Olson v Keefe (No 4)

Case [2019] FCA 691

FEDERAL COURT OF AUSTRALIA

Olson v Keefe (No 4) [2019] FCA 691

File number: NSD 1498 of 2016
Judge: BROMWICH J
Date of judgment: 17 May 2019
Catchwords: COSTS – where repeated attempts made by applicant to rectify pleadings – where applicant denied leave to file further amended statement of claim – whether costs of application should be awarded to the respondents on an indemnity basis – whether costs should be payable forthwith – held: indemnity costs ordered, not payable forthwith
Legislation:

Fair Work Act 2009 (Cth) s 570

Federal Court of Australia Act 1976 (Cth) s 43(2)

Federal Court Rules 2011 (Cth) r 40.13

Cases cited:

Cytel Pty Ltd v Peoplebank Recruitment Pty Ltd (No 2) [2008] FCA 697

Ingot Capital Investments Pty Ltd and Others v Macquarie Equity Capital Markets Ltd (No. 7) [2008] NSWSC 199; 65 ACSR 324

Liberty Financial Pty Ltd v Scott (No 4) [2005] VSC 472

Liberty Financial Pty Ltd v Scott [2005] VSCA 263

Mead v Watson as liquidator for Hypec Electronics [2005] NSWCA 133; (2005) 23 ACLC 718

Olson v Keefe (No 2) [2017] FCA 1168; 122 ACSR 395

Olson v Keefe (No 3) [2018] FCA 2001

Olson v Keefe [2019] FCA 339

Orrcon Operations Pty Ltd v Capital Steel & Pipe Pty Ltd (No 2) [2008] FCA 24

Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72

Rafferty v Time 2000 West Pty Ltd (No 3) [2009] FCA 727; 257 ALR 503

Rissanen v Nunan [2019] NSWSC 418

Rosegum Corporation Pty Ltd v Young, in the matter of Rosegum Corporation Pty Ltd (No 2) [2017] FCA 36

Rosniak v Government Insurance Office (1997) 41 NSWLR 608

Date of hearing: Determined on the papers
Date of last submissions: 23 April 2019
Registry: New South Wales
Division: General Division
National Practice Area: Employment & Industrial Relations
Category: Catchwords
Number of paragraphs: 29
Counsel for the Applicant: Mr G Hatcher SC with Mr H Stitt
Solicitor for the Applicant: Mills Oakley Lawyers
Counsel for the Respondents: Mr Y Shariff with Mr N Condylis
Solicitor for the Respondents: King & Wood Mallesons

ORDERS

NSD 1498 of 2016
BETWEEN:

KEVIN OLSON

Applicant
AND:

MICHAEL THOMAS KEEFE

First Respondent

HILCO MERCHANT RESOURCES LLC

Third Respondent

HILCO MERCHANT AUSTRALIA PTY LTD ACN 150 215 875

Fourth Respondent

JUDGE:

BROMWICH J

DATE OF ORDER:

17 MAY 2019

THE COURT ORDERS THAT:

1.Order 2 made on 18 December 2018 be varied such that it reads:

The applicant pay the first, third and fourth respondents’ costs of and incidental to the applicant’s request to file a further amended statement of claim on an indemnity basis, as agreed or assessed.

2.The applicant pay the first, third and fourth respondents’ costs of and incidental to the interlocutory application filed 29 March 2019 on an ordinary basis, as agreed or assessed.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

BROMWICH J:

Introduction

  1. On 18…

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AGLC
Olson v Keefe (No 4) [2019] FCA 691
Case
[2019] FCA 691
Decision Date

CaseChat Overview and Summary

In the case of Olson v Keefe (No 4), the applicant, Mr Olson, sought leave to file a further amended statement of claim, which included claims for unconscionable conduct, a profit interest, breach of implied terms, and contraventions of the Corporations Act. The respondents opposed the application and sought indemnity costs. The central issue before the court was whether Mr Olson should be ordered to pay the respondents’ costs on an indemnity basis and, if so, whether these costs should be payable forthwith. The court had to balance the principle that costs follow the event against the practicalities of the case and the potential impact on the proceedings.

The court determined that Mr Olson should pay the respondents’ costs on an indemnity basis for his application to file the further amended statement of claim and on an ordinary basis for the costs application itself. However, the court decided against making the costs payable forthwith. The court considered the nature of the case, the stage of the proceedings, and Mr Olson's status as a natural person. The court concluded that requiring immediate payment of costs might unduly hinder the continuation of the proceedings and was not in the interests of justice. Instead, the court ordered that the costs should not be taxed until the proceedings had concluded or the parties had otherwise agreed.

In summary, the court granted the respondents’ application for indemnity costs related to the further amended statement of claim application but ruled that the costs should not be payable immediately. This decision ensures that the proceedings can continue without undue financial burden on Mr Olson, while still recognising the respondents' position as the prevailing party in this aspect of the litigation. The court's order allows for the possibility of setting off the costs against any future liability for costs or awards, or for the parties to negotiate costs if the matter settles before the substantive hearing.

Orders

Orders of the court

1. Order 2 made on 18 December 2018 be varied such that it reads:

The applicant pay the first, third and fourth respondents’ costs of and incidental to the applicant’s request to file a further amended statement of claim on an indemnity basis, as agreed or assessed.

2. The applicant pay the first, third and fourth respondents’ costs of and incidental to the interlocutory application filed 29 March 2019 on an ordinary basis, as agreed or assessed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Pursuant to an order dated 1 May 2019, Mr Olson has since filed a FASOC with the consent of the respondents. A procedural timetable is in place for the closure of pleadings by early July 2019.Background The request to file the second FASOC was obviously not Mr Olson’s first attempt at re‑pleading his case. By way of background, and noted at [7]–[8] of Olson v Keefe (No 3), there have been repeated attempts by Mr Olson to rectify fundamental defects in his pleadings, especially in so far as they seek to plead causes of action going beyond a claim of breach of contract arising out of his employment with, in the alternative, the third or fourth respondent, or both. The respondents have maintained, in correspondence between the parties and before the Court, opposition to four such claims, being:(1)an unconscionable conduct claim, alleging contraventions of ss 20 and 21 of the Australian Consumer Law (contained in Schedule 2 to the Competition and Consumer Act 2010 (Cth)) (Unconscionable Conduct Claim);(2)a claim alleging rights to a “profit interest” or equity share in the sale of the third respondent’s Australian business (Profit Interest Claim);(3)a claim for a breach of an implied term in Mr Olson’s “Contract of Employment” to act with fidelity to “the bargain” (Implied Terms Claim); and(4)a claim of contraventions of the Corporations Act based on financial information not provided to Mr Olson (Financial Reporting Claim). (At the hearing of the application the subject of Olson v Keefe (No 3), senior counsel for Mr Olson advised that there was no separate financial reporting claim, and that this aspect of Mr Olson’s pleading went to his breach of contract claim.) Following delivery of Olson v Keefe (No 2) on 29 September 2017, Mr Olson sought leave to file a FASOC (first FASOC) and further amended originating application. At the hearing of that application on 16 March 2018, Mr Olson withdrew his application for leave and was ordered to pay the respondents’ costs. On 25 June 2018, Mr Olson furnished to the Court the second FASOC. The application for leave to file the second FASOC was heard on 13 September 2018. As noted in the uncontested Tatasciore affidavit, versions of the Unconscionable Conduct Claim and the Financial Reporting Claim have been included in the drafts of statements of claim served on the respondents since 28 November 2017; and versions of the Profit Interest Claim and the Implied Terms Claim have been included since 13 April 2018. As set out in Olson v Keefe (No 3), leave to file the second FASOC, which pleaded all four claims, was not granted. It should be noted that an earlier pleaded claim relating to an alleged profit interest was summarily dismissed by consent: see Olson v Keefe (No 2) at [19]. For the reasons that follow, I have determined that Mr Olson should pay the respondents’ costs of, and incidental to, his application to file the second FASOC on an indemnity basis; and the costs of this costs application on an ordinary basis. Contrary to the respondents’ application, however, I have determined that the costs should not be made payable forthwith. Rather, in accordance with r 40.13 of the Federal Court Rules 2011 (Cth), the respondents must not tax the costs until the proceeding has finished (or as otherwise agreed between the parties).Submissions of the parties and consideration

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Whilst it is true that Mr Olson filed his original claim in September 2016, and I accept the respondents’ contention that the substantive proceedings may not take place until mid-2020 given the current stage of the matter, I do not consider the likely delay to the finalisation of the proceedings, or what Mr Olson’s contribution may be to that delay, sufficient to warrant a costs order payable immediately. The contention that a costs order made payable forthwith would act as a punishment to the unsuccessful party, rather than as compensation to the successful party, cannot stand as a general principle (nor was it advocated as such by Mr Olson). However, the particular circumstances of the case militate against such an order being made. Although no evidence was put forward by Mr Olson on this point, I consider him being a natural person as relevant to determining whether to exercise the discretion, particularly in circumstances where an order for costs to be paid immediately may stymie the continuation of proceedings. In all of the circumstances, I do not consider it in the interests of justice to require departure from r 40.13 of the Rules. Conclusion For the reasons above, Mr Olson is to pay the respondents’ costs of, and incidental to, his application to file the second FASOC on an indemnity basis; and the costs of, and incidental to, this costs application on an ordinary basis. Contrary to the respondents’ application, however, I have determined that the costs should not be made payable forthwith. Rather, in accordance with r 40.13 of the Rules, the respondents must not tax the costs until the proceeding has finished (or as otherwise agreed between the parties). If Mr Olson is ultimately successful, then the costs orders may be set-off against any liability for costs and other awards. If Mr Olson is ultimately unsuccessful, then costs will be taxable at that stage. If the matter otherwise settles between the parties prior to the substantive hearing and determination of the matter, they will be at liberty to negotiate at their discretion.

Ratio Decidendi

Legal Principle Established

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