit of David Dudderidge filed 9 February 2015, at Annexure “DD8”.
[13] Calderbank v Calderbank [1975] 3 All ER 333.
The Respondent submitted that the Applicant had sufficient information at the time of the 3 December 2014 letter, and particularly on the Applicant’s own material, to conclude that the serious injustice threshold (in s.90SB of the Act) could not, or was unlikely to, be satisfied. The letter specifically dealt with jurisdiction as a discrete issue and specifically referred to costs and the manner in which they would be sought if the jurisdiction issue went to a hearing. It was open to the Applicant to reject the offer on the substantive matter but concede that the Initiating Application should be dismissed. In all the circumstances, it was unreasonable for the Applicant to pursue the jurisdictional issue to hearing.
The Respondent sought that an order for costs be made in a fixed amount dealing with three separate periods:
·Until the letter of 3 December 2014, on a party-party basis by reference to Schedule 1 of the Rules;
·From 5 December 2014 until 30 January 2015, on an indemnity basis quantified as $5,005.00; and
·An amount of $3,600.00 from 2 February 2015, also on an indemnity basis, and disbursements of $136.36 with respect to the costs application.
In the alternative, the Respondent submitted that, if s.117 of the Act applied, the relevant principles are set out in Gissing & Sheffield (No 2) [2013] FCCA 921 with respect to both costs generally and indemnity costs. With respect to s.117(2A) of the Act, the Respondent submitted that the Applicant had significant equity in her property situate in [omitted] and had an income in excess of $83,000.00 per year. Notwithstanding that, it was submitted that the financial position of the parties was not directly relevant to the jurisdiction issue.
With respect to the conduct of the parties, the Respondent submitted that it was unreasonable for the Applicant to press the jurisdictional matter to hearing. By reference to matters conducted under the
Fair Work Act 2009(Cth) (“the FW Act”), the Respondent submitted that the Applicant had initiated the proceedings “without reasonable cause”[14] in that, upon the facts apparent to the Applicant at the time of instituting the proceedings, there was no substantial prospect of success.
The Respondent further submitted that the Applicant had caused the Respondent costs by her “unreasonable act or omission”[15] and the prospects of success are relevant in determining whether a party caused the other costs by an “unreasonable act or omission”.[16]
[14] Fair Work Act 2009 (Cth), s.570(2)(a).
[15] Ibid, s.570(2)(b).
[16] Ibid.
The Respondent also submitted that it was relevant that the Applicant was wholly unsuccessful in the substantive application. Further, there was a genuine offer of settlement in writing. The Respondent also submitted that the Court should give weight to the fact that the costs of the matter far outweighed the dispute between the parties and it should not have gone to a hearing. An order for costs is compensatory in nature and is designed to indemnify the successful party against the expense of the proceedings.[17] The Respondent submitted that the Applicant ought to have known the difficulties in establishing jurisdiction and it is just and equitable for a costs order to be made fixed in the amount sought.
[17] See Latoudis v Casey (1990) 170 CLR 534.
The Applicant’s submissions
The Applicant submitted that the relevant provisions in determining the costs application were those in s.117 of the Act and, even if s.79 of the FCC Act applied, costs are at the discretion of the Court.
The Applicant submitted that there should have been no need to institute the proceedings. The Applicant’s solicitor wrote a letter to the Respondent’s solicitor dated 5 September 2014[18] and requested that a sum of $45,600.00, which was the total amount of the Respondent’s claim at the time, be held in trust to be argued about later and the rest be released to the Applicant who had purchased another property and was counting on that money in order to settle on her purchase. The letter suggested a round-table conference and urgently requested a response. In the event that there was no agreement, the letter stated that “appropriate urgent relief” would be sought.[19]
[18] Affidavit of Ashley Brygel filed 2 March 2015, at Annexure “AB-1”.
[19] Affidavit of Ashley Brygel filed 2 March 2015, Annexure “AB-1” at p.2.
On 15 September 2014, the Respondent’s solicitor replied stating that his client saw “no benefit” in a round-table conference and that he was “instructed to issue proceedings without further delay”.[20] A proposal was made that “50% of the net sale proceeds … [be] held in trust pending the resolution of the matter”.[21]
[20] Ibid, at Annexure “AB-2”.
[21] Ibid.
On 16 September 2014, the Applicant’s solicitor responded stating that it was a “pity that [the Respondent would] not agree to meet at a
round-table conference”.[22] The letter went on to suggest that the failure of the Respondent to agree to the Applicant’s proposal “serves no purpose except to hold my client to ransom”.[23] The letter stated that,if the Respondent had not replied by 2.00 p.m. on 18 September 2014, an application would be filed in the Federal Circuit Court
(Family Law division) seeking “urgent relief along the lines of the Proposed Interim Arrangement”.[24]
[22] Ibid, at Annexure “AB-3”.
[23] Ibid.
[24] Ibid at p.2.
There was no response to that correspondence raising any issue of jurisdiction. On 30 September 2014, the Respondent’s solicitor sent an e-mail to the Applicant’s solicitor which raised, for the first time,
the issue of jurisdiction, stating that “[i]n the event the matter is not resolved prior, the threshold matters in respect to jurisdiction can be dealt with at final hearing, in the event the FCC does not have jurisdiction the matter will proceed in VCAT”.[25]
[25] Affidavit of David Dudderidge filed 9 February 2015, at Annexure “DD2”.
The Applicant submitted that, at that time, the Applicant was not aware that proceedings had been instituted by the Respondent in VCAT.
There had been no letter saying that such proceedings would be instituted. The Respondent had not provided a copy of the VCAT Application for Order[26] to the Applicant. The Applicant was unaware that the proceeding had been instituted until 10 October 2014.
[26] Affidavit of Ashley Brygel filed 2 March 2015, at Annexure “AB-4”.
The Applicant submitted that the Respondent had rejected all suggestions to participate in a round-table conference and,
despite several requests by the Applicant between July 2014 and February 2015, had not produced copies of bank statements substantiating the mortgage payments he claimed to have made.
The Applicant submitted that it cannot be said that she was entirely unsuccessful in her application as the parties reached agreement substantially in accordance with the interim orders she sought and the parties agreed that the application for interim orders should be dismissed without costs. By reason of instituting the proceedings,
the Applicant achieved a Heads of Agreement. The Applicant would not have incurred costs if that agreement had been reached back in September 2014.
With respect to the other elements of s.117(2A) of the Act,
the Applicant submitted that she was solely liable for a very substantial mortgage and had 100% of the care of her two children. The letter of
3 December 2014 from the Respondent sought a “full and final settlement of all matters between the parties” on a particular basis, including a payment of $35,000.00.[27] No Court or Tribunal has made a determination that the Respondent is entitled to such a payment. It is therefore not relevant with respect to the question of costs in these proceedings.
[27] Affidavit of David Dudderidge filed 9 February 2015, Annexure “DD8” at p.2.
The Applicant further submitted that there could be no orders for costs up to 25 November 2014 as the Respondent, at that time, had done no more than file a Notice of Address for Service.[28] No costs agreement disclosure statement has been provided by the Respondent with respect to the basis of the costs claimed and, if there is any entitlement to
costs, it must be with respect to the jurisdictional argument only.
On 25 November 2014, the Respondent raised the jurisdictional argument and directions were made for a hearing to determine jurisdiction. On the return date for the judgment, the Respondent failed to appear and did not take the opportunity to make an application for costs on that day. The Applicant also submitted that the costs claimed are excessive and disproportionate.
[28] Notice of Address for Service filed by Nevile & Co Lawyers on 3 November 2014.
The applicable jurisdiction
The Respondent argued that the Court should deal with the costs application under the provisions of s.79 of the FCC Act rather than s.117 of the Act. Section 79(1) of the FCC Act provides:
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.
The Respondent submitted that, as the Court had found that it lacked jurisdiction under the Act to deal with the substantive application,
the exclusion in s.79(1) of the FCC Act did not apply. Section 79(2) of the FCC Act specifically refers to the jurisdiction of the Court 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.
Section 117 of the Act provides as follows:
(1)Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A)In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g) such other matters as the court considers relevant.[29]
[29] Family Law Act 1975 (Cth), s.117.
The term “proceedings” is defined in s.4(1) of the Act to mean
“a proceeding in a court, whether between parties or not, and includes cross-proceedings or an incidental proceeding in the course of or in connexion with a proceeding”. It has a wider meaning than ‘proceedings for principal relief’, ‘Part VIIIAB proceedings’,
Part VIIIA proceedings’, ‘Part VIIIB proceedings’, and ‘Part VIII proceedings’, all of which are separately defined.[30]
[30] See Ibid, s.4(1).
I am of the view that a proceeding with respect to the jurisdiction of the Court to hear and determine a matter under Part VIIIAB of the Act is “an incidental proceeding in the course of or in connexion with a proceeding”.[31]
[31] Ibid.
The Respondent attempted to draw a distinction between the application of s.117 of the Act in Peake and the application of that section in this case. Peake concerned an application for a declaration under s.90RD of the Act. Section 90RD of the Act empowers the Court to make a declaration that a “de facto relationship existed, or never existed”,[32] between two persons who are parties to an application under ss.90SE, 90SG or 90SM of the Act, or to an application for a declaration under s.90SL of the Act.[33] In the event that the Court declares that the parties were not in a de facto relationship within the meaning of the Act, the Court has no jurisdiction to consider an application under ss.90SE, 90SG, 90SM or 90SL. Judge Harman stated expressly that “the Court was absent jurisdiction to determine any issue in dispute between the parties, save costs arising from the proceedings”.[34]
[32] Family Law Act 1975 (Cth), s.90RD(1).
[33] Sections 90SE and 90SG deal with maintenance proceedings and ss.90SM and 90SL with property proceedings between parties to a de facto relationship.
[34] [2014] FCCA 2723, pp.8-9 at para.33.
Further, his Honour stated:
As is correctly and appropriately identified by Mr Peake’s attorneys the issue of costs is dealt with by section 117 of the Family Law Act. I am satisfied that notwithstanding the declaration made by me as to an absence of jurisdiction to deal with and determine the part VIIIAB proceedings that the Court retains jurisdiction to deal with any application for costs arising from the proceedings generally.[35]
[35] Ibid, p.24 at para.96.
His Honour went on to say:
The proceedings that were instituted by Ms Benedict were instituted under the Family Law Act 1975 and thus, I am satisfied, that the “general rule” established by section 117(1) that
“… each party to proceedings under this Act [emphasis added] shall bear his or her own costs”, applies.[36]
[36] Ibid, p.25 at para.99.
The fact that the Court only acquires jurisdiction to determine an application under ss.90SE, 90SG, 90SM or 90SL of the Act once a positive finding is made with respect to s.90SB of the Act does not mean that, if the Court determines that it has no jurisdiction to make an order under those sections, that it has no jurisdiction under s.117 of the Act, because a proceeding to which s.90SB of the Act applies is still a proceeding “under this Act”[37] for the purpose of s.117 of the Act.
[37] [2014] FCCA 2723, p.25 at para.99.
The costs application
Clearly the Court has a discretion, where it is of the opinion that the circumstances justify doing so and where the considerations in s.117(2A) of the Act have been taken into account, to award costs to a party, including costs on an indemnity basis. In Peake, Judge Harman accepted that the scale of costs in Schedule 1 of the Rules was not prescriptive and I accept that, in appropriate circumstances, the Court may depart from the scale of costs.
Further, it is accepted that the principles established by Sheppard J
in Colgate-Palmolive Company & Anor v Cussons Pty Ltd (1993)
46 FCR 225 (“Colgate-Palmolive”) are applicable in considering whether indemnity costs should be awarded in exercising a discretion under s.117(2) of the Act. His Honour summarised these principles at paragraph 24 of the judgment. It is clear that 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 a party and party basis. His Honour went on to say that “[t]he circumstances of the case must be such as to warrant the Court in departing from the usual course”.[38]
[38] (1993) 46 FCR 225, at para.24.
While not limiting the circumstances which might warrant such a departure, his Honour cited examples of where Courts have considered that such a departure was warranted:
I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud
(both referred to by Woodward J in Fountain and also by Gummow J in Thors v. Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v. Hutchinson (1987) 10 NSWLR525, Maitland Hospital v. Fisher (No. 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal), Crisp v. Keng (Supreme Court of New South Wales, 27 September 1993, unreported, Court of Appeal) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records).[39][39] (1993) 46 FCR 225, at para.24.
His Honour concluded that the existence of particular facts and circumstances that might warrant an order for costs on an indemnity basis did not mean that a judge was necessarily obliged to exercise their discretion to make such an order.
The Full Court of the Family Court supported the application of
the principles in Colgate-Palmolive in Prantage & Prantage
[2013] FamCAFC 105, stating further:
Court and trial Judges in this jurisdiction have routinely followed Kohan [Kohan & Kohan (1993) FLC 92-340] in holding that indemnity costs orders are to be seen as “a very great departure from the normal standard”.[40]
[40] [2013] FamCAFC 105, p.16 at para.79.
The application of s.117(2A) of the Act
Section 117(2A) of the Act sets out the matters which the Court shall have regard to in considering what (if any) order should be made under s.117(2) of the Act. Contrary to the submissions of the Respondent,
the fact that this is an application for costs in a jurisdictional matter does not, in my view, mean that the financial circumstances of the parties are irrelevant. The Applicant has filed a Financial Statement;[41]
the Respondent has not. The Applicant deposed to having an average weekly income of $1,602.00.[42] It was her evidence that she had purchased a property in [omitted] with a mortgage of $470,000.00 for which she was solely responsible and was also solely responsible for the care and upkeep of her two children. There was no information on the Respondent’s income or liabilities. Neither party is in receipt of legal aid.
[41] Financial Statement filed by Ms Ollie on 24 September 2014.
[42] Ibid, at p.2.
Section 117(2A)(c) of the Act deals with the conduct of the parties “without limiting the generality of the foregoing” and this includes
“the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters”.
It is clear from the decision of Judge Harman in Peake that his Honour was supportive of a modern approach to civil litigation which places emphasis on the parties engaging in negotiation and alternative means of dispute resolution as early as possible in the proceedings. He went so far as to suggest that it might be inferred from the provisions of the FCC Act that:
… the Court might, whether sitting in its family law or general federal law jurisdiction, actively engage and encourage parties to participate in forms of dispute resolution other than litigation, such as, mediation and conciliation.[43]
[43] [2014] FCCA 2723, p.10 at para.58.
I concur with his Honour that, increasingly in civil litigation, parties are to be encouraged to attempt to resolve matters at the earliest opportunity and by non-litigious means. It is the practice of civil courts to support alternative dispute resolution and to go so far, in some jurisdictions, as to require parties to engage in such procedures prior to engaging in litigation.
The Applicant in this matter complains that the Respondent rejected all proposals to engage in round-table dispute resolution and, despite numerous requests, failed to provide documents substantiating his claimed contributions to the [S] property. Further,
the Respondent failed to warn the Applicant of his intention to file proceedings in VCAT or to provide a copy of that application to the Applicant. The Applicant submitted that she was forced to issue proceedings in this Court because of her need to have moneys released from the sale of the [S] property in order to finalise the purchase of her new home.
The Applicant filed her application on 24 September 2014. It would appear that the Respondent was served with the application on the same day. It is not clear whether his application to VCAT was lodged before or after his solicitor received the application filed in this Court. In any event, it would appear that the Applicant was not made aware of the existence of same until 10 October 2014. While I appreciate that, under the VCAT rules, an application is not required to be served on the respondent, I would have thought that, as a matter of professional etiquette at least, the Respondent’s solicitor would have indicated to the Applicant’s solicitor an intention to file the application and provided a copy when he did so. The Respondent did not comply with the Rules of this Court with respect to the filing and service of a Response to the Applicant’s Initiating Application.
Section 117(2A)(d) of the Act is not relevant to these proceedings.
The Respondent submits quite rightly that, with respect to the jurisdiction argument, the Applicant was unsuccessful in establishing the jurisdiction of this Court. The Applicant contends, however,
that with respect to the interim orders sought by her, she was successful in obtaining Heads of Agreement with the Respondent substantially in the form of those interim orders. In terms of the purpose of initiating the proceedings, she was therefore not entirely unsuccessful.
Section 117(2A)(f) of the Act deals with the issue of the making of an offer in writing to the other party “to settle the proceedings and the terms of any such offer”. The Respondent seeks to rely on the letter to the Applicant’s solicitor of 3 December 2014. Clearly that letter does make an offer which the Respondent’s solicitor says is put forward by way of “full and final settlement of all matters between the parties”.[44]
I do not accept the Respondent’s submission that the offer can somehow be dissected so that the “full and final settlement of all matters”[45] can be divided into settlement of the financial dispute and settlement of the jurisdictional dispute. As the issue of what,
if anything, the Applicant should pay to the Respondent had not been determined by any Court or Tribunal, I do not consider that the letter of offer, given its terms, can be relied upon with respect to costs concerning the determination of jurisdiction only.
[44] Affidavit of David Dudderidge filed 9 February 2015, Annexure “DD8” at p.2.
[45] Ibid.
Section 117(2A)(g) of the Act gives the Court the ability to refer to any other matters which it considers relevant. In this regard,
the Respondent referred to the type of statutory considerations given to the awarding of costs under the FW Act. The Respondent cannot rely on matters determined in a different statutory context. Nevertheless,
the instituting of proceedings which are frivolous or vexatious or “without reasonable cause”[46] are matters which the Court is entitled, in my view, to consider relevant to determining if an application for costs should be granted. There is nothing to suggest that the proceedings in this matter were instituted frivolously or vexatiously. Were they, therefore, instituted “without reasonable cause”[47]?
[46] Fair Work Act 2009 (Cth), s.570(2)(a).
[47] Ibid.
The expression “without reasonable cause”[48]has been the subject
of judicial consideration in a number of matters, many of which
are referred to in the judgment of Lucev FM (as he then was) in
Olsen v Wellard Feeds Pty Ltd(No 2) [2008] FMCA 447. Some of the principles which can be derived from those cases are:
[48] Ibid.
a) whether a proceeding has been commenced without reasonable cause is relevantly established as a matter of fact … ;
b) a proceeding is not without reasonable cause simply because it failed;
…
d) may be without reasonable cause if the case was misconceived;
…
f) may be without reasonable cause if “upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success”, that is “it is clear that the proceeding must fail”;
g) will not be without reasonable cause if it requires the resolution in favour of the applicant of one or more arguable points of law;
h) to be without reasonable cause a case must be bound to fail in the sense that it is obviously untenable and bad beyond argument; and
i) that in determining whether proceedings were instituted without reasonable cause the focus must be on the institution of the proceedings, and not unduly on the outcome.[49]
[49] [2008] FMCA 447, pp.3-4 at para.8.
A distinction needs to be drawn between the pursuit of an argument which does not succeed and the institution of a proceeding which is misconceived. As Tracey J put it in Australian and International Pilots Association v Qantas Airways Ltd (No 3) (2007) 162 FCR 392:
The prosecution of any incompetent or hopeless case can be regarded as “an unreasonable act” … Conversely, in my opinion, the pursuit of a contentious, and ultimately unsuccessful, argument is not an unreasonable act.[50]
[50] (2007) 162 FCR 392, p.402 at para.36.
The meaning of “serious injustice” for the purposes of s.90SB(c)(ii) of the Act has not been the subject of much consideration in this Court. Indeed, in determining the matter the Court was required to consider the term as used in cases determined under different, albeit similar, statutory provisions. Nevertheless, the Applicant should have been alive, at least by 25 November 2014, to the fact that establishing that she would suffer a “serious injustice”[51] if not allowed to proceed under the Act would not be an easy onus for her to meet.
[51] Family Law Act 1975 (Cth), s.90SB(c)(ii).
I am not satisfied that the Respondent is entitled to claim any costs which relate to proceedings prior to the jurisdictional hearing. This is because, apart from lodging a Notice of Address for Service,
the Respondent filed no material until 4 December 2014. Further,
the Heads of Agreement entered into by the parties specifically stated that “the parties agree to dismiss the interim application returnable on 25 November 2014 in the Federal Circuit Court proceeding
MLC 8579/2014 with no order as to costs”.[52][52] Affidavit of Ashley Brygel filed 2 March 2015, at Annexure “AB-6”.
The starting point for consideration of whether any costs should be awarded to the Respondent with respect to hearings post-dating
25 November 2014 is the general rule that each party to proceedings under the Act should bear their own costs. Further, the awarding of indemnity costs must be seen as “a very great departure from the normal standard”.[53] While the Applicant, in hindsight, may have been better advised to withdraw her application in this Court having achieved the objective of the interim orders she sought and allowed the matter to proceed in VCAT, I am not satisfied that her decision not to do so meets the threshold of being an unreasonable act.
[53] [2013] FamCAFC 105, p.16 at para.79.
The amount in dispute between the parties is not substantial. There has really been no attempt to use alternative means of dispute resolution which would have avoided the costs of litigation. I am, however,
not satisfied that, in all the circumstances, the Applicant should bear the cost of the matter proceeding to a jurisdictional hearing. Had the Respondent appeared on the day that the judgment was handed down, the matter of costs could have been dealt with on that day avoiding further costs to both parties.
For these reasons the application for costs is dismissed.
I certify that the preceding fifty-six (56) paragraphs are a true copy of the reasons for judgment of Judge Whelan
Associate:
Date: 7 April 2015
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