Panagiotidis v IProsper Financial Planning Pty Ltd (No 2)
[2024] FedCFamC2G 797
•28 August 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Panagiotidis v IProsper Financial Planning Pty Ltd (No 2) [2024] FedCFamC2G 797
File numbers: MLG 2439 of 2021
MLG 4068 of 2020Judgment of: JUDGE SYMONS Date of judgment: 28 August 2024 Catchwords: INDUSTRIAL LAW – Costs – application for costs under s 570 of the Fair Work Act 2009 (Cth) – where latest iteration of the applicants’ pleadings were struck out in their entirety following a contested hearing – whether the failure of the applicants to replead and to defend the strike out applications involved an unreasonable act or omission – consideration of costs principles as they apply to s 570 of the Act – where respondents sought costs on an indemnity basis – where applicants sought that the taxation of any costs order be deferred pending the final determination of the proceeding – costs awarded on an indemnity basis to be taxed forthwith Legislation: Fair Work Act 2009 (Cth), ss 550, 570
Federal Circuit and Family Court of Australia Act 2021 (Cth), s 190
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth), r 1.04
Federal Court Rules 2011 (Cth), r 40.13
Cases cited: Australian and International Pilots Association v Qantas Airways Ltd (No 3) (2007) 162 FCR 392; [2007] FCA 879
Clifton (Liquidator) v Kerry J Investment Pty Ltd trading as Clenergy (No 2) (2020) 277 FCR 382; [2020] FCAFC 112
Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225
Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574; [2008] FCAFC 143;
Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 3) [2017] FCA 810
Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 5) [2018] FCA 19
Oliver Hume South East Queensland Pty Ltd v Barclay (No 2) [2021] FCA 1426
Panagiotidis v IProsper Financial Planning Pty Ltd [2024] FedCFAmC2G 253
Richens v Commonwealth of Australia (as represented by the Commissioner of the Australian Federal Police) [2018] FCA 1276
Ryan v Primesafe (2015) 323 ALR 107; [2015] FCA 8
Sabapathy v Jetstar Airways (2021) 283 FCR 348; [2021] FCAFC 25
Saxena v PPF Asset Management Ltd [2011] FCA 395
Taj v Western Health (No 2) [2014] FCA 339
Trustee for the MTGI Trust v Johnson (No 2) [2016] FCAFC 190
Tsilibakas v Transfield Services (Australia) Pty Ltd (No. 2) [2015] FCA 1048
Zibara v Ultra Management (Sports) Pty Ltd (2021) 283 FCR 18; [2021] FCAFC 4
Division: Division 2 General Federal Law Number of paragraphs: 65 Date of last submissions: 22 August 2024 Date of hearing: Determined on the papers Place: Melbourne Solicitor for the Applicants: Zeitz Workplace Lawyers Counsel for the Respondents: Mr J Tierney Solicitor for the Respondents: Davies Lawyers ORDERS
MLG 2439 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: VINCE PANAGIOTIDIS
Applicant
AND: IPROSPER FINANCIAL PLANNING PTY LTD (ACN 609 115 415) AS TRUSTEE FOR IPROSPER UNIT TRUST
First RespondentCASANDRA MURPHY
Second RespondentANTONIO TZOUVELIS
Third Respondent
MLG 4068 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: VINCE PANAGIOTIDIS
First Applicant
BRIAN SAYERS
Second ApplicantAND: GOLDEN FINANCIAL GROUP PTY LTD (ACN 128 837 285)
First Respondent
IPROSPER FINANCIAL PLANNING PTY LTD (ACN 609 115 415) AS TRUSTEE FOR IPROSPER UNIT TRUST
Second RespondentCASANDRA MURPHY
Third RespondentANTONIO TZOUVELIS
Fourth Respondent
ORDER MADE BY:
JUDGE SYMONS
DATE OF ORDER:
28 AUGUST 2024
THE COURT ORDERS THAT:
1.The applicants pay the respondents’ costs of and incidental to the strike out applications heard on 18 May 2023 incurred after 28 October 2022.
2.The legal costs referred to in paragraph one of these orders are to be paid on an indemnity basis, and to be taxed in default of agreement.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)
REASONS FOR JUDGMENT
JUDGE SYMONS:
INTRODUCTION
On 23 November 2020, Mr Panagiotidis and Mr Sayers commenced proceedings alleging contraventions by Golden Financial Group Pty Ltd (Golden), IProsper Financial Planning Pty Ltd (IProsper), Ms Murphy and Mr Tzouvelis of various provisions of the FW Act. This proceeding (MLG4068/2020) is referred to by the parties as the original claim.
On 27 September 2021, Mr Panagiotidis commenced a separate proceeding in which he made allegations that IProsper, Ms Murphy and Mr Tzouvelis had contravened various general protections recognised by the FW Act. This proceeding (MLG2439/2021) is referred to by the parties as the general protections claim.
On 31 August 2022 the applicants in the original claim filed an amended statement of claim (ASOC) and on 15 September 2022 Mr Panagiotidis filed a further amended statement of claim in the general protections claim (FASOC). On 7 November 2022, the respondents filed an application to strike out both sets of pleadings (strike out applications).
The strike out applications were heard on 18 May 2023, and on 19 March 2024 I made orders striking out both the ASOC and the FASOC with leave to the applicants to replead. My reasons for judgment were published as Panagiotidis v IProsper Financial Planning Pty Ltd [2024] FedCFAmC2G 253 (strike out decision). This judgment should be read with the strike out decision to the extent necessary.
The respondents now seek their costs of the strike out application on an indemnity, or alternatively, party and party basis as was foreshadowed at the time of hearing and confirmed at a directions hearing held on 13 May 2024 at which time orders were made for the filing of submissions by both parties and it was agreed that the question of costs would be determined on the papers.
MATERIAL RELIED UPON
In making and resisting the application for costs the parties rely upon:
For the respondents:
·the affidavit of Antonia Sakkas dated 7 November 2022 (Sakkas affidavit);
·Submissions filed in relation to the strike out application dated 22 February 2023 (paragraphs [75]-[83] only);
·Submissions on costs filed on 31 May 2024; and
·Submissions in reply filed on 12 July 2024.
For the applicants:
·Submissions filed on 5 July 2024.
LEGAL PRINCIPLES
Section 570 of the Fair Work Act 2009 (Cth) (FW Act) provides as follows:
(1)A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.
(2)The party may be ordered to pay the costs only if:
(a) the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or
(b) the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; or
(c) the court is satisfied of both of the following:
(i)the party unreasonably refused to participate in a matter before the FWC;
(ii)the matter arose from the same facts as the proceedings.
The policy behind s 570 is to ensure that the spectre of costs being awarded against an unsuccessful litigant does not loom so large in the mind of potential applicants that those with genuine grievances and arguable evidentiary and legal bases for them are put off commencing or continuing proceedings.[1]
[1] Trustee for the MTGI Trust v Johnson (No 2) [2016] FCAFC 190 at [8] referring to the observations of Mortimer J (as her Honour then was) in Ryan v Primesafe [2015] FCA 8 at [64].
For that reason, the threshold set by s 570(2) is high and the Court’s discretion to award costs is to be exercised with caution and in a clear case,[2] in part to avoid discouraging parties from completely and robustly pursuing claims or in equally robustly pursuing their defence of such claims.[3] Even where the threshold is met, the Court retains a discretion.
[2] Saxena v PPF Asset Management Ltd [2011] FCA 395 at [5]-[6].
[3] Richens v Commonwealth of Australia (as represented by the Commissioner of the Australian Federal Police) [2018] FCA 1276 at [23].
The applicant for costs bears the onus of establishing that one or more of the criteria in s 570(2) are met.
SUBMISSIONS
The respondents’ case
The respondents submit that the applicants engaged in an unreasonable act or omission within the meaning of s 570(2)(b) of the FW Act by refusing to replead their claims, and by resisting the strikeout applications. The respondents submit that the applicants’ position was unreasonable for the following reasons.
First, each of the combined 157 objections identified in the ASOC and the FASOC were found to be soundly based and upheld with the result that the pleadings were struck out in their entirety. The respondents submit that volume of “clear defects” identified by them must have led the applicants to realise that the pleadings were confusing, vague, ambiguous and were embarrassing. The decisions taken by the applicants to refuse offers to replead and to instead defend the strike out applications were inconceivable.
Second, the ASOC and the FASOC contained claims that were “plainly hopeless”. The respondents identified 13 causes of action in the ASOC (reduced to ten after the applicant conceded three on or after 15 May 2023) and five causes of action in the FASOC (reduced to four after the applicant conceded one) that were found to be so lacking in material facts that they failed to plead a complete cause of action. The respondents submit that it ought to have been readily apparent to the applicants that these causes of action, as pleaded, could not possibly have succeeded and the failure to replead them was manifestly unreasonable.
Third, the strike out decision involved an acceptance by the Court that there was a “catalogue of defects”’ common to both the ASOC and FASOC including that they:
·were confusing, vague, ambiguous, conclusory, prolix and labyrinthine.
·contained rolled-up allegations.
·were discursive and pleaded inessential facts that were irrelevant or peripheral to the cause of action.
·contained a ‘Summary of Claim’ that was labyrinthine, susceptible to various meanings and contained inconsistent and confusing allegations.
·failed to plead a material fact and therefore failed to plead a complete cause of action in respect to a number of allegations.
·contained irrelevant allegations.
Again, the respondents submit it ought to have been clear to the applicants that the pleadings were deficient having regard to the sheer volume of problems identified by the respondents, the cumulative effect being that at times, the pleadings (or aspects of them) were unintelligible.
The respondents submit that the applicants should have been further aware that they had a heightened obligation to plead their claims with great care, given the inherently serious FW Act contraventions that were alleged.
Fourth, the respondents submit that they put the applicants squarely on notice of their pleading concerns and foreshadowed the filing of the strike out applications, on the following occasions:
(a)On 17 May 2022 the respondents wrote to the applicants noting various deficiencies in the latest iteration of pleadings and requesting they be amended.[4] Pursuant to orders made by Hespe J on 7 July 2022, the applicants filed the ASOC and the FASOC.
(b)On 15 September 2022, the respondents wrote to the applicants stating that the FASOC should be struck out and repleaded and identified particular paragraphs of concern.[5]
(c)On 29 September 2022, the applicants wrote to the respondents seeking clarification about aspects of the respondents’ objections. The letter did not address the request to replead.[6]
(d)On 7 October 2022 the respondents wrote to the applicants stating that the ASOC should be struck out.[7]
(e)On 14 October 2022, the applicants wrote to the respondents and sought further information and/or clarification about aspects of the respondents’ objections to the ASOC.[8]
(f)On 28 October 2022, the respondents wrote to the applicants attaching a Draft Schedule to their proposed strike out applications and invited the applicants to again agree to further amend their pleadings.[9] The applicants wrote to the respondents on 2 November 2022, stating that they would defer any response until after the mediation scheduled for 7 November.[10]
(g)On 4 November 2022 the respondents wrote to the applicants to inform them of their intention to file the strike out applications on 7 November 2022 and to give the applicants a final opportunity to agree to replead.[11]
[4] Exhibit AS-1 to the Sakkas affidavit.
[5] Exhibit AS-4 to the Sakkas affidavit.
[6] Exhibit AS-5 to the Sakkas affidavit.
[7] Exhibit AS-6 to the Sakkas affidavit.
[8] Exhibit AS-8 to the Sakkas affidavit.
[9] Exhibit AS-12 to the Sakkas affidavit.
[10] Exhibit AS-12 to the Sakkas affidavit.
[11] Exhibit AS-13 to the Sakkas affidavit.
The respondents submit that at least by the time that the Draft Schedules were prepared and sent to the applicants, the precise detail of the respondents’ objections had crystallised and been plainly communicated: the Draft Schedules were largely in the same form as the Schedules that accompanied the strike out applications and by reference to which the Court determined those applications.
The respondents submit that it was incumbent on the applicants to genuinely consider the objections and to explain their basis for resisting the invitation to replead. Instead, according to the respondents, the applicants avoided a meaningful engagement with the respondents’ concerns which attitude persisted up to and including the hearing of the strike out applications. This was said to be evident from the applicants’ written submissions which contained the broad assertion that the respondents “understand the case against them” and “disclose reasonable causes of actions appropriate to the pleadings”.[12]
[12] Applicants’ strike out submissions at [6], [12] and [22].
The respondents submit it to be significant that it was only days before the strike out hearing that the applicants finally provided a response to the Schedules of objections and that this response was the subject of criticism in the strike out decision for “its failure to confront the criticisms identified by the respondents and the adherence to the view, promulgated through the hearing, that deficiencies can be cured by reference to contextual material, including affidavits”.[13]
[13] Strike out decision at [98].
The respondents submit it to be further noteworthy that the applicants in this case have at all times been legally represented by the instructor with carriage of the proceeding, and at various times by counsel. Their position can be distinguished from that of self-represented litigants. The complaints made by the respondents ought to have been well understood.
The respondents submit that efforts by the applicants to impugn the respondents’ motives for pursuing the strike out applications – for example, the applicants described the applications as a “defensive manoeuvre to try and avoid pleading”[14] – involved the making of comments that were inaccurate and gratuitous and reflected a total failure by the applicants to properly consider the defects in their pleadings.
[14] Applicants’ strike out submissions at [8].
The respondents submit that all of the foregoing matters coalesce to provide a proper basis for an award of indemnity costs.
The respondents submit that an order for indemnity costs may be appropriate where a party has engaged in conduct that causes loss of time to the Court and to other parties. Indemnity costs may also be ordered where a party has acted in wilful disregard of known facts or clearly established law (referring to Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233-4 and Zibara v Ultra Management (Sports) Pty Ltd [2021] FCAFC 4, [176]). Indemnity costs can be awarded where “the applicant, properly advised should have known that he had no chance of success (Zibara at [176]).
The respondents acknowledge that to justify a special costs order, there must be conduct deserving of criticism and resulting in greater expense to the innocent party (referring to Clifton (Liquidator) v Kerry J Investment Pty Ltd trading as Clenergy (No 2) [2020] FCAFC 112, [31]).
The respondents submit that by refusing to replead their respective cases, the applicants engaged in conduct that caused loss of time to the Court and to the respondents, that involved a wilful disregard of clearly established law and occurred in circumstances where the applicants, properly advised, should have known that they had no chance of success in defending the strike out applications.
The respondents submit that indicative but not exhaustive of the “untenable” and “improperly drafted” claims that the applicants should have abandoned are:
·The claim that the respondents had committed “serious contraventions” of the FW Act, when the elements of those contraventions had not been pleaded.
·The misrepresentation claims that involved conduct occurring more than six years before the commencement of the proceeding.
·The allegations in respect of the Corporations Act 2001 (Cth), the tort of deceit, Australian Consumer Law, breaches of the OHS Act and “conversion” which were all lacking in material facts and had no prospect of success.
·Rolled-up allegations which decisions such as Sabapathy v Jetstar Airways[15] establish are indefensible.
·Allegations of accessorial liability under s 550 of the FW Act having regard to the principles that govern how such allegations must be pleaded.
[15] [2021] FCAFC 25, [23].
The respondents submit that in circumstances where the applicants were given ample notice of the strike out applications and persisted with sets of pleadings that were “self-evidently confusing” the respondents should be fully compensated for the significant and unnecessary costs they have incurred in bringing and arguing the strike out applications and the costs that will be thrown away by reason of the applicants having leave to file a further statement of claim.
The applicants’ case
Despite the Court ruling on 13 May 2024 that it was appropriate to determine the respondents’ costs application before the finalisation of the substantive proceedings, the applicants persist with the submission that the application is premature and that the Court should refrain from determining the costs issue until all matters in the proceedings have been concluded.
The applicants’ case is otherwise that the conditions for the making of a costs order do not arise for the following reasons.
First, the applicants submit that despite their “broad ranging” objections to the pleadings, the respondents have admitted that there are viable causes of action available to the applicants and have acknowledged, in affidavit material filed in the Court, that money is owed to them. The failure of the respondents to make any commission payment to either applicant is itself conduct that involves an unreasonable act for the purpose of s 570(2)(b) of the FW Act.
Second, the applicants submit that having regard to the “strong positions” held by all parties, there was always going to be a hearing in respect of pleadings. The applicants submit that had the matters proceeded as originally scheduled when they were originally before this Court and before the transfer to the Federal Court, the respondents would have raised and addressed pleadings concerns during the running of the hearing. This was said to follow from the fact that the respondents had pleaded under cover of objection to earlier iterations of the applicants’ statements of claim and had submitted through counsel at the hearing of the strike out application that this would have necessitated a pleadings argument at the start of trial.
Third, the applicants submit that the respondents (and by implication, the Court) should have taken a more robust approach to the adequacy of their pleadings. They cite the decision of White J in Tsilibakas v Transfield Services (Australia) Pty Ltd (No. 2) [2015] FCA 1048 at [19]-[21] as an example of this approach.
Fourth, the applicants submit it to be significant that the respondents “only sought to raise purported deficiencies in the original pleadings filed after the transfer to the Federal Court and for the sole stated reason that ‘As the matter has been moved to a superior court, it is appropriate that the Respondents press the objections [to the original statements of claim]’”. In support of this submission, the applicants appended (as Attachment 1) correspondence from the respondents’ lawyer to the applicants’ lawyer dated 17 May 2022. The applicants maintain the submission that the objections to their pleadings are “part of a strategic approach to place pressure on them”.
Fifth, the applicants submit that disputes in respect of pleadings are commonplace in litigation, particularly where there are complex legal and factual issues in contention, and it was not therefore unreasonable for the applicants to maintain their position with respect to the strike out application. The applicants criticise the respondents for taking a retrospective view of the merits of the applicants’ position with the benefit of hindsight and the strike out decision.
The applicants then, under the heading “other issues” make the following submissions:
·Once the decision was made by Judge Symons on 19 March 2024, the Applicants made a pragmatic decision to attempt to replead their case in accordance with the decision, as opposed to appealing to the Federal Court of Australia. It was assumed that this would be the quickest and most efficient manner to deal with the issue and to enable the matters to proceed to trial without additional costs or delay.
·This was done on the basis that such an approach was consistent with the intention of the Rules and the legislation to be as effective and efficient as possible.
·The Applicants have bene put to extensive additional costs and suffered a delay of more than two years as a result of the Court processes, including the transfer of proceedings to the Federal Court of Australia and the return to the Federal Circuit and Family Court some months later. In the circumstances, their conduct in pressing for the matters to proceed based on pleadings filed or the original pleadings filed was not unreasonable. But for the processes of the Court, their matters would have been heard and determined by now.
·Section 190 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (FCFCA Act) defines the overarching purpose of the civil practice and procedure provisions “…facilitate the just resolution of disputes” according to law and as quickly, inexpensively and efficiently as possible.
·The Applicants could not reasonably have expected or understood that the Court would determine that s 190 of the FCFCA Act and rule 1.04 of the Federal Circuit and Family Court of Australia Rules should not be applied but that the Federal Court Rules should be given paramount weight (Panagiotidis v iProsper Financial Planning Pty Ltd [2024] FedCFamC2G 253 at [114]). The Applicants’ reliance on the Rules and legislation directly applicable to this Court (at [84]) was reasonable, considering the context and history of the matters, including the closure of pleadings and preparedness of the Respondents to proceed to trial in May 2022.
The applicants submit that in the event that the Court was to make an order as to costs it should resist doing so on an indemnity basis as this would be “extremely unusual, having regard to the limitations imposed by section 570 of the FW Act”.
The applicants also submit that there is an issue as to what costs have actually been suffered by the respondents having regard to the complexity of the matter and the earlier submission that there was always going to be an argument on the pleadings.
The applicants submit even if an order is to be made, it should not be enforceable until the conclusion of the matters and final determination of the Court. In the alternative, any costs awarded should be paid into Court to preserve the capacity of these funds to be offset and applied against orders that might reasonably be made at hearing or on appeal.
Reply submissions of the respondents
The respondents join issue with the submission that “there was always going to be a hearing in respect of pleadings” and identify the maintenance of this view as a further example of the applicants’ failure to engage with the substance of the respondents’ complaints with the pleadings. According to the respondents, there would have been no need for an interlocutory hearing if the applicants had repleaded their case.
The respondents submit that this case is analogous with the case considered by Bromberg J in Taj v Western Health (No 2) [2014] FCA 339 in which his Honour made an order that the applicant pay the costs of and incidental to the respondents’ interlocutory applications having found (at [14]) that the pleading failed to properly disclose a cause of action such that it was capable of being characterised as an “unreasonable attempt to plead a case”.
The respondents resist the submission that it would be appropriate for the Court to order that payment of any costs award be deferred until after the conclusion of the hearing. To the extent that the applicants purport to rely on r 40.13 of the Federal Court Rules 2011 (Cth) the respondents submit that there is a clear basis in this case for departing from the general rule (referring to Oliver Hume South East Queensland Pty Ltd v Barclay (No 2) [2021] FCA 1426, [70]-[75] and Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 5) [2018] FCA 19). First, as this is a FW Act proceeding, there is no reason to assume there will be further costs orders. Second, ordering costs payable forthwith is appropriate where new pleadings have been ordered, and the case is starting afresh (Federal Treasury, [9]). Third, the costs order is confined and will not have the effect of draining the applicants of their resources to conduct the litigation (Federal Treasury, [9]). In these circumstances, the appropriate order (if there is to be an award of costs) is that costs are to be taxed forthwith if not otherwise agreed.
CONSIDERATION
The respondents contend that the discretion in s 570(1) of the FW Act to award costs in favour of a party to a proceeding is enlivened pursuant to s 570(2)(b) because unreasonable acts or omissions of the applicants caused them to incur costs.
Relevant principles
In addition to the principles that control the exercise of the Court’s discretion to depart from the general rule that the FW Act is a no costs jurisdiction, the following principles regulate the circumstances in which s 570(2)(b) will be engaged.
Section 570(2)(b) of the FW Act requires proof that: (1) the party against whom costs are sought has by its action(s) or omission(s), behaved unreasonably; and (2) those unreasonable act(s) or omission(s) caused the other party to incur costs: Fair Work Ombudsman v Grouped Property Services Pty Ltd (No 3) [2017] FCA 810 at [25] (Katzmann J).
Whether a party behaved unreasonably is a question that is to be determined objectively: Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879; (2007) 162 FCR 392 at 402 [32] (Tracey J).
In Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143; (2008) 170 FCR 574, the Full Court (Tamberlin, Gyles and Gilmour JJ) made the following observations concerning “an unreasonable act or omission” (at 582 [29]):
…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: Australian and International Pilots Association 162 FCR at 402; Standish v University of Tasmania (1989) 28 IR 129 at 138-139. 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….Indeed, while courts should use the discretion in s 842(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.
Was there an unreasonable act or omission?
The respondents identify two unreasonable acts and/or omissions, being the refusal to replead claims and the resisting of the strike out applications.
I consider that as and from 28 October 2022, the refusal or failure of the applicants to replead their claims and the decision taken by them to resist the strike out applications (being different sides essentially of the same coin) involved unreasonable behaviour.
I have fixed the point of time as 28 October 2022 because this was the date on which the respondents first identified in comprehensive, schedule form, the full complement of objections that they made to the ASOC and the FASOC. As noted earlier, those objections did not alter materially by the time that the Court came to adjudicate on them.
I consider that the character of the objections identified (a not insignificant number involved incomplete causes of action or causes of action that were not available) combined with the number of objections, should have prompted different (less defensive) action from the applicants. The respondents’ case on costs does not depend on an ex post facto analysis. Instead, I accept the submission that it should have been clear to the applicants, who were at all times legally represented, that the pleadings they relied on were deficient in significant respects and that this created special difficulties in the context of claims that, if proven, would attract pecuniary penalties.
While I accept that pleadings fights are not unusual, it is the response to such skirmishes that has the capacity to transform a reasonable act or omission into one that lacks reason or proportionality. In this case, the strength of the applicants’ position was plainly in the eye of the beholder. As the strike out decision records, each of the combined 157 objections identified by the respondents was found to be soundly based and the ASOC and the FASOC were struck out in their entirety. The very modest concessions made by the applicants just prior to hearing did not alter the outcome.
While the applicants have no doubt at times been frustrated by the trajectory their proceedings have taken through this Court and the Federal Court and wish to expedite their cases to resolution, the irony is that the entrenched position they have adopted in relation to their most recent pleadings has served to protract, rather than move things along. The applicants would do better to acknowledge the current state of play rather than to dwell on a period concerning earlier iterations of their pleadings that now has only historical significance.
The behaviour of the applicants has undoubtedly caused the respondents to incur costs. The failure to replead or yield ground on the objections identified by the respondents necessitated the filing of, preparation for, and hearing of an interlocutory application seeking the involvement of the Court to progress the matter.
I am satisfied that the conditions for the engagement of the Court’s discretion to award costs under s 570(2)(b) of the FW Act are satisfied.
Discretion
I have borne in mind the need for caution in applying s 570(2)(b) of the FW Act, consistent with the principles discussed earlier in this judgment and the fact that the discretion to award costs ought not to be exercised in the case of every transgression in the conduct of proceedings.
However, I consider this to be an appropriate case for the exercise of the discretion. The applicants were on notice as to the inadequacies of their pleaded cases and that a failure to redress these inadequacies would prompt a strike out application and, if successful, an application for costs. The applicants have offered little in the way of meaningful explanation for their failure to adopt a more reasonable position and have instead doubled down, including in resisting this application, as to the correctness of their position.
On what basis should costs be awarded?
The respondents seek their costs on an indemnity basis. They submit that this is a special case because the applicants engaged in conduct deserving of criticism which resulted in greater expense to the respondents.
The award of indemnity costs is an exceptional order, and one that the Court must approach cautiously before reaching the required degree of satisfaction that the award is appropriate. It is not however the case that an award of indemnity costs is not available in cases governed by s 570 of the FW Act or is subject to a further, super-added set of conditions because of the environment in which it operates.
I am satisfied that it is appropriate in this case to make an order that the applicants pay the respondents’ costs of and incidental to the strike out applications in recognition of the intractable and unreasonable position they adopted in relation to this discrete application that the respondents were required to bring and to maintain.
I will however decline to make an order in the more expansive terms sought by the respondents that would require the applicants to pay their costs that will be thrown away by reason of the applicants having leave to file a further statement of claim. It would be premature to make an order that comprehends this event including because there is an extant application to consider whether parts of the amended pleadings should be struck out.
Finally, I am not persuaded that it would be appropriate in this case to accede to the applicants’ request that taxation of any costs order be deferred until the proceeding is finished.
Instead, in circumstances where the costs application operates on a discrete event that can be quarantined from the balance of the proceeding, where there has been significant delay in the proceeding and relatedly, where it is difficult to predict when the final determination will occur, where two of the respondents are individuals and where, by reason of the wholesale striking out of the statements of claim the proceeding has effectively “started afresh”, it is appropriate that the respondents enjoy the fruits of their costs order without further delay.
I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Symons. Associate:
Dated: 28 August 2024
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