Ree Honey v Fizzics Education Pty Ltd
[2023] FedCFamC2G 319
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Ree Honey v Fizzics Education Pty Ltd [2023] FedCFamC2G 319
File number(s): SYG 1178 of 2022 Judgment of: JUDGE OBRADOVIC Date of judgment: 28 April 2023 Catchwords: FAIR WORK – PRACTICE & PROCEDURE – Indemnity costs Legislation: Fair Work Act 2009 (Cth) s 570
Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)
Federal Circuit and Family Court of Australia Act 2021 (Cth)
Cases cited: Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879
Bywater v Appco Group Australia Pty Ltd [2019] FCA 799
Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143
Golowenko v Clime Investment Management Ltd [2021] FedCFamC2G 241
Hutchinson v Comcare (No.2) [2017] FCA 370
McAlister v Yara Australia Pty Ltd [2022] FedCFamC2G 174
Patrick Stevedores Holdings Pty Limited v Construction, Forestry, Maritime, Mining and Energy Union (No.5) [2021] FCA 1645
Ryan v Primesafe [2015] FCA 8
Saxena v PPF Asset Management Ltd [2011] FCA 395
Shea v Energy Australia Services Pty Ltd (No 2) [2015] FCAFC 14
Trustee for the MTGI Trust v Johnston (No 2) [2016] FCAFC 190
Division: Division 2 General Federal Law Number of paragraphs: 31 Date of last submission/s: 3 February 2023 Date of hearing: 3 February 2023 Place: Parramatta Appearing for the Applicant: No appearance Solicitor for the Respondents: Colin Biggers & Paisley ORDERS
SYG 1178 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: REE HONEY
Applicant
AND: FIZZICS EDUCATION PTY LTD
First Respondent
JUSTINE BELLAMY
Second Respondent
BEN NEWSOME
Third Respondent
order made by:
JUDGE OBRADOVIC
DATE OF ORDER:
28 APRIL 2023
THE COURT ORDERS THAT:
1.The applicant is to pay the respondents’ costs on an indemnity basis in the amount of $20,106.80 within 28 days.
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 OBRADOVIC:
These are Reasons for Judgment with respect to an indemnity costs application made by the respondents after the applicant failed to participate in court ordered mediation and thereafter failed to prosecute the proceedings.
On 3 February 2023, the Court dismissed the applicant’s application filed on 11 August 2022 and amended on 1 September 2022 for default in absence of the applicant pursuant to r.13.06 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth) (“the Rules”).
On 3 February 2023, the Court directed the applicant to file and serve any response and submissions in relation to the costs application by 17 February 2023. The applicant has not done so.
The respondents rely upon two affidavits and written submissions in support of the application for costs.
BACKGROUND
On 11 August 2022, the applicant commenced proceedings alleging that the respondents had contravened the general protections afforded to employees pursuant to Part 3-1 of the Fair Work Act 2009 (Cth) (“the Act”) and sought damages, the imposition of pecuniary penalties, interest and costs.
On 1 September 2022, the Court ordered by consent that the matter be referred to a registrar for mediation. The mediation was to occur on 27 October 2022.
Two days prior to the mediation, the applicant’s legal representatives contacted the Court seeking that the mediation be postponed because they were unable to obtain instructions from their client. The Court subsequently vacated the mediation date and the matter was listed for directions on 11 November 2022.
The respondents filed an affidavit on 9 November 2022 explaining the circumstances of the vacation of the mediation and the costs that they had incurred for the mediation.
On 11 November 2022, the applicant’s legal representative appeared on the applicant’s behalf and told the Court that he was still unable to obtain instructions from his client and that on 4 November 2022 he served on his client a notice of intention to withdraw as solicitor. The respondents subsequently made an oral application for costs for the costs thrown away both for the preparation for the mediation and the costs of that day’s attendance in the sum of $8,318.20.
On 11 November 2022 the Court ordered that:
1.The oral application for costs made today in respect of the costs thrown away by the vacation of the mediation previously scheduled on 27 October 2022, and today’s costs, is listed for determination at 10:15am on 3 February 2023. The matter is otherwise listed for directions on that date.
2.If the Applicant does not appear on the next occasion, the Amended Application filed 2 September 2022 will be dismissed.
3.The solicitor for the Applicant is directed to notify the Applicant of the Orders made today including that an application for indemnity costs has been made and of the consequences of the Applicant’s non-appearance on the next occasion.
4.The Respondents are to file and serve any written submissions in relation to the application for costs by 4pm on 27 January 2023.
On 15 November 2022, the applicant’s legal representatives withdrew from the proceedings.
On 25 January 2023, the respondents filed written submissions and an affidavit in support of their application for costs. The affidavit gave an itemised table of the respondents’ costs in the proceedings totalling $20,106.80.
The applicant did not appear on 3 February 2023 and the respondents moved the Court to dismiss the application and make an indemnity costs order against the applicant for the costs of the entirety of the proceedings in the fixed sum of $20,106.80 to be paid within 14 days. The Court ordered that the applicant’s application be dismissed and that the applicant file and serve any response and submissions in relation to the application for costs within 14 days. The Court noted that the issue of costs would be decided on the papers thereafter and that the applicant had failed to participate in mediation as ordered by the Court.
RELEVANT LEGAL PRINCIPLES RELATING TO COSTS IN FAIR WORK PROCEEDINGS
Section 570 of the Act provides as follows:
Costs only if proceedings instituted vexatiously etc.
(3)A party to proceedings (included 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.
(4) 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;
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 respondents apply for costs pursuant to s.570(2)(b) of the Act.
Section 570 of the Act is not a licence to parties to ignore their obligations to avoid undue delay, expense and technicality.[1]
[1] Ryan v Primesafe [2015] FCA 8 in the context of the Federal Court of Australia Act 1976 (Cth) (“the FCA Act”) and the obligations imposed by ss 37M and 37N of that act.
The authorities speak of the intersection between s.570 of the Act and the overarching purpose of the civil practice and procedure provisions. The Rules and the Federal Circuit and Family Court of Australia Act 2021 (Cth) provide that the overarching purpose is to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible. A lack of compliance with these overarching purpose provisions may inform the assessment of whether one of the pre-conditions for the exercise of the costs discretion mandated by s.570 of the Act exists.[2]
[2] Bywater v Appco Group Australia Pty Ltd [2019] FCA 799, [10] per Lee J; see also McAlister v Yara Australia Pty Ltd [2022] FedCFamC2G 174, [11].
Even so, the discretion to award costs pursuant to s.570 of the Act should be exercised with some caution so as to avoid parties being discouraged, for fear of an adverse costs order, from pursuing litigation under the Act in the manner which they deem best with a reasonable cause of action.[3]
[3] Construction, Forestry, Mining and Energy Union v Clarke [2008] FCAFC 143, [29] (‘Clarke’); Hutchinson v Comcare (No.2) [2017] FCA 370, [7] (‘Hutchinson’).
The basis of the respondents’ application is that the Court should be satisfied that the applicant’s failure to attend mediation and prosecute the proceedings was an “unreasonable act” within the meaning of s.570(2)(b) of the Act.
When dealing with an application for costs arising from proceedings under the Act, relevant to the provisions of s.570(2)(b), “unreasonable” does not equate to “exceptional”, and whether an act is “unreasonable” is informed by its context and requires an evaluative assessment of all the circumstances.[4]
[4] Patrick Stevedores Holdings Pty Limited v Construction, Forestry, Maritime, Mining and Energy Union (No.5) [2021] FCA 1645 [6](3).
In the context of the use of the word “unreasonable” in s.570(2)(b), taking into account the underlying purpose of that provision which includes the promotion of access to justice,[5] a higher standard of unreasonableness is to be adopted. The fact that a party has conducted litigation inefficiently or adopted a misguided approach will be relevant to, but not conclusive of, the party having acted unreasonably in a sense relevant to s.570(2)(b).[6]
[5] Trustee for the MTGI Trust v Johnston (No 2) [2016] FCAFC 190, [8] per Siopis, Collier and Katzmann JJ
[6] Hutchinson (n 3) at [8] per Bromberg J, citing Clarke (n 3) at [29] per Tamberlin, Gyles and Gilmour JJ.
Once the power to award costs is enlivened under s.570(2) of the Act, the Court can make an order for costs to be paid on an indemnity basis with the general law principles as to the award of such costs applied.[7]
[7] Shea v Energy Australia Services Pty Ltd (No 2) [2015] FCAFC 14 at [10].
The power to order costs, once a criterion in s.570(2) has been satisfied, is discretionary and should be exercised, not so as to impose a penalty or punishment on the losing party but to provide an appropriate means of compensating the successful party having regard to all of the circumstances.[8]
[8] Ibid at [11]
The test as to whether indemnity costs should be awarded, is whether the justice of the case might so require or, whether there exists some special or unusual feature of the case to justify the Court in departing from the ordinary practice.[9]
[9] See, Australian and International Pilots Association v Qantas Airways Ltd (No 3) [2007] FCA 879 at [39]; cited in Golowenko v Clime Investment Management Ltd [2021] FedCFamC2G 241 at [27]
THE RESPONDENTS’ SUBMISSIONS
The respondents submitted that the following factors, inter alia, should convince the Court to exercise its discretion pursuant to s.570(2) and to make an indemnity costs order:
(a)The applicant proposed the mediation and the Court ordered mediation by consent;
(b)Attendance at mediation was not optional;
(c)The mediation was vacated two days prior to its commencement in circumstances where the applicant’s legal representatives had confirmed the applicant’s attendance on 20 October 2022;
(d)The respondents had no reason to believe that the mediation would not proceed and subsequently incurred significant costs in preparation;
(e)The applicant has not communicated with the respondents since the mediation;
(f)The applicant has not provided any explanation as to why the applicant could not attend the mediation or when the applicant may be able to attend a future mediation;
(g)The applicant has shown no intention of prosecuting the proceedings at all;
(h)The costs incurred for the mediation, the directions listings and in the proceedings generally were entirely wasted;
(i)The applicant has wasted both the Court’s and the respondents’ time and money; and
(j)The applicant’s actions or omissions have offended against the overarching principles of the Rules.
The Court accepts these submissions.
DETERMINATION
The Court’s power to award costs is of an exceptional nature in an otherwise no-costs jurisdiction. The Court is satisfied, having regard to the matters at [25] above, that the case for the exercise of its discretion to award costs has been clearly demonstrated.[10]
[10] Saxena v PPF Asset Management Ltd [2011] FCA 395 at [6]
The Court accepts, in the absence of any explanation by the applicant as to why he has not attended mediation and has otherwise disengaged from the proceedings, that the applicant’s actions in the circumstances were unreasonable and caused the other parties to incur significant costs.
The justice of the case requires that the applicant pay the respondents’ costs on an indemnity basis.
As such, the applicant is to pay the respondents’ costs on an indemnity basis in the amount of $20,106.80 within 28 days, in view of a 14 day period sought likely being too short.
The Court so orders.
I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Obradovic. Associate:
Dated: 28 April 2023
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