Raeburn v Amici BAKERY and Ors (No.2)
[2015] FCCA 2327
•27 August 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| RAEBURN v AMICI BAKERY & ORS (No.2) | [2015] FCCA 2327 |
| Catchwords: PRACTICE & PROCEDURE – Application by first to fourth respondents for costs pursuant to section 570(2)(b) of the Fair Work Act 2009 – whether unreasonable act or omission caused respondents to incur costs – application dismissed. |
| Legislation: Fair Work Act 2009, ss.70(2)(b), 539, 546, 550, 570 Federal Circuit Court of Australia Rules 2001, r.13.03(B)(1)(a) |
| Saxena v PPF Asset Management Ltd [2011] FCA 395 Stanley v Service to Youth Council Incorporated(No.3) [2014] FCA 716 |
| Applicant: | KARA TAMIKA RAEBURN |
| First Respondent | AMICI BAKERY |
| Second Respondent | PAUL FRANCIS KORSZAK-KRZECZOWSKI |
| Third Respondent | SANDRA LEE |
| Fourth Respondent | JEAN LEE |
| Fifth Respondent: | DANIEL SCOTT KAGAN |
| File Number: | MLG 1496 of 2013 |
| Judgment of: | Judge Jones |
| Hearing date: | 4 May 2015 |
| Date of Last Submission: | 29 June 2015 |
| Delivered at: | Melbourne |
| Delivered on: | 27 August 2015 |
REPRESENTATION
| Solicitors for the Applicant: | Mr Peter Lustig |
| Solicitors for the Respondent: | Gleeson & Co |
ORDERS
The application filed by the first to fourth respondents on 2 March 2015 be dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1496 of 2013
| KARA TAMIK RAEBURN |
Applicant
And
| AMICI BAKERY |
First Respondent
| PAUL FRANCIS KORSZAK-KRZECZOWSKI |
Second Respondent
| SANDRA LEE |
Third Respondent
| JEAN LEE |
Fourth Respondent
| DANIEL SCOTT KAGAN |
Fifth Respondent
REASONS FOR JUDGMENT
Introduction
On 4 February 2015, I dismissed the applicant’s Application alleging contraventions of section 45 of the Fair Work Act 2009 (“the Act”) as a consequence of breaches of the Restaurant Industry Award 2010 (“the Award”), and breaches of her contract of employment with the first respondent, pursuant to rule 13.03 (B)(1)(a) of the Federal Circuit Court of Australia Rules 2001 (“the Rules”).
The applicant filed her Application and Statement of Claim on 12 September 2013. She claimed damages for the alleged contraventions and breaches together with the imposition of civil penalties under sections 539, 546 and 550 of the Act.
The first respondent was the applicant’s former employer. The second to fourth respondents were directors of the first respondent at various times. The fifth respondent was joined as a respondent during the course of proceedings, on application by the first to fourth respondents (who shall be collectively referred to in this judgment as “the respondents”). The fifth respondent was a former director of the first respondent.
The litigation of this matter took some time for a variety of reasons which is apparent from the summary of the procedural history of proceedings:
a)The applicant was employed as a manager with the first respondent;
b)At the same time as the applicant filed her Application, three Applications were filed by three applicants who were casual employees (front of house staff) employed by the first respondent. (collectively “the casuals”) claiming damages for alleged breaches of the Award, their contracts of employment and civil penalties;
c)In all four applications, the named respondents (the first to fourth respondents) were the same, the second to fourth respondents being current and former directors of the first respondent. All applicants had instructed the same solicitor and these respondents likewise instructed the same solicitor;
d)By consent, orders were made that all applications be heard contemporaneously and the proceedings adjourned to a direction hearing on 18 February 2014;
e)By consent, orders were made vacating the directions hearing and re-listing it for 27 March 2014;
f)On 27 March 2014, leave was granted to the respondents to make an oral application for orders that the solicitor for the applicant and casual employees not act for the applicant and casual employees on the basis of a conflict of interest. Orders were made that this application be dealt with on the papers and a timetable for the filing of submissions was set;
g)On 2 July 2014, I delivered a judgment and made orders dismissing the respondents’ Application;
h)On 2 July 2014, the respondents filed an Application in a Case seeking orders that the proceeding be struck out by reason of the applicant failing to provide discovery or alternatively orders requiring the applicant to file and serve her affidavit of documents. The respondents also sought costs of and incidental to the application;
i)The respondents also sought orders by an affidavit filed by their solicitor on 1 August 2014, that the applicant be joined to each of the casuals’ proceedings. This application was refused by order of the Court made 21 August 2014;
j)On 21 August 2014, orders were made listing the applicant’s proceeding for final hearing commencing 4 February 2015. The applicant was required to file and serve any affidavits and documentary material she intended to rely on, on or before 13 November 2014. The respondents were required to filed and serve their affidavits and documentary material on or before 4 December 2014;
k)Neither party filed affidavits and/or documentary material in accordance with the order made 21 August 2014;
l)On 4 February 2015, at the commencement of the final hearing date, the applicant sought leave to file and serve her trial affidavit. Leave was not granted and I made an order dismissing the applicant’s application pursuant to Rule 13.03(b)(1)(a).
On 2 March 2015, the respondents filed an Application in a Case seeking Orders that the applicant pay the respondents’ “costs of and incidental to this proceeding.” The respondents rely on s.570(2)(b) of the Act.
Under s.79 of the Federal Circuit Court of Australia Act 1999 (Cth), this Court has general power to award costs which is relevantly qualified as follows:
“79 Costs
(1) 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.
Note: See section 117 of the Family Law Act 1975 in relation to family law or child support proceedings. See section 570 of the Fair Work Act 2009 for proceedings in relation to matters arising under that Act.”
Section 570 of the Act which relevantly provides:
“570 Costs only if proceedings instituted vexatiously etc.
(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.
Note: The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 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) ………”
Submissions
Respondents’ Submissions
It is apparent from the respondents’ written submission[1] that they rely on the following circumstances in alleging that the applicant’s unreasonable act or omission caused it to incur costs pursuant to s.570(2)(b):
a)An offer by them to pay the applicant underpayments in wages and superannuation which was not accepted and the subsequent payment of the amount specified in the offer (with an adjustment upwards) to the applicant;
b)The provision by it of employee records, payslips, timesheets, pay summaries and PAYG Payment summaries to the applicant by May 2013;
c)The failure of the applicant to comply with Court Orders to file trial documents.
[1] Submissions on Question of Costs filed 25 May 2015.
In relation to the first circumstance the Chronology set out in the respondent’s written submissions[2] relevantly states:
“08.10.13 Lustig letter to Gleeson. Open letter setting out chronology stating that inadvertent underpayments to Raeburn totalling $3,090.71 together with superannuation of $278.16 which Amici was ready, willing and able to pay to discharge all outstanding obligations would be made within 7 days upon receipt of bank and superannuation details, to be accepted within 14 days. The offer was made as a Calderbank offer, indicating that the offer will be referred to on the question of costs in the event that the proceeding continues after the time of the expiry of the offer.
No response at all was received from Gleeson or Raeburn to the Calderbank offer.
[2] Ibid at [2].
…
19.12.13 In the face of no response to the Calderbank offer Amici paid the aforesaid amount to Raeburn with prejudice, together with a 15% gratuity of $463.61.”
The respondents submit in relation to the offer and subsequent payment to the applicant that:[3]
“[43] The Respondents made an open offer in the form of a Calderbank Offer to the Applicant on 8 October 2013, less than one month after proceedings had been instituted. There was no response to the Calderbank offer by the Applicant or her solicitors. This is further conduct that is embraced by section 570(2)(b) of the Act that is “unreasonable”. Certainly section 37M of the Federal Court Act requires parties to civil litigation to take steps to conduct litigation efficiently and inexpensively. The non-response to the offer militates with litigant and practitioner responsibilities. The letter dated 8 October 2013 from Lustig to Gleeson concludes as follows after citing the Calderbank authority:
“my clients will rely on this open offer as to issues of costs should this proceeding continue after the time of expiry of this offer”(14 days).
[44] Amici then paid with prejudice payments together with a 15% gratuity to Raeburn on 19 December 2013 which monies were banked by Raeburn.”
[3] Ibid at [43] to [44]
The second two circumstances are related. As to the assertion that they provided the applicants with said documents by May 2013, the respondents relevantly state in the Chronology:[4]
“03.04.13 Gleeson to Lustig seeking inter alia copies of timesheets, pay summaries et al. “Our clients are in possession of sufficient material to supply most of the information required in any case…”.
…
13.05.13 Lustig to Gleeson attaching Raeburn’s employment record, PAYG Payment summary year ending 30 June 2011, 30 June 2012, payroll advice 1 March 2011 to 31 January 2013.”
[4] Ibid at [2].
The respondents then submit at [7] to [9] of their written submission:
“[7] On the date of the hearing, 4 February 2015, the Applicant sought to file an affidavit which was supported by an oral application. Counsel for the Applicant readily conceded that if the application were successful it would result in an adjournment as the Respondents would need to respond to same and prepare their cases. The Applicant’s counsel submitted from the bar table that the Applicant failed to comply with the Court’s orders as she had difficulty in compiling her claim, that her pay slips were inconsistent and/or irreconcilable and that she has to rely on rosters which was a difficult exercise that led to delay. The materials were in fact in the solicitors for the Applicant’s possession from 13 May 2013 (see para 2 above) and certainly since the issue of the Statement of Claim and the Application on 12 September 2013. Further, Fairwork PayCheck Plus calculations were provided on 4 November 2013. The Restaurant Industry Award 2010 including Schedule A are public documents which the Respondents presume the Applicant and her solicitor had access to.
[8] There was no affidavit material before the Court setting out an explanation for the non-filing of affidavit material, nor was there any material from the Applicant before the Court on the actual merits of the case and no communication with the Court concerning the Applicant’s predicament or reason setting out why there had been non-compliance with the Court Orders.
[9] The Respondent submitted that they were significantly prejudiced by the delay and having to wait any further would have serious consequences for their business and the individuals’ lives which an order for costs of any adjournment would not adequately compensate. The non-compliance was in complete disregard of the Court’s orders and on Aon principles would not be in the public interest to accede to the Applicant’s late application to file material.”
The respondents submit that[5]:
[26] The Respondents submit that the Applicant’s conduct is such that it is an “unreasonable act or omission” that has caused the Respondents to incur costs, being the costs of the proceeding. If the Court is satisfied as to one of the matters set out in section 570(2)(a), (b) or (c), and the Respondents rely on 2(b), then the Court can make the order for costs under section 570(1) of the Fair Work Act 2009. That, in effect, enlivens the jurisdiction of the Court to make the order (See Ashby v Slipper (No 2) [2014] FCAFC 67).
[27] The Respondents advised the Applicant’s legal representatives, Gleeson, on 28 February 2013, after the Applicant had withdrawn her Fair Work Act Ombudsman’s complaint, for whatever reason, that should the Applicant institute any other complaint, they reserved rights with respect to costs.
[28] Further the Respondents made an open offer which was with prejudice on 8 October 2013 and coupled same with a Calderbank Offer.
[29] Given the non-prosecution of the Applicant’s claim and the non-response to the Calderbank and open offers, the Respondents therefore have two vehicles on which to base their costs application.
[30] It goes without saying that the cost of defending the proceeding has been enormously onerous for the Respondents. The foundation stones for the case for the Applicant were alleged breaches of the Fair Work Act and claims for Civil Penalty Provisions under sections 539, 546 and 550 of the Act, the effect of which were not insubstantial as alleged by her. No evidence in the form of affidavit or document was filed to support any of the allegations.”
[5] Ibid at [26] to [30].
The Respondent argues that by reference to sections 37M[6] and 37N of the Federal Court Act 1976:[7]
“[38] In this proceeding Raeburn and/or her practitioners have conducted themselves in a manner that totally avoids compliance with sections 37M and 37N above, and the Aon principles, which conduct, it is submitted, ought to be taken into account by the Court when exercising its discretion on the question of costs.”
[6] The respondent submits that this section embraces the observations of CJ French in Aon Risk Services Australia Limited v Australian National University [200] HCA 27 at [3]3 to [6].
[7] Submissions on Question of Costs filed 25 May 2015 at [38].
The respondents rely on the decision of Justice Bromberg in Saxena v PPF Asset Management Ltd [2011] FCA 395 (“Saxena”) at [8] to [9], where His Honour found that the failure of the respondents to comply with Court orders for a “very extended period” was an “unreasonable act or omission” within the terms of s.570(2)(b). The respondents submit that the factual circumstances surrounding non-compliance with Court orders by the applicant fall within the analysis of Justice Bromberg in Saxena and, consequently, warrant an order of costs under s.570(2).
The respondents submit that the circumstances of this case ought be distinguished from those which existed in Stanley v Service to Youth Council Incorporated(No.3) [2014] FCA 716 as the respondents do not argue that there were unreasonable acts or omission engaged in by the applicant because of matters of evidence.
Applicant’s Submissions
As to the Court’s general jurisdiction to award costs pursuant to s.570 of the Act, the applicant submits in her written submissions as follows:[8]
“[1] The Court’s jurisdiction to award costs in a matter arising from the Fair Work Act 2009 (“the FAIR WORK ACT) (sic) is derived from section 570 of the FAIR WORK ACT. Section 570 is a continuation of the long held policy of only allowing costs in workplace relations proceedings in limited circumstances so as not to discourage potential litigants instigating proceedings through fear of an adverse costs order. In keeping with that section 570 strips the Court of its general powers to award costs and in its place confers a limited discretion on the Court to make a costs order in limited circumstances. It will be submitted that the circumstances permitting a costs order are not present in this prceeding.”
[8] Submissions on Behalf of the Applicant filed 16 June 2015 at [1].
The applicant relies on the decision of the Full Court of the Federal Court in Construction, Forestry, Mining and Energy Union v Clarke (2008) 170 FCR 574 (“Clarke”) with respect to s.824(2) of the Workplace Relations Act 1996 (“WR Act”) which relevantly provided:
(2) Despite subsection (1), if a court hearing a proceeding (including an appeal) in a matter arising under this Act (other than an application under section 663) is satisfied that a party to the proceeding has, by an unreasonable act or omission, caused another party to the proceeding to incur costs in connection with the proceeding, the court may order the first-mentioned party to pay some or all of those costs.
In particular, the applicant relies on the Full Court’s observation at [29] that Courts should not exercise the discretion with too much haste as this may discourage parties from pursuing litigation in the manner they deem best.
The applicant submits that in determining whether she engaged in an unreasonable act or omission, the Court should have regard to the conduct of the entire proceeding, along with the related proceedings in relation to the casuals, as these matters, the applicant alleges, “had a serious impact on the Applicant’s ability to comply with Courts (sic) orders.” [9] In respect of the conduct of the entire proceeding and the related proceedings involving the casuals, the applicant submits:
“[16] The employee records along with the Fairwork PayCheck Plus calculations and other documents relating to pay provided by the Respondents were incomplete and wildly inaccurate and made the task of complying with the Applicants claim extremely difficult.
[17] In addition to the incomplete employee records the Respondents’ made two interlocutory applications both of which prohibited the Applicant’s lawyers from forwarding her case for several months. Firstly, the Respondents’ alleged that Gleeson and Co had a conflict of interest and on 27 March 2014 the Respondents were granted leave to made an application that Gleeson and Co be restrained from acting for the Applicant and in the Casuals Case. On 2 July 2014 the Court dismissed the Respondent’s application. However, for ethical reasons Gleeson and Co were unable to do anything other than respond to the allegation of a conflict of interest between 27 March 2014 and 2 July 2014. That is, the Applicant’s lawyers were unable to forward the Applicant’s case as doing so might have breached their ethical responsibilities not to act against the interest of the Casuals. Consequently, three months was lost.
[18] Following the conflict application the Respondents’ then made an application to join the Applicant as a respondent to the Casuals Case, which in essence was a further attempt to preclude Gleeson and Co acting, along with an application to strike out the Applicant’s and the Casuals Case on the grounds that discovery had not been made, despite the fact that the Court had not ordered discovery. Again, for ethical reasons, the Applicant’s lawyers could not advance her case. On 21 August 2014 the Respondent’s application to have the Applicant joined as a Respondent in the Casuals Case was dismissed. Again, a significant period of time was lost.
[19] It is submitted that the incomplete employee records along with the Respondents’ interlocutory applications and time lost as a result had a compounding effect on the Applicants capacity to comply with orders of 21 August 2014. Notwithstanding that the applicant did attempt to file and serve her affidavit on 3 February 2015. In light of that it is submitted that the Applicants act or omission is not unreasonable.”
[9] Ibid at [15]
The applicant further submits that the respondents have not established any causal link between the alleged unreasonable act or omission on the part of the applicant and the costs incurred by the respondents.[10] The applicant argues that costs were only referred to in passing (at paragraph [30] of the respondents’ written submissions). This reference to costs, the applicant argues, does not satisfy the requirement in s.570(2)(b) that any unreasonable act or omission “caused” the respondents to incur costs.
[10] Ibid at [20]
The applicant also claims that pursuant to s.14 of the Federal Circuit Court of Australia Act (“FCCA Act”), the applicant was entitled to believe that the orders made by the Court on 4 February 2015 put an end to the proceeding. The applicant submits that the respondents did not on that day make an application for costs or suggest they were serving their rights in relation to costs or indeed make any mention of costs other than to state that an order for costs would be inadequate. The applicant submits that:
“22.………the orders of 4 February 2015 comply with section 14 and allowing the respondents application several months later would be contrary to the principle in section 14 that “all matters in controversy between the parties be completely and finally determined.”
Respondents’ Submission in Reply
The respondents replied to the applicant’s submissions regarding the conduct of the entire proceedings and the related proceedings in relation to the casuals as follows:
a)the applicants complied with the Court’s orders in the casuals’ proceedings and have not explained what the “serious impact” was;[11]
b)the applicant’s complaint regarding the failure of the respondents to provide accurate and comprehensive employee records and documents is hollow given the failure of the applicants to seek either discovery or to complain, through her solicitors, with respect to the inadequacies of the material already provided and her failure to make an application to the Court for the material; [12]
c)the applicant does not explain how the alleged failure to provide relevant employee records and documents had a compounding effect and serious impact on her or her solicitor’s capacity to prepare for trial in accordance with the court orders. [13]
[11] Submissions in Reply on the Question of Costs filed 29 June 2015 at [10]
[12] Ibid at [11] to [14]
[13] Ibid at [15].
In their written submissions in reply the respondents distinguished the decision in Clarke on the basis that “the parties actually filed and served material, whereas here, no material was filed.”[14]
[14] Ibid at [7].
As to the applicant’s submission regarding section 14 of the FCCA Act, the respondents submit that:[15]
“……………… the respondents were prudent to wait for the appeal period to lapse before making the application for costs, which they then did with appropriate haste and in accordance with the provisions of Rule 21.02 of the Federal Circuit Court Rules 2001,”
[15] Ibid at [22].
Approach to s.570 of the Act
In Clarke, the Full Court set down the correct approach to provisions under s.824(2) of WR Act which provided for the Court to exercise its discretion to award costs where an unreasonable act or omission caused another party to incur costs (see [18] above). Section 570(2)(b) of the Act substantially replicates s.824(2) of WR Act. The Full Court stated at [28]:
“[28] We turn now to s.824(2) of the WR Act. This provision carves out another exception to the usual rule in s.824(1) that costs orders are not to be made in respect of proceedings in a matter arising under the WR Act. The exception applies when two criteria are satisfied. The first criterion is that one party must have engaged in “an unreasonable act or omission”. As the reasoning of Tracey J in Australian and International Pilots Assn v Qantas Airways Ltd (No 3) (2007) 162 FCR 392 and Siopis J in McAleer v The University of Western Australia (No 2) (2007) 161 IR 151 demonstrates, whether a party has conducted itself or its litigation in such a way as to cross this threshold will depend on the particular circumstances of the case. The second criterion is that the act or omission of one party must have “caused another party to the proceeding to incur costs in connection with the proceeding”. Once both criteria are satisfied, then the Court “may” in its discretion order the party which has engaged in the unreasonable act or omission to pay some or all of the costs of the other party.”
The Full Court then held in respect of the costs application before it at [29]:
“[29] In our view, the respondent has not engaged in “an unreasonable act or omission”. 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 Assn 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. 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). True it is that the concession ultimately given by the respondent that it regarded the decision of Nicholson J as erroneous could have been given earlier. However, it was a concession which was, in light of the decision of this Court on the substantive appeal, properly made and beneficial to the appellants. Although it is arguable that the lateness of the concession may have put the appellants to some extra costs, we are of the view that it cannot be characterised as “unreasonable” in the circumstances of this case. 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.
I am satisfied that the approach to be adopted in determining an application made under s.570(2) is to determine:
a)Whether, having regard to the particular circumstances of the case, the party against whom a costs order is sought engaged in an unreasonable act or omission; and
b)If the answer to a) is Yes, whether that unreasonable act or omission caused the other party to incur costs;
c)In the event these two criteria are satisfied, whether the Court should exercise its discretion to award costs.
In addition, the discretion conferred within the provisions of s.570(2) should be exercised without due haste or cautiously: Saxena at [6].
In Ryan v Primesafe[2015] FCA 8, Mortimer J dealt with an application for costs arising from proceedings under the Act. In relation to the provisions in s.570 of the FW Act generally Her Honour noted:
“64. I accept the general import of the authorities relied on by the applicant and Mr McDonald in their written submissions about the significance of the threshold set by s.570(2) of the Fair Work Act. Although some of the authorities relied on dealt with the predecessor provisions to s.570, there is no difference in substance in the way the threshold is expressed. The discretion conferred by the confined terms of s.570(2) should be exercised cautiously, and the case for its exercise should be clear: see Saxena v PPF Asset Management Ltd [2011] FCA 395at [6] per Bromberg J. The reason for caution is the potential for discouraging parties’ pursuit in a complete and robust way of the claims for contravention which they seek to make under the Fair Work Act, or the defence of such claims. The policy behind
s.570 is to ensure that the spectre of costs being awarded if a claim is unsuccessful does not loom so large in the mind of potential applicants (in particular, in my opinion) that those with genuine grievances and an arguable evidentiary and legal basis for them are put off commencing or continuing proceedings. It is an access to justice provision. Insofar as it operates to the benefit of respondents, it is designed to ensure respondents feel free to pursue arguable legal and factual responses to the claims made against them. There is an almost identical provision in s611 of the Fair Work Act, giving the Fair Work Commission a similar costs power, conditioned by similarly-worded considerations. The predecessor provisions, and the conscious broadening of the statutory terms used in s.570, are traced by the Full Court in Australasian Meat Industry Employees’ Union v Fair Work Australia (No 2)(2012) 203 FCR 430; [2012] FCAFC 103 at [3]- [4] per Jessup and Tracey JJ.65. None of those propositions deny the Court’s ability to find that one or both of the two preconditions expressed in
ss 570(2)(a) and (b) exist where the factual circumstances warrant it. The legislative policy behind a provision such as s.570(1) is not inconsistent with the requirements for proceedings to be conducted reasonably, fairly and efficiently. As an access to justice provision, it contemplates parties and their legal representatives will access the Court responsibly.”In Rentuza v Westside Auto Wholesale[2009] FMCA 1022 (“Rentuza”) Lucev FM (as His Honour then was) considered the issue of whether an unreasonable act or omission had caused a party to incur costs for the purposes of s.570(2)(b) of the FW Act.
At paragraphs [26] to [28] in Rentuza His Honour made the following observations, with which I respectfully concur:
“26. For the purposes of s.570(2)(b) two criteria must be fulfilled. They are:
(a) that a party must have engaged in an unreasonable act or omission; and
(b) that the unreasonable act or omission must have caused another party to incur costs in connection with the proceeding.27. Whether a party has engaged in an unreasonable act or omission depends upon an objective analysis of the particular circumstances of the case.
28.The exercise of the discretion in s.570(2)(b) is not necessarily engaged because:
(a) a party does not conduct litigation efficiently;
(b) a concession is made late;
(c) a party may have acted in a different or timelier fashion;
(d) a party has adopted a genuine but misguided approach.”
[Footnotes from original omitted]
Consideration
The basis for an award of costs against the applicant under s.570(2)(b) of the Act that as alleged by the respondent is unreasonable acts or omissions by the applicant. The respondent alleges the following acts and/or omissions of the applicant were unreasonable:
a)Failing to accept the offer of settlement it made in October 2013 and, subsequently, continuing to pursue her claim when the respondents paid to her that amount (with an upward adjustment) a month later; and
b)Failing to comply with orders of the Court to file her trial affidavit without reasonable cause.
Was there an Unreasonable Act or Omission?
I am not satisfied that the failure of the applicant to accept the respondents’ offer of settlement made on 8 October 2013, constitutes an unreasonable act or omission in circumstances where the offer was made less than one month after the applicant initiated proceedings and where the respondents unilaterally paid the applicant the amount contained in the offer (together with a “15% gratuity”) to the applicant a month later.
I now turn to the failure by the applicant to comply with the Court orders.
I accept the applicant’s submission that for a period of time, as a consequence of the two interlocutory applications made by the respondents, which were subsequently dismissed by the Court, her solicitors, being prudent, ceased taking instructions from the applicant and preparing her affidavit and other materials which would ordinarily be filed in the Court in preparation for trial. This period of time was from 27 March 2014 when the respondents were granted leave by the Court to pursue its argument regarding conflict of interest to 21 August 2014 when the respondent’s application to join the applicant in the casuals’ proceedings was dismissed. However, the orders setting out trial directions were made on 21 August 2014 and required the applicant to file and serve any affidavits and documentary material she intended to rely on, on or before 13 November 2014.
The applicant then claims that, in addition to this period of time when her solicitors were unable to effectively act for her, relevant employee records and documents provided by the respondents were incomplete and inaccurate rendering the preparation of affidavit material “extremely difficult.” The respondents dispute this, pointing to the inaction of the applicants in seeking discovery or corresponding with their solicitors regarding this matter. In dealing with this costs application I am unable to make any finding regarding this dispute between the parties as to the provision or non-provision of relevant documentary material by the Respondents.
I agree with the respondents, however, that if the applicant’s ability to prepare her trial affidavit material was compromised by the respondents failing to provide relevant documentary material, one would have expected the applicant’s solicitors to have corresponded with the respondents’ solicitors. Alternatively, if she had wished to be relieved of the obligation to file her affidavits in accordance with the orders made on 21 August 2014, the appropriate course was to apply to the Court to vary the directions which had earlier been made.
I am satisfied the applicant’s conduct in failing to comply with the orders for a period of some three months, without taking any steps to relieve herself of the obligation to file her affidavits, until the day of trial was an unreasonable act or omission . Had the Court granted leave to the applicant to file the affidavit, the inevitable consequence would have been the vacation of the final hearing to some months in the future.
Did the Unreasonable Act or Omission cause the respondents to incur costs?
However, I agree with the applicant’s submission that the respondents have not identified how that act caused them to incur costs.
It is the respondent’s case that the unreasonable act or omission caused them to incur costs, yet their written submissions do not satisfactorily identify a causal link. It is left to the Court to infer this.
I am not satisfied I can infer this on the material before me. The respondents (quite properly) did not file and serve their affidavits or documentary material in accordance with my directions made on 21 August 2014. Consequently, I would not find any costs were incurred, in the absence of properly identified costs, as a consequence of preparation for trial.
Furthermore, it must be borne in mind that the Court refused to grant leave to the applicant, at the first day of trial, to file her trial affidavit. Her application was dismissed and proceedings brought to finality. The respondents did not incur any prejudice or costs flowing from an adjournment of the hearing to another date. In the circumstances where the respondents were to attend Court on 4 February 2015 in any event, I am not satisfied the applicant’s unreasonable act caused costs to be incurred by the respondent on that day.
Accordingly, I am not satisfied that the applicant’s unreasonable act or omission caused the respondent to incur costs.
Even if I were so satisfied, because of the circumstances set out in [43], I would not exercise my discretion to award costs pursuant to section 570(2)(b).
Conclusion
For the reasons set out in this judgment, I will order that the respondent’s application filed 2 March 2015 be dismissed.
I certify that the preceding forty-six (46) paragraphs are a true copy of the reasons for judgment of Judge Jones
Associate:
Date: 27 August 2015
Key Legal Topics
Areas of Law
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Civil Procedure
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Negligence & Tort
Legal Concepts
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Abuse of Process
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Costs
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Estoppel
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Res Judicata
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Stay of Proceedings
0
9
5